SOUTH KOREAN - INTERNAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81T00700R000100050002-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 15, 2016
• Document Release Date: August 22, 2003
• Sequence Number: 2
• Publication Date: July 26, 1976
• Content Type: PAPER

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26 July 1976
South Korea -- Internal
The present form of government dates from 1972, when Pak
scrapped the democratic constitution.
He was motivated by concern over:
-- The growing strength of the opposition
New Democratic Party. In the elections
of April 1971 his opponent, Kim Tae Chung,
:1o s-t -b-y---a . w t n ,
-- Developing signs of a return to the faction-
ridden politics that preceded the military
coup of 1961.
-- The prospects of diminishing support from the
United States. His worries here stemmed first
from the 1969 Nixon Doctrine and then from the
developing Washington-Peking relationship.
-- His belief that the ROK would be at a serious
disadvantage in talks with a monolithic North
if firm controls were not imposed on the
domestic scene.
Under the present iz'slrii constitution, the president
-- can serve any number of terms
-- controls the national assembly
-- has sweeping emergency powers which Pak has use,
extensively. The best known of the Emergency
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Measures -- EM 9 -- prohibits public criticism of
the president, government policy, or EM 9 itself.
Pak's government is very much a one-man show
-- It depends ultimately on the loyalty of the
military, but the military do not themselves
play a role in government.
To keep him in touch with what is going on, Pak
depends on his Blue House staff and a handful of
Right now his most important
advisers are Presidential Secretary, Kim Chong-you,
and the Head of the KCIA, Sin Chik-su. But Pak
makes the decisions.
-- Professionalism has become very important at all
levels of government -- the economic ministries art
run by economists, the legal ministries by lawyers
and so forth. Expertise does play an important part
in the decision-making process. But once the Pr.es_ df'nt
has made a decision, his advisers, however profess.-:on=al,
tend to tell him what he wants to hear.
-- Advisers and others who show signs of becoming too
prominent or ambitious are quickly sidelined. This;
has been the fate of civilians like Kim Chong-pil
former head of the CIA and until recently Prime Minit;ter.
And of senior military like General Yun Pil-yoaq,
former head of the capital security command.
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The national police and the KCIA are the principal
instrumentalities of internal control. Both of them, particu_Laly
the KCIA, also play an important part in keeping the President
informed.
--- The KCIA's role is 4, pervasive gpw..& It monitors
and sometimes influences the activities of
opposition political elements, student groups,
and the media.
But Pak's government rests on a good deal more than pervas-ive
controls and the ultimate support of the military.
Because fear of the North is still very strong,
Pak's belief that stability and order come
first is widely shared.
--- The expanding economy has provided increasing
benefits for most of the population.
--- The military, the bureaucracy, and the major
business elements are generally satisfied that
Pak's leadership has served ROK interests and
their own.
.t.eI^ cti140-1 Many feel that Park's authoritarianism is too rigid. And
when he seemed 1e -t3o-~ i:tate a break with Japan in the
fall of 1974, it appeared possible that he would lose the suFppc>rt
of the major interest groups. But that crisis passed. And the
general view among the elite remains that South Korea cannot
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afford the disorder, immobilism, and inefficiency they associate
with political party rule.
The opposition is weak and divided
,,,.,.-The political opposition centered in the New Democratic
25X6 1?arty is fractious
adept at manipulating these weakensses.
The ground troops of the opposition 4" the students
are easily intimidated,
and their ranks require renewal
d/graduation day.
The most principled and serious opposition comes from
the Christians. Although a distinct minority (
of the population), they are influential because of
their important role in the pre-war independence
movement and because of the number and quality of
their educational institutions. But nevertheless
they are a minority, and, for the most part, a very
cautious one.
The current trial of clergyman and others who have urced
the restoration of democracy has attracted a good deaL
of attention in the United States. But it has failed
to spark wider anti-government activity in Seoul_
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The record of economic progress has been a remarkable ono
and President Pak is given a good deal of credit for this. In
the past decade
-- Real GNP has expanded at a 9% average annual rate.
-- Exports have increased on an average of 30% annually.
Industrial output has grown by roughly 25%.
-- The manufacturing share of GNP has increased from
12% in 1965 to 28% in 1975. Progress has been
especially marked in shipbuilding, petrochemicals, petroleum
refining, and most consumer goods.
-- Since the early 1970s, exports of manufactures have
shotup at a 60% annual rate.
As everywhere, the benefits have been unevenly distribute-I
and standards of living are not as high as in Taiwan, for exam;:)l.#,.
But to a significant degree the results of economic progress havt,
filtered down to the factory worker and the peasant.
Per capita personal income has increased almost five-
fold since 1966.
-- Farmers have benefitted from higher agricultural prices
and adequate supplies of fertilizers.
-- Wages are now eight times the 1965 level. However,
roughly two-thirds of the gain has been eaten up by
inflation; taxes have also made major inroads into
take-home pay.
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-- But in 1976, if the government can contain the
inflation rate at the current 10%, real income
will increase about 5%.
Because it is heavily export oriented, the ROK economy was
badly hurt by the world-wide slump.
-?- The economy is particularly closely linked with ours
and Japan's. We and the Japanese are the ROK's
principal trading partners, suppliers of technology,
and sources of foreign capital.
- - South Korea was also badly hit by the oil price increase.
It is almost entirely dependent on imports for its
energy sources.
However, South Korea is now leading almost all of the non-
OPEC LDC's in the pace of its economic recovery:
-- Real growth was 8% in 1975.
-- It will probably exceed 9% in 1976.
-- In 1975 with export volume up 20%, industrial
production expanded by 19%.
-- Industrial unemployment fell from 10% in early 1975
to about 6% in the first quarter of 1976.
This year, so far, export volume is up 65% from the
first half of 1975. Consumer goods, especially
textiles and footware, are in the lead.
Overseas sales will probably not maintain this pace in the next
six months.
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Trade barriers in importing countries -- especially
textile quotas -- will almost certainly have a restraining
effect.
-- Production capacity limits will also operate as
a restraint.
-- The present annual rate of increase in industrial
production -- 36% -- probably cannot be maintained.
In addition to commodity exports, overseas construction will
be playing an increasingly important part in the ROK balance
of payments.
-- New contracts, almost all in the Middle East,,shou.ld
reach $2 billion this year, more than double 1975_
The extraordinary surge in exports of goods and services
has substantially narrowed Seoul's balance--of-payments gap E?rtt
bolstered foreign lender confidence.
Imports have been held down thus far by high
inventories, bumper crops in 1974 and 1975, and
government policies.
-?- Import growth likely in the second half, however,
will probably bring the total import bill to
$8 billion in 1976 compared with $6.5 billion in 197-i.
-- With exports likely to reach $7.5 billion, the currnnf
account deficit should go at least as low as $1.2
billion compared with $2 billion in 1974 and 1975.
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1976, Seoul should be able to cover its financial qap --
about $1.8 billion -- comfortably from
-- new medium and long-term credits, with Western
Europe a notably larger contributor this year.
-- new direct investments
-- a reduced interest burden in the current account
as the result of repayments of short-term credits.
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