South Korea the neo-mercantilist?

The pressure to export military armaments to Ukraine will soon subside but South Korea's refusal will leave a bitter taste.

South Korea’s steadfast refusal to export military armaments to Ukraine, even amid intensifying international appeals, is interesting. On the surface, the Yoon Administration purported to be a global pivotal state, and gave rhetorical support to the values of freedom, democracy and the rule of law. Beneath the surface, it continues a long foreign policy tradition characterized by the absence of values and the prioritization of economic strength and trade surpluses - quite simply, neo-mercantilism.

Neo-mercantilism is an economic strategy or policy framework where a country seeks to achieve economic and strategic goals by actively managing its trade and investment flows to maximize national wealth, power, and self-sufficiency. It draws on principles of classical mercantilism from the 16th to 18th centuries but adapts them to modern contexts, focusing on leveraging trade, industrial policies, and state intervention to benefit the national economy. Key features of neo-mercantilism include:

• Export promotion: Emphasis on increasing exports over imports to achieve a trade surplus, which helps accumulate foreign reserves and strengthen the economy.

• Protectionism: Use of tariffs, quotas, subsidies, and other trade barriers to protect domestic industries from foreign competition.

• Industrial policy: Active government involvement in fostering specific industries, often through subsidies, research and development support, or other incentives.

• Strategic resource control: Ensuring access to critical resources through policies or investments abroad, aiming to reduce dependency on foreign suppliers.

• Currency manipulation: Deliberate undervaluation of a country’s currency to make exports more competitive and imports more expensive.

• National security considerations: Integrating economic policies with security goals, such as reducing dependence on foreign technology or securing supply chains in critical sectors.

• State-led capitalism: Government plays a central role in shaping economic outcomes, often through state-owned enterprises or strategic alliances with private firms.

Neo-mercantilism remains a defining feature of South Korea’s economic and foreign policy. Emerging from the ashes of the Korean War, South Korea adopted a strategy centered on export-driven industrialization to achieve rapid economic development. This historical context forges a pragmatic approach where economic imperatives often outweigh other considerations.

South Korea's economic rise relied heavily on fostering favorable trade relationships while avoiding entanglements that could jeopardize market access or economic stability. This approach has evolved into a cautious diplomacy that prioritizes maintaining strong economic ties with key trading partners, such as China and the United States.

Even as South Korea modernizes its military and grows its defense industry, these priorities shape its restrained posture in the arms trade, particularly in contentious conflicts like the one in Ukraine.

A neo-mercantilist reluctance to support Ukraine?

Since the Russian invasion of Ukraine in 2022, South Korea has provided humanitarian aid to Ukraine but has consistently declined requests to supply lethal military aid. These requests have been remarkably consistent from Western partners, predominantly the United States, the European Union, NATO,  as well as from individual member and partner states, including Poland, Germany, France, the United Kingdom, Canada, and Australia. South Korea has consistently left its options open.

The line in the sand that it draws on each visit of a foreign leader is continuously redrawn. Despite even increased cooperation between Russia and North Korea, South Korea refused to support Ukraine.

North Korea and Russia significantly strengthened their bilateral relations with Russia's ongoing conflict in Ukraine. This deepening alliance was formalized through the North Korean–Russian Treaty on Comprehensive Strategic Partnership, signed 18 June 2024 during Russian Vladimir Putin's visit to Pyongyang. The treaty encompasses political, trade, investment, and security cooperation, with key provisions including:

• Mutual Defense Commitment: Article 4 stipulates that if either nation is subjected to armed invasion, the other will provide military and other assistance using all available means, in accordance with Article 51 of the UN Charter and their respective national laws.

• Defense Capability Enhancement: Article 8 mandates the establishment of mechanisms to strengthen defense capabilities to prevent war.

In practical terms, the partnership led to North Korea providing military support to Russia's efforts in Ukraine. Unconfirmed reports indicate that North Korea has dispatched thousands of troops to assist Russian forces, with estimates even suggesting up to 100,000 North Korean soldiers may ultimately be involved. Confirmed reports also indicate that North Korea has supplied Russia with artillery shells and other munitions, bolstering its military capabilities in the conflict. 

Yet, South Korea did nothing! It provided limited humanitarian aid, but refused to condemn Russia or support Ukraine militarily. Think about it… a state that purports to be a global pivotal state, and gives uninhibited rhetorical support to the values of freedom, democracy and the rule of law - has done absolutely nothing to help a fellow democratic state in its struggle for freedom from an authoritarian major power. Why did South Korea not support Ukraine? There are multiple reasons:

• Ukraine is distant and not a core strategic interest.

• South Korea must focus on its own defense vis-a-vis North Korea.

• There is no public support.

• Russia is important to South Korea’s energy security, and supplies significant amounts of liquefied natural gas (LNG) and other raw materials critical to South Korea's industrial sector.

Each of these reasons can be easily debunked - except the last.  

• Ukraine is distant and not a core strategic interest - as was South Korea to every UN participating member in 1950. 

• South Korea must focus on its own defense vis-a-vis North Korea - Russian cooperation with North Korea means the defense of Ukraine weakens North Korea. The two conflicts are inextricably connected.

• There is no public support - a smart public supports no participation in military conflict. It is the government’s job to put forward a coherent case to justify it and secure public support.

The sole reason South Korea refused to support Ukraine militarily is LNG. Russia is important to South Korea’s energy security. In layman’s terms, neo-mercantilism. South Korea’s strategic prioritization of its economic and industrial interests over broader value-based commitments. By maintaining a neutral stance, South Korea avoids jeopardizing its critical trade relationships, particularly with China and Russia, which are vital markets for its export-driven economy. This restraint aligns with neo-mercantilist principles, where states emphasize economic security and domestic industry growth, often at the expense of collective security initiatives. 

However, in the longer term, this neo-mercantilist stance will mark South Korea as a questionable partner. 

As a critical ally under the U.S. security umbrella, South Korea’s reluctance to contribute militarily to Ukraine raises questions about its reliability as a partner in global security initiatives. As South Korea rises as a middle power, its economic strength comes with growing expectations to play a more active role in shaping the international order. Seoul’s reluctance to provide military aid to Ukraine risks undermining its credibility as a committed global stakeholder and partner. It is not doing this. 

It is currently convenient for most states to work closely with South Korea at the moment because it is at the height of its manufacturing capabilities. South Korea is a leading global arms exporter in recent years, with significant contracts in Europe, the Middle East, and Asia. However, these exports are often crafted to minimize geopolitical entanglements, favoring deals that do not provoke backlash from powerful states like China or Russia. By refusing to arm Ukraine, Seoul is signaling that it is not part of the broader liberal-democratic order at heart, but rather because of convenience. There are no values but just neo-mercantilist interests. Shared values arguably last longer than shared economic convenience. 

South Korea’s refusal to provide military support to Ukraine risks souring its relationships with NATO, the EU, and the Democratic Party in the United States, as these entities view the Ukraine conflict as a defining moment for global democratic solidarity. While NATO and the EU have actively rallied to counter Russia's aggression, South Korea’s reluctance may be perceived as a failure to uphold shared democratic values, undermining trust and goodwill. 

Similarly, the Democratic Party, which has prioritized alliances and a unified front against authoritarianism, is likely to view Seoul’s neutrality as a strategic disappointment. Although pressure on South Korea to support Ukraine might subside under a Trump administration, given Trump’s historical skepticism toward NATO and limited focus on the conflict, the lingering sense of abandonment and misalignment in values will persist among Western allies. 

Imagine for just one second, a scenario ten years from now - an indepdendent Ukraine shakes off Russia and secures its freedom. With EU support, it again establishes itself as a manufacturing and agricultural power house. When North Korea next threatens South Korea, will Ukraine and the EU lend their support? Perhaps they too will provide South Korea with humanitarian aid. Ambulances, gas masks, and meal kits as the North Koreans march down the peninsula with their advanced Russian technology and battle-hardened, experienced soldiers.

Enduring sentiments play a role in foreign affairs. South Korea’s refusal to support a liberal-democratic state could complicate future collaborations and erode South Korea’s standing as a reliable partner in the eyes of its democratic allies - and foreign policy is best crafted with a long-term outlook. Short-term gains cost the nation long-term credibility.