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Cablegate: Seoul - Press Bulletin; January 25, 2010

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UNCLAS SECTION 01 OF 03 SEOUL 000091

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV MARR ECON KPAO KS US
SUBJECT: SEOUL - PRESS BULLETIN; JANUARY 25, 2010

TOP HEADLINES
--------------


Chosun Ilbo, All TVs
U.S. Educational Testing Service (ETS) Sends Security Officials to
ROK Following Series of Leaks of SAT Test Papers in ROK

JoongAng Ilbo
Hospital Charges for Cancer Operations Differ
Up to 5 Million Won

Dong-a Ilbo
Four Arrested in Second SAT Leak Scandal

Hankook Ilbo
Liquid Assets Moving to Stock Market

Hankyoreh Shinmun
Lee Myung-bak Administration Uses
Media Reform Bill Politically

Segye Ilbo, Seoul Shinmun
Sejong City Legislation Due on Jan. 27


DOMESTIC DEVELOPMENTS
---------------------

The ROKG decided yesterday to reject North Korea's proposal to hold
military talks on Jan. 26 for the time being. A senior Unification
Ministry official said that the planned Feb. 1 talks with the North
on the operation of the joint Kaesong Industrial Complex must be
carried out first and then the two Koreas could sit down to deal
with military-related matters. (JoongAng)

North Korea yesterday criticized the ROK's recent remarks about a
"preemptive strike" if there is any indication of a nuclear attack
from the North as "an open declaration of war." (All)


INTERNATIONAL NEWS
------------------

According to Japan's Nihon Keizai Shimbun, Kim Yong-nam, president
of the Presidium of North Korea's Supreme People's Assembly,
recently presented three conditions for the North's return to the
Six-Party Talks: 1) signing a peace treaty with the U.S. and China;
2) talks with the U.S. on regime security; and 3) lifting of
economic sanctions. (JoongAng)


MEDIA ANALYSIS
--------------

Secretary Clinton's Speech on Internet Freedom
Most media on Saturday (Jan. 23) gave straight coverage to Secretary
of State Hilary Clinton's Jan. 21 speech on Internet freedom.

Coverage highlighted the Secretary's statements: "Countries or
individuals that engage in cyber attacks should face consequences
and international condemnation;" and "We look to the Chinese
authorities to conduct a thorough review of the cyber intrusions
that led Google to make its announcement (that China should either
stop censoring Internet searches or risk a pullout by the
search-engine giant.) And we also look for that investigation and
its results to be transparent."

-President Obama's Wall Street Reform
------------------------------------
Left-leaning Hankyoreh Shinmun editorialized on Saturday: "If
President Obama's financial regulations go into effect, speculative
investment by large banks will become practically impossible. ... It

SEOUL 00000091 002 OF 003


is highly likely that EU nations, such as Britain and Germany, will
follow suit, given their strong stance toward regulating financial
markets. ... President Obama's Wall Street reform does not seem to
have a major effect on the ROK's banking industry right away. The
ROK's financial industry still relatively strictly separates
commercial banking and investment banking duties. What is somewhat
worrisome is, however, that some city banks, while promoting their
growth into large banks, are trying to expand their high-risk
investment duties. Even if investment bank duties are still
relatively light, now is the time to be on guard against making the
same mistakes as the big U.S. banks."

An editorial in right-of-center JoongAng Ilbo wrote today: "We
should be wary of mimicking another country' financial reform. As
the ROK's immature opening of the financial market set off a
financial crisis, it is dangerous to recklessly follow U.S.-style
financial reforms. ... Now is the time for the ROK to approach U.S.
financial reforms from various perspectives and to seek a
Korean-style financial model that fits its own situation."

- N. Korea
----------
Most newspapers on Saturday carried reports quoting Foreign Minister
Yu Myung-hwan as telling a Jan. 22 press briefing that he hopes the
stalled Six-Party Talks will resume sometime around the Lunar New
Year's holiday on Feb. 14.

Right-of-center JoongAng Ilbo replayed a Jan. 23 report by Japan's
Nihon Keizai Shimbun saying that Kim Yong-nam, president of the
Presidium of North Korea's Supreme People's Assembly, presented
three conditions for the North's return to the Six-Party Talks
during a recent meeting with a visiting Italian parliamentary
delegation: 1) signing a peace treaty with the U.S. and China; 2)
talks with the U.S. on regime security; and 3) lifting of economic
sanctions. JoongAng Ilbo wrote in the headline: "N. Korea Indicates
Intention to Exclude ROK from 'Talks on Korean Peninsula Peace
Treaty.'"


OPINIONS/EDITORIALS

U.S. FINANCIAL REFORM... IT IS TIME TO EXPLORE A 'KOREAN-STYLE
FINANCIAL MODEL'
(JoongAng Ilbo, January 25, Page 34)

Financial reform measures unveiled by U.S. President Barack Obama
are stronger and more comprehensive than expected. The reform plans
are designed to block commercial banks from making high-risk
investments and to limit the scope and size of large financial
institutions in order to get rid of the "too big to fail" principle.
The Glass-Steagall Act which was enacted in 1933 but repealed in
1999 is being revived again. Previously, President Obama proposed a
fee to raise 90 billion dollars in 10 years from top banks to recoup
every single dime of a Wall Street bailout. Obama is initiating
financial reform, buoyed by public anger over massive Wall Street
bonuses.

President Obama is ready to have an uncomfortable relationship with
Wall Street which once supported him. He believes that reckless
investment by the financial institutions triggered the crisis.
Obama said, "If those folks want a fight, it's a fight I'm ready to
have." U.S. taxpayers complain that the banks "privatize" earnings
and "socialize" losses. If U.S. financial reform is carried out, it
may help to prevent recurrence of a financial crisis. However, a
policy dependent on public sentiment yields side effects. If the
financial market is constrained, there is a greater possibility that
a global double dip may occur. If the U.S.'s financial banks
suffer, this may jeopardize its national competitiveness.
(Therefore,) the U.S. seems to be facing a double-edged sword.

Obama's financial reform proposals have already sparked controversy
at home and abroad. The U.S. financial sector is lashing out at the
reform plans. Even within the U.S. administration, Treasury
Secretary Timothy Geithner, who took the lead in easing financial

SEOUL 00000091 003 OF 003


regulations, and National Economic Council Director Lawrence Summers
are voicing different opinions. The reform proposals may be
considerably watered down when they are presented to the U.S.
Congress. Still, the undeniable fact is that the global financial
market is undergoing transformation. The U.S. and British financial
models that existed before a global crisis are not sustainable. A
new global standard will reveal itself when some challenges ahead
are resolved.

We should carefully watch how things play out. What is imperative
is that we should prepare against a possible outflow of foreign
funds in the wake of U.S. financial reform. Even though we need to
pay attention to the Obama Administration's effort to remove a blind
spot in financial oversight, we should note that the ROK's financial
environment is considerably different from that of the U.S. ROK
banks engage in a meager proportion of high-risk investments unlike
the U.S. and Britain. It has been a year since the ROK implemented
the Capital Market Consolidation Act which permits combined
operation of all financial investment businesses (such as sales,
brokerage, asset management, discretionary investment advisory
service). In this situation, if the ROK joins the bandwagon and
implements regulations (similar to that in the U.S.), it may have a
fatal effect.

We should be wary of mimicking another country's financial reform
measures. (Since) the ROK's immature opening of the financial
market set off a financial crisis, it is dangerous to recklessly
follow U.S.-style financial reforms. We should think about Obama's
financial reform from a different perspective. Struggling financial
institutions in industrialized countries may open new opportunities
for ROK financial companies which are seeking to globalize their
businesses. Now is the time for the ROK to approach U.S. financial
reforms from various perspectives and to seek a Korean-style
financial model that fits its own situation.


STEPHENS

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