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DE RUEHUL #1686/01 1550818
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FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC 4846
INFO RUEHBJ/AMEMBASSY BEIJING 2588
RUEHKO/AMEMBASSY TOKYO 2701
RHHMUNA/CDR USPACOM HONOLULU HI
RUALSFJ/COMUSJAPAN YOKOTA AB JA
RHMFISS/COMUSKOREA J2 SEOUL KOR
RHMFISS/COMUSKOREA J5 SEOUL KOR
RHMFISS/COMUSKOREA SCJS SEOUL KOR
RHEHNSC/NSC WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC//OSD/ISA/EAP//

UNCLAS SEOUL 001686 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON KS
SUBJECT: LEE MYUNG-BAK DREAMS UP A CANAL PROJECT 
 
¶1.  (SBU) SUMMARY:  The Pan-Korea Grand Waterway is a key 
campaign pledge of ROK's leading presidential hopeful, Lee 
Myung-bak of the opposition Grand National Party (GNP).  Lee 
is the frontrunner in the poll with 37.8 percent of the 
public supporting him in a May 30 poll by Joongang Daily. 
(His closest rival, GNP's Park Geun-hye scored 25.5 percent 
support)  The Waterway is an ambitious cross-country canal 
project that aims to build 3,100 kilometers of canals and is 
estimated to cost 14.1 trillion won.  On May 21, his camp 
released the blueprint of the cross-country canal project 
which became the focus of the televised debate on May 29 
among the five contenders for the GNP candidacy.  The project 
is in the center of controversy as Park Geun-hye and Lee's 
other political rivals continue to bring up the issue to 
attack Lee even after the debate.  Critics, including not 
only Lee's rivals but also many academics, are skeptical 
about the project's feasibility and economic efficiency, and 
express concerns about possible negative impact to the 
environment, notably the water supply.  END SUMMARY. 
 
------------------------------------------ 
BLUEPRINT FOR THE PAN-KOREA GRAND WATERWAY 
------------------------------------------ 
 
¶2. (U) Lee Myung-bak's advisory group on the canal project, 
the Pan-Korea Grand Waterway team, unveiled the blueprint for 
the project at a symposium on May 21.  The Pan-Korea Grand 
Waterway would be 3,100 kilometers long in total and consist 
of seventeen routes, including five routes in North Korea. 
The longest canal would be "The Canal" (Gyeongbu Canal, 
meaning Seoul-Busan Canal) which would link the Han River in 
Seoul to the Nakdong River in Busan, a port city at the 
southeastern end of the peninsula.  In the southwestern part 
of the Korean peninsula, the Honam Canal would connect the 
Geum River and the Youngsan River.  Gyeongbu Canal and Honam 
Canal would converge and eventually be connected to a canal 
in North Korea. Construction of the Gyeongbu Canal alone will 
take four years and cost 14.1 trillion won (approximately USD 
15.16 billion). 
 
¶3. (U) Specific plans for routes in the North and Honam Canal 
have not been finalized yet.  Thus, critics' attention has 
centered on "The Canal" so far.  At the Grand National Party 
(GNP)'s first of four policy debates on May 29, the 
contenders for the GNP candidacy attacked the feasibility of 
the project, turning the debate into a virtual hearing on the 
canal.  At the debate Lee Myung-bak, Park Geun-hye, Won 
Hee-ryong, Hong Joon-pyo and Go Jin-hwa presented and debated 
their economic policy platforms, all four candidates besides 
Lee criticized and questioned Lee's project.  Following the 
debate, Park's two close aides, lawmakers Yoo Seung-min and 
Lee Hye-hoo hosted a press conference at which they released 
a public questionnaire, criticizing and asking follow-up 
questions about the canal project.  There also has been 
lively discussion about the canal among academics and NGOs. 
 
 
----------------------------------------- 
CANAL SHIPPING: CHEAPER THAN OTHER MODES? 
----------------------------------------- 
 
¶4. (U) The most controversial issue about the canal project 
is its economic efficiency.  Press reported that Jo 
Won-cheol, a professor at Yonsei University and a member of 
the Pan-Korea Grand Waterway team, said the ROK needs to 
diversify its transportation means in order to cope with 
increasing freight traffic.  Jo argued that the volume of 
freight shipped in containers is expected to jump by two or 
three times by 2020, citing statistics from the Korean 
Ministry of Maritime Affairs and Fisheries.  He claimed that: 
canal shipping would reduce South Korea's heavy reliance on 
road transport, the dominant mode of transport; canal 
shipping is cheaper than road and coastal transport; and it 
is more reliable than coastal shipping.  Eighty percent of 
the freight shipped in containers via roads between Seoul and 
Busan could be shipped via the canal, Lee's camp asserted. 
Additionally, the project would develop the rural, landlocked 
areas of Korea, help the tourism industry, and create jobs. 
Lee noted during the debate that the project would create 
300,000 jobs. 
 
¶5. (U) However, critics are doubtful of the viability of the 
shift from road transport to canal shipping.  Experts say 
that canal shipping requires more time and procedures than 
road shipping.  Some experts note that coastal shipping is 
also more efficient than canal shipping as a vessel between 
Incheon (a port city just west of Seoul) and Busan carries 
more cargo and saves more time than a barge. It will take 
nearly 40 hours by the canal from Seoul to Busan (NOTE: it 
takes approximately three hours by bullet train and four 
hours by car from Seoul to Busan. END NOTE).  Critics claim 
that the canal project is outdated, citing the decline of the 
canal shipping industry in the U.S. and Europe.  Some pundits 
were also doubtful about the canals creating jobs in the long 
run. 
 
¶6. (U) At a press conference on May 30, Park Geun-hye's camp 
claimed that the benefit-cost ratio of the canal project was 
between 0.05 and 0.28, which means an investment of 100 
Korean Won would return between 5 and 29 Korean Won.  They 
were citing figures from a study done by a professor in 
economics at Hanyang University (NOTE: it is uncertain 
whether he is in Park's camp. END NOTE).  Lee's camp refuted 
the argument, and one of his advisors argued the ratio would 
be 2.3 while another aide argued it would be between 1.2 and 
1.5. 
 
------------------------------------- 
THE CANAL: AN ENVIRONMENTAL DISASTER? 
------------------------------------- 
 
¶7. (U) Critics expressed concerns about the project's 
negative impact on environment.  They argued that weirs (dams 
to raise the water level of a stream or river or divert its 
flow) and docks will keep water stagnant and deteriorate 
water quality, and that barges may spill hazardous materials 
into the canal or pollute the air.  This would threaten the 
supply of drinkable water to 31 million Koreans relying on 
the Han and the Nakdong River for their water supply, they 
say.  Lee's camp argued the canal project would not endanger 
the country's water supply as the canals would have double 
waterways so barges could use a waterway separated from the 
rivers supplying drinking waters. 
 
-------------------------------- 
MOTIVES BEHIND THE CANAL PROJECT 
-------------------------------- 
 
¶8. (U) Lee is hoping to project the image of Cheonggye Stream 
into the canal project and reaffirm his image as a as a 
policymaker with economic proficiency.  As Seoul Mayor in 
2005, he restored Cheonggye Stream to success amid fierce 
opposition.  The stream has been visited by over 10 million 
people and has revived the center of Seoul.  The 5.8 
kilometer artificial stream has had significant cultural and 
economic effect in Seoul's city center.  This achievement 
greatly helped his rise to national prominence and top 
presidential candidate.  His successful career as the CEO of 
Hyundai Construction and Engineering before entering politics 
also reinforced this image. 
 
¶9. (U) Some pundits argue that Lee proposed "The Canal" plan 
to gain support from voters from the southwest Youngnam 
region.  According to one observer, they welcome Lee's idea 
mainly because of the likely jump in real estate prices in 
the region which will result in gains to individuals' 
investment.  Skeptics of the Honam Canal also see the idea as 
Lee's effort to garner support from people in the Honam 
region in ROK's southeast.  The region is considered crucial 
in winning the presidential election. 
 
------- 
COMMENT 
------- 
 
¶10. (U) The canal project is a tangible, symbolic idea voters 
can easily envision and understand Lee's economic vision. 
Add Lee's success with Cheonggye Stream project and many 
people feel "The Canal" project is possible.  However, 
feasibility of the project is questionable and turning out to 
be a nice target for Lee's political opponents.  Although the 
overall approval rating for Lee remained intact at around 
37.8 - 43.4 percent after the debate, nearly 30 percent of 
the surveyed responded that Park had performed well, in 
contrast to the 14.4 - 24 percent for Lee.  Moreover, a poll 
done before and after the debate shows a significant decrease 
in the percentage of supporters (from 46.3 percent to 33.8 
percent) among the respondents.  Also not helping the 
E 
credibility of the project is President Roh's pointed remark 
over the weekend that "nobody in their right mind" would 
invest in this project. 
VERSHBOW