For the first time since the Korean war, this divided peninsula seems to have an opportunity to remove itself from the list of the world's chief trouble spots.
South Koreans are currently trying to construct a new political system to replace the one that collapsed with the assassination of president Park Chung Hee last October. They also are confronted with an unusual peace offensive from the North as the communist government, which has sworn to dominate the South for three decades, now presses a new suit for reunification.
While the prospect for reunification is remote at best, the two Koreas may conceivably develop human, cultural and economic ties much in the way the two Germanys did in the early 1970s.
Much will depend on evolution within South Korea, however. The metaphor South Koreans use to describe what is happening these days is one of rebuilding a house, stone by stone, after the roof and a couple of walls caved in on the old one.
Apart from changing this political system, South Korea is rebuilding an economy that, after a decade of miraculous growth, faltered and then spun out of control last year and is still heading downward.
Moreover, Seoul's foreign and domestic policies are carried out by a temporary civilian government with a shaky mandate and watched from the wings by a martial-law command that sometimes seems to have its own ideas about the direction South Korea should take.
The result is an apprehensive, what-will-happen-next mood. In the past, South Korea has been preoccupied with economic growth, national defense, and the restless search for freer institutions. Today it just wants things to slow down.
This week the newspaper Chosun Ilbo asked a national sample of people what they consider the government's most urgent task. Forty percent chose social stability as their main concern -- a much higher percentage than those worried about national security and political liberalization.
But a series of interviews last week suggest that out of all the turmoil of recent months, a broad consensus is emerging. There is more unity and confidence than many suspected would be possible when President Park was killed on Oct. 26.
There is general agreement that a new constitution will be hammered out this year and the first free elections held early in 1981.The two political parties have shaped two constitutions remarkable for their similarities rather than their differences. The interim government is preparing its own version, but so far no major contradictions have appeared.
The precarious administration of President Choi Kyu Hah has moved to satisfy dissident groups by freeing political prisoners, granting amnesties, reinstating professors and students, and jettisoning Park's authoritarian emergency decrees.
Opposition leaders such as Kim Dae Jung, who spent 33 months in prison under Park, wants liberalization at a faster pace, but his criticisms are muted and he credits the president with getting off on the right foot.
"The basic direction of the process begun under Choi is moving toward democratization," Kim said. "I think the degree and the speed in which it is going is not satisfactory."
Choi's government is hemmed in by the martial law authorities, who intervene through press censorship, control of public meetings, and other less visible moves. The government, according to reliable sources, would have moved further to restore campus freedoms if the military had not objected.
Any attempt by the military to reverse the gradual reforms would meet with widespread opposition. Even the powerful corporate community, which was angered by the Dec. 12 coup inside the military because it created an image of instability harmful to business, would object to military suppression of the reforms.
But many fear some new social convulsion -- such as a campus uprising -- would lead to a military crackdown. Even some dissidents who went to jail under Park are urging students to go slow, arguing that full liberalization will come in time.
"We should not provide an excuse for the military to come in," said Kim Dong Gill, a Yonsei University professor who served a year's prison term under Park and who is widely admired by students.
Economic rehabilitation is taking place against the backdrop of a shattering round of inflation. The government estimates it will be around 23 percent this year, but other economists think it will be closer to 30 percent. Devaluation of the Korean won caused oil prices to shoot up 30 percent last month. Premium gasoline costs $4.50 a gallon, perhaps the world's highest rate, and the price of everything else is skyrocketing.
Even before this year's shocks, the fabled Korean economy was slumping badly. Exports, the main engine of the economy, began slipping last spring, leaving Korea with a balance of payments deficit. The economy, which grew at an amazing 10 percent a year through most of the 1970s, leveled off at 7 percent last year. The most optimistic growth projection for this year is 5 percent.
But the fear of economic collapse that pervaded the country during the fall and winter is dissipating. Deputy Prime Minister for Economic Planning Lee Hahn Been pointed out that exports have been climbing since the currency devaluation and personal savings are growing as result of higher interest rates. Some small and medium-sized companies are going under, he acknowledged, but the large conglomerates are weathering the storm.
Foreign investors have not fled. "We have more offers for loans than we can use," said K. H. Lee, vice chairman of the Samsung group of companies. "The banks are still coming to us."
A revealing gauge of South Korea's fiscal resilience is the willingness of foreign banks to tide it over with direct loans. When the Korean Exchange Bank entered money markets last winter in search of a $300 million loan, the prospects were not encouraging. But U.S., Canadian and European banks responded so enthusiastically that when the agreement is signed March 26, in New York, the total subscription is likely to be $500 million.
"It was a test of whether South Korea is real and whether it is going to even be here 10 years from now," said Laurence Berger, general manager of Morgan Guaranty Trust, which was the syndication agent. "The answer is that most bankers think it is for real. South Korea is not a banana republic."
North Korea's pressure to reconvene talks on unifying the country have put the South on the spot, but there is no serious disagreement on how to respond. Unification remains a distant goal to South Korean politicians of all stripes and the North's overtures have not evoked great enthusiasm in Seoul.
The South is prepared to test the North's willingness to take small steps toward normal relations if a suggested conference of prime ministers ever takes place.
Such steps might include mail service between the two countries, contact for divided families, joint sports events and cultural exchanges. Only if these tentative moves worked would the South consider entering into economic cooperation projects, apparently the highest item on the North's agenda. The idea of a North-South confederation leading to unification is so remote that the South's negotiators do not spend much time thinking about it.
What worries the government is that South Koreans may perceive it as moving too slowly to meet the North. The ideal of unification is a widely popular, extremely emotional issue for millions of people who have relatives on the other side.