Doom and gloom
President faces grave post-elections challenges
A year ago, Washington was embracing President Yoon Suk Yeol. He was being lauded for strengthening Seoul’s defense alliance with the U.S. and Japan. However, the April 10 National Assembly election has raised concerns about how reliable an ally Korea will be in the future.
The election results reveal a country that is deeply polarized, mired in domestic troubles and unlikely to be able to tackle major economic challenges during the remaining three years of Yoon’s term in office. The conservative president’s unpopularity, which recently hit a new low, will continue to undercut his effectiveness as a leader.
The failure of Yoon’s People Power Party (PPP) to make gains in the 300-member National Assembly, winning only 108 seats, will likely deal a death blow to the president’s economic reforms. Meanwhile, the liberal opposition, including the Democratic Party of Korea (DPK) with 175 seats and Cho Kuk’s Rebuilding Korea Party with 12 seats, will provide the two parties with a near-supermajority if they agree to cooperate. By controlling three-fifths of the parliamentary seats, they will have the power to fast-track legislation.
The public rejection of the Yoon administration can be regarded as decisive since the election had the highest voter turnout since 1992. A large share of blame should be placed on the president, who is perceived as being out of touch with the public as he governs in an autocratic manner. Any sensible politician, particularly one who was elected to office with the slimmest of margins, should have been willing to be more flexible. But Yoon’s background as a prosecutor has made it difficult for him to compromise.
The government’s defeat also reflected public unhappiness over economic issues, particularly inflation. There are concerns about high interest rates and energy prices as well as the weakening of the Korean currency and a slowing job market. The young are unable to find good jobs or buy affordable housing due to high property prices.
Some of these issues could be addressed if the opposition-dominated National Assembly seriously considered some of Yoon’s market-based economic proposals. He has proposed reforms to make the labor market more flexible, which is needed to fight inflation. This policy was reflected in the government’s controversial attempt to increase medical school admissions. The government also appeared ready to try to cut dividend taxes to help boost the stock market.
Other government proposals included increasing the housing supply and thus lowering costs by relaxing greenbelt restrictions, implementing major infrastructure projects to promote regional development and boosting job creation.
But both Yoon and the opposition appeared locked in a damaging stalemate. Only 30 percent of the bills submitted to the National Assembly by the government have been enacted, compared to a 60 percent passage rate under the administration of Moon Jae-in. Opposition lawmakers have dismissed many of Yoon’s economic proposals as favoring the rich and contributing to increased social inequality. Meanwhile, Yoon has vetoed nine bills in his two years in office, more than any previous president in the last 30 years.
Unfortunately, the partisan warfare looks to get worse as the two sides engage in personal rancor. DPK leader Lee Jae-myung has called the Yoon administration a “prosecutor dictatorship” and Cho Kuk said he wants the president not to be “a lame duck” but “a dead duck.” Meanwhile, the government continues to pursue a graft case against Lee and is fighting an appeal by Cho in a document forgery and bribery case.
The lack of political cooperation will make it much more difficult for Korea to confront several long-term challenges. The most significant is the rapidly aging population. Korea has the world’s lowest total fertility rate at 0. 72. This will result in a shrinking economy at a time when the government will need to spend a lot more on caring for the elderly.
At the same time, export-dependent Korea may have to cope with the sudden slowdown in economic growth in China, its largest overseas market. China is facing its worst economic crisis in decades. Its property is cratering, undermining consumer spending. It is also suffering from an aging population, like Korea.
There is a threat that China’s economy will stop growing altogether. The rest of the world seems unlikely to absorb a glut of Chinese manufactured products that cannot be sold at home. The likely result will be that many countries will impose high tariffs on Chinese goods, and Beijing in turn will retaliate on foreign companies.
Further challenges await. If Donald Trump is reelected as U.S. president, he is likely to put pressure on Korea to significantly increase spending to support the stationing of American troops in Korea at the risk of seeing them depart. That would essentially threaten the U.S.ROK military alliance.
It is thus a dangerous time to have a divided government in Korea as polarization grows stronger.