The major event of the first quarter of 2008 was the inauguration of a new government in South Korea.  The Lee Myung-bak government offered some initial signals of the types of policies it intends to pursue both on and off the peninsula.  While there is much that was accomplished under the Roh Moo-hyun government in U.S.-ROK relations, most experts agree that the overall tone between the new Lee government and the Bush administration will improve considerably.  Meanwhile, U.S.-DPRK relations in the context of the Six-Party Talks remain stuck on completing the second phase of the denuclearization agreement, despite some audibles by the U.S. team in conjunction with the Chinese.  While we may be in the first quarter of the year, it may be the last quarter for the six-party process absent any progress.

“It’s the economy, Pabo (Stupid)”

Lee Myung-bak won the presidency by the largest margin of victory of any ROK president since the establishment of democracy in the country in 1987.  Though part of this margin is attributable to dissatisfaction with the previous government’s performance, the victory undeniably marked a swing of the political pendulum back to the right-of-center in Korean politics after a decade of left-of-center politics. The former chairman of Hyundai Construction put forward three major policy priorities – revitalizing the economy, enhancing Korea’s position as a global player, and restoring trust in the U.S.-Korea alliance.

As with almost all democratic presidential elections, the key issue motivating voters’ political choice was the economy.  Lee has promised to take Korea “back to the future” by reemphasizing the return to a pro-growth national economic strategy rather than the prior government’s focus on income redistribution.  While the Roh government’s intentions were noble, their policies failed to achieve the desired objectives.  As a result, income gaps remained wide, educational reform did not happen, unemployment did not decline, and the major chaebol conglomerates felt as though they were under siege from their government.  Lee’s 7-4-7 proposal has famously promised raising Korea to the 7^th largest economy in the world, creating a $40,000 GDP per capita income level, and achieving 7 percent growth in the economy.  Post-election, Lee’s team has already tried to dampen down expectations of achieving the 7 percent growth.  Indeed, when a group of former U.S. government officials were invited to meet the president-elect in January (including the author), his first question was about the sub-prime mortgage crisis in the U.S. and the impact this would have on the global economy and Korea’s overall growth.  Under Lee, Korean businesses will operate under a friendlier climate with likely reductions in corporate taxes (up to 3 percent), more public construction projects (including Lee’s idea of a “Korea canal”), and expansion of Seoul city.  As important to the Lee government as growth is, to re-instill confidence within Korean corporations to invest in the country is a top priority.  Estimates are that Korean companies have accumulated upward of $60 billion in cash, uncertain of investing in the economy given the previous government’s policies.  For these companies, Lee’s presidency clearly presages a new day.

Mind-meld

President Lee will make his first trip to Washington in April to spend an evening and morning at Camp David.  The choice of the venue is significant because it affords leaders the opportunity for private meals, one-on-one time, walks through the woods, and rides on the golf cart where some personal chemistry can be created.   This was the primary element missing in the alliance over the past several years.

There were many important agreements reached between the U.S. and South Korea over the past five years – arguably more substantive agreements than in any five-year period in the alliance.  The return of over 60 military camps and bases to the Koreans, the transfer of wartime operational control (OPCON) over ROK forces (by 2012), and the agreement to relocate Yongsan garrison constituted the biggest changes in the U.S. force presence in Korea in decades.  In addition, the U.S. committed to work on a visa waiver program for Korea and inked a blue-ribbon standard free trade agreement (FTA) with South Korea, constituting the largest FTA outside of NAFTA and America’s single largest bilateral FTA.

In spite of these agreements, the tone in the U.S.-Korea relationship was never good.  In part, this had to do with ideological differences, but it also had to do with a lack of personal chemistry between the two leaders.  President Bush’s close personal ties with leaders like Koizumi Junichiro, John Howard, Tony Blair, Angela Merkel, and even Hu Jintao were never approximated with Roh.  This is likely to change with Lee.  For the first time in arguably a decade, Bush will meet with a Korean leader much like himself: a conservative, pragmatic businessman who is a man of faith.   Their first telephone conversation after Lee’s election was pleasant and even contained a joke or two about the two leaders’ relative golf capabilities.  This ability to connect at a human level will be welcome by alliance supporters as a missing ingredient in an otherwise sturdy alliance relationship.

All signals from the Lee administration in the past quarter indicate that they will continue with the alliance agreements from the previous administration.  There has not been much publicity in this regard because most of the focus between the inauguration in late-February and the end of the quarter has been on preparations for the National Assembly elections on April 9 where Lee hopes the conservatives can win back a majority.  The low-key but important visits by National Security Advisor Byung-kook Kim and Foreign Minister Yu Myung-hwan in March to Washington, however, made clear the policy directions of the new administration – all of which are probably music to the ears of most supporters of the alliance.

On North Korea, the Lee administration began implementing its “reciprocity-first” policy.  Rather than prioritizing handouts to Pyongyang, Lee made clear in his inaugural address as well as in other statements his intention to help the DPRK reach a $3,000 per capita income in one decade as long as Pyongyang reciprocates cooperation in denuclearization and in inter-Korean relations.  Of the three baskets of inter-Korean assistance – humanitarian (food, fertilizer), economic cooperation projects (Kaesong industrial complex and Kumgang mountain tourism project), and big-ticket infrastructure projects (joint fisheries zone, road and rail promised by Roh government in October 2007 summit) –  Lee will likely continue food and fertilizer (albeit at lower levels if there is no progress on Six-Party Talks) and the inter-Korean cooperation projects, but will not expand the latter or start the big-ticket infrastructure projects without reciprocity from the North on denuclearization.   Deputy Minister Park In-kook’s strong statements before the UN Human Rights Council in Geneva that Seoul would no longer remain silent on DPRK human rights abuse was another clear indication of the policy’s new direction.

Some on the left in Seoul have criticized Lee’s policy as “no-policy,” but for both conservatives and for those who want negotiations with North Korea, Lee’s policies are the right mix of carrot and stick.   Or as one top official put in informally, “sometimes, silence is a policy.”  The new emphasis on human rights will be welcomed by President Bush who arguably has done more on the issue than any previous U.S. president, setting up a program for resettling DPRK defectors in the U.S., appointing a special envoy, and hosting North Korean defectors in the Oval Office.  The ROK statement at the UN Human Rights Council in Geneva was made without much fanfare and yet was made decisively by the Lee government.  By contrast, it took almost 12 hours of negotiation to get Seoul to agree to include one line in the 2006 ROK-U.S. Joint Declaration at Gyeongju on the “mutual concern for the situation of the people of North Korea.”

Moreover, the coordination of inter-Korean assistance with Six-Party Talks will be welcomed by all members of the talks.  The Unification Ministry’s free-hand to spend its budget on North Korea independent of progress in the Six-Party Talks was a coordination challenge for those seeking to modulate the right amount of pressure and incentives to bring the North to negotiate seriously on denuclearization.    Lee has sought to reduce the role of this agency and put the Foreign Ministry in the lead on North Korea.  This new policy does not guarantee success, because in the end, the decision rests with Pyongyang to make the right choices, but it is clearly a policy that reflects the administration’s more pragmatic and less ideological view of the DPRK.

 A global U.S.-ROK alliance?

Another theme likely to resonate in U.S.-ROK relations under the new Lee government is the broadened scope of the alliance.  Again, this was a trend that was held up prominently during the Roh Moo-hyun years, and the previous government deserves credit for stepping up in Iraq where the ROK had the third largest ground contingent doing important force protection and training activities, particularly in Irbil, not just humanitarian assistance.  Seoul also contributed UN peacekeeping forces in Lebanon and was an early supporter in Afghanistan. The problem was that even as Korea’s scope expanded in its global operations, its mentality did not.  In other words, it was not to fight the global war on terror or for stability in the Middle East that Korea sent troops to Iraq; instead, it was seen as a quid pro quo for hoped-for concessions by the Bush administration on North Korea.  Lee will not allow an obsession with North Korea to dictate ROK global policy.  As he stated throughout the campaign, he will treat the North as a “normal” country, not as an exception to every global norm that Korea aspires to.   In this regard, the context of every foreign policy decision does not need to be “cleared” by pro-DPRK factions.  Seoul can renew its commitment to the global war on terror in Afghanistan without anxiety that this might elicit a negative response from the DPRK.  It can talk about increasing the ROK’s profile as a provider of overseas development assistance to the world without leftist hesitation that such ODA money should be used for the DPRK rather than to combat AIDS in Africa or avian flu in Vietnam.    Seoul can also improve relations with Japan without the biases held by the political left, who display a combination of anxiety and insecurity disguised as nationalism towards its neighbor.

FTA and OPCON

The two concrete policy issues between the U.S. and ROK in the run-up to Lee’s April Camp David visit were on trade and OPCON.  In the latter case, many of Lee’s top military advisors were outspoken in their opposition to the Roh government’s conclusion of an agreement to return wartime OPCON over ROK forces to South Korea by April 2012.  The view was not that the concept of OPCON transfer was wrong, but that the Roh government was pursuing it for ideological reasons without a clear assessment of the strategic environment in which such a transfer would happen.  Though this looked as if it might be the first issue of contention between the two governments, early and quiet trips by both U.S. and ROK interlocutors helped to ease some of the anxiety surrounding the issue and address some of the ROK concerns.

The free trade agreement is, however, another matter.  The degree of frustration on the Korean side at how this very important agreement – important not just for the U.S.-ROK alliance, but also for free trade and U.S. leadership in Asia – has become a victim of the U.S. election campaign has been palpable.  Despite revisions that have already been made on the Korean side to meet Congressional demands, the prospects of passage in the U.S. Congress seem slim.  The ROK interlocutors worked throughout the quarter to sort out a path to salvage the agreement.

While there is a great deal of pessimism in the commentary/pundit echo chambers in Washington about the FTA, I think that what is greatly underestimated is the determination and political will of both the new Lee government and the Bush administration to get the agreement through.  This is by far the largest bilateral FTA the U.S. has negotiated, and the largest FTA outside of NAFTA.  Its passage is not only a symbol of the alliance, but also a symbol of U.S. leadership in free trade when other multilateral forums are in jeopardy.  The call for a “strategic pause” on U.S.-negotiated FTAs would only sideline the U.S. while China and the EU continue to move forward negotiating preferential arrangements.

There were rumors that the Lee government would come to Washington with the decision to re-open its beef market to the U.S., which constitutes an important pre-condition to removing some of the voices of opposition to the FTA on Capitol Hill.   Presuming that the Grand National Party (GNP) does well in the National Assembly elections, this would set the stage for bringing the FTA before the Korean national legislature for ratification.  On the U.S. side, there are concerns that elements of the FTA are not acceptable (e.g., autos), but one should not underestimate the political will of the Bush administration, even in its last months, of pressing hard to move the agreement through with the help of key Cabinet secretaries.  The administration has not yet made the FTA a “high politics” issue, but if it does, there may be a brighter outcome than most today expect.

Six-Party Talks in the Fourth Quarter?

The biggest headline event in U.S.-DPRK relations during the quarter had nothing to do with nuclear weapons and everything to do with music.  The New York Philharmonic’s well-publicized visit to Pyongyang offered a moment of “violin” diplomacy that captured the world’s imagination.  The North Koreans were gracious hosts and the event constituted a good example of the things available to the DPRK once it makes the decision to denuclearize.  Unfortunately, the key immediate indicator of that decision – the nuclear declaration and the disablement of Yongbyon – lacked any significant movement.  An informal declaration provided by the North in November 2007 apparently did not come close to being acceptable.  While the disablement process at Yongbyon has moved forward well with U.S., Russian, Chinese, Japanese, and South Korea experts all on the ground at Yongbyon at one time or another (unprecedented in terms of multilateral nonproliferation efforts in the North), Pyongyang appeared not to be ready to reveal all of its past nuclear activities, including uranium-based programs and past proliferation activities.  U.S. negotiator Chris Hill in conjunction with the Chinese hosts of the Six-Party Talks tried to come up with “work-throughs,” – diplomatic instruments to finesse the data declaration – but as of the end of the quarter, these do not appear to have worked.

Many on the conservative side are arguing that we are now in the fourth quarter of Six Party talks with no DPRK cooperation even three months after the Dec. 31 deadline.   While optimism is not warranted, a great deal has been accomplished since the February 2007 agreement, and for this reason, diplomats will continue to try to achieve completion of this second phase of “declaration and disablement.”   Meanwhile, Hill’s time might be better spent getting the US-ROK FTA passed.