Ad­vice for South Korea’s Moon

Pro­ceed with cau­tion to pre­serve eco­nomic progress and na­tional se­cu­rity

The Washington Times Daily - - COMMENTARY - By Tom Ridge Tom Ridge is the chair­man of Ridge Global. He was the first sec­re­tary of the U.S. De­part­ment of Home­land Se­cu­rity and is a for­mer gov­er­nor of Penn­syl­va­nia.

In the 64 years since the end of the Korean War, South Korea has built it­self into a re­gional eco­nomic pow­er­house and a global in­no­va­tor whose cit­i­zens en­joy a sta­ble econ­omy and demo­cratic gover­nance. At this mo­ment in its his­tory, how­ever, se­ri­ous eco­nomic, po­lit­i­cal and na­tional se­cu­rity risks threaten this stun­ning ac­com­plish­ment. A new pres­i­dent tak­ing the helm fol­low­ing a po­lit­i­cal scan­dal, a bel­liger­ent Kim Jong-un in the North, and in­ten­si­fy­ing eco­nomic chal­lenges have cre­ated a volatile sit­u­a­tion where mis­steps could quickly un­der­mine decades of peace and pros­per­ity for South Korea.

Kore­ans elected Moon Jae-in early May in a spe­cial elec­tion to re­place Park Geun-hye, ousted due to a bribery scan­dal in­volv­ing some of Korea’s largest busi­nesses. Sam­sung Group chief, Jay Y. Lee, was ar­rested in Fe­bru­ary and re­mains jailed as he awaits his next court date. Mr. Lee’s ar­rest and the for­mer pres­i­dent’s re­moval from of­fice have rocked South Korea’s po­lit­i­cal and busi­ness com­mu­ni­ties. In ad­di­tion, the lead­er­ship vac­uum at Sam­sung cre­ated by Mr. Lee’s ar­rest is sig­nif­i­cant and po­lit­i­cally harm­ful given that Sam­sung’s op­er­a­tions ac­count for more than 20 per­cent of the South Korean gross do­mes­tic prod­uct (GDP) and 30 per­cent of its ex­ports.

The elec­tion of Pres­i­dent Moon was cer­tainly a re­ac­tion to th­ese events. Mr. Moon is a lawyer, not an econ­o­mist. His elec­tion, mark­ing a rather sud­den about-face from the poli­cies that have shaped Korea’s eco­nomic suc­cess, means the coun­try could go in a very dif­fer­ent di­rec­tion — but which di­rec­tion and where it leads are open ques­tions.

On top of th­ese in­ter­nal chal­lenges, Mr. Moon in­her­ited a brazen and an­tag­o­nis­tic leader in the North. A se­ries of de­fi­ant mis­sile tests po­ten­tially ca­pa­ble of de­liv­er­ing nu­clear weapons sug­gest Kim Jong-un is in­creas­ingly im­per­vi­ous to in­ter­na­tional pres­sure, or sim­ply reck­less. While Kore­ans have lived with an uneasy cease­fire for more than 60 years, with the 33-yearold Mr. Kim, they have never be­fore faced with such er­ratic lead­er­ship in the North.

For con­text, the cap­i­tals of the two Koreas, Py­ongyang and Seoul, are only 120 miles apart — a lit­tle more than the dis­tance be­tween Colum­bus and Cincin­nati, Ohio. And the dis­tance from the demil­i­ta­rized zone at the bor­der (DMZ) to Seoul is the same as the dis­tance be­tween two base­ball parks, Na­tion­als Park and Cam­den Yards, at ei­ther end of the Bal­ti­moreWash­ing­ton Park­way.

Thus, Mr. Kim does not need an in­ter­con­ti­nen­tal mis­sile to threaten greater Seoul, where 11 mil­lion of South Korea’s 50 mil­lion peo­ple live. If Mr. Kim is look­ing to the South and see­ing an untested leader whose first ac­tions are likely to crip­ple his coun­try’s eco­nomic en­gines, Mr. Kim’s provoca­tive ac­tions will likely con­tinue or even es­ca­late.

Mean­while, South Korea’s eco­nomic per­for­mance could in­vite new chal­lenges as well. Due in no small part to un­even ex­ports, its GDP has ef­fec­tively stalled, grow­ing to just 0.9 per­cent in the first quar­ter. And the pro­longed jail­ing of Sam­sung’s heir can only have the ef­fect of slowing or stop­ping in­no­va­tion at a com­pany el­e­men­tal to South Korea’s eco­nomic prospects.

Ac­cord­ing to the mar­ket re­search firm TrendForce, Sam­sung’s share of the global smart­phone mar­ket is about 26 per­cent. Ap­ple’s share is about 17 per­cent. No doubt, Ap­ple would like to change that and has be­gun tout­ing the ex­pected re­lease of its new iPhone later this year, which seems to come at the perfect time to take mar­ket share from its dis­tracted and lead­er­less com­peti­tor.

Ev­ery­one knows that Ap­ple and Sam­sung have been in a fierce smart­phone com­pe­ti­tion for the bet­ter part of a decade. Not as many peo­ple know that China’s two ma­jor smart­phone mak­ers, Huawei and Oppo, have mar­ket shares of 11.4 per­cent and 8.1 per­cent each. To­gether, their 19.5 per­cent of smart­phone sales out­pace iPhones. And it is no se­cret that there is a lot more room for growth in smart­phone sales in China than in the U.S. or South Korea. China would be de­lighted to use Sam­sung’s prob­lems as an open­ing to drive its two ma­jor phone man­u­fac­tur­ers to the doorstep of con­sumers world­wide — mar­ket share that is very hard to re­claim in the com­pet­i­tive tech sec­tor.

While Sam­sung re­mains for­mi­da­ble (as the mak­ers of Black­berry de­vices can at­test) mar­ket lead­er­ship can turn to mar­ket lag­gard in the blink of an eye. Black­berry’s sales were off 73 per­cent in just two-and-a-half years be­tween Septem­ber 2013 and March 2016. Mr. Moon should take note.

It has long been un­der­stood that there is a strong, in­dis­pens­able re­la­tion­ship be­tween na­tional se­cu­rity and eco­nomic strength. Na­tions are bet­ter able to meet for­eign threats when they can pro­vide am­ple eco­nomic op­por­tu­nity and hope for up­ward mo­bil­ity to their cit­i­zens. That ex­plains why Sec­re­tary of De­fense James Mat­tis re­cently told The New Yorker that the cyn­i­cism and sense of alien­ation many peo­ple in the U.S. and other coun­tries feel to­ward their gov­ern­ments and each other keeps him up at night more than North Korea and other foes.

When I was tapped by Pres­i­dent Ge­orge W. Bush to serve as the first sec­re­tary of home­land se­cu­rity af­ter the Septem­ber 11 ter­ror at­tacks, I needed to re­as­sure the Amer­i­can peo­ple and sig­nal to the rest of the world that the U.S. was ready for emerg­ing threats. Sim­i­larly, with the se­ri­ous eco­nomic and mil­i­tary threats cir­cling South Korea, Pres­i­dent Moon must take steps to demon­strate to North Korea and the global mar­ket­place that South Korea is sta­ble, se­cure and com­mit­ted to sus­tain­ing the eco­nomic progress it has made over the years.


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