South Koreans Worried About Obama

With all the gush about Obama in the news it is difficult to separate the fat from the meat. Even the financial news sections have shown no immunity and have started writing stories based in fantasy (such as claiming that East Asia is happy he, not McCain, won) — they have apparently elected to believe their own pre-election stories about an economic disaster and have pinned their hopes on the ambiguous notion of “change” that Obama campaigned on. That is not to say that there are no financial problems in the world, there are.

Those problems are simply not of great concern to the US. The US economy is not about to fall apart, indeed it has already taken appropriate measures to ensure its well-being. With a $14 trillion GDP behind it, the US can generally take care of itself. The sum total of all of Europe’s GDP is far less than that of the US, however, and its exposure runs far deeper into much scarier places than any of the problems in the US. The problems Europe faces are severe, particularly Eastern Europe. Eastern Europe was propped up as a developing economy model by Western European banks, financed largely through the carry trade in Swiss Francs and Japanese Yen (educate yourself: Investopedia, Forbes, Motley Fool, Wikipedia). This says nothing of the problems East Asia will face as exports suffer a drastic decline.

The focus of this article is not finance specifically (I’ll write another one about that later), but South Korean worries about Obama as the next American President and, more broadly, Democratic control of the Congress. The concerns South Korea has expressed over an Obama presidency must be viewed in relation to a broader global cool-down, so I’ve mentioned just how broad the cooldown is, and tried to highlight how America will (as usual) be the best place to either be or be doing business with during the global economic correction. It is important to remember that regardless of how many individual’s personal routines are interrupted or how scary that is this is only a market correction so long as it does not lead to another World War.

South Korea considers it a great foreign and economic policy success to have recently negotiated and signed a free-trade agreement (FTA) with the US. South Korea is worried that Obama and a Democratic Congress will reneg on the promises the Bush administration has made with them. Obama has been very outspoken about his opposition to FTAs, NAFTA being one of his principle targets in the Democratic primary race against Clinton. Once he spoke, he couldn’t exactly stop speaking, which has made his temporarily advantageous campaign stance against something that is almost universally good — FTAs almost always benefit everyone in the long-term — into something he will need to be perceived as acting in accordance with. South Korea is going to be his first test. South Korea needs this agreement with the US, particularly as its European export market is expected to fall through the floor over the next year. The Bush administration, with a longer-term relationship with a potentially reunited Korea in the future in mind, was accomodating with an FTA. Obama could upset that, and this has South Korea very worried.

The outcome is not of concern only to South Korea, however. All of East Asia and much of the world will be watching to see how the US Congress and the new President-elect will deal with this issue. If he invalidates deals made under the Bush administration, he could severely damage the American image of reliability which has been forged by over two centuries of solid foreign policy consistency, each president following in the footsteps of the last (several) to maintain continuity and consistency so that everyone knew what they were dealing with when they dealt with America. This has played no small part in allowing America to maintain its role as the prime geopolitical pivot and the only remaining world leader.

Foreign policy is the only area the President really has much control over as an individual office. Breaking deals that were just made is a rough way to start things out.

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