{"id":2200242,"date":"2023-02-24T09:29:53","date_gmt":"2023-02-24T09:29:53","guid":{"rendered":"https:\/\/www.nknews.org\/koreapro\/?p=2200242"},"modified":"2023-04-05T16:09:38","modified_gmt":"2023-04-05T07:09:38","slug":"how-the-war-in-ukraine-jeopardizes-south-koreas-economic-ambitions-in-eurasia","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/02\/how-the-war-in-ukraine-jeopardizes-south-koreas-economic-ambitions-in-eurasia\/","title":{"rendered":"How the war in Ukraine jeopardizes South Korea\u2019s economic ambitions in Eurasia"},"content":{"rendered":"

Russia\u2019s invasion of Ukraine has posed difficult questions to South Korea over the last year, forcing Seoul to make decisions about how forcefully to <\/span>condemn Moscow\u2019s actions<\/span><\/a> and whether to <\/span>provide direct military support<\/span><\/a> to Kyiv.<\/span><\/p>\n

Economic problems have only complicated these diplomatic considerations, as the ROK has grappled with the war\u2019s effect on energy prices and its economic ties with Russia.<\/span><\/p>\n

In the short term, South Korea must manage the impact of rising energy prices on domestic productivity and its ability to maintain exports.<\/span><\/p>\n

But in the long run, the war in Ukraine presents a more comprehensive challenge to Seoul\u2019s economic strategy, and the ROK will need to decide whether to maintain its \u201cnorthern policy\u201d aimed at shoring up ties with Russia and post-Soviet states to promote greater economic connectivity with the Eurasian landmass, or seek other alternatives to this strategy.<\/span><\/p>\n

\"\"

Shipping containers | Image: Pexels<\/a><\/p><\/div>\n

LOOKING NORTH<\/b><\/p>\n

The economic ripple effects of the conflict in Ukraine have reverberated toward export-dependent South Korea.<\/span><\/p>\n

Firms are feeling the pinch from the war\u2019s economic fallout, with one stark example being how Samsung\u2019s profitability has <\/span>recently plummeted<\/span><\/a>. The Bank of Korea has also <\/span>warned<\/span><\/a> that the limits the war has placed on access to materials used in the automotive industry could exert a negative effect on the Korean economy, while the Sejong Institute <\/span>notes<\/span><\/a> rising energy prices due to the war could negatively affect domestic industrial productivity.<\/span><\/p>\n

The <\/span>spike in energy prices<\/span><\/a> \u2014 amounting to $78.1 billion worth of energy imports against a trade deficit of $47.5 billion \u2014 could also <\/span>negatively affect exports<\/span><\/a> by driving up logistics prices, which would be particularly damaging to South Korea\u2019s global economic reach.<\/span><\/p>\n

These negative economic effects are of course not unique to the ROK, but Seoul faces a particularly acute quandary given its geopolitical position between continental Eurasia and the <\/span>maritime realm of the Pacific, which it has long sought to balance between.<\/span><\/p>\n

Seoul has sought to strengthen economic and geopolitical ties with countries under Soviet influence since as far back as 1973, following the <\/span>June 23 Declaration<\/span><\/a> that declared South Korea\u2019s determination to open to these countries.\u00a0<\/span><\/p>\n

These efforts picked up after Mikhail Gorbachev delivered his \u201cKrasnoyarsk Declaration,\u201d <\/span>signaling Moscow\u2019s intent<\/span><\/a> to foster economic relations with South Korea, and Roh Tae-woo announced his Nordpolitik vision for improving ties with the Soviet Union and China \u2014 both in 1988. Moscow and Seoul subsequently established formal diplomatic relations in 1990.<\/span><\/p>\n

South Korea has since consciously pursued a \u201cnorthern strategy\u201d centered on Russia. But since the start of the Ukraine war, Seoul\u2019s criticism of Moscow\u2019s invasion and support for economic sanctions against it have led the Kremlin to designate the ROK an \u201cunfriendly country,\u201d putting this strategy at risk. Russia has also warned Seoul of consequences if it supplies Kyiv with weapons.<\/span><\/p>\n

For now, however, the diplomatic chill between the ROK and Russia has not entirely <\/span>upended economic relations. As Russia expert Park Byung-hwan <\/span>notes<\/span><\/a>, the Kremlin continues to allow the export of gases critical to South Korea\u2019s semiconductor industry despite restrictions on exports to \u201cunfriendly countries.\u201d <\/span>Russia and South Korea are also set to cooperate on the construction of a <\/span>nuclear power plant in Egypt<\/span><\/a>.<\/span><\/p>\n

In addition, while many global firms have left Russia due to economic risks, the major South Korean automaker Kia is <\/span>still operating<\/span><\/a> in the country. While the company reportedly <\/span>considered leaving<\/span><\/a> last October due primarily to economic volatility, its continued presence shows Kia still finds it profitable to maintain operations in Russia.\u00a0<\/span><\/p>\n

Indeed, news of Russia\u2019s imminent debt default in June 2022 <\/span>did not cause panic<\/span><\/a> among South Korean firms operating in the country at that time, as businesses largely took preemptive measures to mitigate the effects of the default on their operations.<\/span><\/p>\n

\"\"

South Korean President Moon Jae-in receives a Joseon Dynasty-era sword as a gift from Russian leader Vladimir Putin | Image: Official Blue House Twitter<\/p><\/div>\n

HARD CHOICES<\/b><\/p>\n

The fact that there is still limited ROK-Russia economic cooperation does not change <\/span>the fact that South Korea faces tough choices over how it chooses to balance between the continental and maritime realms of its geopolitical strategy.<\/span><\/p>\n

One alternative to strengthening ties with Russia is for South Korea to shift its focus to shoring up relations with China, which serves as the end of the so-called <\/span>Middle Corridor<\/span><\/a> logistics route connecting to Central Asia. Seoul <\/span>has solid ties with<\/span><\/a> Uzbekistan and has been keen to take advantage of the Middle Corridor as an alternative to overland shipping traversing Russia.<\/span><\/p>\n

The issue with this is that strengthening economic relations with Beijing runs <\/span>counter to the <\/span>growing trend<\/span><\/a> of South Korean firms removing their operations from China in <\/span>favor of countries closer to the Indo-Pacific rim such as Vietnam, for a variety of reasons including a more friendly business environment and cheaper labor costs.<\/span><\/p>\n

Another possibility is that Seoul could de-emphasize the continental aspect of its <\/span>geopolitical strategy and focus on shoring up ties with maritime Pacific states.<\/span><\/p>\n

But this likely would not be a beneficial alternative for Seoul. To do so would forego an opportunity to enhance ties to the markets of continental Eurasia, and as the ROK finds itself in an <\/span>increasingly precarious<\/span><\/a> position in the so-called chip war due to U.S. regulations that prohibit firms that receive financing from the U.S. from expanding operations in China (one of South Korea\u2019s most important economic partners).\u00a0<\/span><\/p>\n

Any closer alignment with these Pacific players could upset Seoul\u2019s relations with Beijing even more than they already are if Beijing believes Seoul is following Washington\u2019s lead.<\/span><\/p>\n

Whatever strategy South Korea adopts, it\u2019s clear that it will struggle to sustain the policies born out of the geopolitical thaw that started in the 1980s. Seoul has long sought to separate its pro-U.S. stance from its approach to Russia as much as possible, and this has been key to the success of its \u201cnorthern policy\u201d so far.<\/span><\/p>\n

But as Russia\u2019s invasion has drawn the battle lines of what increasingly looks like a new cold war, the foundations of this approach are shaking.<\/span><\/p>\n

Edited by Bryan Betts<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Defense & Security<\/span><\/a>Inter-Korean & Foreign Relations<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

Russia\u2019s invasion of Ukraine has posed difficult questions to South Korea over the last year, forcing Seoul to make decisions about how forcefully to condemn Moscow\u2019s actions and whether to provide direct military support to Kyiv. Economic problems have only complicated these diplomatic considerations, as the ROK has grappled with the war\u2019s effect on energy […]<\/p>\n","protected":false},"author":7824,"featured_media":2199105,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[24,26,28],"class_list":["post-2200242","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-business-economy","tag-defense-security","tag-inter-korean-foreign-relations"],"yoast_head":"\nHow the war in Ukraine jeopardizes South Korea\u2019s economic ambitions in Eurasia - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2023\/02\/how-the-war-in-ukraine-jeopardizes-south-koreas-economic-ambitions-in-eurasia\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How the war in Ukraine jeopardizes South Korea\u2019s economic ambitions in Eurasia - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"Russia\u2019s invasion of Ukraine has posed difficult questions to South Korea over the last year, forcing Seoul to make decisions about how forcefully to condemn Moscow\u2019s actions and whether to provide direct military support to Kyiv. 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