The task was how to balance market requirements with political needs rather than choosing one over the other. He had to formulate a strategy that ensured not only high growth but also a material basis for regime stability. As part of this strategy, Park banished the DRP from economic policymaking processes and put state ministries under his exclusive political control. It was he who decided how the balancing act was to be pursued. To bring about a concert of state ministries to achieve his understanding of balancing acts, Park applied the principle of placing planning, executing, and monitoring powers all in one basket by consistently backing the EPB in interministerial policy struggles.49
Yet working through the state bureaucracy did not imply the delegation of power. Park saw himself as South Korea’s agenda setter and intervened regularly in economic policymaking—with a clear sense of priorities—
from early in his presidency. Even before Park expanded his Blue House in 1969 to prepare for heavy and chemical industrialization, he declared,
“Professors should show me how to achieve my goal rather than teach me what I should strive for.”50 He treated chaebol owners similarly. The Hyundai Group’s Chông Chu-yông was his type of entrepreneur, willing to tackle new business ventures against all odds once Park had made up his mind, with an unwavering belief in Park’s pledge to rescue him if his business got into trouble. Against words of caution, Park asked what South Korea’s alternative was. “The experts only try to discourage me by identifying risks and obstacles. Had I listened to their advice, I would have ended up doing nothing.” When his aides called for scaling back his industrial projects to make them more viable, he answered: “We should even be prepared to replace our original investor with a new one if the original investor fails.”51
Presidential activism and dominance were a constant during Park’s political rule, but his style of leadership underwent a subtle change starting in 1969. Before 1969 Park proceeded project by project, with one or another aide acting as his punsin—literally, his “incarnation”—to monitor the process of policy formulation and implementation. This structure was necessary because with scarce capital and technology, Park could at best pursue a limited number of relatively simple industrial projects. Given their limited number and nature, Park could devote his full attention to economic policymaking and was confident of his ability to monitor projects with the help of his punsin. For example, Park entrusted the EPB with building an
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integrated steel mill in 1961, only to see it get bogged down by a lack of interest among foreign investors. He jump-started the project in the mid-1960s, but again the results were disappointing. This time, however, Park made the EPB deputy prime minister accountable for the project, and ended up dismissing his deputy prime ministers in 1967 and in 1969 when talks with foreign bankers for commercial loans collapsed.
The pet project went forward only when Park decided to seek politically motivated aid rather than commercial loans for the construction of the steel mill. In 1969, senior secretary Kim Hak-ryôl of the Blue House was brought in as the EPB deputy prime minister to draw up a new plan to construct the mill with noncommercial foreign funds. A year earlier, Pak T’aejun had been appointed president of the newly established Pohang Iron &
Steel Company and assigned the task of lobbying Japan to allocate $73.7
million of its reparation funds to the iron and steel company’s purchase of the necessary technology and production facilities.52 These two confidants of Park drove the integrated steel mill project with Park’s full support. Kim Hak-ryôl had been Park’s most trusted economic advisor since the early days of the military junta, when he tutored Park on economic matters.53
Likewise, Pak T’ae-jun had been a loyal aide since he studied under Park as a cadet at the Korea Military Academy in 1948. After joining the junta as the chief of staff for Park in 1961 and participating in its Committee on Industry and Commerce for three years, Pak T’ae-jun served as Park’s secret envoy (milsa) in 1964 to break the deadlock in talks with Japan over the issue of normalization of diplomatic relations.54 Made for their role as Park’s punsin, Kim Hak-ryôl and Pak T’ae-jun knocked on the doors of Park’s Blue House whenever political obstacles rose and state ministries resisted.
To build up South Korea’s technological capacity, Park recruited Ch’oe Hyông-sôp as his punsin in the area of science and technology. With Park’s support, Ch’oe drew up the charter for the Korea Institute of Science and Technology in 1966 and headed it until he was made the science and technology minister in 1971. To guarantee budgetary stability and research continuity, Ch’oe had the EPB channel money in the form of donations. To ensure his scientists’ autonomy in research activity, moreover, he secured Park’s support in legally banning state ministries from intervening in individual research projects and in exempting his institute from the National Assembly’s frequently politicized audits and inspections.55 Similarly, when Park found that Kim Hyôn-ok—a loyal military comrade since Park’s Logistics Headquarters Command years—was not only a workaholic but a
“bulldozer”-style leader, Park had him serve as the mayor of Seoul with the mission to reconstruct the capital into a grayish yet modern city as rap-
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idly as possible between 1966 and 1970.56 In building a new state bureaucracy modeled after South Korea’s half-American and half-Japanese military organization, Park chose Yi Sôk-je as his minister of government in 1963. Yi had crossed the Han River with Park on May 16, 1961, and chaired the military junta’s Legislation and Judiciary Committee, responsible for redrawing laws and purging “corrupt” bureaucrats as well as ordering a sweeping arrest of “leftists” in the early days of the coup.
Yi Sôk-je remained minister of government until 1969 in order to institutionalize a professional state bureaucracy, with its elite recruited from competitive civil service examinations and promoted on the basis of performance.57
In addition to the practice of working through confidant-led state agencies to realize his goals, Park resorted to the establishment of an interministerial task force within the Blue House when he thought he needed to take charge personally in the interests of coordination. The Kyôngbu (Seoul-Pusan) Highway project was exemplary in this regard; Park was its planner, implementer, and monitor. Two and a half years after a state visit to West Germany, where he learned of the Autobahn, Park made public his plan to link Seoul with four major cities by constructing a highway system. The groundbreaking ceremony for the highway was held in the middle of his 1967 presidential campaign. After his landslide victory in both the presidential and the National Assembly elections in May and June of that year, he organized a Blue House task force with three military engineers and one construction bureaucrat to review six budget plans independently submitted by state ministries, Seoul City, the army’s Engineering Corps, and Hyundai Construction Company. With the cost estimates varying widely between eighteen and sixty-five billion won, Park chose thirty billion won as the size of the government budget for Kyôngbu Highway because it was an “approximately mid-figure,” and ordered An Kyông-mo—a former construction minister with an engineering background—to organize a Planning and Research Corps for Constructing National Highways with relevant state ministries and chaebol construction companies.
“The Corps,” Kim Chông-ryôm recalled, “was given a broad budget limit within which it was to build Kyôngbu Highway rather than calculating costs based on its task.” To skeptics and critics, who warned against a poorly built highway, Park simply said he would “repair after completing its construction.”58
To purchase land before information on the highway leaked out and speculation broke loose, Park personally chose the path for the highway, using his ability to read maps as a former artilleryman. He then called in two top state bank executives under pledges of utter secrecy to order a
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land survey and directed provincial govern
ors and the Seoul mayor to get landowners’ consent to sell within one week by “mobilizing county magistrates, town heads, and other civil servants” under the Ministry of Home Affairs’ control. All this was completed in less than three months for the project’s most expensive portion, the section linking Seoul and Taejôn. By the time of the groundbreaking ceremonies, thirteen construction companies—chosen by Park without public bidding—were already purchasing heavy construction equipment with state-guaranteed foreign commercial loans, as most had only outworn equipment unfit for building tunnels and bridges. Park also had to recruit thirty-four military engineers on active duty as supervisors at construction sites and fifty university graduates as inspectors while setting up a new civil engineering examination system.59
Park did not set his goals on the basis of the resources at his disposal.
Rather, he defined his objectives first and let them identify what resources he needed to complete them. Encouraged by results, Park even moved up his target completion date for the highway by a year and daily checked work progress from a “situation room” set up in his Blue House. The 260-mile-long Kyôngbu Highway was completed on July 7, 1970, a week after his revised target date and less than two and a half years since its groundbreaking ceremony. The total cost was forty-three billion won, thirteen billion won more than the original target goal.
After 1969, Park became more willing to let his Blue House economic teams act as more than facilitators for state ministries’ work. This change in style had as much to do with Park himself as with the changing nature of state tasks and resource capabilities. He intervened extensively and deeply in ministerial operations before as well as after 1969, but the way he intervened changed after 1969. Before that time, Park chose indirect intervention through confidant-led state ministries and public enterprises (with the exception of the Kyôngbu Highway project). He believed that relying too much on Blue House secretaries would demoralize the line ministries and make his coordination efforts harder, not easier.
After 1969, by contrast, he strengthened the policymaking role and capacity of his Blue House Secretariat and intervened more directly in policy formulation and implementation. The new approach began with a change in Blue House personnel. Park named Chang Tôk-chin—a thirty-five-year-old Ministry of Finance bureaucrat—to the newly established post of Third Senior Secretary on Economic Affairs in April 1969 and O
Wôn-ch’ôl—a forty-three-year-old assistant vice minister at the Ministry of Trade and Industry—to the newly created position of Second Senior Secretary on Economic Affairs in November 1971. The Third Senior Secretary position was created when many chaebol, laden with state-guaran-
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teed foreign loans, showed signs of a severe liquidity squeeze during the global recession of early 1969. Their financial difficulties threatened the solvency of state-owned commercial banks. Because Park’s high-risk, high-payoff modernization strategy of loan-financed industrialization rested on his ability to convince potential investors that the state would rescue them in difficult times, he faced the exceedingly arduous political task of forcing chaebol to make painful adjustments without actually threatening to bankrupt them. With the option of bringing in market forces as a disciplinary whip excluded from the outset, Park had to rely on the state’s bureaucratic power to distribute adjustment costs among the stakeholders. This could be done only if Park personally took charge, working through a technically competent task force set up inside his Blue House Secretariat.
The task of distributing adjustment costs through bureaucratic intermediation rather than through market forces provoked political resistance too powerful for any of the state ministries; it also was too complex a job for any single individual, including Park, to pursue in a sporadic manner.
Chang Tôk-chin drew up a threefold strategy: rescue the MOF-controlled state commercial banks that had underwritten the chaebol’ s foreign loans; funnel more resources into the faltering corporations in order not to waste their production facilities; but penalize the owners for mismanagement by liquidating their personal assets. Chang Tôk-chin’s team restructured 30 insolvent companies with foreign loans in May 1969 and another 56 firms under bank management by August 1969. Once the broad policy guidelines were established on financial and corporate restructuring, Park dismantled Chang Tôk-chin’s team and set up an interministerial Corporate Rationalization Committee headed by the EPB deputy prime minister in December 1970. After a heated debate over what constituted “insolvent companies,” the EPB finally came up with a formula whereby 26 of the 121 companies with foreign debt were classified as “insolvent” and thus requiring state support. When the EPB measure proved to be inadequate in turning around the surviving chaebol conglomerates, keeping the state banks afloat, and reversing the pressures of the foreign exchange crisis, Park, on the recommendation of Chairman Kim Yong-wan of the Korea Federation of Industries, ordered the Blue House Secretariat secretly to draw up an Emergency Decree for Economic Stability and Growth in August 1972 to rescue the chaebol groups by freezing their private curb-market loans.60 The corporate sector was too weak to be left to state ministries. Park had to take charge again and adopt what was a de facto breach of private property rights to keep the chaebol groups afloat and to prevent South Korea from defaulting on foreign commercial
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loans. And he could trust only his Blue House Secretariat to devise such a radical policy.
The establishment of the post of second senior secretary, by contrast, was a product of Park’s own political decisions as well as South Korea’s increased state capabilities. As Park’s dogged attempts to build an integrated steel mill during the 1960s show, Park was infatuated with HCI long before he formally announced it in 1973 as South Korea’s paramount policy goal. Park’s decision to bring in O Wôn-ch’ôl as the second senior secretary in 1971 on the recommendation of the chief of staff, Kim Chông-ryôm, was part of this lifelong ambition to emulate Meiji Japan’s modernizers. With South Korea’s gross national product increasing by 9.1 percent annually in real terms and its domestic savings rate cumulatively adding up to a 15.7 percentage point increase since 1962, Park thought that the time had come for him to pursue HCI in a more systematic manner even if foreign companies and banks only slowly came up with the required capital and technology. O Wôn-ch’ôl also fueled Park’s “can do” (hamyôn toenda) spirit by articulating what he called an “engineering approach” to minimize risks and costs.61 With O Wôn-ch’ôl’s expertise in industrial policy, Park believed he could draw up an HCI plan attractive even to skeptical foreigners. Whereas the HCI drive of the 1960s consisted of just a few projects, the HCI program Park envisioned after 1971 was on the scale of national restructuring, with the state subsidizing the chaebol’ s simultaneous entries into multiple unrelated industries. The program was economically too risky, technically too complex, and politically too controversial to be left to frequently bickering and generically conservative state bureaucracies. Park had to intervene more directly, regularly, and systematically from the Blue House than in the 1960s.
Even so, it is important not to exaggerate Park’s shift in leadership style after 1969. The second senior secretary had only three MCI bureaucrats to assist him until he retired in December 1979 upon the death of Park Chung Hee. By tightly limiting O Wôn-ch’ôl’s staff, Park made sure that O
would be only a messenger of presidential orders, a monitor of policy implementation, and a facilitator of interministerial coordination. The bulk of the planning was done by the HCI Planning Corps, headed by either an EPB or an MoF bureaucrat during 1974. Thereafter the implementation of the 1974 plan was monitored through a weekly Working-Level Assistant Vice Ministerial Meeting. O Wôn-ch’ôl was in charge of both the planning and the working-level implementation meetings.
The relative limits to change in Park’s leadership style were more visible in other policy areas. Pak T’ae-jun remained the Pohang Iron
& Steel
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Company’s CEO even after Park’s death in 1979, while Ch’oe Hyông-sôp served as the science and technology minister for seven and a half years after leaving the Korea Institute for Science and Technology in 1971, during which time he created fourteen research institutes. Likewise, once Yi Sôkche showed his ability to control and reform state ministries, Park in 1971
made him head of the Board of Audit and Inspection, from which he lashed out against state bureaucrats’ illegal activities in order to counter an increasingly serious moral hazard problem built into Park’s bureaucratically driven economy. Park continued to rely on ministers as decision makers and presidential secretaries as personal staff in most policy areas even after launching HCI in 1973, because he knew that much of his power came from the politically loyal, but also technically competent and highly motivated, state bureaucracy. Park limited the number of staff in the Blue House Secretariat even when he entrusted them with his pet projects—
Kyôngbu Highway in 1967 and HCI after 1973—in order not to demoralize the state ministries.62
Park had the necessary ingredients to become a powerful leader and leave a lasting mark on South Korean history. Following the lessons he learned during his military years, he concentrated planning, executing, and monitoring powers in two institutions—the KCIA for partisan political issues and the EPB for nation-building economic policy—with the Blue House Secretariat serving as his messenger, monitor, and coordinator among state ministries except when he had a goal he thought could be pursued more rapidly under his Secretariat’s direct intervention. Park had a keen—even brutal—strategic mind, and he skillfully used the institutions of power to his advantage. He never shied away from sacrificing what he believed were secondary considerations once he made up his mind on policy priorities, and he had the KCIA and the EPB systematically mobilize multiple resources to achieve his overriding policy goals. Moreover, when he planned to extend his rule through a constitutional amendment or a palace coup, he could plead, cajole, threaten, repress, and even lie, depending on who his audience was. Against Park, by contrast, stood South Korea’s organizationally fractured, ideologically shallow, and much less strategically minded political parties.
Park Chung Hee Era Page 23