April 12 (Bloomberg) -- South Korean President Lee Myung Bak’s party retained control of parliament in an upset win that boosts its chances of retaining the presidency in December elections.
Lee’s New Frontier Party won 152 of the 300 seats in the National Assembly while the main opposition Democratic United Party secured 127 and its partner took 13, results showed. Exit polls published after voting ended yesterday indicated the coalition would gain as many as 173 seats, in a race that took place ahead of a planned North Korean rocket launch.
The victory may give new NFP chief Park Geun Hye momentum for the presidential race. While Lee’s popularity has plummeted since his term began in 2008 amid slowing growth and rising inflation, opposition pledges to raise taxes, boost welfare spending and revisit a U.S. trade deal failed to resonate.
“It’s a bit of an unexpected result, given that people are grumbling about the economy,” said Lee Seung Woo, a strategist at Daewoo Securities in Seoul. “But the results show people made choices independent of daily life. The perception is that there will be no major changes in policies.”
The vote took place as North Korea prepared to fire a long-range rocket in defiance of international condemnation, threatening a U.S. food aid deal and roiling markets. The totalitarian state yesterday named leader Kim Jong Un head of the ruling Workers’ Party, further consolidating his power since the death of his father Kim Jong Il in December.
The benchmark Kospi index fell, declining 0.7 percent at 2:41 p.m. in Seoul. EG Corp., an iron oxide producer whose biggest shareholder is Park’s younger brother, surged by the daily limit of 15 percent. The won was little changed.
Park, daughter of former President Park Chung Hee, took over as ruling party chief after it lost the Seoul mayoral race in October and the previous head resigned over an Internet hacking scandal. She renamed the party and softened its hard-line stance on North Korea, while pledging to restructure the social welfare system and boost employment.
“The NFP has disappointed the people in many ways over the past four years and we believe that you’ve really given us our last chance,” she said today in an e-mailed statement. “We promise new politics.”
Park successfully distanced the party from the Lee administration’s problems, boosting her chances of becoming the next president, said Park Won Ho, a professor of political science at Seoul National University.
Other possible candidates to replace Lee after his single five-year term ends are Moon Jae In of the DUP, who served as former President Roh Moo Hyun’s chief of staff, and independent Ahn Cheol Soo, founder and chief executive of software developer Ahnlab Co.
The NFP’s majority was reduced as it struggled to overcome a series of scandals. Before yesterday’s vote, the party held 162 parliament seats, while the DUP had 80 and the United Progressive Party held seven.
The top campaign issue was the economy. Opposition politicians charged that Lee failed to deliver on a campaign pledge to increase annual growth by 7 percent and per capita income to $40,000. Economic growth has slowed to an average 3.2 percent from 4.3 percent during predecessor Roh’s administration while inflation has risen. The benchmark Kospi index has fallen about 6 percent in the past year.
North Korea has begun fueling the rocket to put a satellite in orbit sometime between April 12 and 16, Yonhap News cited space agency official Paek Chang Ho as telling a group of foreign journalists yesterday in the capital of Pyongyang. The launch, set to mark the 100th anniversary of the birth of state founder Kim Il Sung, is on schedule, Paek was quoted as saying.
A South Korean intelligence report this week warned that Kim’s regime is preparing to detonate an atomic weapon. While the DUP accused the government of leaking the report to influence the elections, analysts including Park Young Ho said North Korean provocations weren’t a factor.
“South Koreans separate the North Korean issue from their domestic political decisions because they feel the North will never change no matter what kind of government is in power,” said Park, who is senior research fellow and director at the state-run Korea Institute for National Unification. “North Koreans have threatened and attacked under both liberal and conservative governments and South Koreans don’t think their voting orientation will have any influence over the North.”
Turnout for the election was smaller than expected at 54.3 percent. The National Election Commission had predicted a participation rate of 56.9 percent supported by greater interest from younger voters, a demographic that would have helped the opposition.