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R 250755Z OCT 07
FM AMEMBASSY SEOUL
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INFO RUEHBJ/AMEMBASSY BEIJING 3295
RUEHKO/AMEMBASSY TOKYO 3431
RHHMUNA/CDR USPACOM HONOLULU HI
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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 003178 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR PREL KN KS
SUBJECT: CHUNG DONG-YOUNG ADVISORS: IT'S ALL ABOUT THE 
ECONOMY 
 
¶1.  (SBU) Summary: In a recent meeting with Emboffs, members 
of United New Democratic Party (UNDP) candidate Chung 
Dong-young's policy advisory team discussed Chung's economic 
policy, his views on the U.S. and his strategy for overcoming 
Lee Myung-bak's sizable lead in the final 60 days of the 
campaign.  Also present were several Chung confidants and 
campaign staffers.  End Summary 
 
--------------------------------------------- ---- 
Economy: Chung's Policy Right, Lee's Policy Wrong 
--------------------------------------------- ---- 
 
¶2.  (SBU) Chung's economics advisors, as a whole, professed 
views that were more moderate than the media's portrayal of 
him as a big government socialist.  In fact, they noted that 
the portrayal of GNP Candidate Lee's economic policies as 
"small government" was not consistent with the facts.  For 
example, several of the advisors noted that Lee's plan to 
build a canal across Korea would require huge government 
expenditures.  By contrast, Chung plans to spend government 
money to educate young workers to engage in technical jobs as 
a way to reduce youth unemployment. 
 
¶3.  (SBU) On the policy side, the strongest voice belonged to 
Seoul National University Professor of Economics Ryu 
Keunkwan, who insisted that, once Chung's policies were 
reviewed, the Korean people would find them superior to 
Lee's.  Ryu, who received a PhD in econometrics from 
Stanford, insisted that Chung's economic vision was market 
based, while Lee's was not.  Ryu and others emphasized that 
Chung's plan was to target small and medium-sized 
enterprises.  Chung advisor Professor Kim Dong-sik said Lee 
encouraged an export-based growth model which would only 
benefit large businesses, whereas Chung intends to expand 
domestic markets in order to enable smaller businesses to 
grow. 
 
¶4.  (SBU) Chung's advisors were convinced that Chung had the 
right vision but acknowledged the need to better explain his 
policies to the people.  Kim Dong-sik conceded that the 
complexity of Chung's plan may be more difficult to explain 
to the Korean people, especially when compared to Lee's 
simple, but misguided, economic proposals.  However, Chung's 
policies would provide a long term solution to the country's 
economic woes based on "real" economics rather than relying 
on Lee's more populist proposals for massive government 
projects.  To accent the market-based nature of Chung's 
plans, one advisor explained that Chung not only supported 
the KORUS FTA but was also interested in pursuing an FTA with 
China. 
 
----------------------------------- 
North Korea: Engage, Engage, Engage 
----------------------------------- 
 
¶5.  (SBU) Dongkuk University Professor of North Korean 
Studies Kim Jong-wook, one of two North Korea advisors for 
the Chung camp and a former advisor to then Unification 
Minister Chung, made it clear that Chung would follow the 
general Sunshine Policy path laid out by former President Kim 
Dae-jung.  Kim noted that joint inter-Korean projects along 
the east coast were unlikely to increase in scope because of 
the lack of potential profits there.  On the other hand, Kim 
believed projects on the west coast could be commercially 
viable, and supported the "inkblot" approach -- opening 
special economic zones along the west coast of the peninsula, 
starting with the Kaesong Industrial Complex (KIC) and 
followed by projects in Haeju, Nampo, and Sinuiju.  These 
"inkblot" development zones could eventually "bleed over" and 
combine into a consolidated area of capitalism, and 
ultimately result in de facto economic unification. 
 
¶6.  (SBU) Kim, a specialist on the everyday lives of common 
North Koreans, said he believed that the DPRK had undergone 
quiet but crucial change in the last few years: North Koreans 
increasingly were relying less on the government distribution 
system and more on money earned through local market sales in 
order to survive.  Other advisors told emboffs that Chung 
would put North Korea policy front and center and that only 
by achieving peace with the North, could South Korea thrive. 
To emphasize his focus on North Korea, Chung accompanied a 
group of small and medium business representatives to Kaesong 
Industrial Complex (KIC) just two days after winning the 
 
UNDP. 
 
¶7.  (SBU) Kwon Seung-il, another former Ministry of 
Unification official, said if the Korean people understood 
Chung and Lee's respective policies toward North Korea, then 
they would support Chung over Lee.  Kwon said that the 
conservative media conglomerates were responsible for 
deceiving the Korean people by over-emphasizing the potential 
economic burden that could come with engagement.  He noted 
that the true yearly expenditures to each Korean citizen was 
only 2000 KRW (or about two USD) for engagement projects. 
Moreover, progress on the Peninsula could not be measured 
directly in terms of "return on investment."  Instead he 
noted that Koreans would continue to support a pro-engagement 
policy, despite the "conservative media conspiracy" that was 
not accurately portraying the burden to the Korean taxpayer. 
 
¶8.  (SBU) Interestingly, a high school classmate of Chung, 
Professor Cho Seung-il, when asked similar questions, 
acknowledged that the tide of public opinion was beginning to 
turn and that the North Koreans were not doing much to help 
themselves.  Therefore, while Chung obviously hoped that 
Koreans would welcome further expenditure on engagement, this 
might not be an easy issue to motivate voters. 
 
------------------------------ 
Strategy for the Final 60 days 
------------------------------ 
 
¶9.  (SBU) This group of policy advisors, Chung confidants and 
campaign workers was surprisingly confident.  Despite polls 
that show Lee with almost three times the support of Chung 
(54 percent to 17 percent in an October 22 Joongang Ilbo 
poll) they professed certainty that once people saw what 
Chung stood for, they would support him.  They believed the 
explanation of Chung's policies was more important than the 
unification of the three remaining liberal candidates.  Also, 
after Chung's victory in the UNDP primary that defied most 
experts' predictions, the camp members said they felt they 
could win in the general election.  Professor Kwon Manhak, 
the policy director of Chung's team, told poloff that Chung 
could win if he was within 10 percent of Lee by election day 
due to superior turnout at the polls. 
 
---------- 
The People 
---------- 
 
¶10.  (SBU) Leading Chung's group in our meeting was 
first-term UNDP Lawmaker Park Myung-gwang, a former professor 
and close Chung advisor.  Two of Chung's classmates (one from 
high school, one from Seoul National University) joined the 
event and were called on to define Chung's thinking and his 
strategy.  Ahn Byung-woo, a college classmate and a professor 
of history at Hanshin University told poloff that he was not 
in charge of any particular policy for Chung, but rather 
served as a sounding board for overall policy and strategy 
questions. 
 
¶11.  (SBU) Min Su-young, Chung's former assistant and also 
his wife's niece, is in charge of fundraising for the 
campaign.  She told emboffs that this year there would be no 
fundraising violations.  According to election officials 
poloff met during the primary, there were no incidences of 
vote-buying in this primary, perhaps a first for Korea.  She 
told emboff that this year since the UNDP primary was so 
close to the presidential election, the 46 billion won the 
party would receive to run the campaign would be sufficient. 
This also would reduce the need to raise illegal funds as in 
past elections. 
VERSHBOW