South Korea

South Korea/North Korea

South Korean Deputy Minister of Defense Ahn Byong-kil, speaking before the National Assembly's National Defense Committee on April 26, announced that the U.S. and South Korean governments had agreed that there would be no limit to range and payload of commercial launch vehicles, and that the range limit for South Korean military missiles would be raised to 300 kilometers. However, the U.S. has insisted that a Memorandum of Understanding (MOU) be signed between the U.S. and South Korea prior to the agreement being finalized. South Korea, instead, is trying to formalize the agreement merely through a letter of intent.

This chain of events was triggered by a test launch on April 10 of a South Korean surface-to-surface missile on its West Coast. The missile flew roughly 40-50 km. South Korean defense officials termed this as a routine test of an upgraded missile. However, on April 18, South Korean media reported that the United States had determined the test-firing was actually of a missile with a 300 km range, nearly twice the range allowed by Korea-U.S. missile development agreements. U.S. officials reportedly registered their protest to the test believing that the South Korean military only partially fueled the missile to avoid a confrontation with the U.S. The South Korean Defense Ministry, in response to the U.S. protest, stated emphatically that the missile only flew 40 km, and didn't even come close to the 180 km limit dictated by U.S.-Korean technology sharing agreements. The South Korean Ministry of Foreign Affairs and Trade, however, denied that the U.S. had even filed a complaint.

The issue of South Korea's domestic missile program is longstanding, dating from former President Park Chung Hee's self- reliance program for national defense that included both missile and nuclear weapons research. According to South Korean reports, Seoul agreed with Washington to limit the range of its domestically developed missiles to 180 km in 1979, renewing the agreement in 1990. The decision to accept the U.S. proposed restrictions had since intensified tensions within South Korea and between South Korea and the U.S. As North Korean missile technology advanced, the South Korean program was reportedly nearly scrapped in 1982 by then President Chun Do Hwan under pressure from the U.S. Following an assassination attempt in 1983, Chun restarted the domestic missile development program, which then test fired the Hyon Mu surface-to-surface missile with a range of 180 km. In 1990, South Korea signed a new pact with the U.S. to limit missile development to those with a range not exceeding this 180 km level.

However, rapid North Korean missile developments led South Korea to seek modifications from the U.S. in the allowable range, asking for a change from 180 to 300 km. The U.S. had steadfastly refused. After North Korea tested the 2,000 km capable Taepo Dong 1 missile in August last year, South Korea renewed its calls for extending the allowable range, possibly beyond 300 km to 1,000 km. While the South Koreans claimed the new ranges would allow them to hit most targets within North Korea, the U.S. began to fear the regional repercussions of longer-range missiles under South Korean control. In the 1970s and 1980s, the U.S. kept the South Korean missile development in check over concerns that it could raise tensions on the Korean peninsula. However, now the U.S. opposes this development because such proposed 300 km missiles could strike parts of Japan, while 1,000 km missiles could reach Beijing and Tokyo -- developments that could further destabilize the entire region.

This latest incident raises some other salient questions. What reason would South Korea have, at this time, to test a longer- ranged missile, when in less than nine months they believe the range restrictions will no longer apply? Likewise, why would the U.S. bother to make an issue of a missile that it admits flew less than 50 km? The answer to these questions lies with the power South Korea can exert over its neighbors. South Korea is still reliant on U.S. forces to provide for its defense. Within these arrangements, South Korea's domestic weapon's program has only slowly developed in comparison to its neighbors. As the U.S. and South Korea diverge on their goals and views in North East Asia, South Korea lacks the ability to project its power alone. With the addition of longer-range missiles to its arsenal, especially 1,000 km missiles, South Korea would become more of a regional power, with the ability to exert its own pressures on its neighbors.

The launch of the South Korean missile and subsequent U.S. protest again revealed the underlying tensions between the two allied nations. After all, the recent development of public and private differences between the countries over South Korea's Sunshine Policy toward North Korea, and comments by South Korean President Kim Dae Jung on adjusting the status of the U.S. Forces Korea (USFK), have both underscored these tensions.

What has now changed is the fact that the U.S. has decided to capitulate on the effective range of South Korean missiles. What remains unclear is why the U.S. should insist on a more legalistic fig leaf than what the South Koreans are prepared to provide. Perhaps the U.S. is using this legalism (the MOU) to assert its continued close involvement in and oversight of South Korean missile development. South Korea has been incorporating French technology in its missiles and may be able to pursue future development without U.S. assistance. Washington may have determined it would rather keep track of an approved extended range missile program than lose touch with future independent South Korean missile developments.

What is clear is that the price of a continued U.S. presence in South Korea is changing. American involvement in Kosovo and Iraq has started to produce tangible costs. The South Koreans know that the U.S. needs to keep troops on the peninsula in order to guarantee stability in the Eastern Pacific. Given the ongoing development of the Sunshine Policy and the U.S. over-extension in Southeastern Europe and in the Gulf, the leverage the South Korean regime has vis-a-vis the U.S. has now increased.

The North Korean government confirmed this weekend that it was preparing to test a new missile in late August. The confirmation came after South Korean intelligence sources were quoted by South Korean media as saying that preparations were underway for a new launch at North Korea's Musudan-Ri launch facility in the northeast. South Korean media reported that the height of the launch pad had been increased from 20 meters to about 60, leading to speculation that the new missile to be tested was substantially larger than the one launched last August, and therefore had a much longer range, perhaps as much as 3,750 miles - long enough to reach parts of Alaska. Agence France Presse reported that North Korea had leased a Thai communications satellite with Global Position System (GPS) that would be used to track the missile test. With evidence mounting that the test was likely, North Korea condemned efforts by Japan, South Korea and the U.S. to block the launch, which most observers felt confirmed an upcoming test.

Amidst this speculation, the U.S. aircraft carrier Constellation and its battle group arrived in the Korean port of Pusan for a five-day port call. The carrier, scheduled to be deployed in the Gulf, could be held near Korea if tension intensified. At the same time, Japanese Prime Minister Obuchi, on a previously scheduled trip to China and Mongolia, made the impending launch a prime topic of conversation, seeking both Chinese and Mongolian help in persuading North Korea not to test the missile. In addition, Japan has made it clear that it would not be able to provide North Korea with cash, departing from a U.S.-negotiated program designed to supply energy to North Korea in exchange for North Korea not developing nuclear weapons. This departure would create a crisis between Japan and the U.S., which regards North Korea's nuclear weapons program as a separate and greater threat, and does not want the missile problem undermining control of the nuclear problem. Topping it all off, India has seized a North Korean ship that it says was smuggling missile parts to Pakistan.

So, North Korea has done what it does best: getting everyone tied up in nervous knots. In point of fact, all that has happened is that South Korea has claimed to have detected the construction of a large, new test facility, while the North has simply defended its right to launch any missile it wants. This was enough to create an uproar involving all the regional powers and the U.S. as well. Whether the missile is ever launched, crashes or works, North Korea has succeeded in creating precisely the environment it thinks it needs in order to survive. The missile is in a way much less interesting than the use to which North Korea puts the very rumor of its existence.

North Korea has one consistent goal: to survive as an independent country under the control of the present regime. For North Korea, this has not been an easy goal to achieve, and it became increasingly difficult and even seemingly impossible following the collapse of the Soviet Union. The foundation of North Korea's security was the fact that its survival was in the strategic interest of both the Soviet Union and China. This kept at least some resources flowing in and guaranteed the physical security of the country. Even after the Sino-Soviet split, North Korea's security was assured. Indeed, it was in many ways in a better position than before. It could play the Soviets off against the Chinese to increase their support, without being forced to develop openings to the West.

The triumph of Deng's line in China was the first challenge to North Korea. As China opened to the West and focused on economic development, whatever strategic benefit North Korea might have provided evaporated into irrelevance. Investment in Shanghai was infinitely more important than the status of North Korea. Glasnost and the collapse of the Soviet Union further pushed North Korea into strategic irrelevance. By 1993, North Korea was on its own for the first time since its founding, without a patron prepared to underwrite the survival of its regime. With Soviet communism gone and Chinese communism appearing to deteriorate into little more than an irrelevant piety, insulation against the fabulously successful South seemed impossible to maintain. North Korea was expected to collapse, and scenarios for dealing with this prospect were developed by all concerned. South Korea drew up detailed plans for the administration of North Korea, worrying about such issues as whether or not they should pay the North's debt.

North Korea's regime was not, however, prepared to go gently into that good night. They devised a strategy that we call the "Crazy Fearsome Cripple Gambit." North Korea understood its vulnerabilities very clearly. It also understood the fears of others. South Korea, with its capital and industrial heartland only a few miles from the DMZ, was interested in reunification, but much more motivated to avoid any conflict that would endanger its economic infrastructure. The U.S. was equally eager to avoid a situation in which its forces in Korea were engaged in high-intensity conflict. China and Russia did not want relations with the West disrupted. North Korea was also aware that it had a reputation for military formidability and unpredictability, although it had pursued an extremely cautious and rational foreign policy since 1953. It had few assets to play with, but two were of the essence. First, no one really, deeply cared what happened in North Korea. Second, no one wanted a war with North Korea.

By 1994 North Korea had perfected a brilliant three-part strategy. The first part was to portray itself as a cripple. Since 1994, we have been hearing of massive food shortages that would likely wipe out huge swaths of North Korea's population. Every summer, reports begin to circulate about the likelihood of massive deaths in the coming winter. Now, there is little doubt that life in North Korea is miserable, that malnutrition is rampant, and that deaths from starvation have occurred. But if the reports that have circulated since 1994 were all true, everyone in North Korea should be dead by now. Most are not. What North Korea did was to take a real problem - its food situation - and make it appear to be so devastating that it might destroy not only the regime, but the whole country.

That would seem a strange thing to do, but was in fact extremely rational, as part of the Crazy Fearsome Cripple Gambit. During the early 1990s, there was discussion of what actions might be taken to hasten the fall of the Pyongyang government. South Korea and the U.S. both had tools available that could have caused serious problems for the regime. By projecting a massive, insoluble food crisis, the North Korean government made it appear that outside actions were completely unnecessary. With a food crisis on the order of Ethiopia's, the regime was likely to collapse on its own. There was no reason to undertake risky strategies to hasten its fall. The expectation of collapse, in an interesting way, tied the hands of its enemies. As an added bonus, the perception of impending starvation actually motivated the international community to ship food to North Korea, alleviating what shortage there was.

Having established itself as a cripple, unworthy of outside manipulation, the next step was to make itself fearsome. The North did everything it could to make the West aware that it was developing nuclear weapons and delivery systems. It conducted maneuvers of conventional forces that made it appear that their soldiers were massing along the DMZ ready for a strike. It carried out espionage missions that set alarms ringing in Washington, Tokyo and Seoul. The North did everything in its power to appear as fearsome as possible. When it recently prevented inspections of its nuclear facilities, it may have been stopping Western inspectors from finding out how far it had gotten. Alternatively, it may have stopped the U.S. from finding out they had not gotten nearly as far as anyone thought. We don't know. However, by preventing inspections, North Korea allowed everyone's imagination to run wild. Whenever things quieted down, they could count on South Korean intelligence to float another story about North Korea's new and extraordinary achievements in weapons development. The stories may well have been true; North Korea certainly devoted a huge amount of its resources to developing weapons. But the actual construction of weapons was less important than was convincing everyone that they were constructing weapons. North Korea may well have major nuclear capabilities and delivery systems, but that is less important than making sure the outside world believes that it has those systems.

Having established that they were crippled and fearsome, the critical element was to establish their insanity. The appearance of being crippled helped enormously. Since the regime was in imminent danger of falling, since the government would do anything to stay in power, and since the government had all sorts of military options available to them, it followed that the threat of collapse might trigger some crazed military adventure. Because no one wanted that, it followed that not only would no one try to collapse the North Korean regime, but that they would take steps to stabilize it. The fear that desperation would make North Korea take extreme measures, coupled with a deep-seated belief that the North Korean government in general was hearing voices that no one else could hear, generated a general feeling that North Korea was like nitroglycerine. It was likely to go off at a single, careless touch. That view suited North Korea's needs perfectly. The Crazy Fearsome Cripple was born - a serious actor on the global stage.

The North Koreans have created a situation in which every move they make is watched, reacted to and feared. No one discusses the collapse of North Korea any longer. Rather, everyone discusses what steps can be taken to stop the North Koreans from developing nuclear weapons, from developing long-range missiles, from suddenly and unpredictably invading the South. These are not things they are actually likely to do. The North Korean army, for example, is essential to internal security. True, Seoul's industrial treasures are within striking distance of the DMZ. But that would mean a miserable urban battle in which the defenders have a decided advantage. North Korea is not about to throw away the foundation of its regime in house-to-house fighting in Seoul. Similarly, North Korea is not about to nuke Anchorage. Much of North Korea would disappear shortly thereafter into a radioactive cloud. This would definitely disrupt the regime. Most of the threats that North Korea poses are credible only if we assume that they are nuts. Of course, nothing in their foreign policy indicates anything but strict self-control. Strange press releases aside, the North Koreans have been quite restrained since 1953.

For North Korea, doing something is much less effective than appearing to be capable of doing something or appearing to be about to do something. For over five years, North Korea has conducted a holding action, designed to preserve their independence and their regime by appearing to be a Crazy Fearsome Cripple better left alone. The goal was to survive until the geopolitical climate shifted and it could, once again, find a patron to whom it could be useful.

It appears to us that North Korea is indeed becoming useful to China once again. At a summit meeting in China between China's and Japan's prime ministers, Japan's prime minister came asking for a favor: Chinese pressure on North Korea to cancel its missile test. It came bearing gifts. Japan became the first G-7 nation to negotiate a bilateral agreement with China on World Trade Organization membership. It achieved this agreement by conceding to China a main point concerning participation in China's potentially enormous telecommunications industry. However, China made it clear that this wasn't enough. It wanted Japan's assurances that it would not include Taiwan in its trilateral relationship with South Korea and the U.S. This, plus the fact that Japan takes the missiles much more seriously than does the U.S., obsessed with North Korea's nuclear capability, promises to kick off a very satisfactory row between Tokyo and Washington - precisely what Beijing and Pyongyang want to see.

Now, it really isn't clear how much influence China has in North Korea. That isn't nearly as important as the fact that the Japanese think China has influence. It is a marvelous reason for the Chinese to work to develop some influence, since they can obviously trade that influence for major Japanese economic and political concessions. If Japan and the U.S. are worried about North Korea, China can trade on that concern. That means that North Korea will be of value to China and can extract concessions and support from Beijing, which in turn means that Beijing will not want North Korea to collapse and will work to stabilize the regime. And that will mean that the Crazy Fearsome Cripple, simultaneously too weak to worry about and too dangerous to anger, will have pulled off what appeared impossible a few years ago: it will have survived.

Unification of North and South Korea?

North Korean Foreign Minister Paek Nam Sun, speaking at a recent meeting on the sideline of the U.N. General Assembly session in New York, said that North Korea had been watching the implementation of the one-country, two-systems plan under which Hong Kong was reunited with China. He added that Pyongyang was considering it as a model for Korean reunification. Paek's comments follow a series of North Korean diplomatic overtures around the world. In light of this, the one-country, two-system approach to Korean unification is intriguing. However, there are fundamental differences between the situation in China and that on the Korean Peninsula, making the proposal, no matter how interesting, a starting point rather than a solution.

The idea of a one-country, two-system plan for reunification of the Koreas, raised at a time of increased North Korean diplomatic activity, will create new openings for inter-Korean dialogue. North Korea has consistently expressed its opposition to South Korea's Sunshine Policy of constructive engagement, calling it an attempt by the South to export its cultural system to the North and eventually assimilate the North. However, Paek's proposal forwards what essentially amounts to an advanced state of Sunshine Policy as a model for inter-Korean unification.

While the one-country, two-systems reintegration of Hong Kong with China ostensibly allowed Hong Kong to maintain its own local economic and political system, in reality it has slowly been acquiescing to China's wishes. With the extreme differences between South Korea and North Korea's foreign policies, it is unlikely they would find common ground under such a plan. One side would be coerced into accepting the will of the other in order to present a unified political and economic front to the world, and the North is far more likely to be subsumed than the South.

Aside from the internal ideological differences, any reunification plan acceptable to the North would require the withdrawal of U.S. troops from the Korean Peninsula. A reunified Korea would technically no longer present a threat to U.S. interests, making obsolete the reasons for stationing troops there. Yet, the United States is committed to maintaining a large-scale military presence in Asia, a third of which is currently stationed in Korea.

Despite warming relations between North Korea and the United States, as evidenced by the recent easing of sanctions, there is nothing to suggest that the United States is considering the possibility of removing its troops. William Perry, coordinator of U.S.-Korean policy, is convinced of the need to maintain U.S. military presence on the peninsula. While the United States is interested in a stable Korean peninsula, it may not be convinced that a one-country, two-system plan would provide enough of a stabilizing effect to justify the removal of U.S. forces. As well, there are other strategic concerns in the region, such as China, that determine U.S. troop deployment.

While North Korea's unofficial proposal does not mean a reunification of Korea is beginning, it does present a point of reference for future talks. As with the Sunshine Policy, it suggests a gradual merging of the two Koreas. However, unlike the Sunshine Policy, the North Korean proposal would necessarily require rethinking both nations' foreign relations, as part of a true reunification into one country. While there would be much to resolve in implementing such a program, it does represent progress in North Korean attempts to move away from rogue state status and into the international diplomatic arena.

On Oct. 22, General Fu Quanyou, chief of general staff of China's People's Liberation Army (PLA), resurrected the Cold War metaphor used to describe relations between the two nations. Speaking at the North Korean Embassy in Beijing on the 49th anniversary of China's participation in the Korean War, Fu referred to ties between China and North Korea as being "as close as lips and teeth." Fu's remark comes amid a general rebuilding of the friendship between the two nations, which deteriorated during China's economic opening and reform in the early 1990s. The reversion to the terminology of pre- economic reform China, coupled with China's apparent backtracking on economic opening, suggests that Beijing may be re-evaluating its foreign policy.

If Fu had made the comment 10 years ago, it would have aroused little attention. After the Korean War, the nations talked of ties sealed with blood and described their nations "as close as lips and teeth." However, in the early 1990s, with the process of economic opening in China overpowering traditional ideological ties between the nations, the phrase began to fade. Then, when China established diplomatic ties with South Korea in 1992, relations between China and North Korea began a steep decline. The "lips and teeth" description, while not entirely abandoned, has been widely avoided by Beijing for years.

China's pull away from North Korea was tied to its search for economic investment. A perceived connection with the reclusive and unpredictable North, it was feared, would scare away potential investors. Establishing formal ties with South Korea demonstrated that Beijing was placing a higher priority on economics than on ideology and relations with the North.

During the past year, however, ties between North Korea and China have been warming. Simultaneously, China has been struggling to deal with internal instability triggered by financial stresses brought on by the economic reform process. Under President Jiang Zemin, China has taken a strong interest in maintaining social stability, even at the cost of economic reform. This in turn has threatened foreign investments in China, as it continues to close off or tightly regulate desirable areas of investment.

Such economic concerns may be at least partially instigating the reconnection between China and North Korea. While Fu's resurrection of the metaphor - made during a commemoration of China's support of the North during the Korean War - reawakens the old fear of China holding North Korea's leash, more likely Beijing will attempt to use the threat engendered by such fears as an economic bargaining chip.

By taking on a closer relationship to North Korea, China becomes a vital path for relaying concerns to the North. This, in turn, gives China leverage with nations like Japan and the United States, as well as South Korea. Already, China has gained economic concessions from Japan due in part to its influence with North Korea ( http://www.stratfor.com/asia/specialreports/special24.htm ).

Relations between China and North Korea have not returned to the warmth of the 1950s, nor are they likely to do so. However, restoring relations gives China an important tool for dealing with the United States, Japan and South Korea. These countries, all of which have strategic interests in North Korea and China, represent large quantities of potential investment capital for China. By combining the strategic importance of North Korea and the economic interests of China, the return of a "lips and teeth" relationship may be part of an aggressive Chinese policy aimed at continuing to receive foreign capital without having to grant concessions to investors.

A riot broke out Oct. 11 in North Korea's North Hamgyong Province, which borders both China and Russia, according to Chinese and South Korean media reports published this week. North Korea mobilized an elite border guard unit to quash the riots, which took place near the northwestern border city of Onsong. The special unit responded with helicopters and ground forces, and followed up with a search operation to find the leaders of the riot and "outside impure elements."

North Korea has long harnessed the fear of social instability to gain leverage in dealings with other nations. By playing up outsiders' paranoia that a collapsing regime may resort to any measure - including launching a suicide attack on South Korea - it wins economic humanitarian assistance while maintaining its isolation. [ http://www.stratfor.com/asia/aiuarchive/a981222.htm ]

But the riot near Onsong suggests that unrest in some outlying regions of the country may be near the breaking point. This does not mean that a general uprising against Kim Jong Il's government is near, but that localized dissatisfaction with the current economic and political situation could lead to eruptions of violence, requiring military intervention. Signs of instability - especially real, not engineered, instability - could win Korea support from a wary China.

The riots came amid tightened border security by both North Korea and China, designed to stem the flow of illegal North Korean citizens seeking food and medicine across the Tumen River in China. While many of the North Koreans crossing into China are reportedly seeking refugee status, both sides oppose calling them refugees out of fear that granting such status would trigger a massive increase in the number of North Koreans crossing into China.

The incident in Onsong seems to be isolated, at least for now. Potential unrest appears confined to the border areas, where political and ideological exiles are often sent, and news of the outside is easier to obtain. With North Korea increasing economic and social exchanges with other nations to bolster its shrinking economy, such internal dissatisfaction could spread.

As North Korea balances its financial distress with the need to remain insulated from the rest of the world, there are other signs that the regime's security may be threatened. Kim Jong Il's eldest son, Kim Jong Nam, has taken a post in the Ministry of Public Security, an early step toward succeeding his father. The elder Kim's rise to power following his father Kim Il Sung's death was a slow process, marked by purges in the government ranks.

Firmly establishing Kim Yong Nam as his successor could be an attempt to counter a threat against Kim Jong Il's authority. Placing his son in a position of public security, tasked with information gathering and finding dissidents, signals to both the citizens of North Korea and to potential opponents that the Kim Dynasty will continue. By emphasizing the dynastic succession implemented by his father, Kim Jong Il hopes to rekindle public affection for North Korea's leadership, which has dwindled without Kim Il Sung's charismatic presence.

While the signals out of North Korea may be simply more false signs of imminent collapse, the unrest in the north and potential splits in Pyongyang suggest the precarious situation may be more than a carefully crafted diplomatic bargaining tool. A truly destabilized North Korea poses a threat not only to South Korea and the U.S. forces there, but also to China, Russia and possibly Japan. While South Korea, the United States and even to some extent Japan have accelerated contact with North Korea, it is China that has recently forged the closest ties.

China has already been moving to strengthen relations with North Korea in order to regain leverage against U.S. allies in the region. While Beijing would benefit strategically from holding the leash on North Korea's belligerency, it would be threatened by an out-of-control North Korea. Real signs of North Korean disintegration could speed up moves to bring Sino-North Korean cooperation back to a level not seen in decades. China may even seek to influence or manipulate North Korea's internal politics to maintain the momentum of strengthening relations and guarantee North Korean cohesion.

South Korea's ruling coalition and the opposition parties on Nov. 30 scuttled an important debate on a bill that would have begun the privatization of state-run monopolies, including crucial power, gas and financial corporations. Under the bill, restructuring would have begun with the Korea Electric Power Corp (KEPCO), the state power utility. Beginning in January, KEPCO would have been broken up into as many as six subsidiaries, then sold off to private investors. Other major state firms would have followed suit. But the parliament refused to debate the KEPCO sale and has effectively put a stop to further reforms.

The parliament's decision reflects increasingly broad dissatisfaction with reform. In the past month, Seoul has endured two major protests and a threatened labor strike over privatization. It appears that the leaders of South Korea's parties are at least temporarily abandoning the president's call to sell state-owned monopolies; they are, after all, up for re-election in just four months. Whether they resume reforms after the elections is in question; if they do not, they could jeopardize the country's economic recovery.

Because of sometimes painful economic reforms, South Korea has reached an important stage in its recovery from the economic crisis that gripped Asia in 1997. After restructuring the country's banking system and downsizing corporations, the country is showing excellent signs of economic recovery. The government has announced an extraordinary 9 percent growth rate for the economy this year. The country is a net creditor and major industries, like shipbuilding, are winning Asia's competition for export markets. On Nov. 20, President Kim Dae Jung boldly announced that South Korea had "completely" overcome the 1997 foreign exchange crisis. But the reform process that has helped bring South Korea to this point is itself only half-finished. The privatization of the state-run monopolies is the next major stage, necessary to sustaining growth in the long term.

Yet South Korean politics is turning decidedly against more reforms as everyday South Koreans appear reluctant to make the additional sacrifices for the sake of restructuring the economy. Throughout the month of November, the country's labor unions have mounted a major campaign to halt the government's plans to sell state-run firms. The two umbrella labor unions have organized two demonstrations, each with a turnout of approximately 20,000 people.

Workers fear that as firms are subdivided and sold off, the new owners -- likely foreigners -- will downsize significantly, adding to the country's already serious unemployment problem. Five thousand workers have been laid off at KEPCO alone -- without privatization. And while unemployment is down from the beginning of the year, some 1 million South Koreans are still out of work.

Labor unrest is clearly feeding election-season apprehensions among the country's politicians. The unions have enough clout to gain any legislator's attentions. The Korea Confederation of Trade Unions (KCTU) - only one of the two umbrella unions -- claims over 1 million members, and voters. On the face of the matter, the government could resume its reforms once the volatile campaign season ends next spring. President Kim has committed himself to finishing the task, last year stating flatly that "economic reforms will not be halted midway."

But even after the elections, South Korea may find it hard to resume the unpopular work of slashing government payrolls. Right now, Kim is isolated in his call for more reforms; popular sentiment, the opposition and his own ruling party oppose him. Even after the election, the president will struggle to make a difficult sale: calling for sacrifice in the midst of an increasingly healthy economy.

If the bulky and inefficient state-run monopolies continue to drain government resources and fail to improve productivity, economic growth will eventually stall. The drive to restructure the economy will now halt for at least four months. If economic indicators remain rosy, politicians and the public alike will believe that that restructuring is neither necessary nor worth the sacrifice. South Korea may lose its competitive edge, and bring its current recovery to a grinding halt.