South Korea will make history on February 25th when Park Geun Hye was sworn in as South Korea's first female president. In society long marked by patriarchy with key political and business positions going almost exclusively to men, this marks a major step forward for the rapidly changing and dynamic nation. Still, Ms. Park comes into power in South Korea at a time when relations with North Korea are deteriorating and the global economy is mired in risk and uncertainty. While Ms. Park has proven to be a savvy politician her most difficult battles still lie ahead.
Park Geun Hye is the daughter of military strongman Park Chung Hee who seized power in 1961 via a military coup. Park Chung Hee is largely credited with building South Korea's so-called tiger economy by building up export focused industries and supporting large Chaebols (essentially conglomerates) through government support and funding. While Park Chung Hee's rule was controversial and marked with a suspension of the constitution and democratic elections his efforts did help build South Korea into the industrial giant it is today. At the time he seized power in 1961 South Korea was one of the poorest nations in the world. Park would be assassinated in 1979 by his own intelligence chief.
Park Geun Hye was widely considered to be the most conservative candidate among the 12 major candidates for the Presidency. This field of candidates would eventually be whittled down to two candidates, Ms. Park and Mr. Moon Jae-in, leader of the Democrat United Party, a left leaning political party that enjoys popularity throughout the country. Ms. Park defeated Mr. Moon by securing 51.6 percent of the vote to Mr. Moon's 48%.
Park's Saenuri Party does hold a majority of the 300 National Assembly with 154 seats. At the local level, however, the Saenuri Party holds less power, holding only 1,639 seats out of the total 3,893 seats in local assemblies. The Saenuri party is the direct descended of the first Park's Democrat Republican Party and under various names was always the nation's largest party in South Korea's National Assembly until 2004. In 2004, however, the party suffered a defeat and lost its majority following the impeachment of President Roh Moo-hyun, a Saenuri representative.
Importantly, the DUP was able to secure Seoul the capital and largest city in South Korea. Seoul is an immense mega-city, home to many of South Korea's largest companies and some 10.5 million people. A few failed policies or poor handling of South Korea's complex political and economic situation could swing popular opinion behind the DUP. The DUP also holds 127 seats in the National Assembly, giving the party plenty of voice and clout. The party was formed in 2011 with the merger of the Democratic Party, South Korea's largest opposition party at the time, and the Citizens United Party, a minority player.
At the same time South Korea itself is finding itself in a challenging economic and political situation. Whether or not the DUP will choose to cooperate with Ms. Park or take a stronger opposition stance remains to be seen, though Ms. Park's overall national popularity should help her push initiatives through the National Assembly.
Beyond domestic challenges, Ms. Park will have her work cut out for her in the international sphere. North Korea has launched its third nuclear test and has been issuing its normal proclamations of destruction. New leader Kim Jong-il is proving to be as aggressive as his forefathers and recently has shown little willingness to negotiate more peaceful terms between the two nations, which are still technically at war.
Meanwhile the global economy remains mired in uncertainty. The Chinese economic is showing strength, but Chinese leaders are demonstrating a more inward focus that may end up having detrimental impacts on some of its trading partners, including South Korea. At the same time Western markets, such as the United States and Europe, are still stagnate. The United States is projecting moderate-to low growth through 2013 while European leaders believe that their recession will continue, if not worsen. Further, with budget cuts looming in the United States it is fair to wonder if South Korea may see decreased military aid in the near future.
Meanwhile a weakening Yen will likely make the Japanese more competitive in the international market. This is especially important as Japan and South Korea's economies are both reliant on similar industries, such as high-end manufacturing and the production of industrial equipment. A resurgent Japan will compete directly with South Korea and its industries. Further, numerous politican situations, such as the Japanese essentially “air brushing” their history books and downplaying atrocities perpetuated by Japanese armed forces in World War II and political battles over the small Dokdo island chain.
Whether or not Ms. Park has the political capital and acumen to deal with all of these situations remain to be seen. Still, the South Korean stock market has largely trended upwards since she won the election on December 19th 2012 and leaders around the world have lauded her success. And while the South Korean economy will face many challenges, a strong private sector led by internationally famous companies, such as Samsung, and stable public finances should pave the way for success in the years to come.