895B.13/6–951: Telegram
The Ambassador in Korea (Muccio) to the Secretary of State
1033. Re Embtel 1019, June 6; 959, May 16; 892, April 23 and Toeca 40, March 14.1 PriMin and MinFin finally got approval for won 6,000 to 1 dollar counterpart rate over strong opposition of Pres who gave his approval with reluctance. Long impasse reached with ROK over counterpart rate and press clamor against revision of rate created strong feeling on part of public, as well as in govt circles, that increase in rate and nonpayment of “UN loan” are factors which will lead to further inflation. In order get full ROK support for measures to combat inflation, incl pricing and prompt sale of imported supplies at realistic counterpart rate, and to dissipate any feeling on part of [Page 528] public that Korea’s financial woes are caused by UN–US policies rather than by deficiencies ROK Govt, believe wld be great psychological polit value if US, fol recent establishment new counterpart rate authorized: (1) partial settlement of won advances to UN forces by payment to Korea of dollars recd from personnel in exchange for won and (2) application of ECA counterpart fund balance on Govt overdraft. Public criticism of MinFin for his vigorous tax collection program is severe. Higher rate for imported aid goods also extremely unpopular with powerful groups as recent press and assembly comment indicates. Consider it essential that strongest possible support, by way of apparent accomplishments, be given soonest to those few officials who appear to recognize validity US recommendations and are willing cooperate in instituting more adequate fiscal and monetary policies.