The recent election of Lee Jae-myung as President of South Korea marks a significant political shift that could reverberate not just domestically, but throughout the wider East Asian region. Lee, the former governor of Gyeonggi Province and a figure associated with South Korea’s progressive bloc, secured a narrow but decisive victory, promising bold reforms and a more equitable society.

His presidency is poised to steer the country on a distinctly different course from that of his conservative predecessors, particularly in matters of economic justice, foreign policy and regional diplomacy.

Domestic policy

At the heart of Lee Jae-myung’s domestic agenda is a renewed emphasis on economic justice. Often described as a populist by critics and a pragmatic reformist by supporters, Lee has long championed a redistribution of wealth, fair taxation, and robust social welfare measures. His policy proposals include the introduction of a universal basic income – albeit slowly – and a more expansive welfare state.

While the feasibility of such reforms remains to be tested in such a conservative society, particularly under the scrutiny of a still largely fragmented National Assembly, Lee’s election has nonetheless rekindled a broader public discourse on inequality and the role of the state in addressing economic disparity.

Housing affordability, another critical issue for South Korean voters and especially the younger generation will also feature prominently in Lee's domestic agenda. He has pledged to stabilise the housing market through increased public housing supply and tougher regulations on speculative investment.

Unlike his conservative counterparts, who tended to favour deregulation, Lee appears much more inclined to pursue interventionist policies that align with his social democratic vision.

However, whether these plans can be implemented effectively will depend on Lee’s ability to negotiate with a potentially hostile legislature. His previous confrontations with party rivals and outspoken style may require tempering in favour of coalition-building and consensus politics.

Relations with Japan

The new president’s approach to neighbouring Japan is expected to be cautious but calculated.

While he has not shied away from criticising Tokyo, in particular over historical disputes such as WWII forced labour and territorial claims regarding the disputed Dokdo islets (Takeshima in Japanese), Lee has sensibly signalled a willingness to compartmentalise these issues in order to foster cooperation on trade, technology and regional security.

Unlike some of his progressive predecessors who were more overtly confrontational, Lee appears to understand the importance of stabilising South Korea-Japan relations, especially in light of growing regional tensions and the shared challenge of an assertive China.

To this end, regional analysts anticipate a dual-track policy: firm on historical memory and sovereignty, but open to diplomatic engagement and economic collaboration.

In particular, the semiconductor and battery supply chains offer fertile ground for cooperation, given both countries’ shared vulnerabilities in these sectors. Moreover, the rise of trilateral security coordination between Seoul, Tokyo and Washington will likely continue under Lee’s administration even if there may now be more emphasis on maintaining South Korean autonomy within the alliance framework.

The US alliance

Lee Jae-myung inherits a longstanding strategic alliance with the United States, which remains central to South Korea’s security posture. However, his rhetoric suggests a more nuanced and independent approach than that of his conservative predecessors who largely sat in the pocket of Washington on many issues. While he is unlikely to challenge the fundamentals of the alliance, Lee is expected to assert a greater degree of strategic autonomy, particularly in matters relating to North Korea and China.

During his campaign, Lee made clear that South Korea should not be expected to “automatically align” with US policies as more conservative presidents have, particularly those that might antagonise Beijing.

This in itself signals an important shift from the unambiguous pro-US stance of previous conservative administrations, towards a more balanced diplomacy aimed at avoiding entanglement in US-China rivalry.

That said, Lee is understood to be pragmatic enough to recognise the indispensability of the alliance, particularly in light of the North Korean threat. Joint military exercises, intelligence sharing, and technological cooperation in areas such as AI and cybersecurity are likely to remain cornerstones of bilateral ties.

North Korea: dialogue and deterrence

Unsurprisingly, inter-Korean relations are expected to occupy a central place in Lee’s foreign policy. Drawing from the legacy of the Sunshine Policy, Lee has voiced his support for re-engaging with Pyongyang, not as a concession but as a strategy for regional stability and eventual reconciliation. His stance combines a willingness to pursue dialogue with a commitment to maintaining deterrence – a delicate balancing act that successive administrations have struggled to manage.

Lee’s policy is thus likely to include renewed calls for humanitarian assistance, resumption of family reunions, and potentially the reopening of the Kaesong Industrial Complex, should the North show reciprocal goodwill. However, the geopolitical context has changed significantly since the Moon Jae-in years.

North Korea’s recent and ongoing missile tests and continued pursuit of nuclear capabilities complicate the prospect of dialogue. Any outreach effort by Lee will have to navigate not only the intransigence of Pyongyang but also the scepticism of Washington and Tokyo.

Southeast Asia

Further afield, an often overlooked but increasingly vital aspect of South Korea’s foreign policy is its engagement with Southeast Asia. Lee Jae-myung is expected to continue and possibly expand the "New Southern Policy" initiated under Moon Jae-in. This strategy aims to reduce over-reliance on the US and China by strengthening ties with ASEAN nations through trade, infrastructure, education and cultural exchange.

Under Lee’s leadership, analysts expect South Korea to double down on economic diplomacy in the region, promoting Korean technologies, green energy cooperation and digital infrastructure projects.

Furthermore, given his focus on inclusive growth and technological innovation, Southeast Asia offers a fertile landscape for win-win cooperation that aligns with both Lee’s domestic and foreign policy priorities.

Additionally, Lee may use ASEAN platforms to advance broader multilateral agendas, including climate change, pandemic preparedness and digital governance. By doing so, South Korea can position itself as a middle power that punches above its weight in the Indo-Pacific.