(EDITORIAL from the Korea Times on March 10)

IMF???s Belated Reflection: Seoul Should Remain Alert on New Economic Order

For many Koreans, the International Monetary Fund has meant much more than just
another worldwide organization over the past decade.
In exchange for extending a $57-billion bailout fund to Korea in December 1997,
the ``lender of last resort'' forced this country to undergo an extremely painful
economic restructuring that called for keeping interest rates unbearably high,
deregulating the domestic financial industry and sharply enhancing the
flexibility of labor markets.
Numerous businesses, including almost half of the nation's 30 largest
conglomerates, went belly up and were put on fire sale, producing a far larger
number of unemployed who called themselves ``IMF'' (I Am Failure). Surviving
firms saw their financial structures solidified, but the so-called
neo-liberalistic reform triggered controversy about a massive drain of national
wealth and, more importantly, an income polarization leading to the present 20-80
society.
The United States and a number of other economies are in a situation Korea faced
about 11 years ago, but the IMF's advice this time is exactly the opposite:
enhanced financial regulations and economic stimulus that may have to continue
until 2011.
In a policy report released on Friday, the IMF acknowledged it could neither spot
the early signs of crisis nor cope effectively with it even as the global
financial turmoil deepened. We would like to add one more age-old problem
inherent in the 65-year-old body ??? double standards and partiality in favor of
industrialized countries.
Fortunately, the nation will likely have a good opportunity to have its voice
heard on the international stage when Seoul serves as the chairing country of the
Group of 20 summit next year. Even at this year's summit in London on April 2,
Korea will be a member of the chairing group, along with host Britain, an
occasion for both industrialized and emerging economies to revive the global
economy, improve the world's financial system and reform various international
institutions, including the IMF.
Korea, which has posed itself as a bridge between industrialized and
industrializing countries, should be able to match its words with deeds, not
leaning to a particular group or region but taking a balanced and global
initiative, such as anti-protectionist campaigns ??? no easy task given the
nation's limited diplomatic capacity and experience.
Currently, some East Asian countries are calling for enhancing regional
cooperation by boosting regional trade from 38 percent to 50 to 60 percent of
their total trade and setting up an Asian Monetary Fund (AMF) or Asian Currency
Unit (ACU). This is only natural for regional countries, now forced to shoulder
inappropriate burdens caused by a crisis that took place across the Pacific.
It would be a high-wire act for Seoul to please both regional partners and its
single biggest ally ??? Washington ??? on which Korea unduly relies on in terms
of economy and security.
America is still the world's biggest economic and military power, but the
U.S.-originated crisis is driving the world back toward a multi-polar situation,
a trend to which many Korean officials seem to turning a blind eye, at least
officially.
Putting all your eggs in one basket is always risky, but never has this old
saying been truer than it is now. Korea will have to walk on a diplomatic tight
rope very skillfully over the next few years, between bilateral and multilateral
interests and between regional and global relationships.
(END)