PRESIDENT LEE BEGINS HIS 3RD YEAR STRONG; REGIONAL

C O N F I D E N T I A L SEOUL 000027 SIPDIS E.O. 12958: DECL: 01/08/2030 TAGS: PGOV PREL ECON KS KN SUBJECT: PRESIDENT LEE BEGINS HIS 3RD YEAR STRONG; REGIONAL ELECTIONS AND SEJONG CITY TO DOMINATE HEADLINES Classified By: POL M/C James L. Wayman. Reasons 1.4 (b),(d). ¶1. (C) Summary: President Lee Myung-bak begins his third year in office with rising poll numbers, recently topping 50 percent, and momentum to command the political playing field. The June 2 regional elections will dominate the political agenda, while the Sejong City controversy has the most potential for bedeviling Lee and the ruling GNP. North Korea is a political wildcard as anticipation grows for a surprise South-North summit, which, if he gets what he is bargaining for, would vindicate Lee's North Korea policy. We expect a routine cabinet reshuffle by March, which will be of negligible political consequence. Korea's chairmanship of the G-20 and role as host of the November 2010 G-20 summit will pay political dividends throughout the year to President Lee as Koreans bask in the glow of their role as leaders on the world stage. U.S.-ROK bilateral issues on the domestic political radar include Lee's decision to send a Provincial Reconstruction Team to Afghanistan and Washington's delay ratifying the KORUS FTA. Other bilateral issues, though potentially thorny for Lee, are either unknown to the public or limited enough in their influence on the public that they are unlikely to affect Lee's domestic political standing in the near term. End Summary. Rising Poll Numbers and Momentum -------------- ¶2. (C) As he begins his third year in office, President Lee Myung-bak's approval rating topped 50 percent in recent polls, his highest rating since April 2009. Besides high marks for his handling of Korea's economy, Lee is benefiting from the successful November summit with President Obama, his achievement in securing the 2010 chairmanship of the G-20, and the deal he sealed in December with the United Arab Emirates to export and construct four nuclear power plants. Sources close to the Blue House described Lee as "giddy" with his standing in public opinion. ¶3. (U) Real Meter's December 29 poll showed Lee with a 53.1 percent approval rating. Korea Research Institute released a poll at 51.6 percent, up some 20 percent from 31.6 percent in the wake of former President Roh Moo-hyun's suicide in May ¶2009. The left-of-center Hankyoreh daily's December 29-30 poll put Lee's approval at 56.8 percent. The ruling Grand National Party (GNP) is also enjoying higher numbers. Real Meter's December 24-28 poll had the GNP at 42.9 percent, ahead of the opposition Democratic Party (DP) at 25.2 percent. June 2 Regional Elections -------------- ¶4. (C) Nationwide elections for governors, mayors, and provincial and city councils will be held June 2. Ruling and opposition parties see the elections as an important test of strength and the opening round of the 2012 presidential and National Assembly elections. The races for Seoul Mayor and Gyeoggi Province Governor will likely be the most closely watched, and nomination battles within the parties will reveal which factions have the upper hand going into the more important 2012 elections. Parties should decide on nominees by April and it is too early to predict the outcomes. Sejong City -------------- ¶5. (C) President Lee's controversial opposition to a 2005 law passed under former President Roh Moo-hyun's leadership to relocate much of Korea's central government to a new capital 150 kilometers south of Seoul, Sejong City, carries high political risks for Lee and the ruling GNP. Sejong City is located in South Chungcheong Province, a historically important swing region in presidential elections. Although he supported the relocation plan as a presidential candidate in 2007, Lee now says it is impractical and inefficient to relocate the capital. A majority of the ruling GNP's members agree with Lee and a November 2009 Korea Research Center poll found that 52 percent of Koreans also agreed that the plan to relocate the capital to Sejong City should be revised. Proponents of the relocation, including all opposition parties and GNP heavyweight and presidential aspirant Park Geun-hye, say the government should keep its promise to the people of South Chungcheong Province. ¶6. (C) Lee faces two political challenges resolving Sejong City: maintaining party unity and minimizing fallout for the GNP in the 2012 presidential election. First, Lee, who has the support of a majority of the GNP, must win Park Geun-hye's support to pass legislation implementing his new plan for Sejong City. Park, who was GNP chairperson in 2005 when the party supported passage of the relocation plan and who would need Chungcheong voters in the 2012 presidential race, has been unwilling to change her position on the issue. But party unity is as much in Park's interest as it is Lee's, as she needs a strong, unified GNP to back her 2012 presidential bid, and party insiders are hopeful she will find a way to reconcile with the will of the party and avoid causing the Administration a costly political defeat. Second, while risking the ire of Chungcheong voters, Lee will attempt to gain support in other parts of the country for putting national interests ahead of regional political pandering. With half the electorate now located in the capital region -- Seoul, Gyeonggi Province, and Incheon -- old regional loyalties that have dominated Korean politics are breaking down as voters become more focused on the economy and quality of life issues. ¶7. (C) President Lee is set to announce his plans for Sejong City on January 11. GNP sources tell us that until Park Geun-hye responds to Lee's proposal it will not be clear whether Lee will have the votes in the National Assembly to amend the relocation legislation, saving him from an embarrassing political defeat on an issue he has made a test of his leadership. But with a majority of the party and public opinion behind him, Lee would not suffer as much from a defeat as would his party. The fear among ruling party members is that the GNP will go into the June regional elections divided over its inability to reach consensus on Sejong City. Politics of LMB's North Korea Policy -------------- ¶8. (C) A political wild card is the possibility of South-North summit. Speculation is growing among GNP insiders that Seoul and Pyongyang are hammering out the terms of a meeting and that Lee would be willing to travel to Pyongyang in exchange for the North's recommitment to all previous South-North agreements, commitment to return to the Six Party Talks, agreement to release some South Korean POWs, and agreement to resume family reunions. The expectation among GNP members is that Lee would be prepared to offer significant infrastructure and agricultural projects, but no cash, in exchange for the North's concessions. A South-North summit on Lee's terms would be a political boon to Lee and the GNP, and would be widely viewed as a vindication of Lee's North Korea policy. Imminent Cabinet Reshuffle -------------- ¶9. (SBU) Despite Blue House denials, many observers expect President Lee to reshuffle his cabinet by March. Ministers who plan to run in the June elections have to resign their positions 90 days prior to the elections. That might affect Culture Minister Yu In-chon, Health Minister Jeon Jae-hee, and Labor Minister Yim Tae-hee, who are seen as potential candidates for either Seoul Mayor or Gyeonggi Governor. Also, it is unusual for cabinet members to serve more than two years, leading to speculation that Foreign Minister Yu Myung-hwan, Environment Minister Lee Maan-ee, Land and Transportation Minister Chung Jong-hwan, and Education Minister Ahn Byeong-man, who were members of Lee's inaugural cabinet, might be ripe for replacement. G-20 -------------- ¶10. (C) Korea is the 2010 Chair of the G-20 and will host a number of G20-related ministerials, conferences, and events culminating in November with the G20 summit in Seoul. Koreans are very proud of the international attention their country will receive in this role, and, especially if the ROK continues its rapid recovery from the global financial crisis, President Lee will benefit politically throughout the year as the summit moves nearer. Bilateral Issues and the Domestic Political Agenda -------------- -------------- ¶11. Two U.S.-ROK bilateral issues are on the domestic political radar: Afghanistan and the KORUS FTA. ¶12. (C) President Lee's decision to send a Provincial Reconstruction Team to Afghanistan, protected by ROK troops, has been less controversial than many observers anticipated. The National Assembly is scheduled to take up the authorizing legislation in February, where it is expected to pass. The opposition Democratic Party's opposition to the deployment is widely regarded as political posturing, in light of the fact that the then-ruling Democratic Party during the Roh Moo-hyun administration approved sending combat troops to Iraq. Nevertheless, if the PRT were to suffer any casualties, the current support for dispatching the PRT would evaporate and there would be intense pressure on Lee to withdraw the PRT. ¶13. (C) Korea is awaiting action by the U.S. to ratify the KORUS FTA. Failure to ratify the agreement presents President Lee with the risk that he is seen to be mismanaging relations with the U.S., although we believe it is more likely that the Korean public would blame the U.S. for the delay. There is no doubt about Lee's commitment to free trade agreements and broad recognition of his effectiveness at advancing Korea's free trade agenda. He has already signed deals with the EU and India and initiated negotiations with Australia and New Zealand. With these major successes, there is a growing sense that a failure to ratify the KORUS FTA would be seen in Korea as Washington's loss rather than Lee's. ¶14. (C) Other bilateral issues, though potentially thorny for Lee, are either unknown to the public or limited enough in their impact on the public that they are unlikely to affect Lee's domestic political standing in the near term. For example, base relocations and camp returns are an issue primarily for the Gyeonggi Province Governor, where most of the bases are located, but it is not an issue likely to cost Lee much, if any, political capital. A bilateral nuclear accord and an agreement on missile issues, while important to the bilateral relationship, are problems being resolved out of the public's sight and not likely to rise to a level of public awareness in the near future. The transfer of war time operational control, though it has the potential to affect Lee's political standing, has diminished as an issue since reaching something of a peak during President Obama's November 2009 visit to Seoul. It will return as a front-burner issue, but not likely until after the June regional elections when 2012 presidential contenders begin sounding out campaign themes. STEPHENS