Economics

South Korea’s Constitutional Court began reviewing President Yoon Suk Yeol’s impeachment on Saturday, following a National Assembly vote that led to it. Yoon was scheduled for questioning on Sunday as part of a prosecutors’ office investigation, but he has not responded. Meanwhile, the leader of his party, who had supported the impeachment, has resigned.

NBC News reports the prosecutors’ office asked Yoon to appear for questioning on Sunday as part of an investigation over his failed attempt to declare emergency martial law earlier this month. Prosecutors will issue another summons for the president. 

On Saturday, the National Assembly voted to impeach Yoon, with 204 lawmakers in the 300-member house in favor of the motion and 85 against. Eight votes were declared invalid, while three lawmakers abstained from voting.

The vote comes a little more than a week after Yoon survived an impeachment vote, capping multi-week political turmoil in the country that borders North Korea. This follows Yoon’s declaration of the briefest martial law in South Korean history on December 3, lasting only a few hours, after accusing the opposition party of engaging in ‘anti-state activities.’

Recall, Yoon said: “I will not give up. I will do my best for our country.” And this could be why he failed to appear for questioning on Sunday.

“If Yoon continues to defy requests for questioning in the two inquiries, investigators could ask a court to issue a warrant for his arrest,” NBC noted. 

Under South Korea’s Constitution, Yoon’s impeachment has allowed Prime Minister Han Duck-soo to become interim leader.

Political instability in South Korea led to the resignation of Han Dong Hoon, the leader of Yoon’s People Power Party, on Monday morning. 

Han said he does “not regret supporting the impeachment” because the president’s use of martial law was wrong. 

“Defending illegal martial law is a betrayal of the country, the people, the conservative spirit, and the achievements of our party that achieved industrialization and democratization,” Han emphasized. 

Given that the Constitutional Court will now decide whether to reinstate or remove Yoon, Goldman’s Goohoon Kwon and Andrew Tilton provided clients with the possible transition scenarios. That process could take up to six months.

Here’s what comes next: 

Newsquawk’s latest headlines on the ongoing political turmoil: 

• South Korean MPs have successfully voted to impeach President Yoon in their second attempt, amid backlash following his brief move to impose martial law, according to BBC. Yoon was suspended from official duties at 19:24 local time on Saturday while PM Han is to continue as acting president, according to Yonhap.

• South Korea’s acting president Han vowed to leave no vacuum in state affairs, build a solid security posture, and ensure the cabinet works hard to maintain trust with the US, Japan, and other partners. He also pledged efforts to operate financial and forex markets smoothly, according to Yonhap. Acting President Han said the country will maintain preparedness to prevent North Korea from stirring up provocations, secure national interests ahead of the new US administration, and prioritise national security above all else, according to News1 and Yonhap.

• South Korea’s opposition leader Lee Jae-myung said the party has decided not to proceed with the impeachment of acting , according to Reuters.

• Bank of Korea stated it is necessary to respond more actively to the economic impact compared with past impeachment periods, given heightened challenges in external conditions. It also said it will use all available policy instruments, in conjunction with the government, to respond to and avert escalation of volatility in financial and forex markets, according to Reuters.

• South Korea’s Finance Minister said the government will continue to swiftly deploy market-stabilising measures as needed, seek more support measures for vulnerable sectors, and actively communicate with parliament to keep the economy stable. The minister also confirmed that the bi-annual economic policy plan will be announced before the end of the year, according to Reuters.

• South Korea’s financial regulator said it will expand market-stabilising funds if needed to boost liquidity in bond and short-term money markets and expects financial markets to stabilise as recent political events are temporary shocks, according to Reuters.

Also, the Goldman analysts warned of another scenario that could unfold: “… muddling through in a political gridlock.”