From Third World to First The Singapore Story pdfdrive com

Foreign Affairs
in response to my interview with the
editor, Fareed Zakaria. He did not agree that history and culture made for
different attitudes of a people and different norms of government. 
Foreign
Affairs
invited me to reply. I chose not to. The difference in our views cannot be
resolved by argument. It will be settled by history, by the way events will
develop in the next 50 years. It takes more than one generation for the political,
economic, social and cultural implications of policies to work themselves out. It
is a process of attrition, of social Darwinism.
As the president-elect, Kim Dae Jung agreed to Kim Young Sam’s pardon of
the two former presidents then serving long terms of imprisonment for treason,
bribery and, in the case of Chun, murder. They were freed in December 1997
and attended the presidential swearing-in ceremony in February 1998. After his
swearing-in, President Kim Dae Jung shook hands with Chun and Roh, a gesture
of “reconciliation and harmony” in Korean society, as the presidential
spokesman put it. It was staged before a crowd of 40,000. Whether this political
theatre restored the people’s confidence in their system of government is open to
question.
South Korea’s political institutions would have suffered less damage if, like
Mandela’s government in South Africa, they had closed all past accounts. The
Truth and Reconciliation Commission in South Africa forgave all those who had
committed atrocities during the apartheid regime if they declared their previous
wrongdoings. While it might not have achieved reconciliation, the commission
did not worsen the divide.
Their trials not only destroyed Chun Doo Hwan and Roh Tae Woo, they also

---

diminished the men who had helped to create modern Korea, leaving the people
cynical and disillusioned with all authority. It will be some time before Koreans
regain their esteem for their leaders. Chun and Roh had played by Korean
standards of their time, and by those rules they were not villains. Pressured by
American public opinion against having another military man as successor, Roh
had allowed power to go into the hands of Kim Young Sam. These events have
sent the wrong signals to military leaders in charge of other countries, that it is
dangerous to hand over power to civilian politicians who seek popular support.
In 1999 I attended a meeting in Seoul as a member of the International
Advisory Council (IAC) to the Federation of Korean Industries. At a forum on
22 October, IAC members had a discussion with the leaders of Korean chaebols.
These chaebols are Korean versions of Japanese zaibatsus. In every major
industry where zaibatsus have been successful, chaebols followed to compete
with cheaper labour and lower costs. Like the Japanese, they went for market
share, ignoring cash flow and the bottom line. As in Japan, the whole Korean
domestic economy, especially the high savings of their workers, provided the
base for chaebols to get capital at low interest rates and target specific industries.
With the end of the Cold War, the external situation changed. Like Japan,
Korea had to open its domestic and especially its financial markets. Their
chaebols had borrowed about US$150 billion in foreign currency for rapid
industrial expansion in Korea and abroad – in China, former communist
countries in eastern Europe, the Russian Republic and the central Asian
republics of the former Soviet Union. These investments were not based on
expected returns on equity but on aggressive expansion to capture market share.
When they were unable to repay the interest due, towards the end of 1997 the
Korean currency, the won, collapsed. The IMF came to their rescue. Three
weeks later, Kim Dae Jung won his election as president.
I told the chaebol chiefs that Korea was at a crossroad. They could not
continue with the old paradigm based on the Japanese model, because the
Japanese themselves had hit the wall. Korea and Japan were now part of an
integrated global economic and financial system, and would have to abide by the
rules that the United States and the European Union had settled for the IMF,
World Bank and WTO. This required them to be as competitive in their
investments, with the eye on the bottom line, as any American or European
corporation. The question was how to get from where they were to where they
must be if they were to be competitive. Chaebols had grown into widespreading
conglomerates. Now they should concentrate on what they had done best and

---

make those their core businesses, hiving off their non-core businesses. Next,
they needed managers who had entrepreneurial drive if their businesses were to
thrive.
The chaebol leaders were pleased that I thought Confucianist culture had not
caused their collapse but that their weakness was their informal system of doing
business and their disregard for the rate of return on equity and the bottom line.
This was made worse by their not having open, transparent systems, level
playing fields and standard international accounting practices. Hong Kong and
Singapore, both Confucianist societies, had withstood the financial storm
because both had British systems of law, business methods that were transparent,
accounting practices of international standard, open tenders and binding
contracts negotiated on level playing fields, and bank loans made at arm’s
length. Korea had to adopt these practices. Korean business practice followed
that of the Japanese, based more on informal relations and less on formal rules
and the law. The chaebol leaders understood the need for such restructuring but
were reluctant to give up family control of the corporate empires they had built
up in the last four decades, and hand over the destinies of their constituent
companies to managers who had been accustomed to leaving the entrepreneurial
decisions to the founders.
After the IAC meeting I called on President Kim Dae Jung at the Blue
House. In his mid-70s, he was broad-built and above average in height for a
Korean of his generation. He walked slowly with a limp, the result of an injury
sustained from an attempt on his life in 1971, reportedly by KCIA agents. He
had a serious, even solemn, expression, until he broke into the occasional smile.
He posed a series of issues, starting with North-South relations. Methodically, he
went through the items he had in mind. He wanted a critique of his policies,
beginning with his “sunshine policy”. The aims of this policy were: first, to
prevent war by maintaining a strong deterrent stance; second, to reunify the two
without damaging or threatening the North Korean regime; third, to create an
environment in which the two could cooperate in economics and business at the
private level.
I said it made sense to help North Koreans change from within by
transferring technology, management and knowhow and encouraging them to
develop. North Korea could raise its standard of living and be less of a burden on
the South. However, this must be accompanied by more people-to-people
contact, particularly exchanges between think-tanks, universities and opinion
formulators, to change their mental outlook.

---

He then asked for my assessment of Chinese-North Korean relations. I did
not believe the chemistry between old leaders like Deng Xiaoping and Kim II
Sung existed between Jiang Zemin and Kim Jong Il. The older generation had
fought together as comrades in arms in the Korean War. The present generation
of leaders did not share that camaraderie. It was not in China’s interest to have
war and disorder in the Korean peninsula. What China wanted was a status quo
that would enable trade with and investments from the South to continue.
Neither was it in China’s interest to have the two Koreas reunited. Then China
would lose the North Korean card against the United States and South Korea.
Kim had thought through his problems; he simply wanted my confirmation or
contradiction of his views.
Kim impressed me by his stand on East Timor. The recent crisis and the
Internet age, he said, had brought northeast and southeast Asia closer together.
Although East Timor was geographically far from South Korea, the conflict had
indirectly affected them. It would be better if all countries in Asia could
cooperate as one, on a bigger scale. That was why he had decided to send
combat troops (a battalion of 420) to East Timor, even though his opposition in
the national assembly was against it. He had another reason: in 1950, 16
countries came to South Korea’s aid and hundreds of thousands died in the
Korean War. South Korea would have failed in its responsibilities if it did not
help the UN in East Timor. Making northeast and southeast Asia one region, I
believed, was a matter of time. The two subregional economies were
increasingly intertwined.
The Korean media had expected us to discuss our differing views on Asian
(i.e., Confucianist) values, and on democracy and human rights. I told them the
subject was not discussed; we were both in our late 70s and unlikely to change
our views. History will decide who had a better reading of Confucian culture.
In Kim I found a man who had been tempered through many a crisis. He had
learnt to control his emotions in order to achieve his higher purposes. He had
been captured by the KCIA when he was in Japan and tortured, and would
probably have been killed but for the intervention of the Americans. Yet in order
to win the election in 1997 he formed an alliance with a former KCIA director,
Kim Jong Pil, and made him his prime minister when he won the election.
A significant reason for South Korea’s present political, economic and social
difficulties was that the transition from martial law to free-for-all democratic

---

politics had been too sudden. They had no established tradition of law
enforcement to control public assemblies or rules to regulate trade unions and
require them to hold secret ballots before going on strike or taking industrial
action. In Singapore, when we took office in 1959, the British had left us a
whole set of subsidiary legislation for minor offences, so when Emergency rule
ended there were other means to keep public protests from going beyond
tolerable limits and upsetting law and order. If the Koreans had democratised
more gradually and had first put in place the necessary legislation to modulate
demonstrations and protests, the people might have been less prone to excesses
in their protests, especially the angry confrontations of workers and students
with the police.
It will take some time to renew the social contract between leaders and
people. They need to restore people’s confidence that there will be fair play
between the successful and the less successful, between the better and the lesser
educated, between management and labour. In their dash for rapid growth,
successive presidents allowed a policy that favoured high rewards for
industrialists, managers and engineers as against workers, widening the wealth
gap as their GDP rose. Once restored in a new social contract, Koreans will
forge ahead with vigour again. They are a dynamic, industrious, resolute and
able people. Their intense culture makes them achievement-oriented.
After several false starts, the North and South Korean presidents finally met
at a summit in Pyongyang on 13 June 2000. The live telecast of their meetings
astonished South Koreans. The much-maligned North Korean leader, Kim Jong
Il, demonstrated warmth, humour and friendliness. A wave of euphoria swept
South Koreans. Even the most sceptical were impressed. But doubts remain.
Was this not the man who ordered the assassination of South Korean ministers at
a wreath-laying ceremony in Rangoon in 1983 and the bombing of a South
Korean airliner in 1987?
Within days, US Secretary of State Madeleine Albright visited Beijing and
Seoul. In Seoul, she said US forces would remain in Korea. But if the thaw
continues, she must expect the North to press for their withdrawal and the South
to agitate in support. And if North Korea stops its missile development, it will
remove the need for America’s national missile defence system which is to
guard against a missile attack by a “rogue” state like North Korea, not China.
I met President Jiang Zemin in Beijing on the afternoon of that Korean

---

summit. He was in high spirits, recounting with pleasure the handshake of the
two leaders he had watched on television. Jiang had much to be satisfied about,
Kim Jong Il having made a rare visit to Beijing to discuss the matter with him a
fortnight before the event.

---