Yoon and Lee's First Meeting Addresses 'Livelihood and Political' Issues... Support Funds and Special Prosecutor Law in Focus

Broad Discussions Without Agenda Restrictions
Diverging Views on Minsheng Support Fund and Cha Sang-byeong Special Prosecutor Act

[Image source=Yonhap News]

On the 29th, the first bilateral meeting between President Yoon Suk-yeol and Lee Jae-myung, leader of the Democratic Party of Korea, is expected to cover a wide range of sensitive issues related to public livelihood and political affairs. With both President Yoon and Lee agreeing to engage in dialogue without restrictions on the agenda, broad discussions are anticipated; however, since their positions are sharply divided on key matters such as the "25,000 KRW per person nationwide livelihood support payment" and the "Special Prosecutor Act on the alleged external pressure in the death case of Marine Chae Sang-byeong (Chae Sang-byeong Special Prosecutor Act)," the negotiation atmosphere may not be easy.

According to the presidential office on the 28th, the weekend before the summit between President Yoon and Lee saw busy preparations underway. A senior presidential office official told Asia Economy, "Since it was agreed to have broad discussions without agenda restrictions at the summit, various topics related to livelihood and political issues could all be addressed," adding, "Because it is not exactly clear which topics will be discussed, preparations are underway for subjects likely to be brought to the table."

The summit, held in the form of a tea meeting at 2 p.m., is expected to see a large number of issues emphasized by the Democratic Party before and after the general election discussed. Although Lee accepted President Yoon's intention to have unrestricted dialogue as a measure for 'cooperation,' the Democratic Party may demand the introduction of the Chae Sang-byeong Special Prosecutor Act, a special prosecutor investigation related to First Lady Kim Keon-hee, and an apology for President Yoon’s vetoes on various contentious bills, drawing attention.

Yoon: "Concerns about fueling inflation" VS Lee: "Difficult to feel economic recovery"

In particular, the livelihood recovery support payment, which Lee proposed as a pledge for the recent general election, is expected to emerge as one of the major issues. Democratic Party officials said that on the 28th, Lee focused on preparing for the meeting with the two key themes of "livelihood recovery measures" and "a shift in national policy direction." However, since the presidential office has consistently expressed a negative stance on distributing cash equally to all citizens regardless of income level or circumstances, it seems unlikely that President Yoon will accept this proposal.

A senior presidential office official said at a briefing on the 25th that regarding the 1.3% growth in real Gross Domestic Product (GDP) in the first quarter compared to the previous quarter, "We need to be very cautious about policies that could stimulate inflation so that the recovering economy does not translate into rising prices." This was interpreted as a veiled criticism by the presidential office that cash support like the 250,000 KRW per person requested by Lee could lead to inflation.

With the first quarter economic growth rate significantly exceeding expectations, the government and global investment banks (IBs) have begun to revise upward South Korea’s annual "growth outlook." The real GDP in the first quarter increased by 1.3% (preliminary figure) compared to the previous quarter, surpassing the market consensus of 0.6%, raising expectations for growth. According to the International Finance Center, the median forecast of global IBs was raised from 2.0% to 2.5%. Barclays adjusted its forecast from 1.9% to 2.7%, JP Morgan from 2.3% to 2.8%, and Goldman Sachs from 2.2% to 2.5%.

[Image source=Yonhap News]

A presidential office official said, "To provide livelihood support payments, an additional supplementary budget (Chugyeong) must be prepared, but with the surprise growth in GDP in the first quarter this year, it seems the conditions for a legal supplementary budget such as economic recession are becoming less likely." Last year, national debt exceeded 50% of GDP for the first time, leading to criticism of frequent supplementary budgets.

In response, Lee is expected to counter by saying that although some domestic demand indicators have improved, the felt economy is still not good. He believes that the increase in private consumption and construction investment in the first quarter is due to a base effect from previous sluggishness, making it premature to be confident in a sustained improvement. However, the presidential office is open to selective support for vulnerable groups, including low-income households, so if both sides make concessions, there is a possibility of finding common ground.

Unresolved Legislative-Executive Conflicts Also on the Agenda

The unresolved conflicts between the legislature and executive branch may also be discussed. The Presidential Commission on Medical Reform was launched on the 25th and held its first meeting, but it was criticized for limitations as it proceeded without participation from the Medical Association and resident representatives. Accordingly, attention is focused on whether discussions will be held on the "Special Committee for Public Discussion on Health and Medical Reform" recently proposed by Lee at the National Assembly level.

Various special prosecutor investigations pushed by the opposition, including the Chae Sang-byeong Special Prosecutor Act, are also expected to be key topics of dialogue. According to Democratic Party officials, Lee is expected to express regret over President Yoon’s repeated vetoes of special laws such as the Itaewon disaster special law. President Yoon has shown willingness to listen carefully to Lee’s remarks, but there is also a negative sentiment toward accepting the various special prosecutor laws pushed by the opposition.

Hong Cheol-ho, Senior Secretary for Political Affairs, said at a briefing on the 26th, "We hope this will be an opportunity to resolve national issues through frank dialogue between the president and the opposition leader," adding, "The most important thing is that President Yoon is likely to find momentum in his meeting with Lee on livelihood issues that are of public interest."