President Kim Dae-jung of South Korea sacked most of his cabinet yesterday and appointed a new team of ministers, including a pro-reform finance minister and a unification minister who strongly favours closer ties with North Korea.
President Kim's surprise re placement of the government is apparently intended to sustain the sweeping economic reform movement he inaugurated after his election in the autumn of 1997 and to prepare for parliamentary elections next year. It also comes on the eve of critical peace moves on the Korean peninsula.
The ministers of finance, commerce, defence, education, health, environment, justice, construction and transportation, culture and tourism, labour and national unification all were replaced. South Korea's economy grew by more than 4 per cent in the first quarter due to surging factory output, an unexpectedly high growth figure which led many observers to predict a loss of momentum in the reorganisation of the country's heavily-indebted conglomerates, or chaebols.
However, Mr Kim said reforms would accelerate rather than slow down. "We have to focus completely on reforms this year," he said in a statement from the Blue House, the presidential headquarters in the capital, Seoul. "The government has to ask the chaebols for a thorough restructuring. The International Monetary Fund and other foreign organisations all point out that the top five chaebol reforms are not yet sufficient. We have to induce the top five chaebols to reform."
The IMF, which arranged a $58.35 billion bailout to rescue South Korea's economy from collapse in 1997, works closely with the Seoul government on reforms. The President gave the key job of Finance Minister to his chief economic secretary, Mr Kang Bongkyun, a strong supporter of eliminating non-viable units in the big family-run chaebols which dominate the economy.
Mr Kang caused some controversy last month when he warned that stubborn chaebols could face debt workout programmes that could deprive owners of management control.
President Kim's new Unification Minister, Mr Lim Dong-won, takes office at a critical time for relations with North Korea. As chief presidential secretary on unification affairs he travelled to Tokyo at the weekend for trilateral talks with Japanese officials and the former US defence secretary, Mr William Perry, who is to visit North Korea today. Later this week, Mr Perry is expected to visit South Korea with outline proposals for an overall peace plan.
The shuffle precedes President Kim's visit later this week to Moscow, which has reportedly offered Russian submarines as payment for $1.7 billion debt it owes South Korea. He is also expected to discuss President Yeltsin's request for a place in the peace process which involves North and South Korea, China and the United States. The South Korean leader also hopes to get support for the "sunshine policy" from Russia, once North Korea's closest ally.
Mr Lim has been an advocate of this policy, which is designed to remove slowly the barriers which have existed on the peninsula since the Korean War.
The Prime Minister, Mr Kim Jong-pil, was not affected by the shake-up as he is a partner in South Korea's coalition government with President Kim, the first leader elected from the opposition since military rule.
Mr Kim Dae-jung promised in 1997 that he would adopt a parliamentary cabinet style of government half way through his five-year term, and a showdown on this unresolved issue is expected in August. Mr Kim Jong-pil withdrew from the presidential race and threw his support behind Mr Kim Dae-jung in exchange for that promise.