{"id":2207192,"date":"2024-11-19T12:23:32","date_gmt":"2024-11-19T03:23:32","guid":{"rendered":"https:\/\/koreapro.org\/?p=2207192"},"modified":"2024-11-20T17:03:37","modified_gmt":"2024-11-20T08:03:37","slug":"trumps-return-forces-south-koreas-defense-industry-to-adapt-to-new-realities","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/11\/trumps-return-forces-south-koreas-defense-industry-to-adapt-to-new-realities\/","title":{"rendered":"Trump\u2019s return forces South Korea\u2019s defense industry to adapt to new realities"},"content":{"rendered":"

Donald Trump\u2019s impending return to the White House in January could drastically reshape the global defense industry, testing the adaptability of South Korea\u2019s burgeoning arms sector.<\/span><\/p>\n

Trump\u2019s emphasis on burden-sharing among allies and an America First policy in defense procurement will create new opportunities but also challenges, leading to increases in global defense spending but also heightened competition in regions like Europe and the Middle East.<\/span><\/p>\n

For South Korean defense firms, which have made significant inroads into global markets, adapting to the shifting dynamics will be crucial to sustaining growth.<\/span><\/p>\n

EUROPE: OPPORTUNITIES AND COMPETITION<\/b><\/p>\n

Trump\u2019s anticipated demand for NATO countries to increase defense budgets, potentially to 3% of GDP, could accelerate rearmament across Europe. Poland, a key buyer of South Korean K9 howitzers and Chunmoo rocket systems, may spend about <\/span>4.7% of its GDP<\/span><\/a> on defense \u2014 the highest in NATO \u2014 in 2025.<\/span><\/p>\n

Poland\u2019s reliance on South Korean weapons stems from Warsaw\u2019s urgency to modernize its military. South Korea\u2019s ability to deliver weapons systems quickly \u2014 an edge over American and European suppliers facing supply chain issues \u2014 has been critical in securing deals.<\/span><\/p>\n

For instance, Poland signed a <\/span>$15 billion contract<\/span><\/a> with Hanwha Defense in 2022 to procure hundreds of K9 howitzers, marking one of the largest arms deals in South Korea\u2019s history. The ROK demonstrated rapid delivery capabilities when Hanwha Aerospace <\/span>delivered<\/span><\/a> the first batch of 24 K9A1 howitzers to Poland in Dec. 2022, just months after the contract was finalized.<\/span><\/p>\n

With ongoing concerns over Russian aggression, Eastern European nations like <\/span>Estonia and Romania<\/span><\/a> have also shown interest in South Korean arms, citing their cost-effectiveness and compatibility with NATO standards.<\/span><\/p>\n

More broadly, countries like the Czech Republic and Slovakia are exploring procurement options too. South Korea\u2019s ability to remain agile and offer tailored solutions will thus be critical in retaining its global market share.<\/span><\/p>\n

However, Europe\u2019s push for strategic autonomy poses a threat to South Korea\u2019s foothold. French President Emmanuel Macron called for <\/span>reducing reliance on non-European suppliers<\/span><\/a> in April, emphasizing the need for an independent European defense industry.<\/span><\/p>\n

France and Germany are scaling up production, with the Franco-German defense conglomerate KNDS rolling out a <\/span>new version of its Leopard 2 tank<\/span><\/a> in June, highlighting the competitive challenges South Korea faces.<\/span><\/p>\n

\"\"

A German Army Leopard 2A7V tank fires a round while taking part in the Canadian Army Trophy tank competition at Adazi in Latvia, June, 7, 2024 | Image: NATO via Flickr<\/a><\/em><\/p><\/div>\n

MIDDLE EAST: SHIFTING PRIORITIES<\/b><\/p>\n

The Middle East has been a cornerstone of South Korea\u2019s defense exports in recent years, with deals amounting to billions of dollars. Saudi Arabia, for example, invested in LIG Nex1\u2019s <\/span>Cheongung-II missile systems<\/span><\/a>, while the UAE secured air defense systems from Hanwha Defense.<\/span><\/p>\n

These agreements flourished against a backdrop of strained U.S.-Gulf relations during the Biden administration, driven by factors such as the <\/span>temporary suspension of arms sales<\/span><\/a> to Saudi Arabia and heightened tensions over human rights concerns, including the killing of journalist <\/span>Jamal Khashoggi<\/span><\/a>. As a result, Gulf states sought to diversify their arms supplies.<\/span><\/p>\n

Saudi Arabia\u2019s <\/span>$71.72 billion defense budget<\/span><\/a> for this year highlights its ability to drive demand for advanced systems. The kingdom\u2019s interest in South Korean weapons has been tied to their cost-effectiveness and compatibility with U.S. systems, enabling seamless integration into existing arsenals.<\/span><\/p>\n

The UAE, meanwhile, has prioritized acquiring cutting-edge air defense systems to counter threats from Iranian-backed Houthi rebels in Yemen and other regional adversaries.<\/span><\/p>\n

Trump\u2019s return could upend this dynamic. Saudi Arabia, which has historically used arms procurement as a diplomatic tool, may prioritize reestablishing its relations with the U.S., potentially shifting back to American-made weapons systems.<\/span><\/p>\n

American firms, emboldened by Trump\u2019s protectionist trade policy and assertive foreign policy, will likely push aggressively into the Gulf markets as well.<\/span><\/p>\n

Despite these challenges, South Korea has carved out a reputation for reliability and cost-efficiency that could enable it to retain niche markets, particularly in areas like unmanned systems, mid-range air defense platforms, drones and cyber defense.<\/span><\/p>\n

SOUTHEAST ASIA: COMPLEX MARKETS<\/b><\/p>\n

Southeast Asia presents a mixed landscape for South Korea\u2019s defense industry.\u00a0<\/span><\/p>\n

The Philippines has procured South Korean <\/span>naval vessels<\/span><\/a>, <\/span>FA-50 fighter jets<\/span><\/a> and <\/span>K136 Kooryong multiple rocket launchers<\/span><\/a>. Similarly, Indonesia\u2019s acquisition of <\/span>Chang Bogo-class attack submarines<\/span><\/a> reflects growing demand for ROK systems in the region.<\/span><\/p>\n

However, these markets come with challenges. Indonesia\u2019s <\/span>partial withdrawal from the KF-21 fighter jet project<\/span><\/a> due to funding issues will likely limit further ROK-Indonesia joint projects, particularly in light of Jakarta purchasing French Rafale fighter jets.<\/span><\/p>\n

Additionally, other Southeast Asian nations face financial constraints. For example, Vietnam\u2019s <\/span>$7.8 billion defense budget for 2024<\/span><\/a> is dwarfed by Saudi Arabia\u2019s, limiting Hanoi\u2019s ability to purchase advanced systems at scale.<\/span><\/p>\n

Geopolitical sensitivities further complicate the equation. The Philippines risks provoking China if it deploys South Korean weapons in contested maritime zones, while Vietnam faces similar risks due to an ongoing territorial dispute with China in the South China Sea.<\/span><\/p>\n

Seoul must navigate these dynamics carefully to avoid diplomatic fallout with Beijing.<\/span><\/p>\n

Nevertheless, the region\u2019s growing interest in naval modernization presents a potential growth avenue. South Korea\u2019s advanced shipbuilding industry could play a key role in addressing Southeast Asia\u2019s maritime security needs by offering vessels that combine affordability with advanced capabilities.<\/span><\/p>\n

\"\"

Hanwha Defense’s Redback AS-21 Infantry Fighting Vehicle, July 27, 2023 | Image: Hanwha<\/a><\/em><\/p><\/div>\n

AUSTRALIA: MIXED PROSPECTS<\/b><\/p>\n

Australia has been a promising market for South Korean defense exports, but recent policy shifts have tempered expectations. Under Prime Minister Anthony Albanese, Australia conducted a <\/span>defense strategic review<\/span><\/a> that reduced planned acquisitions of Hanwha Defense\u2019s self-propelled howitzers and infantry vehicles.<\/span><\/p>\n

Concurrently, much of Australia\u2019s defense budget is now tied to the AUKUS pact, particularly the acquisition of nuclear-powered submarines from the U.S. and U.K.<\/span><\/p>\n

Despite this setback, South Korea’s shipbuilding industry offers a silver lining. Hanwha Ocean\u2019s <\/span>contract to service U.S. naval ships<\/span><\/a> indicates the growing potential for the ROK to play a critical role in allied naval logistics. With Australia’s increasing focus on naval defense, South Korean firms could find opportunities in shipbuilding and maintenance, repair and overhaul (MRO).<\/span><\/p>\n

Notably, South Korea has reportedly been <\/span>invited to participate<\/span><\/a> as a \u201ccooperating partner\u201d in AUKUS Pillar II, which focuses on advanced defense technologies. This inclusion could enhance collaboration with Australia and other partners in areas such as cyber capabilities, artificial intelligence and quantum technologies.<\/span><\/p>\n

However, the ROK faces fierce competition. Japan, another AUKUS partner, has ramped up its defense production capabilities and could emerge as a rival in securing Australian contracts.<\/span><\/p>\n

South Korea must leverage its strengths in rapid delivery and cost efficiency to remain competitive.<\/span><\/p>\n

INDIA: A FRAGILE OPPORTUNITY<\/b><\/p>\n

India\u2019s <\/span>purchase of 100 K9 Vajra howitzers<\/span><\/a> from South Korea in 2017 marked a key development in the two countries\u2019 defense cooperation. The Indian Army\u2019s subsequent order for <\/span>another 100 units in 2023<\/span><\/a> signals strong satisfaction with the system\u2019s performance. The K9 Vajra, an Indian variant of the K9 Thunder, has proven effective in high-altitude regions like Ladakh, where it is deployed along the Line of Actual Control with China.<\/span><\/p>\n

Despite this success, India\u2019s protectionist policies remain a major hurdle. The Modi administration\u2019s <\/span>\u201cMake in India\u201d initiative<\/span><\/a> prioritizes domestic production, requiring foreign suppliers to establish local partnerships or transfer technology.<\/span><\/p>\n

South Korea must carefully balance its desire for market access with its need to protect intellectual property. India\u2019s dissatisfaction with Russian arms \u2014 exposed as unreliable in Ukraine \u2014 provides an opening, but securing large-scale contracts will require complex negotiations.<\/span><\/p>\n

India\u2019s <\/span>$74.3 billion defense budget for 2024-25<\/span><\/a> spotlights its potential to be a lucrative market, but South Korea\u2019s ability to expand beyond artillery systems will depend on its flexibility in adapting to India\u2019s demands.<\/span><\/p>\n

Beyond artillery, South Korea could position itself as a supplier of advanced missile systems, such as the Chunmoo Multiple Launch Rocket System, or short and medium-range surface-to-air missiles like the Cheongung-II, which would enhance India\u2019s air defense capabilities.<\/span><\/p>\n

India\u2019s reliance on aging Russian equipment, particularly in missile defense and armor, presents another opportunity. For example, South Korea\u2019s robust technology in guided weapons and missile defense could align with India\u2019s focus on countering threats from Pakistan and China. Additionally, naval systems such as advanced frigates could appeal to India\u2019s growing maritime ambitions.<\/span><\/p>\n

To overcome the stringent \u201cMake in India\u201d policy, South Korean defense firms could form partnerships with leading Indian companies. Collaborating with firms like Larsen & Toubro, which co-produced the K9 Vajra, or Bharat Dynamics Limited, a state-run missile manufacturer, could strengthen the ROK\u2019s market position.<\/span><\/p>\n

\"\"

The USS Fitzgerald participates in Exercise Rim of the Pacific (RIMPAC) 2024, July 18, 2024 | Image: U.S. Navy<\/a><\/em><\/p><\/div>\n

U.S. RELATIONS: NAVAL ADVANTAGE<\/b><\/p>\n

Trump\u2019s presidency is expected to emphasize naval readiness, creating a unique opportunity for South Korean shipbuilders. The U.S. Navy has long struggled with maintaining its fleet due to domestic shipyard limitations, and South Korea, with its advanced shipbuilding infrastructure, is well-positioned to fill this gap.<\/span><\/p>\n

Hanwha Ocean\u2019s MRO <\/span>contract<\/span><\/a> with the U.S. Navy represents a significant step forward and could lead to further collaboration. Notably, during a congratulatory phone call with South Korean President Yoon Suk-yeol after his election victory, Trump specifically <\/span>highlighted the potential<\/span><\/a> for cooperation on shipyard maintenance.<\/span><\/p>\n

However, Trump\u2019s protectionist policies pose risks. Tariffs or procurement restrictions favoring American firms could limit South Korea\u2019s ability to compete in the U.S. market. Additionally, the unpredictable nature of Trump\u2019s foreign policy may create uncertainties for long-term planning.<\/span><\/p>\n

To mitigate these risks, Seoul will need to focus on its strengths, such as shipbuilding and unmanned systems, while continuing to diversify its export markets. Leveraging its strategic position in the Indo-Pacific could also enhance its value as a U.S. partner.<\/span><\/p>\n

Edited by Alannah Hill<\/span><\/i><\/p>\n

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

Donald Trump\u2019s impending return to the White House in January could drastically reshape the global defense industry, testing the adaptability of South Korea\u2019s burgeoning arms sector. 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