A Terminal High Altitude Area Defense (THAAD) interceptor is seen in Seongju, South Korea on April 26, 2017. Photo: Reuters

As widely expected, South Korea resoundingly chose Moon Jae-in, the liberal candidate from the Democratic party, as its new leader in Tuesday’s snap presidential election. His decisive victory ends nearly a decade of conservative rule and may herald a major shift in the country’s domestic and foreign policies.

Domestically, Moon’s first task is, among many others, to clean up and reform the country’s political and economic system, which is heavily influenced and dominated by its massive conglomerates known as chaebols.

The shady involvements of these powerful family-run multinationals in South Korea’s politics were the key reason for former President Park Geun-hye’s corruption scandal that left Asia’s fourth biggest economy in turmoil for months, and a power vacuum following her impeachment in March.

Internationally, the new president, sworn in on Wednesday, has to deal with three big (and related) challenges his country is facing: a growing missile and nuclear threat from its northern neighbor, a rising friction with President Donald Trump’s administration and frosty ties with China.

How the former human rights lawyer will deal with one of these issues will impact not only Seoul’s posture on the other two but also the wider region’s geopolitical landscape.

On the first, as he has pledged, the 64-year-old is likely to adopt a more conciliatory approach toward North Korea to ease mounting tension over Pyongyang’s accelerating nuclear and missile program.

The son of Korean refugees may resume the so-called “Sunshine Policy,” a strategy of direct engagement with North Korea on economic and political issues aimed at improving relations between the two sides of the peninsula.

The policy was advocated by two previous liberal presidents, Kim Dae-jung (1998-2003) and Roh Moo-hyun (2004-2008), but abandoned under the last two conservative governments. Moon, who served as chief of staff to President Roh Moo-hyun, is a strong proponent of such an engagement with Pyongyang.

Yet, while advocating direct dialogue and engagement with the North, the left-leaning liberal president also wants to maintain pressure and sanctions on Pyongyang to induce change. In an interview with the Washington Post on May 2, he said he agreed “with President Trump’s method of applying sanctions and pressure to North Korea to bring them out to negotiate.”

In fact, judging by that interview, he highly values South Korea’s alliance with the US, calling it “the most important foundation for our diplomacy and national security,” and agrees, by and large, with Trump’s posture vis-à-vis North Korea.

Nevertheless, the newly-elected and inaugurated president and the Trump administration have a number of differences.

One is Moon’s position that as the country directly involved, South Korea must play a leading diplomatic role on the North Korea issue. Seoul was largely marginalized on the matter during the last few months. Trump invited Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping to his resort in Florida for talks and had many phone calls with these two leaders while he rarely spoke with South Korea’s acting President Hwang Kyo-ahn. Such a snub has created a resentment among many South Koreans.

Trump’s other careless comments have intensified their anger. These include his claim that he had learned from Chinese President Xi Jinping that “Korea actually used to be a part of China,” his threat to end the free trade agreement with South Korea and his suggestion that Seoul should pay for the THAAD (Terminal High Altitude Area Defence) platform, an American anti-ballistic missile defense system.

The latter issue is a thorny one not only because of the question of who should pay for it. Moon is also critical of the decision to speed up the deployment of the missile defense shield. In his view, the hasty move lacked democratic procedure, caused divisions in South Korea and aggravated foreign relations.

A country with which South Korea has experienced deep tensions since the July 2016 announcement – especially after the March 2017 installation – of the US-operated antimissile shield is China.

Considering the deployment of the missile interception system as a US attempt to contain it militarily, the communist country has cracked down on South Korea’s economic interests. Beijing has applied sanctions on its businesses in China, boycotted its products and banned Chinese tour groups from visiting the country.

As China is South Korea’s biggest trading partner, such a widespread economic retaliation has damaged the latter’s economy. This is a reason why mending ties with Beijing, which have sunk to the lowest point since the two countries established diplomatic relations in 1992, must be high on Moon’s agenda.

But this is very problematic because, from Beijing’s perspective, “to demonstrate its readiness to ease tensions, Seoul should … call off deploying the THAAD system.” However, such a move will be undoubtedly opposed by the Trump administration.

It is unclear whether the new leader is willing to displease Washington, his country’s decades-long military and political ally, and to delight Beijing, its giant neighbor, by deciding to halt the powerful missile defense system, which was already partially up and running.

Faced with the imminent security threat from its neighbor, South Korea’s last government decided to speed up the shield deployment despite China’s threats of dire consequences for doing so. The decision clearly underlined that the conservative leaders put their country’s national security before its economic interests. It was also indicative of their preference for military and ideological ties with the US over economic and historical links with China. Most tellingly, it showed they did not buckle under Beijing’s economic power and pressure.

Should Moon reverse the decision, it would not only mark a radical strategic shift in the country’s relations with the US and China but also indicate that South Korea eventually bends to Beijing’s demand. All of this would also have regional ramifications. For instance, if its economic retaliations against Seoul succeed in forcing the latter to reconsider the THAAD deployment, China is more likely to use such tough tactics with other smaller regional countries.

Seen in this light, not only Washington, Beijing and Pyongyang but also many other countries will be watching closely for any signals and moves from Seoul in the coming weeks or months.

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Xuan Loc Doan

Dr Xuan Loc Doan researches and writes on a number of areas. These include the domestic and foreign policy of the UK, Vietnam and China, US-China relations and geopolitical issues in the Indo-Pacific region.