SCENESETTER: LEE MYUNG-BAK PROMISES A BETTER

C O N F I D E N T I A L SECTION 01 OF 05 SEOUL 000343

SIPDIS

SIPDIS

FOR THE SECRETARY FROM AMBASSADOR VERSHBOW

E.O. 12958: DECL: 02/18/2018
TAGS: PREL PGOV MARR MNUC KN KS OVIP
SUBJECT: SCENESETTER: LEE MYUNG-BAK PROMISES A BETTER
RELATIONSHIP WITH THE UNITED STATES

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Classified By: AMB. ALEXANDER VERSHBOW. REASONS 1.4 (b/d).

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Summary
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1. (C) Madam Secretary, the election of Lee Myung-bak, his
appointment of pro-American advisors, and the likelihood that
his party will secure a commanding majority in the National
Assembly elections in April, provide an excellent opportunity
to build a more substantial U.S.-ROK partnership for the
future. The goals before us are:

-- To ratify the KORUS FTA, which means billions of dollars
for the U.S. economy and the creation of a lasting economic
pillar for our Alliance. Support for the FTA remains solid
among the Korean leadership, media and public. Korea's
National Assembly formally took up the FTA on February 15,
thanks to pressure from Lee's supporters; ratification will
likely occur some time in the next few months.

-- To solve the beef issue, which is a prerequisite to
Congressional consideration of the FTA. Lee understands the
importance of resolving this by the time he visits Washington
in mid-April. While Lee's team has explained that formal
signature of a new beef agreement won't be politically
possible until after Korea's legislative elections on April
9, we have proposed informal exchanges on a new beef
agreement during March.

-- To strengthen our cooperation to denuclearize North Korea
through the Six-Party Talks. A key challenge for the Lee
administration is to balance its demand for substantial
reciprocal actions by the North as the precondition for
economic assistance against irrevocably damaging inter-Korean
relations. My recommendation is for you to welcome Lee's
refreshingly tough stance, but also make him aware that we
support North-South engagement, provided it is closely
synchronized with efforts to achieve denuclearization,
through the Six-Party process.

-- To upgrade the U.S.-ROK Alliance's mission and structure
so that it can play an enhanced role in fostering peace on
the Peninsula, the region, and elsewhere in the world. I
recommend you convey to Lee that Washington is committed to
strengthening the Alliance and expanding its global
dimension. Lee will be very receptive as he has repeatedly
and publicly voiced his commitment to a stronger Alliance and
to a more prominent role for the ROK on the world stage.

-- To work effectively with the South Korean government to
meet the requirements needed to facilitate the ROK's entry
into the Visa Waiver Program (VWP). Early admission by the
ROK into the VWP is a very high priority for the Lee
administration.


2. (C) We would like to see progress on all these goals by
the time of President Lee's first visit to Washington (April
17-19). It will not be easy, but there is a great sense of
renewed hope and a palpable flow of energy that has come back
into the U.S.-ROK relationship. With a president and an
administration that are instinctively drawn to the United
States, there is a real opportunity to restore both momentum
and trust to a relationship that has been underperforming in
recent years. If there's any danger ahead, it's the risk
that no ROK leader can possibly live up to the high
expectations that Lee's presidency has generated in South
Korea, as well as in Washington. End Summary.

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Lee's Domestic Agenda: The Economy First
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3. (C) At the top of Lee Myung-bak's Presidential agenda is
his pledge to increase economic growth. He ran on a "747"
platform, saying he would boost economic growth to 7 percent
a year over the next decade, raise per capita GDP to USD
40,000, and make the ROK the 7th largest economy in the
world. ROK presidents are elected to only a single 5-year
term, but the energetic President-elect plans to set the
South Korean economy well on its way toward those goals
during his time in office. Is that what the Korean public
wants? The answer is clearly yes, as evidenced by the fact
that with 49 percent of the vote, "MB" had nearly twice the

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public backing of his nearest competitor in a 10-candidate
field. Koreans across the political spectrum want a stronger
economy (particularly with growing concern about Chinese
competition) and believe that Lee Myung-bak is the person
best equipped to deliver it. Few expect he will actually
achieve his ambitious economic goals, but the ROK has enjoyed
tremendous economic growth over the years and clearly does
have the potential to soar to still greater heights. To this
end, he is focusing on addressing a few key structural
impediments (insufficient foreign investment, high taxes,
over-regulation, labor friction) that should be able to
increase Korea's already respectable 4-5 percent annual
growth rate.

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FTA Ratification Likely
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4. (C) Our highest bilateral priority is the ratification
and implementation of the KORUS FTA, which will create an
enduring economic pillar for our bilateral partnership, as
well as open up billions of dollars in new opportunities for
U.S. businesses. Korean support for the KORUS FTA remains
solid -- among the political leadership, the media, and the
public. In most Korean minds, the FTA is not just a
tremendously important trade deal (Korea's largest ever),but
also the key to deepening the bilateral partnership with the
United States, keeping pace with the larger economies of
China and Japan, and breaking with the protectionist policies
of Korea's past. Despite pockets of resistance and the
reluctance of some legislators to schedule a tough trade vote
before the upcoming April 9 legislative election, it is
widely expected that once a ratification vote is held in
Korea's National Assembly, the FTA will pass by a comfortable
margin.


5. (C) President-elect Lee ran on a platform of strong
support for the FTA, and soon after he won the December
election, his GNP party (currently in the legislative
minority),began pressing the National Assembly to ratify the
FTA quickly. After some debate, the Foreign Affairs
Committee officially took up the FTA on February 13. The
Government hopes to get the FTA ratified by the full National
Assembly before the current legislative session adjourns on
February 26 -- a goal that at this point remains possible but
difficult. Failing that, the FTA will likely be ratified
during a special legislative session in the March-May
timeframe, or soon after the newly-elected National Assembly
convenes for the first time in June.


6. (C) A few Korean legislators have noted the lack of
movement on the FTA in the U.S. Congress and the negative
comments on the FTA by Democratic presidential candidates,
and wondered why Korea should rush to ratify an agreement
that faces serious ratification challenges in the United
States. But the preponderant view in Seoul seems to be that
since the U.S. ratification debate will be tough, prompt
ratification by Korea (ideally before Lee arrives in
Washington on April 17) could help build pressure on Congress
to ratify the FTA, ideally before the U.S. political
conventions this summer.

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Beef Market Opening
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7. (C) While rapid Korean ratification of the FTA would be
useful for us, our more urgent priority is for Korea to
reopen its market to U.S. beef -- without which our Congress
will not even consider the FTA. President Roh committed
publicly to reopening that market in line with international
science (allowing in U.S. beef of "all cuts and all ages");
but after his party's shellacking in the December 19
Presidential elections, he overruled his advisors and decided
to defer any action to the new government.


8. (C) Lee and his team understand the importance of the
beef issue, and have assured us they will work to get it
resolved before the President-elect goes to Washington on
April 17. They add, however, that given its political
sensitivity, they cannot sign any deal with us before the
April 9 legislative elections. While acknowledging that
constraint, we have noted that there likely won't be enough
time to close a beef deal by the Lee visit unless our two

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sides begin informal discussions of a new beef import
protocol during March. Some transition team members have
expressed concern that Lee will have to take political hits
to resolve beef without any certainty that it will lead to
Congressional ratification of the KORUS FTA. We have
explained that, while no one can guarantee the outcome of
Congressional deliberations, finally resolving the beef issue
will guarantee that the Administration (and the U.S. business
community) will be in a position to make the strongest
possible push for the agreement, consistent with President
Bush's strong commitment to the FTA, most recently expressed
in his State of the Union address (which drew wide and
appreciative coverage here).

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North Korea: Sunshine Policy Not So Sunny
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9. (C) After the economy, North Korea policy is the most
important issue of concern to South Koreans. Early moves by
Lee Myung-bak and his team regarding North Korea have rattled
the ROK establishment. These included: the repudiation of
ten years of Sunshine Policy as appeasement; a plan to
weaken, if not eliminate, the powerful Ministry of
Unification; and a debate within the Transition Committee
about whether even ROK humanitarian aid (fertilizer and rice)
should be conditioned on North Korea's cooperation in the
denuclearization talks. As a result, the DPRK has yet to
officially acknowledge Lee's election, and must be chagrined
that he has made it clear that major economic projects agreed
upon during the October 2007 North-South summit will be
reexamined by his administration case-by-case and in
accordance with South Korea's economic interests. Even the
flagship projects, the Kaesong Industrial Complex and Mt.
Kumgang tourist center, will see their subsidies cut.
Pyongyang's response thus far has been to adopt what could be
a prolonged "wait-and-see" attitude.


10. (C) We share a keen interest in the question of how the
two Koreas will now interact, and what ground rules they will
use. Radio silence would benefit neither side and could lead
the North to engage in another of its periodic provocations.
That, in turn, could upset the Lee Administration's ambitious
economic agenda by increasing a sense of instability in the
marketplace. It could also erode support among a Korean
public that has grown comfortable with engagement, despite
being disappointed with its one-sided results under Roh
Moo-hyun. A breakdown in North-South interaction would also
be unhelpful to the Six Party Talks. I would suggest that
you welcome the President-elect's refreshing toughness on the
need for reciprocity and giving priority to denuclearization;
you might also express how much we look forward to more
closely synchronizing North-South cooperation with progress
in the Six Party Talks.

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Japan and China
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11. (C) Beyond the peninsula, I am also optimistic that Lee
will significantly improve Japan-ROK relations and
U.S.-Japan-ROK trilateral cooperation. Born in Osaka, the
President-elect has far less animosity toward the Japanese
than his predecessor who, as you know, subjected visiting
Washington officials to anti-Japanese tirades. Lee also
recognizes that his goals for economic growth and further
progress in the Six-Party Talks will require Japanese
cooperation. He has already made an important overture
toward improving relations with Japan by sending his older
brother (who is the vice speaker of the National Assembly) as
his personal envoy to Tokyo to establish personal ties with
Prime Minister Fukuda. Fukuda will reciprocate that gesture
by joining you at Lee's inauguration.


12. (C) The South Korean caveat to Lee Myung-bak's desire to
improve relations with Japan -- and also upgrade the U.S.-ROK
Alliance -- is that he and his administration must take care
not to inadvertently worsen the ROK's good relations with
China. In fact, Lee has made an effort to assure the Chinese
that Sino-South Korean relations will not suffer under his
administration. I also recommend that you assure Lee that
Washington does not desire any friction in Seoul's
relationship with Beijing. Rather, as allies that share
deeply rooted regional interests, we value Seoul's good

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relations with Beijing, which can be helpful in managing
regional and global challenges, including but not limited to
North Korea.

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Opportunity to Expand the U.S.-ROK Alliance
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13. (C) Lee Myung-bak's security policy advisors have made
it clear to us that he would like his first summit with
President Bush to include a joint declaration in which the
two Presidents would articulate a vision of a redefined
U.S.-ROK Alliance. The Foreign Ministry, acting on
instructions from Lee's transition team, is already working
on proposed wording for such a statement. Likely elements
could include the call for a more strategic alliance
partnership with added peninsular, regional and global
dimensions. Some influential academics in Lee's camp prefer
that the two leaders call for a study, but most recognize
that we should seize this important opportunity for the two
Presidents to chart the direction in broad yet bold strokes.
Doing so would demonstrate not only that the U.S. and South
Korea remain committed to their continuing mission of
deterring North Korean aggression, but that the Alliance also
has an important future role to play in underpinning the
peace process that is to come. Senior MOFAT and transition
team officials also point to the presence of U.S. forces on
the Asian land mass as playing an important stabilizing role
in the region by helping steer China toward responsible
policies, while encouraging better Japan-ROK cooperation.
Finally, offering the Lee Administration a true strategic
partnership with the United States would appeal to South
Korea's aspiration to be taken more seriously on the world
stage. The ROK has played a global role by dispatching
troops to Iraq, Afghanistan and Lebanon, and its
highly-capable military does not labor under political
constraints as does Japan's. But the Koreans could do much
more (e.g. equipping and training the Afghan army, joining
PSI in the years ahead). Expressing interest in working with
South Korea to craft an updated vision for the Alliance would
prompt our ally to give more serious consideration to future
contributions around the world.


14. (C) It is also important to implement the agreements we
have reached with Roh Moo-hyun on Alliance transformation.
These include an agreement to relocate our forces from the
middle of Seoul to new facilities 60 kilometers to the South
and a companion agreement to consolidate our previously
scattered military presence on the peninsula into three
strategic military hubs. Another, the OPCON transfer
agreement, means that after April 17, 2012 a South Korea
4-star general would lead ROK troops in time of war with
support from the U.S. military, rather than the other way
around. All three agreements are important evolutionary
steps that will serve to transform the Alliance into a more
balanced security partnership, while also making it more
politically sustainable in the South Korean domestic
environment. Some in Lee Myung-bak's conservative Grand
National Party (GNP) want to turn back the clock, especially
on the OPCON agreement, but their views don't reflect the
majority of Koreans who prefer greater self-reliance and to
be treated as an equal partner within the Alliance structure.
While President Lee will see that political-military
relations with us are conducted in a more constructive
manner, he will need appropriate political cover before
moving in our direction on contentious issues, like
burden-sharing or sensitive environmental concerns
surrounding camp returns.

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National Assembly Elections
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15. (C) When it comes to the South Korean economy, the fate
of FTA ratification, North Korea policy, and Alliance issues,
much will depend on the outcome of the April 9 ROK
parliamentary elections when the entire National Assembly is
up for election. The 299 seats in the unicameral body are
composed of both direct and proportional representatives and
turn over once every four years. The proximity of the
National Assembly elections to the presidential election is
unusual and presents a unique opportunity for Lee Myung-bak.
Still in the post-election honeymoon phase, Lee's popularity
and that of his Grand National Party virtually assure him of

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a large majority in the next National Assembly, which will
take office on June 1. The liberal parties, which are still
in disarray after their resounding loss in the presidential
election, are unlikely to succeed in mounting a serious
challenge outside of a few traditional strongholds. Some
political pundits predict the GNP may win more than 200
seats, giving the party a two-thirds (constitutional)
majority. The prospect of a GNP-dominated National Assembly
bodes well for Lee's ability to push through legislation. It
would also give him significant leeway in pursuing
potentially unpopular endeavors -- such as elimination of the
Ministry of Unification or his grand canal project. Some
observers worry, however, that such latitude would allow Lee
to wield even more authority than his predecessors, who were
criticized for being too powerful.

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The Popular Appeal of Visa Waiver
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16. (C) Finally, ROK entry to the Visa Waiver Program (VWP)
will be a high priority for the Lee administration and, when
it is realized in the near future, will give a significant
boost to our bilateral relationship. Korea is the fifth
largest source of foreign travelers to the United States
after Canada and Mexico. Our Non-Immigrant Visa Unit
processes more visa applications than any other Foreign
Service post (over 460,000 in FY 07) with an approval rate in
excess of 95 percent. DHS-hosted negotiations in late
January yielded progress on a U.S.-ROK Memorandum of
Understanding on sharing terrorist/criminal information and
other security cooperation required by the "9/11 Law."
Mechanisms to share information about Korean travelers still
have to be hammered out, but progress is being made. Less
certain is DHS's timetable for meeting the law's requirements
that the U.S. institute an exit control mechanism and
Electronic Travel Authorization system for new VWP members.
Another critical item is the ROKG's production of electronic
passports, scheduled to begin later this year. While it is
unlikely that sufficient progress will be made in all these
areas to allow announcement of a timetable for Korea's
accession during Lee's April trip to Washington, the ROKG is
determined to see Korea join the VWP, perhaps even by the end
of 2008, as part of the first tranche of new members since
9/11.

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MB's Pragmatic Leadership Style
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17. (C) The inauguration of Lee Myung-bak as President of
the Republic of Korea marks a shift to a more pragmatic,
business-like style of governance in South Korea. Lee has
been a successful private sector businessman (Hyundai Group)
and a respected public sector administrator (Mayor of Seoul).
He has earned the nickname "The Bulldozer" owing to his
construction industry background and straight-ahead style of
leadership. During his time as mayor, he was best known for
unearthing a buried stream called Cheonggyecheon that flowed
beneath the center of Seoul, beautifying what had been the
site of a hideous elevated highway. He turned it into a
urban ecological attraction where residents and visitors
alike enjoy taking long pleasant strolls along the waterway.
As president, Lee will bring similar energy and focus to
national governance. He looks forward to meeting you and the
President. You will find him refreshingly frank in his
desire to improve the ROK's relations with us, and an
amiable, good-humored interlocutor.
VERSHBOW