P 241122Z FEB 09
FM AMEMBASSY SEOUL
TO SECSTATE WASHDC PRIORITY 3341
INFO AMEMBASSY BEIJING 
AMEMBASSY TOKYO 
EPA WASHINGTON DC

UNCLAS SEOUL 000278 
 
 
STATE FOR OES/EGC, OES/ENV AND OES/PCI 
STATE ALSO FOR EEB/TRA AND EAP/K 
EPA FOR OIA 
 
E.O. 12958: N/A 
TAGS: SENV ECON PGOV KS
SUBJECT:  ROKG ANNOUNCES FOUR-YEAR "GREEN NEW DEAL" TO INVEST USD 38 
BILLION TO CREATE NEARLY ONE MILLION GREEN GROWTH JOBS 
 
¶1.  Summary: The South Korean government has announced that it will 
invest 50 trillion won (USD 38.1 billion) over the next four years 
on environmental infrastructure projects in a "Green New Deal."  The 
program, comprising nine major projects and 27 secondary projects, 
is intended to spur slumping economic growth and create nearly one 
million jobs.  The Green New Deal demonstrates the government's 
belief that investing in eco-friendly projects is not only good for 
the environment, but also is good for the economy.  Draft 
legislation that includes the Green New Deal is expected to be 
submitted to the National Assembly in March.  Environmental groups, 
although generally pleased with the program, have raised questions 
about funding and whether the proposed projects are really new or 
just previous proposals recycled into a new package.  However, many 
of the projects are new, and although several others predate the 
announcement of the Green New Deal, they have been expanded and will 
receive additional funding.  End summary. 
 
Job Creation Program Linked to Green Growth 
------------------------------------------- 
¶2.  President Lee Myung-bak's Government announced a "Green New 
Deal" program on January 6 to create jobs especially targeted to 
low-income earners.   The plan had been approved at a Cabinet 
meeting earlier that day.   Although South Korea's unemployment rate 
stands at only 3.2 percent, it is expected to increase in the coming 
months as the economy continues to slow.  GDP grew in 2008 at an 
annual rate of 2.5 percent, but declined by 3.4 percent in the final 
quarter as Korea felt the effects of the global downturn, and the 
Government's current projection is for the Korean economy to shrink 
by 2.0 percent in 2009.  "We are in unprecedented global economic 
crisis," Prime Minister Han Seung-soo said in the January 6 
statement, "We must respond to the situation in an urgent manner." 
 
¶3.  The projects envisioned in the Green New Deal represent a 
medium-term (2009-2012) action plan to serve as part of President 
Lee Myung-bak vision of a "low-carbon and green growth" economy, 
unveiled in August 2008, to combat global climate change and to 
nurture Korea's economic growth.  The Green New Deal projects will 
be funded by both Korea's central and provincial governments, along 
with the private sector.  Several of the projects complement and 
some overlap with the "Seventeen New Growth Engines" that will 
contribute to the country's economy over the next 5-10 years 
announced last September by the Ministry of Knowledge Economy, and 
which are a separate longer-term strategy for spurring Korea's 
economic growth.  (Requested funding for the New Growth Engines is 
also part of the draft legislation that includes the Green New Deal 
and is expected to be submitted to the National Assembly in March.) 
 
 
The Details of the Deal 
----------------------- 
¶4.  The following paragraphs outline the main elements of the 9 
major activities, as outlined in a ROKG briefing paper. 
 
A)  Restore the nation's four major rivers:  The Green New Deal 
calls for the central and provincial governments, as well as the 
private sector, to invest 18 trillion won (USD 13.7 billion) for 
dredging the countries four major rivers -- the Han, the Yeongsan, 
the Geum, and the Nakdong -- reinforcing their embankments, and 
cleaning up their surrounding areas.  This project also includes 
building 1,297 kilometers of bicycle trails alongside the rivers and 
linking them with existing bicycle paths.  The project is expected 
to create 280,000 new jobs.  The government expects the bicycle 
trails to generate tourism revenue and hopes that the pristine 
ecosystems near the demilitarized zone and the scenic views along 
the coastline will attract not only domestic but also foreign 
tourists on these sections of the new trails.  (Note:  this is the 
largest of the projects associated with the Green New Deal 
program.) 
 
B)  Build-up the nation's green transportation networks:  The 
central and provincial governments will funnel a total of 11 
trillion won (USD 8.4 billion) into the construction of high-speed 
railways linking Seoul and southern port cities of Busan and Mokpo, 
and establishing a bus rapid transit system in big cities.  These 
projects, expected to create 160,000 jobs, were already on the 
drawing board, but implementation will be stepped up under the Green 
New Deal. 
 
C)  Build-up the nation's Geographic Information System (GIS):  The 
central and provincial governments plan to invest 700 billion won 
(USD 500 million) in a project that will combine the nation's GIS 
data base on real estate and infrastructure, and integrate 
management systems for energy usage by buildings.  This project is 
expected to create 20,000 jobs, mainly in the high-tech sector. 
 
D)  Construction of small-scale dams and reservoirs:  Plans include 
the construction of several small-scale dams for flood control and 
the building of 96 water reservoirs to secure clean drinking water 
sources throughout the country.  The central and provincial 
governments and private sector will invest two trillion won (USD 1.5 
billion) in these projects, which are expected to generate 30,000 
new jobs. 
 
E)  Expand R&D into clean energy and "green vehicles":  The central 
government will invest two trillion won (USD 1.5 billion) in this 
program to create 15,000 jobs.  Projects include expanded R&D for 
new and renewable energy such as solar, geothermal, and wind energy. 
 Green vehicle projects include replacing diesel-powered city buses 
with compressed natural gas (CNG) buses, and continued R&D into 
hybrid vehicles and hydrogen fuel cell vehicles.  (Note: Separately, 
the Hyundai-Kia Motors Group is devoting substantial resources into 
production of its Liquefied Petroleum Injected (LPI) Hybrids using 
lithium batteries with mass production beginning in July.  The 
private company is also continuing its own research and development 
of hydrogen powered cars.  End note.)  A related project is to speed 
up the development of bio-ethanol production technology for use as 
vehicle fuel. 
 
F)  Expand waste recycling:  Projects include constructing 27 
landfills with methane collection facilities, 43 organic 
waste-to-gas or other refuse-derived fuel facilities, and 42 plants 
for generating electricity or heat from waste incinerators.  In 
addition, "waste-to-energy towns" to be constructed adjacent to 
several of the new facilities will use the heat, electricity, and 
gas generated by the facilities, as well as provide residences for 
plant employees.  Central and provincial government investment of 3 
trillion won (USD 2.9 billion) in this project should create 50,000 
jobs. 
 
G)  Increase Reforestation and Utilize Forest Biomass: The 
government plans to expand the area designated for reforestation 
from the current 235,000 hectares to 340,000 hectares.  It will also 
improve forest management by increasing the number of workers 
engaged in forest protection activities.  And it will construct 
facilities to use waste forest biomass from pruning and cleaning of 
undergrowth.  The central government will invest three trillion won 
(USD 2.9 billion) in this project, which is expected to generate 
230,000 related jobs. 
 
H)  Construct "green homes" and improve public buildings:  Projects 
include building two million green homes equipped with solar power 
and energy efficiency devices and installing energy-saving window 
frames and replacing asbestos-containing insulation materials in 
more than 2000 school buildings.  Another related project is to 
replace regular light bulbs in public buildings with 
energy-efficient LED lighting.  More than 9 trillion won (USD 6.8 
billion) from the central and provincial governments will be 
expended on this project, which should create 150,000 jobs.  (Note: 
The private sector undoubtedly will play a role in these projects as 
well, but was not specifically mentioned in this part of the 
briefing paper.  End note.) 
 
I)  Create more green leisure spaces:  Projects include the clean-up 
and restoration of small rivers and streams running through cities 
and towns.  Concrete block embankments will be replaced with earth 
and stone, and gravel roads will be constructed atop the new 
embankments.  The new green leisure spaces will be used as 
mini-parks by local residents.  The provincial governments will lead 
these projects and plan to invest 600 billion won (USD 457 million) 
to create 15,000 jobs. 
 
Funding and Implementation 
-------------------------- 
¶5.  The government's draft funding schedule shows that of the 
combined amount of 50 trillion won (USD 38 billion) to be invested 
over the next four years, the central and provincial government will 
provide 37.5 trillion won (USD 28.7 million) and 5.3 trillion won 
(USD 4.3 billion), respectively.  The remaining 7.2 trillion won 
(USD 5.4 billion) is expected to come from the private sector.  As 
yet, there is no further breakdown of funding sources for the 
various projects other than what is outlined in the above 
paragraphs.  After the government's announcement of the Green New 
Deal, the Ministry of Strategy and Finance (MOSF) said in its news 
briefing that the government has already secured 4.4 trillion (USD 
3.4 billion) for this year's projects.  Requested funding for the 
remaining four years is included in the draft legislation that is 
expected to be submitted to the National Assembly in March. 
 
¶6.  On February 16, the government combined three existing national 
committees - the Climate Change Committee, the Sustainable 
Development Committee (both under the Prime Minister's Office), and 
the Energy Committee (under the President's Office) - to form a new 
national "Low Carbon and Green Growth Committee" under the 
President's Office to oversee the maturation of the Low Carbon and 
Green Growth plan.  A new task force composed of interagency members 
under the Low Carbon and Green Growth Committee will coordinate the 
Green New Deal projects among the 11 implementing ministries and set 
out project priorities and allocate project budgets. 
 
¶7.  According to the government news briefing, the projects will be 
implemented in a manner that balances development of local regions. 
Many of the projects slated to begin now are, in fact, updated 
versions of existing projects already underway, such as the 
continuing research and development of clean energy sources and 
local rehabilitation and restoration activities in and around the 
nation's four major rivers.  The government plans to implement brand 
new projects beginning in the second half of this year after a 
master blueprint is set out in May. 
 
Public Reaction 
--------------- 
 
¶8.  While there appears to be general public support for the overall 
goals of the Green New Deal program, concerns have been voiced over 
some of the specifics, amid suspicions that the government may be 
overselling the initiative to respond to public concern about the 
slowing economy. 
 
¶9.  Local NGOs - an important voice in the Korean environmental 
community -- generally view the Green New Deal favorably because of 
its focus on green issues.  While they welcome the opportunity for 
low-income earners to find jobs, however, some have expressed 
unhappiness that so many of the jobs created under the Green New 
Deal (95 percent by one NGO's estimate) are for unskilled, manual 
labor of temporary duration.  They suspect the government of 
attempting to assist struggling Korean construction companies 
instead of designing a jobs program more balanced towards creating 
skilled jobs for college graduates.  Although Korean NGO's routinely 
suspect the government of hidden motives, it is true that only about 
50,000 of the nearly one million jobs created under the Green New 
Deal will be for skilled workers, and the vast majority of unskilled 
jobs will be in the construction sector. 
 
¶10.  Environmental NGOs are especially cautious about the project to 
restore Korea's major rivers - the biggest single component of the 
Program.  Many fear  the river restoration project could lead to 
resurrection of President Lee's plans to build a Grand Canal 
(President Lee proposed last year to build a 3,100 kilometer-long 
network of waterways connecting major rivers in South Korea, but 
shelved the plan in May, following growing public criticism).   The 
Korean blogosphere contains pieces critical of the river restoration 
project, equating it with the Grand Canal scheme. 
 
Media Commentary 
---------------- 
 
¶11.  More than one month since the announcement of the Green New 
Deal, the media is generally commendatory of the proposed program 
New Deal and the associated draft legislation of which it comprises 
a part.  Noting that the government's approach to green growth is 
not a single plan, but a series of strategies, recent newspaper 
articles have emphasized the "greenness" of the Green New Deal - its 
energy efficient home construction, LED lighting, low pollution 
cars, expanded mass transit, and investment in new and renewable 
energy research. Initially, however, some local papers had 
criticized the program for simply collecting and listing projects 
that were already being undertaken and selling them to the public as 
something new.  In fact, several of the projects were already 
planned or under various stages of implementation before the 
announcement of the Green New Deal - among them, the build-up of the 
green transportation networks, the investment in R&D for green 
vehicles, the reforestation project, and the construction of waste 
recycling facilities. 
 
¶12.  However, according to former Minister of Finance Kang Man-soo, 
who spoke on this subject on February 12 (just before being moved to 
the Chairmanship of the Presidential Council on National 
Competitiveness), the intention of the Green New Deal is to pull 
together projects from the various ministries and agencies - along 
with new projects - so they could be integrated, implemented, and 
managed systematically.  Moreover, nearly all the "old projects" are 
getting a boost from the Green New Deal, as they will be expanded, 
receive additional funding, or have their implementation 
accelerated.  The increase in the numbers of hectares to be 
reforested is one explicit example.  Ongoing R&D into new and 
renewable energy will get a substantial increase in central 
government funding.  Waste recycling facilities were already being 
constructed by local governments; the Green New Deal will provide 
central government funding for more of them.  Last year the 
government announced its initiative to begin installing LED lighting 
in public buildings; under the Green New Deal the conversion in 
government buildings to LED lighting must be completed by the end of 
¶2009. 
 
¶13.  Other media concerns have focused on the budget:  with the 
government's first-year outlays for the four year program covering 
only one tenth of the total projected 4-year spending (4.4 trillion 
won of the 50 trillion won total), some wonder if the government 
will actually fund the program to the extent it has announced. The 
4.4 trillion won for this year, in fact, is funding that had already 
been allocated to ministries for ongoing projects.  The government 
has now combined the Green New Deal proposals with an earlier draft 
law - the Basic Law on Climate Change (which aims to reduce 
greenhouse gas emissions primarily by expanding nuclear energy and 
investing in new and renewable energy), along with the New Growth 
Engines proposal to submit to the National Assembly in a single 
funding package.  Several National Assembly contacts told us that 
the draft legislation will undoubtedly be revised to some extent, 
but they expect the basic provisions to pass at the approximate 
requested funding levels. 
 
¶14.  Comment: Although the Green New Deal is a medium-term measure 
to provide jobs to South Korea's growing ranks of unemployed, its 
focus on "green projects" is an indication of President Lee' 
determination to use the current difficult economic situation as an 
opportunity to build up a Low Carbon, Green Growth economy over the 
long term.  As yet, however, the Green New Deal is only a plan, and 
the details still need to be worked out.  As the various projects 
move toward implementation, issues related to sharing costs between 
central and local governments and the private sector will become 
clearer, and potential opposition to some projects, such as the 
river restoration project, may delay or halt their implementation. 
That said, while the obstacles facing Korea in creating a low 
carbon, green growth economy are considerable, Korea has a proven 
track record of marshalling national resources to accelerate 
development and approach advanced-economy benchmarks.  With the 
low-carbon, green-growth concept potentially presenting an answer to 
Korea's deep-seated concerns about resources, competitiveness, and 
economic recovery, the "Green New Deal" will bear watching as Korea 
tries to move forward on its ambitious plans to transform itself 
into a Low Carbon, Green Growth economy. 
 
 
STEPHENS