The First Year of the Lee Jae-myung Administration: 

Achievements and Challenges in Foreign Policy and Economic 

Policy

Son-taek Wang

Visiting Professor

Sogang University

As the Lee Jae-myung administration marks its first anniversary, assessing its achievements and challenges in foreign policy and the economy is particularly instructive. Unlike most previous administrations, it assumed office amid simultaneous domestic and international crises.

Within a year, however, the administration has moved beyond restoring political stability and has begun laying the foundations for a new phase of national development. Its performance in both foreign policy and economic management has exceeded many observers' expectations, owing largely to strategic policy choices and their consistent implementation.

The administration's most significant foreign policy achievement during its first year has been the steady management of the ROK–U.S. alliance. The ROK–U.S. summit held in Washington, D.C., in July marked a decisive turning point in defining the direction of South Korea's foreign policy under the Lee administration. 

Despite these circumstances, the government, through careful preparation and agile diplomacy, successfully concluded the meeting, reaffirming the continuity and resilience of the alliance to both domestic and international audiences. Equally significant was the ROK–Japan summit that preceded the Washington meeting.

By reaffirming his commitment to sustained trilateral cooperation among the United States, Japan, and the ROK, President Lee Jae-myung demonstrated that South Korea's foreign policy would remain predictable, consistent, and firmly anchored in cooperation with its key democratic partners.

The successful hosting of the APEC Summit in Gyeongju was another major diplomatic achievement. During the preparatory phase, concerns were raised about the adequacy of infrastructure and the government's readiness to manage an event of such scale.

In the end, however, South Korea demonstrated its diplomatic competence by organizing the summit efficiently and effectively. Particularly noteworthy was its facilitation of a U.S.–China summit on the margins of the meeting, which underscored Seoul's growing role as a capable middle power and a trusted diplomatic convenor.

The management of South Korea–China relations also deserves recognition. A bilateral summit between the two countries was held on the sidelines of the Gyeongju APEC meeting, followed by another summit in Beijing earlier this year, helping to place bilateral relations on a more stable and predictable footing.

At a time of intensifying U.S.–China strategic competition, the Lee administration succeeded in reinforcing the ROK–U.S. alliance while preserving opportunities for constructive engagement with China. By maintaining this balance, Seoul reduced strategic uncertainty on the Korean Peninsula and expanded its diplomatic flexibility in an increasingly competitive regional environment.

These diplomatic achievements also produced tangible economic benefits. Following President Trump's return to office, the United States' renewed tariff policies significantly disrupted the global trading system and heightened uncertainty in international markets.

Given South Korea's heavy dependence on international trade, many observers anticipated that the country would face a substantial economic shock. The Lee administration, however, moved quickly to engage Washington through active negotiations, ultimately securing trade terms broadly comparable to those obtained by South Korea's major competitors.

Moreover, the administration did not view U.S. requests for expanded Korean investment in the United States simply as a burden arising from tariff negotiations. Instead, it treated them as an opportunity to broaden South Korea's access to the U.S. market and deepen bilateral industrial and technological cooperation. This approach reflected a broader strategy of transforming short-term trade frictions into longer-term economic and strategic partnerships.

Equally significant was the progress made on long-standing issues in bilateral strategic cooperation. U.S. support for South Korea's development of conventionally armed nuclear-powered submarines, together with progress toward expanding South Korea's domestic uranium enrichment capabilities for peaceful purposes, represented important steps toward resolving policy issues that had remained under discussion for decades.

The improved relationship between the South Korean and U.S. governments also facilitated expanded cooperation between firms in both countries in the field of artificial intelligence, contributing to increased investment, exports, and corporate revenues. These developments strengthened South Korea's position in one of the world's fastest-growing strategic industries while reinforcing the broader economic partnership between the two allies.

Financial markets also responded positively to the administration's economic agenda. The KOSPI index, which stood at approximately 2,700 when the administration took office, surpassed the 8,000-point mark within less than a year.

Although this remarkable performance reflected multiple factors—including the global boom in artificial intelligence and favorable international market conditions—the administration's efforts to improve corporate governance, enhance market transparency, and pursue its long-term objective of raising the KOSPI above 5,000 also helped strengthen investor confidence.

Taken together, these achievements were not the product of chance but of deliberate policy choices and consistent implementation. Among the factors underlying these stronger-than-expected outcomes, the most significant was the administration's unwavering commitment to maintaining and strengthening the ROK–U.S. alliance while preserving trilateral cooperation among the United States, Japan, and the ROK.

then–Democratic Party leader Lee Jae-myung repeatedly reaffirmed both his commitment to, and vision for, a strong ROK–U.S. alliance. After assuming office, he continued to emphasize alliance-centered diplomacy, helping restore international confidence in South Korea's strategic direction.

Had uncertainty surrounding the alliance persisted, coordination with the United States on security, tariff negotiations, investment, and other bilateral initiatives would almost certainly have become more difficult. By reaffirming policy continuity at an early stage, the administration reduced strategic uncertainty and created a more favorable environment for diplomatic and economic cooperation.

A second factor behind the administration's performance was its steady management of relations with neighboring countries. While reaffirming that the ROK–U.S. alliance remains the cornerstone of South Korea's foreign policy, the administration also made clear that it did not seek confrontation with China, thereby preserving opportunities for constructive and mutually beneficial cooperation. In its relations with Russia, it adopted a pragmatic approach that upheld fundamental principles while avoiding unnecessary escalation. Although no major breakthrough was achieved in relations with North Korea, the administration pursued policies aimed at reducing military tensions while keeping the door open to dialogue. Taken together, these policies helped maintain regional stability and reduced strategic uncertainty on the Korean Peninsula.

A third factor was the administration's strategy of balancing greater strategic self-reliance with strong alliances and broader international cooperation. While reaffirming the ROK–U.S. alliance as the cornerstone of South Korea's foreign and security policy, the administration also articulated a clear commitment to the eventual transfer of wartime operational control (OPCON) and to strengthening the country's independent defense capabilities. 

Alliance and strategic self-reliance should not be viewed as competing concepts but as mutually reinforcing pillars of national security. Strengthening deterrence through the alliance while enhancing South Korea's strategic autonomy and bargaining power through greater self-reliance is well suited to the country's geopolitical circumstances.

Rather than emphasizing either alliance dependence or inter-Korean engagement as the primary organizing principle of foreign policy, the Lee administration has sought to integrate alliance cooperation, strategic autonomy, and regional diplomacy into a more balanced national security strategy.

Despite these accomplishments, significant challenges remain. First, South Korea should gradually restore a more institutionalized framework for conducting foreign and trade policy. Over the past year, President Trump's unconventional negotiating style made it largely unavoidable for policy coordination to be concentrated in the Office of the President.

In the medium to long term, however, greater responsibility should be delegated back to the Ministry of Foreign Affairs, the Ministry of Trade, Industry and Energy, and other relevant ministries. Strengthening the role of these institutions would promote greater policy continuity, improve administrative capacity, and ensure a more sustainable and resilient decision-making process.

Another important priority is the effective implementation of the K-Initiative through an integrated, whole-of-government approach. Proposed by President Lee Jae-myung, the K-Initiative seeks to elevate South Korea's policy capabilities to world-leading standards across a broad range of sectors while enabling the country to assume a more proactive leadership role in addressing regional and global challenges.

South Korea already enjoys significant international recognition for its economic competitiveness, democratic resilience, cultural influence, and leadership in advanced technologies. The next challenge is to convert these strengths into greater strategic influence by integrating them into a coherent national strategy that enhances both hard and soft power.

To achieve this objective, the government should establish a high-level cross-ministerial task force with the authority to coordinate policy across relevant ministries and agencies, ensure strategic coherence, and oversee implementation. Building such an institutional mechanism should be one of the administration's highest priorities during its second year in office.

Finally, improving inter-Korean relations will require patience, strategic consistency, and careful preparation. North Korea's continued adherence to its hostile "two-state" policy has made meaningful progress difficult. Even so, the administration's realistic objective of reducing military tensions while preserving the possibility of dialogue represents a constructive and pragmatic approach.

Going forward, the South Korean government should continue to demonstrate its readiness for engagement while preparing practical measures that can be implemented when opportunities for cooperation reemerge. Lasting peace and stability on the Korean Peninsula will not be achieved through short-term political developments, but through sustained strategic commitment, consistent diplomacy, and long-term patience.

The administration's first year was defined by efforts to overcome serious domestic and international crises while restoring national stability. At the same time, it laid the groundwork for South Korea's next stage of development. Its achievements in diplomacy and the economy were not inevitable but reflected deliberate strategic choices made under exceptionally difficult circumstances.

Looking ahead, if the Lee Jae-myung administration continues to strengthen the ROK–U.S. alliance, maintain balanced relations with neighboring countries, and pursue a foreign policy that integrates strategic self-reliance with international cooperation, it will be well positioned to open a new chapter of sustainable growth and national development over the remainder of its term.