THE SITUATION IN THE REPUBLIC OF KOREA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001300010033-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 15, 2016
• Document Release Date: July 15, 2004
• Sequence Number: 33
• Publication Date: October 12, 1966
• Content Type: IM

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12 October 1966
No. 1607/66
Copy. No.
23
INTELLIGENCE MEMORANDUM
THE SITUATION IN THE REPUBLIC OF KOREA
DIRECTORATE OF INTELLIGENCE
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This Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of Title 18, Sections 793 and 794, of the U.S. Code, as
amended. Its transmission or revelation of its contents
to or receipt by an unauthorized person is prohibited
by law. The reproduction of this form is prohibited.
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
12 October 1966
INTELLIGENCE MEMORANDUM
The Situation in the Republic of Korea
SUMMARY
The present government of South Korea is pat-
terned on the American system, with a separation of
executive, legislative, and judicial powers. Presi-
dent Pak Chong-hui, however, holds key powers which
virtually allow him to dictate government policies
in line with the Korean tradition of government by
a single individual or small group.
Under Pak's leadership Korea has achieved a
considerable degree of political stability. The
reduction of inflation to manageable proportions
and the normalization of relations with Japan have
contributed to general improvement of the economy.
Better economic prospects, together with Korea's
enhanced international role, are reflected in a
growing national pride and a more confident att.i-..
tude on the part of government leaders, businessmen,
and the public at large.
NOTE: This is one of a series of memoranda pro-
duced by CIA on those countries to be visited
by President Johnson. It was prepared by the
Office of Current Intelligence and coordi-
nated with the Office of National Estimates
and the Office of Research and Reports.
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The Koreans, however, still face many major
problems. Despite economic gains the country re-
mains heavily dependent on outside assistance.
Factionalism and pervasive corruption are a con-
tinuing threat to long-term political stability
and economic development.
Korea's achievements are promoting a growing
independence and assertiveness in policy matters
and are making the leadership less amenable to US
guidance. The problems arising from the partition
of Korea are becoming increasingly important issues
both domestically and internationally.
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1. Although not a widely popular figure, Pak
has achieved growing respect and acceptance as a
national leader who is likely to succeed himself in
next year's elections. On two controversial issues
--relations with Japan and sending troops to Viet-
nam--he won backing from the majority of his own
party in the National Assembly and acceptance if not
full support from the public. Most significantly,
he retained the support of the military upon which
his position ultimately depends. In Pak's view, the
settlement with Japan and the commitment of troops
to Vietnam represent vital steps toward assuring the
economic viability of the nation and strengthening
its international security position. Under the terms
of settlement, Japan agreed to give Seoul $800 mil-
lion in grants and loans.
2. Korea entered the Vietnam conflict from
mixed motives of sentiment and self-interest. The
sentiment was compounded of feelings of loyalty to
the US and a deep-seated sense of obligation to re-
pay the free world for coming to Korea's aid in 1950.
The self-interest stemmed in large measure from a
general conviction that Korea must profit economically
in Vietnam as Japan did in the Korean war. These two
motives seem to merge in the concept that sending
troops to Vietnam is a demonstration of loyalty that
should strengthen Korea's claims on the US for long-
term military aid and protection.
3. Pak hopes that the development of a strong
South Korea will ultimately lead to reunification on
non-Communist terms. Seoul formally supports the
UN formula for Korean unification based on the hold-
ing of free elections under UN supervision in both
North and South Korea. Nevertheless, UN failure to
bring about unification after 20 years is raising
doubts in South Korea that the UN can or is willing
to deal with the problem and a belief that news
alternatives must be found.
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Economic Gains
4. The buoyant effect of an expanding economy
on public attitudes has benefited Pak politically
and encouraged a substantial degree of political
stability.
5. Over the past two years the gross national
product has increased in real terms about eight per-
cent annually. Exports rose to $180 million in 1965
compared with only $87 million in 1963 and are ex-
pected to reach about $250 million this year. Korean
construction firms have received contracts for work
abroad, and Korean laborers and technicians are be-
ing recruited for work in Europe, South America,
Canada, and Vietnam. Agriculture has expanded
enough to justify government claims that the nation
will be essentially self-sufficient in food in a few
years.
6. Major difficulties that remain, however, in-
clude insufficient domestic investment capital to
absorb available foreign development funds and ex-
ports that still lag behind import requirements for
raw material and capital goods. The trade deficit
decreased in 1965 but was still $275 million, most
of which was covered by US grants and loans and
sales of goods and services to UN (US) Forces in
Korea.
7. Urban poverty and unemployment still plague
the regime. Planning and public housing are virtually
nonexistent in the burgeoning cities, especially Seoul.
Unemployment is large, between 5.7 percent and 7.7
percent of the labor force, and underemployment is
larger. Inflation, although reduced to manageable
proportions, is a real and continuing threat to the
livelihood of most Koreans.
Pak's Opposition
8. Unable to develop a credible alternative to
Pak's administration, his political opposition has
become largely discredited, disorganized, and vir-
tually leaderless. The more intransigent elements,
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led by former president Yun Po-sun, have resigned
from the Assembly, in a futile gesture of defiance
and personal pique. Subsequently, the more reason-
able of the opposition groups has been led by Pak's
growing use of compromise and persuasion to co-
operate with the regime on less controversial issues.
9. Pak has had less success in coping with the
hostility of students and intellectuals, who are
frustrated by a lack of what they regard as desir-
able job opportunities and who are repelled by the
pervasiveness of corruption in high places and the
regime's disregard for democratic practices. Never-
theless, Pak has managed to reduce student disturb-
ances without arousing serious public hostility.
The Dangers
10. The greatest hazard to continued progress
lies within Pak's government party, which holds 110
of the 175 seats in the National Assembly. Corrup-
tion and factionalism are endemic, and the effective
opposition that would enforce discipline upon the
members of the government and their party colleagues
is missing. The political storm over a recent
smuggling scandal involving the government, big
business, and Japanese interests is symptomatic of
the long-term political and economic difficulties
faced by the regime.
11. The scandal grew out of the political in-
fighting among Pak's supporters, with the chairman
of the government party appearing to have surfaced
the case in an attempt to bring down factional op-
ponents close to Pak. The stake was control of the
regime's sources of political funds. Although Pak
moved quickly to bring his lieutenants back into
line and restore political calm, the public saw the
case as confirmation of its worst suspicions of col-
lusion between highly placed Koreans and Japanese
interests.
12. With elections in the offing, the struggle
for political funds is becoming more intense and
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such incidents are more likely to occur. Thus far,
the squabbling of the opposition politicians has
prevented them from making the most effective use
of the material at hand to attack the government.
Pak.is well aware that this is not likely to remain
the case as the elections draw near and he undoubt-
edly sees his Manila trip as an opportunity to
strengthen his position at home. Seoul is already
depicting the conference as a great personal triumph
for Pak and crediting him personally with the ini-
tiative for bringing it about.
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