Since obtaining its independence, South Korea has maintained a close and friendly relationship with France, which was the second western European state after Britain to recognize the government of the Republic of Korea as the only legitimate government on the Korean peninsula. France has been Korea’s strong ally since the end of the Korean War.

Numerous individuals and organizations alike have historically maintained friendly relations between the two countries, particularly religious and business entities, including multinational corporations.

As for individuals, nobody contributed more to the development of the economic relations between the two countries than Cho Joong-hoon, the founder of Hanjin Group. In fact, it wouldn’t be an exaggeration to say that he dominated Franco-Korean economic relations from the 1970s until the early 1990s. It is actually rather inappropriate to think of Cho as a single individual since he was the head of a chaebol that benefited greatly from the support from the military regimes of Park Chung-hee and Chun Doo-hwan.

What is really interesting about the role played by Cho is that, viewed in the context of international political science, the blurred dividing line between different economic factors contributed to an ever closer cooperation relationship between the two countries.

Given that the regimes of Park and Chun were keeping the Korean economy under tight protectionist control, and that Cho could be readily identified with the Hanjin Group (and vice-versa), it is difficult to clearly tell whether the principal driving force behind the development of Franco-Korean relations was an individual person, an enterprise, or the state.

This specific feature may account for the fact that illegal monetary flows were often facilitating trade at that time. In what follows, I will elaborate on the particulars of this economic system and provide a few cases for illustrative purposes.



Subway construction in Seoul and the bitter end of Alstom



The contract worth 18.5 billion yen ($157 million) for the construction of Seoul’s first subway linebetween 1973 and 1974 went to a Japanese consortium led by Mitsubishi. However, the French company Alstom had already worked hard to conclude a memorandum of understanding with the Subway Construction Headquarters affiliated with Seoul City Hall. Alstom was a multinational transportation and energy company specializing in the construction of railway carriages and railroad transportation services.

AnMOU is not legally binding. However, since South Korea at the time was engaged in a fierce diplomatic battle in the UN with the North Korea that was about to emerge as an international player, it was hardly possible for South Korea to ignore France. In the 1970s, since the times of Charles de Gaulle, France had been conducting a policy of equidistance with respect to both the USSR and the US, while producing immense influence on the African, Middle Eastern, and the developing nations so that it effectively held a casting vote in international diplomatic matters at the UN, being a diplomatic superpower.

On July 28, 1972, Kishi Nobusuke, the former prewar Japanese prime minister and the maternal grandfather of today’s Prime Minister Shinzo Abe, visited the Blue House as head of a Japanese delegation sent by the Committee for the Korean-Japanese Cooperation. That visit resulted in the Japanese consortium led by Mitsubishi winning the contract for the construction of Line 1 of the Seoul subway.

In this way, Koreans have opted for Japanese technology to guide the construction of not only railway carriages, but also the associated civil engineering works, signal systems and the like. As a result, Alstom had to retire from the Korean market having to wait for another 20 years to obtain a contract for the construction of high-speed TGV-style trains. The victory gained by Mitsubishi back then infuriated the French Elysee, indeed.



North Korea joins WHO



On March 28, 1973, North Korea filed an application with the UN to become member of the World Health Organization. Supported by Japan, the South Korean government immediately intervened in order to thwart this attempt. However, Seoul had to keep a low profile since the North Korean request to join WHO was granted approval at the 26th General Assembly of the United Nations on May 17 of the same year. The Blue House reacted immediately in a rather sensitive a fashion.

On the 4th of June 1973, Kim Jong-pil, the then Korean prime minister, paid a visit to Paris, where the French President Georges Pompidou urged him to purchase the Airbus aircraft that had already been developed. Back then, those aircraft, which were jointly developed by France, Germany, Great Britain, and Spain, were not taken seriously by anybody, because they had not proven themselves. Kim called Cho Joong-hoon asking him to immediately fly to Paris. The two flew on board of the presidential airplane to Toulouse in order to inspect the production facilities where the Airbus aircraft were being produced.



Korean Air purchases Airbus aircraft



Cho’s first reaction was to say no, since not a single aircraft had been completed. However, he ended up being persuaded by Kim to do the opposite. Finally, Korean Air ordered the delivery of six Airbus aircraft on the condition that they would be paid for later.

Korean Air thus became the first foreign company to purchase Airbus aircraft. Airbus was in fact so worried about possible technological defects that it maintained a team of technicians at Gimpo Airport for several years.

Due to the dramatic decision to purchase the Airbus aircraft, Korean Air has amassed enormous profits by starting to serve the lucrative European destinations. During the oil crisis of 1973 when energy prices were rising on a daily basis, the more energy efficient Airbus aircraft contributed to Korean Air’s competitive advantage.

Encouraged by the fact that there had been no accident involving an Airbus aircraft operated by the Korean Air, the world’s air carriers embarked on a purchasing spree for the Airbus planes, rivaling the US’ Boeing. The mutually beneficial relationship between Korean Air and Airbus undoubtedly serves as a role model for the Franco-Korean relationship.



Committee for Franco-Korean Cooperation and Sogeko



The two factors holding back the Korean economy in 1973 were the international oil crisis, and the chronic shortages of foreign exchange. The Franco-Korean Committee for Economic Cooperation was established in the spring of 1974 with the view of being a springboard that would start off luring capital inflows from France. The Blue House nominated Cho to chair this committee. Since that moment, Cho truly became the protagonist of Franco-Korean relations.

The members of this committee commuted between Paris and Seoul on an annual basis, thus contributing to the development of the bilateral relations. In the process, Societe Generale and Hanjin Group founded the Franco-Korean Financial Group in 1977.

At the time, Koreans were almost totally ignorant with regard to the financial affairs. Sogeko was a channel through which the French shared best-practice financial approaches with Koreans. The only problem was, the lecturing fees proved to be far too high. Sogeko, though, grew to become one of the most profitable merchant banks in the world.

By Lee Chang-hoon 

Lee Chang-hoon, a former president of Halla University and Veolia Water Korea, is now the president of the Seoul ASEM Institute for International Relations and the representative for Korea of the French ports of Le Havre-Rouen-Paris called HAROPA. Lee holds a doctorate from the University of Paris X. He can be reached at leech771@seoulasem.com. — Ed.