RPT-ANALYSIS-First liberal rule in decade unlikely to bring swift changes in S.Korea – Nasdaq

This post was originally published on this site

Reuters


(Repeats story from Monday with no change to text)
    * Moon's first 100 days likely to focus on economic reforms
    * His party has minority in parliament
    * Passing major legislation requires "super-majority"
    * Moon to push jobs, minimum wage
    * No sweeping chaebol reform expected

    By Christine Kim and Cynthia KimSEOUL, May 16 (Reuters) - South Korea's new liberal
President Moon Jae-in promised to seek a parliamentary review of
a controversial U.S. anti-missile defence system. If the vote
were held today, the deployment would likely be endorsed in the
legislative body controlled by conservative and moderate
politicians.
    More importantly, pushing for that motion would strain
Moon's already fraught relations with the opposition, whose
cooperation is essential on a more urgent policy goal: creating
hundreds of thousands of jobs in a country where youth
unemployment is near an all-time high.
    Despite the election of the first liberal president in South
Korea after nine years of conservative rule, sweeping policy
changes on the left are almost untenable in the divided National
Assembly, where Moon's Democratic Party holds only 40 percent of
the 299 seats.
    Moon's first 100 days in office will likely focus on pushing
economic reforms that have broad consensus across the political
spectrum, political experts say.
    While Moon has promised a shake-up of South Korea's powerful
family-run conglomerates, lawmakers would likely support more
modest changes, such as ending the practice of pardoning
convicted corporate criminals, given the outsized importance of
chaebols to Asia's fourth-largest economy. [nL3N1GY5MC]
    Kang Dong-wan, a political science professor at Dong-A
University in Busan, saw "a good chance of a very messy
parliament" unless Moon uses a "give-and-take" approach with
other parties.
    During the campaign, Moon criticized the previous government
of impeached leader Park Geun-hye for agreeing to host the
Terminal High Altitude Area Defense (THAAD) system without
seeking parliamentary approval.
    He also promised to reopen the Kaesong Industrial Zone just
north of the militarised border with North Korea, a joint
economic cooperation project Park scrapped in 2016 after the
North fired a long-range rocket.
    But these pledges have drawn fierce criticism, unlike his
other goals - creating jobs, raising the minimum wage, reforming
conglomerates, and setting up a body to investigate corruption
by high-ranking public officials.
    (For Moon's main election pledges, click [nL4N1I623K])
    "Moon will first have to tackle issues which have some kind
of common ground among political parties and the public, not
divisive issues such as THAAD," said Kim Jun-seok, a political
science professor at Dongguk University.

    DEPLOYING THAAD
    Underscoring the dilemma for Moon, North Korea on Sunday
fired a ballistic missile in defiance of calls to rein in its
weapons programme, only days after he took office pledging to
engage the North in dialogue. [nL4N1IF09K]
    Backing away from his THAAD pledge could ease tensions with
Washington, though it does risk alienating Beijing, which
considers THAAD's powerful radar a threat to its own security.
    "Unless Moon is out of his mind, he shouldn't continue to
drag on with the THAAD issue. He really can't oppose it
anymore," said Hong Moon-jong, a member of the conservative
Liberty Korea Party, the second-largest party with 107 seats,
behind the 120 seats held by the ruling party.
    Two other major opposition parties, the centrist People's
Party and the conservative Bareun Party that together have 60
seats, also support the deployment.
    If the new administration wants to work with the opposition,
Moon should focus on creating jobs instead, which the Liberty
Korea presidential candidate had also promised, Hong said.
    In fact, Moon's first executive action was to create a
presidential "jobs council" tasked with implementing his promise
to create 810,000 public-sector jobs over his single five-year
term.
    Officials have started drafting a supplementary budget,
worth as much as 10 trillion won ($8.95 billion) that will pay
for new jobs, people involved in the effort told Reuters. It
requires parliamentary approval.
    Also high on his list: increasing the minimum wage to 10,000
won($8.83) an hour by 2020, from 6,470 won and cutting working
hours to about 1,800 a year, from an average of 2,113 as of
2015. Parliament also has to approve such changes.

    TAMING PARLIAMENT
    South Korea's National Assembly has a long history of
physical scuffles. One lawmaker famously set off a teargas
canister to thwart a bill in 2011. It passed anyway.
    The so-called parliament advancement law, which requires
three-fifths of all lawmakers to approve disputed bills, was
created in 2012 to civilise debate and prevent the largest
parties from railroading bills through.
    While the law refined parliamentary proceedings, it also
prevented Park's government from passing any major legislation
despite her Saenuri Party holding a majority.
    Even before her party lost its majority in the April 2016
election, Park's package of four bills, introduced in 2015 to
reform South Korea's rigid labor market, never passed. The
labour reform bills were central to her election pledges of
boosting economic growth to 4 percent.
    Opposition parties in parliament also blocked Park's other
election promises, including easing regulations for the services
sector to boost investment.
    "The previous Park Geun-hye administration tried all it
could to make things possible without parliamentary approval as
it was not friendly with parliament, but it got little done,"
said a senior government official tasked with creating new
policies in the Moon administration.
    With most major reforms requiring a super-majority of 60
percent to pass in parliament, Moon has acknowledged bipartisan
unity will be key to his success. He spent a large part of his
first day in office meeting with opposition leaders and
requesting their cooperation.

 (Additional reporting by Ju-min Park; Editing by Soyoung Kim
and Bill Tarrant)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5654; Reuters
Messaging: cynthia.kim.thomsonreuters.com@reuters.net))

Keywords: SOUTHKOREA POLITICS/100 DAYS (ANALYSIS, PIX)