Budget Plan Is Bottom Line for S. Korean Voters

Angry South Koreans will be glued to their television sets tonight as they try to decide which of three presidential candidates is most likely to save their disintegrating economy from meltdown.

With the election Thursday considered too close to call, more than half of all South Koreans are expected to tune in to the third and final candidate debate, which comes during South Korea’s worst postwar financial crisis.

The search for a new leader, however, has been overshadowed by public rage at outgoing President Kim Young Sam.

His government is blamed for bungling South Korea’s financial management so badly that, despite a $60-billion bailout from the International Monetary Fund, a leading politician and former economist admitted Saturday that he did not know whether South Korea can avoid defaulting on its spiraling foreign debt.

Kim is under increasing pressure either to resign immediately after the election or to remain on as a figurehead but hand over real power to deal with the financial crisis to the winning candidate, who will not be inaugurated until Feb. 25.

“If a company collapses and goes into receivership, its president is immediately dismissed,” said Park Jae Woo, a junior manager who has seen his life’s savings vanish in the stock market in a single month. “Korea is now under IMF receivership, so how come Kim Young Sam hasn’t been immediately replaced?”

The president should resign “as soon as possible,” certainly within days of the election, said Lee Hahn Koo, president of the Daewoo Economic Research Institute.

The two leading candidates to succeed Kim--longtime opposition leader Kim Dae Jung and former Supreme Court Justice Lee Hoi Chang--are talking about a power-sharing arrangement with the lame-duck president to restore confidence in an economy now widely seen as rudderless.

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Aides to President Kim and Kim Dae Jung agree that the president is unlikely to resign early and forfeit what little face he has left.

But “in effect, he will virtually step down,” predicted Ben Q. Limb, a New York attorney who is now an aide to Kim Dae Jung. “Things will be done under his name, but the ideas and implementation will be from the new man.”

On Saturday, in a bid to reassure panicky investors that the new president will abide by the stiff bailout conditions imposed by the IMF, President Kim hosted a meeting that included Kim Dae Jung, Lee Hoi Chang and another candidate, Rhee In Je, who is running a distant third in the polls.

The three contenders signed a statement pledging to “exert utmost efforts to regain international confidence and expeditiously stabilize the nation’s financial market by implementing the agreement between the government and the IMF.”

The candidates also called on South Koreans to endure “all the pain” of the current crisis and promised that the government will “set an example in frugality and thriftiness.”

Desperate to husband the country’s dwindling foreign-currency reserves, the government has been pushing an austerity campaign through television programs exhorting citizens to buy Korean products; shun imported luxury goods; exchange their foreign currency for the nation’s own currency, the won; take public transportation instead of driving; and eat in restaurants less often.

Many patriotic, nationalistic Koreans seem to be taking the advice to heart.

Kim Geon Shin, 40, who runs a small manufacturing company with her husband, said the two sold all their dollars because “we wanted to contribute to the economy.”

That was a few weeks ago, after the won broke through the symbolic level of 1,000 to the dollar. After a week of panic selling, the won closed Friday at 1,710 to the U.S. currency.

Does Kim regret her idealism? “No, I think we did the right thing,” she said, adding that she is angry at those who keep unloading their won.

Traffic on Seoul’s gridlocked streets has been a bit lighter than usual, though residents say the decline may have been prompted in part by a 13% increase in the price of gasoline. An American businessman reported that one Korean executive arrived for a business lunch last week in a subcompact car instead of his luxury sedan. Behind the wheel, however, was the man’s usual driver.

“I’m trying to save a little bit on everything,” said Chan Se Young, president of a six-employee customs clearance firm whose business has fallen 20% in the last month.

Chan was sipping a brew with a friend in a cheerful, German-style beer hall whose waiters were dressed in Santa suits, but the two friends had ordered only one dish of food instead of the usual two. “I’m using the subways these days too,” Chan said.

The cut that hurt Chan worst was canceling his daughter’s English classes, which cost 180,000 won a month--about $200 before the currency collapsed--and are now a luxury he is not sure he can afford.

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Though there have been a few anti-IMF demonstrations--along with complaints about U.S. and Japanese attempts to “tame” South Korea by means of the IMF, and rhetoric about “Western corporate hunters” getting rich off Korea’s misfortunes--Chan insisted most Koreans do not blame foreigners for their troubles.

“This is our own fault for having selected such a stupid president,” he said. “Our government was incompetent. They could have corrected the situation earlier, or negotiated sooner with the IMF and gotten better terms. But I am not entirely unhappy with the IMF conditions. Seventy percent of what the IMF is requesting is what we should have done ourselves.”

Some people’s losses are of their own making, but they nonetheless say Kim Young Sam has made their problems worse.

A man who would identify himself only as K. S. Kim complained that his recent gambling losses in the United States are now more than 50% higher than he thought they were. On a losing streak in Las Vegas last month, he withdrew $2,000 from an ATM with his Visa card. At the time, the exchange rate was 1,035 won to the dollar. Thursday, he called the bank and was told that the rate will be calculated Dec. 27, the date of his next bill.

“That’s a lot of [extra] money I lost,” he said. “What did I do? . . . This whole thing is Kim Young Sam’s fault.”

Park, the junior manager--who borrowed most of the $222,000 he lost in the stock market and now must repay the loan at 15.5% annual interest--is even more bitter.

“I was totally and completely betrayed by the confidence I had in the government,” he said. “Sure, there was kind of a ‘bubble’ in our economy, and the economy should be restructured, but a large share of the blame goes to the government.”

Many observers complain that authorities have undermined the stabilizing effect the IMF package should have had and further spooked the markets by concealing the true dimensions of South Korea’s debt problems and the scarcity of its foreign policy reserves.

“Government policy announcements keep changing every three days. How can we believe them?” Park asked. “And we can’t trust their statistics, which are not credible. The numbers are changeable to fit the situation.”

Despite his troubles, Park said he expects the Korean economy and his personal fortune to recover eventually--and he may even try to profit from the crash by buying stocks he thinks have hit bottom.

Park has not yet decided whom he will vote for Thursday, and, like most Koreans, he will be watching tonight’s debate to try to figure out which candidate will be best for the economy.

South Korea prohibits publication of public opinion polls immediately before an election, but private poll results that are nonetheless circulating in Seoul indicate that Kim Dae Jung retains a slim lead of anywhere from 2 to 7 percentage points over Lee Hoi Chang.

However, regionalism continues to play a key role in South Korean politics, and because voters are often unwilling to admit their regional animosities to pollsters, opinion surveys here must be read with special care. Tonight’s debate will be a make-or-break moment for the candidates, said Han Sang Jin, a political scientist at Seoul National University.

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Times staff writer Jim Mann contributed to this report.