Pity poor Korea--and not, anymore, just the brooding North. On both sides of the feared demilitarized zone (DMZ), trends have taken a sharp turn for the worse. Start with Seoul: When the Asian financial crisis washed over it, South Korea's economy simply collapsed. The won lost more than half its value against the dollar, the Seoul stock market plunged 70 percent, and the crisis laid bare the cruel fact that South Korea resides on the edge of bankruptcy, and will remain there for some time to come. The country reportedly has more than $150 billion in foreign debt coming due in the next year or two, and just a few billion in currency reserves to pay it back.
On the political front, the December election of opposition candidate Kim Dae Jung was a triumph for South Korean democracy. (In a move delicious for its symbolism, North Korea angrily refused to allow South Korean contract workers in the North to cast absentee ballots, calling the act an infringement of its sovereignty.) But Kim's party is a minority in the National Assembly, the urgent need for painful reform confronts his left-leaning political base, and South Korean politics may well be stuck in an erratic period of realignment for some time. Gridlock, and resulting political unrest, are hardly out of the question.