Korea, the Asian powerhouse looking to Europe

South Korea has grown into one of the world’s most important economies, the global reach of its manufacturing sector matched only by the cultural impact of its films and music. Political Editor Nick Powell looks at the background to the Republic of Korea’s remarkable economic growth and how it is facing its geopolitical challenges.

South Korea did not start with many advantages. It had been devastated by war, cut off from the northern half of the peninsula and had historically difficult relationships with nearby China and Japan. Dr Byeong-Gyu Cho of the Korea Development Institute, reflected to me about how the country had rebuilt itself economically.

“In the 1960s, it was light industry, textiles, shoes, anything we can sell that can make money for Korea. That was very urgent for the Korean government, dollars. But after several years there was competition from other Asian countries”, he said.

Next came the construction of heavy industry, notably by becoming a major steel producer.

“The US government and the World Bank opposed the Korean government strategy. That’s the recommendation from advanced countries to developing countries, not to try to make steel industries, which is annoying”, Dr Cho explained.

But South Korea pressed ahead and the situation had changed by the end of the 1960s because of the strong social and political competition from North Korea. The message was that Asia had to take care of itself because American protection was no longer certain as the USA extracted itself from Vietnam. “Korea was not ready for heavy industries but had to do something, so we got all the resources to heavy and chemical industries in the early 1970s”, was how Dr Cho put it.

The growth in ship building and car manufacturing created the demand for steel. At first export orders were hard to come by eventually took off. In essence, it was state capitalism. The state led the way and picked some strategic sectors. “In most cases in that kind of system, there’s corruption. The lucky thing for Korea was there was nothing much of corruption”, was Dr Cho’s take on why it worked.

In contrast, political inflexibility was sending North Korea’s economy into a downward spiral. It remains a serious military threat but it no longer offers a credible alternative vision economically or socially. In the late 1990s, the South reached out with a so-called sunshine policy, offering economic cooperation.

Byoung-Joo Kim, Affiliate Professor at Hankuk University of Foreign Studies, was a policy counsellor in the South Korean government at that time. “I do strongly believe even to this day that the sunshine policy the government tried was an absolutely necessary policy”, he told me. “I’m glad we did it, I believe we did the right thing. It just happened to be that it didn’t work because North Korea was not the partner that we assumed”.

That failed attempt at improving relations through goodwill that was not reciprocated has returned the focus to ensuring national security, in which the protection of the United States plays a crucial role. “We absolutely need the United States’ maximum deterrence in the short term but the United States is not reliable in the long run”, said Prof Kim.

He reminded me of Donald Trump’s threats to pull American troops out of South Korea, which has left the country looking at how it can deter the North on its own, given the apparent impossibility of any rapprochement. It also has heightened the significance of Europe, not just as an economic partner but as a bastion of democratic values and political freedom.

“It’s half of our key alliances national security-wise and in economic ties, so it’s absolutely critical, no question”, explained Prof Kim. This meant that any signs of instability in Europe are viewed with concern. The Professor cited the impact of the energy crisis, particularly on Germany, as well as the twists and turns of Italian politics.

“Europe has always been a place for where we have a lot of admiration”, he said. “A little bit more towards the north and a little bit less, I suppose, on the southern side because of the uncertainties and a lot of the same thoughts about the UK because of Brexit. Our stance towards Europe is kind of perplexed and mixed in many ways but on the importance of it, there’s no question”.

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