Big Loss Turns Pro-Business Yoon Into Lame Duck in South Korea

Sam Kim and Soo-Hyang Choi
·4 min read
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About two years after winning South Korea’s presidency, Yoon Suk Yeol is already looking like a lame duck.

A stinging defeat in Wednesday’s parliamentary election has derailed his conservative pro-business agenda and will make it harder to deal for the remaining three years of his term with a left-leaning bloc that strengthened its hold on the legislature.

While investors expected the election outcome to deal a blow to Yoon’s investor-friendly capital-markets policies, continued optimism on chip stocks overshadowed the ruling party’s defeat and helped Kospi erase its earlier loss of 1.6%. Analysts said the results could make it tougher for Yoon to push through initiatives to benefit investors such as scuttling a capital gains tax, while likely sinking his flagship policy of boosting stock valuations via the “Corporate Value-Up” program.

“It will be difficult for Yoon, who will fall into a lame duck, to push for any major policy initiatives, domestic or foreign,” said Gi-Wook Shin, director of the Walter H. Shorenstein Asia-Pacific Research Center at Stanford University.

Yoon will have little room to move on the legislative front after the vote Wednesday where his conservative People Power Party bloc lost seats and was reduced to about 108 spots in the 300-seat unicameral parliament known as the National Assembly. The opposition Democratic Party bloc expanded its majority with 175 seats, according to the National Election Commission. The DP alliance held 169 seats before the vote.

The Rebuilding Korea Party, launched by Cho Kuk, a justice minister during the administration of Yoon’s predecessor President Moon Jae-in, took 12 seats and looks set to align itself with the DP.

The gap between the two blocs appeared to be one of the largest for a losing ruling party and a dominant opposition in parliamentary elections since the advent of full democracy in the late 1980s, according to the DongA Ilbo newspaper.

The leader of the PPP during the campaign, Han Dong-hoon, stepped down after the election, apologizing for the loss.

The president’s main foreign policy initiatives, which don’t require parliamentary approval, are likely immediately unaffected by the election results. These include closer security cooperation with the US and Japan, and taking a tough line with North Korea.

Democratic Party leader Lee Jae-myung, who lost to Yoon in the 2022 presidential race decided by the narrowest margin in the country’s history, now finds himself in the driver’s seat as he is set for another try at the presidency in the 2027 election.

Lee, an advocate of a universal basic income, had proposed a total 13 trillion won ($9.6 billion) in cash handouts to citizens as a way to revive the economy while he was on the campaign trail. His Democratic Party has been looking to increase taxes on wealthy individuals and the chaebol conglomerates that dominate the corporate landscape.

“Yoon will need to bend his knees to Lee if he has to,” Rhee Jong-hoon, a political commentator who’s authored several books on domestic politics, said. “Otherwise, he’ll find it difficult to avoid turning from a lame duck to a dead duck.”

Lee has also called for closer ties with China. He could put pressure on Yoon to back away from calls from the US to join in Biden administration initiatives aimed at slowing Beijing’s access to advanced semiconductors and strengthen global supply chains for key materials such as chips in ways that are less reliant on Beijing.

A major foreign policy test could come as soon as May, when South Korea is expected to host the first summit since 2019 among his country, China and Japan. Beijing has been feeling pressure as Tokyo and Seoul have been moving closer to Washington in recent years and raising their security cooperation to some of their highest levels.

Yoon will also have to work with opposition at home to deal with issues, including a plan to increase the number of medical students despite objections from doctors and reforming the pension system to address aging demographics. Yoon may need to back away from relying on presidential orders to push items like these through, according to Hahm Sung-deuk, dean of the Graduate School of Political Studies at Kyonggi University in Seoul.

Yoon was able to dodge a major bullet. While the opposition bloc increased its number of seats, it still fell short of a 200-seat threshold that would have allowed it to override any presidential veto, approve impeachment measures attempt constitutional amendments.

Meanwhile the race for the country’s next leader is likely to heat up.

“If there is a challenge, it could be that the entire country’s focus is now going to be on the upcoming 2027 presidential election,” Duyeon Kim, an adjunct senior fellow in Seoul at the Center for a New American Security, said in an interview with Bloomberg TV.

--With assistance from Youkyung Lee.

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