Seoul, the Blue House, the presidential residence located in the northwest of the city.
Early on Saturday morning, South Korea's current president, Kim Young-sam, who had been on edge for several days, was abruptly awakened by his staff. They handed him several newspapers fresh off the press.
Still in his pajamas, Kim Young-sam only needed to glance at the headlines before he couldn't contain his anger. He pointed furiously at one of his subordinates and shouted, "Who leaked the news? Who? You idiots, you're all idiots! And these newspapers, they should all be hanged, hanged!"
This was followed by a series of crashing and shattering sounds as he destroyed an entire reception room.
After venting his rage, Kim Young-sam calmed down slightly but had no appetite for breakfast. He urgently summoned his advisory team to the Blue House to discuss countermeasures.
However, before the Blue House could formulate an effective response, as the day broke, the news that the current government was planning to seek a humiliating bailout from the International Monetary Fund (IMF) had already spread across the streets and alleys through newspapers and television.
Although the national economy had been in turmoil recently, most of the public had no idea what the IMF was. But under sensational headlines like "Blue House Conspires to Sell Out the Nation, IMF to Take Over Korea's Financial Sovereignty," "Reenactment of the Eulsa Treaty, Korea to Face Century-Long Shame Again," and "Better to Die with Honor, Inviting the IMF is Inviting Wolves into the House," public sentiment was easily stirred.
Particularly the frequent mention of the Eulsa Treaty in newspapers and TV reports struck a nerve with Koreans.
In 1905, after winning the Russo-Japanese War, the Japanese government signed the unequal Eulsa Treaty with the Korean Peninsula, which had been abandoned by both China and Russia. Under the pretext of lending Korea 10 million yen, Japan declared the entire peninsula a protectorate of Japan.
Five years after taking control of the peninsula's economy, in 1910, Japan, step by step, fully annexed the country, turning it from a so-called "protectorate" into a full-fledged colony. For the next 35 years, until the end of World War II, the Korean Peninsula remained under Japanese rule before regaining its sovereignty.
In the newspapers and TV news that Saturday, large sections were devoted to portraying the IMF bailout as equivalent to signing a second Eulsa Treaty. Comparisons were also made to Thailand, which had already accepted IMF assistance, further fueling the anger of the Korean public.
The public's thinking was simple.
No matter how difficult the country's situation might be, selling out the nation was absolutely not an option.
Better to die with honor than live in disgrace.
Thus, on Saturday morning, when live TV broadcasts showed people demonstrating outside the Blue House, large numbers of Seoul residents took to the streets and began gathering around the presidential residence in the northwest of the city.
By noon, what had started as a few hundred people had swelled into a massive crowd of over 100,000, and the numbers were still growing. The public held up signs and chanted slogans, demanding that President Kim Young-sam publicly declare that under no circumstances would he seek a bailout from the IMF at the cost of selling out the nation.
If this had happened at any other time or under different circumstances, the Blue House might have been able to handle it calmly.
But not now.
No one understood the country's precarious state better than South Korea's top leadership. The nation's short-term foreign debt due within a year was close to $90 billion, with a third of it needing to be repaid by the end of the year. However, the South Korean central bank had less than $8 billion in usable foreign reserves.
Unless the government decided to default, failing to repay these debts when they came due would mean only one thing: national bankruptcy.
While corporate bankruptcy might result in liquidation or layoffs, national bankruptcy would lead to the collapse of the country's credit, causing the currency to devalue indefinitely. This would wipe out decades of accumulated national wealth.
Just like what happened in Russia after the ruble's infinite devaluation a few years ago.
The Soviet Union, which had rivaled the United States for half a century, left its successor states with a substantial economic foundation, even if it couldn't match the U.S. in scale. However, the economic collapse caused by currency devaluation plunged many former Soviet states into a depression no less severe than the Great Depression in the U.S.
Therefore, if South Korea were to go bankrupt, it would undoubtedly plunge into a prolonged depression of unknown duration. Businesses would collapse en masse, unemployment would skyrocket, and social order would disintegrate.
A true apocalypse.
Compared to avoiding this apocalyptic scenario, seeking a bailout from the IMF was almost the only option for South Korea without breaking international rules.
As for breaking the rules and defaulting, that was also a possibility.
But would other countries allow it?
Let's not forget, tens of thousands of well-equipped U.S. troops were stationed in South Korea's capital!
While the public might selectively ignore this fact, South Korea's leadership couldn't. These military forces could indeed protect South Korea from foreign invasion, but under certain circumstances, they could also be used to impose a military takeover in an instant.
With incomplete sovereignty, how could South Korea afford to default?
Beyond the economic implications, the Blue House also faced a significant political issue.
The presidential election.
1997 was the year of South Korea's 15th presidential election, scheduled for December 18.
According to South Korea's constitution, Kim Young-sam could only serve one term and was ineligible for re-election. However, Lee Hoi-chang, another candidate from Kim's ruling party, was still vying for the presidency.
The media's sudden onslaught would undoubtedly damage Kim Young-sam's approval ratings, which would in turn hurt Lee Hoi-chang, who was already trailing behind another candidate, Kim Dae-jung. Moreover, if the ruling party lost the election, under South Korea's political rules, the entire current administration could quickly fall from power.
Caught between a rock and a hard place.
In the end, after just one day of facing the public, the Blue House quickly chose to compromise. After all, this was an urgent crisis, and further escalation could lead to unpredictable consequences. That afternoon, Kim Young-sam personally delivered a televised address, publicly declaring that South Korea would not accept IMF assistance.
He also called on the public to unite and overcome the difficulties together.
South Korea's turmoil quickly spread internationally.
In response to international attention, following Kim Young-sam's public statement, Michel Camdessus, the current head of the IMF, gave an interview in Washington, D.C. He stated that the IMF was a neutral international financial institution and would not force any country to accept loans it did not need.
However, Camdessus also emphasized that to ensure the proper use of IMF loans, any assistance provided would come with appropriate conditions. The IMF would not compromise on this principle.
These statements from both sides essentially meant that the planned negotiations between the South Korean government and the IMF had ended before they even began.
While South Koreans celebrated this victory the next day, international speculators began to ramp up their bets against South Korea.
Everyone understood that South Korea's explicit rejection of IMF assistance meant that foreign capital would flee the country at an accelerated pace, the foreign debt market would face a selling frenzy, the stock market's plunge would continue, and, most directly and severely, the Korean won would depreciate even faster.
In short, the country was sliding further into the abyss.
Only one step away from complete collapse.
Behind the scenes, invisible to the public, Simon's plans continued to unfold.
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