This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

• The Blue House confirmed that a “Green New Deal” would be a component of a Korean New Deal that President Moon announced on May 10.
• This confirmation followed urging from the environmental group Greenpeace for Moon to set a positive example for combating climate change as South Korea addresses the economic downturn caused by the pandemic.
• The Moon government has already pledged to implement a nation-wide emissions cap and put Korea on a path to becoming a zero-emissions country by 2050.

Implications: South Korea’s current environmental policy aims are emerging out of foundations laid by economic initiatives of previous administrations. Although Presidents Park Geun-hye and Lee Myung-bak advanced “green” plans that were primarily aimed at boosting economic growth, their initiatives ensured that the government’s pro-environment posture would be closely associated with economic growth. Moreover, it cultivated stakeholders who would push the government to do more to reduce the country’s carbon emissions. Moon Jae-in’s ongoing efforts are further helped by the widespread recognition that increased public investment is vital to the post-COVID economic recovery.

Context: In his 2008 inauguration speech, President Lee Myung-bak highlighted his vision of employing green technology to overcome the ongoing global financial crisis. During the Park Geun-hye administration, the government continued to promote green technology as a vehicle to boost the economy. During this period, the Korea Electric Power Corporation advanced an initiative to improve the country’s energy efficiency by integrating smart technology into the electricity grid. The investment in smart electrical grid helped set the stage for additional investments in renewable energy sources including solar energy, energy storage, and electron volt chargers.

Korea View was edited by Yong Kwon with the help of Gordon Henning, Soojin Hwang, Hyungim Jang, and Ingyeong Park.

Picture from flickr account of Republic of Korea

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

• On Lunar New Year’s Day, six people died when a faulty gas pipe exploded at a vacation rental home in Gangwon Province.
• Subsequent investigation revealed that the facility had been operating illegally and that the faulty gas pipe had also been installed illegally.
• The local government had promoted this vacation rental facility on its official website as part of its effort to grow tourism traffic to the province.

Implications: Despite increased emphasis on public safety from the central government, the inconsistent enforcement of regulations continue to create vulnerabilities. The Gangwon provincial government was prompted to engage in safety checks at lodging facilities after a similar gas explosion two years ago. However, regulators were unable to inspect rental vacation homes that were illegally listed as multi-dwelling homes. As a result of rigid regulatory interpretations, lodging facilities that potentially posed the greatest threat to the public were left out from routine inspections. This occurred even when the government had information that proved that these facilities were operating illegally. This case suggests that Korean regulators may be weighed down by bureaucratic rigidities and poor inter-agency coordination, creating obstacles for the consistent enforcement of safety regulations.

Context: The 2014 Sewol accident is the most notable example of a recent public safety failure. Laws were in place to restrict the dangerous practice of loading cargo above the regulated level. However, official inspectors failed to verify the specifications of the vessel Sewol after it was remodeled. This negligence led to the maritime accident that killed 304 ferry passengers. The disaster had major political ramifications as the Park Geun-hye administration was scrutinized for both shortcomings in preventative regulations and its poor handling of the disaster response. The recent resort accident shows that ensuring public safety remains a persistent public policy challenge in South Korea.

Korea View was edited by Yong Kwon with the help of Gordon Henning, Soojin Hwang, Hyungim Jang, and Ingyeong Park.

Emblem from the Republic of Korea government

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

• The Wuhan virus has spread to six different countries, leaving more than 630 infected and 17 deaths.
• As of January 27, there were four confirmed cases of the coronavirus in South Korea. There have not been any fatalities.
• Korea Center for Disease Control and Prevention has heightened the disease alert level from blue to yellow, and have banned travel to Wuhan and the surrounding region.
• Local quarantine authorities are taking preventative measures by asking airport and sea ferry authorities to scan travelers’ body temperatures and symptoms of the virus.

Implications: Despite concerns that it might cause a panic, the Moon Jae-in administration is opting to inform the public on the potential severity of the Wuhan virus as it seeks to prevent the disease from reaching the general public. This is consistent with President Moon’s overall emphasis on greater transparency when enacting public policy. The government’s ability to be upfront about the public health risk was partly facilitated by the fact that the first domestic case of the virus was successfully quarantined at the airport. The Moon administration is likely looking to avoid comparisons to the previous administration, whose slow response to the outbreak of the Middle East Respiratory Syndrome (MERS) in 2015 was severely scrutinized.

Context: South Korea recorded 186 confirmed cases of MERS and 38 fatalities in 2015. The Park Geun-hye administration’s handling of the health emergency was extensively criticized for its improper response in the initial stages of the outbreak. Many health experts have pointed out that the first 14 fatalities in the first week of the outbreak could have been avoided had the government responded with appropriate urgency. The outcry around the government’s delayed response led to the dismissal of the health minister and elevated the public perception that the administration was incompetent.

Korea View was edited by Yong Kwon with the help of Gordon Henning, Soojin Hwang, Hyungim Jang, and Ingyeong Park.

Image from the Republic of Korea Government

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

• The Ministry of Land, Infrastructure, and Transport confirmed plans to impose a price ceiling on new apartments built on private land to curb the cost of living.
• Real estate prices of Seoul’s affluent Gangnam district is expected to rise more rapidly in the second half of 2019.
• Reflective of the supply constraint, Seoul Housing & Communities Corp. announced plans to undertake a pilot project to construct a compact city over a highway.

Implications: Conventional policy tools deployed by the Korean government until now have been inadequate to curb housing demand in metropolitan Seoul. New supply has been added to satellite cities surrounding the capital, but heavy traffic and insufficient public transportation connecting these new exurbs to the city center have discouraged people from moving to these new areas. Analysts fear that the price ceiling may exacerbate the situation if construction companies are insufficiently incentivized with high returns to take on new projects in the city.

While measures to add more bus routes and extending the subway line could mitigate some of the constraints, adding new supply of housing inside the city may be the most direct way to tackle the rising cost of living. To this end, one construction company has taken on an ambitious project to maximize the city’s use of vacant air space over highways and other public infrastructure. However, this plan has not yet been widely adopted. As such, volatility in Seoul’s real estate market will continue to pose a major challenge to President Moon Jae-in for the duration of his term.

Context: Successive South Korean presidential administrations have struggled to control the housing market. In 2007, the Roh Moo-hyun administration imposed a price ceiling on new apartment units in an effort to curb increases in the cost of living. The policy was unsuccessful in moderating prices because construction companies reduced investments in new projects, leading to housing scarcity in Seoul. Taking office in 2008, President Lee Myung-bak attempted to address the widening gap between supply and demand by pushing private developers to invest more aggressively. Succeeding Lee, President Park Geun-hye reversed the Roh era price ceiling in 2013 and introduced tax incentives for home buyers. However, these policies have failed to curb the rise in housing costs.

Korea View was edited by Yong Kwon with the help of Yusong Cha, Stephen Eun, Taehwa Hong, and Hyoshin Kim.

Picture from user Chris Harber on Flickr

By Jenna Gibson

In the United States, the rise of terms like “fake news” and “alternative facts,” as well as scandals about election manipulation through made-up news stories and biased sources have led to a spike in discussion about the inherent trustworthiness of the news media. However, when it comes to overall distrust in the news, the United States has nothing on South Korea.

According to the University of Oxford Reuters Institute’s 2017 Digital News Report, South Korea has the lowest trust in news out of the 36 countries surveyed around the world. Just 23 percent of Koreans said they trust news overall in that survey, and only 12 percent said that the news is free from political and business influence. By contrast, the United States also reported a low trust in news, just 38 percent, putting it at number 28 out of 36. The report, which has examined media consumption around the world since 2013, added Korea in 2016, and the results that year were about the same – 22 percent said they trusted the news, which was 25^th out of the 26 countries surveyed (only ahead of Greece).

Another interesting finding in the 2017 report was that Koreans have a narrow gap between their trust of news overall (23 percent) and their trust in the news they personally consume (27 percent). In most other countries surveyed, that gap was significantly higher (38 percent vs. 53 percent in the US, for example), reflecting the fact that people presumably seek out and follow news outlets that they find particularly trustworthy. In Korea, however, the popularity of news aggregation platforms like Naver and Daum mean that people often consume the news through a third party. According to the Oxford researchers, “The small difference between overall trust and trust in the news I use, relates to the heavy use of portals, where people often don’t remember specific news brands.”

Several major scandals in the last few years have dealt major blows to Korean trust in the news media. Former President Park Geun Hye was accused of using South Korea’s strict defamation laws to silence critics in the media, causing many moderate to left-leaning publications to self-censor out of fear of prosecution. The Park administration was also criticized for manipulating major public broadcasters KBS and MBC by appointing conservative pro-Park CEOs to both organizations. Employees of both companies have protested these appointments on and off for years, culminating in a months-long strike last fall that eventually resulted in the removal of the two leaders. After the announcement that their strike was successful, the KBS Union released a statement reading, “We have only just removed the biggest hurdle that stood in the way of KBS becoming a true broadcasting company of the people. Our goal isn’t just to make KBS what it was 10 years ago, our goal is to end the broadcasting company’s shameful history of servitude and submission to power. We will create a KBS that touches the lives of our citizens and reflects their opinions and ideas.”

These issues are not just limited to Park Geun Hye’s time, however. Earlier this year, an online blogger known as “Druking” was accused of using a computer program to “like” comments on news stories on Naver, thus artificially inflating certain comments to make sure that they were shown first in the comment section below political stories, as well as writing critical comments. Police say he used as many as 2,000 online IDs at a time to manipulate Naver comment sections. The blogger was recently indicted along with three former members of the Minjoo Party, who were also allegedly participating in online opinion rigging. Naver has since announced that they are overhauling their news portal to prevent similar issues in the future, and hope to make their process more transparent to regain the trust of the public.

In the Reporters Without Borders annual World Press Freedom Index, South Korea fell from 31^st in the world in 2006 to 70^th in 2016, largely on the back of these influence scandals. But in 2017 the country returned to 63^rd, and then jumped 20 places to hit 43^rd in 2018’s report. According to the index, the media’s work to expose Park’s corruption, as well as President Moon’s efforts to end the MBC and KBS strikes were the main reasons for this improvement.

The Moon administration has openly stated that they want to make these issues a priority. Right after his election last summer, Moon’s team pledged to bring Korea back to 30^th in the ranking, and listed that pledge fourth among the incoming administration’s 100 policy priorities. Solving the MBC/KBS issue shows he is serious in following through on this promise. But issues remain – the structure that allows the government to appoint managers at these broadcasters are still in place, leaving open the possibility for future influence. Plus, South Korea’s defamation laws allow for harsh punishments for a range of political and non-political speech, and could still be used to silence opponents of the government. By eliminating these structural issues within South Korea’s free speech landscape, as well as considering whether the National Security Law which criminalizes viewing of a wide range of North Korea-related material, Moon can ensure that his commitment to free speech lasts long after he leaves the Blue House.

Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo by KEI Intern Minhee Lee

By Troy Stangarone

In 2017, much of the world’s attention turned to the Korean Peninsula. South Korean politics underwent major changes as President Park Geun-hye became the first South Korean president to be removed from office and a snap election was held in May that saw the election of Moon Jae-in. North Korea also dominated the news as Kim Jong-un followed through on his promises to test an intercontinental ballistic missile (ICBM) and has raised concerns over the prospect of military action on the Korean Peninsula as North Korea has advanced its programs more quickly than many expected.

The changes in South Korean politics and North Korea’s progress on weapons development on their own could mark 2017 as a major turning point on the peninsula. However, we also saw the United States threaten to withdraw from the KORUS FTA and China perhaps put more pressure on South Korea over THAAD than North Korea over its nuclear weapons program. As we take our annual look back at the events that helped to shape the Korean peninsula during the past year, it is also an opportunity to review the events we highlighted on The Peninsula in our annual 10 Issues to Watch For on The Korean Peninsula in 2017 blog.

Looking back, we largely touched on what would be the key issues on the Korean peninsula in 2017. Though, in the case of burden sharing we may have been a year too early and there are reasons to believe late in 2017 that our prediction on relations between South Korea and Japan while right for 2017 may be challenged in 2018. Areas where we could have done better include more of a focus on North Korea’s desire to try and complete much of its weapons testing in 2017, how nations in East Asia would react to the U.S. withdrawal from the Trans-Pacific Partnership, and the impact that the impeachment of Park Geun-hye would have on the leadership of South Korean chaebol. With that said, here’s a brief look back at the 10 issues we highlighted and what happened:

1. Political Dynamics and the Presidential Election in South Korea

The impeachment of Park Geun-hye and the subsequent election of Moon Jae-in as president were two major events in South Korean politics in 2017. While the snap election won by Moon resulted in a victory for the leading contender rather than an upstart candidate hoping to take advantage of shifts in the South Korean political scene, it did see the rise of populism in South Korea as we have seen in much of world over the last couple of years. The difference being that populism in South Korea is being driven by the left rather than the right. While Moon’s election could have resulted in shifts in policy towards North Korea and Japan, he has largely represented continuity through his endorsement of President Trump’s policy of maximum pressure and his efforts to separate historical issues from policy more broadly with Japan. Though, he has moved to give the government a greater role in job creation in South Korea.

2. The Trump Administration’s Foreign and Security Policy in East Asia

Despite campaign rhetoric that accompanied President Trump’s run to the White House, U.S. foreign and security policy towards East Asia has remained largely the same. Much of the strong rhetoric about the need for allies to contribute more to their defense has remained, but the broader U.S. policy in the early part of the Trump Administration seems to have largely remained in place. The most significant difference to date may have come in the rhetoric designed to describe the Administration’s policy. The Trump Administration has decided to move away from using the Obama Administration’s Asia Rebalance to a new Indo-Pacific strategy, but it is unclear how different the policy will be in reality. Though, we could see greater differences in 2018 as negotiations on burden sharing with South Korea will need to be completed and North Korea’s

3. Trump Administration Asia Economic Policy

If U.S. foreign and security policy in East Asia has largely remained consistent, the same cannot be said of U.S. economic policy. Trade policy was the one area where it was clear President Trump intended to make changes. On the first day of the new Administration, President Trump followed through on his promise to withdraw from the Trans-Pacific Partnership (TPP) and shift from the use of multilateral trade agreements to bilateral trade agreements to advance U.S. interests. The Trump Administration has also pushed to renegotiate the U.S.-Korea (KORUS) FTA, which President Trump has consistently referred to as a “horrible” trade agreement and only North Korea’s nuclear test in September may have convinced the Trump Administration to renegotiate rather than withdraw from the agreement. It has also taken steps to use more U.S. trade remedies to push a harder line with China on its trade practices.

4. North Korean Behavior in Response to a New Political Environment

Despite announcing in his New Year’s Day address that North Korea was close to conducting an ICBM test, North Korea did seem to display some hesitancy in its testing in 2017 as it adjusted to the new Trump Administration in Washington, DC and there have been indications that Pyongyang is confused by Washington’s new policies. At the same time, North Korea did not conduct as many missile tests around the U.S.-South Korean military exercise in the spring and delayed conducting its first ICBM test until July. However, by the middle of the year North Korea seems to have determined that the new Administration would not be a break on its behavior and proceeded to conduct missile tests at roughly the same rate as in 2016.

5. Will North Korea be a Trump Administration Priority?

It was clear before the Trump Administration came into office that dealing with North Korea would be a foreign policy priority, but less so where it would rank in terms of priorities, especially given candidate Trump’s focus on China. However, addressing North Korea’s nuclear program has become the Trump Administration’s top foreign policy priority because of both the maturity of North Korea’s weapons programs and the growing threat they represent to the U.S. homeland and the region. As a result, President Trump has lessened economic priorities that he campaigned on, such as addressing trade with China, and offered Beijing a better deal on trade if it helped the United States deal with North Korea.

6. Are Sanctions Working?

This was one of the key questions for 2017 and will remain a top issue in 2018. Are sanctions working on North Korea? Sanctions have taken a toll as exports to China have fallen by $410 million through October compared to the same period in 2016 and some countries have begun completely cutting off trade, but they have created no discernable change in North Korea’s testing or willingness to return to talks. However, concerns we had at this time last year that there may be a turn away from sanctions have not yet come to pass. While some of the presidential candidates in South Korea had expressed a desire to reverse course on sanctions with North Korea, Pyongyang’s continued missile test and hydrogen bomb test have closed any avenue for engagement and a lessening of sanctions, easing those concerns. Though, there has been an increasing consideration of the use of military force in the United States to solve the North Korean nuclear issue.

7. Special Measures Agreement/Burden Sharing 

Because of the focus on this issue by candidate-Trump we had an expectation that it could come to the fore in 2017. Asides from the occasional rhetorical flash, it didn’t. However, in 2018 the United States and South Korea will need to conclude a new Special Measures Agreement to determine the level of burden sharing in the alliance. This may just be an issue deferred.

8. Will RCEP Be Finalized in 2017?

One of the expectations for 2017 was that if President Trump followed through on his pledge to withdraw from the TPP, it would help spur the Regional Comprehensive Economic Partnership (RCEP) to conclusion and help to provide China with a platform for supplanting the United States’ leadership in East Asia on economic issues. While China has sought to supplant the United States on trade, RCEP remains unconcluded and rather than withering the TPP is very much alive. The remaining members under Japanese and Australian leadership have sought to conclude the agreement and leave open the door to a U.S. return in the future. The regional response to the United States on trade has not played out how one would have expected.

9. Will the Korean Wave Continue?

The Korean Wave, or Hallyu, continued to grow in 2017 despite Chinese retaliation over THAAD. China is a key market for Hallyu content and products. As a result of THAAD, China prohibited the streaming of new K-dramas and banned group tours to South Korea where Chinese tourists purchase large amounts of Hallyu related products such as K-beauty. Both of these actions cut into profits from Hallyu, but there was also significant growth of K-beauty product exports to China as Chinese customers sought to make up for the loss of purchases from their trips to Seoul. While China’s measures have clearly cut into Hallyu, it has seen increasing success outside of China. One of the biggest new hits on U.S. TV, The Good Doctor, is the export of a South Korean drama and the growing enthusiasm for Hallyu can be seen at KCONs around the world as well as in the American TV debut of boy band BTS, who will be ringing in the new year in Times Square along with the world’s biggest artists. While China’s THAAD retaliation clearly represented a challenge to Hallyu, it continues to thrive.

10. Relations Between South Korea and Japan

The relationship between South Korea and Japan has developed largely as we expected. The 2015 agreement regarding the Comfort Women remains unpopular in South Korea and President Moon has said the South Korea could not “emotionally” accept the agreement. However, in contrast to the Park Administration the Moon Administration has worked to separate historical issues from other issues in the relationship. Shortly after his election President Moon spoke with Prime Minister Abe about North Korea and the two have met in a summit meeting during APEC and the trilateral meeting with President Trump on the sidelines of the UN General Assembly. While the growing threat from North Korea, along with President Moon’s reluctance to date to call for the Comfort Women deal to be revised or scrapped, has likely helped to maintain ties, a South Korean commission recently concluded that the agreement did not adequately take into account the views of the Comfort Women and could challenge this balance in the new year.

Beyond the events that we expected, here is a look at some of the unexpected events that helped to shape 2017:

1. North Korea’s Nuclear Successes

After a series of Musudan missile failures in 2016, few would have expected the progress shown by North Korea in 2017. However, 2017 saw Pyongyang make significant progress as it introduced the Hwasong 14 and 15 models for its three successful ICBM tests. Also, more than a year after claiming the successful test of a hydrogen device, North Korea successfully conducted it first test of a hydrogen bomb. While North Korea’s successes to-date may not quite complete their tests as Kim Jong-un indicated, they have brought North Korea significantly closer to being able to strike the U.S. homeland than many would have thought possible in 2017.

2. How Sanctions on North Korea have Changed

Prior UN sanctions on North Korea were designed to prevent North Korea from acquiring the technology that it needed to advance its nuclear weapons and missile development, but that began to change in 2017. While UN sanctions in 2016 began to move in this direction with caps on the export of coal, sanctions in 2017 prohibited the export of most of North Korea’s minerals, textiles, fish, and basic items such as wood products. They also began to cut into North Korea’s earnings from the export of labor to foreign countries by requiring that all workers return to North Korea in the next year and prohibiting future work contracts. In essence, the sanctions on North Korea have moved from a stage of punishment and deterrence to one of coercion.

3. The Impact of Scandal on the Chaebol Leadership

The impeachment of Park Geun-hye has also had a significant impact on the leadership of South Korea’s chaebol who became embroiled in the scandal, but also left mixed signals. When the scandal first broke there was hopes that the history of the South Korean legal system going light on the heads of chaebol would have changed. Lee Jae-yong, the head of Samsung, was found guilty of giving bribes to Choi Soon-sil in the Park scandal and now faces 12 years in prison. However, there are now indications that may not be the case. Many of the key figures of the family behind Lotte were also convicted in the scandal, but given suspended prison sentences. The Lotte case indicates that the change many hoped for may not be the case and next year we will learn whether Lee Jae-yong’s sentence is also reduced and suspended or if he is faces jailtime.

4. China’s Retaliation Over THAAD

China never formally sanctioned South Korea over the deployment of THAAD, but it took steps related to Hallyu, tourism, Lotte, and other areas in an effort to pressure the South Korean government to reverse its decision over THAAD. While there seemed to be an agreement to return to normal, China has only partially reversed its economic pressure over THAAD and indicated that it will only completely do so once the missile defense system has been reversed. However, through October, the economic costs to South Korea from the deployment of THAAD are likely over $9 billion, while North Korea has only seen its exports to China decline by $410 million.

5. The Assassination of Kim Jong-nam

While not taking place directly on the Korean Peninsula, the assassination of Kim Jong-un’s older half brother Kim Jong-nam in Malaysia was one of the year’s most surprising events. Not only did North Korea take out a potential rival to Kim Jong-un on foreign soil, but it did so using VX nerve gas raising concerns about North Korea’s potential use of chemical and biological agents in addition to its nuclear weapons and missile programs.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from the Republic of Korea’s photostream on flickr Creative Commons.

By Troy Stangarone

After three months of deliberations, the Constitutional Court has unanimously accepted the National Assembly’s impeachment of President Park Geun-hye. Since the scandal surrounding President Park and her confidant Choi Soon-sil first broke last fall, South Korea has gone through an extended political crisis. Protesters have gone to the streets in record numbers and the fallout from the scandal has led to the arrest of President Park’s former Chief of Staff, the head of the National Pension service, and Samsung Vice President Lee Jae-yong among others.  With the Constitutional Court having decided to accept the removal of President Park from office, what comes next?

A Snap Election and a Compressed Transition

With President Park removed from office, Acting President Hwang Kyo-ahn will select a date to elect a successor. The election must be held within 60 days of the Constitutional Court’s decision. With the ruling having taken place on March 10, the current expectation is that the presidential election will be set for May 9. Acting President Hwang does have some discretion in selecting the date. With two holiday’s in Korea during the prior week, scheduling an election day earlier than May 9 may be complicated.

If regularly scheduled elections are unpredictable (see U.S., 2016 and UK, Brexit), snap elections are inherently more unpredictable. While the compressed timetable gives Moon Jae-in, the leading candidate in polls, an advantage, the dynamics in a short campaign could change quickly and provide few opportunities for a candidate to rebound should there be a sudden shift.

The new president will take over as soon as their victory has been certified by election officials and serve a full five year term. While prior incoming administrations had a transition period between a December election date and inauguration day on February 25, the new administration will have no transition period. Additionally, the inauguration date for presidents going forward, will move to the next president’s inauguration date, should there be no constitutional reforms to set a fixed date.

Compressed Political Primaries

With elections approaching, each party will need to select their candidate. In a normal election, the political parties would have sufficient time to implement a primary process. While the political parties control their primary process, we have already seen indications of how the process will be shortened. The Minjoo Party conducts a two round primary, unless on candidate receives 50 percent of the vote in the first round. As part of the primary, they hold a voting tour similar to the U.S. primary system where votes are staggered across different regions. In light of the compressed campaign calendar, the voting tour will be reduced to four areas for the upcoming election.

While Korean election law requires presidential elections take place over 23 days, there will be an incentive for the parties to select nominees as soon as possible to begin the process of unifying the party behind their standard bearer and putting in place a plan to win the upcoming election.

Game Changing Events

In the United States, every campaign heads into the final stretch of the election concerned that there could be an “October surprise.” The idea of the October surprise is that there is some unforeseen event that fundamentally reshapes the election in a way that the campaigns cannot control. Each campaign will need to prepare for such a game changing event, especially in what could be a fluid election race. In a short campaign cycle, even normally less significant events could alter the race if a candidate does not handle their response to changing events well.

Political Alliances

Should Moon Jae-in secure the nomination of the Minjoo Party nomination, he will be the odds on favorite to win. He currently leads all of the political contenders in the polls at 36.4 percent and narrowly lost to Park Geun-hye in the 2012 presidential election. During that election, the failure to quickly develop an alliance between Moon and the other main opposition candidate at the time, Ahn Cheol-soo, may have cost him the election. There have already been suggestions that other candidates may try to form an alliance to preclude Moon from winning the presidency. With South Korea now having four major parties, in the absence of an alliance, there is also a greater chance those opposed to Moon Jae-in would likely divide the opposition vote. This will be another factor to watch as the election proceeds.

Can Conservatives Smooth Their Divisions

During the impeachment debate, conservatives in South Korea split over whether to support President Park or to vote against the impeachment. Tensions between President Park’s strong supporters and other party members, however, predated the impeachment process. Ultimately, significant numbers of the then Saenuri Party (recently renamed the Liberty Korea Party) voted for the president’s impeachment and many of those who voted for the impeachment left to form the new Bareun Party. One of the story lines to follow will be whether conservatives are able to heal their rifts and put together a united ticket or whether divisions remain.

Will Acting President Hwang Kyo-ahn Resign and Seek the Presidency?

Currently, the strongest contender for president from the conservative side is Acting President Hwang Kyo-ahn. After Ban Ki-moon withdrew his candidacy, many of his supporters shifted their support to Acting President Hwang, who has risen to nearly 15 percent in one of the most recent polls. However, should Acting President Hwang decide to seek his own term as president, he would need to resign from his current role as Acting President and Prime Minister. If he does intend to run, he will most likely resign sometime shortly after setting the new date for the election so as to be eligible to run in the Liberty Korea Party’s presidential primary. Should he do so, Deputy Prime Minister and Minister for Strategy and Finance Yoo Il-ho would become acting president.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Fredrick Rubensson’s photostream on flickr Creative Commons.

By Troy Stangarone

With the arrest of Lee Jae-yong on charges of bribery, embezzlement, perjury, and the illegal transfer of funds abroad, Samsung faces a period of uncertainty at a critical time for South Korea’s leading chaebol. Last year, Samsung had begun to turn around declining trends in earnings and seemed to turn a corner on product design until the failure of the Galaxy Note 7 damaged Samsung’s image. At the same time Samsung was managing these corporate challenges, it was also undergoing a multiyear transition to the leadership of Lee Jae-yong from his father Lee Kun-hee, who has been incapacitated since a heart attack in 2014. Now, Samsung faces the prospect of being without its new leadership before the transition has been completed.

Lee Jae-yong may ultimately be found to be innocent, but his temporary removal raises questions for Samsung’s near-term future as well as for the impact of a potentially more permanent departure from Samsung’s leadership.

Who Will Run Samsung in the Short-Term?

With Lee Jae-yong expected to be in custody at a minimum for up to 21 days as prosecutors prepare formal charges plus the length of any trial, Samsung will likely be run by a trusted caretaker. In the past, when Lee Kun-hee was unable to run Samsung due to convictions on bribery and tax evasion, lieutenants ran Samsung as caretakers. With Lee Jae-yong at least temporarily removed from the scene we should expect a similar arrangement. As was the bribery and tax evasion case with his father in 2008, multiple executives are also under investigation, meaning that Choi Gee-sung, the number two at Samsung, may not end up serving as the caretaker depending on how the investigation into Samsung’s ties to Choi Soon-sil develop.

While Samsung has delayed conducting its annual management reshuffle and setting business targets for the year in light of the crisis, keeping key people in place might actually add stability to Samsung at an uncertain time. At a division level, Samsung is run by professional managers who should be able to keep things moving forward, limiting the impact of Lee Jae-yong’s absence in the near-term. The real question for Samsung will be whether any caretaker is empowered to make strategic decisions, something which has not been the case in the past.

What Does this Mean for the Succession Plan?

The prospect of Lee Jae-yong spending an extended period of time behind bars raises questions about the viability of completing the succession plan. If he is ultimately exonerated, the succession plans can continue to move forward. At a minimum, the succession plan will slow down, but may have to be rethought if Lee Jae-yong is convicted.

Given the current uncertainty, the initial default option will likely be to follow the path of his father and leave Samsung in the hands of a caretaker until Lee Jae-yong’s legal situation is resolved and a future Korean president has granted a pardon allowing Lee Jae-yong to resume control. If a conviction requires an alternative plan, one option would be to continue with the succession process, but transition control to another family member such as Lee Boo-jin or Lee Seo-hyun. A third option would be to maintain family ownership, but transition the company to permanent professional management. In this scenario, the family would likely need to make clear that any professional manager was empowered to make strategic decisions for Samsung moving forward.

Will Samsung Continue Internal Reforms?

The charges against Lee Jae-yong may provide insight into whether the internal reforms at Samsung were supported by the entire Lee family or were the sole initiative of Lee Jae-yong. Under his leadership, Lee Jae-yong has sought to modernize and move Samsung’s internal culture to one more akin to a start-up to help spur innovation. Some of the moves included more flexible working hours, reducing management levels, loosening the use of titles, encouraging more discussion, and limiting the pressure to attend after work functions.

While Samsung has been successful with its traditional corporate culture, it also faces a more competitive international environment and change will likely be a key to long-term success. With Lee Jae-yong removed from Samsung’s day-to-day operations, will management begin to slip back into more traditional management styles, or has there been a broader decision made to reform Samsung’s internal culture in a way that would survive Lee Jae-yong’s absence?

How Will this Impact Samsung’s Brand and Growth?

Samsung took a hit to its reputation last year with the Galaxy Note 7’s battery issues. The Galaxy Note 7 aside, as long as Samsung continues to produce quality, innovative products its reputation is unlikely to take much of a hit internationally. Domestically, however, because of the ubiquitous nature of Samsung and the ties of the scandal to the impeachment of President Park Geun-hye, its reputation will face greater challenges.

While the Samsung brand is unlikely to be significantly damaged from the scandal internationally, efforts to reshape Samsung and find new areas of growth may face a more significant challenge. Lee Jae-yong had been trying to reshape Samsung by selling off unprofitable divisions or ones that seemed to have limited growth prospects, such as its printer business, while at the same time move into promising new fields like autonomous driving. Will shareholders of companies such as Harmon International * reconsider selling to Samsung and will other potential acquisition targets in promising areas look to more stable situations for merger partners instead of entertaining an offer from Samsung? Given the potential constraints on Samsung’s leadership, the reshaping of Samsung as a corporate entity is likely to slow.

Should Samsung Take Risks or Be Risk Averse?

The natural instinct of a company in a crisis is to minimize risks. Since the product design for this year’s new Galaxy and Galaxy Note models has already begun, any new features under consideration will likely be included in the Galaxy 8, since it release is expected to be in either March or April. However, in light of last year’s troubles with the Galaxy Note 7, there may be a temptation to play things safe with this year’s Note model and only include tested features that are popular in the Galaxy 8.

Playing it safe on design, though, could be the bigger risk for Samsung. The smartphone industry is quick moving, and if Samsung does little to innovate and differentiate itself from up and coming producers like Xiaomi, while allowing Apple to gain a bigger lead, it could find itself in the same position it was until recently with an increasing challenge from both high end producers and low end producers to its market share. Nokia and Motorola were both once dominate producers and were quickly surpassed by others. Regardless of the duration of Lee Jae-yong’s absence, Samsung will need to avoid becoming risk averse in the smartphone industry to maintain its position.

While South Korea has a complicated relationship with the chaebol, should Lee Jae-yong be convicted it would perhaps be a sad irony that one of South Korea’s most progressive third generation chaebol heirs would be taken down by scandal that represents much of the old Korea – in which there was an expectation that for companies to get along they had to do favors for the government and that the government could do them favors in return.

*Shareholders of Harmon International approved the sale to Samsung after this blog was initially published.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from JCDecaux Creative Solution’s photostream on flickr Creative Commons.

By Juni Kim

The revelations of Choi Soon-sil’s involvement in the administration of President Park Geun-hye and the subsequent scandal late last year have led to record low public approval ratings for President Park and her impeachment by the South Korean National Assembly on December 9^th. This is only the second instance of a South Korean president being impeached, after President Roh Moo-hyun’s impeachment in 2004. The Constitutional Court, which began hearings for her impeachment last December, must either uphold or disapprove of the National Assembly’s impeachment motion.

The below graphic outlines the impeachment timeline and what are the next steps for the Constitutional Court.

The impeachment process requires six votes from the nine-member court for the impeachment to be upheld. Obtaining the necessary six votes is complicated by the end of Chief Justice Park Han-chul’s term on January 31^st and Acting Chief Justice Lee Jung-mi’s retirement on March 13^th. Even with court vacancies, an approved impeachment still requires six votes. This means that only three votes are required to overturn the impeachment motion before March 13^th, and only two votes are needed after that date.

Before stepping down from the court, Chief Justice Park implored the Court to reach a verdict before Justice Lee’s term ends. However, the Constitutional Court has scheduled additional hearings through February 22, and it is highly unlikely that a decision will be made before hearings are over. A decision could be reached after the date and before March 13^th, but the Court technically has until June to make a final decision. If the impeachment motion is approved, the new presidential election must occur within 60 days.

Juni Kim is the Program Manager and Executive Assistant at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

Photo from Robert Heese’s photostream on flickr Creative Commons.

By Troy Stangarone

Summing up a presidential legacy is a complex endeavor. There are countless details that are either unknown or just too difficult to fit into the flow of a single piece. There are choice that in the immediate term may seem wise, but in the hindsight of years less so. While mistakes today may come to be viewed as prudent years on. This is even more the case when it deals with only a single aspect of one part of the presidency, the relationship between the United States and the Republic of Korea. A relationship that while vibrant and strong, is also inevitably tied to both countries’ relationship with the Democratic People’s Republic of Korea.

For the last eight years, we’ve seen a relationship that has grown beyond the Cold War confines of the threat from North Korea and that has begun to evolve into more of a partnership that works together both in the region and on the global stage. This shift was possible in large thanks to the relationship that the Obama administration inherited and the partners they had to work with in South Korea under the Lee Myung-bak and Park Geun-hye administrations.

When President George W. Bush handed U.S.-Korea relations over to President Barack Obama on January 20, 2009, he handed over an alliance that was in good shape. While the relationship between the United States and South Korea had been rocky at times during the early years of the Bush administration, even during those difficult times progress was made on the alliance. As a result President Obama inherited an alliance that was already growing and changing as Bush administration left a legacy of a completed but unratified free trade agreement with South Korea (KORUS FTA), and agreements to move U.S. Forces Korea from Seoul to Camp Humphreys near Pyongtaek and to transfer wartime control of South Korean forces back to the South Korean government.

Over the last eight years, the Obama administration has built on the foundations of the alliance it inherited. While the alliance remains rooted in the United States’ commitment to defend South Korea against North Korean aggression, the Obama administration has worked with South Korea to move the alliance beyond deterring North Korea. Perhaps most critically in this was the administration’s support for Lee Myung-bak administration’s efforts to see South Korea contribute more to the global community. As part of these efforts, the Obama administration supported Seoul’s efforts to host the G-20 leaders summit in 2010 and asked South Korea to host the second Nuclear Security Summit as part of the Obama administration’s efforts to enhance global nuclear security.

Beyond summits, the Obama administration has sought to increase cooperation with South Korea in a wide range of areas that are now referred to as the New Frontier issues and include areas such as cyber security, climate change and global health. As an example, in the area of global heath South Korea worked with the United States and other nations to deal with the Ebola outbreak in Africa in 2014.

In the economic relationship, the Obama administration engaged South Korea in additional negotiations to address concerns related to trade in autos with the KORUS FTA. After reaching an agreement, the KORUS FTA went into effect on  March 15, 2012. The administration also negotiated a new 123 agreement to continue civilian nuclear cooperation between the United States and South Korea.

At the core of the alliance, defense cooperation, the administration has proceeded and largely concluded the efforts begun by the Bush administration to move U.S. troops from Seoul to Camp Humphreys. It also updated the decision to transfer wartime operational control to South Korea by moving the agreement from a deadline based transition to a conditions based agreement that would implement the transition only once South Korea has developed the intelligence and command infrastructure necessary to undertake operational control of forces.

If the relationship with South Korea has been a boon for Obama, than it is the relationship with North Korea where the long eye of history may have more to say in the years to come. While he inherited a North Korea that had already tested a nuclear weapon, North Korea has gone on to conduct four additional nuclear tests during his time in office and he will pass along to the Trump administration a much more dangerous North Korea than he inherited.  Many have criticized the Obama Administration’s “strategic patience” approach, but alternatives are limited if the goal is a denuclearized North Korea within a short time span.  There may have been other tools that the Obama Administration used over the past eight years that are not in the public domain to prod change in North Korea that only time and change in North Korea may tell.

Much as in the case of South Korea, leadership has likely played a role in the deteriorating situation with North Korea. If President Obama was fortunate to have willing partners in South Korea, the death of Kim Jong-il left a much more aggressive Kim Jong-un in charge of North Korea. While Kim Jong-il famously slapped away Obama’s inaugural offer of talks, it is unclear if diplomacy could have played much of a role in convincing Kim Jong-il or Kim Jong-un to roll back North Korea’s nuclear program.

Shortly after Kim Jong-un came to power, the Obama administration negotiated a moratorium on missile launches that North Korea would soon violate and despite efforts by the Park Geun-hye administration in South Korea to build relations with North Korea Kim Jong-un instead chose to greet her administration with confrontation through an ICBM test, a nuclear test, and the withdrawal of North Korean workers from the joint North-South industrial complex in Kaesong. It is perhaps telling that a U.S. administration that, despite domestic opposition, negotiated a nuclear deal with Iran and reopened relations with Myanmar and Cuba found North Korea an unwilling partner for improving relations.

With the path to negotiations closed the administration instead pursued a course of increasing pressure on North Korea. It’s perhaps most significant achievement on this end was the development of increased cooperation with China on sanctions in the United Nations. While the robust sanctions negotiated after North Korea’s fourth nuclear test in January of 2016 were found to have been flawed, those sanctions were revised after North Korea’s fifth nuclear test to close loopholes and being to bring real pressure on North Korea.

In addition to international sanctions, the administration took advantage of new sanctions authorities granted to it by Congress, though perhaps reluctantly and not to the degree critics of the administration might have hoped. Perhaps most significantly on this front, the administration has sanctioned both Kim Jong-un and his sister personally for their roles in human rights violations in North Korea.

Perhaps the last legacy item for the Obama administration in regards to North Korea has been its efforts to increase the deterrent capabilities of the alliance. It reached an agreement with South Korea to expand the range of South Korean missiles to allow Seoul to be able to target any area of North Korea and to help facilitate its “kill chain” concept of being out to take out North Korean nuclear facilities prior to an imminent attack. On the more controversial side, it also worked with Japan to develop new defense guidelines that would allow Japan to play a more active role if the U.S. were to come under attack and which would also aid in a contingency on the Korean peninsula and for the deployment of the Terminal High Altitude Area Defense system to protect parts of South Korea against North Korean missile attacks.

For President Obama it will be a strong legacy he leaves with South Korea, a nation that he visited more often than all but France, the UK, Germany, and Mexico and developed close personal relationships. It is North Korea where time may judge him more harshly, or depending on the actions taken by Kim Jong-un and the Trump administration come to view him as prudent. By his own standards, President Obama has done well.  He once described his foreign policy philosophy as looking for singles and doubles, and “don’t do stupid s@#%.” By that standard, President Obama has managed U.S.-Korea relations well. He’s made progress on a range of issues and avoided serious mistakes, and despite challenges presented by North Korea, he stands to hand the alliance over to his successor, Donald Trump, much as President George W. Bush did to him, in good shape.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from The White House’s photostream on flickr Creative Commons.