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CH292 | GSI
🕑 Added 2025-08-27 09:59:23 +0000 UTCThe Organisation for Economic Co-operation and Development (OECD) was established as an international organization with the purpose of promoting economic development, international cooperation, and trade expansion.
As South Korea achieved remarkable economic growth—so significant that it was called the "Miracle on the Han River"—and its trade volume increased, pressure to join the OECD and open its markets intensified in the early 1990s.
However, the government and political circles, fearing that market liberalization would destabilize the fragile domestic economy, repeatedly postponed the decision under various pretexts.
"If the agricultural market opens up and an influx of cheap foreign agricultural products, including rice, floods in, it's obvious that farmers will suffer greatly. And politicians who rely on their votes certainly wouldn't welcome that."
It wasn't just the farmers who were concerned. Companies producing automobiles and other industrial goods, which had been comfortably operating in the domestic market under import restrictions, were also reluctant to see those protections lifted.
With such complex and intertwined interests, the debate over OECD membership sparked fierce political opposition and division.
At that moment, Seok-won, who had so far given only safe, non-controversial answers, suddenly voiced strong opposition. Taken aback, Chairman Kim Jae-chun asked,
"Did you just say we must never join?"
"Yes."
Seok-won met Kim Jae-chun’s gaze directly as he answered.
Kim Jae-chun, now even more intrigued, pressed further.
"Tell me your reasons."
After briefly organizing his thoughts, Seok-won began to explain seriously.
"Since we've moved past developing-nation status and are on the threshold of becoming an advanced economy, I do agree that we can no longer delay OECD membership and market liberalization. Given that we've achieved economic growth through exports, opening Korea’s domestic market aligns with the principle of reciprocity."
Kim Jae-chun took a sip from his glass and continued listening attentively.
"In the past, when companies lacked sufficient capital and technology, protecting domestic industries within a controlled environment was necessary. However, keeping them sheltered like greenhouse plants at this stage would do more harm than good. Instead, pushing companies to compete freely with foreign firms will drive them to grow further."
At this point, Secretary-General Woo Chun-il tilted his head in confusion.
"Based on what you're saying, shouldn’t you be in favor of OECD membership rather than opposing it?"
"Ultimately, I believe that market liberalization is a step we must take to modernize our economic system. However, the reason I'm saying now is not the right time is because the timing is terrible."
Kim Jae-chun crossed his arms and asked,
"What do you mean by bad timing?"
"If this were during the economic boom driven by the 'three-lows' (low oil prices, low interest rates, and a weak dollar), it might be a different story. But right now, the economy is on a downward trajectory."
Kim Jae-chun looked unconvinced.
"The Bank of Korea has projected an economic growth rate of over 5% this year, which is higher than last year. Yet, you're saying the economy is struggling?"
"Yes."
Seok-won, receiving the full attention of the room, responded with unwavering confidence. Kim Jae-chun narrowed his eyes.
"As of June, consumer prices have risen by 3.8%, threatening the annual target of 4.5%. On top of that, the current account deficit continues to grow due to a surge in imports. I'm sure both of you are aware of this."
"……."
"In this situation, as the Bank of Korea raises the benchmark interest rate to curb inflation and financial authorities order a reduction in loans, small and medium-sized enterprises (SMEs), which already have weak financial foundations, are starting to feel the pressure of a liquidity crunch."
Seok-won spoke in a heavy, subdued tone, meeting Kim Jae-chun’s gaze from across the table.
"In short, the economy's fundamental strength is weakening."
Realizing the gravity of the situation, Kim Jae-chun and Secretary-General Woo Chun-il’s expressions stiffened slightly.
"If we open up our domestic market by joining the OECD under these unfavorable conditions, there is a high possibility that we will face severe consequences, such as the encroachment of foreign capital into our domestic market, a wave of bankruptcies among SMEs, and the influx of speculative short-term foreign capital leading to serious side effects."
In reality, the rapid increase in short-term foreign currency borrowing—one of the direct causes of the IMF financial crisis—had already been made possible by the government's domestic financial liberalization policies, even before OECD membership was finalized.
‘However, it’s undeniable that the massive inflow of speculative foreign short-term capital after OECD accession exacerbated the crisis. When the economy faltered, that capital withdrew all at once like a receding tide, completely draining the already insufficient foreign exchange reserves.’
Moreover, the short-term foreign debt, which had already surged within a short period, skyrocketed even further after OECD membership, reaching unsustainable levels.
‘Many factors combined to trigger the IMF crisis, but the most critical was the end of the "three-lows" boom, which led to a sharp decline in exports and a continuous increase in the current account deficit.’
Simply put, if a country is earning fewer dollars while spending more, a crisis becomes inevitable.
"What kind of side effects are you referring to?"
Kim Jae-chun asked with a serious expression.
"In the worst-case scenario, we could face a foreign exchange crisis."
At the mention of a foreign exchange crisis, both men looked visibly shocked.
"I understand your concerns about the economy, but even with a current account deficit, our exports last year alone exceeded $120 billion. Isn’t a foreign exchange crisis a bit of an overstatement?"
Woo Chun-il, doubtful, expressed his skepticism, and Kim Jae-chun nodded in agreement.
"Of course, the foreign exchange authorities are not incompetent. If they detect signs of a crisis, they will take the necessary measures. However, as I mentioned earlier, if we open the financial market without proper safeguards and speculative short-term foreign capital floods in, only to exit all at once for some unforeseen reason, managing the situation will be extremely difficult with our current capabilities."
Seok-won, his expression grave, continued his explanation.
"Even a financially sound company with strong performance and no structural issues can suddenly face bankruptcy if it finds itself in a liquidity crisis, unable to secure funds while facing a surge in debt repayment demands. I’m sure you understand how that could happen."
"……."
"The same applies to a nation," Seok-won said.
Kim Jae-chun emptied the last of his drink and asked in a subdued voice, "Then, what do you think should be done about this issue?"
Seok-won responded as if he had been waiting for the question.
"Since joining the OECD is inevitable, the best course of action would be to postpone it for two to three years, during which time we can refine our laws and systems and make all necessary internal preparations before opening the market."
Kim Jae-chun stroked his chin and fell into deep thought for a moment before finally raising his head.
"Well, this conversation has gotten too serious—it's ruining the taste of my drink. But I will seriously take your opinion into consideration."
He deliberately brightened his tone to lighten the atmosphere.
"Alright, let’s set aside the heavy topics and just enjoy our drinks."
"On a fine evening like this, shouldn’t we have some music? Should I ask the madam to bring in the band?"
Catching on quickly, Secretary-General Woo Chun-il chimed in, and Kim Jae-chun nodded with a laugh.
"Haha, go ahead."
Seok-won felt a slight regret that they couldn’t delve deeper into the discussion, but he knew that talking about it here wouldn’t solve the issue anyway, so he went along with the mood.
"Are you going to sing ‘Mokpo Is a Harbor’ like last time?"
"Haha! Of course. That’s my signature song, isn’t it?"
And so, the madam was called, and the three men enjoyed their drinks in a lively atmosphere. It wasn’t until past midnight that the gathering finally came to an end.
As Kim Jae-chun, heavily intoxicated, stepped out of the grand gate with the madam’s support, he extended a hand toward Seok-won.
"Let’s see each other more often from now on."
Seok-won quickly grasped his hand and replied with a smile, "Yes, please get home safely, Chairman."
"Didn’t I tell you to speak comfortably with me?"
At the playful reprimand, Seok-won immediately adjusted his wording.
"Understood, sir."
Only then did Kim Jae-chun nod in satisfaction before getting into the back seat of a waiting black sedan with the madam’s assistance.
Standing nearby, Woo Chun-il, his face flushed from the alcohol, watched him with a knowing expression.
"The Chairman seems to have taken quite a liking to you."
"If that’s the case, I’m relieved," Seok-won replied.
Woo Chun-il gave him a light pat on the shoulder.
"Then let’s talk again soon."
"Yes, I’ll reach out to you."
With a brief wave, Woo Chun-il turned and got into the car after Kim Jae-chun.
As the domestically manufactured sedan glided smoothly away, Seok-won watched its retreating figure and pondered.
"I know this conversation alone won’t be enough to prevent the IMF crisis, but at the very least, I hope it helps the government and the ruling party establish some measures to slow the outflow of foreign reserves during the OECD accession negotiations."
"If we can reduce even a fraction of the suffering caused by the IMF crisis… that would be ideal. But… it won’t be easy."
Muttering to himself with a bitter expression, Seok-won turned toward the madam standing nearby and thanked her before getting into his own car.
Meanwhile, as their car made its way down the main road toward Donggyo-dong, Kim Jae-chun leaned back into the plush leather seat and turned his head to Woo Chun-il.
"What do you think about what Park said?"
"Are you referring to what he said about a possible foreign exchange crisis?"
"Yes."
"It’s not entirely baseless, but isn’t it still unlikely to become a reality?"
Kim Jae-chun gave a small nod.
"That’s true."
A foreign exchange crisis—he, too, found it hard to believe that such an event could actually happen.
Yet, Seok-won’s unwavering conviction as he emphasized the risks kept lingering in his mind.
Noticing the chairman’s unease, Woo Chun-il straightened his posture.
"If it’s bothering you, I can have the professors we consult take a closer look at whether this is a real possibility."
"That sounds like a good idea. Go ahead and do that."
Kim Jae-chun gazed out the car window at the city lights passing by, lost in thought. Then, he suddenly spoke.
"That friend, President Park—meeting him in person, I can see why you spoke so highly of him."
"I thought you would be impressed."
"You said he graduated from Harvard, right?"
"Yes. I heard he completed his economics degree with outstanding marks."
"Young, full of drive, and exceptionally intelligent… He’s truly a talent worth having."
Kim Jae-chun clicked his tongue in regret.
"If only he weren’t Park’s son, I’d recruit him into our party in an instant. Such a waste."
Woo Chun-il carefully gauged the chairman’s mood before speaking.
"Should I discreetly test the waters and see if he’d be interested?"
Kim Jae-chun hesitated for a moment before shaking his head.
"No. If he gets involved in politics and somehow ends up on the wrong side of the Blue House, Daehung Group could find itself in serious trouble. Let’s just leave him be."
"Understood."
With the alcohol taking its toll, Kim Jae-chun leaned into the swaying motion of the car, slowly closing his eyes.
