Roh was sentenced to 22 years, Chun to death, but in December 1997, Kim granted them a presidential pardon and the two were released from prison. 1997 was a very bad year for South Korea’s economy, with the won taking a tumble and tourism dropping dramatically. In February 1998, former dissident Kim Dae-jung became president, the first time a non-conservative had headed the country in its 50 years of independence. Kim promised to introduce economic and democratic reforms and improve relations with North Korea.

By mid-1998 the South Korean economy was actually shrinking – something that hadn’t occurred for nearly two decades. Rising bankruptcies and soaring unemployment led to large-scale labour unrest, but the economy is now on the move again.

Making good on promises of more neighbourly relations with North Korea, Kim made an historic visit to shake the hand of reclusive North Korean leader, Kim Jong Il, in June 2000. As a sign of good faith he allowed the North Korean government to arrange for his security. In October 2000 he was awarded the Nobel Peace Prize, and as part of a partnership with Japan and the USA continues to pursue a policy of cooperation with North Korea. In December 2001 he became the first Asian leader to speak before the European Parliament in Strasbourg.

The luster of Kim’s peace prize seems to have worn off with evidence of a cash for summit scandal. Apparently, the South Korean government had a hand in a secretly pumping a vast sum of money – in the order of $100 million or more – into the North in order to ensure that then President Kim Dae-jung could get a visa to North Korea and shake hands with the Dear Leader.

Recent History
A naval battle early the following year against North Korea that left four dead (and claimed an estimated 30 North Korean victims) highlighted the fragility of the rapprochement. In December 2002, Roh Moo-hyun won the presidency, but by early 2004 he was hanging on to power by a thread. Parliament voted to impeach him, but its decision was reversed by the Constitutional Court. Meanwhile, a site for the country’s new capital city was chosen in the Yeongi-Kongju area and the US announced plans to reduce its troop numbers by a third. After successfully completing a free trade agreement with Singapore and Chile (which, if nothing else has brought some reasonably priced wine into the country), South Korea initiated FTA talks with a number of other countries including the USA (very contentious due to the potentially negative impacts on South Korea’s agricultural industries) and Canada.

all info taken from www.lonelyplanet.com