South Korea's FinMin battles low won, worse

President Lee Myung-bak, and his Finance Minister Kang Man-soo -- twinned to make the ‘LeeMan Brothers’ -- have struggled for credibility in their handling of the global financial storm that Lee himself has said could be more destructive than the Asian financial crisis a decade ago.

‘The economy is about trust and sentiment. But Kang, who has already lost trust, is trying harder and harder to keep his position as the South Korean economy is crashing,’ said Song Doo-young, a spokesman for the opposition Democratic Party.

Kang's job had looked on the line earlier this year.

His ministry's preference for a weak won, while oil prices were still surging, was seen as contributing to inflation and doing little to help the rapid growth the government had pledged when it came to power in February.

The authorities then changed tack and tried to defend the won at 1,000 to the dollar, a dyke that quickly broke under the global financial onslaught, bringing charges that Kang was flip-flopping on currency policy. It is now trading at around 1,420, down about a third since the government took office.

Officials who work with Kang say the 63-year-old career bureaucrat comes across as stubborn but also decisive.

‘He is a hard worker with a strong drive. He exerts strong, charismatic leadership and is generous towards his staff,’ said one high-ranking colleague of Kang who asked not to be named.

UNFLATTERING

Kang's image in the financial markets is a lot less flattering, with several analysts and traders saying his perceived policy inconsistencies have lost him trust, which some analysts say is adding to the country's economic problems.

In a poll of 20 economic experts by a leading local newspaper last week, Kang won high marks for courage but far fewer for trust. It ranked him the lowest of the country's top three financial officials -- behind the central bank governor and the chief regulator.

‘The economic policy makers have only just begun to act as a team after losing a lot of confidence in the market ... I believe President Lee should make up his mind and replace Kang,’ said one leading private sector economist, who asked not to be identified because of the sensitivity of the issue.

He echoed some other critics in saying that a key problem for Kang was that he had been away from the financial markets for so long he was out of touch with the huge changes in the global financial system since he was last in high office.

It is not the first major financial crisis for Kang, who has long been close to Lee and is a member of the same church.

He was vice finance minister in 1997 at the start of the Asian financial slump, which took South Korea to the brink of default. Kang has in the past taken his share of the blame for the problems which led to that crisis, though he denies responsibility.

His official profile points out that it was Kang who undertook reforms of the financial system as the crisis unfolded.

From the outset, Kang made clear that management of the financial system, notably the currency, was too important to be left to traders.

At his inaugural press conference as minister, Kang noted that he was in New York when the 1985 ‘Plaza Accord’ was reached to realign the dollar against the yen, in the process halving US debt to Japan.

‘(I) realised that the foreign exchange rate is a means to defend economic sovereignty, and that it is like a war ... I thought the foreign exchange rate shouldn't be left solely to the market,’ he said.