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Cablegate: Chung Dong-Young Advisors: It's All About The

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R 250755Z OCT 07
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC 7093
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
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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

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