By Juni Kim

After three years in office, President Moon Jae-in finds himself in uncharted, positive territory. No prior South Korean president has maintained an approval rating above 50 percent entering the fourth year of his or her term, but Moon for the past three weeks has seen his approval ratings rise past 60 percent according to polls conducted by Gallup Korea and Realmeter, with Gallup Korea’s poll last week indicating approval at 71 percent.

The Moon administration’s deft handling of the COVID-19 outbreak in South Korea has jumpstarted his previously diminishing approval numbers. At the initial outbreak of the COVID-19 crisis in South Korea in late January, Moon’s approval ratings were fluctuating at the low-to-mid 40 percent range. However, Moon has since made significant and steady gains among the South Korean public as his government’s efforts to contain the outbreak have so far been effective. In the latest Gallup Korea poll conducted on May 6^th and 7^th, 53 percent of respondents that approved of Moon indicated that the president’s handling of COVID-19 contributed to their positive response.

Moon’s public approval resurgence is remarkable on multiple levels. Moon had entered office with the highest approval ratings of any South Korean president in 2017 with over 80 percent approval, but as economic concerns increased and his efforts to engage with North Korea stalled, Moon’s ratings steadily declined before flattening below 50 percent throughout much of 2019. A political scandal last Fall involving the resignation of his controversial Justice Minister Cho Kuk saw his approval rating sink to as low as 39 percent. Beyond a bump in his approval ratings in early 2018 caused primarily by his diplomatic breakthroughs with North Korea, Moon did not have a significant increase in his approval ratings until March 2020. Moon’s recent successes in winning back public support were underscored by a historic voter turnout in parliamentary elections last month, which led to his party winning a supermajority in the National Assembly.

Moon is also bucking the historical trend of South Korean presidents that have generally seen their approval ratings drop throughout their five-year terms. Up until his recent surge, it seemed that Moon’s struggle to maintain his public support would not be too dissimilar from his predecessors. As mentioned previously, no previous South Korean president since 1988 has maintained an approval rating above 50 percent past their third year in office, and if Moon’s positive polling numbers continue he will become the first president to do so.

Even among other world leaders who have received public approval bumps due to their handling of COVID-19, Moon’s approval ratings rank among the highest. The polling firm Morning Consult tracked an average public approval gain of 9 percent among ten world leaders since the World Health Organization declared the COVID-19 crisis a pandemic on March 11^th. In comparison with the Gallup Korea poll numbers, Moon received a 22 percent approval bump during that time, with only Australian Prime Minister Morrison (32 percent) and Canadian Prime Minister Justin Trudeau receiving a similar increase (22 percent). The bounce may be attributed  to a “rally-round-the-flag” effect that some leaders have received during national crises. It should be noted that of the countries included in the analysis South Korea and Australia have had the most success in reducing the number of daily COVID-19 cases with numbers dropping below 20 cases per day for the past three weeks.

Despite the recent increase in public support, the unpredictable nature of the COVID-19 crisis will likely complicate Moon’s path forward for the remainder of his term. Reports of a new outbreak in Seoul’s Itaewon district renewed fears of the virus and underscored the difficulties of managing a crisis that may stretch into years. The economic effects caused by COVID-19 and the Moon administration’s handling of their fallout will also play a significant factor in his approval ratings. Moon’s approval had previously sunk due to economic concerns, and this may happen again with disconcerting signs of slowing growth and trade.  And of course, there is the continuing puzzle of what to do about Kim Jong-un and North Korea. For his part, Moon remains undaunted in hoping to engage with North Korea. On May 10, he reiterated his hope for future cooperation on inter-Korean projects.

For now, Moon is in a strong position that has predecessors would have envied. With a supermajority in South Korea’s legislature and public support, Moon has political maneuvering room for the remaining two years of his five-year term. The COVID-19 crisis will continue to evolve and bring new challenges to his administration, but for now, Moon Jae-in appears far from being a lame duck.

Juni Kim is the Senior Manager for Operations and Technology at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.  

Graphics by Juni Kim.

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

By Juni Kim

While much of the world is grappling with the escalating COVID-19 crisis, South Korea has received glowing international media coverage for its domestic campaign to contain the virus and to reduce its death toll. News headlines like “Why South Korea’s COVID-19 strategy is working,” “South Korea shows that democracies can succeed against the coronavirus,” and “How South Korea Flattened the Curve” hold up South Korea as a model to follow in fighting the virus’s spread. In a March 23^rd article, The New York Times stated “No matter how you look at the numbers, one country stands out from the rest: South Korea.” World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus praised South Korea’s efforts last week saying “WHO is working in solidarity with other countries with community transmission to apply the lessons learned in Korea and elsewhere, and adapt them to the local context.”

However, South Koreans have had a more mixed opinion of their government’s COVID-19 response. According to Gallup Korea, overall approval of the government’s containment efforts was reported at 58% for polling conducted on March 10^th to the 12^th, with 41% of survey respondents expressing disapproval. This is a marked improvement compared to an earlier poll conducted on February 25^th to the 27^th when approval was at 41% and disapproval at 51%. The February poll was conducted during South Korea’s period of rapidly escalating daily cases.

The difference in approval is largely split along political lines. In the March Gallup Korea poll, approval among respondents that identified with the progressive Democratic Party of Korea (DPK), the party of South Korean president Moon Jae-in, was at 86%. Conversely, respondents that identified with the conservative United Future Party (UFP) polled 22% approval. The February poll also had a partisan split, though with overall lower approval ratings, with 71% approval for DPK respondents and 8% approval for UFP respondents. It is also worth noting that President Moon’s approval ratings over the past two months remain similar to his approval ratings prior to the outbreak. While recent polls suggest a slight uptick in approval (the latest Gallup Korea poll shows his approval at 49%), he has generally polled in the mid-40% range both before and during the crisis. His approval is also sharply divided along party affiliation, with the latest poll indicating 89% approval among DPK respondents and only 7% among UFP respondents.

Justin Fendos, a professor at Dongseo University, has negatively remarked on the politicization of the COVID-19 crisis in South Korea. Writing in a March 10^th article for The Diplomat, he stated “I am extremely disappointed by this politicization of the outbreak. I can say with some authority that the negative coverage has started to make my job, and the jobs of my many colleagues, more difficult.” According to Fendos, many elderly South Koreans, who are more likely to be affiliated with the UFP and are also the most vulnerable demographic to the virus, have questioned or dismissed the government’s social distancing and containment protocols. If public trust in the government falters, residents may feel less inclined to comply with government advisories, which may introduce new opportunities for COVID-19 to spread.  For instance, several churches in South Korea have continued to hold physical gatherings despite authorities calling for social distancing, with one church congregation seeing an outbreak of 52 infections and another clashing with police officers.

With legislative elections scheduled to take place on April 15^th in South Korea, the partisan divide will likely be further exacerbated as politicians tussle over gaining votes. While such divisions are to be expected during an election year, the COVID-19 crisis adds a complicating dimension to the election run-up. Politicians on both sides should be wary of the potential spread of misinformation that runs counter to fact-based public health recommendations. With many Western nations looking to South Korea for lessons, another one to watch for is how South Korea continues to handle the health crisis while coping with political divisions and upcoming elections.

Juni Kim is the Senior Manager for Operations and Technology at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone. Graphics by Juni Kim.  Research assistance provided by Park Ingyeong and Jang Hyungim, Interns at the Korea Economic Institute of America.

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

By Mark Tokola

Genron NPO, a Japanese non-profit organization, released the results of an opinion survey in October 2019 that focusses on Japanese and Chinese perspectives of one another, but which also includes some nuggets about how the two countries perceive South Korea.  The survey was conducted by the Public Opinion Research Center in Japan and by the Horizon Research Consultancy Group in China.  For Koreanists, the most striking finding is the souring of Japanese public opinion towards South Korea, which is unsurprising given the state of relations between the two countries, but which the Genron survey confirms and quantifies.  China’s opinions regarding the two Koreas have held steady from 2018 to 2019, but Japan has come to feel less affinity towards South Korea, considers it less important for Japan’s interests, and believes South Korea’s influence in the region will decline over the next ten years.

The topline for Genron of their survey was that the Chinese public is taking an increasingly favorable view of Japan, whereas Japan’s view of China became only slightly less negative over the same period.  The percentage of Chinese who view Japan unfavorably fell steeply from 93 percent to 53 percent from 2018 to 2019.  The percentage of Japanese who view China unfavorably decreased only slightly from 90 percent to 85 percent.  From the Japanese perspective, the biggest obstacle to better bilateral relations are territorial issues (the Senkaku Islands and Chinese intrusions into Japan’s air and maritime space) followed by China’s “different political system.”  For China, territorial issues also are the biggest issue, followed closely by “Japan’s lack of a proper apology and remorse over its history of invasion into China.”  The Chinese and Japanese publics agree that their bilateral relationship is “important,” but are pessimistic about its future.  49 percent of the Chinese public expect a military conflict between the two countries, 23 percent of Japanese expect such a conflict.

Both the Chinese and Japanese publics considered their relationships with the United States to be their most important — more important than their relationship with each other.  Regarding South Korea, around 20 percent  of the Chinese public in both 2018 and 2019 said that China’s relationship with South Korea was more important that its relationship with Japan.  Around 45 percent say that China’s relations with Japan and South Korea are equally important.  Over the same period, there was a sharp increase in the percentage of Japanese respondents who said that Japan’s relationship with China was more important than its relationship with South Korea, from 23 percent to 31 percent.  The percentage of Japanese who believe that Japan’s relationship with China and South Korea are equally important fell from 53 to 43.

Regarding areas for bilateral cooperation between China and Japan, the most important for Japan is dealing with the North Korea nuclear issue followed closely by cooperation on the environment.  The Chinese public thought the two countries should cooperate primarily on strengthening bilateral trade and investment, followed by North Korea’s nuclear weapons program.  Renewable energy was a close third.

The Genron survey asked about “affinity” with other countries separately from their importance. Japanese affinity towards South Korea dropped from 26 percent to 17 percent.  That compares to Japanese affinity towards the United States at 50 percent and towards China at 5 percent.  Chinese affinity towards the United States was 17 percent, and towards Japan 12 percent.  Those numbers held steady over the course of the year.  China does not feel much affinity for any foreign country.

There was a question in the Genron survey asking whether the influence of various countries will change over the next ten years in regarding to Asia.  Over 80 percent of the Chinese and Japanese see U.S. influence as either increasing or holding steady over the next decade.  71 percent of Chinese believe that South Korea’s influence will increase or hold steady, but only 39 percent of Japanese believe that.  They believe South Korea is the country most likely to decrease in influence in Asia over the next ten years.

China and Japan unsurprisingly perceived threats to their security coming from different directions.  The countries that Japan considers as posing a security threat were: North Korea (85 percent), China (58 percent), Russia (36 percent), South Korea (23 percent), and the United States (10 percent).  For China, the threats come from: Japan (75 percent), the United States (74 percent), India (17 percent), Vietnam (17 percent), Russia (16 percent), South Korea (12 percent), and North Korea (10 percent).  It would be interesting to see which countries South Korea finds most threatening, but that was outside the scope of the Genron survey.

Finally, another informative question from the survey in regard to South Korea asked the Chinese and Japanese which countries they believe should participate in a potential multilateral framework for security in Northeast Asia.  For China, the list was short.  The only countries that rated over 40 percent were China, the United States, Japan, and Russia.  South Korea trailed at 31 percent, and North Korea at 26 percent.  For the Japanese a high percentage of the public said that a regional security framework should include, in order: China, Japan, South Korea, the United States, Russia, North Korea, and India.  Indonesia, Mongolia, and Australia all rated over 25 percent.  There was a sharp disparity between the low level of support in China for including South Korea in a security framework (31 percent), and the very high level of support in Japan for including it (80 percent).  Japan may have low affinity for South Korea, but considers it important for its security.

What can be drawn from the data?  First, the disputes between the governments of Japan and South Korea seem to be having a corrosive effect on the Japanese public’s perceptions of South Korea, at least in the short term.  On the other hand, the Japanese public firmly believes that the biggest threat to their security comes from North Korea and believes, much more strongly than China, that South Korea should be part of a potential multilateral security framework.  This suggests that the government of Japan would find public support for an effort to improve relations with Seoul.  The survey results are a reminder that over time relations between South Korea and Japan have had their highs and lows (regrettably, more of the latter) but the two countries know they need each other.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Image from RICO Lee’s photostream on flickr Creative Commons.

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

• President Moon Jae-in’s approval rating fell 5% between mid-January and the final week of February, according to Gallup.
• Conservative politicians have criticized Moon’s handling of the epidemic since the initial stages of the outbreak.
• A poll by Hankook Research revealed that 50% of constituents identifying as centrists disapprove of the government response to COVID-19.

Implications: While President Moon Jae-in’s approval ratings have fallen in the past 6 weeks, the impact of the coronavirus on people’s confidence in the government may be overstated. President Moon’s approval rating fell from 47% in the second week of January (before the first confirmed coronavirus case in South Korea) to 42% in the final week of February as the number of coronavirus patients grew to nearly 3,000. However, Moon’s approval ratings have been fluctuating between 39% and 49% since October 2019. Although additional polling suggests that the government’s handling of the outbreak may affect the voting behavior of some cohorts in the upcoming general election, Korean presidents commonly head into legislative elections with falling approval ratings.

Context: Fluctuating approval ratings of previous administrations suggest that public health crises may have less impact on voter sentiment than analysts assume. For example, President Lee Myung-bak faced the H1N1 outbreak in 2009-2010, which infected 700,000 Koreans and killed 260. Despite the high rate of infection, Lee’s approval rating grew to 54% during the height of the epidemic and still enjoyed 48% support by the time the outbreak was declared over in April 2010.

It is also true that every preceding South Korean presidential administration experienced a natural erosion of public support. About a month before the 2012 legislative elections, President Lee’s approval rating stood at a mere 26% – a shadow of President Moon’s current 42%, one month before elections on April 15, 2020. As KEI’s Junil Kim noted in a previous blog article, every South Korean president sees their ratings continue to fall as their term continues. In that sense, President Moon is actually playing with an advantage, having entered office in 2017 with historically high approval ratings.

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

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

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

• A top official from the Liberty Korea Party (LKP) announced that one-third of their incumbent lawmakers would not stand in next year’s legislative elections.
• On November 17, in two separate announcements, former Minjoo Party legislator and presidential chief of staff Im Jong-Seok and LKP Representative Kim Se-Yeon declared their intention to not run in the upcoming election.
• Others like former LKP leader Kim Moo-sung and Minjoo Reps. Rhee Cheol-hee and Pyo Chang-won also announced their decision to not seek a nomination in 2020.
• In last year’s Inter-Parliamentary Union survey, South Korea ranked 143 out of 150 member countries for the share of lawmakers aged below 45 (6.33 %).

Implications: Public demand for a “changing of the guard” in the next parliamentary election reflects widespread fatigue with the existing political establishment. Successive scandals in both the leading ruling and opposition parties, from President Park’s impeachment to Justice Minister Cho Kuk’s resignation, fueled dissatisfaction towards the existing cast of figures leading the legislature. Making things worse, the current legislative session is on track to end with the lowest number of bills passed.

In response, a recent survey showed that 69.4% of respondents noted that at least 30% of lawmakers should be replaced in the next election. In another survey, 80.5% of respondents agreed that there should be some generational change in the upcoming parliamentary election. These polls pressure political parties to overhaul their lineup of candidates. Announcements by political mainstays like Im Jong-suk and Kim Se-yeon last week emboldened calls to replace multi-term lawmakers with new faces.

Context: It is not the first time that the general public’s dissatisfaction translated into an injection of fresh politicians to the legislative election lineup. However, there are arguments that next year’s election will be a broader push for a generational change. In 2004, 23 lawmakers in their 30s were elected. The number of first-term lawmakers aged under 40 significantly decreased since the 2008 election. Only 3 of the 300 lawmakers elected in 2016 were under the age of 40. While these veteran legislators were once at the forefront of leading South Korea’s political transition from authoritarianism to democracy, the so-called 386 generation is now seen as a roadblock for younger, more dynamic politicians who can bring fresh policy ideas to the National Assembly.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

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

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 National Defense announced plans to loosen physical standards for eligible conscripts. This aims to help the military meet its manpower needs.
• Simultaneously, the Ministry of Patriots and Veterans Affairs recognized Ha Jae-heon, a former Army soldier who lost his legs to a North Korean landmine, as having been “wounded in combat.”
• Observers see the elevation of Ha’s designation from “wounded while in public service” as part of an effort to publicly underscore the government’s appreciation of servicemen.

Implications: The South Korean government’s effort to prevent rapid aging from affecting its military readiness may incur backlash from young men who already feel disenfranchised. While ongoing reforms hedge against the inevitable reduction in military personnel, the government appears to also place emphasis on public outreach to encourage military service. This is evident in improvements in military welfare and the government’s efforts to promote positive images of military service. In particular, men wounded in uniform are now receiving higher compensation to ameliorate negative perceptions.

The government also decided to increase manpower by loosening physical standards for eligible conscripts. This decision has already sparked a backlash among many young men who see the male-only draft as a hindrance to their job prospects and welfare. This cohort of conscription-eligible young men already displays dissatisfaction with the incumbent administration. According to a Gallup Korea poll in September, only 31% of men in their 20s have a favorable view of the government. Only men in their 60s have responded with a lower favorability towards the incumbent administration.

Context: The number of conscripts fell from 291,000 in 2009 to 253,000 in 2018. This corresponds with the shrinking population in the past decade. The number of men eligible for conscription is expected to fall below 250,000 after 2022. As a result, even if 90 percent of young men serve in the armed forces as a volunteer or conscript, South Korea will have to ensure future preparedness with a drastically smaller military.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

Picture from the U.S. Department of Defense website

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

• President Moon Jae-in met with the head of the International Olympic Committee to seek his support for a joint Korean bid for hosting the 2032 Summer Olympics.
• During the meeting, Moon also advocated for North and South Korea to compete as one team in the 2020 Tokyo Olympic Games.
• The two Koreas most recently played as a unified team in the 2019 World Handball Championship.

Implications: While President Moon sees joint participation in international sporting events as a vehicle to advance inter-Korean engagement, tepid domestic support for these efforts correspond with findings that South Koreans may be losing their co-ethnic affinity to North Koreans. A survey in 2018 found that public endorsement for North and South Korea’s co-hosting the Olympics fell from 66% to 47% if respondents were told that Seoul would help fund the construction of facilities in North Korea. This upholds findings that suggest South Koreans, particularly younger cohorts, are beginning to identify the two Koreas as distinct and separate countries. If true, this presents an obstacle for the Moon administration even if there is a diplomatic breakthrough as there might be domestic pushback to allocating national resources for the economic development of North Korea.

Context: South Korea already faced domestic backlash for fielding a late-minute unified hockey team to compete at the Pyeongchang Olympics in 2018. A survey found that 80% of respondents generally supported North Korea’s participation in the games, but 49.4% of people polled by a Realmeter survey showed a preference for North and South Korea marching under their respective national flags. These results suggest that animosity toward North Korea is not the source of South Korean tepidness towards joint participation in sporting events – rather, it may be an acknowledgement of a separate and distinct national identity.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

Picture via James Hill published in The New York Times

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

• Many online platforms served as venues for the political debate around the controversial confirmation of Justice Minister-designate Cho Kuk.
• Supporters and detractors engaged in online campaigns to elevate their respective taglines on the ranking of most-searched keywords on major search portals.
• A group of petitioners claimed that detractors attempted to reduce the credibility of their online petition by using fake accounts and uploading hoax signatures.

Implications: While the high rate of online penetration has been an economic boon to South Korea, the absence of vigilant monitoring on online platforms have raised concerns that savvy users may hijack the algorithm to manipulate political discourse. Both detractors and supporters of Justice Minister Cho Kuk’s confirmation mobilized users to input specific taglines into the search bars of popular online portals, causing key phrases to appear in real-time search rankings. Their aim was to influence public opinion. Observers have also raised suspicions that automated programs were used to boost these search terms. Similarly, some activists have alleged that fake accounts were being used to both inflate and sabotage online petitions. With limited progress from the public or private sectors to control this abuse, civil society leaders worry that these tactics will pose threats to the credibility of democratic institutions and processes.

Context: Concerns around misinformation and public opinion manipulation are acute in South Korea because of the country’s extensive smartphone and internet penetration. The courts recently convicted power-blogger Kim Dong-won for engaging in an illicit cyber-operation to influence public opinion. Kim ran a computer program to artificially inflate the number of “likes” on online comments to boost positive public sentiment for then-candidate Moon Jae-in ahead of the 2017 election. Although the problem had been previously acknowledged, this scandal created a very public spotlight on the risks posed by digital technology.

Korea View was edited by Yong Kwon with the help of Soojin Hwang, Hyoshin Kim, and Rachel Kirsch.

Picture from user TFurban on flickr

By Juni Kim

Moon is at a pivotal crossroads in his presidency. As he approaches the halfway point of his five-year term, the initial public enthusiasm over the revival of the Korean peace process that buoyed his high approval rating has steadily waned from multiple diplomatic setbacks over the past year. Economic concerns have also become a primary sticking point for Moon and his administration, and efforts to assuage an anxious citizenry have not yet effectively yielded results. Recent cabinet reshufflings and controversies over nominated picks have also hurt the administration’s standing. With his public approval ratings dipping under 50 percent in recent months, Moon faces critical decisions in the coming months if he wishes to win back the strong public support that helped usher him into office.

When Moon was elected in May 2017, South Korean voters had high hopes in resetting the political scene after the scandal and public fallout that helped oust Moon’s predecessor Park Geun-hye. Moon garnered widespread public approval during his first months in office with approval ratings that peaked over 80 percent, but since then his numbers have steadily dropped to under 50 percent. Although the three inter-Korean summits last year brought about approval rating bumps, the gains made from the summit were eventually erased by public concerns over the progress of the peace talks and the administration’s handling of the economy.

As mentioned in a previous blog post, Moon’s steady fall in his approval ratings since the start of his presidency follows a familiar refrain from past democratically-elected Korean presidents. Despite entering his term with record-high approval ratings, Moon’s ratings have consistently decreased over the past two years, with the notable exception of a significant ratings bump last Spring when the first inter-Korean summit between Moon and North Korean leader Kim Jong-un occurred. Despite the downward trend, Moon has consistently polled higher than his predecessors, and even in the most recent quarter he is only averaging a few points lower than previous presidents Kim Dae-jung and Lee Myung-bak.

It is also worth noting that no South Korean president has been able to average a quarterly approval rating higher than 50 percent past his/her third year in office. Moon is currently fluctuating a little beneath that mark, but if he is able to win back some support in the coming months he may be the first president to do so.

For his part, Moon has pushed to reverse his fortunes and get the peace process back on track. In light of the recent no-deal summit between the U.S. and North Korea in February, Moon met with U.S. President Donald Trump in Washington last Thursday to discuss alternative agreements, and yesterday Moon stated he would be open to a fourth inter-Korean summit “regardless of venue and form.”

Time is the critical factor for Moon and his administration in gaining back public favor. If peace talks continue to stall, Moon will have an increasingly difficult time winning back a constituency eager to see tangible progress, and a disillusioned public can jeopardize Moon’s policy agenda in the last few years of his presidency. With strict UN sanctions on North Korea still in place, the proposed inter-Korean economic projects that were meant to be launching point for cross border cooperation have yet to take off beyond initial discussions and joint surveys. The start of these projects will likely require some form of sanctions lifting, which would likely only occur from an agreed U.S.-North Korea deal. President Trump indicated last week that he is in no rush to make a deal, but for Moon the stakes grow higher as the months roll by. For now, it appears that Moon is undaunted despite recent setbacks in staking his presidential legacy to the success of the peace process.

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

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

By Troy Stangarone

If 2017 was the year of “fire and fury,” 2018 saw the United States and North Korea turn from the rhetoric of war to diplomacy as U.S. President Donald Trump met North Korean Chairman Kim Jong-un at the first ever U.S.-North Korea summit in Singapore.

If 2018 was the year the diplomacy on the Korean Peninsula, it was also a year of frustrations as the United States and North Korea have been unable to make progress on agreeing to a path towards the dismantlement of North Korea’s nuclear weapon and missile programs, or in taking steps to build the new relationship promised in Singapore. With U.S.-North Korea relations stalled, North-South relations have been unable to move forward at the pace hoped for despite more extensive agreements on inter-Korean cooperation.

While North Korea dominated the headlines in 2018, the past year began with South Korea’s successful hosting of the Winter Olympics. It saw the United States and South Korea agree to revise the U.S.-Korea FTA (KORUS), but South Korea also become caught in the United States trade war with China. The United States and South Korea also failed to reach an agreement on burden sharing.

On the domestic front, the Moon Jae-in administration implemented a series of new policies to advance an income lead approach to economic growth, but so far has yet to see the results hoped for from its reforms.

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 2018 blog and the events we didn’t see coming.

Looking back, we largely touched on what would be the key issues on the Korean peninsula in 2018, but we missed on the sudden shift to summit diplomacy on the Korean Peninsula and what in one poll has been identified as the top news story in the United States in 2018 – the summit meeting between Trump and Kim. Here are the issues we identified:

1. Could War Break Out on the Korean Peninsula?

Coming into 2017, tensions between the United States and North Korea had been growing. Pyongyang’s December 2017 inter-continental ballistic missile (ICBM) test demonstrated it had the ability to reach anywhere in the continental United States, even if it had not yet completely mastered ICBMs. Despite the increasing threat of war, we were largely right in our analysis when we said that “war can, and most likely will, be avoided as long as cooler heads in Washington and Pyongyang prevail.” What we largely didn’t foresee is that war would be avoided not just because “cooler heads” would prevail, but that would lead to a year of North Korean summits with South Korea, China, and the United States.

2. The Advancement of North Korea’s Nuclear and Missile Programs

With the movement towards dialogue between the United States and North Korea, our prediction that North Korea would continue to test missiles fell flat. For all of 2018, North Korea refrained from conducting missile tests to either demonstrate new capabilities or to express its displeasure at the progress of talks with the United States. At the same time, there is every indication that our second prediction was correct. Kim Jong-un pledged in his 2018 New Year’s Address that North Korea would continue to expand its supply of missiles and fissile material and has yet to shut down its nuclear facilities at Yongbyon or its missile production facilities.

3. The Impact of Sanctions on North Korea

On the surface, sanctions have worked. Exports to China, North Korea’s primary trading partner have fallen to under $200 million through November. At the same time, despite sanctions causing declines in exports to China and other countries, there are signs that the markets are remarkably stable. In data published by DailyNK, the exchange rate and the price of commodities in markets have been fairly stable. Contrast this with Iran, where the U.S. withdraw has caused the Iranian Rial to drop in value. While the North Korean economy is not in a good position, the effect of sanctions seems to be less than many would have expected.

4. The 2018 Winter Olympics

By all measures the 2018 Winter Olympics in Pyeongchang were a success. South Korea finished tied for sixth for the most medals won, and concerns about attendance were ultimately relieved as the organizers came within their goal of selling 90 percent of the tickets. Most importantly, North Korea took part in the games easing concerns that it could disrupt the festivities and its participation helped to jump start a year of diplomacy.

5. Special Measures Agreement/Burden Sharing

The United States and South Korea have yet to conclude discussions on a new Special Measures Agreement to determine how much South Korea will contribute to the non-personnel costs of U.S. troops in South Korea. While the failure to conclude an agreement has not yet affected the alliance, the current agreement expires at the end of 2018. Indications are that the talks are stalled over an insistence by the Trump administration that South Korea raise its contribution to burden sharing by potentially twice as much as South Korea was previously contributing.

6. U.S.-Korea Trade Policy

The United States and South Korea were able to quickly reach an agreement on modest adjustments to the KORUS FTA. With the National Assembly having approved the changes and the U.S. trade deficit with Korea continuing to decline, the concerns around the KORUS FTA have begun to dissipate.

However, the KORUS FTA was not the only trade issue in the U.S.-Korea economic relationship. As we noted last year, the U.S. used a Section 232 national security investigation to push South Korea into agreeing to a quota on its steel exports to the United States equal to 70 percent of its shipments over the last three years, and also imposed tariffs on Korean washing machines as part of a safeguard case. South Korea may not be out of the woods yet, as a decision will likely come on a Section 232 case on automobiles and automotive parts early next year. South Korea is only major automotive producer to not receive some type of assurance that it will not have tariffs imposed on its exports if automotive imports are found to have national security implications.

7. Will China’s Economic Pressure on South Korea Over THAAD End?

As we foresaw at the beginning of the year, China’s pressure over the decision to deploy THAAD has moderated rather than disappeared. Despite South Korea and China agreeing in October of 2017 to normalize economic relations, Lotte is in the process of closing its Lotte Mart stores in China, and the effects on tourism can still be felt. Based on the latest data from the Korea Tourism Organization, a bit more than 400,000 Chinese tourists traveled to South Korea in November. This is up from just under 300,000 at the same point last year. However, despite the increase in Chinese tourism in November, it is still below its pre-THAAD highs. All told, the South Korean economy has lost more than $13 billion from the decline in Chinese tourism alone.

8. Moon Jae-in’s Promised Economic Reforms

The Moon administration continued to implement its income lead growth policies in 2018 taking steps to shorten the work week and raising the minimum wage for the second year in a row. However, the results have been mixed, especially with slowing job growth in August and September. South Korea also saw estimates for its GDP growth in 2018 and 2019 revised down. Some of this revision is due to external factors, but declines in investment and job growth are also weighing on the economy. The new year will be an important period for determining whether the current challenges are due more to the markets adjusting to the new policies or whether the policies themselves will need to be adjusted.

9. South Korean Local Elections

The ruling Minjoo Party won a resounding victory in the 2018 local elections. The party won 14 of the 17 mayoral and gubernatorial posts up for grabs, as well as 11 of 12 by-elections for the National Assembly. Seoul Mayor Park Won-soon also won a third term as mayor.

10. Hallyu’s Ongoing Rollercoaster Will Continue

The growth of K-pop around the globe was one of the major stories in 2018, even being highlighted by the BBC as BTS became the first Korean group to enter the UK Top 40 and land in the top spot of the iTunes album chart in 60 countries. Despite still facing challenges in China as part of the fallout from THAAD, K-pop saw growth in Japan and in Latin American markets. However, the big success for K-pop came in its breakthrough in the United States. BTS had two albums reach the top of the Billboard 200 and three songs on the Billboard Hot 100. However, the success extended beyond BTS as four other Korean acts landed albums in the top 40 of the Billboard 200 and BLACKPINK saw its video Ddu-Du Ddu-Du gain the fifth most views on YouTube in a 24 hour period among all genres.

The Bonus Issue: Will There Be Constitutional Reform?

While the Moon administration pushed for a package on Constitutional reform to be concluded in time for the local elections, ultimately reform efforts stalled in the National Assembly.

Beyond the events that we expected, here is a look at some of the unexpected events that helped to shape 2018:

1. When Donald Met Jong-un

Prior to 2018 no sitting U.S. president had met with the leader of North Korea. That changed in 2018 as U.S. President Donald Trump altered the normal protocol of only meeting a foreign leader, especially one such as Kim Jong-un, until after a series of deliverables have been agreed to by both sides. The summit in Singapore produced an outline for moving relations forward, but there has been virtually no progress in talks with North Korea, despite the United States canceling military exercises with North Korea. In spite of the lack of progress, Trump has professed his goodwill for Kim saying “And then we fell in love, OK? No, really, he wrote me beautiful letters, and they’re great letters. We fell in love.”

2. Perceptions of Kim Jong-un in South Korea Improved – A Lot

If meeting a sitting U.S. president was an historic moment, it was preceded by Kim Jong-un being the first North Korean leader to cross into South Korea, even if only to the South Korean side of the DMZ. Your author was in Seoul at the time watching Kim cross the demarcation line live on his cell phone in a taxi to the National Assembly. What struck me at the time was lack of coordination on the North Korean side as the delegation walked to the DMZ and the lighthearted nature of Kim Jong-un as he invited South Korean President Moon Jae-in to briefly visit North Korea before their meeting.

Kim’s visit made an impression on South Koreans as well. Prior to the April Summit Kim had an approval rating in South Korea of 10 percent, though that rose to 31 percent after the summit. More impressive, after the summit a new poll found that 78 percent of South Koreans saw Kim as trustworthy. A degree of goodwill remains as 60 percent of South Korea would have welcomed Kim to Seoul had he come in December as expected.

3. Inter-Korean Relations

In addition to the April summit, Kim and Moon held two additional summit meetings – a second summit in the DMZ and Moon’s visit to Pyongyang. These summits resulted in the Panmunjom and Pyongyang Declarations which laid out steps to improve inter-Korean relations. While sanctions related to North Korea’s weapons programs have prevented significant movement on inter-Korea relations, the two Korea’s did take steps to advance relations in 2018. In addition to the summit meetings, the two Koreas held the first family reunion since 2015, took steps to reduce military tensions and implement a new military agreement in the DMZ, and conducted a joint survey and groundbreaking ceremony for a project to reconnect the railways on the Korean Peninsula.

4. North Korea’s Cyber Activities

North Korean has become one of the world’s most active cyber powers and despite the diplomacy with the United States and South Korea, Pyongyang kept up its activities in 2018. According to Group-IB, since the beginning of 2017 approximately two-thirds of the theft of cryptocurrency has been by North Korea, netting the regime $571 million. It also used the Pyeongchang Olympics and summit meetings with Kim Jong-un as potential bait for phishing attacks.

5. The U.S.-China Trade War

In a globalized world where countries are part of supply chains, tariffs are an imprecise tool and South Korea found itself one the countries most exposed to a trade war between the United States and China. More than 40 percent of South Korea’s GDP is accounted for by exports, while China and the United States are South Korea’s top two trading partners, respectively. For most of 2018, South Korea had managed the conflict fairly well by increasing exports to China and resolving the issues around the KORUS FTA. However, in the year’s last quarter South Korea began to see declining demand for its top export to China, semiconductors, while overall sales of automobiles began to decline significantly in China – signs that the effects of the trade war are beginning to set in.

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

Image created by Juni Kim is the Program Manager and Executive Assistant at KEI.