Korea shaken by influence-peddling scandal

Foreign media outlets that are reporting Choi Soon-sil’s manipulation of state administration seem to be defining Korea as a "crony society" wherein politics and economy are affected by personal connection. The Financial Times reported on Sunday that President Park Geun-hye and Choi Soon-sil are long-time friends, and Choi’s father, the late Choi Tae-min, was a religious leader in veil and mentor to Park, while the Choi family is suspected of ripping companies off money using the president’s influence. The Wall Street Journal reported on the same day that the Choi family’s connection of religious admiration is amplifying public suspicions about the case,” while National Public Radio said that a scandal related to shamanistic worship is posing threat to the Korean president. The foreign media effectively implies that the entire Korean society is being swayed by a religious sect.

It is obvious that the Choi Soon-sil scandal, if it gets prolonged, could deal a devastating blow to the Korean economy. Global credit rating agencies such as Moody’s and Standard & Poor’s have thus far given high marks to Korean companies’ corporate restructuring policy, and the scenario of mid- to long-term national reunification. When it comes to economy and diplomacy, the president’s commitment is the core driving force for advancement. If these engines come to a halt, global credit rating agencies will start to ruthlessly attack Korea in earnest.

　

Domestic consumption was already in deep slump, and retail sales in September plunged by the highest margin in five years and seven months after taking another hit by the recall of Samsung Electronics’ Galaxy Note7. The nation is in a grave crisis, with both production and investment on the decline. The ship of the Republic of Korea has started tilting, but the captain has lost control over its crewmembers, and the ship seems to have nowhere to go. As Choi Soon-sil is suspected of having intervened in making major state policies including the inter-Korean Kaesong Industrial Complex in North Korea, government officials are feeling hopeless as well. The government announced Monday a plan to inject 11 trillion won (9.6 billion dollars) in the shipbuilding industry through 2020, as it aims to keep the three largest shipbuilders despite the gloomy outlook casting over the industry, but the government would not have presented this plan unless they took the situation too lightly.

When adjusting a nation’s sovereign rating, international credit rating agencies do not necessarily consult and coordinate with the country concerned. When rumors of an economic crisis amplified due to malicious reporting on Korea in the wake of the global financial crisis, the Strategy and Finance Ministry visited international credit rating agencies and sought to promote strong fundamentals of the nation’s economy. Economy-related government agencies should start communicating with global credit rating agencies as well as providing regular briefings to foreign media. The same holds true with diplomacy. Not only the Foreign Affairs Ministry but also Kim Kwan-jin, chief of the national security office at the presidential office, should stay balanced to ensure that Korea will not face setbacks in sensitive pending diplomatic issues including a Korea-China-Japan summit.