Korea’s Flailing President

Hit by party infighting and the mishandling of controversial US beef imports, the administration of President Lee Myung Bak is drifting only three months after its inauguration.

With a wide range of interest groups attacking him for reopening the domestic beef market to foreign imports, and with the police and other authorities criticized for overreacting to anti-import protests, his leadership has been significantly undermined. Police have threatened to “punish” students holding rallies, as well as entertainers openly voicing support for the protesters.

His problems are compounded by longstanding tensions with critics inside his own party and the need to cope with an ideology-driven opposition that is unlikely to cooperate with the new National Assembly, which begins its four-year seating on June 1. This could spell trouble as Lee’s administration prepares to submit dozens of bills calling for crucial economic reforms.

Against that backdrop of disarray and chaos, the self-made businessman who rose to become the top executive of Hyundai Engineering and Construction, has seen his approval rating drop from 57 percent in February to 23 percent in mid-May, the biggest drop for any president in the last 10 years. At the same time, the popularity of the ruling conservative Grand National Party (GNP) has also fallen, from the 50 percent level shortly after his election to 30 percent in May.

It’s highly unsettling for local business leaders bent on benefiting from the market deregulation that was Lee’s overriding campaign promise. He was elected last December vowing to revive the growth momentum of Asia’s fourth largest economy. His initial pledge to return Korea to the 7 percent growth of the 1980s and 1990s is unlikely to be met during a global downturn. Indeed, he may have trouble matching the respectable 4-5 percent notched by his liberal predecessors – who were supposedly anti-growth. To make his targets, he needs to create at least half a million jobs this year, first by opening up the economy through ratification of the free trade deal negotiated with the United States last year.

Passing the deal hinges on resuming US beef imports, which were halted in 2003 due to fears of mad cow disease, a ban that has helped drive prices higher for domestic producers. But that is not the only market-opening pressure he faces. Talks are underway with the European Union for wider opening of the automotive market. China, Korea’s biggest trading partner, is asking for a similar free trade agreement. For this and other pending issues, such as Beijing’s help in denuclearizing North Korea, Lee is making a four-day state visit to China from May 27. The 30-member size of his business delegation, consisting of top conglomerates such as Samsung and Hyundai, attests to his big business agenda he faces.

His agreement to lift the ban on imports of all US beef, worth about US$800 million a year, is essential for the US Congress to pass the FTA, with several key US farm-state senators ruling the deal dead if beef – not technically part of the FTA – is not allowed back in. While international bodies have ruled US beef safe, Seoul’s principal opposition, the liberal United Democratic Party (UDP), refuses to endorse it without major changes. They want Korea to retain the right to judge if the beef to be cleared for imports is good enough for consumption.

The US and South Korea are in agreement that no meat suspected of mad cow contamination should be allowed for trade. But the issue has fallen into the hands of the anti-American lobby, which is skillfully using it as a weapon against Lee. Their distortion of the real issue has baffled domestic consumers, who already pay five times the international price for domestic beef. No wonder consumers have welcomed the prospect of buying cheaper imported beef, as indicated by their 53 percent endorsement of the FTA negotiations with the US last year. Indeed, the negotiations were successfully carried out by former President Roh Moo Hyun, a liberal leader.

But Lee is clearly guilty of mishandling the issue. He has been unable to explain the inefficiency of the domestic cattle market and the Ministry of Agriculture has failed to provide timely and sufficient assurances on mad cow disease. The government’s aloof and high-handed attitude on the issue helped created the impression that Lee was trying to push dangerous beef in order to “please his American friends,” as his foes put it. Lee himself was outraged by the suggestion he was pushing bad beef for political purposes.

The opposition, however, understands that politicization of the issue can backfire, and the matter now appears on the way to resolution. But that hasn’t spared Lee from a barrage of criticism over his poor communication skills. With his falling approval ratings foreshadowing a corresponding drop in the approval ratings of the ruling GNP, now holding a slim margin of 153 seats in the 299-member parliament, his grip over the conservative camp looks set to weaken further.

That would be bad news for Lee but not to his conservative opponents, headed by Park Geun Hye, who ran against him for the GNP nomination and narrowly lost. The daughter of former military dictator Park Chung Hee, she is threatening to leave the party, taking with her up to 60 legislators (some now already outside the GNP) unless they are given leadership positions in the party. Lee and his supporters worry that the pro-Park bloc, which has resisted his rise ever since she lost in the primary last year, could develop into a permanent inner-party dissident group, creating more trouble.

A showdown between the two sides is in the making at the forthcoming GNP party national convention in July. If Lee mishandles this confrontation, he runs the risk of eroding the GNP’s parliamentary base, which he needs to push through his policy agenda. His economic reform program runs the gamut from FTA ratification to privatization and cutting the fat from bloated state-funded industries.

In South Korean politics, all past heads of government, including former President Kim Dae Jung, the paragon of the liberal pro-democracy movement, retained their control by keeping a tight leash on the legislative wing of their party. Given this pattern, tightening his grip on the GNP has become pivotal for Lee, analysts say. The first challenge he will face will be his leadership in the campaign for June 4 local government by-elections, which will choose local district administrators in 52 precincts across the country. How forcefully he campaigns in the coming weeks will show whether he can retake the policy agenda from the opposition, keeps his internal foes at bay and restore – indeed establish – his leadership.