SCENESETTER FOR THE SECRETARY'S JUNE 26-27 VISIT

C O N F I D E N T I A L SEOUL 001244

SIPDIS

FOR THE SECRETARY FROM AMBASSADOR VERSHBOW
BEIJING PASS A/S HILL

E.O. 12958: DECL: 06/23/2018
TAGS: PGOV PREL PINR KS KN
SUBJECT: SCENESETTER FOR THE SECRETARY'S JUNE 26-27 VISIT
TO SEOUL

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


1. (C) SUMMARY: Your visit to Korea comes at a particularly
sensitive time in U.S.-ROK relations. Since your last visit
in February, the optimism that accompanied President Lee
Myung-bak's inauguration has been replaced by growing public
discontent with the Lee Administration and its policies.
This discontent has manifested itself in more than six weeks
of candlelight protests over the agreement to resume the
importation of U.S. beef. These protests have remained
anti-Lee, but South Korean policymakers are concerned that
missteps on Alliance issues could ignite nascent
anti-American elements in the populace. For that reason,
progress is likely to be slow on KORUS FTA ratification as
well as on potentially controversial alliance topics,
including the Special Measures Agreement (SMA) negotiations,
camp returns, USFK relocation, and additional ROK
contributions in Iraq and Afghanistan.


2. (C) Nevertheless, President Lee and his administration
remain committed to the alliance and are hopeful that work
can begin soon on strengthening the relationship. For this
reason, they are reluctant to reconsider the timing of the
President's visit, although they cannot be certain the
streets will be quiet next month. We are optimistic that the
new beef measures, which seem to be meeting with support from
the mainstream media, will create a climate for Lee to
implement our beef deal later this week, isolate the
dwindling number of anti-beef activists, and get on with the
nation's business. In your meetings with President Lee and
Foreign Minister Yu Myung-hwan, we recommend that you solicit
their opinions on how our two governments can get back on
track with FTA ratification and alliance issues. Both will
also likely want to hear about U.S. thinking on next steps
with North Korea as we enter phase three of the Six-Party
process. The ROKG is aware that North Korea may be looking
to drive a wedge between South Korea and the U.S.; during
your visit Lee and Yu will want to reinforce the image of
U.S.-ROK cooperation in dealing with North Korea. END
SUMMARY.

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Government of the Wealthy, For the Wealthy?
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3. (C) Lee's problems started even before he took office
when criticism began to mount over his cabinet and Blue House
staff picks. Lee used his CEO instincts to recruit the "best
of the best," but instead he brought in an elite team that
was derided from the get-go for their patrician credentials.
Early on the progressive media began to sow doubts that Lee
genuinely had the average South Korean's interests at heart.
Lee is currently taking steps to rectify this perception and
on June 20 announced a major overhaul to Blue House staff,
including a new chief of staff and national security adviser.
In the next week or so, Lee is also expected to announce a
cabinet reshuffle -- press reports speculate he is likely
replace 4-6 ministers, possibly including Prime Minister Han
Seung-soo and Foreign Minister Yu.


4. (C) Lee, who was elected on promises to boost Korea's
economic performance, has also been hurt by slowing growth
and rising inflation, although there seems to be a general
recognition that much of this reflects global economic trends
beyond Korea's control. Additionally, Lee's efforts to boost
investment by relaxing regulations on Korea's chaebol
businesses have reinforced public concern that his policies
are targeted toward the elite and ignore the plight of the
middle and lower classes.

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Mismanaging Beef
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5. (C) The decision to reopen the market to U.S. beef, and
the government's mishandling of the issue, proved to be a
catalyst that galvanized Korean public dissatisfaction with
the Lee Administration. In thinking about moving forward on
beef, Lee had several key goals: to proceed with an

agreement that was largely in line with what the Roh
Administration had quietly discussed with us; to wait until
after the April 9 legislative elections to publicly announce
the negotiations; and to prepare a set of support measures to
help the Korean beef industry (which was expected to be the
principal source of opposition) to adjust. However, not
enough was done to prepare the Korean public for the move
from the government's historic position (that many questions
remained about the safety of U.S. beef). To the Korean
public, the dramatic shift in the ROKG's public posture on
U.S. beef, in negotiations that concluded the night before
President Lee was to meet with President Bush, seemed to
demonstrate that the safety c
oncerns of the Korean public were being tossed aside so Lee
could enjoy an historic summit at Camp David.


6. (C) After the beef deal was announced, public opposition
grew quickly. Misinformation about the safety of U.S. beef
was disseminated on the internet and through cell phone text
messages (which for many Korean youths have more credibility
than established media, since they are "independent").
Students played a dominant role in the early protests, saying
that eating U.S. beef wasn't a matter of consumer choice (as
Lee had argued) since students would have no choice but to
eat the allegedly BSE-infected U.S. beef that Korean school
cafeterias (and military messes) would serve. As concern
about U.S. beef spread from students to the mainstream
population, the government's missteps in defending the
agreement exacerbated the situation. The Government's dogged
insistence on holding a lame-duck National Assembly session
in May, to try to force through the ratification of the KORUS
FTA, gave the United Democratic Party (UDP) opposition, in
majority at the time, a spectacular platform to grandstand
against the beef deal and insist that it be renegotiated.
Turning water cannons on the protestors brought back
unpleasant memories of past governments, and enabled the
protestors to present themselves as fighters for Korean
democracy.


7. (C) To its credit, the Lee Government has tried to do the
right thing on beef, and has resisted the calls for
renegotiation of the April beef deal that have come in from
protestors, the political opposition, and the Grand National
Party (GNP) alike. However, the general disarray within the
government, the chaos in the streets, and the fact that the
protestors have made Lee himself the issue, have all made it
difficult for the government to defend its position and
challenge the allegations of the protestors. Instead, the
government has found itself chasing after the moving
goalposts of NGO demands, trying to address each new
allegation as it arises.


8. (C) The Government hopes that the new beef measures
announced on June 21 will enable them to put this issue
behind them. The initial press reaction seems to be
generally favorable, and supportive of the notion that it is
time for Korea to move on (although activists and some
left-wing papers won't be satisfied unless Lee backs down and
formally abrogates the beef deal). The number of protestors
has declined significantly since earlier in the month, and
while there were some violent protest on Sunday night, the
estimated number of participants, at 2500, was actually
fairly small. However, even if our new beef measures succeed
in isolating the extremists (and allow the ROKG to implement
our beef agreement later this week as it has promised),this
entire episode has crystallized a critique of Lee's
governance that will weaken him, and provide a rallying cry
for his opponents, for some time to come.

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Lee is Floundering
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9. (C) The recent outpouring of disapproval over the beef
issue has become the rallying cry enabling South Koreans to
express their cumulative frustration with the Lee
Administration. What makes the situation much more
inflammable is that this was American beef and the agreement
was reached hours before the Camp David summit. The

perception that President Lee was kowtowing to Washington is
a theme much used by leftists and nationalists in the
protest, but anti-Americanism is not the principal draw for
the mainstream protestors; rather, it's anti-Lee.


10. (C) The 18th National Assembly, which officially took
office at the end of May, has yet to convene because the
opposition UDP is boycotting the proceedings. More of a
threat to President Lee, however, is his failure to unite the
conservatives both within and outside the GNP. Lee's rival
for party power, Park Geun-hye, retains a great amount of
support within the party as well as enormous popular appeal
throughout Korea. Continued bitter infighting with Park was
the primary factor in the GNP's weaker than expected
performance in the April 9 National Assembly elections.
Despite weak efforts to reach out to Park, Lee has yet to
repair the conservative divide. The GNP will pick a new
leader at the party conference on July 3. The two
frontrunners are both close to Lee Myung-bak, making party
unification unlikely in the near future.

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Alliance on Hold?
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11. (C) The beef issue will have a profound influence on our
bilateral relationship in the coming months. First, Lee
Myung-bak must rebuild domestic trust in his administration
before he or his staff can even think about making any
progress on ongoing bilateral issues. To rush into any
controversial Alliance agreements, our ROKG interlocutors
believe, is to open the door on the nascent anti-Americanism
that the public discourse has thus far largely avoided.
During your visit you can look forward to frank and open
discussions with both President Lee and Foreign Minister Yu,
both of whom will likely offer their thoughts on when and how
to pursue important alliance issues as well as ratification
of the KORUS FTA (to which Lee publicly reiterated his
commitment in his address to the nation last Thursday).



12. (C) Already the ROKG has taken care to push all ongoing
alliance issues to the back burner. In the last few weeks,
the ROK side has postponed bilateral talks, including our
annual D-level Strategic Consultations for Allied Partnership
(SCAP),the next round of SMA burdensharing negotiations, and
talks on the environmental issues relating to the return of
nine USFK camps. SMA and camp returns have long been two of
the most sensitive alliance issues for the Koreans, as they
require committing ROK budgetary expenditures and have
generated significant criticism for "not standing up to the
U.S." in previous negotiations. Other issues that the Korean
public sees as being on the U.S. "wish list" -- such as
continued or expanded ROK participation in Iraq and
Afghanistan or more involvement in PSI -- will also prove
more difficult to make progress on in the short to medium
term. The ROKG recently postponed indefinitely plans to send
a survey team to prepare for dispatching ROK Police Trainers
to Afghanistan.


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CLOSE CONSULTATION ON DPRK NEEDED
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13. (C) President Lee entered office determined to change the
tenor of the South-North relationship, proposing in his
"Denuclearization, Openness, USD 3000" initiative to offer
substantial economic assistance to the North, but only in the
context of progress on denuclearization and on the basis of
reciprocity. The public largely supported this shift from
what was seen as unconditional aid under the Roh Moo-Hyun
Administration. However, both the ROKG and the public have
been dismayed by the DPRK's outright rejection of the shift
in approach, while noting that the DPRK has been careful to
keep the Kaesong Industrial Complex, and Kaesong City and Mt.
Kumgang tours -- all revenue sources -- operating as before.
The official radio silence between the two Koreas has been
broken only by sporadic hostile rhetoric from the North

labeling Lee as a "traitor" and "charlatan." The ROKG has
tried to ease the situation, offering 50,000 metric tons of
food assistance (no reply) and sending the Minister of
Unification to an event commemorating the June 2000
Inter-Korean Summit. This reflects concern that the ROK is
being left behind as U.S.-DPRK relations progress, but there
are no signs of a thaw.


14. (C) Against this backdrop, and in the broader context of
President Lee's political crisis, your visit will be an
important opportunity to: (a) support Lee's reciprocity-based
philosophy for South-North relations; and (b) explain to the
ROKG your vision for the future of U.S.-DPRK relations, in
terms of our gameplan for the next phase of the Six-Party
Talks, food assistance, steps toward normalization, and
kicking off the North East Asia Peace and Security Mechanism.
It will also be important, during the public portion of the
the visit, to make clear that the USG and ROKG maintain very
close consultations on all aspects of DPRK policy.

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Comment
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15. (C) The continuation of protests after the conclusion of
beef talks last weekend in Washington highlights the
difficulty the Lee Administration faces. These protests,
which center on U.S. beef but also represent an increasingly
wide array of concerns -- from government control of the
media to the rumored privatization of health care -- have
completely hamstrung the government, crippling both the
legislative and the executive branch. While we believe the
protests are likely to wind down in the next week to ten
days, even then the Lee Administration will want to take a
"go slow" approach to any potentially controversial policies.
Before the president can start making progress on any of his
campaign promises, he will have to rebuild the public trust
-- no mean feat for a man whose approval ratings have fallen
from 80 percent to 20 percent in the last six months. These
are indeed challenging times for President Lee and his team.
VERSHBOW