Foreign Relations of the United States, 1961–1963, Volume XXII, Northeast Asia

249. Letter From the Ambassador to Korea (Berger) to Secretary of State Rusk⁰

Seoul, December 15, 1961.

Dear Dean: I have now had time to reflect on the situation here in the light of Park Chung Hee’s visit to the United States, and am able to send you the appraisal you requested.¹

2. I believe the political situation is now fairly well stabilized, and we can count on this continuing for at least six months. I would not yet venture to say it will remain stable until the election promised for May 1963 because there are still some uncertainties, especially in the economic field, but I think it possible. (All this presupposes that Park will escape an assassin’s bullet.)

3. I attribute this stabilization to five principal factors:

a. When the Junta took power in May almost no one knew who they were or what they were up to. They have now established themselves as a group of capable, energetic and dedicated men, determined to make genuine reforms, to lay foundations for honest and effective government, and devoted to the return of representative government. They have produced convincing evidence that they will not tolerate corruption, graft, bribes, smuggling, tax evasion, or political blackmail in government, military or civilian life. They are introducing long overdue reforms in agriculture, industry, banking, education, and social welfare. They are reorganizing public administration at all levels. While there is skepticism in some quarters that they will succeed, bitterness on the part of those who have been hurt, and criticism that in some respects they have moved too fast and often too arbitrarily, no honest person here now questions their motives, and most people are impressed with their dedication and an increasing number with the results already achieved.

b. The emergency stage of the revolution is now practically over, and the early atmosphere of tension and personal fear and insecurity has virtually disappeared. People are now beginning to relax and speak more freely, and the press, while still inhibited by self-censorship, puts out a surprising amount of critical comment. There are two main reasons for this improved atmosphere:

i. The government has announced there will be no further indictments after December 11 before the Special Revolutionary Courts, which hope to wind up their trials of those indicted prior to that date by February or earlier, and people who have not been charged for past offenses can now breathe easy.

ii. The government policy of amnesty or leniency toward all but principal offenders—in the interests of national unity—has been greeted with relief.

However, even though arrests from now on will normally require warrants, habeas corpus will be restored, and future trials will generally take place in the regular courts, the government is not yet ready to restore full “due process.” The right of peaceful assembly is still restricted by martial law; the midnight to 4 a.m. curfew is still in effect; and under a special law which went into effect December 11 persons who obstruct revolutionary tasks, initiate disturbance or civil war, or join anti-state organizations will be subject to court-martial. These may be subject to arrest without warrant and may not be protected by habeas corpus. Sentences for such activities may be as severe as death.

c. Chairman Park Chung Hee has established himself in Republic minds as a forceful, fair and intelligent leader who can be trusted with power, trusted to keep the revolution on the path of decency and moderation, and trusted to abide by the pledge he gave on August 12 to return to civilian government after the election in May 1963. Park, therefore, represents a most important link between the government and the people, and a most important stabilizing element in the situation. Moreover, the vigor with which Park has fought against factionalism in the Supreme Council has so far served to keep this endemic disease under control.

d. The bumper 1961 crop, the gradually accelerating economic revival since July, public works to help relieve unemployment, and the government’s farm reform measures are beginning to give new hope to the people. Earlier fears of inflation have somewhat subsided; civil servants, teachers and soldiers are looking forward to a promised pay increase in 1962; and the farmers, after an initial skepticism, are beginning to believe that perhaps this government is different from its predecessors and that there will be real reforms to the benefit of agriculture.

e. The public support given the military government by the United States and the friendly reception of Park during his visit to the United States have, however, been perhaps the decisive factors in stabilizing the situation. One Korean put it to me in a sentence, “Since the United States is impressed with Park, we Koreans value him more.”

4. As a result of the above any immediate danger of an attempted counter coup has receded; the government is growing every day in self-confidence; false rumors about corruption and incompetence in government, directed partly at American ears, have almost ceased circulating; and the threat that the government would be torn to pieces by factionalism has subsided.

5. Thus, as I see it, we shall enter 1962 with fairly promising prospects:

a. Our economic aid and loan and military assistance programs for FY 1962 will be more effectively used than by any previous government and should provide enough to produce substantial economic progress next year. There is the prospect that the International Development Association may soon make its first loan to Korea—for railway rolling stock. The West German government has just announced that $37 million in government and private funds will be made available for capital investment. If there is a settlement with Japan in the current negotiations—and the military government is determined to achieve this and is prepared to make reasonable concessions—this will bring great benefits to the Korean community and give them even more hope for their future. Indeed without a normalization of Korean-Japanese relations, I can see little hope for the economic future of South Korea.

b. The United States Operations Mission, under Mr. Killen’s able direction, is being rapidly whipped into shape, both in terms of policies and staff, so as to concentrate our aid and our energies in the vital sectors. Mr. Killen will also reduce his staff by September 1, 1962, from about 475 direct hire and contract employees to about 225. If more US economic aid and loans can be effectively utilized, Mr. Killen and I will not hesitate to ask for them.

c. Our United States military are encouraged by the vigor with which the government is eliminating corrupt practices in the military and reducing the volume of pilfering and diversion of military supplies. Improvements in auditing, inspection and inventory control in the ROK military establishment are also producing good results, and many of these practices are now being introduced in the civilian government sector.

6. Against this rosy background there are, however, certain potential dangers in the situation:

a. The government is trying to do too much too fast, as a result of which its calendar 1962 budget, now under consideration, is not only very much larger than last year but provides for an excessive amount of deficit financing. It is quite clear they are assuming the United States will make up most of this deficit. Mr. Killen and I are doing everything possible to persuade them to reduce their planned expenditures. We are making clear that we will take no responsibility for making up any such deficit as they have budgeted for nor bail them out if unwise policies set off a serious price inflation. We are asking them to come up with a more prudent and better balanced budget at this stage, and to resort to supplemental budgets if the situation develops more favorably than we now think. At this writing I cannot tell you what success we will have.

b. Since the low point of economic activity in June when only $7.4 million of foreign exchange were sold, there has been an encouraging improvement:

July	$10 million
August	$12.6 million
September	$21.3 million
October	$27.6 million
November	$32.9 million

Part of this rise is healthy, but part can be attributed to forward speculative buying in anticipation of price inflation, for the revival of production and trade has lagged behind foreign exchange sales. This forward buying, of course, has the advantage of bringing goods into the pipeline—now somewhat depleted as a result of the summer slump in foreign exchange sales—and will serve to moderate the upward price movement that it anticipates. Happily, foreign exchange reserves have been climbing, and this provides a potential weapon against inflationary pressures. To keep prices from spiralling in 1963, however, there will need to be a much faster pickup in production. It is not yet possible to say whether this will take place.

c. The Korean Business Community is still lukewarm, at best, in its support of the military government and its economic program. Among the pending problems assumed by the new government was a group of old cases of tax evasion, profiteering by illicit means and related offenses involving most of the country’s leading industrialists. This posed a real dilemma, since the offenses were so flagrant and well-known that they could not be allowed to go unpunished, yet the people and corporations concerned represented a very substantial portion of the industrial plant and experience essential to economic recovery and expansion. The government moved rapidly and forcefully to dispose of the problem and acted with moderation and understanding of the economic as well as the political issues which it entailed. The businessmen, however, after their initial fright, have realized the strength of their own bargaining position and have been jockeying for advantage, protesting their support for the government’s program but delaying the action and decisions that would start wheels turning. Success in dealing with this problem will require just the right combination of incentives and pressure and this combination has not yet been worked out.

d. Unemployment, underemployment, and low wages are still pervasive, and we are beginning to get a few reports of restlessness among urban workers. So far this has been held in check by stable prices, but if price inflation should get its head, there could be public demonstrations and strikes next year.

e. Factionalism, which has plagued Korean governments for hundreds of years, remains a latent threat to the stability of the government. That factionalism has been kept under control up to now is due largely to Park’s determination to fight those of his colleagues who are so motivated. He has been successful so far, and at the moment the situation is fairly quiet, but there may well be a renewal of factional fighting in the Supreme Council and it cannot yet be said with any certainty that Park will be able to contain it during the whole period of his government’s tenure in power.

f. Corruption, the other endemic disease of Korean governments, has been sharply curtailed, but there have already been a few confirmed cases of corruption involving military officers in the government, including some very close to those at the top. These have been immediately and severely dealt with, and Park hopes this will be a warning to others. There is good evidence that the great majority of leaders on the Supreme Council will not hesitate to punish any offender no matter how high. While leaders at the top are likely to keep their hands clean, the danger is that corruption will gradually begin to creep back in the lower military ranks of the Junta and among civil servants. The extent is not likely to be anything like as great as in the past, because people are being very much more careful. The outlook, therefore, is for less corruption, but those who engage in it will play for bigger stakes. Fewer but bigger scandals are therefore a possibility and could do damage to the good reputation of the government.

g. The educational community is in turmoil because of a radical educational reform that provides for a reduction in university and college intake from about 40,000 to 11,000 a year so as to reduce the total enrollment over four years from about 156,000 to about 44,000. There are a number of other educational measures, including the compulsory retirement of teachers and professors at 60, the organization of teachers and students into associations under government auspices, reduction in liberal art and expansion of technical education, engineering and science enrollment, scholarships for poor students (this for the first time), et cetera. These measures, some still tentative, have been applauded in some circles, but they have also engendered bitterness, criticism, and some resistance among those who have been hurt. There is general agreement among most Koreans that reforms are needed to get at profit-making “diploma mills,” bribery to get into and out of universities and inferior teaching, but in developing its programs the Ministry of Education has done too little spadework with those interested or affected, and in general has been pre-emptory in putting through its measures. There have already been two public protest meetings among university groups in violation of the government ban on meetings, and these have led to threats of prosecution, and there could be trouble from this quarter. The government is aware of this, is keeping the educational community under close surveillance, and is determined to act forcibly to break up any disturbance.

h. The government requirement that all voluntary organizations be investigated and cleaned up before they will be re-registered and allowed to function normally is still in effect. Trade unions, business and professional associations, charity, welfare, sports, and numerous other organizations are all involved. Many have already been cleared and are functioning normally, although subject to irksome surveillance. However, a good many organizations, still awaiting clearance, are operating in low gear. Dissatisfaction hits many groups and individuals, and here too, unless the situation is rectified this could become a breeding ground for trouble.

I have discussed this situation with a number of leaders of these organizations. With few exceptions they applaud the government’s efforts at reform and would support the government if given a chance. I have urged key government leaders to try to enlist their positive cooperation by consultation and by giving them more freedom of action, but while I have been thanked for this counsel and been assured it will be done, the government, and especially the ROKCIA, remains suspicious and fearful of organized groups, and improvement in the situation has been slow.

i. Political parties are banned, and unless government policy is changed they will not be allowed to become active until January 1963. However, politicians are meeting more or less secretly to plan their tactics and strategy. Most of them are waiting to see how the situation develops over the next six months. If it develops unfavorably they will continue to sit in the wings. If it develops favorably, many of them plan to offer their support and services to the government, hoping in such an alliance to get into the public eye in advance of January 1963 so as to pre-sent themselves as the leaders best able to carry on with the revolutionary reforms when the military government retires. We may assume that there are a number of military leaders who are toying with the idea of taking off their uniforms and running for office, and that they will not be averse to alliances with selected politicians whose reputations are not too tarnished. Factionalism in the Supreme Council could be enhanced by this development, because military leaders with political ambitions will be jockeying for position and may differ on which politicians and political groupings to join up with.

7. To summarize, I think there are good prospects for 1962, as well as dangers. We shall know a lot more in the course of the next three to six months. Meanwhile I think it safe to say that despite certain important shortcomings and certain dangers, the record of reform and improvement which has taken place is heartening and suggests we can go to Congress this spring in good conscience that this has been a constructive year and that our continuing massive support is well justified.

8. There are certain aspects of American aid policy based on world wide considerations and which do not take into account certain special problems in Korea, which are disturbing General Meloy, Mr. Killen and me, for they hamstring what we are trying to achieve here. I have already analyzed them in Embassy telegram No. 642 of October 28,² and there is no point in going over the ground again. I mean, however, to write you about these when we can see more clearly the shape of the Korean budget, now under consideration.

I hope you will find these observations helpful.³

Sincerely,

Sam

0. Source: Department of State, Central Files, 795B.00/12-1561. Confidential; Official-Informal.
1. Rusk’s request has not been found.
2. See footnote 3, Document 244.
3. On January 10, 1962, Assistant Secretary of State for Far Eastern Affairs Harriman sent a memorandum to Rusk summarizing Berger’s letter and suggesting a reply in which Rusk stated that he shared Berger’s “cautious optimism.” The Rusk letter also suggested that the success that the military in Korea had enjoyed was due in good part to the encouragement and assistance of Berger and his team. The letter was sent to Berger on January 19, 1962. (Department of State, Central Files, 795B.00/1-1062 and 795B.00/1-1862)