Can Yoon Suk-yeol Use His Outsider Reputation to Move South Korea Forward?

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When Yoon Suk-yeol won the March 9 presidential election in South Korea, newspaper headlines described him as a rebel, a maverick and an outsider. It is quite something for such a conservative and elitist country to elect an outsider as president.

 

The key to understanding Yoon’s presidency is the word “outsider.” Yoon became famous as a prosecutor in cases involving disgraced conservative President Park Geun-hye. He further solidified his reputation as an outsider when he also fell out with former liberal President Moon Jae-in over investigations of presidential aides.

 

Coming into the polls, it seems Yoon understood the public mood better than anyone else, and his background captured the spirit of the time with people looking for someone opposed to all stripes of the establishment. His campaign fitted the national mood.

 

Will Yoon continue to play the role of an outsider as president? Or will he assume the position befitting his background as a member of the South Korean elite? Although he won a reputation as a maverick prosecutor when he fought the political establishment, he is from the elite, graduating from the prestigious law faculty of Seoul National University in 1983 before beginning a much sought-after career in the prosecutor’s office in 1994. The balance that he strikes between elite insider and independent maverick will determine the direction of his policies, especially on domestic issues, where a presidential agenda has significant influence. There are plenty of non-domestic issues, however, that he faces urgently.

 

How Yoon Entered Politics

 

Yoon announced his run for president on June 29, 2021, only nine months before the election. Since he resigned from his position as prosecutor general in March 2021, it took him only three months to enter politics after leaving the Moon Jae-in government. But he was a leading potential candidate for president well before his resignation. As early as November 2020, polls showed him to be the most popular among those likely to run for office.

 

How did a prosecutor become a presidential candidate? Throughout the 2010s, South Korean politics was plagued by a series of presidential scandals. Three successive heads of state — Lee Myung-bak (2008-13), Park Geun-hye (2013-17) and most recently Moon Jae-in — all became aloof, unresponsive, authoritarian leaders in office while their associates in government alienated the public with partisan, polarizing policies and questionable ethical behavior. The political crisis reached its peak with Park’s impeachment in March 2017. The public was yearning for a leader who could shake up the political establishment and stand up for principles.

 

Yoon emerged as a political leader in this environment of distrust and cynicism. He first came to public attention in 2014 when the Park government fired him as the lead prosecutor investigating National Intelligence Service officials of the Lee Myung-bak government for manipulating public opinion in online media using undercover operatives. Park was not comfortable with Yoon’s “overly aggressive” investigations, which risked hurting the reputation of the conservative ruling party, and she pressured him to limit the scope of his investigations. When he refused, he was removed from the investigation team and reassigned to a regional prosecutor’s office.

 

His reputation grew when a special prosecutor later named him in 2016 to head a probe into irregularities in the Park Geun-hye administration. He prosecuted Park and other officials for abuse of power and other crimes. When the charges were upheld at trial, Yoon became a public hero for sending powerful people to jail.

 

Moon Jae-in, who won the presidency on the heels of the Park scandals in May 2017, promoted Yoon to be the head of the Seoul prosecutor’s office that same month and then in July 2019 to become prosecutor general. Then a new scandal broke out in August 2019 that put Yoon in the headlines for a number of months. He openly defied Moon’s appointment of Cho Kook, a law professor at Seoul National University and a senior presidential advisor, as minister of justice. As soon as Moon announced the appointment, the prosecutor’s office undertook a wide-ranging investigation into the business activities of Cho and his family. Also targeted were the university entrance records of Cho’s children, and the family was accused of many illegal activities to help their children gain admittance to prestigious universities.

 

Cho resigned after only one month in office, but a serious rift opened between President Moon and Yoon. Choo Mi-ae, who succeeded Cho as justice minister, pressured Yoon to resign, which he finally did in March 2021. The struggle between the two dominated headlines nationwide for months and firmly established Yoon’s reputation as a political maverick.

 

What Does He Want to Do?

 

Yoon has built his political career by fighting a political establishment, both on the left and on the right, that abused power. His view of the three former presidents he served in the 2010s is that they all compromised the rule of law, a principle that is most important to him as a prosecutor. He seems to view politicians and their cronies as the biggest threat to democracy. The public seems to agree with him.

 

Restoring democratic governance means restoring the rule of law. Yoon has shown many times that he has no tolerance for politicians who do not abide by the letter of the law, having prosecuted as felonies actions that had been considered misdemeanors, such as issuing an internship certification letter for a college applicant who did not perform the work described. This had previously been seen as a “common” practice; not to Yoon.

 

All indications are that as president, Yoon will place the highest priority on transparency and the rule of law in formulating and implementing government policies. If he is true to his word, no short cuts or irregularities will be allowed. To him, the rule of law is the best way to protect justice and is consistent with the people’s common-sense understanding of democracy.

 

If the hallmark of the Yoon Suk-yeol government is to be the rule of law, what are his plans for specific policy areas? Since he had been a career prosecutor specializing in anti-corruption investigations, not much is known about his other policy agendas or preferences. During the campaign, he signaled that his government would be more pro-business and pro-growth than the liberal Moon Jae-in government. The value that he emphasizes most often in his speeches on economic policy is economic freedom. A government that allows people to freely pursue their dreams and opportunities is a government that is just and fair. He also wants to make sure that government provides sufficient support for people to take advantage of the opportunities such freedoms afford.

 

But Yoon is likely to spend his first year reacting to international and domestic crises instead of setting a new domestic agenda. A looming economic crisis will dominate the first year of his presidency. It will be a formidable challenge for his leadership. The commitment to the rule of law alone will not be enough in a world beset by crisis near and far.

 

The Dominant Domestic Challenge: Economic Recovery

 

President Yoon inherited an economy that may already be in a crisis. After two years of the Covid-19 pandemic, the economy has been slow to recover, with the gap between rich and poor widening. People were losing hope as home prices doubled and tripled in large cities.

 

Still more shocks came by the time he took office in May as the Ukraine crisis disrupted a global supply chain already upended by the economic conflict between the US and China. Yoon himself has warned the public to prepare for the coming of stagflation.

 

Unfortunately, President Yoon does not have much room to navigate an independent path in response to crisis. First, most sources of instability are from outside — the war in Ukraine, the US-China trade disputes, and disruptions in global supply chains. Second, high levels of government and household debt make South Korean financial markets vulnerable to a crisis. If an economic crisis spills over to financial markets, it is not clear whether the government will be able to inject enough capital to stabilize the markets. Unlike the previous financial crises of 1997 and 2008, the South Korean government’s ability to borrow is limited.

 

To his credit, President Yoon has staffed his economic team with respected career bureaucrats. Many of them have experience fighting financial crises and should be able to provide sound advice and actions.

 

Equally positive news is a strong relationship with the United States. President Joe Biden visited Seoul on May 20, just two weeks after Yoon’s inauguration. The two leaders affirmed their commitment to strong bilateral co-operation on issues spanning security, the economy and finance. Given the close relationship between the two countries, the new president can count on Washington’s support if a financial crisis ever comes. Critical to its ability to stop a currency crisis is the swap agreement with the US that allowed South Korea to defend its currency in 2008-2009 because the US Federal Reserve promised to lend dollars that the Bank of Korea needed to fight currency speculators.

 

Long-term Structural Reforms

 

Will the support of his economic advisors and American allies be enough to avoid a serious crisis? In the short term, yes. But the long-term challenge is different and requires strong presidential leadership. Unless he improves the long-term competitiveness of the South Korean economy, the country will continue to be vulnerable to economic crisis.

 

The structural reforms necessary to restore economic dynamism are not much different from those that South Korea initiated after the financial crisis of 1997 — financial, corporate and labor reforms. Although Korean financial markets and corporations became financially stronger due to post-crisis economic reforms, problems with competitiveness remain.

 

South Korean companies have been slow to keep up with new technological and industrial developments, especially the changing dynamics of the semiconductor industry. Korean semiconductor companies remain strong in conventional markets, such as memory, but they have lagged behind in new growth markets as their American and Taiwanese rivals excel in contract manufacturing and other areas.

 

Neither have South Korean banks and financial institutions achieved competitiveness in international markets. Due to numerous regulations, Seoul is having a hard time attracting foreign investors and is still a minor financial center, far behind other international financial centers in Asia. The Korean labor market is also more rigid than other Asian countries and the power held by labor unions has become even stronger in the last five years due to President Moon’s pro-labor government policy.

 

Looking to the Future

 

As Yoon entered his second month in office, public support for him grew. Approval ratings rose to 54.1 percent in the fourth week of May from an initial score of 52.1 percent. His party also won a landslide victory in regional elections held on June 1. The ruling People Power Party took governorships in 12 out of 17 provinces. Before the election, 13 of 17 governors belonged to the opposition Democratic Party.

 

Early successes are attributed to three factors. First, the honeymoon effect was strong. The regional elections were held only three months after the presidential election and one month after the presidential inauguration. Second, Yoon’s decision to move the presidential office to a former military base in Yongsan became popular with the public. Third, Biden’s visit boosted Yoon’s popularity as it gave him a chance to showcase his international leadership.

 

To continue his success, however, he has to overcome several challenges. First, he needs a more vigorous domestic agenda based on his outsider image. If he does not live up to his reputation as a reformer, he and his party may not be able to maintain public support. They should remember that South Korean voters have become impatient in recent decades, switching their political allegiances in response to shifting political winds.

 

Second, he needs to deal with a divided government. The opposition Democratic Party now holds 180 seats in the 300-seat National Parliament. Since the next general elections are due in April 2024, President Yoon will have to work with an opposition-dominated legislature for at least two more years.

 

If Yoon continues his success, he has a chance to rebuild both South Korean democracy and the conservative political movement. Along the way, he is expected to prove his reputation as an outsider by carrying out tough economic and social reforms. The country has not had a truly popular conservative leader since the strongman Park Chung-hee in the 1970s. South Korean conservatives are hoping that Yoon will become the first “great” conservative president since Park. That is a tough task, but Yoon at least has the right credentials going into the battle.

 

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