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South Korea’s current president, Moon Jae-in, entered office in May 2017 with an approval rating of nearly 80%, one of the highest in the country’s modern history.  Although he won the presidential election with 13.4 million votes (or 41% percent of the voting population)¹, and has maintained an approval rating between 70-80%², Moon faces many challenges that will critically shape the rest of his term. The most significant he is likely to face are: 1) building consensus with the splintered political parties in the South Korean National Assembly; 2) pushing forward with ambitious plans for political and economic reform; and 3) dealing with major foreign policy problems such as North Korea and China. He has had scant success with North Korea, but his contacts with China in the final months of 2017 have tested how tightly tied to the United States he wants to be, including to its trilateral strategy with Japan and Trump’s new Indo-Pacific strategy.    

To avoid being cast as a lame duck president, Moon Jae-in like his predecessors will be hard pressed to deliver on campaign promises and signature economic and political initiatives within the first two years of his term. While the office of the president can wield a large amount of power in South Korean politics, especially with a broad public mandate, a fragmented National Assembly can block nearly all important presidential initiatives. To eliminate concerns about long-term political party gridlock and potential lame duck status, Moon may grasp at low hanging political fruit early in his term.

For the Moon administration, an instance of low-hanging fruit may have been the recent rapprochement between China and South Korea in late October.³ Although the actual announcement came as a surprise to many observers, an overture to China to restore bilateral relations may have been a move that the Moon government was considering for some time. On October 31, South Korean and Chinese officials met for an initial consultation meeting⁴ (announced as a “provisional agreement” by China⁵) to explore steps towards restoring their bilateral relationship. Ties between Seoul and Beijing had been rocky since July 2016 when a dispute over the installation of a Terminal High Altitude Area Defense (THAAD) system in South Korea overtook all other aspects of the relationship. The consultation meeting was followed by a bilateral summit between President Xi Jinping and Moon Jae-in during the latter’s visit to China from December 13-16.  Although most observers assess the outcome of the summit as positive, Chinese treatment of Moon⁶ and his media delegation call into question whether the two countries share reciprocal views of the importance of their relationship.⁷ It could also contribute to doubts about whether China will be a trustworthy long-term partner for South Korea.

A second related action that the administration may have seen as an achievable goal is the strategic use of the 2018 PyeongChang Olympics. South Korea has been using the games as an opportunity to end the freeze between Beijing and Seoul and also as a prospective event to test engagement with North Korea through sports diplomacy.⁸ Seoul may have complex calculations for pursuing these actions but the administration may also have determined that it could achieve a few symbolic wins early in Moon’s term. Although these actions (and others like them) may register with the internal balancing logic of the Moon government, they may not necessarily translate well to the outside world unless strategic choices and intentions are clearly communicated to countries in the region. By December 20 it had become clear that Moon was also seeking a delay during the duration of the Olympics, including the paralympics, in ROK-US military exercises if North Korea shows restraint in testing, something likely to be welcomed by China.

Under the present strategic circumstances, it may seem illogical to many that South Korea would seek to restore relations with China and pursue limited engagement with North Korea.⁹ Examining these disparate actions within the larger context of the Moon administration’s main challenges and competing objectives, however, can shed light on the strategic decisions of the government. Rather than aiming for short-term gains, the Moon administration would benefit from considering the long-term effects of its strategy, particularly with respect to China and North Korea.

Consensus Building in Domestic Politics

South Korean politics have always been contentious but in the wake of the impeachment of President Park Geun-hye and election of Moon, party politics have become even more divisive. Corrosive identity politics, strong party-bosses, and excessive competition have always had deep-seated roots in South Korea’s political culture. However, the splintering of conservatives and progressives into five different parties before and after the impeachment of Park has made it even more difficult to achieve political consensus.

The political party configuration in the National Assembly shows how problematic it is to pass legislation even for the ruling party. Moon Jae-in’s primary political base, the Minjoo (Democratic) Party, currently occupies 121 seats in the 300-seat unicameral legislature. The other progressive parties including the People’s Party and Justice Party occupy a combined total of 45 seats. The agendas of the progressive parties, however, do not always align well, and the People’s Party has been known to occasionally take sides with conservative parties. The main conservative opposition parties, the Liberty Korea Party and the Bareun (Righteous) Party, currently hold 116 seats and 11 seats, respectively. The conservatives split based on allegiance (or non-allegiance) to Park Geun-hye. This political climate significantly impacted the 2017 elections and has hindered the government’s ability to achieve consensus on policy initiatives. The Minjoo Party must build a coalition with members of other parties to even have a chance at passing any meaningful legislation.

This political infighting is likely not only to affect political party support but also to set the tone for political compromise throughout Moon’s presidency. His party could lose seats in the National Assembly elections in 2020. Unless Moon can build greater consensus across party lines on key policy initiatives and encourage cooperation between the Blue House and the National Assembly, public support for his administration and the Minjoo Party could significantly decrease, making it more difficult to govern the country and engage in reforms. Structural reforms, a key campaign promise of the administration, could be hampered by political gridlock and the failure to pass necessary legislation. This presents an enormous ongoing challenge for Moon’s signature policies in both the domestic arena and in foreign policy. Domestic political concerns will also likely continue to impact Moon’s implementation of regional and global-oriented policies.

The Reform Agenda

Moon Jae-in has placed a high priority on spurring economic growth and pursuing reform of systemic problems in the South Korean economy and government. The promise of job growth and the pledge to reform corrupt practices in government and business circles was a primary reason why South Koreans voted for Moon in the 2017 election.¹⁰ However, the reform agenda is closely tied to the complexity of domestic politics. 

A key signpost in Moon’s reform agenda has been the prosecution of former officials from the Park Geun-hye and Lee Myung-bak administrations as well as chaebol leaders who have allegedly colluded with conservative governments to maintain power and reap corporate profits. The Moon government has aggressively pursued the prosecution of corporate leaders in some cases such as Samsung vice chairman Lee Jae-yong and former government officials. But Moon faces a dilemma particularly with respect to pursuing corruption charges for corporate leaders. Actions taken against large conglomerates will have a direct impact on economic performance since the chaebol make up an inordinate part of the overall South Korean economy. Given the economy’s dependence on export-led growth and chaebols, the Moon administration may need to carefully balance corporate reforms with the demand for economic prosperity. 

The Moon government has declared that it will foster “income-led growth” but has not yet introduced a detailed economic plan.¹¹ The pillars of this economic strategy include: creation of more jobs, expansion of social welfare programs and increased support for the middle class through tax breaks, investment in small-to-medium-sized enterprises and innovative industries, and reform of the labor market. To meet this ambitious reform agenda, the administration will need to raise funds in the amount of 178 trillion won (approximately $157 billion) through taxes and other means of raising capital.¹²  This will not be an easy task and will require that South Korea sustain steady economic growth. For a country heavily dependent on exports, it means that South Korea must maintain good trade relations with existing partners, particularly China and the United States.

Returning to the example of Chinese and South Korean rapprochement, and considering its reform agenda, the Moon Jae-in government likely made the decision to normalize relations with China because it is an important condition for maintaining South Korea’s economic growth. This is despite the fact that the South Korean public has shifted to a negative view of China and economic retaliation for THAAD cost South Korea billions of dollars in 2017 alone.¹³ China is still South Korea’s largest trading partner and the bilateral economic relationship is worth over $200 billion. According to 2016 figures, bilateral trade in goods and services was worth approximately $145 billion dollars and foreign direct investment totaled about $74.7 billion combined.¹⁴ South Korea’s economic dependence on Chinese trade may have been the deciding factor despite concerns about China’s use of economic coercion. Additionally, apprehension about attracting Chinese tourists for the 2018 PyeongChang Olympics may have played a part in the decision. Domestic economic factors and strategic foreign policy imperatives probably prompted the Moon administration to seek diplomatic and economic reengagement with China. Similar factors may have also impacted the decision to engage North Korea through proposed participation in the Olympic games.

China, The Olympics Factor, and North Korea

Chinese and South Korean relations have been fraught with tensions since July 2016 when the Park Geun-hye administration announced that the THAAD system would be deployed to the Korean Peninsula. As a response, the Chinese imposed intense sanctions on South Korea that resulted in economic losses of approximately $7.5 billion alone in 2017.¹⁵ The Chinese continue to maintain that THAAD undercuts the country’s nuclear deterrent and is part of a US plan to encircle Beijing with a regionally US-led missile defense system.¹⁶ The United States and South Korea assert that the missile defense system is intended to defend against the North Korean threat and is not aimed at China.

The conflict overall has caused quite a dilemma for the Moon administration, as Seoul feels trapped in a larger regional power struggle between the United States and China. While South Korea has been dealing with various strategies and stages of hedging and regionalism for years to manage US and China relations, the THAAD conflict is particularly problematic for the Moon government in four respects.  

First, China’s retaliatory actions have undermined South Korean economic growth at a time when Koreans still feel economically insecure and discontent with many social and political problems. Leaders in Seoul are aware of the need to spur economic growth and carefully manage public opinion since these sentiments helped to take down the Park Geun-hye government and brought the Moon administration to power. Second, the THAAD conflict exacerbates divisions within the National Assembly and the Moon government between those groups who favor continued dependence on the US-ROK alliance and those who seek better relations with China and more independence from the United States. While Beijing has shown over the last year that it will intentionally use economic leverage to force South Korea to comply with Chinese interests, divisions still exist within the Moon government. Third, Chinese sanctions, if continued, would significantly impact the number of Chinese tourists visiting South Korea particularly for the 2018 PyeongChang Olympics.¹⁷ The hosting of the 2018 Olympics is an immense source of national pride, and the Moon government is aware that if the games turn into a disaster, it could easily turn public opinion against the administration.

Experts analyzing the recent warming of relations between China and South Korea may have even underestimated the extent to which concerns about the 2018 PyeongChang Olympics played a part in motivating Seoul to reengage with Beijing. The country has taken the hosting of international sporting events very seriously since the 1988 Seoul Summer Olympics. Considerations about low ticket sales and the potential lack of Chinese tourists at the 2018 Olympics probably weighed very heavily on the Moon administration.  

In addition to China, the South Korean government faces a large dilemma on North Korea.¹⁸ North Korea continues to threaten both the United States and South Korea, and has dominated headlines throughout this year with a continuous stream of missile and nuclear weapons testing. In 2017 alone, North Korea has tested its missile technology on seventeen different occasions. In the face of North Korean threats, Moon Jae-in has vowed to maintain strong alliance relations with the United States. Yet, he is walking a thin tightrope between two unpredictable leaders, one in Pyongyang and one in Washington. Concerns about North Korea’s disruption of the 2018 Olympics have even prompted Moon to request a delayed start for the annual US-ROK military exercises, which are held annually at the end of February or in early March.¹⁹ As sanctions pressure and diplomatic isolation increases on North Korea, however, Moon’s administration will be forced to make some hard choices between engagement with North Korea (a primary campaign promise) and continuing unified action with the United States to support its maximum pressure policies. 

Moon has from the beginning of his term sought for South Korea to play a bigger role in managing conflict on the Korean Peninsula and relations with North Korea. South Korea believes that China also has extensive leverage over North Korea and has encouraged China to use this power to pressure North Korea into stopping development of its nuclear weapons and ballistic missile programs. However, South Korea is often reluctant to anger China with further actions because of the perception that it will not help on North Korea and could fall back on economic coercion. As calls for increased pressure on North Korea and stronger sanctions grow, China may use the opportunity to create divisions in the US-ROK alliance. The Moon administration’s choices may again be largely influenced by domestic political imperatives and the larger strategic environment that could be outside the control of the administration. The challenge will be to coordinate policies and to avoid Seoul de-linking from the United States, Japan, and other stakeholders that seek denuclearization. Washington may encourage inter-Korean engagement but will likely emphasize that the United States and South Korea remain united in their policy goals and public messaging with regard to North Korea. Any divisions or perceived weaknesses in the alliance will be used by Pyongyang to its advantage.

Conclusion

President Moon Jae-in’s choices have thus far been shaped by a combination of challenging and sometimes conflicting domestic and foreign policy imperatives. In the past, South Korean presidents have often sought to achieve small political and economic wins with low hanging fruit to avoid being cast as a lame duck president in the first couple years of their term. This may have led to the prioritization of short-term political wins over long-term strategic goals. As a review of South Korean domestic conditions and recent ROK-China exchanges demonstrate, the Moon Jae-in administration may be no exception to this tendency. 

Recent events show that if South Korean actions are perceived as detrimental to the long-term strategic interests of South Korea and the US-ROK alliance, this could cause deepening concern over time in Washington. This is particularly true if Seoul is perceived as leaning more closely towards Beijing than in the past. An analysis of challenges faced by the Moon administration and recent ROK-China interactions, however, may provide some reassurance that South Korea is not leaning too far towards China. In the early stages of the Moon administration, Seoul still appears to be largely pursuing a hedging strategy with Beijing. For its part, and under these circumstances, the South Korean government should not take for granted that other countries will comprehend the complex mix of challenges and strategic choices that the Moon administration now faces. The current government should strive to more effectively communicate its intentions with regard to China and North Korea both in public and private to ensure that the United States and other critical allies are on the same page with regard to strategy and policy.  This will be the best way to ensure that the Moon administration is able to overcome difficult challenges and not sacrifice long-term strategic options for short-term wins.