[Analysis] The point of conflict in the debate over railway privatization

Police spray water mixed with tear gas as they attempt to forcibly enter the offices of the Korea Confederation of Trade Unions in the Kyunghyang newspaper building in central Seoul, Dec. 22. The police were seeking the Korean Railway Workers’ Union leadership, including union head Kim Myung-hwan, who had already fled. (by Park Jong-shik, staff photographer)

Government and workers have different positions on possibility that separation of one line would lead to privatization

By Noh Hyun-woong, staff reporter

As part of the government’s response to the controversy over the privatization of the railroad, various officials - including the Minister of Land, Infrastructure, and Transport; the Minister of Strategy and Finance; and the Prime Minister - have stepped forward to reiterate that the separation of the Suseo KTX Line does not represent privatization. But the Korean Railway Workers’ Union and civic groups refuse to believe the government’s claims, insisting that this is the first step toward privatization.

The government’s position is that privatization can be prevented by mobilizing the available methods, which include placing limitations on the transfer of company shares to private investors and revoking the operating license. According to the government’s proposal, Korail will have a 41% share in the new operator of the Suseo KTX line, which will begin operations in early 2016. Private investors are not able to purchase the remaining 59% of the company’s stocks either; stock participation is limited to public corporations such as the National Pension Fund.

In addition, a clause is included in the company’s articles of association prohibiting the sale of publicly controlled shares to the private sector. The articles of association also mandate that the board of directors must pass a special resolution (2/3 of directors present, 2/3 in favor) for any sale of shares. In addition, if Korail has an operating surplus, it can increase its shares by 10 percentage points each year. This would suggest that Korail could eventually buy all of the shares of the new operator depending on its performance.

Land, Infrastructure, and Transport Minister Suh Seoung-hwan even said that if public corporations sell their stock to the private sector, the ministry would revoke the new company’s right to operate the railroad.

But the railroad union sees things differently. The union argues that it would essentially be impossible for Korail to turn a profit if it splits the KTX market, the most profitable part of the business. From the labor union’s point of view, there is no chance that Korail could increase its share in the new company as the government has claimed. The union also believes that there would be a variety of ways to get around the government’s measures to prevent the private sector from investing in the new company, such as buying shares in a fund.

The union has some evidence to back up its argument. The law firm Sejong was commissioned by Korail to prepare a review of the government’s proposal. The law firm concluded that the privatization prevention plan put forward by the government is seriously flawed. It is likely that the quorum requirement for board meetings convened to sell shares violates commercial law, and it is also probable that the restriction on the operating license is unconstitutional, since it is an administrative tactic that wields the government’s right to license activities as a weapon against stock transfers in the private sector.

The second point under debate is the effect of setting up a new operator. The government believes that introducing a new operator will result in an improvement of Korail’s loose management and will lead to an improvement in the quality of railroad service. According to the government, the laxness of Korail’s management is so severe that the company is running an average yearly deficit of 570 billion won (US$536 million). In addition, the government has argued, Korail’s accounting is opaque and there is no other comparison company, making it hard to expect any improvement. The argument is that introducing a new operator would provide a model that Korail’s management could be compared to, and that this would also lead to more efficient management.

However, the opposite case can also be made. Opponents say that splitting off a new operator from Korail, which is saddled with a substantial debt because of the government’s failed policies, would result in more problems at the company. According to documents that Korail prepared before its board of directors meeting on Dec. 10, at which it was decided to set up a new operator, the creation of the new operator is estimated to reduce Korail’s revenue by an approximate yearly average of 500 billion won.

In addition, opponents argue that the government has only offered a vague explanation of how creating a new operator would help normalize Korail’s management. Since Korail keeps losing money, the government is basically saying, we should split up the company and see what happens. In fact, according to the National Assembly Research Service’s (NARS) Dec. 20 analysis of the government’s plan to develop the railroad business, investing in a separate company without devising any fundamental measures for normalizing railroad operations is not enough to prevent Korail’s deficit from continuing to grow.

For these reasons, the argument that the government’s creation of the new railroad company will eventually lead to railway privatization is gaining strength. In particular, the NARS analysis predicted that splitting a line that is expected to be highly profitable into a separate company would worsen operating conditions at Korail and make it difficult to keep the railroads public.

If efforts to make Korail’s management more efficient by prioritizing profitability end in failure, the only remaining option would be selling the railroad to the private sector. In fact, the government and Korail agreed in theory during the railroad development measures workshop in July to shut down eight unprofitable railroad lines.

Railway strike threatens to become labor-government war

Leaders of the Korean Confederation of Trade Unions chant at a news conference Tuesday to denounce Sunday’s police raid on its headquarters. (Yonhap News)

The railway union’s strike continued to grow Tuesday, bringing the Korean Teachers and Education Workers’ Union into the fray as the police sought a detention warrant for its chief Kim Jeong-hoon. 

Kim was taken into custody on Sunday during the police’s attempt to arrest railway union leaders from the Korean Confederation of Trade Unions’ headquarters in Seoul. 

Although large number of unionists were taken into custody for blocking the police from entering the KTCU office, a detention warrant has been requested for Kim only. 

Despite deploying thousands of police officers and spending most of the day on the raid, the railway union leaders were not found at the KTCU office, fueling criticism of incompetence and claims that the Park Geun-hye administration was establishing a police state. 

The raid has also prompted the KTCU to declare war against the administration and plans to go on a general strike from Dec. 28 to call for the president’s resignation. 

The more moderate Federation of Korean Trade Unions has also declared that it would join the strike, saying that the situation was not limited to the KTCU. 

Together, the two umbrella unions amount to about 1.7 million members. 

The railway union has staged a general strike since Dec. 9 in protest of state-run train operator KORAIL’s plans to set up a subsidiary to operate a new KTX bullet train route, saying that the measure was a step toward railway privatization. 

Passenger train operations have since dropped to about 70 percent of normal levels, while freight train operations dropped to 30.1 percent. 

The political parties have also taken up sides in the railway strike union, stepping up their attacks against each other following Sunday’s raid. 

“The railway strike, which was aimed at protecting the iron bowl, is becoming a political strike as the forces that deny the election result have formed a combined front with the railway union,” ruling Saenuri Party floor leader Rep. Choi Kyung-hwan said Tuesday. “Iron bowl” is a term referring to vocations with high job security. 

He added that the main opposition Democratic Party was the “original” instigator in reforming the railway system, citing related developments from the Kim Dae-jung and Roh Moo-hyun administrations. 

“(I) emphasize again that hard-line nongovernmental organizations and the KTCU, which are transforming the railway strike into a campaign to overturn the administration, cannot stand above the law.” 

Meanwhile, the DP continued its attack on the government and the ruling party.

“The Park Geun-hye administration is now against the common people. Railway and health care privatization cannot be accepted under any circumstances,” DP floor leader Rep. Jun Byung-hun said. 

“President Park Geun-hye’s uncommunicativeness is pushing laborers to the brink. It causes talks to stop, justifies the police forcing their way into the KTCU and becomes the order for oppressing KORAIL workers.” 

DP secretary-general Rep. Park Ki-choon also claimed that Park’s plans to offer a special pardon early next year was an attempt at appeasing the public. 

Prime Minister Chung Hong-won played down the railway union’s claims of railway privatization, saying that it was not an issue. 

“The government has repeated several times its position that the railway will not be privatized. The railway union should stop repeating claims that have already been accepted, and return to work immediately,” Chung said at Tuesday’s Cabinet meeting.

100,000 South Koreans Protest Election Scandal, Labor Clampdown

Posted 28 December 2013 18:46 GMT

A series of different protests as well as a mass strike organized by labor groups rocked South Korea on December 28, 2013. 

From noon till late at night, about 100,000 citizens and labor workers angrily demonstrated against the current government's election manipulation scandal and clampdowns on labor groups as well as moves toward privatization of the nation's railway system, though the administration denies such claims. Some observers are calling the outbreak of demonstrations proof that public anger has nearly “reached its boiling point” [ko].

Although it failed to reach its goal of one million participants, more than 100,000 [ko] were reported to be present till late afternoon. Although police estimate the total number barely reached 20,000, some disputed the number by pointing out that 13,000 riot police were mobilized for the event. 

One image making the rounds online purportedly of the strike turned out to actually be from 2010. Nevertheless, plenty of dramatic photos showing the scale of the main protest in Seoul Plaza circulated the web:

These citizens were not able to enter the plaza as a wall of police bus blocked their way. So instead, the plaza's surrounding roads were fully packed with these people. 

It is hard to guess the real scale of the protest against railway privatization by merely looking at photos. But I will post these three photos, which show protesters who are “in” the Plaza. Please take into account that these are only 70 percent of the total participants. 

Seoul Plaza is already fully packed. 

This is a photo of the No. 6 exit of the City Hall subway station [which leads to the Seoul Plaza]

Though labor unions overwhelmingly counted the largest participation, various non-labor groups also hosted minor protests today, including students, lawyers, media workers [ko] and a particularly unique group, the newly launched KOCA (Korean Online Communities Alliance) [ko], an association of the nation's major online community sites.

“We are Not Fine” movement-themed protest (from 12 p.m. to 3 p.m.) 

In Seoul, Daejeon, Changwon and Pusan, young protesters, especially students, took turns standing on stage and spelling out “the reasons why they can't be okay” [ko] from 12 p.m. to roughly around 3 p.m. 

A high school girl said some students of Gaepo High School may get reprimanded for posting hand-written posters. She said “we will be feeling ‘fine’ only after expressing our thoughts”. 

Flash mobs (at 3 p.m.)

Flash mobs of citizens singing the revolutionary anthem “Do you hear the people sing?” from the musical “Les Misérables” were held in Seoul, Pusan, Gwangju, Daejeon and Daegu. Here is a video of a flash mob which took place near the Yonsei University in Seoul:

Civil rights lawyers’ protest (from 2 p.m. to 3 p.m.)

Civil rights lawyers held a protest at 2 p.m. at Bosingak Bell Pavilion, and around 3 p.m. they marched towards the Seoul Plaza.

Under the slogan of “From the courtroom to the streets” and “There is no injustice that wins the justice”, these lawyers are gathering at Bosingak to call for democracy. This shows how far our democracy and common sense have fallen. 

Mass strike by labor groups (from 3 p.m. to 4 p.m.)

Before joined by other groups, labor unions held a fierce demonstration at Seoul Plaza against the government's decision to crack down on fired railway workers and labor leaders.

I give them a round of applause for their strong alliance – many groups, even KLUC [Korea Labor Union Congress] have joined, calling out “We will protect our railway system by having a general strike by Korean Confederation of Trade Unions.”

(as of 2:57 p.m.) The Construction Labor Union is marching to Seoul Plaza from Youngpung Bookstore. I can't see where their line ends.

Main rally

A main demonstration was scheduled to take place around 4 p.m., but Seoul Plaza was already packed with protesters from around 2 p.m.

The photo on the left shows Seoul City Hall Plaza at 1:30 p.m. and the right is taken at 2:55 p.m. Now there is no room for extra feet.

The protest continued into the night.

Written byLee Yoo Eun

Posted 28 December 2013 18:46 GMT

WANTED : Suspect for 2012 fraudulent Presidential Election in Korea

South Korean Agents Accused of Political Interference

• By Jeyup S. Kwaak

South Korea’s defense ministry said its cyberwarfare agents broke political neutrality by criticizing opposition lawmakers online, part of a wider scandal about government agencies’ activities during the presidential election last December.

Baek Nak-jong, the chief investigator of a probe into the military’s Cyber Warfare Command, said Thursday the investigation found 2,100 online postings praising or blasting specific parties or lawmakers among 286,000 posts written by its psychological-warfare unit since the command’s foundation in January 2010 until Oct. 15 this year.

The mission of the psychological-warfare unit is to counter propaganda and online rumors from North Koreaon issues that include the sinking of a South Korean corvette in 2010 attributed to but denied by the North.

Mr. Baek denied that the messages about South Korean politicians and political parties were designed to influence the presidential election last December in President Park Geun-hye’s favor, an allegation that has caused a political mud fight in Seoul this year.

Specific names of opposition politicians were mentioned in the 2,100 postings, Mr. Baek said, “but not with the goal of political interference.”  Linking politicians with North Korea is highly sensitive in South Korea, which remains technically at war with its northern neighbor.

Reuters

People shout slogans during a candle-light demonstration demanding an apology from South Korean President Park Geun-hye to the nation, and calling for the resignation of National Intelligence Service (NIS) chief Nam Jae-joon in central Seoul August 10, 2013.

In June, prosecutors indicted a former spy-agency chief for orchestrating a Twitter smear campaign against government critics. The chief, Won Sei-hoon, and the agency have said the messages were a part of their normal psychological warfare operations againstNorth Korea, the line also maintained by the defense ministry.

The agency has also announced a set of internal reforms, which critics have called insufficient.

The defense ministry has asked prosecutors to charge 11 officials of the psychological-warfare unit for the breach of political neutrality, according to the investigator.

Mr. Baek said the investigators couldn’t find proof of coordination between the defense ministry and the national spy agency. He added that the head of the psychological-warfare unit said he acted without orders from his superiors.

Kim Han-gil, the leader of the largest opposition Democratic Party, said Friday the results were “offensive to the people” and urged a fresh investigation.

Some pundits have questioned how much impact the alleged campaign on Twitterand other online forumscould have had in Ms. Park’s presidential victory, particularly as polls showed her main support came from older voters less familiar with social media.

Ms. Park has denied involvement and said the government will enact additional measures to ensure impartiality after the probes are over.

Doubts about the government’s online psychological activity are likely to linger as proving secret agencies’ activities will be difficult in court, according to Park Chan-un, a human-rights lawyer and professor at Hanyang University in Seoul.

“It’s bound to uncover just the tip of the iceberg,” he said.

http://blogs.wsj.com/korearealtime/2013/12/20/south-korean-agents-accused-of-political-interference/

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