South Koreans have been heading to the polls today to pick a president, in a race that is impossibly close to call. The voting is taking place during what's currently the world's worst Covid-19 outbreak, and a time North Korea keeps blasting test missiles off into the sea off the Korean peninsula.
A victory for opposition candidate Yoon Suk-yeol would likely bring Korea closer to the United States, a key ally as North Korea looks poised to begin work on its nuclear-bomb program. A Yoon win would also be more supportive for the private sector, while his opponent is pushing social policies like a minimum income.
Opposing Yoon, who leads the conservative People Power Party, is Lee Jae-myung of the ruling Democratic Party of Korea, the liberal alternative. Current president Moon Jae-in of the DPK must step down at the end of his five-year term. Both Moon and Lee are seen as pushing a "cake-ist" path that keeps both China and the United States close.
South Korea blew through 300,000 Covid cases for the first time yesterday, reporting 342,446 new cases, up 68.9% from only the day before. That brings total cases to 5.2 million, 55% of them coming in just the last two weeks.
Korea has worked hard to accommodate infected voters. It is allowing Covid-positive people out of quarantine to vote, and giving them exclusive access to the polls from 6 p.m. to 7:30 p.m. after the regular voting ends. On the downside, health precautions have clashed with ballot security. The early votes of virus patients have sometimes been collected in garbage bags and paper containers, rather than official ballot boxes. In 14 cases, voters were handed ballots that other voters had already filled in. The election commission has revised rules to let Covid pariahs put their votes directly into the voting boxes...
Fortunately, the Korean public are well-covered by the vaccine, with 86% of the population double-jabbed. That's in the top 10 of nations worldwide, even when you factor in odd vax leaders like Brunei, the Cayman Islands and Malta.
This is the first election for Yoon, a star former prosecutor general of South Korea. He helped convict two Korean ex-presidents on corruption charges (Moon's predecessor Park Geun-hye, and her predecessor Lee Myung-bak), not to mention the heir to the Samsung empire, Lee Jae-yong. He says renewed allegations of ethical lapses and influence peddling in the current administration persuaded him to run.
Yoon therefore has outsider status and appeal. He would be the first former prosecutor general to become president, should he win. Lee is a civil rights lawyer who most recently served as the governor of Gyeonggi Province, surrounding but not including Seoul. Yoon had a tiny edge in the last polls.
Whoever wins will also have to combat runaway housing prices, huge levels of personal and household debt, and the high levels of social inequality skewered so pointedly in the Oscar-winning movie Parasite.
While our outside view of South Korean politics tends to look through the prism of tensions with the North, T.S. Lombard strategist Rory Green notes, it will be the local economy that likely decides this vote. The average apartment in Seoul costs 18 times the median annual salary, a multiple that has risen from 11 since the current administration took office in 2017. Youth unemployment is 25% if you exclude temporary jobs.
Lee, who once said he wants to be a "successful Bernie Sanders," has proposed granting a universal basic income to all citizens of South Korea, which would make it the first Asian nation to do so. The plan calls for initial payments of 1 million won (US$813) per year, with citizens below the age of 29 given an additional 1.2 million won, and rural residents getting an additional 1 million won. Lee himself is from a poor and remote mountain village.
Eventually Lee hopes to establish a minimum universal income of 6 million won (US$4,878), which would require extra taxes such as a carbon tax. Local governments would distribute the income in the form of cash or spending vouchers. The province Lee was governing, the most-populous in Korea, has been giving out regular payments to all residents during the pandemic.
Lee has also promised to provide 1 million "basic homes" that are offered at low rents, and to increase the housing stock by 3.1 million units.
Yoon has argued from a fiscally conservative position, pledging to remove regulations that are holding back the private sector. He also promises to target income inequality but says he'll do so in a more targeted way.
The future direction of the central Bank of Korea will also factor into the equation. Current BOK Governor Lee Ju-yeol has a term that ends on March 31. Since President Moon's term ends in May, he should select Lee's replacement, but whoever is identified as the next president will surely want to have a say. Yoon suggests he wants to spur growth by easing credit conditions, so he would likely prefer a more-dovish governor than Lee.
Concerned about rising inflation and that soaring personal debt, South Korea last August became the first Asian nation to raise interest rates in this cycle, as central banks prepare to remove some of their Covid stimulus. The Bank of Korea has now raised rates three times, to 1.25%, and economists expect another quarter-point hike by the third quarter.
Yoon got a boost last week when a third candidate, Ahn Cheol-soo, withdrew from the race and threw his backing behind Yoon. Ahn founded the People's Party, and was cornering around 10% of potential voters. That was splitting the conservative ranks, which may now consolidate behind Yoon.
Korea watchers caution that telephone polls tend to overexaggerate the level of conservative support in Korea. To be honest, neither candidate is particularly popular, leading to a surprisingly large number of swing voters who say they'll decide on the day.
That day is today. Although not quite. A record 16 million voters, 36.9% of the 44 million registered, cast their ballots in early voting on Friday and Saturday. That's a record since early voting was first held in 2014. So a lot of the vote count is already in.
There will be no exit polls until around 7 p.m. Seoul time, with a winner likely to be declared tomorrow. Before a polling blackout began in the week before the election, the two candidates were neck and neck, neither anything close to a margin of error away from victory or defeat.
That the wives of both candidates have been mired in corruption scandals kinda pales in comparison to the immediate challenges facing Korea.
Satellite images captured on Friday show what analysts say is construction at North Korea's nuclear-testing site, for the first time since it was closed in 2018. That's when North Korean dictator Kim Jong-un declared a voluntary moratorium on nuclear-weapons tests. But Kim says he no longer feels he has to stick to that, since talks over denuclearization and the lifting of North Korean sanctions have gone nowhere since 2019.
North Korea on Saturday launched its ninth weapons test of the year, firing what's thought to be a ballistic missile into the Sea of Japan, which both Koreas call the East Sea. It may soon also launch a spy satellite, which uses the same banned ballistic technology.
Yoon has talked the toughest stance on the provocations north of the border. He says a preemptive strike might be necessary to contain Kim Jong-un, if there's an imminent threat to South Korea. He also pledges to deploy additional missiles systems in the THAAD missile-defense array. He would also like to see South Korea join the "Quad" alliance of Pacific democracies: the United States, Japan, India and Australia.
That risks provoking China, which vehemently protested the deployment of the THAAD system when U.S. forces installed it in 2017. Beijing imposed restrictions on travel to Korea that, pre-Covid, devastated the tourism-dependent economy on the resort island of Jeju.
A consumer boycott proved particularly costly for Lotte (KR:004990), the Korean conglomerate that allowed its Skyhill Country Club golf course to be used as the site to install THAAD. The Lotte Mart supermarket chain shut down its entire network of 112 stores in China, which it had built up over the course of 11 years.
Lee says South Korea's main goal should be continued peace on the Korean peninsula, and pushes both continued denuclearization and an easing of sanctions. He's likely to continue the warming of relations with Pyongyang encouraged by Moon, whose parents were both refugees from the North.