Korea, South
After World War II, a republic was set up in the southern half of the Korean Peninsula while a Communist-style government was installed in the north. During the Korean War (1950-1953), US and other UN forces intervened to defend South Korea from North Korean attacks supported by the Chinese. An armistice was signed in 1953, splitting the Peninsula along a demilitarized zone at about the 38th parallel. Thereafter, South Korea achieved rapid economic growth with per capita income rising to roughly 20 times the level of North Korea. South Korea has maintained its commitment to democratize its political processes. In June 2000, a historic first North-South summit took place between the South's President KIM Dae-jung and the North's leader KIM Chong-il.
There are currently no known threats to expatriate personnel or visitors in the Republic of Korea (South Korea), a highly developed, stable, democratic republic with powers shared between the president and the legislature. Tensions with the Democratic People's Republic of Korea (North Korea) have eased in recent years, but relations remain a major concern in Seoul, particularly over the North's fragile economy, poor human rights record and nuclear ambitions. Since 1995, North Korea has depended on outside aid to feed its 22 million people.
Parliament voted to impeach President Roh Moo-hyun in March 2004, ahead of the April 2004 general election. Prime Minister Goh Kun became acting head of state, promising to continue existing foreign and economic policies.
The president had become mired in a political stand-off, sparked by a breach of election rules. Roh, and his political rivals, had also become embroiled in a scandal over illegal election funds.
A liberal reformer from the governing Millennium Democratic Party, Roh won closely fought presidential elections in December 2002.
Roh had argued that South Korea should have greater jurisdiction over US troops on its territory. He favored Seoul's "Sunshine Policy" of constructive engagement with North Korea, a source of tension with Washington.
After posting real growth in gross domestic product (GDP) of 6.3% for 2002, South Korea's economy slipped into recession in the first half of 2003. The contraction was caused largely by a tightening of the availability of consumer credit, which reduced domestic demand. Real growth resumed in the third quarter, however, and the country is projected to show a real GDP growth rate of 2.5% overall for 2003, climbing to 6.0% in 2004. Growth in exports, particularly to the United States and China, has been strong in the second half of 2003.
In the wake of the Asian financial crisis of 1997-98, South Korea began an economic reform program designed to address some of the conditions which made its economy vulnerable. Most importantly, the South Korean government has begun to break the hold of the chaebols (large, multi-industry conglomerates) over the financial sector. The lack of an "arms length" business relationship between borrowers and lenders had led to many South Korean financial institutions having a very large ratio of non-performing loans. While there is no intention of forcing the chaebols to divest their financial subsidiaries, the government has increased regulation to prevent chaebols from abritrarily channeling money into other subsidiaries. Chaebols also have been pressed to spin off their non-core businesses and to rationalize their corporate structures.
To stimulate domestic demand, the South Korean government under President Kim Dae-jung enacted a package of tax cuts directed at lower and middle-income workers.
