{"id":2202357,"date":"2023-09-26T17:00:14","date_gmt":"2023-09-26T08:00:14","guid":{"rendered":"https:\/\/koreapro.org\/?p=2202357"},"modified":"2023-09-27T17:04:20","modified_gmt":"2023-09-27T08:04:20","slug":"balancing-economic-leverage-south-koreas-energy-reliance-on-russia","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/09\/balancing-economic-leverage-south-koreas-energy-reliance-on-russia\/","title":{"rendered":"Balancing economic leverage: South Korea\u2019s energy reliance on Russia"},"content":{"rendered":"

Russia\u2019s potential military cooperation with North Korea has sharply escalated tensions with South Korea. Lim Soo-seok, the ROK foreign ministry spokesperson, <\/span>highlighted<\/span><\/a> the significant negative implications such a partnership could have for Moscow-Seoul ties. However, a key challenge for South Korea in reacting to Russia\u2019s military overtures to the DPRK lies in its heavy reliance on Russian energy. This dependence gives Moscow a potential upper hand, with the capability to use energy exports as a strategic lever.<\/span><\/p>\n

Even as diplomatic engagements continue, exemplified by the recent <\/span>meeting<\/span><\/a> between ROK foreign minister Park Jin and his Russian counterpart, Sergei Lavrov, a shift is evident in South Korea\u2019s approach to Russia under the Yoon administration. This shift, exacerbated by Russia\u2019s <\/span>warning<\/span><\/a> to South Korea against supplying arms to Ukraine, points to a strained bilateral relationship that, if not managed carefully, could jeopardize South Korea\u2019s energy security and broader regional security.<\/span><\/p>\n

CHANGING DYNAMICS<\/b><\/p>\n

Despite the mounting tensions, the sustained dialogue between Russia and South Korea\u2019s top diplomats reflects a cautiously optimistic stance held by many in Seoul regarding their relationship with Moscow.<\/span><\/p>\n

After South Korean President Yoon Suk-yeol\u2019s <\/span>visit to Ukraine<\/span><\/a> in July, ROK First Vice Foreign Minister Chang Ho-jin <\/span>downplayed concerns<\/span><\/a> that the visit would endanger the country\u2019s ties with Russia. Similarly, veteran ROK diplomat Wie Sung-lac underscored the importance of <\/span>recent high-level interactions<\/span><\/a> between South Korean and Russian officials.<\/span><\/p>\n

Moscow recognizes Seoul\u2019s attempts to preserve relations, with Russian Deputy Foreign Minister Andrei Rudenko <\/span>acknowledging<\/span><\/a> South Korea\u2019s efforts to maintain economic ties despite Russia\u2019s increasing global isolation amidst its ongoing invasion of Ukraine.<\/span><\/p>\n

Yet the reality remains: The bond between Russia and South Korea, once hailed as a \u201c<\/span>strategic partnership<\/span><\/a>\u201d in 2008, has witnessed a pronounced decline.<\/span><\/p>\n

Under the Yoon administration, South Korea\u2019s potential involvement in joint economic initiatives with Russia looks <\/span>increasingly bleak<\/span><\/a>. Yoon\u2019s approach starkly differs from the ones adopted by former South Korean leaders, such as Park Geun-hye and Moon Jae-in, who actively pursued economic collaborations, as seen with the <\/span>Eurasia Initiative<\/span><\/a> and the <\/span>New Northern Policy<\/span><\/a>.<\/span><\/p>\n

Adding to the list of departures from tradition, Yoon hasn\u2019t attended the Eastern Economic Forum (EEF) in Vladivostok \u2014 <\/span>a long-standing platform<\/span><\/a> for Russia and South Korea to deliberate on economic partnerships. At the recent EEF, Georgy Zinoviev, Russia\u2019s chief diplomat for Asia-Pacific affairs, <\/span>cautioned<\/span><\/a> that South Korea\u2019s arms supplies to Ukraine could severely damage the bilateral relationship, a sentiment earlier <\/span>expressed<\/span><\/a> by Vladimir Putin.<\/span><\/p>\n

\"\"

President Yoon Suk-yeol meets with Ukrainian President Volodymyr Zelenskyy in Kyiv, July 15, 2023 | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

HISTORICAL PRECEDENT AND CURRENT STAKES<\/b><\/p>\n

The deployment of the U.S. Terminal High Altitude Area Defense (THAAD) system to the ROK from 2016 to 2017 was the last time South Korea and Russia faced significant challenges to their relations. Analyzing this period offers <\/span>insight<\/span><\/a>: Moscow and Seoul navigated this challenge effectively, maintaining their bilateral ties.<\/span><\/p>\n

This measured response contrasts <\/span>China\u2019s strong reaction<\/span><\/a> to the THAAD deployment. Mutual economic interests drove this resilience, with South Korea keenly investing in the development of Russia\u2019s Far East, presenting <\/span>opportunities<\/span><\/a> for both nations.<\/span><\/p>\n

The contemporary landscape, however, brings a new set of challenges. Russia\u2019s potential collaboration with North Korea, a nation Seoul has unambiguously <\/span>labeled<\/span><\/a> an enemy, will exert more pressure on the ROK-Russia relationship than the THAAD incident did. Similarly, if Seoul takes actions that jeopardize Moscow\u2019s interests in Ukraine or its military collaboration with North Korea, Russia will likely resort to coercive economic tactics against the ROK as leverage.<\/span><\/p>\n

ENERGY VULNERABILITY<\/b><\/p>\n

Russia may have limited influence over non-energy-related trade with South Korea, especially compared to China’s leverage. However, Seoul would be ill-advised to ignore the tools Russia possesses.<\/span><\/p>\n

For instance, South Korean firms operating in Russia face the ongoing <\/span>risk of asset appropriation<\/span><\/a> by Russian authorities. Exiting the Russian market is equally daunting, as businesses departing must <\/span>contribute<\/span><\/a> to the Russian national budget, thus potentially violating Western sanctions against Moscow. Despite these challenges, South Korea has significantly scaled back its economic involvement in Russia since the onset of the Ukraine conflict.<\/span><\/p>\n

In 2022, South Korea\u2019s investment in the Russian economy was a mere one-tenth of a percent of its total foreign investment, according to <\/span>data<\/span><\/a> from the Korea International Trade Association (KITA). Additionally, the Korea Trade-Investment Promotion Agency (KOTRA) determined that Russia\u2019s expanded trade ban on \u201cunfriendly\u201d countries, including South Korea, would <\/span>not significantly impact<\/span><\/a> the ROK\u2019s economy.<\/span><\/p>\n

However, South Korea\u2019s reliance on Russia for its energy needs is another matter entirely. Devoid of natural energy reserves, the ROK heavily relies on imports and Russia\u2019s proximity to the Korean Peninsula positions it as a primary supplier. By 2022, energy imports from Russia, spanning coal to crude oil and natural gas, <\/span>constituted<\/span><\/a> roughly 72.5% of South Korea\u2019s total imports from the nation.<\/span><\/p>\n

Even without deliberately targeting the ROK, the ripple effect on energy prices from Russia\u2019s invasion of Ukraine has <\/span>strained<\/span><\/a> the South Korean economy. High energy costs have dented industrial productivity and have played a role in South Korea\u2019s recent trade deficits. This energy reliance has not escaped Seoul\u2019s policymakers and analysts.<\/span><\/p>\n

A KITA report from June <\/span>highlighted<\/span><\/a> an uptick in South Korean coal imports post Russia\u2019s Ukraine invasion, partly due to reduced Russian coal prices. Similarly, a 2022 Bank of Korea <\/span>report<\/span><\/a> also emphasized South Korea\u2019s energy import reliance on Russia.<\/span><\/p>\n

Seoul should be wary of Moscow\u2019s potential to leverage energy exports, as seen in <\/span>Europe<\/span><\/a>. With South Korea-Russia relations potentially approaching their lowest point since the Cold War, the ROK\u2019s energy dependency dilemma is in sharp focus.<\/span><\/p>\n

\"\"

Industrial machinery working with coal, Jan. 25, 2021 | Image: Pexels<\/a><\/em><\/p><\/div>\n

BALANCING ECONOMIC LEVERAGE<\/b><\/p>\n

The future of Russia-South Korea ties may hinge on Russia\u2019s eagerness to retain economic cooperation, given that <\/span>long-term opportunities<\/span><\/a> with Seoul remain viable. However, the Yoon administration\u2019s lack of a detailed strategy for economic partnership with Russia should concern South Korean policymakers. It could render the Kremlin more inclined to penalize South Korea than during the THAAD controversy.<\/span><\/p>\n

Nevertheless, should Russia use its energy resources as leverage against the ROK, it must anticipate the subsequent fallout. Beyond geopolitical considerations, Moscow\u2019s continued economic engagement with Seoul, even amid tensions, largely stems from Russia\u2019s pursuit of South Korean <\/span>capital and expertise<\/span><\/a> for the Russian Far East to counterbalance Moscow\u2019s overreliance on Beijing.<\/span><\/p>\n

Since its incursion into Ukraine, Russia\u2019s economic dependence on China has <\/span>deepened<\/span><\/a>. Thus, leveraging energy exports against South Korea could backfire and solidify the ROK\u2019s retreat from strategic collaboration with Russia rather than inducing a change in South Korean policy.<\/span><\/p>\n

The dilemma for Seoul is evident: while Moscow can readily employ energy as a diplomatic tool, South Korea\u2019s quest for alternative energy sources is more arduous. In any energy tussle, the ROK will likely bear the brunt of economic repercussions first.<\/span><\/p>\n

Edited by John Lee<\/span><\/i><\/p>\n

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

Russia\u2019s potential military cooperation with North Korea has sharply escalated tensions with South Korea. Lim Soo-seok, the ROK foreign ministry spokesperson, highlighted the significant negative implications such a partnership could have for Moscow-Seoul ties. However, a key challenge for South Korea in reacting to Russia\u2019s military overtures to the DPRK lies in its heavy reliance […]<\/p>\n","protected":false},"author":10407,"featured_media":2202358,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[21],"tags":[26,28],"yoast_head":"\nBalancing economic leverage: South Korea\u2019s energy reliance on Russia - 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\/09\/balancing-economic-leverage-south-koreas-energy-reliance-on-russia\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Balancing economic leverage: South Korea\u2019s energy reliance on Russia - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"Russia\u2019s potential military cooperation with North Korea has sharply escalated tensions with South Korea. 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