May 18, 2017 10:00 am JST

Cold wind from the north blows through Moon's Blue House

Pyongyang won't be the only headache for South Korea's new liberal president

HIROSHI MINEGISHI and KIM JAEWON, Nikkei staff writers

SEOUL When Moon Jae-in took the oath of office in South Korea on May 10, a retired child care worker on the outskirts of Seoul summed up the sentiments of a good portion of the nation.

"I'm glad our country is now on the right track," said Kim Mi-ock, 52.

The liberal Moon took 41.1% of the vote in the presidential election the previous day. But in a Hankook Research survey of 1,000 people, conducted just after the vote, 77.9% of the respondents said they support the new president and 86.9% said they expect he will lead the country well during his five-year term.

Kim, for one, liked what she saw from the 64-year-old Moon on labor reform. "I was impressed with his promise to change contract workers to permanent ones in public institutions," she said.

The stock market, too, welcomed Moon's inauguration, with the benchmark KOSPI index hitting fresh highs on expectations for his economic policies.

The euphoria was short-lived, though: A cold wind blew in from the north, putting Moon in an awkward position after just a few days on the job.

INSTANT MESSAGE North Korea on May 14 test-fired a new medium long-range ballistic missile -- a projectile the regime later said is capable of carrying a nuclear warhead. The test was the latest display of Pyongyang's determination to develop a nuclear weapon that can reach the U.S. mainland.

The launch could also be taken as an early test for Moon -- a proponent of rapprochement with the Kim Jong Un regime.

Moon's election had called into question the durability of the Seoul-Washington-Tokyo united front against Pyongyang. In his inauguration speech, he reiterated his intention to pursue dialogue with the North, breaking with the unyielding stance of his predecessor, Park Geun-hye.

But the missile launch left Moon little choice other than to condemn North Korea. He said the test was not only a clear violation of United Nations Security Council resolutions but also a "grave act of provocation" against his country and the international community.

South Korea's presidential Blue House said Moon convened his first National Security Council meeting at 8 a.m. on May 14, a few hours after learning of the test-firing. While keeping the door open for bilateral talks, he sought to show he is no pushover.

Moon is not the only leader willing to talk with Pyongyang. While the Donald Trump administration sent an aircraft carrier strike group to the waters off the Korean Peninsula and has talked about keeping "all options on the table," the U.S. president earlier this month said he would be open to meeting Kim "under the right circumstances."

Former U.S. officials recently met in Norway with senior North Korean diplomat Choe Son Hui, who oversees North American affairs. Choe reportedly said the North, too, would be open to talks with the Trump administration "if conditions are set."

Yet, the reality is that the two sides have very different ideas about the right "circumstances" or "conditions." North Korea wants the U.S. to recognize its status as a nuclear-armed state. It is also demanding an end to "hostile" American policies. The U.S., meanwhile, wants North Korea to abandon its nuclear weapons program.

And so the standoff continues.

North Korea's latest launch shows it has no intention of halting its pursuit of advanced missile technology, even under stronger pressure from the U.S. and China, said Cheong Seong-chang, a senior researcher on unification strategy at the Sejong Institute. Cheong said the weapons programs are helping Kim maintain his grip on power and providing legitimacy to the regime.

With that in mind, peninsula watchers wonder whether Moon's softer, dialogue-first approach has any hope of persuading Pyongyang to give up those programs.

Moon and Trump have agreed to meet in Washington in late June to discuss North Korea and other matters, according to the Blue House.

BETWEEN TWO SUPERPOWERS Meanwhile, Pyongyang's latest launch has also put Moon on shakier ground when it comes to missile defense.

Moon has long opposed the deployment of Terminal High Altitude Area Defense, a U.S. anti-missile system known as THAAD, on South Korean soil. But with Pyongyang looking trigger-happy as ever -- and Washington and Tokyo calling for greater pressure on the regime -- it will be difficult for Moon to do away with the system, which is already partly operational.

On the other hand, leaving it in place will upset Beijing, which worries that the system blunts its own missile capabilities.

Moon will have to get used to juggling the interests of the U.S. and China, since it will be a challenge throughout his term. His decision on THAAD could have grave economic implications as well, given that the two superpowers are South Korea's biggest trade partners and import large volumes of its products.

That is to say nothing of the primary economic hurdle Moon will have to clear: developing a brand-new growth model.

CORRUPTION AND INEQUALITY Moon's victory can be attributed to the yawning chasm between South Korea's privileged few and everybody else -- a gap opened, in part, by collusive relations between politicians and the families that run the country's huge conglomerates. Park, after all, was impeached due to influence peddling by a close confidante.

South Korea's stunning economic ascent through the second half of the 20th century -- known as the Miracle on the Han River -- was interrupted by the Asian currency crisis of the late 1990s. Even then, a reform agenda enforced by the International Monetary Fund sparked a strong rebound.

In recent years, however, growth has been less than miraculous, hovering around 2%. Other serious problems have emerged: record-high youth unemployment, close to 10%, and a wage gap that widened under the last two conservative administrations.

To tackle these issues, Moon is expected to veer leftward, focusing on the same kind of redistributive policies as former President Roh Moo-hyun -- for whom Moon once served as chief of staff.

The new president has promised to create public-sector jobs, including by hiring more police officers, firefighters and child care workers. At the same time, he has pledged to take a hard line on the chaebol conglomerates.

Moon will draw on support from three main groups: onetime student activists who want him to follow Roh's example, close aides who worked on his presidential campaign, and a circle of experts from various fields. Like Moon, many members of this network lean leftward, suggesting his administration will have a deep commitment to progressivism.

A look at Moon's cabinet picks may also offer some hints on his policy direction.

On May 10, the new president named Lee Nak-yon, the governor of South Jeolla Province, as his prime minister. Lee, 65, was a senior member of Moon's campaign strategy team for the previous presidential election in 2012. A journalist-turned-politician, he was a Tokyo correspondent for the Dong-A Ilbo newspaper in the early 1990s.

Assuming Lee is confirmed by the National Assembly -- hearings are scheduled for May 24 and 25, with a vote to come on May 31 -- he is expected to help navigate the complicated relationship between Seoul and Tokyo. He could have his hands full if Moon follows through on his campaign talk of renegotiating or scrapping a deal with Japan, signed by Park, that was supposed to resolve the issue of wartime "comfort women."

Lee's nomination is also seen as an effort to bridge a geographical divide. He hails from the southwestern region of Honam, which has a longstanding rivalry with Moon's southeastern home region of Yeongnam.

Other appointees have histories of reaching out to the North. The pick for spy chief, 63-year-old Suh Hoon, dealt with North Korea as an agent with the National Intelligence Service and attended two North-South summits. His appointment also requires parliamentary confirmation.

Former lawmaker Im Jong-seok, Moon's choice for chief of staff, was a well-known student activist who arranged an illegal visit to Pyongyang by a female student in 1989. This violation of the national security law landed him in prison for three and a half years. Im, now 51, is also an advocate of the Kaesong Industrial Complex, a joint North-South project that was closed by the Park administration.

The center-right Liberty Korea Party protested Im's appointment on these grounds.

Moon, who has vowed to unite South Korea's fractured society, cannot afford to simply ignore the opposition. He will need other parties' help to pass his agenda.

Moon's Democratic Party of Korea holds 120 seats. That makes it the largest force in parliament, but the number is still far short of a majority in the 299-member assembly.

The Liberty Korea Party has 107 seats, followed by the liberal People's Party, with 40 seats. The conservative Bareun Party has 20 seats, while the progressive Justice Party holds six.

The confirmation hearings for Moon's cabinet appointments may offer a sneak peek at the battles ahead. Experts see a relatively easy path to confirmation for Lee with help from the People's Party, which has strong ties to the Honam region. But there is no guarantee the party will line up behind Moon's other choices.

As daunting as Moon's diplomatic challenges are, he will not find his domestic chores any easier.

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How a 'troublemaker' ended up in South Korea's Blue House

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