The talk on UK-Korea relations by Sir Thomas Harris KBE CMG, held at Gresham College on Friday 27th of June, was both a stimulating and ultimately uplifting account of the diplomatic and economic interactions between the two countries before and after the Korean War. Amongst his various international posts as a businessman and diplomat, Sir Thomas served as British ambassador to Korea from 1993 to 1997 (a fuller biography can be found here). The following is a summary of the talk.
Before the War
Prior to the war, Britain’s relations with Korea had been tenuous at best. Aside from an isolated incident in 1885, in which British forces took control of the island of Komundo as a base for a possible war with Russia, British imperialism had left the country untouched.
Perhaps as a result of this lack of direct involvement, Britain did nothing to prevent Korea’s conquest by Japan, and the few British businesses who remained invested in the peninsula were expelled by the Japanese in the 1930s.
The seeds of growth
In the aftermath of the Korean War, while on a travel scholarship to Japan, the speaker recalled a chance meeting with some US Peace Corps members. They despondently informed him that Korea was a ‘bottomless pit’ – USD 2 billion of financial support had failed to produce any discernible improvement in the economy.
History of course would overturn these gloomy expectations. And happily, Britain was able to play a role in the birth of the shipbuilding industry, a cornerstone of the Korean economic phenomenon, wherein the country was transformed from a net receiver to net donor of foreign aid in a matter of decades.
In the 1970s, Japan’s shipbuilding companies were reluctant to help their struggling neighbour. In his efforts to find an alternative partner, Hyundai CEO Chung Ju-yung came across the Devon-based Appledore Shipping Company. The British engineers provided by Appledore, together with finance from Lazards, helped Korea pull off the miraculous birth of the largest shipbuilding industry in the world.
The relationship continued in later years with a collaboration between George Turnbull of British Leyland and the Korean car manufacturing industry. Later the two countries would collaborate in the field of nuclear power. Soon after, British banks became involved in setting up operations in Korea. The Chung family became very close to Britain, and bilateral relations flourished.
Hiatus – the ‘Gisaeng’ incident
There was however, a major hiccup in 1978. While the precise details remain obscure, the then Secretary of Trade made abrupt exit from a gisaeng party held in honour of a visiting British trade delegation. Nobody knows quite what had upset him. The loss of face on both sides led to a loss in momentum which took years to correct.
Skipping forward to the early 1990s, Sir Thomas’s own tenure as British ambassador coincided with a renaissance in UK-Korea relations. In his first year in Korea, the number of visiting ministers stood at a grand total of one. By his final year, this number had increased to fourteen visits. Amongst the successful diplomatic initiatives he undertook was a celebration of the 800th anniversary of Seoul’s foundation as capital.
Facing the crisis
The ensuing Asian financial crisis dealt a blow to the confidence of foreign investors. Sir Thomas, however, expressed his admiration for the response of the Koreans to this disaster.
Rather than suffer a ‘lost decade’ like Japan, the Koreans instituted a series of ‘rapid, radical, painful and successful’ reforms in areas such as trade and investment, as well as public infrastructure (e.g. broadband).
The Koreans had in the 1970s followed the Japanese model of growth. Until the crisis hit in 1997, this model had worked well for them. Rather than cling to it following the crisis, however, the conglomerates realised that they had to develop a more sophisticated, globalised mindset. By adapting to a new model of growth, they have not only survived, but grown stronger.
The Queen’s state visit at the height of the crisis was greatly appreciated by the Korean public. Although it had been planned for many years, they chose to see it as a sign of support and friendship in their time of trial.
British involvement in Korea began to deepen once again. Examples include the acquisition of Korea First Bank in 2004 by Standard Chartered, and the establishment of UK-Korea Forum for the Future.
Challenges for the future
Korea, it seems, has never been a country without daunting challenges. In the final section of the talk, Sir Thomas turned to the challenges it faces today. Personal indebtedness, one of the region’s lowest savings rates, a fast-ageing demographic, and rising inequality – are all threats to growth which must be overcome.
Insofar as these factors could result in a swing towards populist policies, unhelpful regulation and government intervention, and more frequent strike action, they represent concerns for foreign investors. Indeed, some British and European institutions have already reduced their presence in Korea (HSBC, StanChart, Aviva and ING), indicating that this fear is already beginning to affect the general mood.
The next stage, he believes, is for the Korean economy to strengthen the service sector, whose employees currently underperform productivity benchmarks. This he believes will change if the somewhat inflexible, military-style working culture (better suited to production-based industries) is adapted.
Regarding Sewol, he observed that the reaction of Koreans to the disaster caught many by surprise. While anger was directed at those responsible to some extent, the burden of the public reaction was one of soul-searching and self-reflection, asking ‘What sort of a country is this?’
Although the parallel story was not directly alluded to, it put me in mind of the queues of Koreans who lined up outside the banks during the Asian Financial Crisis, not to protest, but to donate heirlooms and gold, as if they believed the financial crisis was somehow their fault and responsibility to solve.
A bright outlook
Challenges aside, in the closing remarks of the main talk, Sir Thomas re-iterated his own high opinion of the Korean workforce. The highest educational standards, the strong work ethic, and the political pragmatism and speed of reform (a positive result of the 빨리 빨리 mindset), foreshadow a bright future.
As for interactions with other countries and in particular the UK, the EU-Korea Free Trade agreement has eliminated many of the barriers previously in place, and heralds a new era of bilateral relations.
The balance between our two countries has shifted considerably since the 1970s. At that time, Britain was useful to Korea as a source of technology and expertise. Now the boot is on the other foot. ‘We now look to Korea for technology, research and partnership’, Sir Thomas asserted.
If time had allowed, it would have been interesting to hear what Britain has to offer to Koreans as a trade partner in this new age, besides English teachers and Scotch whisky, a couple of our primary exports as of today.
In response to a question on what he had most appreciated about his time in Korea, the response came, half-jokingly, ‘The Foreign Office is stuffed with experts on China and Japan, but there was no one in the Foreign Office who knew anything about Korea – so I had a free rein, it was wonderful.’
Five Korean war veterans who attended the talk also spoke informally to the group at the end. The speaker had already mentioned regarding the ‘forgotten war’, that it has taken a Korean initiative to set in train plans for a Korean War memorial in London. The veterans added that there are also now finally plans in motion to institute a Korean War Veterans Day. On which uplifting note, the talk came to a close.
I personally was glad to learn that UK-Korea relations have grown to be more than ‘tenuous’. By learning from the technology of British engineers, Chairman Chung of Hyundai was able to build a world-beating industry out of an empty beach. As we enter a new era of shifting global power, one hopes that future British governments will position the UK to benefit from South Korea’s knowledge and dynamism.