S. Korean financial market relatively unaffected by Russian risk

[Lee Jae-min] ‘Host-and-run’ phenomenon

kh close

 

Published : 2014-01-21 19:39
Updated : 2014-01-21 19:39

The F1 Grand Prix race is not coming back to Yeongam, South Jeolla Province, this year because of a dispute involving adjustment of contract terms. Few remember the 2011 Daegu World Track & Field Championships. All these huge sports-investments are staged to host local events while the deficit is ballooning. Incheon’s hosting of the 2009 World City Expo drew complaints from the Bureau International des Expositions in Paris due to unauthorized usage of the title “Expo.” Submission of unauthorized official documents in the course of Gwangju’s bid to host the World Aquatics Championships in 2019 has led to a criminal investigation.

All the uncontrolled international activities and events hosted by local governments are finally taking a toll. The Board of Audit and Inspection reports that Korea’s local governments registered an almost 1 trillion won deficit from the 28 international events hosted between 2008 and 2011 alone. The number will surely soar when subsequent events are added. Alarmed by the skyrocketing financial burden, the central government, although belatedly, is now tightening up the oversight regulations. A bill has just been introduced which would require prior approval by the National Assembly when a local-government-hosted event exceeds a designated monetary threshold.

As hosting international events is considered to be one of the most dramatic barometers of the achievements of the head of a local government, many governors and mayors have put this at the top of their agenda. As a matter of fact, major local governments maintain international cooperation divisions to spearhead their international programs. Everything international seems tempting.

Enormous amounts of tax money are then poured into implementing the plan. The credit is taken by governors and mayors, but the resulting financial burdens are dumped on the lap of their successors or someone else in Seoul. Given this host-and-run phenomenon, tightening the oversight on the local governments’ international activities is long overdue.

The real problem actually goes beyond the budget issue. Local governments’ international drives often involve the signing of documents and papers with foreign counterparts. Sometimes national flags are placed side by side on the table and fountain pens are exchanged. These solemn ceremonies are enough to trick people (even the signers themselves) into wrongly believing that they are signing a treaty or something on behalf of their countries. In a couple of hours, the pictures are then posted on the websites of the local governments. One down, more on their way.

Many promises are made during these agreements. If the purpose is to induce foreign direct investment into the region, a fat incentive package is offered. Favors are given to a group of foreign companies and businesses over others without proper consultation with the central government. Products are purchased without going through necessary procedures. Oftentimes, the mayors and governors themselves are “movers and shakers” in domestic politics and would hate to be seen as succumbing to the pressure of the central government.

The problem is, in terms of legal obligations under treaties there is simply no difference between a central government and a local government of a state. All levels of government collectively constitute the government of a contracting party bound by treaties and agreements. In the absence of close coordination, some of the promises made by local governments may actually be incompatible with Korea’s commitments.

In fact, quite a few legal disputes unfolding on the international stage nowadays involve actions taken by local governments. In other words, any document signed by a local government that contains some substantive issues may implicate the central government in Seoul if something goes wrong. This realization is critical in reviewing local governments’ international activities.

The race for the June local government election is now heating up. Watch for rosy promises for big international events and programs. There may be another host-and-run.

By Lee Jae-min

Lee Jae-min is an associate professor of law at Seoul National University. ― Ed.

Photo News

티아라 효민 멋진 뒤태에 남심 흔들

섹시백 선발대회 몸매 뽐내는 참가자들

카자흐 女배구선수 초특급 미모, 전세계 ‘깜짝’