‘Don’t Shy Away From Being the Bad Cop’: Lee Hyung-il Faces Early Test as Deputy Prime Minister

With Kim Yong-beom Gone, the Economic Team Needs a Real Commander

Inter-Ministerial Coordination and Policy Flexibility Face a Test

Restoring the Finance Ministry’s Organizational Capacity After Losing Budget Authority Is Also a Task

“No matter what happens, he never loses his temper.”

“He is a rare official with both ability and character.”

It is hard to find anyone in government who speaks ill of Deputy Prime Minister and Finance Minister Lee Hyung-il. That is the consistent view among officials who worked with him at the Ministry of Finance and Economy, the Planning and Budget Office, and the National Data Agency, formerly Statistics Korea. Lee served as assistant minister at the Ministry of Economy and Finance under both the Moon Jae-in and Yoon Suk Yeol administrations. His mild manner also earned him a staff-selected “boss people want to emulate” award three times.

Lee has many strengths as an aide. But he has yet to prove himself as a commander who can settle conflicts between ministries and relay dissenting views to the president. A deputy prime minister is, at times, a role that requires playing the bad cop. His leadership, shaped by years as a gentle policy aide, is now facing a full test.

President Lee Jae-myung, who is visiting the U.S. to attend the United Nations General Assembly, approved Lee’s appointment on Sept. 22. In government circles, there is growing talk that Lee must now serve as the economy’s real commander. The prevailing view has been that Kim Yong-beom, the former presidential chief of policy, had effectively been the administration’s top economic strategist until now.

Former Deputy Prime Minister Koo Yun-cheol had a relatively limited role and policy reach. Kim oversaw policy design and coordination among ministries. Lee, then a vice minister, and Lim Ki-geun, now minister for government policy coordination, worked with Kim to prepare implementation plans.

Inside and outside government, some expect Kim’s successor as presidential policy chief to come from the social-policy bureaucracy, where reform has moved more slowly. That would leave the policy chief overseeing social policy, while the deputy prime minister takes charge of economic policy.

Even so, leading the economic team will not be easy. The budget office and the Ministry of SMEs and Startups are both headed by former politicians. Industry Minister Kim Jung-kwan and Financial Services Commission Chairman Lee Eog-won are, respectively, Lee’s civil-service exam peer and senior. That has fueled doubts about whether he can bridge their differences. Inside the budget office, some officials have kept their distance from the finance ministry’s command structure, saying, “We are not an economic ministry but a coordinating body under the Prime Minister’s Office.” A clash between the two ministries over next year’s sovereign wealth fund contribution budget underscored that tension.

Criticism of economic policy is also weighing on Lee. Many in government point to economic policy, including housing measures, as a major reason for President Lee’s recent drop in approval ratings. A tougher property-tax policy that Lee helped design as vice minister has been criticized for having an unclear effect on stabilizing home prices. Even if he designed the policy himself, Lee needs to reexamine both its impact and side effects and present revisions to the president, officials say.

There is also a view that aides are working in an atmosphere where it is difficult to speak bluntly. Government officials say President Lee has such a deep understanding of each ministry’s pending issues that he can spot even minor numerical errors in reports. As a result, aides have focused less on debating policy direction and more on answering the president’s questions flawlessly and carrying out his instructions.

Some officials say the Ministry of Finance and Economy no longer has the organizational strength it once did to support Lee. The separation of budget authority has reduced the ministry’s leverage over other ministries, even as its responsibility for overseeing economic policy remains unchanged. The same dynamic is evident in staffing. Within the ministry, some employees are reluctant to take posts under the assistant minister. The perception is that promotions are badly bottlenecked, workloads are heavy and authority is weak.

Officials also say the role of the policy coordination bureau, which is responsible for reconciling differences among ministries, has weakened. If those departments fail to attract strong talent, the deputy prime minister’s ability to drive policy will inevitably suffer. Making sure their performance is reflected in promotions and appointments, and restoring energy to the organization, is also among the tasks Lee must address.

Kim Ik-hwan, Hankyung.com reporter lovepen@hankyung.com