The 7th Workers’ Party Congress

The 7th Workers’ Party Congress concluded on May 9. The four-day event was marked by Kim Jong-un’s title being elevated to the Chairman of the Korean Workers’ Party (KWP). His previous title was the First Secretary of the KWP.

Although 120 foreign journalists were invited to Pyongyang for this event, coverage was limited due to constrained access.¹ The reporting, albeit hampered, indicates that Kim reaffirmed his policy of byungjin² and announced North Korea’s five-year economic plan with a special emphasis on addressing North Korea’s electric power shortage problem.³ Eight North Korean officials who also attended the 6th Workers’ Party Congress in October 1980 made appearances: Kim Yong-nam (President of the Presidium of the Supreme People’s Assembly, age 88), Kim Ki-nam (Party Secretary of Publicity and Information, age 87), Park Pong-ju (Premier, age 77), Choi Yong-rim (Former-Premier, age 88), Oh Keuk-ryul (Vice Chairman of National Defense Commission, age 85), Ju Kyu-chang (Former Director of KWP Machine-Building Industry Department, age 88), Yang Hyung-seop (Vice Chairman of the Presidium of Supreme People’s Assembly, age 91), and Tae Jong-su (Chief Secretary of the South Hamgyong KWP Committee, age 80).⁴ In total, 3,467 members attended the event which was reported to have cost the North Korean government approximately USD $200 million.⁵

The Standing Committee of the Party’s Politburo now consists of five members: Kim Jong-un, Kim Yong-nam, Hwang Pyong-so, Park Pong-ju, and Choe Ryong-hae, among whom the last two are newly elected.⁶

In response to the event, the Blue House stated that “if North Korea continues to develop nuclear weapons, it will fail to undergo economic development or improve the lives of its citizens. Rather, it will face stronger sanctions and more isolation.”⁷
 

South Korean Approach to Foreign Policy^{8, 9, 10}

With the 7th Party Congress in the backdrop, there is growing interest in the foreign policy positions of three major parties in the National Assembly. On North Korea, for instance, the three parties seem to hold divergent views: the TDP and the PP both favor engagement with North Korea while the NFP supports President Park’s hardline approach.

Meanwhile, floor leaders of the three parties held a meeting to organize the 20th Assembly, which will hold its first session on May 30. They agreed to maintain the 18 standing committees and to elect the speaker and committee chairs by June 7 and 9, respectively. However, they have not yet reached an agreement on the committee chair assignments. Traditionally, the largest party holds the speakership and the opposition leads the judiciary committee. The problem is that the TDP is both the opposition and the largest party. Absent any changes until June 7, the next speaker is likely to come from the TDP.¹¹ The NFP is arguing that it should lead the judiciary committee if the TDP takes the speakership. The PP supports the NFP’s position.¹²
 

Party Approval Rating^13,14

Source: Gallup Korea Daily Opinion

Restructuring

The government and the Bank of Korea (BoK) have yet to reach an agreement on the financial arrangement involving the restructuring of troubled sectors. The government and the BoK appear to agree, in principle, that the troubled banks (i.e. Export-Import Bank of Korea and Korea Development Bank) must be financed through both direct and indirect means. But while the BoK prefers creating a recapitalization fund which will be backed by government guarantee,¹⁵ the government believes that such guarantees will require time until the 20th National Assembly can act. It is unclear, however, exactly when the Assembly can or will act, given the split among the three major parties which hold different positions on this issue. In addition, there appears to be a lack of consensus regarding the BoK’s direct financing option with the BoK officials voicing concern over the risk exposure problem.¹⁶

As the government and the BoK work through their differences to find a solution to this problem, some companies are seeking ways to preemptively restructure their businesses. Doosan has been off-loading many of its non-core assets since August 2014 to amass over KRW 3.6 trillion, and announced its latest sale of HRSG to GE Power for KRW 300 billion on May 10.¹⁷

The government is also mulling over the need to restructure certain overseas development operations among state-owned companies, such as the Korea National Oil Corporation (KNOC) and Korea Gas Corporation (KOGAS). The Ministry of Trade, Industry and Energy (MOTIE) commissioned a study on this issue and held a public hearing on May 20.

The commissioned report suggests four options: 1) merge KNOC and KOGAS, 2) move the overseas development operation from KNOC to KOGAS, 3) sell KNOC’s overseas development operations to domestic companies, or 4) build a daughter company specialized in operating overseas asset.¹⁸ Privatization is considered to be an ideal but unrealistic option due to the lack of experience in the private sector on overseas development.¹⁹ The authorities appear to be leaning towards off-loading the overseas development operation to KOGAS.²⁰
 

President Park in Tehran

President Park visited Iran on May 1-3 as the first South Korean president to do so since the two countries established diplomatic relations in 1962. In addition to adopting a Joint Statement on the Comprehensive Partnership, which reaffirmed South Korea and Iran’s commitment to nuclear non-proliferation and denuclearization, President Park also landed 30 economic cooperation projects worth USD $37.1 billion.²¹

Although some supporters claimed that President Park’s visit to Iran could be a way to pressure North Korea,²² others expressed caution about the signal this visit may send to other Gulf nations, such as Saudi Arabia. This concern, in part, explains Prime Minister Hwang Kyo-ahn’s visit to Saudi Arabia on May 19.²³
 

Approval Ratings for Potential Presidential Candidates²⁴

Source: Gallup Korea Daily Opinion

Policy on North Korea by Major Party in South Korea