Monday, September 22, 2008

Kim Jong Ill or Kim Jong Well?

THIS week rumours swirled that Kim Jong Il, North Korea’s dictator, was gravely ill. The 66-year-old, officials said in Seoul, had suffered a “collapse”. South Korea’s president, Lee Myung-bak, was worried enough to call an emergency meeting with senior aides. An anonymous American intelligence official in Washington might have been at the bedside: Mr Kim, she told reporters, was probably half-paralysed following a stroke. (Mysteriously, South Korean spooks later reported he was recovering from surgery.) A North Korean diplomat denied the claims as “nefarious machinations”, noting that the Western press had a habit of telling lies (unlike the snow-pure Pyongyang Times).

He is half-right. The Western press has recently shown lurid interest in the theory of a Japanese professor that a double has been standing in for Mr Kim, who has in fact been the Dear Departed since 2003. For years rumours have erupted about Mr Kim’s health following prolonged public absences. Each time, he has eventually waddled back into view. The last scare was in May 2007, when he stopped appearing in public, and diabetes or heart problems were blamed. A team of German heart surgeons, sworn to secrecy, was flown to Pyongyang. Yet they may have operated on any member of the elite, not specifically on Mr Kim. At any rate, by the time of an October summit with South Korea’s then president, Roh Moo-hyun, Mr Kim looked hale enough—by the standards of a man with a podgy, grey demeanour.

Perhaps something is up this time. Neither hide nor tousled hair of Mr Kim has been seen since August 14th. His absence was conspicuous at the huge celebrations marking the 60th anniversary of North Korea’s founding. They included a vast militia parade on September 9th.

Mr Kim became head of the armed forces in 1991, three years before the death of his father, Kim Il Sung, and the world’s first communist dynastic succession. Until now, Mr Kim appears not to have missed a single military parade. A foreign medical team, this time Chinese, is now back in the capital.

Some analysts have blamed Mr Kim’s health for recent setbacks in the “six-party process” meant to wean the regime off its nuclear weapons in return for aid and security guarantees. The current phase of the talks has to do with a proper accounting of the North’s nuclear programmes, in return for which America will drop North Korea from its blacklist of state sponsors of terrorism. Yet the information that North Korea has so far produced is underwhelming: it fails to cover details of existing plutonium weapons, a possible programme for enriching uranium, and proliferation activities in the Middle East.

North Korea is indignant at demands for intrusive inspections: it insists that America drop it from the blacklist before agreeing to a verification protocol. In August it stopped disabling its main nuclear facility at Yongbyon and even threatens to undo the dismantling. North Korea has also suddenly put on hold a recent agreement to launch an official investigation into the fate of Japanese citizens kidnapped during the 1970s and 1980s and taken to the North. One Western diplomat, present at a weekend meeting in Beijing between envoys from America, Japan, China and South Korea, says these four parties are “at a loss over where to go next”.

Yet for North Korea, intransigence is the norm. Its negotiating style is marked by bluster, foot-dragging, blackmail and brinkmanship. Indeed, the same diplomat notes that the North’s recent actions have been “tactically cautious”: for instance, there is no sign that Yongbyon’s dismantlement is about to be fully reversed. In their talks over abductions, the Japanese think their counterparts acted entirely rationally—from a North Korean perspective. One senior Japanese official with long dealings says that North Korean diplomats do nothing without directions from the highest level. The Dear Leader, then, if he is ill, appears to be making clear decisions.

Still, speculation turns naturally to Mr Kim’s succession plan, for if he has one, he has not disclosed it. His possible heirs are little known, and include three sons and his brother-in-law. None has devoted the years spent by Mr Kim in preparing to take over. His eldest son was caught trying to enter Japan in 2001 on his way to Tokyo Disneyland; he subsequently lived and gambled in Macau. Of the other sons, both in their 20s, one is known only for his obsession with Eric Clapton, a rock star. Perhaps Mr Kim, a family man, intends that none of his relatives should be around on the day when international prosecutors come calling on the leaders of a regime that has starved, tortured or worked to death in prison camps many hundreds of thousands of its own people.


Wednesday, September 17, 2008

FTSE promotes South Korea to developed market

South Korea will be promoted to developed-market status from advanced emerging, global index provider FTSE Group said late Wednesday, in a move that will likely attract more fund flows into the Asian country.

The upgrade comes after FTSE surprised global fund managers last September by choosing to upgrade Israel to developed-market status instead of South Korea.

South Korea's promotion should lead to increased funds flows into its stock market, said Jerry Moskowitz, president of FTSE Americas, in an interview with MarketWatch.

"We estimate that just with the FTSE indices alone, it could be high as $10 billion, but we believe other index companies will follow," Moskowitz said. "The net could be as high as $25 billion of new funds flowing into the Korean stock market."

FTSE also said Wednesday that red-chip stocks, which are currently included in Hong Kong, a developed market, will be moved to China, a secondary emerging market. Red chips are Chinese companies trading on the Hong Kong exchange, but that have at least 50% of their revenues generated from business in mainland China.

The changes announced Wednesday will be implemented in the FTSE Global Equity Index Series in September 2009.

FTSE currently classifies countries as developed, advanced emerging, secondary emerging, and frontier.

Taiwan, which is being considered for promotion to developed market status from advanced emerging, will remain on FTSE's so-called watch list. The list includes countries that FTSE is actively monitoring for possible promotion or demotion.

While FTSE praised Taiwan for its progress on implementing market reforms over the past 12 months, the index provider said that no change in Taiwan's status will be made at this time.

Pakistan has been removed from the FTSE's watch list and will no longer be considered for possible demotion to frontier market status from secondary emerging.

What does the upgrade mean for South Korea?

The market reaction to South Korea's upgrade was muted Thursday, as global markets continue to be dominated by unprecedented turbulence.

In Seoul, the Kospi index fell 2.3%. It is down 27% this year.

Still, analysts say FTSE's upgrade of the market will likely be a major positive in the long term.

"Given the current deep undervaluation due to the ongoing global financial market turbulence, concerns over a local forex crisis and capital concerns, even a small positive, such as the potential upgrade, could trigger a rally," said Clemens Kang, a strategist at Woori Investment and Securities, in a research note.

Also, funds benchmarking advanced markets are ten times larger than those benchmarked against emerging markets, indicating that substantial capital inflows are possible for the Korean equity market, Kang said.

However, Kang cautioned: "We believe the upgrade will have only a limited near-term impact on the Korean market, as any net increase in foreign capital will likely begin after" the first quarter of 2009.

Analysts at Hyundai Research said that, judging from Israel's experience, Korea can expect a re-rating of market valuations as well as reduced market volatility when it's included in the developed market index.

"We believe large caps should benefit relatively more when Korea is classified as a developed market, given the attributes -- conservative, long-term based investment -- of global investment funds that will likely flow in," Hyundai Research said.


Kim Yong-Il's consort: a key player in North Korea?

SEOUL, South Korea - Kim Jong Il's companion and former secretary is emerging as a key player in the communist nation after the autocratic leader's stroke.

South Korean officials are keeping a close eye on Kim Ok amid some intelligence reports that she's not only nursing the ailing leader but also is signing official documents on his behalf.

Experts believe the communist leader is retaining a firm grip on power, running the nation from his bed with the help of military and communist party chiefs in line with the nation's "songun," or military first, policy. But they are not discounting the role of the woman who is seen by some as the de-facto first lady.

"She is the closest person personally to Kim Jong Il," said Marcus Noland, a North Korea expert at the Peterson Institute for International Economics in Washington. "In some ways, she's the one guarding the bedroom or hospital door. She would be in a position to convey his preferences."

Kim, 66, reportedly suffered a stroke last month and is recuperating following emergency brain surgery — though North Korean officials deny the communist leader, who was last seen in public more than a month ago, is ill.

The notoriously secretive nation bars ordinary citizens from Web access and most cannot make international phone calls. Late founder Kim Il Sung engineered a cult of personality that encompassed himself and his son, and which tolerates no criticism or opposition.

Kim Jong Il was groomed for 20 years to take over as leader, finally assuming the mantle after his father's death in 1994 in the communist world's first hereditary transfer of power. He has three sons — Jong Nam, Jong Chul and Jong Un — but does not appear to have anointed any of them as his heir-apparent.

The longer Kim — known to have diabetes and heart disease — remains bedridden, the greater the likelihood of a power vacuum, analysts say.

"If his health problem prolongs, some internal feuding for power will likely occur," said Kang Sung-yoon, a North Korea expert at Seoul's Dongguk University.

And Kim Ok may be poised to fill any void. Experts speculate the North Korean leader's dependence on her during his illness may further bolster her political clout.

"If Kim Jong Il can't communicate with others, her role will be larger," said Kang Jung-mo, a North Korea expert at Kyung Hee University.

Little is known about her. Kim Jong Il is believed to have had three wives before taking Kim Ok as his consort several years ago. She reportedly accompanied the leader on his secret visit to China in 2006.

She is said to be a pianist in her 40s who has served as the leader's secretary since the 1980s.

Furthering the intrigue, Kim's late wife, Ko Yong Hi, — mother of his two younger sons — hand-picked Kim Ok to replace her when she was dying of cancer, according to South Korea's JoongAng Ilbo newspaper.

It wouldn't be the first time an Asian leader's companion has asserted herself. Mao Zedong's last wife, Jiang Qing — nicknamed "Madame Mao" — wielded considerable power in China until her downfall after Mao's death in 1976. And Chiang Kai-shek's wife, Soong Mei-ling, rose to prominence in Taiwan in her husband's twilight years.

Official information is scarce about North Korea, a country where the regime modifies history — including the year and location of Kim's birth — to suit Kim dynasty lore.

South Korean officials refuse to divulge their intelligence-gathering techniques but are known to rely heavily on so-called "human intelligence" — information gleaned from defectors, visiting dignitaries, aid workers, tourists and others able to get into the world's most-isolated nation. Such information can be fragmentary and difficult to verify, experts say.

One South Korean intelligence officer said agents are keeping a close eye on traffic about Kim Ok, including indications she is signing some official documents on his behalf. He spoke on condition of anonymity, in line with department policy.

He said top military officers are likely carrying out key functions — but that Kim Ok probably wields more power than any particular individual.

South Korea's Unification Ministry said it has some intelligence on Kim Ok but cannot confirm reports on her growing influence. The South's National Intelligence Service also said it could not confirm the reports.

Kim's circle of advisers likely includes military and ruling Workers' Party officials, said Paik Hak-soon, an analyst at Sejong Institute in South Korea.

Paik noted the North's five top government organs — the National Defense Commission, the Korean Workers' Party Central Committee, the Korean Workers' Party Central Military Commission, the Standing Committee of the Supreme People's Assembly and the Cabinet — all have pledged their loyalty.

All five sent messages on the 60th anniversary of North Korea's birth praising Kim as a "matchless patriot and an unparalleled great man who has led our republic along the road to victory and glory."

Top officials typically do not offer such effusive congratulations for the North Korean anniversary, and the gesture appears to be an overt pledge that Kim can count on their backing, experts said.

When Kim Jong Il dies, it may be days, weeks — or even months — before the public knows, Noland said. "Then, figuring out who is running the country could take months if not a year."

On Wednesday, South Korean Prime Minister Han Seung-soo ordered the government to stop leaking intelligence about Kim, saying the rampant speculation could end up provoking Pyongyang.

"But we speculate because the North Korean government makes its living depriving outsiders of information," said Nicholas Eberstadt, a researcher at the Washington-based American Enterprise Institute.


Saturday, September 06, 2008

LPGA's "bad idea" (Korean)


Friday, September 05, 2008

LPGA backs down on English requirement

Under increasing criticism, the LPGA Tour on Friday backed off plans to suspend players who cannot speak English well enough to be understood at pro-ams, in interviews or in making acceptance speeches at tournaments.

LPGA Tour commissioner Carolyn Bivens said she would have a revised plan by the end of the year that would not include suspensions, although fining non-English speakers remains an option.

Bivens disclosed the tour's original plan in a meeting with South Korean players two weeks ago at the Safeway Classic in Portland, Ore., Golfweek magazine reported. The policy, which had not been written, was widely criticized as discriminatory, particularly against Asian players.

The LPGA membership includes 121 international players from 26 countries, including 45 from South Korea. Asians won three of the four majors this year.

"We have decided to rescind those penalty provisions," Bivens said in a statement. "After hearing the concerns, we believe there are other ways to achieve our shared objective of supporting and enhancing the business opportunities for every tour player."

The reversal was quickly hailed by two California lawmakers who challenged the original policy.

State Sen. Leland Yee, a Democrat from San Francisco, had asked the Legislature's legal office to determine whether the English policy violated state or federal anti-discrimination laws. If it was deemed legal, Yee said he would have pushed for legislation banning such policies in California.

The LPGA Tour plays three events in California, including its first major championship.

"I'm very pleased that the LPGA saw the wisdom of the concerns that we raised," Yee said. "It's a no-brainer for those of us who have been the recipient of these kinds of discriminatory acts."

State Assemblyman Ted Lieu, a Democrat from the Los Angeles area, said he would target corporate sponsors if the LPGA persisted with its English requirement.

"I'm pleased they have come to their senses," he said.

Bivens' announcement came two hours before the Asian Pacific American Legal Center planned a news conference in Los Angeles to demand the LPGA overturn its policy.

"Until they completely retract it, issue an apology to the players and the fans, I think we'll remain very concerned and interested in what happens," said Gerald D. Kim, a senior staff attorney for the center. "The LPGA has gone about this totally the wrong way."

One of the tour's title sponsors, State Farm, already weighed in this week by saying it was "dumbfounded."

"We don't understand this and we don't know why they have done it," State Farm spokesman Kip Diggs told Advertising Age on its Web site. "And we have strongly encouraged them to take another look at this."

Bivens said the tour will continue to help international players through a cultural program that has been in place for three years and offers tutors and translators.

Earlier this week, Bivens sent a 1,200-word memo to the LPGA membership to outline the goal behind the new policy. She said players would never be required to be fluent or even proficient in English, but rather would be asked to get by with the basics of the language.

She argued that international players who could communicate effectively in English would improve the pro-am experience, sponsor relations and could help land endorsements for the players.

"We do not, nor will we ever, demand English fluency, or even proficiency, from our international players," she wrote.

"To the contrary, we are asking that they demonstrate a basic level of communication in English at tournaments in the United States in situations that are essential to their job as a member of the LPGA Tour."

Yee said he understood the tour's goal of boosting financial support, but disagreed with the method.

"In 2008, I didn't think an international group like the LPGA would come up with a policy like that," Yee said. "But at the end of the rainbow, the LPGA did understand the harm that they did."

The lawmaker said he will continue with his request to the Legislative Counsel's Office, as a way to prevent similar policies in the future.

Lieu said the LPGA's explanation made it seems as though the tour felt it more important to socialize with sponsors than to play golf.

"If you're a sports fan, you should be outraged," Lieu said. ◦

Monday, September 01, 2008

South Korean Preisdent Pardons CEOs

THE leaders of South Korea’s conglomerates or chaebols have long acted as if they were above the law. Kim Seung-youn, chairman of Hanwha, an explosives, construction and insurance group, confessed last year to beating bar workers at a building site with the help of his own goons. He was retaliating after his son was hurt in a scuffle. After a few months in jail, Mr Kim was released on health grounds, and was soon back at his desk running Hanwha. This week, to mark the day South Korea celebrates liberation from Japanese colonialism, the president, Lee Myung-bak, pardoned him and 341,863 others.

They included Chung Mong-koo, the chairman of Hyundai, the world’s sixth-largest carmaker. Last year Mr Chung was convicted of embezzling about $90m from his company, and sentenced to 300 hours of community service. Chey Tae-won, of SK Group, a telecommunications, oil-refining and construction chaebol, was convicted in 2003 of illegal share swaps designed to keep the most lucrative parts of the group in his family’s control. Mr Chey did not serve any time in prison, but was given a suspended sentence. Now Mr Lee has pardoned him, too.

President Lee came to power earlier this year pledging to raise average national income per head to $40,000 a year and to achieve 7% annual economic growth. He has appealed to chaebol leaders to boost investment and jobs. But at his inauguration Mr Lee also promised to back “business leaders who are transparent and put in an honest day’s work”. So the pardons for the three chaebol bosses look a bit odd. Many South Koreans see them as proof that the wealthy are held to different standards from those applied to ordinary citizens.

Mr Lee, a former chief executive of ten different Hyundai group units, has himself been haunted by allegations that his past personal business dealings were less than pristine, particularly with regard to his family’s property sales and the failure of an investment firm he helped found. One of Mr Lee’s prospective ministers and several presidential aides have had to resign after questions were raised over their ethics. The first cousin of the president’s wife was arrested this month after receiving money from a man who wanted to clinch a parliamentary nomination from Mr Lee’s ruling party. The president’s approval rating hovers around 20%. Pardoning business bigwigs will not help it rise.