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New S. Korea Leader Warns of Hardship
Associated Press Writer
Sunday, January 18, 1998;
1:00 p.m. EST
SEOUL, South Korea (AP) -- In an unprecedented ``town hall''-style meeting Sunday, President-elect Kim Dae-jung appealed to South Koreans to accept layoffs and other sacrifices so the nation can rebuild.
``We're just entering a dark IMF tunnel,'' Kim said in a nationally televised meeting with a sampling of constituents. ``The real ordeal will begin from now on.''
The International Monetary Fund granted the country a record $57 billion loan in December -- with strict conditions -- to help it overcome a crisis that has pushed South Korea to the brink of national default.
Calling 1998 a ``year of harsh trials,'' Kim predicted up to 1 million layoffs and double-digit inflation. Layoffs are a key IMF requirement and are crucial to persuading foreign lenders to rollover South Korea's short-term debt of $92 billion, due within a year.
Job cuts and other aftereffects of the economic collapse dominated Sunday's two-hour program, in which Kim fielded questions from seven panelists, 200 studio guests and a few people in the street.
Kim, who was elected Dec. 18, promised during his campaign to hold the public meeting, which was patterned after the town hall gatherings staged by U.S. presidents.
Kim's term will not begin until Feb. 25, but already he has been heavily involved in trying to pull South Korea out of its economic morass.
While promising to strengthen the nation's skimpy social safety net, he appealed to workers Sunday to accept rising unemployment, in part because it is critical to restoring confidence among overseas investors.
``In an era of a global economy, we can't survive without foreign investment. We must change our attitude toward foreign investment. We should welcome it,'' Kim said.
Parliament is considering a bill that would allow companies more flexibility in downsizing, which under current provisions is virtually impossible without the consent of labor unions. Workers, however, are threatening to stage nationwide strikes if the bill passes.
``By allowing layoffs, we'll lose 20 percent (of the work force) but save the other 80 percent. When the 80 percent get stronger, they will help hire back the 20 percent who lost their jobs,'' Kim said.
A South Korean government delegation left Sunday for talks with about 40 international bankers in New York this week. Officials in Seoul said the meetings will focus on a formula to repackage about $35 billion of South Korea's short-term debts as state-guaranteed bonds.
South Korea has basically accepted the proposal, except for its interest rates of up to 12 percent a year, which it considers too high, they said.
Meanwhile, some $8 billion promised by the United States and other rich countries as a second line of credit for South Korea will be put on hold until the talks are successfully concluded.
At the end of last year, South Korea's external debt totaled about $157 billion, of which nearly 60 percent was short-term obligations.
© Copyright 1998 The Associated Press