LEE MYUNG-BAK: THE NEXT PRESIDENT OF KOREA?

C O N F I D E N T I A L SEOUL 004014

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/08/2016
TAGS: PGOV PINR PREL ABLD KS KN
SUBJECT: LEE MYUNG-BAK: THE NEXT PRESIDENT OF KOREA?

Classified By: A/DCM Joseph Y. Yun. Reasons 1.4 (b/d).


1. (C) SUMMARY: In a November 20 meeting with the DCM,
former Seoul Mayor and leading presidential hopeful Lee
Myung-bak said that the December, 2007 ROK presidential
elections will be about the economy above all else. He said
the Korean economy should be growing at a 7 percent rate
instead of the current 4 percent, but did not give a specific
recipe on how he would encourage that kind of growth, other
than noting that Korea needed to expand domestic consumption
rather than depend only on exports. Lee said the U.S.-ROK
relationship was vital for the ROK and eventual
reunification, and that our two countries' national interests
could be harmonized if, unlike President Roh, the future
President chose experienced and knowledgeable advisors. Lee
said engagement with the North should be pursued, but with
firmness based on reciprocity, which was quite different from
the appeasement strategy of the Roh administration. Lee
explained that his 13 percent lead in polls among all
possible presidential candidates was due to his strong
economics background and his consistent, firm stance toward
North Korea. END SUMMARY.

The Political Road Ahead
--------------


2. (C) In a November 20 meeting with DCM Stanton, Former
Seoul Mayor Lee Myung-bak, leading in all presidential polls,
seemed comfortable with his front-runner status and confident
that the campaign leading to the Blue House was manageable
through concentrated focus on the economy. Lee observed the
ruling Uri Party would likely split because of internal
difficulties while he guaranteed the opposition Grand
National Party (GNP) would stay together. He added that the
GNP candidate would become clear in January, 2007. President
Roh was elected in 2002 by playing on anti-American sentiment
but in 2007 while the traditional left-right split and North
Korea would be important election issues, the U.S.-ROK
relationship would not play a major role; the economy would
be the top issue for voters.


3. (C) Lee said Washington and Tokyo should not be too hard
on North Korea before the elections because that could allow
the Uri Party candidate to exploit this issue. During a
recent trip to Japan, Lee asked PM Abe to work to improve the
ROK-Japan relationship only after the GNP came to power in
2008 because the current Roh administration would try to
incite anti-Japanese sentiment and had no interest in
improving the bilateral ties.

The Road to Unification
--------------


4. (C) Lee said no South Koreans expected the Six Party Talks
to succeed so, if they were to fail, it would not have much
impact on the local political scene. He said that Roh and
Kim Jong-il were not serious about the Six Party Talks. For
any approach toward North Korea to work, there should be
strong coordination between the U.S. and ROK and a firm
approach toward North Korea. The DCM cited a poll that said
43 percent of South Koreans thought the North Korean nuclear
test on October 9 was the fault of the U.S. and asked if
politicians might use this to make anti-U.S. sentiment a key
2007 campaign issue. Lee allowed it could happen, but
thought the economy would be the central campaign issue. He
added that South Korea could not accept a nuclear North Korea
and should work with the U.S. to ensure the dismantlement of
the North's nuclear program.

Changes In North Korea Policy?
--------------


5. (C) The DCM asked what changes Lee would make on
inspections of cargo going to and from North Korea and if any
changes were needed regarding the Mt. Kumgang tourism project
or the Kaesong Industrial Complex (KIC). Lee said that the
Mt. Kumgang project started when he was still at Hyundai and
thought it was an important project, but that no cash should
be given to the North Korean regime. He said that former
President Kim Dae-jung had distorted the project but that it
still should be continued without cash payments. Lee
stressed that Kim Jong-il must be confronted with consistent,
firm policies toward North Korea.


6. (C) In an odd aside, Lee said he knew Saddam Hussein well
from his days leading construction projects in the Middle
East and in fact saw Hussein kill a general; he said he had
less to do with Hussein after he witnessed the shooting. Lee
continued that the U.S. did not know Iraq and this had led to
the many subsequent problems. The U.S. should attempt to
understand the way South Koreans view North Korea just as the
U.S. should have tried to understand how Iraqis saw Hussein
before invading Iraq. Such perspectives were needed to
explain why South Koreans still wanted to travel to Mt.
Kumgang despite the nuclear test; South Koreans had an
emotional attachment to the mountain that the U.S. should try
to understand.

Economy, Economy, Economy
--------------


7. (C) On the South Korean economy, Lee said that the
current 4 percent economic growth rate was fueled by exports
and high tech industries which did not create many jobs or
stimulate the development of the overall economy.
Therefore, there was a high level of economic insecurity. To
overcome such insecurities, the domestic market should
develop to the point of around 7 percent growth rate, enough
for new job creation and to fuel a boom in domestic demand.
Lee then touted his canal project that would link Busan to
Seoul, Seoul to Incheon, and also have links into North Korea
to create a transportation corridor that would boost economic
growth. NOTE: Lee recently went to Germany and Netherlands
to study various canal projects and to Switzerland to study
the high-speed particle accelerator on the Swiss-French
border. END NOTE.

Comment
--------------


8. (C) Now leading comfortably in the polls, Lee is widely
seen as the presidential candidate to beat. One of his
rivals, former Governor Sohn Hak-kyu recently conceded that
if Lee keeps building momentum, "he will be unbeatable by any
candidate." Lee, a self-made man, represents several
important symbols that most Koreans revere: former President
Park Choong-hee, who worked closely with Hyundai to encourage
sustained economic development, Hyundai and the success of
the chaebol system, and the Horatio Alger myth, Korean style.



9. (C) Lee's main negative is also his long-time involvement
with the Hyundai Group, especially the construction business.
His opponents assume that Lee must have many skeletons
hidden in his closets because most construction in Korea
involves questionable financing. Lee's take-no-prisoners
style in business and politics also grate his opponents, who
remind the public that South Korea is now beyond such
authoritarian conduct. Still, for many South Koreans,
there's no denying that Lee's can-do persona holds
considerable attraction.
VERSHBOW