Invest1 publisher2 min readPublished
Korea's Assembly reviewed $1.67bn a minute of the US investment pledge behind closed doors
The National Assembly's finance committee took its first briefing on Korea's $200 billion US investment behind closed doors, and the opposition's committee liaison said two hours of questions cannot test whether the deal is commercially sound.
The Investor · Invest desk
What happened
- The National Assembly's Finance, Economy and Planning Committee received its advance briefing on the $200 billion US investment on the 22nd, under the special act governing strategic investment between Korea and the United States.
- At the government's request the briefing was held behind closed doors, after the committee had already pushed it back from its original date of the 17th.
- The main opposition People Power Party called the government's handling a rushed procedure and said a two-hour review of massive state funds strips the Assembly of its right to deliberate.
- Committee chairman Cho Seung-rae said the committee would sort the projects one by one into those requiring a report to the Assembly and those requiring its consent, and would verify whether each is commercially sound.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint With the session closed at the government's request, what the government told lawmakers about the commitment stays outside the public record, so nobody lending to or contracting with the vehicles can price the terms until the committee chooses to publish.
- decision The project-by-project split into report and consent settles where the Assembly can actually withhold approval.
- exposure The downside the opposition names sits on the budget. The state and the taxpayers carry the risk of a bad commercial judgement; a sponsor or a bank does not.
- contradiction The ruling-party chairman has committed to briefings substantive enough to persuade the Assembly while the government asked for this one to be closed, so the follow-up sessions will test which of those two positions binds.
Two hours is 120 minutes, so the first parliamentary pass over the $200 billion worked out to roughly $1.67 billion a minute of questioning [19]. Bae Joon-young of the People Power Party, the opposition's liaison on the committee, said "No one in this world could assess the commercial rationality of a $200 billion U.S. investment project through a question-and-answer session lasting only two hours" [7]. The session had already slipped five days from its original date of the 17th [6][21].
Cho Seung-rae of the Democratic Party of Korea said "The $200 billion, $150 billion and $350 billion U.S. investments involve taxpayer money and national assets" [11]. Two of those numbers add to the third [20]. The account of the session does not include the project list [22].
Which projects need the Assembly's consent, and which need only a report, is the part that decides whether lawmakers can withhold anything. "I also do not want the reporting to the Assembly to become a perfunctory or formalistic procedure," Cho said [14]. Bae asked the chairman to confirm that the briefing was "merely a precondition for pursuing the projects reported," and said it would be "even more unacceptable for the two governments to treat the project as a done deal after today's briefing" [10]. Cho said follow-up steps would be pursued through consultations between the two parties' committee liaisons and the government [15].
Lee Hyoung-il sat with the committee for the first time as deputy prime minister for economy since his confirmation hearing [16]. "Economic indicators recently look sound, but uncertainties remain high, including geopolitical risks and conditions in the semiconductor industry," he said [17]. On the US investment negotiations and the reporting to the Assembly, he said he would "do his utmost with a grave sense of responsibility" [18].
In my view the closed door costs more here than the short clock. Hours can be added to a closed session without producing anything a lender or a voter can check, and the government asked for this one to be closed before negotiations with Washington had begun [5][4]. A state that publishes its reservation price before the talks pays for the publication, and Cho called this only the first briefing [15]. The rushed-procedure charge stops holding if the committee publishes its project-by-project split of report and consent and the government returns for a longer session on the record [13]. If the two governments settle terms while the liaisons are still arranging the follow-up verification, then the two-hour session was the review [15].
What to watch
- Whether the committee publishes its project-by-project split of what needs only a report to the Assembly and what needs its consent.
- Whether the government sits for a second, longer briefing, and whether that one is open.
- Whether negotiations with Washington reach terms before the follow-up verification the party liaisons are meant to arrange.