In an electoral triumph marked by high drama and the end of political uncertainty, Lee Jae-myung has emerged as the newly inaugurated President of South Korea. His victory represents a pivotal moment for the nation, which has been grappling with the aftermath of the martial law instituted by his predecessor, Yoon Suk Yeol, in December. The liberal Lee begins his presidency without the benefit of a transition period, diving headfirst into a landscape rife with challenges.
Economic revival is paramount for Lee, as South Korea’s economic machinery struggles for momentum amidst political paralysis and economic policies from abroad, notably the tariff hikes implemented by ex-U.S. President Donald Trump. The economy is sluggish, characterized by dwindling business investments, weakened consumer spending, and a labor market showing signs of distress. To counteract these issues, Lee has prioritized launching a task force aimed at countering recession threats with enhanced government spending.
The central bank’s recent decision to reduce borrowing costs reflects the dire need to stimulate economic activity, yet projections for 2025 suggest only a 0.8% growth, a stark reminder of the 2020 turmoil during the COVID-19 pandemic. Lee has only a brief window to negotiate with Washington ahead of the potential expiration of Trump’s tariff suspension, which could subject South Korean goods to steep tax rates. While there’s been a legal challenge to Trump’s tariff authority, the resolution remains unresolved. Trump’s administration has indicated the possibility of targeted tariffs affecting critical South Korean industries like autos and semiconductors.
Lee inherits a tense security environment with North Korea, whose nuclear pursuits present ongoing concerns. Although Lee is keen to re-establish dialogue with Pyongyang, North Korea has persisted in rebuffing outreach from both Seoul and Washington. The ongoing Russia-Ukraine conflict has drawn North Korea closer to Russia, adding complexity to diplomatic efforts. During his campaign, Lee had expressed skepticism about an imminent summit with Kim Jong Un but remains supportive of diplomatic efforts led by Washington to rekindle nuclear negotiations.
In a strategic move, Lee appointed former Unification Minister Lee Jong-seok as the head of spy operations, signaling a desire to renew engagement with the North, a strategy reminiscent of former liberal administrations. However, there is caution that Lee may not pursue inter-Korean relations with the same vigor as past leaders, particularly if aggressive actions from the North undermine his domestic support.
Critics of Lee have in the past pointed to his perceived alignment away from traditional allies such as Washington and Tokyo. Yet, Lee’s recent rhetoric has been more focused on pragmatic diplomacy, emphasizing the strengthening of South Korea’s ties with the U.S. and Japan, while also advocating the need to manage relations with China and Russia prudently. Despite differences with Japan over historical disputes, Lee aims to treat them separately from present-day security and trade matters, paving the way for continued cooperation.
Domestically, Lee confronts the task of unifying a country divided by political strife. He has pledged to steer away from factional politics and focus on dialogue to bridge divides. Nonetheless, the specter of the martial law declaration by Yoon remains contentious, with Lee advocating for a thorough investigation into those events. This could generate friction with conservative factions as Yoon faces serious legal charges, though he defended his actions against what he saw as legislative obstruction.
Lee’s administration enjoys a legislative majority that could prove advantageous in implementing his agenda but also raises concerns about the potential for unchecked presidential power. Additionally, Lee faces numerous legal challenges of his own, with proceedings paused during the election campaign. The debate over whether Lee’s presidential immunity extends to previously filed indictments against him remains heated, with legislative proposals to suspend his trials drawing criticism from opposition parties.