HONG KONG (Reuters Breakingviews) - South Korea’s new president will soon feel gravity’s pull. Moon Jae-in’s victory in a May 9 poll heralds a softer stance on North Korea and restores domestic stability after months of chaos. But he will need to unite a polarized nation to push a much-needed reset of South Korea’s growth model.
It is easy to see why voters gravitated to a liberal peace-seeking leader. After nine years of conservative rule, inequalities have widened and conglomerates like Samsung are more dominant, with combined revenue at the top 10 groups equating to two-thirds of gross domestic product. Economic growth has slowed to less than 3 percent and youth unemployment is above 10 percent. Pervasive crony capitalism resulted in the ousting of his predecessor Park Geun-hye, who now faces bribery charges.
Moon takes the reins immediately and some changes are certain during his five-year term. For one, he advocates engagement with North Korea and is widely expected to implement a version of the “sunshine policy,” which was abandoned almost a decade ago. The main criticism of that approach, aimed at engaging with its neighbour both diplomatically and economically, is that it helped fund Pyongyang’s nuclear ambitions.
But the current policy of isolating the communist regime has not resulted in better behaviour, and pushing the despotic Kim Jong Un too hard only raises the risk of brinkmanship. If North Korea will be a headache either way, it is worth trying to restore some peace. The peninsula could certainly use a buffer against the loose cannon of U.S. President Donald Trump, who has said a major conflict with North Korea is possible.
A reduction of tension on the border would allow Moon to focus on issues at home. Moon has pledged to overhaul family-run conglomerates known as chaebol, with proposals including giving minority shareholders more boardroom representation. He has fiscal room to accommodate structural reforms that are required for the economy to be less reliant on powerful groups. But Moon also needs support from right-wing lawmakers that still have a big voice in a fragmented parliament and are likely to resist such changes.
South Korea’s new president is a rational choice but Moon will have to work hard to eclipse his predecessor and shine.
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