South Korea: The Final Hurdle for Democracy

Abstract

In the summer of 1997, as the economic crisis was tearing through countries in Southeast Asia, South Korea seemed to think that it would be spared the contagion. Throughout 1997 there were concerns over the banking sector and over some of the large Korean conglomerates, chaebol, which had become too large, too diverse, and highly leveraged. Giant firms such as Kia Motors and Hanbo were struggling. By summer many foreign banks had stopped or limited their lending to Korean firms, but analysts seemed to think that South Korea would avoid a meltdown.1 As the presidential election heated up in the summer and fall of 1997, the candidates were not talking about the economy and there was no sense of a looming crisis. Nonetheless, by November 1997, South Korea was the latest country to fall prey to massive financial upheaval and political turmoil. What impact did the crisis have on South Korean politics? Of the countries studied here, Korea in 1997 was arguably the most democratic and was certainly the most developed economically. Yet, the economic crisis served as a catalyst for political reform in South Korea, just like in Thailand and Indonesia. Kim Dae Jung (DJ), longtime democracy advocate and opposition politician, won the 1997 presidential election, ending the domination of Korean politics by the more conservative and status-quo party (called the New Korea Party in 1997).