THE LEE HOI-CHANG EFFECT

C O N F I D E N T I A L SEOUL 003285 SIPDIS SIPDIS E.O. 12958: DECL: 12/10/2014 TAGS: PGOV PINR PREL RS CH KN KS SUBJECT: THE LEE HOI-CHANG EFFECT Classified By: POL M/C Joseph Y. Yun. Reasons 1.4 (b,d). ¶1. (C) SUMMARY: Conservative Lee Hoi-chang's November 7 entry into the 2007 presidential race changes the election dynamics. What many clearly saw as the inevitable landslide win of Grand National Party (GNP) candidate Lee Myung-bak has been cast into doubt. Simply put, the majority of votes for Lee Hoi-chang can only come at the expense of Lee Myung-bak. Suddenly, Lee Myung-bak looks vulnerable, especially due to the looming BBK investigation. He now must look for support from an unlikely source, Park Geun-hye who remains coldly aloof. The disarray among the conservatives has re-energized liberals who now see hope for a unified progressive candidate to beat out the split conservative vote as Kim Dae-jung did in 1997. Nevertheless, Lee Hoi-chang, himself battling allegations of prior misdeeds, faces an uphill climb without a party or organizational structure; some believe his support rates have peaked and have nowhere to go but down. END SUMMARY. -------------- Lee Hoi-chang Enters the Race -------------- ¶2. (C) Lee Hoi-chang, who reportedly started producing his campaign video last April, formally entered the presidential race for a third time on November 7. A regretful and deeply reflective Lee apologized for losing the last two presidential elections for the GNP, thereby plunging the country into "ten years of aimlessness." After retiring from politics following his 2002 defeat, Lee described himself as gradually becoming disaffected with a regime that allowed North Korea to develop nuclear weapons while leading South Korea into economic stagnation. Lee Hoi-chang cited his record and reputation as an upright and principled man, implying that the present GNP frontrunner Lee Myung-bak had neither of these qualities. ¶3. (C) During his press conference, Lee Hoi-chang portrayed his return to politics as a sincere attempt to save his country from a decade of misrule, rather than a desperate attempt to grab power one last time. Responding to newspaper accounts that Lee Hoi-chang had left the door open to withdrawing prior to the election, campaign advisor Park Shin-il told poloff that Lee Hoi-chang's main objective was to "snatch power from the leftist government." Should a split conservative vote appear to hand the election to the liberal candidate, Park asserted that Lee Hoi-chang was prepared to "sacrifice himself" for the good of his country and back out of the race. ¶4. (SBU) One day after Lee Hoi-chang's entry into the race, his support rates are already lower than predicted in earlier polls, although the difference is still within the margin of error. A Korean daily newspaper poll had Lee Myung-bak at 41.3 percent, up from 38.5 percent. Lee Hoi-chang's support was down 1 percentage point at 19.9 percent. Nevertheless, Lee Hoi-chang still holds a lead over United New Democratic Party (UNDP) candidate Chung Dong-young who has been unable to exceed 20 percent in any recent polls. -------------- Park's Power Rising -------------- ¶5. (C) Lee Myung-bak's narrow victory over former GNP leader Park Geun-hye in the party's August primary created a cadre of disaffected conservatives whose support for Lee Myung-bak was lukewarm, at best. Moreover, Lee Myung-bak's unprecedented poll numbers, which had not fallen below 50 percent until this week, had largely marginalized Park and her followers. With Lee Hoi-chang's entry into the race, however, Park's affiliation with the GNP old guard has cast her into the limelight as the linchpin of party unity. Park's disdain for Lee Myung-bak campaign insiders such as Lee Jae-o is public, as are Lee Myung-bak's weak attempts to make nice. Park has refused to comment publicly on the situation, but her close aides tell us she will not leave the GNP and throw her support behind Lee Hoi-chang before December 19 under any terms. ¶6. (C) In the coming days and weeks, Park will be wooed fervently by the two Lee's, neither of whom she particularly likes. Lee Myung-bak has already made the first move by firing his right-hand man Lee Jae-o, a GNP powerbroker intensely disliked by Park and her camp for seemingly reveling in her defeat in the primary. Lee Myung-bak's next move is probably to offer a package of concessions, including giving her a big voice in selecting nominees for the National Assembly elections next April. Park will not want to be closely associated with GNP defector Lee Hoi-chang, as she considers herself "a person of principles," a phrase she repeated several times in her acceptance of the GNP primary results. -------------- Scandal to Spare -------------- ¶7. (C) The UNDP this week filed a request for the prosecutor's office to investigate the involvement of Lee Myung-bak's former business partner Kim Kyung-joon, scheduled to return to Korea soon, in an embezzlement and stock manipulation scheme. The so-called BBK controversy (named after the now-bankrupt investment company of which Kim was president) could have serious implications on Lee Myung-bak's candidacy if the investigation turns-up evidence of his wrongdoing. However, Lee Hoi-chang has allegations of his own to worry about, primarily relating to his prior admission of illegal campaign fundraising during the 2002 presidential race. Consequently, the media, which might have otherwise focused their attention entirely on BBK, will undoubtedly dig up dirt on Lee Hoi-chang as well. -------------- Hope for Progressives? -------------- ¶8. (C) The progressive candidates, plagued by voter dissatisfaction with the current administration, have been unable to pose a serious threat to Lee Myung-bak's still significant lead. Although the progressive candidates are still behind both Lees in the polls, the potential of a split conservative vote has increased the odds that a unified progressive candidate will be elected. UNDP candidate Chung Dong-young's advisers have told poloffs on multiple occasions that if Lee Myung-bak's support rating comes down to 35 percent, they could prevail with superior voter mobilization on election day. Progressive candidates are also stepping up discussions to combine their campaigns, in light of recent developments. -------------- Comment -------------- ¶9. (C) Over the last year or so, it has become clear that Korean voters want change. All polls showed that they want a more conservative administration. Even now, the combined polls of the two Lees total well over 60 percent. However, if that were evenly split between the two conservative candidates, a center-left candidate would have an excellent chance of winning. If this happens, Lee Hoi-chang will join a long list of spoilers in Korean electoral history that includes Kim Dae-jung, Kim Young-sam (these two made Roh Rae-woo's election possible in 1987),and Rhee In-je (who helped to elect Kim Dae-jung in 1997). VERSHBOW