LEE MYUNG-BAK: SMOOTH SAILING TILL DECEMBER?

C O N F I D E N T I A L SEOUL 001711

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/10/2014
TAGS: PGOV PREL KS ECON KN
SUBJECT: LEE MYUNG-BAK: SMOOTH SAILING TILL DECEMBER?

REF: A. SEOUL 1418

B. SEOUL 975

Classified By: Alexander Vershbow. Reasons 1.4 (b,d).


1. (C) SUMMARY: In a June 4 meeting, the Ambassador and GNP
presidential front-runner Lee Myung-bak discussed North
Korea, the December elections, and the FTA. Lee also asked
the Ambassador to help set up a meeting with Secretary Rice
during his scheduled June 11-14 trip to Washington D.C. Lee
said he feared the progressives would try to make North Korea
a key issue in the presidential elections even though most
South Koreans were not as concerned over security issues as
they were over the economy. Lee noted that the North had to
denuclearize in order to reap the benefits of his proposed
assistance to improve the DPRK's economy. He said that
North Korea would try to influence the election, and that Kim
Jong-il and Kim Dae-jung were the two who most wanted to keep
the GNP out of the Blue House. On the FTA, Lee said the
U.S. decision to keep rice out of the KORUS FTA would be a
great help toward ratifying the agreement in Korea. He
noted, however, that it might be difficult to ratify the
agreement
before the December elections. If the GNP won, Lee said, it
would mean better relations with the U.S. and a more
advanced, globalized Korea. END SUMMARY.

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NORTH KOREA'S IMPACT ON 2007 ELECTION
--------------


2. (C) Former Mayor Lee Myung-bak told the Ambassador on
June 4 that North Korea would have a big impact on the 2007
presidential elections. Recently, a North Korean press
release noted that Lee was a "puppet of the U.S." and, if Lee
won the election, it would lead to war. Since former
President Kim Dae-jung (DJ) and Kim Jong-il had the most to
fear from a Grand National Party (GNP) administration, they
would actively support any progressive candidate while
President Roh Moo-hyun would also work to keep the GNP out of
office. Lee said that many progressive lawmakers had
recently gone to North Korea and delivered the same message
to the North: that a GNP president would decrease stability
on the Peninsula. Several months ago, Lee sent a
representative to meet with a high-ranking DPRK official and
explain Lee's "3000 Unification Plan" (Ref A, a plan to raise
DPRK per capita GDP to USD 3000). Since that time, the North
has requested further details about the plan; so, despite
recent critiques, Lee was not convinced the North was
determined to undermine his candidacy.


3. (C) The Ambassador asked if Lee thought Kim Jong-il was
preparing some bold initiative to present to the ROK to move
inter-Korean relations forward and influence the elections.
Lee said that since Roh wanted a North-South summit so badly,
Kim Jong-il would make outrageous demands to which Roh might
accede. Despite the desire for a summit that Roh's advisors
have clearly communicated to the North, there has been no
positive response from Kim Jong-il. Lee surmised this might
indicate Kim Jong-il expects the GNP to win the presidential
election, and in that case, he knows he should not make too
many deals with the current president. Lee said that DPRK
officials consistently ask South Korean delegations what
South Korea would be like with Lee as president.

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PRESIDENTIAL ELECTION CAMPAIGN
--------------


4. (C) Lee said this year's campaign marked the first time
the GNP has had a series of policy debates and an open
primary (Ref B). The debate series favored the trailing
candidates. Lee noted that the Roh government hoped Park
Geun-hye would become the GNP candidate since Roh thought any
progressive candidate could defeat her in the general
election. Lee said he would refrain from attacking Park in
the primary campaign and would not release information he had
on Park. Since he was the frontrunner, he should remain
"gentlemanly" toward Park. Lee said that there would be lots
of negative attacks on him from Park and from the
progressives, but he was not worried. The campaign structure
was seven people versus him - Roh, DJ, Kim Jong-il and the
GNP candidates all together against his candidacy.


5. (C) Lee said the ROK was at a crucial crossroads. If the
GNP took power in 2008, it would not only improve ROK-U.S.
relations but lead to a change in Korea's national identity.
Korea could become a more advanced, globalized country under
the GNP, or move further toward a more pro-North, pro-China
identity under another progressive regime. Lee noted that
the ROK had to improve economically in order to be ready for
eventual unification and the next administration should focus
on social welfare and decreasing the gap between the rich and
poor.

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PROGRESSIVES
--------------


6. (C) Former President Kim Dae-jung (DJ) wants a single
progressive candidate and so does President Roh, Lee claimed,
but each wanted their own candidate so it might be difficult
for the progressives to unite. For example, DJ supported
former Gyeonggi Governor (and GNP defector) Sohn Hak-kyu, but
Roh could never support Sohn due to personal differences. So
there could be two progressive candidates. The only sure
thing, Lee said, was that the GNP would field one candidate.
Since the Democratic Labor Party would also field a
candidate, there could be three progressive candidates, Lee
said.


7. (C) Lee said Roh will try to emphasize that the
progressives would support peace and a GNP candidate would
upset the "peace mood" Roh hoped to create on the Peninsula
this summer and fall with a summit and other "shows." Roh
also hoped to focus the campaign on North-South issues rather
than on the economy. Normal citizens were not deeply
interested in North Korea or security issues -- they simply
wanted to live a better life. Lee said both DJ and Roh
thought the strategies that got them elected could result in
another progressive administration. But the Korean
electorate had changed a lot since 2002, Lee said, and their
old strategies would likely prove ineffective.

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REGIONALISM
--------------


8. (C) In response to the Ambassador's query about the
effect regionalism would have on the upcoming election, Lee
said he maintained a 25-30 percent support rating in the
southwestern Jeolla Provinces. Lee asserted that the era of
any candidate receiving 90 percent support in Jeolla was over

and if he received 20 percent in December, that would assure
victory for him.

---
BDA
---


9. (C) Lee asked why the Banco Delta Asia (BDA) problem had
not been solved. The Ambassador noted that BDA had, in a
sense, been solved since North Korea could retrieve its money
since the accounts were unblocked on April 10. But North
Korea was insisting on a wire transfer and this was proving
difficult given other banks' reluctance to handle tainted
funds. Lee wished the U.S. good luck, saying that he hoped
the BDA funds issue would be over soon and the Six-Party
Talks would succeed in denuclearizing North Korea while the
Ambassador was in Korea. The Ambassador said it was
unnatural to have a continued state of crisis in Northeast
Asia and this situation could lead to a regional arms race.
Until North Korea denuclearizes, it would be difficult to
give much assistance to the DPRK to overcome its economic
differences. Lee said that the North Korean nuclear problem
should be solved through close cooperation by the ROK with
China and the U.S.

--------------
MYSTERIOUS AID TO THE NORTH?
--------------


10. (C) Lee noted that if North Korea did not receive rice
aid soon, the people would suffer. He also noted that there
were many trucks going into North Korea from Gangwon Province
and no one was sure of the contents. According to Gangwon
citizens Lee met recently, the trucks going North were well
covered. If the trucks were carrying construction materials
for Mt. Geumgang as reported, there would be no reason to
obscure the contents. Many Gangwon residents distrust the
Roh administration and therefore were suspicious of the
cargo.

--------------
JUNE 2 SPEECH
--------------


11. (C) Lee said he was shocked by President Roh's four-hour
speech on June 2 in front of 1000 of his supporters and was
worried about the impression foreign observers would have of
South Korea after viewing the speech. Roh's explicit
comments about presidential candidates and his statement that
"the thought of the GNP winning makes me shudder in horror"
were in violation of election law. Lee said the tirade, in
which Roh criticized all the presidential candidates except
those loyal to him, would serve to unite his ardent
supporters.

--------------
VIRGINIA TECH TRAGEDY
--------------


12. (C) Lee noted that anti-Americanism would not be an
issue in this year's election thanks in part to changed
perceptions in Korea. The U.S. public reaction to the tragic
incident at Virginia Tech taught Koreans much about America
-- Koreans expected a backlash against Koreans and
Korean-Americans, but Americans did not consider the
Korean-American student who committed the murders to be
representative of Korea or Koreans. The fact that Americans
thought of the Korean-American shooter as one unfortunate
psychopath rather than blaming Korea or Koreans was
fortunate. The Ambassador agreed that the U.S. people
handled the situation well and said that in the U.S. we think
of individual responsibility first.

---
FTA
---


13. (C) The Ambassador explained that some clarifications
were needed to the KORUS FTA chapters on labor and
environment, but that the clarifications would in no way
change the balance of the agreement. He added he hoped Korea
would ratify the FTA before the December election. Lee
agreed that the FTA should be ratified, but noted that if the
ratification process were too close to the December election,
anti-American, anti-FTA sentiment could become an election
issue. Former Mayor Lee noted he was concerned the U.S.
ratification process might be delayed until 2008. Lee
cautioned that while most GNP lawmakers were pro-FTA, even
some conservative lawmakers from rural districts might be
hard-pressed by their constituents to vote against the FTA.
Koreans were very emotional; while this contributed to
Korea's dynamism, it also could cause difficulty for the FTA.
For example, one insignificant bone chip in a large beef
shipment can become a national issue.


14. (C) For a few beef or tangerine producers, Korea should
not abandon the KORUS FTA, Lee said. The FTA will benefit
all Korean consumers and create cheaper goods for all. The
government has a responsibility to act in the interest of all
Koreans. Lee joked that the emphasis on saving Korean beef
was already water under the bridge since Korean beef was not
really Korean since the cows eat U.S. feed. Excluding rice
from the KORUS FTA was very positive and would help
ratification in Korea.


15. (C) Lee said he oversaw Hyundai's production of the
Pony, the first Korean car exported to the U.S., and said
that he owed his success to the open U.S. market. If the
U.S. had not been open to Korean cars in the late 1970s,
Korea would not have developed as it did, Lee said. That
said, Lee expressed concern that Japanese cars assembled in
the U.S. could come to Korea and cause problems in the Korean
auto market. The Ambassador downplayed this concern, noting
that there was sufficient demand for Japanese cars in the
U.S. so there would likely be no need for Japanese producers
to export cars from the U.S. to Korea. It was important,
however, for Korea to live up to its commitment to open the
Korean market to U.S. auto imports.

--------------
OVERSEAS TRAVEL
--------------


16. (C) Lee said he hoped to travel to China and Russia
before the December election. But before that, he felt he
should go to the U.S., so he decided to go to Washington June
11-14. Lee requested a meeting with Secretary Rice, and
indicated he may participate in a portion of the June 13-14
meeting of the U.S. Korea Business Council. (He subsequently
cancelled his planned trip).

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COMMENT
--------------


17. (C) Lee Myung-bak is confident and has the swagger, the
money and the organization of a front-runner. Many GNP and
even some progressives have joined Lee's camp because of his
commanding lead. However, there is no such thing as a sure
bet in Korean politics. While Lee has a commanding lead, a
landmark achievement in the heart of Seoul in the Cheonggye
Stream, and a solid background as a politician and CEO, he
may have overreached with his canal project. If Park or the
progressives can convince people the canal project is
far-fetched, old-fashioned or environmentally unwise, Lee's
support could shrink. For now, at least, he is widely
perceived as the man who could bring Korea to advanced-nation
status and revitalize the economy.
VERSHBOW