15/12/2016 2:30 PM IST | Updated 22/12/2016 8:44 AM IST

What The Impeachment Of President Park Geun-hye Could Mean For South Korea And Beyond

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Portraits of South Korea's President Park Geun-Hye (C) and her aides are set in a mock prison during a rally against the scandal-hit president in central Seoul on December 17, 2016.

The year 2016 is increasingly turning out to be one of historic stands taken by the general public worldwide. Contrary to expectations, the vote to leave the European Union dominated the British referendum; Donald Trump had a surprising triumph in the race to the White House; and Mr. Matteo Renzi had to resign when the Italians voted against his suggestion to make constitutional changes to eventually make the parliamentary system of the country pass laws easily. The latest strike has been on South Korea. The country's parliament has voted to impeach President Park Geun-hye over the scandal of corruption and cronyism.

The scandal has exposed the unhealthy ties between establishment politicians and the country's conglomerates.

The laws of the South Korean constitution dictate that an impeachment requires a two-thirds majority to pass i.e. more than 200 votes out of the 300-member legislature. The lawmakers in the country's National Assembly voted overwhelmingly, 234 to 56 with nine invalid votes and abstentions, to pass the bill impeaching Park. This means that quite a few members of her own Saenuri party have voted against her to bring about the impeachment—showing the damage caused to her reputation.

The scandal causing the impeachment revolves around the President's relationship with an old friend, Choi Soon-sil. The roughly 40 year long friendship began when Choi befriended Park after the President's father, Park Chung-hee, was assassinated in 1979. The situation aggravated as Choi is being investigated on charges of abuse of power, attempted fraud, and exerting undue influence on Park. Masked under the name of donations for the foundations she runs, Choi has also been accused of using their friendship to extract millions of dollars from companies that include Samsung and Hyundai conglomerates. However, the question about how Park has benefited from bringing Choi, to whom she is not related, into the heart of state affairs—checking advance copies of speeches, selecting her wardrobe for public appearances, and also acting as her close spiritual adviser—still remains unanswered.

As every sitting South Korean president enjoys presidential immunity, other than for insurrection and treason, Ms. Park has currently been stripped off her executive powers with immediate effect. However, she will continue living at the presidential Blue House, will be able to use her official car and plane, and will receive her monthly salary of around $15,000. The current Prime Minister Hwang Kyo-ahn will serve as the acting President until the court's decision. The country's constitutional court will make a decision within the next 180 days on whether Ms. Park stays on as the President. The rules indicate that if six out of the court's nine members agree on the impeachment, Ms. Park will be removed immediately and quick presidential elections would follow within the next 60 days. Among the current judges, six were appointed by Ms. Park or her conservative predecessor, or are otherwise seen as being close to her party. If she is ousted, she would become the first sitting South Korean president to be deposed in the country's democratic era. However, if six judges reject impeachment, she will be immediately reinstated and could serve the rest of her single, five-year term (till 2018).

If the impeachment is overturned by the court, the rise in public anger and realignment of political alliances would feed into the uncertainty and further hamper the economy.

The impeachment vote has resulted in an uncertain environment in the country. Analysts point out that if the impeachment is overturned by the court, the rise in public anger and realignment of political alliances would feed into the uncertainty and further hamper the economy. The growth rate of the South Korean economy has been decelerating in the recent years with a weaker corporate investment. There is a fear that the political turmoil could have further adverse effects on the corporate investments. The central bank of South Korea also added that a prolonged power vacuum could increase downside risks in the economy. The relatively weak economy, Park's impeachment, and the reshuffling of the key officials by Park, weakened the policy implementation, forcing the reduction in growth forecasts from 2.7% to 2.4%. Furthermore, the increase in uncertainty would prompt many foreign investors to sell off the assets they hold in South Korea. This sale of assets in US dollars would have a negative impact on the Won. The economic effects might also be a fallout of many business leaders defending themselves against the allegations linking them to the scandal.

However, the country's main stock index the KOSPI slid 0.3% after the impeachment was confirmed. The volatility of the stocks and foreign-exchange markets was cushioned because the result was widely expected and hence factored in the market. The Bank of Korea also said the impeachment would have a limited impact on the economy, noting South Korea's economy is mainly affected by external factors. Still, the worry about the impact of US President-elect Donald Trump's policies on trade and foreign affairs is also contributing to the worsening economic outlook of the nation.

On the political front, analysts predict that if the general elections pave the way for a liberal government post Park's ouster, the change in the priorities would have implications in Asia and beyond. Liberal governments are expected to have a more diplomatic engagement with North Korea, as opposed to the current policy of sanctions. Furthermore, the new government might work more closely with China, hence strongly opposing the current plans to implement the American-made THAAD missile defence shield over the Korean Peninsula. This could be one of the first issues that the new South Korean leader might face.

The scandal has exposed the unhealthy ties between establishment politicians and the country's conglomerates. That arrangement was largely tolerated while the large family-owned business conglomerates spearheaded rapid growth in Asia's fourth-biggest economy. But the rising income gap, youth unemployment and high-profile problems affecting Samsung and other major companies, are now contributing towards the waning patience of the voters.

As the events unfold, the question of whether this impeachment would eventually pave the way for a new era of clean politics remains to be answered.

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