Koreas economic credibility under scrutiny due to Choi

Soon-sil scandal
PUBLISHED :November 01, 2016 - 18:45.

THE INVESTOR (TOKYO)

The integrity of Korean policymakers has been placed under scrutiny by the
so-called Choi Soon-sil scandal involving a civilian who allegedly influenced
President Park Geun-hye. The rising skepticism is, in turn, likely to negatively
impact the credibility of Korean policies, including those involving the economy,
according to pundits.
Aki Wakabayashi, the head of Transparency Internationals Japanese chapter,
said that corruption, though it may not have an immediate impact, will eventually
undermine the underpinnings of society. We see similar scandals and corruption
cases in Japan involving the government, which leads to people lacking trust in
policymakers, Wakabayashi said. The public is now refusing to spend, because
they are so concerned about their future well-being, and this has a major impact
on the economy.
Figures showed Japans household spending falling 2.1 percent from a year
earlier in September. The figure has fallen in 11 of the past 12 months. The
Korean economy has persistently focused only on government-led projects, and
when the government is discovered to have made biased decisions, the
credibility of economic policymakers, not to mention that of the economy itself,
cannot be but questioned, said Wi Pyung-ryang, a senior researcher at the
Economic Reform Research Institute.
Meanwhile, the fallout from the latest scandal that has hit Korea is expected
to become even bigger, further weighing on national credibility as news outlets
worldwide are following the events in Korea.
In Japan, major broadcasting stations have been running specials on what
they call the Korean Watergate, mimicking the term coined by the Korean
press. Mainichi Shimbun, quoting Prime Minister Shinzo Abes aide, said the
current crisis surrounding President Park was regretful. Yomiuri Shimbun and
others echoed the Japanese governments growing anxiety about the possibility
of the latest scandal affecting a deal regarding comfort women that the two
nations signed on Dec. 28, 2015. Jiji Press noted relations between Korea and
Japan may fall into an impasse due to the presidents scandal.
By Kim Ji-hyun/The Korea Herald Tokyo Correspondent
(jemmie@heraldcorp.com)

Article review
South Korea has been rocked by protests over the influence peddling of Choi
Soon-sil, the close friend and so-called shaman adviser to President Park Geunhye.
The origins of the scandal go back to 1975, when Park, the daughter of South
Koreas dictator Park Chung-hee, befriended Choi Tae-min, a cult leader who
convinced her that he could communicate with her late mother. The elder Choi,
sometimes described as a Korean Rasputin, profited from his closeness to the
family by creating a series of phony foundations, with resident Park as their head.
After his death, Chois daughter became Parks close adviser and followed in her
fathers footsteps. Choi supposedly managed several non-profits as slush funds,
gained access to confidential government discussions and budget proposals, and
was allowed to edit the Presidents major speechesall in her ability as a private
citizen.
With the Choi Soon-sil scandal taking damage on President Park Geun-hye,
concerns are rising over possible consequences on Seouls diplomatic and
security initiatives, such as a trilateral summit with China and Japan, a US missile
shield arrangement and an intelligence-sharing pact with Tokyo.
The US, China, Japan and other key diplomatic partners are closely monitoring
the development of the scandal involving Parks adviser Choi Soon-sil, which has
basically placed state affairs at an impasse. The rising suspicion is likely to
negatively impact the reliability of Korean policies, especially those involving the
economy, according to experts. The public is now refusing to spend, because
they are so concerned about their future well-being, and this has a major impact
on the economy.
The Korean economy has constantly concentrated solely on government-led
projects, and when the government is discovered to have made prejudiced
decisions, the credibility of economic policymakers, not to mention that of the
economy itself, cannot be but doubted.
On the one hand, the Choi Soon-sil gate doesn't directly affect business
activities or household consumption of South Korea. It doesn't have to do with
the real economy, an analyst said. He mentioned that it was small investors who
were distressed by the political confusion. While small investors sold 527.9 billion
won in stocks during the first month following the allegation, foreign investors
bought 2.9 trillion won worth of stocks.
On the other hand, investigators agree that the scandal can negatively affect the
stock market by accelerating the weak period; with the government losing energy
to go ahead with economic arrangements as the authorities come close to the
end of the term, despite president Park Geun-hye's term ending on Feb. 24, 2018.
There is still more than a year left until the completion of her term, but market
analysts expect that the lame duck period (when president Park is still an elected
official, but her successor has already been chosen) will come earlier than

expected due to the uncontrollable response of the scandal involving the

presidents adviser.

Curmei Victoria