The presidential election has once again come down to the candidates from the two major parties – the Democratic Party of Korea and the People Power Party. Both the Democratic Party of Korea’s Lee Jae-myung and the People Power Party’s Yoon Suk-yeol claim to be the only choice for a better future, and have made numerous pledges they claim are aimed at improving citizens’ lives.

Many of their pledges on social issues outside of the field of politics are almost indistinguishable, promising more or better support for the people. But on foreign relations, defense, and the economy, the two candidates are poles apart.


[Diplomatic policies]

Yoon - Strengthen US alliance, mend fence with Japan

In interviews and discussions, Yoon has revealed that the focus of his diplomatic policies will be centered on a strong alliance with the US and Japan.

In a recent televised debate, Yoon said, “Korea-US relations and Korea-Japan relations collapsed too much during the period of the Democratic Party of Korea’s regime, where the nation has been engaged in submissive diplomacy that is pro-China and pro-North Korea.” Restoring relations with the US and Japan is a priority, he said.

When asked which leader he would meet first if elected, Yoon said he would meet the leaders of the US, Japan, China and North Korea in that order.

In another interview, Yoon stated that equidistant diplomacy with the US and China is not appropriate.

Equidistant diplomacy means maintaining relations with two opposing countries while balancing competing interests for optimal outcomes.

Korea has relied on both countries for different reasons -- the US for security and China for economic -- while maintaining strategic ambiguity.

He said equidistant diplomacy is not possible for Korea because “China is a communist and socialist country and military alliance with North Korea. The US is a free democratic country like Korea and a long-standing alliance.”

Relations with Japan, which have deteriorated under the current Moon Jae-in administration, are expected to see changes if Yoon is elected.

Korea should not be immersed in the past, said Park Chul-hee, Yoon’s foreign policy aide, in an interview. “Historical issues are important, but they won’t overwhelm all issues between Korea and Japan (if Yoon is elected). We should cooperate from a future-oriented perspective. We shouldn’t be hostile to Japan.”


Lee - US, but also China

Lee’s foreign policy stance is similar to that of the Moon administration, emphasizing solid ties with China.

When asked which country’s leader he would meet first if he were elected president in a recent televised debate, he said, “We don’t have to decide in advance now, whether the US comes first, China comes first, or North Korea comes first. The most important thing is to consult according to the situation and meet the most appropriate person at the most useful and most efficient time.” This is different from the answer from Yoon, who picked the US leader first.

Lee said the US is important, but added: “It is wrong to ride on anti-China sentiment to estrange Korea-China relations and gain political interests.”

Despite criticisms of his “humiliating pro-China toadyism,” Lee did not back down from his position. “We cannot escape from economic cooperation with China,” he said.

He said Korea should continue to develop a strategic cooperative partnership with China, as 25 percent of Korea’s trade depends on China with a trade surplus of over 50 trillion won a year.

With Japan, Lee is expected to address more seriously historical issues like comfort women and forced labor.

Lee’s foreign policy aide Seo Hyung-won said in an interview the candidate recognizes improving relations with neighboring Japan as one of the essential diplomatic tasks. Still, historical disputes should not be left unattended.

Seo admitted a two-track approach is inevitable, as problems from the past have spread to economic and security conflicts. “But it should be different from the previous approach. (The current government) has neglected past problems and tries to gain only benefits through cooperation. But Lee’s two-track approach will seriously promote dialogue to solve problems from the past.”


[North Korea and defense]

Lee – continuation of Moon’s policies

Lee’s stance on security and North Korea will by and large be a continuation of the current administration’s policies.

On North Korean denuclearization, Lee endorses an “action for action, simultaneous” and “small deal” approach, in which corresponding measures are taken incrementally and in a synchronized manner in exchange for denuclearization steps from North Korea.

In this context, Lee pushes for easing economic sanctions with a “snapback” provision, which guarantees the immediate and automatic reimposition of sanctions in case of North Korea’s noncompliance.

In essence, Lee is skeptical of the effectiveness of the hardline and sanctions-oriented policy. He also dismissed the previous US Trump administration’s all-or-nothing approach to denuclearization as unfeasible, while admitting the utility and significance of Trump’s top-down approach.

Lee also seeks to build up “pragmatic” inter-Korean relations, which engender economic development and improve people’s lives.

Lee plans to establish a “peace economy system” on the Korean Peninsula to not only develop a mutually beneficial and pragmatic South-North relationship, but also create a “virtuous cycle of peace and economy.” In Lee’s view, peace would lead to economic development, and economic cooperation would solidify peace.

In respect to defense policy, Lee emphasizes bolstering up South Korea’s independent “military core capabilities to respond to nuclear and weapons of mass destruction threats.”

Lee seeks to build a nuclear-powered submarine “based on the solid South Korea-US alliance.” In addition, Lee will expedite the development of indigenous long-range surface-to-air missiles (L-SAM) against North Korean missile threats instead of purchasing THAAD batteries from Washington.

Lee also proposes to establish a “space command” and “defense space network” as part of his multi-domain approach to protecting national security against diverse and non-traditional threats.


Yoon: “Peace through strength”

Yoon seeks to establish “sustainable peace and security on the Korean peninsula by achieving North Korea’s complete and verifiable denuclearization.”

To that end, Yoon will propose a “predictable roadmap for denuclearization,” but he emphasizes the importance of consistency and the principle of reciprocity in nuclear negotiations.

The essence of Yoon’s denuclearization approach is to ask for “substantial” denuclearization measures from North Korea first, and then reciprocate with economic support and other rewards by utilizing measures such as UN sanctions exemption.

But Yoon elucidates that international sanctions must be maintained until North Korea’s complete denuclearization.

Notably, Yoon also seeks to “normalize inter-Korean relations” based on a predictable and principled approach. He considers the current South-North relationship as “abnormal.”

With regard to security policy, Yoon pursues establishing “peace through strength.” In his view, enhancing deterrence against North Korea’s nuclear and missile threats is the starting point of pushing toward denuclearization.

Above all, Yoon will reinforce the South Korea-US combined defense posture and extended US deterrence through various channels.

Yoon endorses the ideas of resuming large-scale, theatrical field training exercises and substantially restoring the Extended Deterrence Strategy and Consultation Group (EDSCG). He views the necessity of deploying US strategic assets and regularly evaluating their readiness through military drills.

Yoon will additionally strengthen South Korea’s independent capabilities to respond to North Korean threats by expediting completion of the indigenous three-axis missile defense system.

Yoon seeks to secure preemptive strike capabilities known as Kill Chain, and strengthen military capabilities required for implementing the Korea Air and Missile Defense (KAMD) and the Korea Massive Punishment and Retaliation (KMPR) systems.

To defend the metropolitan area, he will additionally deploy Terminal High Altitude Area Defense (THAAD) batteries and speed up developing missile shield systems, modeled after Israel’s Iron Dome.


[Economy and real estate]

Lee – government-led growth, housing

Central to Lee’s vision for the economy is granting a greater role for the central government in driving growth and development.

By having the government take the lead in driving transitions in science, industry, education and real estate, Lee looks to make South Korea one of the world’s top five economic powers. He also promised to raise the main bourse Kospi to 5,000 and have the country’s gross domestic product per capita exceed $50,000 during a five-year term.

The Democratic Party of Korea candidate believes it is the job of the central government to drive a transition towards eco-friendly sustainable growth and create jobs in innovative sectors. He vowed to devote 135 trillion won in the budget to fulfill digital transitions and create 2 million jobs.

The budget will be used to support traditional industries to make digital-friendly transitions while helping South Korea give birth to 100 new “unicorn” startups, he claims. All of these would be done in consideration of bringing balanced growth for regions beyond the greater Seoul area.

Another key project Lee wants to kick off is establishing a universal basic income system for South Korea, which would have all citizens unconditionally receive the same sum of money each year, with some groups receiving more based on their socioeconomic standing.

The project will start by giving a base income of 1 million won per year to all South Koreans. Young citizens aged 29 or below will be given 1.2 million won more, and 1 million won will be additionally provided to those aged 60 to 64.

Some low-earning elderly Koreans will be given up to 400,000 won more each, and those in rural areas will be entitled to 1 million won more a year. All of these funds would be provided for local governments to distribute as cash or spending vouchers.

He believes the scheme will help tackle inequality and offset the expected slowdown of economic activities from reduced demand for labor in the fourth industrial revolution.

Lee eventually seeks to expand the scheme so that everyone gets a payment of up to 50 million won a year. The candidate believes his vision is possible if aided by raising new taxes on carbon emissions and by collecting “dividends” from landowners.

The concept of an unconditional payout is also central to Lee’s approach to the real estate market, which he claims is badly damaged from erroneous policy moves from the Moon Jae-in administration.

He repeatedly apologized for his party’s failure in controlling housing prices, promising regulatory relief measures to increase the supply of new homes while cracking down on multiple homeowners and speculators.

The ruling party candidate vowed to supply 3.11 million new housing units, 30 percent of which are to be provided as long-term rental units developed and provided by the central government. He promised to improve public transportation near areas where these public housing units will be built, to appeal to home seekers as a voluntary choice.

As criticism rose on his possible involvement with the Daejang-dong development scandal and on the Moon administration for a scandal involving the Land & Housing Corporation, Lee vowed to have the central government directly run housing projects and ensure fair distribution to those in need.


Yoon – economy centered on “happiness”

Yoon essentially has no experience in elected office, nor has any proven track record of executing economic policies. That said, his anti-Moon administration stance is reflected in much of his vision for the economy. His policies entail undoing what the Moon government has done over a five-year term.

Vowing to create a happiness-centered economy, Yoon looks to have the central government take a new role in driving economic growth. He believes the government should be assisting businesses and facilitating their growth, rather than leading economic development.

Yoon does not have a large-scale reform project like his main rival does. He is keen on bringing growth and increasing efficiency through small, progressive reforms, with advice from industry experts and those at the field.

In his view, the central government should be primarily tasked with creating an environment where businesses are motivated to innovate, and the workforce grows with many being satisfied with their conditions. Regulatory relief and budget restructuring are key to this vision.

He has famously announced to bring flexibility and amendments to the Moon administration’s hallmark policies, like the 52-hour workweek and how minimum wage increases are set. He believes these systems and rules must respect the opinions of employers and employees.

Yoon and his aides are looking to let companies take the main stage in driving innovation and economic growth, while the government takes the role of building infrastructure and providing financial support for newly growing sectors.

The project would include tax relief and loan support for firms and industries with innovative ideas and potential. He is also considering providing benefits like temporary corporate tax exemptions for overseas firms to relocate to Korea.

He believes the government can sufficiently prepare around 50 trillion won a year with careful restructuring of the budget. This will help his government run these supportive projects without raising any new taxes or placing financial burdens on local firms.

The focus on happiness for Koreans is also key in Yoon’s line of promises made for the real estate market, which he accused of being troubled from unreasonable policy moves undertaken by the Moon administration. He is expected to get his hands on the issue within months after taking office.

Blaming the incumbent administration for overly suppressing the supply of new homes and driving up housing prices, Yoon vowed to supply 2.5 million new homes within his term, 1.3 million of which will be in the greater Seoul area.

He seeks to expand opportunities for homeowners to obtain loans in purchasing homes, while making moves to curb the speed of rise in housing prices. Multiple homeowners will be incentivized to sell their extra homes through tax relief measures for single homeowners.

Yoon also vowed to lower the tax rate for real estate transactions, prompting people to make real estate transactions without fear of being bombarded with taxes. He also promised to make this year’s housing prices to reach 2020 levels, emphasizing his vow to curb fast hikes in real estate prices.

By Shin Ji-hye, Ji Da-gyum and Ko Jun-tae
(shinjh@heraldcorp.com) (dagyumji@heraldcorp.com) (ko.juntae@heraldcorp.com)