Global Insight Perspective | |
Significance | GNP candidate Lee Myung-bak's victory was all but a foregone conclusion and has come about despite major fraud allegations having been voiced against him in the lead-up to the polls. |
Implications | The corruption issue is yet to be laid to rest and could cast a shadow over at least the beginning phases of Lee's presidency, notably by hurting the GNP's chances in the May general elections, in which it will seek to become the country's majority party. |
Outlook | It is hoped that South Korea will develop into a more business-friendly entity and shed its legacy of economic nationalism and schizophrenic attitudes to foreign investment, with Lee having pledged further opening to foreign businesses. However, vested interests are set to mediate against any sweeping changes. |
A Firm Victory
Lee's victory in the elections was a foregone conclusion, with the final polls showing that Lee secured 48.6% of the vote, according to the National Election Commission. The final results saw him coming in 20 percentage points ahead of his closest challenger, Chung Dong-young of the liberal United New Democratic Party (UNDP), who obtained 26.2% of the vote, followed by right-wing independent Lee Hoi-chang, who has slipped to third place with just 15.1%. Lee, who secured a victory with the biggest margin in South Korea’s 20-year history of democratic elections, is set to take over the presidency when Roh Moo-hyun steps down in February 2007. However, the fact that elections recorded a 62.9% turnout—the lowest for a presidential race in South Korea’s history—suggests that voter interest may have been weakened by the ongoing corruption scandal against Lee.
Economic Considerations Take Precedence
South Korea’s electorate has shown itself to be primarily concerned with improving the economy at this year’s election, with the ascent of the former Hyundai CEO and Seoul mayor to power seen as providing a necessary boost to it. Whereas recent elections have tended to be dominated by grand political issues such as the pursuit of peace with the Stalinist North, democracy, and greater equality, the electorate’s attention in this year’s campaign has to a much greater degree centred on bread-and-butter politics. Although the South Korean economy has seen an average annual growth of 4.2% under Roh’s rule, the general perception is that this has failed to significantly improve the majority of the population amid the growing cost of property in the Seoul metropolitan area, a widening income gap, and high costs of education. Such concerns have translated into a backlash against the left-leaning Roh, who is widely seen to have failed in providing greater equality. Lee has seemingly provided a viable alternative with his "747 pledge" of increasing annual economic growth to 7% and per-capita income to US$40,000 from levels of US$18,372 last year, according to the International Herald Tribune. Additionally, his objective is to turn South Korea into the seventh-largest economy in the world through the encouragement of increasing business investments and the implementation of tax incentives. Such an approach has found resonance with South Korean voters at a time when concerns are growing over the country’s position in the regional economy as it faces a squeeze from a rising China, with its low-cost manufacturing on the one hand and Japan’s high-tech economy on the other (see South Korea: 14 December 2007: Conservatives Cement Position as South Korean Presidential Election Nears).
A Dirty Election
Although corruption and scandals at the highest political levels are no novelty in South Korea, this year’s presidential elections have been widely considered “the dirtiest” to have ever been held. Lee has been at the centre of a corruption scandal in the lead-up to the elections, with the prosecution having launched a probe into allegations that he had conspired in stock manipulation in a major securities fraud case that took place in 2001 and involved his former business partner, Kim Gyeong-jun. The investigation was launched after the liberal UNDP filed a lawsuit early last month alleging that Lee and Kim had colluded in attempts to artificially raise the stock prices of Kim's Optional Ventures—a successor to his defunct investment company, BKK. The case gained momentum after Kim was extradited from the United States in mid-November, and has acted as "a ticking bomb" with regard to Lee's chances in the presidential race, with the GNP candidate, however, maintaining his firm lead throughout. He was on 5 December finally cleared, paving the way to the presidency (see South Korea: 5 December 2007: Election 2007: Fraud Probe Verdict Clears Way for South Korean Conservatives' Return to Power). In a surprise move, parliament voted to re-open the case on Monday (17 December) in a session that saw fist fights break out between parliamentarians after the fraud scandal gained new momentum when Lee’s political rivals released a seven-year-old video showing him to have admitted to founding the investment company that has been charged with securities fraud—a claim that he has refuted. Ahead of parliament voting for the fresh probe, Roh sought to re-open the case, but his calls were rejected by the Ministry of Justice, holding that prosecutors had already cleared him in the case.
Outlook and Implications
The corruption issue is yet to be laid to rest and could cast a shadow over at least the beginning phases of Lee’s presidency, notably by hurting the GNP's chances in the May general elections in which it will seek to become the country's majority party. Meanwhile, the issue is set to be accentuated by the GNP’s strong links with the conglomerates (chaebols), which is not set to be conducive to current efforts to crack down on the country’s widespread corruption problems. With a conservative win in the elections, South Korea’s liberal parties are meanwhile left to reassess their status, with cohesiveness having been undermined after the Uri Party fractured in February this year, paving the way for a realignment of political forces.
Following Lee’s victory in the elections, South Korea is now firmly set on a conservative path for the next five years. Hopes are that country will develop into a more business-friendly entity and shed its legacy of economic nationalism and schizophrenic attitudes to foreign investment. Lee has promised to cut down the number of regulations that are currently imposed on businesses and commit to general efforts to open up to foreign businesses. Known from his previous job as mayor of the capital, Seoul, as "the Bulldozer", he has a reputation of pushing through his policies and has pledged to take measures to improve infrastructure and to hold South Korea's militant labour unions on a short leash. In the realm of foreign policy, his party has moved towards a more centrist line on North Korea pushed by the positive momentum of the Roh administration's engagement policies, but has made it clear that a continuation of such a line will be dependent on the Stalinist state honouring its commitments under the 13 February Nuclear Disarmament Agreement. This is set to result in cutting down on unconditional aid provided by the Roh government, which has been met with harsh criticism from the GNP. Lee’s ascent to power will shift the policy focus back to the economy and is as such good news for the business sector. However, South Korea's deep-seated economic nationalism cuts across party lines and is unlikely to completely disappear any time soon, although some initiatives are to be expected in order to provide incentives for foreign investors.