South Korea capital move could damage Lee's reforms

SEOUL, Nov 3 - South Korean President Lee Myung-bak risks delays to his business-friendly reform agenda due to a fight in the ruling party over a plan to move part of the government out of the capital Seoul.

Lee wants to scale back the long-standing plan to move nine ministries and four agencies to a yet-to-be built city, criticising it as pork-barrel politics.

But Park Geun-hye, the woman he beat to head the conservative Grand National Party, is demanding the new city go head as planned. She commands enough support within the party -- combined with opposition MPs -- to derail Lee's policy plans.

The new administrative centre called Sejong City, named after an ancient king credited with inventing the Korean writing system, is under construction at a site about 150 km (95 miles) south of Seoul, supposed to be finished by 2012 at a cost of 22 trillion won ($18.68 billion).

"Sejong City would not have burst into today's political fight if Park hadn't voiced her opinions so strongly," said Kang Won-taek, a political science professor at Soongsil University.

Park, the daughter of the country's longest serving leader, is a front-runner to replace Lee as president when his single, five-year term ends in 2013.

Lee this week has shown no signs of stepping away from the project which could anger Park and opposition politicians, making it tough to push through measures on taxes and job creation to boost the economy.

[For a factbox on reforms proposed, click ID:nSEO314453]

The left-leaning opposition, emboldened by victories in by-elections last week, and the fissure in the ruling group will likely make the most of this opportunity to confound Lee and delay reforms it has bottled up for months, Kang Won-taek said.

The plan to move the administrative capital out of Seoul was advanced by Roh Moo-hyun when the left-leaning politician was running in the 2002 presidential race and dismissed by many as political pandering.

Roh won the race, thanks in part to the swing voters in the central region, and pressed ahead with the plan. It was scaled down after court fights and heated opposition from conservative politicians, then the minority party in parliament.

Critics have longed charged that the administrative city is a white elephant, squandering taxpayer money. Backers counter it will help regional development and decrease congestion in Seoul.