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 Since your last visit in February, the optimism that accompanied President Lee Myung-bak's inauguration has been replaced by growing public discontent with the Lee Administration and its policies.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. -------------- Government of the Wealthy, For the Wealthy? -------------- ¶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. -------------- Mismanaging Beef -------------- ¶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. -------------- Lee is Floundering -------------- ¶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. -------------- Alliance on Hold? -------------- ¶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. -------------- CLOSE CONSULTATION ON DPRK NEEDED -------------- ¶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. -------------- Comment -------------- ¶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