President Lee Jae Myung and the Resetting of Korea, Inc.

Introduction

In a turn of events that no one could have foreseen six months ago, Lee Jae Myung of the Democratic Party (DP) won a striking victory to become South Korea’s president on June 3, 2025, with 49.2 percent of the popular vote. Lee also won with the widest margin of votes (2.89 million) in nearly three decades against conservative candidate Kim Mun-soo of the People Power Party (PPP), while Korea Reform Party candidate Lee Joon-seok received 8.3 percent of the vote.¹

This was a remarkable bookend to the outbreak of an unprecedented, six-month-long political crisis that erupted on December 3, 2024, when conservative former president Yoon Seok Yeol abruptly declared martial law. Within just a few hours, however, the National Assembly annulled the martial law decree, and on December 28, 2024, Yoon was impeached by the National Assembly. On April 16, 2025, the Constitutional Court handed down a unanimous decision to finalize Yoon’s impeachment, and Koreans headed to a snap presidential election in June 2025.

Lee’s Stunning Victory and Challenges at Home and Abroad

How Lee’s presidency is going to unfold over the ensuing months and years remains to be seen, but four factors are likely to be decisive in shaping his presidency. First, whether he will exercise power prudently, since he is going to become the most powerful democratically elected president since free elections were restored in 1987 because his party has an overwhelming majority in the National Assembly and also owing to the inability of the tarnished conservatives to provide effective checks and balances on his presidency. All presidents promised to govern for all Koreans (including those who voted against them) and to exclude political vendettas. Rarely, if ever have they done so. Power defines all governments regardless of ideological or structural foundations. But Korean politics is driven even more viscerally by raw power since political compromises, for the most part, are seen as weak and diminishing presidential authority.

Second, Lee is going to place key emphasis on boosting social welfare spending to support those in need, youth unemployment, and elderly care. Despite their vast differences on key issues, the left and right have a common consensus on elevating social welfare services since it is politically popular to do so. At the same time, Lee must implement policies that are business-friendly to enable Korean companies to retain their global competitiveness, especially in AI-driven industries and services. But Lee recently nominated the former leader of Korea’s largest labor union as the new minister of labor. In his first meeting with key business leaders on June 13, 2025, Lee affirmed the centrality of Korean conglomerates in reviving the economy and ensuring global competitiveness and said that his government will “boldly eliminate unnecessary regulations” to boost growth.² Lee also stressed that companies should pay greater attention to the rights of labor unions and small and medium enterprises. But he also nominated a former How companies react to Lee’s policies is critical, especially as the South Korean economy enters anemic growth. According to the Korea Development Institute’s (KDI) projections, the South Korean economy is expected to grow by 0.8 percent in 2025 due in part to heightened tensions following U.S.-driven tariffs and political uncertainty over the past six months.³ The economy is projected to grow by 1.6 percent in 2026.

South Korea’s fundamental problem is its low birthrate, the lowest in the developed world at 0.75 in 2024, although this was a slight improvement from a low of 0.72 in 2023.⁴ Since 2018, South Korea has been the only OECD country whose birthrate has fallen below 1.0, but the government hopes to increase the birthrate to 1.0 by 2030.⁵ Compounding South Korea’s demographic woes is that it officially became a super-aging society—a population with 20 percent or more who are 65 or older—in 2024.⁶ In 2024, South Korea spent 15.4 percent of its GDP on social welfare spending, and in 2065, this is projected to increase to 26.9 percent of GDP.⁷ While the economy is projected to grow by less than 2 percent or even lower throughout the 2020s, the actual growth rate is going to depend on numerous factors, including the successful completion of tariff negotiations with the United States, strengthening South Korea’s global supply chains, and staying ahead of the onslaught of competition from China in virtually all sectors where South Korea remains a global leader.

Third, Lee faces omnidirectional security threats beginning with North Korea’s growing nuclear arsenal and battlefield experience gained from fighting alongside Russian troops in the ongoing war in Ukraine. Moreover, China is flexing its military, economic, and technological prowess as never before. Growing Sino-Russian ties are a worrying trend, as seen during joint aerial intrusions into the Korean Air Defense Identification Zone (KADIZ) like the November 2024 incident when eleven Russian and Chinese warplanes went through KADIZ and Republic of Korea Air Force (ROKAF) jets were scrambled.⁸ While air defense identification zones are not sovereign airspaces, recurrent Chinese and Russian intrusions into KADIZ to test the ROKAF’s ability for rapid responses is just one example of heightened tensions between the ROK and its two giant neighbors.

While Lee’s entire national security team has yet to be filled, he appointed National Assemblyman Wi Sung-lak as his Director of National Security Affairs. Wi was a former career foreign service officer who served as Ambassador to Russia and has extensive experience in denuclearization talks with North Korea.⁹ Foreign observers were relieved by the news of Wi’s appointment given his long-time support for the U.S.-ROK alliance and his role in spearheading Lee’s so-called “pragmatic foreign policy strategy.”¹⁰ Former ambassador to the United Nations Cho Hyun is tipped to be Lee’s foreign minister.¹¹ Conversely, the appointment of Lee Jong-seok as Director of the National Intelligence Service and former minister of unification, Chung Dong-young, once again to the same post, has galvanized progressives in South Korea, given their proclivity for ramping up inter-Korean exchange and dialogue.¹² Senior staff members at the National Security Council are likely to be filled mostly by former senior officials.¹³

Whether Lee’s mix of pragmatists and ideologues will be able to successfully traverse South Korea’s omnidirectional security and economic threats remains to be seen, but one hopes that a more objective assessment will be made of North Korean capabilities and intentions. North Korea remains a looming risk as Kim Jong Un has repeatedly stated his intentions to sever ties with the South. In January 2024, Kim stated that the ROK “is a primary foe and invariable principal enemy” and that unification was no longer going to be pursued.¹⁴ South Korea’s sunshine policy advocates, who believe in sustained engagement with the North, now have to justify how the Lee government may engineer a breakthrough with Pyongyang when Kim has no intention of making deals with South Korea, much less negotiating his nuclear weapons. In September 2022, North Korea adopted a new law that stipulated that if the United States or South Korea attempted to take out Kim or if Kim’s nuclear command and control system was jeopardized, North Korea would use nuclear weapons or launch a nuclear strike “automatically and immediately.”¹⁵

Fourth, even though Lee stands at the apex of his power and there are no challengers to his authority in the DP, his legacy is also going to be influenced heavily by the outcome of the June 2026 local elections (including the mayorships in crucial cities such as Seoul, Busan, and Incheon) and the much more important April 2028 general election. If the DP sweeps the local elections in 2026 as many expect, it will provide Lee with even more political muscle. Lee will use his strengthened power to make sure that the party stands firmly in line heading into the 2028 National Assembly election. Although three years is a lifetime in politics, if the DP retains its supermajority in the National Assembly in 2028, Lee is likely to call for a constitutional revision to adopt the U.S. presidential system of up to two four-year terms.¹⁶ The PPP has also called for revising the constitution but only under the condition that the sitting president is unable to run again for president under the new constitution. For Lee, making sure that the DP retains its significant majority in the National Assembly in the next general election in 2028 is the single most important political goal of his presidency since it will enable him to push off being a lame-duck president as he passes his third year of his single five-year presidential term at that time.

Overcoming the Primacy of Power in Korean Politics 

In the most ironic twist in Korean politics, Lee’s sudden leap to the presidency would have been impossible without Yoon’s disastrous martial law debacle since it changed Korean politics overnight. But Lee deserves credit for creating a platform from which he could ascend to the presidency while ensuring his iron grip on the DP. He was instrumental in leading the DP to an unprecedented victory in the April 2024 general election, and on the flip side, ensuring Yoon’s early lame-duck status. In the 2025 election, the DP gained a supermajority of 168 seats out of 300, and together with an alliance with other smaller left-of-center and leftist parties, the total number of seats that the DP mustered rose to 185.¹⁷ Going forward, the success of Lee’s presidency will depend on making sure that the DP controls the National Assembly with a comfortable margin (including alliances with minor leftist parties)—something that Yoon ignored when he won the presidency in March 2022 with the slimmest of margins of 0.7 percent against Lee.

Lee’s victory from the nadir of politics is as remarkable, and in many respects, similar to U.S. President Donald Trump’s near-miraculous comeback from his defeat in 2020. While Trump and Lee come from very different backgrounds, they both engineered remarkable U-turns in their political fortunes with a laser-like focus on power politics. In more ways than one, Lee and Trump mirror each other’s personalities, disdain for the status quo, and the ability to corral their most ardent supporters even as they also ensure visceral hostility from their respective opposition.

If Lee uses his immense powers to reset Korea in the age of AI, forge a bipartisan consensus on critical domestic and international issues, despite deeply rooted animosity across the aisles, and upgrade Korea’s technological competitiveness, Lee could go down as a successful president. But should he choose to emulate Moon’s so-called “cleansing deeply rooted evils” (against his political opponents) playbook, he is likely to repeat the cycle of untold power that inevitably leads to untold abuses of power that will deepen the political cleavages and crises.

The downfall of the PPP was due to Yoon’s calamitous martial law fiasco of December 2024 and an attempt by Yoon’s cronies in the PPP to change their party’s own democratically selected presidential nominee—Kim Moon-su—in April 2025, with then acting president and Prime Minister Han Duck-so.¹⁸ Han was a respected economic expert who served previously as prime minister and in various economic portfolios, but committed the cardinal sin of politics: drinking too much Kool-Aid. Han announced his presidential run but dropped out just after eight days when the rank and file of the PPP rose up against the party leadership’s attempt to switch presidential nominees. Han’s decision to run was not only a political comedy of epic proportions since he had no standing in the PPP, but it was also the second time that the PPP committed political suicide in half a year.

Transitioning from a Politician to a Global Player 

In hindsight, Yoon’s meteoric rise as the PPP presidential candidate going into the March 2022 presidential election and his subsequent narrow victory should have been a wake-up call for the PPP. From the onset of his presidency, Yoon cut off the PPP leadership that challenged his authority or had different political agendas and dealt only with a handful of pro-Yoon supporters. His obstinate leadership, unwillingness to make political deals with the opposition, an absent presidential office that enabled his wife, Kim Kun-hee, to exert growing influence, and a politically tone-deaf political office contributed to Yoon’s demise. Although Yoon and Lee hail from very different backgrounds and careers, one abiding lesson Lee should carry with him from Yoon’s demise is that abusing presidential powers or taking maximalist positions without the possibility of real compromise is almost certainly going to result in intensifying political pitch battles that will further deepen South Korea’s entrenched ideological divisions.

Whether he will govern from the center as he pledged during the campaign remains to be seen, since Lee is likely to flex his political muscle early on in his administration. Lee will stress judicial reforms. For example, he may expand the number of judges on the supreme court and the constitutional court and break down the power of the office of prosecutor general, since he has argued that the judiciary and the prosecutor’s office have been politicized against him and the DP.¹⁹ More immediately, the DP has pushed through bills to set up three special prosecutorial committees: (1) sedition charges against those who planned and abetted the declaration of martial law in December 2024; (2) reopening cases against the former first lady Kim Kun-hee for her alleged role in stock manipulation prior to becoming first lady in 2022 and for exercising unlawful influence in nudging certain favored candidates in the April 2024 general election; and (3) a thorough investigation of the accidental death of a South Korean marine in 2023 and the alleged subsequent cover-up by the presidential office and the ministry of defense when Yoon tried to stop the military authorities from investigating the case.²⁰

How Lee chooses to use this unprecedented presidential power throughout his presidency, but especially over his first year in office, is going to define his legacy, whether he chooses the path of political retribution as previous governments have done (both on the right and the left), or whether he will emerge as a president who steers Korea toward being a de facto member of the G7 and a critical player in the global commons. If Lee can steer Korea as a top AI research and development powerhouse, it could help elevate Korean firms to the next level. Facing intense uncertainties and competition, Lee could emerge as one of the most successful presidents over the last three decades if he works to pivot the U.S.-ROK alliance into a comprehensive economic and technological alliance (such as with shipbuilding) that can tackle the growing North Korean nuclear threat with objective threat assessments.

Lee had his first call with Trump a few days after he was inaugurated, and Lee’s presidential office said that the two leaders “praised each other’s leadership and agreed to work together to further develop the Korea-U.S. alliance.”²¹ Following his talk with Trump, Lee called Japanese Prime Minister Ishiba Shigeru, and his office noted that he would continue to strengthen ties with Japan and that pragmatism was going to be a key facet of his diplomacy.²² Lee noted that he agreed with Ishiba to “build a stronger and more mature Korea-Japan relationship based on mutual respect, trust, [sic] and a responsible attitude.”²³ With reference to the importance of solid U.S.-ROK-Japan ties in an age of unprecedented turbulence, Lee noted that “in today’s strategic environment, the importance of Korea-Japan relations is growing” and emphasized the need for stronger trilateral cooperation.²⁴

Just a few days after their phone call, Lee also held his first in-person meeting with Ishiba during the sidelines of the G7 summit on June 18, during which they agreed to restart shuttle diplomacy, and the presidential office stated, in part, that “the two leaders emphasized the strategic importance of bilateral cooperation and, marking the 60th anniversary of normalized diplomatic ties, agreed to build a more mature and future-oriented partnership.”²⁵ Ishiba spoke positively about bilateral ties and stressed that “I hope that collaboration and cooperation between Japan and South Korea will become a big driving force for the benefit of our region and the world.”²⁶ Rounding out his initial calls with key world leaders, Lee discussed bilateral ties with Chinese President Xi Jinping on June 10, 2025, and invited Xi to attend this year’s APEC summit later this year in Gyeongju, South Korea. According to South Korea’s presidential office, Xi stressed the importance of stable supply chains and mutual respect for core interests.²⁷ The Chinese Communist Party’s English mouthpiece, the Global Times, quoted a Chinese foreign policy expert who articulated that Lee is likely to implement a more pragmatic foreign policy in contrast to the one-sided pro-U.S. approach of the previous Yoon administration.²⁸

The global security and economic environments are profoundly different from 2017, when the last progressive president, Moon Jae-in, entered office. Moon was nearly obsessed with engineering a “breakthrough” in South-North relations that coincided with Trump’s equally audacious decision to enter into direct negotiations with Kim Jong Un. But Pyongyang today also receives key strategic backing from Moscow based on the June 2024 Russian-North Korean defense accord and Kim’s subsequent decision to send at least 11,000 North Korean troops to Russia in late fall 2024.²⁹ After remaining silent for more than six months, Putin and Kim both confirmed the presence of North Korean troops fighting alongside Russian forces, and Putin said in April 2025 that “we will always honor the Korean heroes who gave their lives for Russia, for our common freedom, on an equal basis with their Russian brothers in arms,” and North Korean media hailed the “heroic feats” of the North Korean troops.³⁰ Like his grandfather, Kim Il-sung, who founded North Korea in 1948, Kim is trying to balance his ties between Russia and China while continuing to receive critical dividends from his two patrons.

Trump also wants to renew negotiations with Kim to claim a breakthrough in U.S.-North Korea ties that addresses North Korea’s growing nuclear arsenal. While Kim has vowed never to negotiate his nuclear weapons, he might agree to a nuclear freeze in exchange for sanctions relief from the United States, and most importantly, even de facto recognition of North Korea as a nuclear weapons state by the United States, although such a move would have extremely negative repercussions for South Korean and Japanese security. As soon as he entered office in January 2025, Trump referred to North Korea as a “nuclear power” and in February 2025 stated that both liked each other and “we got along very well … He is a nuclear power, but we get along.”³¹

All presidents enter office with multiple aspirations, but making sure that South Korea’s global and regional competitiveness remains strong as one of the world’s leading advanced manufacturing powers must remain at the top of Lee’s agenda. At the same time, and as he has shown very early on in his presidency, strengthening economic, technological, political, and military ties with the United States and maintaining robust U.S.-ROK-Japan trilateral relations should remain as key markers of Lee’s foreign policy. As South Korea’s new president, Lee will use his mandate to pursue domestic and international policies that will differ widely from his immediate predecessor but perhaps also from previous progressive presidents.

Unlike any other time over the past two decades, the global security and economic environments are extremely precarious as evinced by the ongoing war in Ukraine, intensifying conflict between Israel and Iran, and growing Sino-American rivalries. Lee also faces the daunting challenge of responding effectively to North Korea’s growing nuclear threat, stronger Russian-North Korean military cooperation, and China’s growing military footprints in Northeast Asia. Therefore, if Lee ensures that South Korea remains firmly in the broader coalition of advanced economies and liberal democracies and augments Seoul’s security and defense postures, he could surprise naysayers by spurring the ROK’s global stature and institutionalizing pragmatic policies at home and abroad. For these reasons, Lee should upgrade South Korea’s role in the global commons as an indispensable, liberal, and militarily capable ally and partner.