Cablegate: Lee Myung-Bak Dreams Up a Canal Project

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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.

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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.

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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.

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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.

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COMMENT
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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

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