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South Korea Ruling Party Risks Parliament Election Loss

South Korean President Lee Myung Bak’s ruling party faces losing control of parliament next week to an opposition that vows to increase welfare spending, revisit a U.S. trade deal and improve ties with North Korea.

The New Frontier Party is struggling to overcome bribery and illegal surveillance scandals ahead of April 11’s National Assembly elections that may forecast the December presidential race. The opposition Democratic United Party has pledged to create 3.3 million jobs and may get a boost from younger voters who face an unemployment rate almost twice the national average.

Asia’s fourth-largest economy has had slower growth and higher inflation under Lee than his predecessor, contributing to a 50 percent drop in his popularity. Relations have also worsened with North Korea, who plans to fire a long-range rocket between April 12 and 16 would scuttle a food aid agreement with the Obama administration.

“An opposition victory will hasten Lee’s position as a lame duck,” said Lee Nae Young, a political science professor at Korea University in Seoul. “Regardless of who wins, we could see many welfare policies enacted before Lee’s term ends, as parties try to improve the odds for December.”

The national prosecutors office on April 1 said it was looking into accusations the government illegally tapped phones and watched civilians and politicians between 2008 and 2010. Lee spokesman Choe Geum Nak the same day said the government would wait for the results of the investigation.

The scandal follows the resignation of the National Assembly’s speaker over allegations of vote-buying in February, and Lee’s party chairman quitting in December after an aide was named by police in a cyber attack on the election commission.

Popularity Contest

According to a Realmeter poll taken March 26-30 before the investigation started, 39.8 percent of voters back the NFP, compared with 30.5 percent for the main opposition DUP and 8.1 percent for its coalition partner, the United Progressive Party. Lee’s approval rating was at 32.7 percent, less than half of his 76 percent when he took office in February 2008.

“The NFP’s ratings are expected to fall as they already started to do so over the weekend, when the surveillance allegations were made,” Realmeter said in a statement accompanying the poll. “The popularity contest between the ruling party and the opposition is expected to be very close until the day of the voting.”

The party’s woes may be compounded by expectations of greater participation by younger, more independent voters, said Park Won Ho, a professor of political science and electoral behavior at Seoul National University. The National Election Commission last month said it expects a 10 percent increase in voter turnout next week, led by people in their 20s and 30s.

‘Unpredictable Youth’

While South Korea’s unemployment rate was at 4.2 percent in February, joblessness for those aged 15-29 was 8.3 percent, according to the Finance Ministry. The youth vote helped an independent candidate who later joined the DUP win Seoul’s mayoral election in October.

“Older voters don’t veer from their conservative voting orientation and provide a constant 30 percent support base for the New Frontier Party, but the unpredictable youth contingent could be enough to overcome that cushion and put the opposition party into power,” Park said.

Lee, who ran South Korea’s largest construction company before entering politics, has also suffered from his failure to deliver on his pledge to boost annual growth to 7 percent and per capita income to $40,000. Gross domestic product during his term has averaged 3.2 percent, down from 4.3 percent during predecessor Roh Moo Hyun’s five-year term, while consumer price gains have averaged 3.6 percent, from 2.9 percent. The benchmark Kospi stock index has fallen 4.6 percent in the past year.

‘Past Wrongdoings’

“I understand people are struggling,” NFP leader and likely presidential candidate Park Geun Hye said at an outdoor market in Sejong City on April 3. “The New Frontier Party is changing and reforming to undo and sever ourselves from past wrongdoings.”

The opposition also seeks to revise the U.S.-South Korea free trade agreement that took effect in March, saying the deal could hurt domestic agriculture and investment. The UPP, the smaller of the two parties, has called for its repeal.

The U.S. International Trade Commission says the deal may increase American exports by as much as $10.9 billion the first year it’s in full effect. It may help South Korea’s economy expand by 5.7 percent within a decade, according to the country’s trade ministry.

North Korea

North Korea plans to launch a satellite attached to a long- range rocket this month, a move which has drawn international condemnation. It threatened a “tremendous catastrophe” should the South intercept the satellite, saying it would constitute an “act of war,” the official Korean Central News Agency reported yesterday, citing a spokesman for the Committee for the Peaceful Reunification of Korea.

Such national security concerns are unlikely to help the NFP. The ruling party lost local elections in June 2010 three months after the deadly torpedoing of a South Korean warship that an international panel blamed on the North.

“Voters see any North Korean action more as Pyongyang strengthening its rhetoric to escalate tensions rather than a real national security threat or an actual move to attack the South,” said Lee Taek Soo, president of Seoul-based polling service Realmeter. “Parties have also abused the threat of North Korea in past elections, so voters have learned their lesson.”

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: John Brinsley at jbrinsley@bloomberg.net

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