Lee Jae Myung
Lee Jae Myung is racing to build a $518B+ AI chip empire and launch free generative AI as a public utility this September, while his approval rating sits at a record-low 44% amid housing-policy backlash, stock-market turbulence, and Donald Trump's unilateral cuts to joint military drills that forced him to accelerate a nuclear-powered submarine program.
Lee Jae Myung is steering South Korea through a converging crisis of security shocks and domestic discontent, betting everything on AI industrial supremacy to hold the country's trajectory. His approval rating has fallen to a record-low 44%, down 7 points since July, with only 30% of voters in their 20s backing him. A property-tax overhaul now headed to the National Assembly before September 3 has drawn fire even from his own supporters, and Lee has acknowledged the criticism, warning his finance minister that the real estate bubble "can no longer be ignored."
On the security front, Donald Trump's unilateral decision to cut the Ulchi Freedom Shield joint drills short in late August destabilized Lee's deterrence posture. Lee responded by accelerating South Korea's first nuclear-powered submarine program, setting a 2030 target to regain wartime operational control from the U.S., and ordering the merger of three military academies into a single National Armed Forces Academy. Kim Yo Jong accused him of "double-dealing" and flattery toward Trump; Lee's office fired back demanding Pyongyang end its slander. He is simultaneously offering unconditional talks to North Korea, restarting the Gyeongwon Line railway near the DMZ, and asking Indonesian President Prabowo Subianto to backchannel with Pyongyang.
The counterweight to all of this is Lee's AI gamble. He launched a free "AI for All" public utility on August 28, with beta testing in September and full national rollout by year-end. Samsung and SK Hynix are committing combined investments approaching $2 trillion across southwest chip hubs, a Chungcheong packaging cluster, and Gwangju facilities freed by an ordered air-base relocation. Lee calls semiconductors, physical AI, and AI data centers "the triple axis for a great leap forward" and has told officials "only speed matters." A record 800 trillion won fiscal 2027 budget and a Future Response Fund financed by semiconductor tax windfalls anchor the plan.
His own Democratic Party is fracturing. Kim Min-seok won the chairmanship on August 17, but three of five Supreme Council seats went to a rival faction. Lee urged the party to "unite firmly once again centered around the new leadership." Meanwhile, his plan to relocate the Financial Supervisory Service to Sejong City faces a staff revolt, with 85.6% threatening to quit. Lee is also managing a diplomatic dispute with Washington over regulatory probes into Coupang and potential Section 301 tariffs, even as new U.S. Ambassador Michelle Steel arrives to manage a $350B South Korean investment package in shipbuilding, nuclear cooperation, and defense.
On their plate
Lee is driving the most ambitious industrial gamble in South Korean history: a $518B+ Samsung/SK Hynix chip hub in the southwest, a sovereign AI model by end-2026, and a free "AI for All" public utility beginning beta testing in September with full national rollout by year-end. He framed semiconductors, physical AI, and AI data centers as "the triple axis for a great leap forward" and told officials "only speed matters," ordering concurrent environmental reviews and pre-secured power infrastructure. The record 800T won fiscal 2027 budget funds the vision through a semiconductor tax windfall.
Trump's unilateral curtailment of the Ulchi Freedom Shield drills (held Aug. 17-27) has destabilized Lee's deterrence posture. Lee responded by accelerating South Korea's first nuclear-powered submarine program, setting a 2030 target to regain wartime operational control from the U.S., and ordering the merger of three military academies into a single National Armed Forces Academy. He is deploying 500,000 "drone warriors" with domestically produced AI drones by 2029 and conducting simultaneous unconditional-talks offers to Pyongyang, a dual-track posture of deterrence plus engagement.
Lee's approval rating has fallen to a record-low 44%, down 7 points since July, with support among voters in their 20s at just 30%. The slide is driven by housing-policy dissatisfaction and a property-tax overhaul that raises holding taxes on high-value non-resident and multi-property homes while preserving breaks for owner-occupiers up to roughly 3B won. Lee acknowledged the criticism, warning his finance minister that tax changes inevitably draw fire and that the real estate bubble "can no longer be ignored." The Kospi's near-40% drop from its June high and bans on leveraged AI ETFs have further dented confidence.
Lee's grip on the Democratic Party is showing strain. After Jung Chung-rae resigned as party chairman amid accusations from pro-Lee members that he prioritized his own faction, the August 17 convention elected Kim Min-seok chairman with 54.08% of the vote. But three of five Supreme Council seats went to Jung-aligned members, exposing persistent divisions. Lee sent a congratulatory message urging the party to "unite firmly once again centered around the new leadership."
Lee's administration is considering relocating the Financial Supervisory Service from Seoul to Sejong City as part of a decentralization strategy. The proposal faces intense opposition: 85.6% of FSS staff have threatened to quit, and critics warn of a brain drain and weakened supervisory capacity. The push reflects Lee's broader effort to redistribute power and investment outside the capital, but the FSS resistance underscores the practical difficulty of uprooting specialized institutions.
Key relationships
Lee must absorb Trump's unilateral security decisions — cutting joint exercises mid-drill, requesting South Korea build 10 U.S. Navy warships — while honoring a $350B South Korean investment package to the United States. The dynamic is asymmetric: Trump acts, Lee manages the consequences.
Kim Yo Jong accused Lee of "double-dealing remarks and actions" and flattery toward Trump over his support of scaled-back military drills. Lee's presidential office responded by urging North Korea to stop slander and commit to peaceful coexistence.
Defense Minister Ahn Gyu-back is executing Lee's military reform agenda, including the academy merger and the 500,000 drone-warrior program.
Lee directly asked Indonesian President Prabowo Subianto to visit North Korea and open a dialogue channel during Prabowo's April visit to Seoul. Prabowo publicly confirmed his willingness to go.
Lee sent a congratulatory message to Kim Min-seok after he won the Democratic Party chairmanship with 54.08% of the vote, urging the party to unite around the new leadership amid internal divisions.
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