South Korean Internal Crisis Explained

April 8, 2018




  1. Former president of South Korea, Park Geun Hye has been convicted for 24 years for corruption. She was found guilty of abuse of power and coercion.

 Important Concepts :


Chaebols are at the centre of the Korean presidential crisis and thus it becomes of utmost importance to understand them and their deficiencies before heading towards the crisis.

  1. Chaebols: 

    • The word comes from the combination of the characters for “rich” and “clan.” It applies to large groups of interconnected companies that are usually dominated by a wealthy family. South Korea has several, but the best known outside the country are Hyundai, LG and Samsung. Others include Hanjin, Kumho, Lotte and SK Group.

    • Chaebols came to power after the Korean war. After the war, Government provided relief funds and cheap loans to businessmen who promised to rebuild the country. They were also protected from international competition. The recipe proved to be potent: Chaebol played a major role in South Korea’s rise as an industrial giant in the following decades.

  2. Problems created by this system of Chaebols:

    1. Widespread inequalities.

    2. Exploitation of labour by Chaebols with low pay and no added benefit.

 South Korean Presidential crisis:

  1. Jay Y. Lee, the heir to Samsung empire was attempting to push through a corporate merger  seen as critical to his plans to succeed his father as chairman. However, the shareholders fought the move. The standoff broke as the South Korea's government-controlled pension fund, which held the shares to cast the deciding vote, endorsed Mr. Lee’s deal. 

  2. Within months of this, Samsung donated $17.4 million to two foundations controlled by the president’s confidante, Choi Soon-sil, and $6.2 million for the training of Korean equestrians, including Ms. Choi’s daughter.

  3. These donations were seen as a quid pro quo (a favour or advantage granted in return for something) which led to impeachment of Park Geun Hye. The Park scandal has put recurring collusion between big business and government in South Korea under intense scrutiny and could reshape the nation’s flawed, young democracy. 


Impact of South Korean crisis on India:

  1. South Korea is a partner in various schemes of the Government like Smart Cities, renewable energy, smart grids, power information and technology, transmission and distribution of electric power, etc. Political instability in South Korea can impact the growth of these projects.

  2. South Korean Industrial conglomerates have invested money in India to the tune of 4.5 billion dollar by 2017. If the crisis leads to witch hunt against Chaebols, this will lead to reduced investment in India.

  3. South Korea has been an important partner in our Act East policy. Our trade with it has shown remarkable increase of 70% between 2010 and 2011. Thus, these crisis will impact both our geopolitical and geo-economic interests. 


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