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Wednesday, November 26, 1997 Published at 11:55 GMT



World

Korean presidential campaign starts under economic cloud
image: [ Looking on intently ... South Koreans must decide who they can trust with their economy ]
Looking on intently ... South Koreans must decide who they can trust with their economy

Campaigning in South Korea's presidential election has begun on the same day as formal negotiations start between the government and International Monetary Fund negotiators.

South Korea must select a new president to replace Kim Young Sam, who is barred from standing for a second term.

All three main candidates have put forward reforms to salvage the country's economy whilst backing Seoul's bid for a $20bn loan from the IMF.

In all, five candidates are standing in the December 18 vote.


[ image: The main contender: but Kim Dae-jung's support has fallen in recent weeks]
The main contender: but Kim Dae-jung's support has fallen in recent weeks
The last public poll allowed before the election puts Lee Hoi-chang of the ruling party level with Kim Dae-jung of the main opposition at 33%.

Rhee In-je, a provincial governor who left the majority party when it rejected his nomination, was far behind in third.

Whichever candidate wins, he takes over a bleak economy showing no signs of immediate change.

The discussions on the exact terms and conditions of the IMF loan start on Monday after a week of preliminary talks. Tough conditions are expected in return for the cash.

Seoul hopes to match the IMF's funds with money from neighbouring countries and other international finance organisations, such as the Asian Development Bank.

The executive director of Asian research at Goldman Sachs, Jean de Bolle, warned the country faces years of painful restructuring.

"There is no fundamental reason why we should see recovery of the market in the 12-month period ahead," Mr de Bolle said.

Kim Chung-ho of the Korean Centre for Free Enterprise, a business lobby group, said all of the presidential candidates have so far been vague about how they would reverse the recent decline in South Korea's fortunes.

"I expect this vagueness to continue as no candidate will want to risk votes demanding specific measures which could include layoffs," he said.


[ image: Lee Hoi-chang: the ruling party candidate has always won for almost 50 years]
Lee Hoi-chang: the ruling party candidate has always won for almost 50 years
Mr Lee proposes cutting government spending by 10% and revising South Korea's "real name" banking system.

The "real name" system, which outlaws false accounts used to launder money, is blamed for pushing more than $70bn into the black economy since being introduced in 1993.

The opposition candidate, Mr Kim, said Seoul should increase its request to the IMF to $70bn and promised a second "economic miracle" in the style of the 1980s boom.

"I promise the country will overcome the IMF shame within one-and-a-half years of taking over through a special policy for economic recovery," he said in a campaign manifesto.

Mr Kim, who is running for the office of president for the fourth time, noted Korea tends to return the incumbent candidate. The country has been dominated by the same party since 1948.

For the first time, candidates' spending in the election will be closely checked and limited to $32m after rows over past excesses.








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