South Korean President Lee Myung-bak has ordered the police to crack down on the anti-government movement that has developed since his administration’s decision to allow the resumption of US beef imports. The move is a response to fears in the Korean ruling elite that social discontent is spiralling out of control and aggravating an already unstable economic situation.

Lee’s office sought to outlaw industrial stoppages yesterday by an estimated 120,000 of the 511,000 members of the Korean Confederation of Trade Unions (KCTU), called over both wage demands and in opposition to US beef imports. Lee declared the stoppages were an “illegal and political walkout” and KCTU leaders have been summoned to appear before the Ulsan District Prosecutors Office. If they do not turn up, arrest warrants will be issued.

Hyundai Motors, whose 44,000-strong workforce closed down production lines for two hours at plants in Ulsan, Jeonju and Asan, has announced it is filing a petition for union leaders to be arrested and charged with “obstructing its business”.

Some 29,000 workers at Hyundai affiliate Kia Motors also took part in the brief stoppage, closing plants in Sohari, Hwaseong and Gwangju. Auto parts manufacturers Mando and Halla Climate Control were affected as well. The vast majority of workers at Daewoo Auto and Ssangyong Motors reportedly did not strike. Outside of the auto industry, few KCTU members participated.

Despite its limited scope, the strike contributed to the general panic in the South Korean corporate elite. The stock market Kopsi index plunged 2.6 percent in trading yesterday, the largest decline in three months and the 18th consecutive day of falls. The stock sell-off has been a response to high oil prices, the government’s lowering of economic growth expectations from 6 percent to 4.7 percent, rising inflation and the fear of political instability.

South Korea recorded a trade deficit of $US284 million in June, a dramatic reversal from the $1.03 billion surplus registered in May. The overall trade deficit for the six months to June has reached $5.7 billion. The cost of oil imports are the main cause, blowing out by 60.9 percent due to the global rise in prices.

Inflation is accelerating. The consumer price index (CPI) rose by the largest rate in June since the turmoil induced by the 1997-1998 Asian financial crisis. The CPI increased by 5.5 percent, compared with 4.9 percent in May. So far this year, the Korean currency, the won, has fallen by 12 percent, contributing to sharp price rises for oil, food and other commodities. The Korean central bank is under intense pressure to raise interest rates to shore up the currency and stem the exodus of foreign capital. Five-year government bonds have already risen this year from 4.92 percent to 5.97 percent.

Lee’s prime minister, Han Seung-soo, told a press conference on Tuesday: “The daily protests are making foreign investors avoid direct investment in Korea and also discouraging investment by domestic businesses. The credibility of South Korea’s economy is worsening rapidly.”

The protests began in April when Lee unexpectedly lifted the US beef ban, which had threatened to obstruct negotiations toward a US-Korea free trade agreement that will give Korean auto companies and other export industries greater access to the US market. US beef imports were banned in 2003 after a case of Mad Cow Disease was discovered in American cattle.

The protests against the decision rapidly developed into a volatile expression of the pent-up discontent and alienation within the working class and youth. Living standards have stagnated or declined since the 1997-1998 financial crisis, as successive governments have implemented policies to protect the profitability of Korean corporations.

President Lee, a former Hyundai CEO who took office in February, is viewed as an even more pro-big business figure than his predecessor Roh Moon-hyan. The policies that Lee unveiled—privatisation, constructing a canal from Seoul to Busan, changes to the education and health-care systems and support for the Bush administration’s hard-line stance against North Korea—have been widely opposed.

The US beef decision was seen as symptomatic of the government’s indifference to the conditions facing ordinary people. Even though no case of Mad Cow has been diagnosed in the US since 2003, thousands of young Internet users discussed the lifting of the ban as evidence that Lee was prepared to infect them in order to secure export opportunities for the chaebols—the Korean corporate conglomerates. On June 10, an estimated one million people demonstrated around the country, demanding Lee’s resignation and the maintenance of the prohibition on US beef.

For weeks, the Korean media has been voicing demands of the ruling elite for Lee’s administration to crack down on the demonstrations and suppress any move by workers to take industrial action. Lee is now clearly acting.

Yesterday’s move to arrest union leaders comes in the wake of brutal police actions on Saturday night against more than 20,000 people who assembled in Seoul Plaza—the largest demonstration since June 10. Over 10,000 riot police were mobilised to block an attempt to march on Lee’s presidential offices. A barricade of 30 police buses blocked their intended route.

Footage quickly published on the Internet showed police rushing into crowds of people and beating them with batons and riot shields, and demonstrators being bowled over and flushed along the ground by high-pressure water cannon. For the first time, the police added fluorescent dye to the water so that protestors could be tracked down and arrested later. As many as 400 demonstrators required medical treatment, as did 112 police.

In an Associated Press clip police can clearly be seen striking a man with the rim of their shields during one of their baton charges.

In another clip available on YouTube police officers can be seen repeatedly kicking a young woman in the head and body as she lies on the ground. The woman—later identified as a 24-year-old who said her family name was Jang—suffered a broken arm and severe bruising. She told journalists: “I continuously rolled my body to survive. They chased me, kicking me primarily in the head. I was afraid that I could die.”

Among the injured were members of the Young Men’s Christian Association (YMCA), who lay down on the road between the protestors and police in an effort to stop the baton charges. Police ignored their pacifist gesture and reportedly stomped on them and struck them with their batons as they ran over the top of them. YMCA Korean secretary general Lee Hak-yeong told journalists that his right arm had been broken. His associate, Hong Gyeong-pyo, was kicked unconscious.

The government seized upon the violent clashes to issue a declaration on Sunday that all further assemblies in Seoul Plaza were illegal and would be prevented.

On Sunday evening, police blocked the subway exits to the Plaza, where demonstrators intended to assemble, while hundreds of police fanned out into the surrounding streets. A truck rigged with protestor’s broadcasting equipment was towed away. At least 16 people who attempted to protest against the police actions were arrested.

At the break of dawn on Monday, police raided the offices of the Korea Solidarity of Progressive Movements, an organisation which has been prominent in the almost daily protests since the beef import ban was lifted in April. According to the Korea Herald, 23 computers, a laptop and boxes of documents were removed.

At the same time, more than 50 police raided the Seoul offices of the People’s Alliance for Countermeasures against Mad Cow Disease—the umbrella organisation for the 1,700 groups involved in the protests. For more than 90 minutes, the police rampaged through the building. They removed three computers, along with placards, banners and raincoats.

In response to the repression meted out to the Mad Cow Alliance, religious organisations have taken responsibility for organising the daily protests. The Catholic Priests’ Association for Justice held a mass in Seoul Plaza on Monday evening, criticising the resumption of beef imports and calling for the sacking of the police commissioner over Saturday’s brutality. Despite promises of non-violence by the religious groups, thousands of police were still mobilised on the streets. Protestant and Buddhist groups are planning similar vigils over the coming days.

For the Mad Cow Alliance’s next major action, scheduled for Saturday, it is calling for a massive turnout to turn the protest into a “Day of victory for one million protesters”.

Editorials in the Korean press have made clear that the ruling class expects the government to use overwhelming force to suppress the demonstration. The JongAng Daily declared on Monday: “As a nation, we have entered into a nightmare of lawlessness and anarchy... In our view the government should respond strongly to the violent protests pursuant to laws and regulations. It should not renege on its pledge to take the more radical leaders of the protestors into custody for initiating the violence.”

Lee’s cabinet has announced that police will be granted the right to use tear gas—a controversial move because tear gas was last used during the mass demonstrations and strikes that led to the downfall of the military dictatorship in 1987.

The instinctive resort of the ruling elite to police-state repression underscores just how superficial the so-called “democratic” reforms since 1987 have been. Behind the façade of elections, the interests of the same clique of powerful business families that benefited from the previous period of military rule continue to be served.