By BLOOMBERG

SEOUL • Moon Jae-in (picture) has more than world peace riding on a successful summit with North Korean leader Kim Jong-un this week — his domestic agenda is also at stake.

Moon’s three-day trip to North Korea’s capital starting today — the first such visit by a South Korean leader in 11 years — will again test his ability to bridge the gap between two volatile leaders, Kim and US President Donald Trump. It may also help South Koreans forget about soaring home prices and unemployment that have brought his sky-high approval ratings down to earth.

South Koreans see Moon’s dovish North Korea policy as a success, beginning with the landmark rapprochement forged with Kim at an April summit at the countries’ border.

That was followed by other initiatives, including a new inter-Korea liaison office and reunions of families separated by the Korean War.

But the goodwill generated from his historic North Korea meetings has been eroded by an economic slump.

Home prices are becoming out of reach for Seoul’s middle class, and unemployment in August rose to its highest level in more than eight years.

This is Moon’s “first political crisis”, said Lee Eun-young, head of the Korea Public Opinion Lab. “Depending on what the government’s goal from the summit is, it could make or break his presidency,” she said, adding that it’s not clear whether Moon wants a declaration to end the war or continued meetings with Kim to find common ground.

Moon is bringing some of South Korea’s top business titans with him to Pyongyang. His 200-member delegation will include Samsung Electronics Co vice chairman Jay Y Lee, Hyundai Motor Co vice chairman Kim Yong-hwan, SK Hynix Inc chairman Chey Tae-won and LG Corp chairman Koo Kwang-mo.

During the summit, Moon will focus on two issues: Reducing military tensions so that he could end the fear of another war and helping move the US-North Korea talks forward.

“What I’m trying to achieve is peace,” Moon said at a meeting with his top aides yesterday. “I will have candid talks with North Korean leader Kim to find a common ground between the US demand to denuclearise and the North Korean demand to end their hostile relations.”

Samsung’s Lee is due to meet Ri Ryong Nam, a vice premier of North Korea’s Cabinet, Moon’s chief of staff Im Jong-seok said during a pre-summit briefing yesterday.

North Korea may propose that South Korean companies invest in Wonsan port and the tourist site of Mt Geumgang, and Moon may visit economic zones on the trip, according to local reports. Any investment would require the lifting of sanctions against North Korea.

Frustration with the economy has led South Koreans to draw unfavourable comparisons between Moon’s policies and the struggles of his mentor and former boss, the late President Roh Moo-hyun. Roh led the country from 2003 to 2008 and was the last South Korean leader to visit Pyongyang.

‘Disappointment’
Moon has said he wouldn’t repeat the economic mistakes that plagued Roh’s presidency, notably a failure to control skyrocketing housing prices that jumped almost 60%, or to reform powerful family-owned conglomerates known as chaebol.

But now similar domestic troubles are hitting Moon. The median price of a Seoul apartment jumped to 779 million won (RM2.89 million) as of August, 20% higher than a year earlier, according to KB Kookmin Bank. Seoul’s younger families are once again being forced out of the market, lamenting their inability to buy apartments as prices outpace what they can save.

“There is a disappointment from people who have believed Moon’s administration would improve the economy,” said Kim Jin-pyo, a lawmaker in the ruling party who served as a finance minister under Roh. “Rather than seeing an improvement, life for small business owners and low-income people got worse.”

Sliding Popularity
So far, Moon’s administration hasn’t had success stemming the real-estate surge in greater Seoul, home to about half of the country’s population, despite having announced measures intended to cool the property market eight times since taking office in May 2017.

In August 2017, he tried to curb speculative housing investment with a plan drafted by an aide who had been behind Roh’s attempt to cool the real estate market. But Moon’s attempts have been impeded, in part by near-record low interest rates that have fuelled speculation in the country’s housing markets.

Moon’s approval rating slid below 50% in a Gallup Korea poll for this first time on Sept 7 — down from 83% after his first summit with Kim five months ago. It climbed one percentage point to 50% on Sept 14 — the same day the landmark inter-Korean office opened in the North Korean city of Gaeseong, allowing 24-hour per day communication between the two sides.

Success at the summit this week could continue to “push up” that support, said Kim Jin-pyo. Moon “will have to find a breakthrough in the impasse in the US-North Korea talks”.

Asked about the slipping poll numbers, Moon’s office last Friday referred to past comments by a spokesman saying they would listen to the voice of the people more closely and review the latest real estate regulations.

‘Somewhat Unusual’
In Pyongyang, things won’t be easy for Moon. He will look to salvage faltering negotiations between Trump and Kim over nuclear weapons, while working to further the prospects of a peace deal between them by the end of this year. Moon and the US president will meet next week in the US — with Moon potentially delivering a message from Kim.

During the summit, Moon will try to persuade the North Korean leader “to come up with somewhat unusual, bold and imaginative” steps towards denuclearisation, according to Moon Chung-in, a professor at Yonsei University who serves as a special presidential advisor on foreign affairs and national security.

“President Moon is not doing all inter-Korean relations for the sake of domestic political popularity,” Moon Chung-in said. “It’s his obligation as the president of Republic of Korea.”

But Moon’s chief of staff Im said yesterday he wasn’t “optimistic” that the summit would produce an outcome that would move the denuclearisation talks forward. “Whether there is an agreement, written or verbal, hinges on sincere talks between the two leaders,” Im said.