Park Chung Hee Era

by Byung-kook Kim

  Park intended to make the executive branch strong and the legislative and judiciary branches weak. He viewed elections as wasteful and conflictive and wanted to restrain interest groups from damaging collective interests.57 He was not an apologist for his turn to authoritarian rule. On the contrary, in his eyes, only a strong, tough state could carry out the mandates of national security and economic development. When his vision of the political system provoked resistance in some quarters of society, he refused to compromise and instead tried to forge national consensus and unity through coercion, intimidation, and repression, if necessary. His belief in the state-corporatist path to modernization led him to fight political battles on multiple fronts with a diverse array of political forces and social groups until they eventually cost him his life and his yushin regime.

  Second, for democracy to be authentic, it had to be “nationalist democracy” (minjokchôk minjuju¤i). During his presidential election campaign in 1967, Park stressed that nationalist democracy rested on the rejection of the foreign-dominated modern history of South Korea. “We still live under the legacies of the five-hundred-year-old flunkeyism of the Chosôn dynasty and Japanese colonialism. Vestiges of premodern feudal elements are not yet wiped out. We should overcome these legacies by becoming an independent and self-reliant people. My nationalism is to adapt foreign ideas, thoughts, and political institutions to befit our own reality and tradition.”58 For Park, Korean tradition consisted of two parts, one that was to be rejected, particularly the legacies of feudalism and flunkeyism (sadae-juÄi), and another, involving national unity and cohesion, patriotism, and resistance against foreign interference and domination, that needed to be nurtured and embraced.

  Third, Park emphasized that democracy had to be “Korean”

  (han’gukchôk) in character in order to ensure political modernization.

  He summed up the essence of “Korean democracy” in 1978: “It is natural that insomuch as people cherish and love democracy, they unite and fight against the enemy when they face apparent threats to democracy by reducing the waste of national power and inefficiency associated with internal conflict and discord. They overcome the national crisis by favoring content and substance, not forms and procedures, as well as valuing efficiency, not competition and compromise. It is they who have grown democracy

  . . . The October Yushin has offered a decisive momentum for democ-

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  racy which dovetails with our historical situation and reality” (emphasis added).59

  Park saw executive dominance as central to his vision of Korean democracy. He stated, “It is a common trend among contemporary democracies in which the executive branch takes leadership in coping with complex policy problems. After having gone through a series of social crises, democratic states have realized that checks and balances among the three branches of government are not absolute. On the contrary, such arrangements of power have become rather obsolete in resolving complex problems of modern governance. As a result, organic integration of state power has become intensified.”60 For Park, efficiency, executive dominance, and guided democracy were the core traits of good polity, a belief that profoundly shaped the nature of the political terrain while he was in control.

  Power was concentrated in his imperial presidency and there was a lack of countervailing powers in society. His concept of “Korean democracy,”

  based on state bureaucratic power and driven by beliefs in national corporate unity, was thus fundamentally authoritarian in character. Administration replaced politics to forge national consensus and unity, and performance pushed ideology to the sidelines as the mode of legitimization. Park built up his political constituency by getting things done, and he fought off the opposition through a complex mix of coercion, intimidation, and cooptation.

  Park’s Korean democracy was intended to let the state bring about social modernization in a top-down fashion. Social modernization, Park believed, required two cardinal strategies, one aimed at the creation of a new citizenry through spiritual reform and rebirth, and the other focused on social mobilization. Park wanted his great legacy to be the transformation of the psyche of South Koreans from the “traditional” type, embodying self-defeatism, nihilism, and fatalism, to the “modern” type, made self-reliant and entrepreneurial through extensive education, training, and indoctrination.61 Having lived through a century of imperial conquest, internal war, economic stagnation, and political instability, much of South Korean society shared Park’s negative image of the initial state of the country when he took power. To a people who had known only defeat, Park preached a “can do” (hamyôn toenda) spirit, creating a new social energy and readiness for upward mobility and new opportunities with the delivery of economic growth.62

  The military played a pivotal role in bringing about the transformation of the South Korean male population. Compulsory conscription produced a reservoir of literate, well-trained, and disciplined manpower with experi-

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  ence in large-scale collective organizational activities, and this resource proved to be instrumental in the country’s economic takeoff. In particular, organizational experience in the military helped enable South Koreans to create modern forms of state, business, and group organization and to coordinate large collective projects efficiently. Park’s use of mobiliza-tional techniques constituted a striking application of military expertise to social tasks. From the 1961 National Reconstruction Movement to the New Community Movement initiated in 1970, the state bureaucracy penetrated, reorganized, and mobilized civil society for the goals of spiritual rebirth, societal transformation, and economic development.63

  U.S. Influence

  Compared with the influences of the Japanese ethos and Korean nationalism, the U.S. factor was less salient in shaping Park’s ideas and strategies regarding modernization. This was in part due to his personality and upbringing. He was fluent in Japanese, but not in English.64 Reticent and shy, Park found it difficult to reach out to the American community in South Korea and nurture enduring ties with its members.65 More important, he suffered a “Red complex” of his own, because his name came up in connection with investigations into communist cells within the South Korean army after World War II. U.S. military intelligence put him on its watch list throughout his military career. When Park was agitating for the purge of military officers suspected of corruption and political collaboration with the overthrown Syngman Rhee in 1960 and 1961, U.S. military authorities at various points suggested that the newly elected Chang Myôn government discharge Park from active service for fear of his leftist ideology.66

  On May 18, 1961, two days after the coup d’état, Park attempted to clear his alleged affiliation with communists in person by meeting with James H. Hausman, who was in charge of U.S. military intelligence in South Korea.67

  Moreover, like many generals of his generation, Park visited the United States for six months of military training, but his experience at the U.S. Artillery School at Fort Sill, Oklahoma, hardly made him comfortable with the United States. The language barrier, his age difference compared with that of his American colleagues, and his educational background in the elite Japanese Imperial Military Academy made his life at Fort Sill difficult.68

  Encountering U.S. culture and people for the first time when he was in his early thirties, Park kept his distance from the United States and dis-

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  trusted its intentions. His complex image of the United States is summarized in The State, the Revolution, and I: First, the United States should realize that Western-style democracy is not fit for the [South] Korean reality . . . Expecting [South] Korea to develop Western-style democracy is like a foolish father who expects his children to grow up as adults overnight. Second, I admire America’s democratic ideals and ambition and appreciate its economic aid very highly. But it should not expect an Americanization of [South] Korean society through the leverage of econom
ic aid . . . Third, U.S. military and economic assistance should be tailored to our needs. We trust American policy advice, but U.S. assistance should be used for rebuilding our economy, not for consumption. The United States should not only increase its aid, but also change its aid policy drastically.69

  The passage shows Park’s mixed image of the United States and its intentions. Park was aware of the importance of U.S. aid for South Korea’s prosperity and security,70 but he was critical of U.S. attempts to interfere in South Korean economics and politics on the basis of that aid. He wanted to go his own way and saw the United States as wanting to balance, realign, and constrain his own ideational fixation with the dirigiste state, HCI projects, and mobilization strategies that grew out of his deep identification with the Japanese ethos and Korean nationalism. The dynamics of Park’s modernization were shaped by the dialectical interplay of these two competing Japanese–South Korean and American worldviews.

  The impact of this interplay was visible from the moment Park seized power in 1961.71 Were it not for subsequent diplomatic and economic U.S.

  pressure to transfer power to civilians by 1963, the military junta could have stayed in power longer by unilaterally delaying the timing of presidential elections. Park’s later declaration of the yushin constitution in order to govern South Korea with an iron fist for the rest of his life provoked the United States to seek to counterbalance his abuse of power through persistent diplomatic pressure for political liberalization, protection of human rights, and the rule of law. Park defied the pressure, only to see the United States increase opposition within the limitations set by the principles of sovereignty and noninterference in domestic affairs. However limited, these U.S. efforts constrained Park’s political behavior significantly, periodically forcing him to soften, if not lift, repressive measures. U.S. intervention made America the primary source of democratic ideals and support for political opposition groups in South Korea, encouraging the formation of a transnational alliance between Americans and South Korean opposition groups against Park’s authoritarian rule.72

  The economic arena also saw serious conflict. Emulating Japan, Park

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  tried to build a “rich nation, strong army” through the establishment of a dirigiste state. His penchant for top-down control was especially clear when he initiated the first Five-Year Economic Development Plan in 1962.

  He was then a novice in the art of governance, with an untamed ambition to catch up with Japan in his lifetime. Although in order to win U.S. support Park and his staff, in drawing up the plan, did refer to the U.S.-

  influenced Nathan Report, Tasca Report, the Three-Year Reconstruction Plan, and the first Five-Year Development Plan of the Chang Myôn government, they formulated their plan without any serious consultation with the United States.73

  Not surprisingly, when the military junta announced its first FYEDP, it provoked strong U.S. criticism. U.S. ambassador Samuel D. Berger and United States Operations Mission (USOM) director James Killen publicly questioned the junta’s ability to raise $2.4 billion in foreign capital and obtain $1.4 billion in foreign—mostly U.S.—aid during the 1962–1966 period.74 The United States viewed the first FYEDP as a shopping list full of wishful thinking rather than as a development plan with feasible target goals.75 To discourage the implementation of the plan even further, the United States threatened to reduce or delay the delivery of its economic aid when political conflict arose with the junta in June 1962 over the currency conversion program and in January 1963 over the issue of extending military rule. The U.S. refusal to underwrite the first FYEDP, coupled with a series of economic policy failures and poor harvests, eventually made Park revise the plan and formulate the second Five-Year Economic Development Plan (1966–1971), which was more along the lines of the Fei-Ranis Report commissioned by the USOM.76

  The issue of financial stabilization split the two allies even more. Upon seizing power in 1961, Park, like his civilian predecessors, tried to pursue expansionary fiscal and monetary policy in order to win public support through the provision of material incentives. In the early days of military rule, he even canceled farm debts as part of his war on usury. By contrast, since the days of Syngman Rhee’s political rule the United States, as a donor of economic aid, had pressed hard for macroeconomic stabilization to arrest inflation and to maximize the impact of grants-in-aid. Like his civilian predecessors, Park resisted the U.S. pressures for interest hikes and currency devaluation in order to earn rents from selling U.S. dollars and aid goods in local markets at above the official exchange rates. The USOM

  succeeded in persuading Park to adopt an economic stabilization policy only after his domestic political situation stabilized with the electoral victory in October 1963. Even then, it was Killen’s strategy of linking the release of U.S. economic and food aid to Park’s implementation of fiscal and

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  financial stabilization that pushed Park toward fiscal and monetary discipline in 1964 and 1965.77

  Joel Bernstein replaced Killen as the director of the U.S. Agency for International Development (formerly USOM) in 1964 and influenced Park’s choice of economic policy much more effectively, convincing Park and his staff of the importance of fiscal and monetary discipline, tax reform, export drive, and trade liberalization. Bernstein came to be known as Park’s most trusted economic tutor, and strengthened his position within myriad bilateral forums of policy coordination between U.S. and South Korean officials.78 Having learned the dangers of shock therapies through repeated policy failures during the military junta period, Park agreed to implement stabilization measures in 1964, paving the way to economic liberalization through the rationalization of South Korea’s interest rates and foreign exchange regime. These began the transition to an export-led growth strategy.

  At the center of financial stabilization was the interest-rate rationalization measure, begun in 1964 on the recommendation of a USAID-commissioned study by John Gurley, Edward Shaw, and Hugh Patrick.79

  Even at the height of U.S. influence, Park was his own master, integrating U.S. policy recommendations in the structure of his own priorities and strategies. To meet the need for capital to supply to the strategic firms and sectors at a preferential rate while accommodating the U.S. demand for interest-rate liberalization, Park increased deposit rates more than loan rates, producing a “reverse interest-rate system” in which deposit rates were higher than loan rates.

  Unfortunately, the reversal of deposit and loan rates resulted in a rapid growth of the private curb market outside the state banking system to the level of 56 to 63 percent of total domestic credit by the end of 1964. At the same time, national savings was discouraged, prompting the United States to advise a doubling of the legal ceiling on interest rates.80 In September 1965, Park undertook another interest-rate reform by doubling the ceiling on interest rates not only to remove the negative effects of low deposit rates on national saving but also to reduce the curb market and expand the state-owned commercial banks’ share of savings. To link this effort at interest-rate liberalization with export growth, Park tapped both Japanese and U.S. expertise to lay the institutional foundations of an export-led growth strategy and to construct an outwardly looking incentive system.81

  In 1964, Amicus Most, an American businessman hired as an advisor to USAID, was instrumental in developing an extensive program for export expansion for MCI.82

  In other words, although the United States was not able to socialize Park

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  in its liberal mold, it exercised considerable influence in counterbalancing Park’s Japanese ideas of economic modernization and his Korean nationalism during the mid-1960s. The security umbrella and military and economic assistance provided by the United States proved to be critical assets in the effort to restrain the most extreme dirigiste part of Park’s Japanese ethos, but to collaborate positively on common goals, the United States neede
d something more. The threat of sanctions could not by itself induce Park’s policy shift toward stabilization, liberalization, and export promotion. To explain the transformation of the U.S. role from a negative one of preemption and sanction to a positive one of collaboration, it is necessary to analyze the emergence of a new epistemic community between U.S. aid officers and South Korean economic technocrats during the mid-1960s.

  Ch’oe Kak-kyu, former deputy prime minister and EPB minister (1991–

  1993), recollected:

  We did not understand basic economic concepts like “present value” at the time. Even college professors did not understand the concept. Foreign exchange rates and prices constantly changed, and it was virtually impossible to plan for future repayment without calculating the present value of the foreign loans disbursed [by the EPB] in the local currency. We learned all this from USOM officials. The same can be said of the foreign exchange rate system.

  Were it not for their assistance, [we could not have thought up] the floating exchange rate system. We, economic technocrats, were adaptive and competent, but policy changes were possible because we had good tutors like the USOM officials.83

  Most of the mid-level South Korean economic technocrats of the 1960s looked upon Killen and Bernstein as tutors, participating in a dense EPB-USOM policy network to import advanced U.S. economic and managerial expertise. The United States influenced Park’s economic ideas by educating and co-opting his economic technocrats into the U.S.-led bilateral epistemic community. Moreover, the United States invited mid-level South Korean economic technocrats to its educational and research institutions for training. Programs had begun at the University of Minnesota, Vander-bilt University, and Williams College in the 1950s as part of U.S. assistance. Korean participants, upon their return home, spread the principles of a market economy and ways to streamline the country’s inefficient administrative system.84 It was this clustering of U.S.-trained and USOM-influenced economic technocrats in South Korea’s elite economic ministries—the EPB, the Ministry of Finance, and the Ministry of Commerce and Industry—that became a new source of internal pressure for policy change during the mid-1960s. To assist the emerging bureaucratic enclaves of policy innovation from outside the state, moreover, the U.S. government