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Thursday, February 26, 1998 Published at 14:53 GMT

World: Asia-Pacific

New Korean President faces economic and political turmoil
image: [ Bank workers protest at the latest closures ]
Bank workers protest at the latest closures

On his first day in power, the new President of South Korea, Kim Dae Jung, is already grappling with political and economic crises.

He plans to meet his parliamentary opposition Friday to break a deadlock over the confirmation of his prime minister.

His political opponents, the Grand National Party, announced that they were boycotting the parliament only hours after his inauguration. This blocked the bill to appoint the new Prime Minister, Kim Jong-pil. The opposition said he was an "old-timer unfit to serve on the threshold of the 21st century".

The president had formed an electoral alliance with the United Liberal Democratic Party in return for offering Kim Jong-pil the post of prime minister if the coalition won. It did, and now the president can't deliver on his promise.

IMF measures hit economy hard

BBC's Korea Correspondent Branwen Jeffreys reports on economic turmoil (3'58")
On Thursday the government announced the closure of two more ailing merchant banks, bringing the total to twelve. It will also give a one-month reprieve to two more which are trying to find merger partners.

The once-thriving Korean economy was caught up in the Asian region's currency crisis, and the country had to accept a record $57bn bailout from the International Monetary Fund.

Because of IMF-inspired reforms, inflation and unemployment are rising. By the end of the year, up to one million people are expected to lose their jobs.

Widespread public approval for Kim

Mr Kim will face these problems in the knowledge that, at least for the moment, he has the confidence of the South Korean people. His latest approval ratings are around 90%.

[ image: From dissident to president.]
From dissident to president.
In his inauguration speech he said he was he was willing to hold a North-South summit at any time, and he would make sure that economic aid was delivered to the North, as promised, despite the collapse of confidence in the South Korean economy.

He added that the "Cold-War style South-North relations" must end as soon as possible.

If the two Koreas carried out their agreements to promote reconciliation and co-operation, then he said they could move forward on a broad path for unification.

However in a recent BBC interview, he said that this could take 10 years.

At the moment, he admitted, South Korea's troubled economy could not afford the costs of unification.

Government and business relations

On the economy, he said that the government would "sternly demand" that businesses make efforts for self-reform.

[ image: Michael Jackson joined George Soros and other dignitaries at the ceremony]
Michael Jackson joined George Soros and other dignitaries at the ceremony
He blamed corruption, government-controlled banks and the uncontrolled borrowing of big family-owned conglomerates or Chaebol for South Korea's economic crisis.

"I am firmly determined to practice a real market economy in this country, excluding any possibility of collusion between government power and businessmen."

He cited "five great reforms" that big business groups had pledged to carry out, and said the government would do its best to encourage foreign investment.

But despite the recent bank closures, critics said the government was still protecting the obsolete banking sector and trying to keep the weakest conglomerates afloat, including the Hanwha Group.

Election comes after long struggle

Mr Kim is the first opposition politician to become president in South Korea in its 50-year history.

Between the 1970s and late 80s he was jailed, exiled or under house arrest for 15 years.

He also survived at least three assassination attempts and a death sentence.

Kim's predecessor Kim Young-sam, also a former dissident, ended three decades of military rule when he took office triumphantly in 1993, but was blamed for the recent economic troubles.

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