President Roh Moo-Hyun talks to reporters after his tour to Singapore in Seoul Airport in Songnam City. Courtesy Newsis

With the start of the 17th National Assembly and reinstated presidency next week, the Roh Moo-Hyun administration faces two critical tasks. First, the government must take steps to revive the faltering economy.

As President Roh stated in his recent address, the priority must not be on short-term fixes, rather, reforms should focus on fundamentals that assure longer-term growth and health of the national economy.

In this regard, the primary impediment faced by Korea is making the successful transition to a service sector based economy. For South Koreans historically, one indicator of economic performance has been exports. The more exports, the stronger the economy.

Along these indicators, South Korea has done well, registering 40 percent growth rates. This is an astounding rate of growth in today's international economy. These stellar numbers, however, are juxtaposed to a domestic economy that is suffering from high unemployment and low investment. One of the sources of this problem, according to economic experts, is Korean unwillingness to make the structural shift to a service-sector based economy.

Relative to its per capita income levels and its highly skilled labor force, South Korea is an advanced industrial society that is still abnormally weighted in the direction of a manufacturing-based economy. Western economists puzzle over this imbalance. Perhaps part of the answer is cultural as Koreans feel more comfortable working with commodities they can physically hold in their hands.

William J. Perry, ex-Secretary of Defense

But China will soon dominate the production and export of manufactured goods in Asia, if not the world. For domestic and international investor confidence in the Korean national economy to grow, and for unemployment to decrease, the country needs therefore to upgrade its service sectors. This is critical to the long-term health and competitiveness of the economy.

Second, the South Korean government needs desperately to address the alliance relationship with the United States. The anti-American demonstrations last year coupled with the talk among a younger generation of Koreans about the US posing a greater threat than North Korea has raised a great deal of concern among Americans who care about the 50-year old alliance.

Many are curious about the future strategic direction of Korea. Others have already written off the alliance, putting South Korea in China's orbit and forever beholden to North Korea's ability to threaten its own collapse to extort aid from Seoul. The election of a liberal parliament and reinstatement of a reformist president will cause many Americans to assume the worst about the alliance's future.

The rebalancing and realignment plan, coupled with the abrupt announcement of the second brigade's transfer from Korea to Iraq, clearly demonstrate how the US-ROK alliance is in a state of flux. The dilemma right now is that the conservatives criticize the liberals for allowing the alliance to fall into such disrepair.

And the liberals deflect such criticism by blaming the Bush administration for unilateralism. The result is that public discussion of the alliance has become highly politicized with each side attacking the other and very little substantive work being done to address problems and misperceptions with the Americans.

Tends of thousands of citizens gathered in downtown Seoul are holding canldle light in their hand as part of their anti American protest.

The United States faced a similar situation with regard to its own policy toward the Korean peninsula not too long ago. Republicans attacked the Democratic administration such that policy toward North Korean became highly politicized to the point of becoming dysfunctional.

At that time in 1999, the United States appointed a respected official, former Secretary of Defense William Perry, to conduct a comprehensive review of US policy toward North Korea. The policy review's valuable contribution was that it addressed the substantive strategy, not the politics, of dealing with North Korea. Most important, it forged a bipartisan consensus on the policy.

The South Korean government needs now to conduct its own version of the Perry review regarding the United States. A blue-ribbon commission of former ROK officials, scholars, and parliamentarians should be appointed to conduct a comprehensive review of South Korea's alliance with the United States.

This commission should be tasked with creating some transparency about South Korea's grand strategic intentions. Among other tasks, the commission should seek to explain definitively how South Korea sees its future defense autonomy; how it views its relations with China (vis a vis the US); and what type of long-term alliance (if any) it wants with Washington.