A Korean 'New Deal'.(World Affairs)

Byline: B. J. Lee

Lee Myung-bak aims to dig his nation to prosperity. But will his $16 billion canal turn into a black hole?

It's a development project aimed to turn the tides--literally. Korea's Han River, which runs across Seoul, would be connected to the Nakdong River due south via a 20km-long underground tunnel. The resulting 553km-long canal, flowing from the capital to the southeastern port of Busan, would be lined with 47 new cargo and passenger terminals, though which 2,500-metric-ton container ships or tourist ferries could cruise across the country in 24 to 36 hours. The ships could travel via the tunnel from Seoul to Tokyo or Shanghai, revolutionizing marine traffic in the region. As many as 700,000 new jobs would be created, not only in construction but also transportation and tourism (visitors will be treated to laser light shows in the tunnel).

That's the vision put forth by South Korea's new president, Lee Myung-bak, who wants to reignite his country's slow economy (GDP growth is down from 7 percent five years ago to 5 percent today) with the $16 billion canal project, which has come to be known as Korea's "New Deal." But the ambitious plan, the centerpiece of his election pledge, is now sharply dividing the nation. While Lee and his ruling camp (which won a slight majority in recent parliamentary elections) call the canal "a multipurpose project that can raise people's happiness index," opponents see it as an old-style development project that will destroy the environment while inflating taxes. Opposition parties have formed a rare alliance against the scheme. "The grand-canal project is an environmental, economic and cultural disaster," says Moon Kook Hyun, an opposition lawmaker-elect and vocal anticanal environmentalist.

But for Lee, the canal isn't just a campaign issue--it's a pet project. The former chairman of Hyundai Engineering & Construction has played with the idea for more than 10 years. Despite his reputation as a free-marketer and cosmopolitan former CEO, Lee has often backed major state building projects. As Seoul's mayor from 2002 to 2006, he rammed through a highly controversial project to tear down an elevated highway at the heart of the city in order to uncover a stream and restore nature to the urban core. Opponents worried about traffic, but the plan worked, and the river has become a beloved landmark. That success helped Lee win the presidency.

Now Lee wants to repeat that triumph. He says the canal will "ignite" his 747 Plan-- to achieve 7 percent economic growth and a per capita income of $40,000, and to join the G7 by 2018. His government figures the canal will produce $38 billion ...