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creating confusion in the markets.

Speaking about the current economic crisis on October 21, President Lee Myung-bak said, “In general, the current situation is more serious than the IMF crisis,” referring to the 1997-98 Asian financial crisis that forced South Korea to accept what was perceived by many within the nation as a humiliating bailout from the International Monetary Fund.

In a Cabinet meeting held at the presidential office of the Blue House, Lee said, “At the time, the crisis was in Asia. But today the crisis is global. This is not a situation in which we can overcome the crisis on our own.”

Lee’s remarks were seen as unusual because he has previously voiced optimism when speaking in public about the economy. His remarks can be interpreted to mean that it was easier for South Korea to escape the effects of the Asian financial crisis because, even though the East Asian region was in crisis, the global economy was in good shape. It will not be as easy for the South Korean economy to recover this time because the entire world is facing economic difficulty and South Korea’s export-dependent economy is sensitive to global economic trends.

Since the eruption of financial turmoil in the United States, Lee has repeatedly expressed optimism about the economy in his public remarks, saying that the current situation is different from the IMF crisis of 1997.

In a “dialogue with the president” aired by KBS 1 TV on September 9, when rumors of a “September crisis,” fear that foreign investors would pull their money out of the markets, were swirling about, Lee said, “There are hardships, but no crisis whatsoever.”

Since then, Lee has emphasized that the fundamentals of the South Korean economy are sound, saying again on October 7 and October 13 that the current crisis is different from the IMF crisis.

Such remarks were viewed as an attempt to calm the psychological fears that had descended upon the local financial market, which was showing extreme volatility in the face of the global financial turmoil. In a dinner meeting on October 2 with floor leaders of the ruling and opposition parties, Lee asked the political leaders “not to inflate the sense of uneasiness.”

Of course, Lee did not downplay concerns about the economy and even remarked that the current situation is not an easy one. In an advisory meeting on the national economy on October 20, Lee said, “At the time of the IMF crisis, the crisis was confined to Asia. So it was a situation in which we were able to overcome the crisis on our own. But recovery won’t be as easy today as the global economy is falling into a recession.”

A Blue House official said, “President Lee’s perspective on the current situation has been consistent.” He said that the president has conveyed that the current situation is different from the one in 1997-98, and that recovery will be more difficult this time.

President Lee has tended to voice his optimism about the domestic situation while expressing a cautious view about the global situation, voicing his optimism to the public, while discussing the situation as a crisis when speaking with government officials.

However, it is a fact that Lee’s position has vacillated as evidenced by his remarks about the current economic situation. In particular, Lee’s talk of a crisis on October 21 was believed to have affected the Korean currency’s decline in value against the U.S. dollar on the same day.

Choi Jin, the director of the Institute of Presidential Leadership in Seoul, said when the economy is having difficulty, President Lee needs to refrain from talking about it and offer some basis for hope, rather than expressing vague optimism or pessimism.

Please direct questions or comments to [englishhani@hani.co.kr]