LEE MYUNG-BAK ADVISOR ON ECONOMIC ISSUES AND DPRK

C O N F I D E N T I A L SEOUL 001418

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/10/2017
TAGS: PGOV PREL KS PINR
SUBJECT: LEE MYUNG-BAK ADVISOR ON ECONOMIC ISSUES AND DPRK


Classified By: A/POL Brian McFeeters. Reasons 1.4 (b/d)

SUMMARY
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1. (C) Nam Sung-wook, Korea University economics professor
and top North Korea policy advisor to leading presidential
contender Lee Myung-bak, told Poloffs during a May 9 meeting
that the 2007 presidential election was essentially about the
economy, with North Korea a secondary issue. He said former
Mayor Lee favors spending ten years helping North Korea reach
a per capita GDP of USD 3000 (from about USD 500 now),and
also believes that the ROK must reach a per capita GDP of USD
30,000 (from USD 18,600 now) before unification could be
considered. End Summary.

IT'S THE ECONOMY
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2. (C) Nam, with a PhD in economics from Missouri
University, has written extensively on North Korea's economy,
and is Lee Myung-bak's key advisor on North Korea policy. He
said that the December 19 presidential election will be
primarily about economics. Leading ROK businesses regard the
Kim Dae-Jung and Roh Moo-hyun administrations as lost time for
the ROK economy. Conglomerates are keeping their money in
the bank now, rather than investing, because of increased
corporate tax rates that Roh pushed through, and because of
other anti-business policies. He said the 4-5 percent growth
rate in recent years was due to fluctuating exchange rates
and did not represent real economic development.

LEE'S USD 3,000/30,000 PLAN FOR NORTH KOREA
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3. (C) Nam described economic conditions in North Korea as
bearable for most of the population. The upper 20 percent of
the population lived relatively well and the poorest 20
percent had no experience of anything but hardship. The poor
lived like Koreans of the 19th century, when two small meals
a day was the norm. Although North Koreans know the ROK and
PRC are wealthier, it was unlikely there would be strong
internal dissent over the poor conditions since they have
never experienced wealth.


4. (C) Nam explained the Lee Myung-bak has a "3,000/30,000"
vision for North Korea. Once North Korea achieved 3,000 USD
per year per capita, dissent would begin and political and
economic changes would likely occur from within. Therefore,
Nam noted, until the North advanced, in about ten years, to
this level, there was no need to make detailed plans for
reunification. It would likely take more than ten years for
North Korea to change significantly. In addition, the ROK
would have to reach a per capita income of USD 30,000 (from
USD 18,000 now) before it could consider unification.
(Comment: In short, the Lee plan, as outlined, appears to be
a way of saying that potential unification is a long way off.
End Comment.)


5. (C) During a June 2006 trip to Pyongyang, Nam walked on
his own for two hours around the city one morning. While
foreigners could walk freely around Pyongyang, Koreans were
assigned minders and he had to sneak out of his hotel one
morning to catch a glimpse of the city on his own -- and he
found his guides very angry when he returned. He was most
struck with the poverty and said the streets and people
reminded him of 1960s or early 1970s South Korea. Since
South Korea has undergone extensive development, including
during the Park Chung-hee presidency, there was a wealth of
development expertise in South Korea that could help North
Korea transform its economy and reach the 3,000 USD level.
Once 3,000 USD was reached, Nam said, people have the means
to think about democratization. It happened in the late
1970s in South Korea, and it could happen in North Korea as
well.

COMMENT
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6. (C) Several sources close to Lee have repeatedly told
poloff that Nam drives Lee,s North Korea policy. Nam and
others close to Lee hope that the economy is the main issue
in the December election, since Lee has a clear advantage
over all other contenders with his Hyundai CEO background.
Lee has assembled a group of accomplished academics on his
foreign policy team, but despite his overseas travel and
business experience, admits to being less accomplished on
foreign policy than some of the other candidates. Lee is
seen as a "doer" and his simple speaking style and hopes his
catchy policy slogans -- 747 economic plan, 3.3 Unification
Plan -- will get him enough votes in December.


VERSHBOW