By Yoon Ja-young
Staff Reporter
Finance and Strategy Minister Kang Man-soo is in a quandary with pressure growing for his resignation.
His offer to pay a courtesy call on Chung Se-kyun, chairman of the largest opposition Democratic Party was rejected Tuesday.
The Citizens' Coalition for Economic Justice held a protest rally to press for Kang's resignation, saying Kang should be held accountable for ``a misguided currency policy, and the growth-oriented economy policy.''
The pressure grew after President Lee Myung-bak decided to retain him in his Cabinet shuffle announced Monday. Kang survived at the cost of Vice Finance and Strategy Minister Choi Joong-kyung.
Cheong Wa Dae said Choi was dismissed as he was held responsible for the chaos on the foreign exchange market.
Choi was a hawkish policymaker who believed in market intervention. The belief, however, made him squander trillions of won by intervening in the currency market in 2004, while trying to pull up the won-dollar rate to help exporters. Choi, who was heading the bureau of international finance at the ministry at the time, moved on to the World Bank after incurring the huge loss.
His prior experience didn't change him, and he continued to support a weaker won policy after being picked up as vice minister under the Lee administration.
While it is evident that the weaker won, amid global inflation, drove the economy into a quagmire, many are wondering why Choi should take full responsibility, as the policy was a product of a Kang-Choi collaboration.
Kang made a number of verbal interventions into the market despite concerns, on the firm belief that a weak won was needed to boost exports.
The mechanism was natural for Kang who started career as government official in 1970s when the country was experiencing double-digit growth on explosive exports. A decade, however, has passed since he quit his job at the ministry after the Asian financial crisis in 1998. Economists have shown that a weak won doesn't boost exports that much now, while Kang was seemingly sticking to the old mechanism.
The weak won policy at the wrong time only added to inflationary pressure in the country which heavily depends on imports for energy and food. Consumer prices rose 44.6 percent in May from a year ago.
The minister is known as a strong willed man, who pushes to implement policies. However, the resoluteness often put him in conflict with the central bank and financial regulators. The Bank of Korea was annoyed by his remarks calling for the lowering of the interest rate, but he continued frustrating other government financial pillars with his uncalculated straightforward remarks that had not been agreed upon.
The ministry also had to issue letters of explanation at various times to withdraw controversial remarks Kang made on various issues. He recently revealed his intention to ease real estate taxes on homeowners in a TV interview, but withdrew the statement only a few hours later after the criticism that it could stir speculation on the real estate market.
Not only the opposition party but also some lawmakers in the governing Grand National Party have asked for the removal of Kang from office amid the ever worsening economy. Cheong Wa Dae, however, explained that ministers shouldn't be changed too frequently in order to enable policy consistency.
Kang and Lee have had a special relation for nearly 30 years, going to the same church ― Somang Church in southern Seoul, which is known as the church of the elite. He is known to have contributed much to the designing of economic pledges made by the President, including the high growth-oriented 747 pledge, which aimed at 7 percent economic growth rate.
While some are supportive of him, saying he should be given a chance, others are wondering if Kang, who survived at the sacrifice of his junior Choi, should continue as head of the economic control tower in a Confucian-oriented culture which considers it a virtue of a leader not to pass blame onto a junior.
``The economic team under Kang set 7 percent economic growth target despite other economic think tanks' estimation of around a 4 to 5 percent outlook and pushed for short-term economic boost policies,'' said the Citizens Coalition for Economic Justice, a leading NGO in the country. It said such growth-driven policies suited the 1960s or '70s. ``He has already lost the trust of market participants, due to the anti-market, government-controlling policies,'' it said. The NGO pledged to continue calling for Kang's resignation.