South Korea

Intelligence for Better Decision Making

Han Duck-soo's Veto Deliberations Stir Political Tensions in South Korea
Dec. 20, 2024 | Indirect Indicator

Acting President and Prime Minister Han Duck-soo is currently deliberating a veto on several policy bills, notably the contentious Grain Law recently passed by the opposition-controlled National Assembly.

The ruling party adamantly opposes this law and is advocating for a veto. This situation has prompted the government to reassess these bills, ensuring they align with constitutional mandates and public interests. An extraordinary Cabinet meeting is planned to make final decisions following the National Assembly's approval.

The Grain Act Amendment presents Han with a significant opportunity to exercise his veto power for the first time. While the ruling party engages in dialogue with opposition members to foster cooperation, the potential veto adds uncertainty to the outcome. This is particularly pertinent given the two special prosecutor bills passed on December 12, which face a veto deadline of January 1. Compounding this situation are ongoing impeachment proceedings against President Yoon and conflicting political interests. Meetings between party leaders are indicative of the tense political climate as Han navigates state affairs amidst potential veto repercussions and the impeachment process.

Han is also expected to seek reconsideration of other controversial bills. Besides the Grain Management Act, these include amendments to the National Assembly Act, the National Assembly Testimony Appraisal Act, and various agricultural acts. A special Cabinet session will establish the government's position on six contentious bills previously opposed by the administration. The Ministry’s request for a veto has led to ongoing communication with opposition parties to avert potential state disruptions.

The special prosecutor law concerning Kim Kun-hee presents a politically sensitive issue with a looming veto deadline of January 1, 2024. The Democratic Party of Korea anticipates a veto and is preparing to respond forcefully, possibly with impeachment actions. The government is working to complete its review before the holiday, focusing on constitutional compliance while addressing concerns about significant taxpayer spending on rice overproduction amid declining consumption.

Han has adopted a strategic approach, distinguishing between 'policy bills' and 'political (investigation) bills.' The business community opposes the National Assembly Testimony Appraisal Act due to trade secret risks, though it appears unlikely that the government will veto the Insurrection Special Prosecutors Act. Nonetheless, the controversial Kim Kun-hee bill raises concerns about potential political fallout, with the opposition Democratic Party preparing for possible impeachment proceedings against Han if he acts contrary to their interests.

On December 18, a confrontation erupted between the ruling People Power Party and the Democratic Party of Korea over Han's veto power. The ruling party deems vetoes constitutionally necessary, while the Democratic Party accuses Han of potentially exceeding his authority, warning that such actions could lead to impeachment. Democratic Party leaders argue Han should focus on stabilizing state affairs rather than exercising presidential powers and advise avoiding vetoes to prevent abuse of authority and constitutional conflicts.

Despite the firm stances held by both parties, Han continues to deliberate on vetoes for specific bills, striving to maintain an open dialogue and promote compromise. The Grain Management Act is among the primary concerns, with potential market disruptions and financial burdens at stake. Han has criticized other agricultural-related amendments for their potential to cause market and financial instability and has raised alarms about privacy risks linked to the National Assembly Testimony Appraisal Act and trade secret disclosures.
Korean Won Plummets Amidst Market Turbulence and Martial Law
Dec. 20, 2024 | Indirect Indicator

The South Korean won has experienced a significant decline against the US dollar since the imposition of martial law on December 3, leading to notable financial market volatility.

The exchange rate fell sharply from 1,402.9 won to 1,435.5 won per dollar by December 18. This depreciation has raised concerns among businesses and individuals, prompting financial companies to reevaluate their risk management strategies and implement stricter capital stability measures.

Financial institutions are now facing increased demands for risk-weighted capital due to the won's decline. KB Financial Group and Hana Financial Group each anticipate capital requirement increases of KRW 500 billion, while Woori Financial Group foresees a rise between KRW 400 to 500 billion. Despite these challenges, individual banks report stable foreign currency liquidity, maintaining coverage ratios above government standards. However, they are also preparing for potential difficulties, particularly concerning foreign currency loans. They are implementing contingency plans to support small and medium-sized enterprises affected by currency fluctuations, such as extending loan maturities and enhancing foreign currency trading.

The devaluation of the won can be attributed to several factors, including geopolitical events like President Yoon Suk Yeol’s martial law declaration and a recent Federal Reserve rate cut. As the currency opened at 1,453 per dollar, the lowest since March 2009, Finance Minister Choi Sang-mok warned of heightened volatility in South Korea's financial and foreign exchange markets.

The breach of 1,450 won per dollar for the first time since the 2009 financial crisis underscores the ongoing challenges for the South Korean economy. The Federal Reserve's recent decisions, perceived as hawkish, and President Yoon's martial law declaration are driving factors behind the won's weakness. Financial Services Commission Chairman Kim Byung-hwan has urged financial institutions to adjust foreign currency loans and settlements to help ease the financial burden on companies. In response to the volatility, Financial Supervisory Service Governor Lee Bok-hyun has emphasized the necessity for institutions to reassess emergency strategies for effectively managing instability.

The South Korean government and financial authorities are actively taking steps to stabilize the markets amidst increased volatility and are urging market participants to remain calm. Governor Lee underscored the significance of this period for economic stability, calling for swift market stabilization initiatives based on prepared response plans. He highlighted the importance of monitoring the impact of base rate cuts on lending rates to ensure rational lending practices amid the heightened market turbulence.

Monitored Intelligence for South Korea - Dec. 30, 2024


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(LEAD) N. Korea declares 'toughest' anti-U.S. counteraction strategy at party meeting: KCNA

Yonhap | English | News | Dec. 30, 2024 | North Korea

North Korea has unveiled a stringent counteraction strategy against the U.S., condemning military collaboration among South Korea, the U.S., and Japan as an aggressive nuclear bloc. This announcement came during a significant meeting of the Workers' Party of Korea, led by Kim Jong-un, who deemed the U.S. the "most reactionary" state and underscored the necessity for a strong anti-U.S. response to protect North Korea's interests.

Kim emphasized the need to enhance military capabilities to meet modern warfare challenges and improve war deterrence through advancements in defense technology. He indicated that the development of the defense industry is crucial to counter increasing military provocations from the U.S. and its allies, labeling South Korea as an "anti-communist outpost" of the U.S.

In personnel updates, Pak Thae-song was appointed premier, taking over from Kim Tok-hun. Other notable appointments include Kim Jong-gwan as vice premier, along with new ministers for resources development and commerce. These changes aim to expedite economic policy implementation. Additionally, Foreign Minister Choe Son-hui and Chief of the Korean People's Army General Staff Ri Yong-gil were elected to the Politburo, highlighting their roles in strengthening ties with Russia, including the deployment of North Korean troops to support Russia in its Ukraine conflict.

N. Korea declares strongest response strategy toward U.S. at key party meeting: KCNA

Yonhap | English | News | Dec. 30, 2024 | North Korea

North Korea has unveiled its strongest response strategy towards the U.S., voicing concerns over military collaborations among South Korea, the U.S., and Japan, which it perceives as a threat. This declaration emerged from a plenary meeting of the Central Committee of the Workers' Party of Korea, led by Kim Jong-un, focusing on national security measures.

The Korean Central News Agency (KCNA) labeled the U.S. as the "most reactionary" state, intensifying its anti-communist stance. Kim Jong-un urged the refinement of warfare tactics to address modern conflicts and evolving threats from adversaries while emphasizing the need for military capability enhancements.

The meeting also resulted in a leadership change, with Pak Thae-song appointed as the new premier, succeeding Kim Tok-hun. Kim Jong-un's leadership during the year-end session highlights the importance of the discussions and strategic decisions made.

北 GPS 교란에 韓 선박·항공기 '위험'…정부, 대책 마련 '속도'

South Korean ships and aircraft 'at risk' due to North Korea's GPS disruption... Government 'speeds up' preparation of countermeasures

ZD Net Korea | Local Language | News | Dec. 30, 2024 | North Korea

Amid increasing cybersecurity threats from North Korea, South Korea is expediting countermeasures against GPS disruption. North Korea's recent satellite navigation system jamming poses risks to military and civilian vessels and aircraft, leading to operational malfunctions and logistical challenges. Previous incidents have demonstrated the severity of these disruptions, resulting in lost control of ships and significant financial losses due to ransomware.

The frequency of GPS jamming has surged this year, particularly during joint military exercises and near contested maritime boundaries, causing temporary navigation failures for both passenger and fishing vessels. In response, the Korea Communications Commission is developing an 'anti-jamming GPS antenna solution' to reduce economic losses and enhance maritime safety.

Efforts are underway to ensure operational integrity in air and maritime traffic management systems. The Ministry of the Interior and Safety is assessing major transportation hubs and launching a project to support navigation safety technology development for smaller vessels. Authorities are determined to collaborate with relevant organizations to effectively tackle GPS signal interference challenges.

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