President Kim Dae-jung came to office in February 1998, only a few months after South Korea received its International Monetary Fund (IMF) bailout. Although President Kim won the 1997 presidential election by 1.6 percent, the slimmest margin of any previous South Korean presidential election, the Kim administration was in a much better position to implement reforms than was the previous Kim Young-sam administration. The political and economic environment had changed drastically in favor of reforms because of the financial crisis and the bailout. The IMF required the Kim government to implement reform policies to meet the conditions of the IMF bailout program. In addition, the new government under Kim Dae-jung's Millennium Democratic Party (MDP) had a close relationship with organized labor, making the labor sector more cooperative with the reform policies of the Kim Dae-jung government.

The first reform efforts by the Kim Dae-jung administration changed the government structure with a reorganization bill. The administration pointed to the Kim Young-sam administration's inadequate response to the warning signs of the 1997 crisis and attempted to improve the effectiveness and efficiency of the government in creating economic policy. With this bill, the Kim administration downsized the government and established the Planning and Budget Commission under the president's direct supervision for closer oversight of the economy.

The Kim government continued the reform drive with institutional and procedural reform to transform economic governance and meet the expectations of the IMF. With pressure from the IMF and the public, the long-stalled Bank of Korea (BOK) Act, part of the financial reform bill providing more autonomy from political control for the central bank, finally passed in the National Assembly on December 31, 1997.

A crucial element of South Korea's security has been its alliance with the United States. The alliance was formalized in 1953 with the signing of a mutual defense treaty, but the relationship began informally when World War II came to an end. The alliance has had its high and low points, as all long-term relationships do. What began as a patron–client relationship between Washington and Seoul is evolving into one that resembles more of a partnership, although an unequal one. The alliance has been the subject of a multitude of studies in the past fifty years, and the precise nature and future of the alliance remain unknown. It appears likely that the alliance, although shifting in form, will remain an important part of South Korean security and the overall security architecture in East Asia for some time. This chapter will examine the history and components of the alliance, the efforts begun under the George W. Bush administration to restructure the U.S. force presence, and the future direction of the alliance.

An Uncertain Guarantee: 1945–1953

Prior to World War II, Korean ties with the United States were minimal, but the closing days of World War II brought Korea to the attention of U.S. leaders. With Japan's hasty surrender after the dropping of the atomic bombs, U.S. officials quickly crafted a proposal for the United States and the Soviet Union to divide the peninsula at the 38th parallel for taking the Japanese surrender.

As Park Chung-hee sat down for dinner on October 26, 1979, with some of his closest advisors, he was facing one of his most difficult decisions as president of South Korea. Protests calling for political reform and democracy were intensifying throughout the country, and many feared the demonstrations would get out of control. Should the government crack down on the demonstrators or begin a process of bringing political change to the country? During dinner, a heated argument ensued during which Kim Jae-kyu, the head of the Korean Central Intelligence Agency (KCIA), received severe criticism from those in attendance for his handling of the demonstrations. Kim Jae-kyu stormed out of the room and returned after a few minutes with a .38 revolver in his pocket, having told his own security detail to shoot President Park's guards if shots rang out. Suddenly Kim Jae-kyu rose from his place, pointed the gun at Cha Ji-chul, the head of Park's security guards, and shouted to Park, “How can you have such a miserable worm as your adviser?” Kim squeezed off two shots at close range, first at Cha Ji-chul and then at Park himself, before the gun jammed. With Park lying wounded on the floor, Kim grabbed a gun from one of his men and shot Park again, finishing the job. Cha Ji-chul ran away to another room, but Kim chased him down and shot him to death.

The broadcast of the Japanese emperor's announcement reached Indonesia at noon on August 15, 1945. The news of Japan's surrender came as a shock to those native nationalists who had collaborated with Japan (Anderson 1972, 66–9). The transfer of power from Japan to Indonesia was about to be arranged, and these Indonesian leaders expected to have a few months afterward to consolidate their government before Japan's eventual defeat. In the previous months, Sukarno, Mohammad Hatta, and others had agreed to a draft national constitution by which a presidential system would be established, based roughly on the Japanese-created administration on Java. This system would have a strong executive who would lead a state party and be advised by agencies set up by the Japanese. In other words, if things had gone as planned, especially if Sukarno had not been later sidelined, there was some chance that Indonesia may have a centralized and cohesive state structure in the mold of militarist Japan.

Japan's surrender meant that no legal transfer of power would happen. It also meant that the Allies and the Dutch would arrive in Indonesia sooner than expected. Yet, after Sukarno and Hatta's proclamation of independence on August 17, it did not yet appear that Indonesia would be destined to have a state with a fragile structure. Despite numerous local uprisings, Indonesian leaders went ahead as planned and set up a government with power centered in the presidency.

VIETNAM AND CHINA IN CONTRAST

Unlike South Korea and Indonesia, which lie far apart geographically, China and Vietnam share a border, and their development paths were not always separate for both ideological and geopolitical reasons. From the 1920s through the early 1960s, the Soviet Union was a source of ideological inspiration as well as practical assistance and doctrinal guidance for both Chinese and Vietnamese communists, who studied Lenin and Stalin in translation, toured Soviet modern factories and collective farms built under Stalin, and received training from Soviet advisers in revolution and administration.

The Vietnamese also received extensive policy guidance in the 1950s from their Chinese comrades, who were more experienced in revolution and state making. Chinese experiences were useful to Vietnam because the historical contexts facing both revolutions were fundamentally similar: both sought to build socialism in predominantly rural, backward countries under the constant threat of “imperialist” attacks. “Land reform” was a particular area where Vietnam learned much from China. The Soviet Union never implemented any land redistribution; Chinese communists developed their own expertise on the issue, and their Vietnamese comrades benefited from consulting China's policies and working with Chinese advisers in Vietnam.

Despite similar conditions and so much shared knowledge among their leaders, several indicators show a striking contrast in the character of socialist development between the two countries. China's average annual economic growth rate between 1953 and 1978 was 6 percent (Lin et al. 1996, 71).

As the new millennium unfolds, the state is rising again in public and scholarly imagination. Two decades ago, the dramatic end of the Cold War fueled speculations that the state was an anachronistic organization that soon would be swept away in the coming wave of liberalization and globalization. Such speculations were not without basis. As once powerful states from Yugoslavia to the Soviet Union collapsed like dominoes, while liberal ideology, the consumer culture, and the Internet revolution expanded their reach across the globe, the days of state sovereignty seemed to be numbered. States appeared no longer able to hold out against the assaults from such global entities as the International Monetary Fund, Microsoft, Citibank, CNN, and McDonald's.

Nevertheless, a new global order superseding states has been elusive. Numerous studies in the past decade have found that global forces, rather than dismantling states, may have strengthened them (Weiss 1998; Migdal 2001, 137–42). In the industrialized world, states continue to regulate markets in ever more sophisticated ways (S. Vogel 1996). Far from being pushed aside, state bureaucrats in many newly industrialized nations are leading the information technology revolution in their countries (Evans 1995). Whereas some states have responded to the global challenge through adaptation, others have launched dramatic counterattacks. After the initial shock following the 1997 financial crisis, the Malaysian government reimposed capital controls, while a new prime minister in Thailand kicked out the IMF. These telling examples suggest that the doctrine of state interventionism is still alive, and global capital may need to learn how to live with it.

THE IRONY OF HISTORY

When the nationalist movements of Vietnam and Indonesia are compared in terms of leadership and discourses, an intriguing irony emerges. Concerning leadership, the Vietnamese movement was dominated by a communist party, whereas nationalists and Muslims led in Indonesia. When we turn to movement discourses, a reverse situation is found. The previous chapter has shown that formulations commonly associated with leftist discourses, such as social justice and class struggle, were suppressed in Vietnam until the late 1940s. Ho Chi Minh did not breathe a word about social justice, socialism, or class struggle in his oft-cited Declaration of Independence. Even in 1950, top Vietnamese communists still had reservations about these themes, indicating their lack of legitimacy. In this chapter, we find that radical leftist discourses dominated the Indonesian movement in the same period. Even Islamic parties such as Masjumi, the largest political party, professed a belief in “socialism” and called its ideology “religious socialism.” Smaller but radical communist parties such as Tan Malaka's Murba Party never failed to proudly proclaim their allegiance to Marx. Despite having a nationalist and Muslim leadership, everything other than “socialism” lacked legitimacy in Indonesia.

What explains this irony? Why did this mismatch occur between movement leadership and discourses, and what is the significance of this mismatch? We have seen in the preceding chapter that “the nation” dominated the Vietnamese anticolonial movement from day one. In contrast, Marxist and populist discourses were popular early in Indonesia, long before native elites started calling themselves “Indonesians.”

Among the macropatterns of state formation and development in six national cases considered in Part I, the accommodation path taken by Vietnam and Indonesia in the 1950s involved elite compromise and mass incorporation. We have seen that the outcomes in these cases were states lacking cohesive structures. Under these circumstances, the Vietnamese and Indonesian state elites implemented developmental policies only to see them backfire (as in Vietnam) or suffer defeat (as in Indonesia).

Part II probes further into the dynamics inside the nationalist movements that founded these states. The goal is to understand how accommodation became institutionalized in political organizations and in elites' discursive formulations. Political organizations and discourses that embodied accommodation can be shown to be incoherent in particular ways that reflected the particular politics of each country. To some extent, the chapters in Part II revisit points raised earlier in Part I, but a narrower focus on the accommodation path here will allow more nuanced accounts of the historical contexts and the thoughts of political actors during state formation. Most importantly, by looking at the subnational level, the analysis of organization and discourse adds causal-process observations to the macroaccounts offered in Part I.

The organizations of the Vietnamese movement, including the coalition government, the Viet Minh united front, and the political parties, are the subject of this chapter.

POLITICS OF ECONOMIC SWINGS

Indonesia experienced a more tortuous trajectory of development than did South Korea. During the first four decades after independence, the Indonesian economy underwent two major pendulum swings. In the first seven years following independence, the Indonesian economy experienced moderate growth, estimated between 3 and 5.5 percent per year (Higgins 1957, 48; Paauw 1963, 189, 200–1; Mackie 1971, 19; Booth 1998, 61). Growth was highest in the first two years of this period, thanks to the Korean War that led to booming demands and favorable prices for Indonesia's primary exports. Although Indonesia faced a growing budget and foreign exchange crisis in late 1952, the economy continued to grow moderately because of government retrenchment policies, including import restrictions, export promotion, fiscal austerity, and foreign exchange controls (Higgins 1957, 1–39).

In 1957 ultranationalist politicians under Sukarno's leadership rose to power and decided to nationalize most foreign enterprises. Under conditions of poor Indonesian management and insufficient credit, the performance of these enterprises, which made up the backbone of the modern sector, worsened. An unrealistic exchange rate, government hostility to foreign capital, inflationary government spending, and large military expenditures were additional factors that devastated the economy (Dick 2002, 182–90). By 1965 the country was practically bankrupt with inflation rates surpassing 500 percent and budget deficits equal to 300 percent of receipts (Hill 2000, 1).

In this book I have been concerned with the origins of developmental states. The state is by far the most important of all political institutions, and its role in economic development has long been central in the study of modern politics. However, this book leaves aside policy explanations for rapid economic growth. Nor do I engage in the debate between neoclassical economists and many political economists concerning the appropriate economic roles for states. The literature on developmental states has produced excellent studies that address these issues (e.g., Evans 1995, esp. ch. 2). Rather, I am interested in the structures of these states. The puzzle is, what gives, or gave, successful developmental states their cohesive bureaucracies, centralized government organizations, progrowth class alliances, and firm ideological foundations? This question has rarely been asked in the political economics literature. Cohesive structures do not guarantee that state leaders at any point in time are committed to economic growth. Yet without cohesive state structures, growth-conducive policies are unlikely to generate the intended impact.

In this chapter, I revisit the assumptions underlying my conceptual framework of state formation politics. These assumptions are about elite alignment patterns, the role of foreign forces, and the ability of the framework to predict events. I also consider three implications of this study for understanding developmental states: the role of colonial legacies, the importance of ideologies, and the conditions under which state elites choose to launch developmental policies.