South Korea

The Republic of Korea (ROK) will host the second Nuclear Security Summit (NSS) in Seoul on March 26 and 27. U.S. president Barack Obama, Chinese president Hu Jintao, UN secretary-general Ban Ki-moon, and leaders of more than fifty other countries and international organizations will attend. The Seoul meeting is a follow-on to the Washington NSS meeting in April 2010, which unanimously endorsed a nonbinding communiqué to secure global stocks of highly enriched uranium (HEU) and plutonium, the critical materials used in nuclear weapons, and agreed to a work plan that detailed steps states would take to implement pledges made in the communiqué. In addition, several nations made specific, national commitments to strengthen nuclear security. The Washington summit succeeded in heightening global awareness of the dangers of nuclear terrorism and motivating a number of states to improve nuclear security by ratifying international conventions and treaties on physical protection and nuclear terrorism and by updating their national nuclear security laws, regulations, and systems. Nevertheless, a recent report by the Nuclear Threat Initiative (NTI) concluded that many states have a long way to go in providing adequate security for their nuclear material and that many storage sites for HEU and plutonium around the world are not well secured. The 2012 Seoul NSS will be critical to motivate states to further the goals of the Washington summit. Like the other participating states, South Korea views the primary goal of this meeting as securing vulnerable nuclear materials worldwide and preventing acts of nuclear terrorism. In addition to hosting a successful summit, South Korea is pursuing several nuclear-related national interests not related directly to the summit. First, Seoul seeks to address the North Korean nuclear threat. It has characterized the summit as highlighting "the importance of maintaining stability on the Korean peninsula and the denuclearization of North Korea." However, North Korea will not attend the summit. South Korea invited the North on the condition that Pyongyang give up its nuclear ambitions—a stipulation that was predictably unacceptable to the North. Nor will the North Korean nuclear weapons program be on the summit's agenda, since most states see the Six Party Talks as a more appropriate venue for addressing the North Korean threat. Therefore, it is unlikely that the Seoul summit will make a meaningful contribution to a resolution of the North Korea nuclear issue. Second, South Korea has sought unsuccessfully to include nuclear safety as a subject of the summit. With twenty-three reactors that provide over 31 percent of its electricity needs and plans to provide 59 percent of electricity from forty reactors by 2030, nuclear power is a national priority for South Korea. But Seoul's nuclear power ambitions are meeting increasing public opposition in the wake of the Fukushima nuclear disaster in Japan last year, and the main opposition party has promised to scale back the ROK plans to build more nuclear power plants if it wins elections this year. The South Korean government has, therefore, sought to use the summit to restore public confidence in nuclear power. However, the Seoul summit will not focus on nuclear safety as such but address this matter only where the issues of safety and security intersect, such as securing emergency electrical supplies and control rooms. Third, the ROK would also like to make progress in negotiating a new peaceful nuclear cooperation agreement with the United States. Seoul wants the United States to grant it long-term consent to enrichment and pyroprocessing (a form of reprocessing) of U.S.-supplied nuclear materials. This permission has been granted to other countries with major nuclear programs and comprehensive nonproliferation commitments, such as Japan. By hosting the Seoul summit, the ROK hopes to advance its position by showcasing its civilian nuclear power status and nonproliferation credentials. The ROK Ministry of Foreign Affairs and Trade has stated, "The fact that Seoul has been selected as the host city of the second NSS is a clear demonstration of Korea's elevated international standing. It also reflects the international community's recognition of our strong adherence to the nonproliferation principle and leading role in addressing climate change and spreading green growth as the fifth-largest nuclear powerhouse in the world and an exemplar of the peaceful use of nuclear power." By hosting the summit, the ROK's standing and credentials will undoubtedly be highlighted. But the ROK will face challenges in obtaining the U.S. permission it seeks. Despite exceptions made for certain countries, U.S. policy is to discourage the spread of both enrichment and pyroprocessing technologies, since they produce directly nuclear-weapon-usable materials. Moreover, though it has already granted long-term permission to Japan, the United States is concerned about the presence of such capabilities in an area as volatile as the Korean peninsula and is trying to persuade North Korea to dismantle its sensitive nuclear facilities. In addition, some members of Congress are trying to pass legislation that would pressure U.S. nuclear cooperating partners to make a legally binding commitment to forego the acquisition of enrichment and reprocessing capabilities. The ROK and the United States are struggling to devise a way forward on this issue that would be acceptable to both countries before the current agreement expires in 2014. There is no simple solution to the differences between the United States and South Korea on this question, and the two states may find it necessary to develop an interim, step-by-step approach that postpones final agreement until the two countries complete their ten-year joint study on the feasibility of pyroprocessing technology. In any event, resolving the conflicting national interests involved in this thorny issue can occur only through tough compromises by both sides in bilateral negotiations. It is doubtful that Seoul's burnishing of its nonproliferation bona fides by hosting the summit will have a significant effect on the outcome of these talks.

Overview U.S.-ROK cooperation in international development is at its early stages, but forging such cooperation has great potential. It enables the two countries to jointly pursue their common interest in the promotion of international development and the shared hope that stability and prosperity will extend to developing countries, many of whom are eager to take Korea's path toward modernization. It is also a potential means to both enhance cooperation with aid recipients and strengthen aid efficiency in a fiscal environment that will require development dollars to go further to achieve their objectives. Despite the bureaucratic and political difficulties inherent in pursuing donor coordination, there are important payoffs from enhanced coordination in the U.S.-ROK development relationship. In this program on U.S.-Korea policy Working Paper, Senior Fellow Scott A. Snyder and Research Associate Seukhoon Paul Choi argue that the two countries should seize this opportunity to establish a new system of partnerships between aid recipients and donors and enhance donor coordination.

The Busan High-Level Forum (HLF)—which met from November 29 to December 1 and involved more than three thousand delegates from nearly one hundred sixty countries as well as representatives from international and civil society organizations, businesses, and foundations—agreed to establish a new development architecture. The forum was originally convened to evaluate the progress made since the adoption of the Paris Declaration for Aid Effectiveness in 2005. However, unprecedentedly broad participation made the HLF a truly universal gathering of traditional and emerging donors. This breadth of participation resulted in a compromise that goes beyond aid effectiveness to establish a new framework for development cooperation. The Paris Declaration concluded with fifty-six partnership commitments and twelve evaluation indicators that donor and recipient countries agreed to implement by abiding by five core principles: ownership, alignment, harmonization, managing for results, and mutual responsibility. But the 2011 survey and evaluation of the Paris principles revealed that only one of the twelve indicators had been fully implemented. The Busan Outcome Document (BOD) also declared that progress was "uneven and neither fast nor far-reaching." In contrast with the 2008 Accra Forum, which based its Agenda for Action on the Paris principles, the Busan HLF concluded that these principles are too process-oriented, technical, and not focused on poverty reduction. Terms like "dead aid" were used to reflect this growing skepticism toward aid effectiveness. Moreover, the European financial crisis has weakened aid commitments from traditional donors. Against this backdrop, the diversity of views among participating countries made it more difficult to achieve meaningful consensus. Traditional donors, especially the European Commission, asserted that the principles of aid effectiveness are "the best we have yet" and favored bolstering the Paris principles over refashioning aid norms. Emerging donors such as China, Brazil, Russia, and India contended that traditional donor standards should not apply to them. They argued that existing international agreements regulating north-south cooperation should be viewed separately from those that govern south-south cooperation. Developing nations insisted on untying all aid by 2013 and making their country systems (e.g., public finance management and local procurement) the default option for aid implementation. Civil society groups such as Better Aid and Open Forum argued that human rights provisions and the Rights-Based Approach should be included in the principles of the BOD. Both South Korea and the United States took a more flexible stance toward aid effectiveness, advocating a new approach designed to achieve significant poverty reduction. South Korea desired to maximize the Busan Forum's impact, attempting to forge a new global consensus around "development effectiveness" as an alternative to "aid effectiveness." But the BOD ultimately reflected compromise among these various positions. The attempt to expand the scope of the Organization for Economic Cooperation and Development Development Assistance Committee (OECD DAC) discussion from aid to development was reflected in the title of the BOD: "Global Partnership for Effective Development Cooperation." The South Korean government proposed that the concept of development effectiveness encompasses effective institutions, gender equality and empowerment for development results, the active involvement of emerging donors and the private sector in development cooperation, and a monitoring framework set with UN collaboration. Another example of an effort to accommodate opposing views was the decision to make the declaration voluntary rather than binding. China is not a signatory to the Paris Declaration and does not uphold existing principles on aid effectiveness. Though several traditional donors argued that China must abide by established aid norms, China argued that there are differences between north-south and south-south cooperation. Furthermore, it opposed the notion of "differentiated responsibilities" in regard to development. To satisfy China and other emerging donors, the phrase was changed to "differential commitment." Tied aid was another issue on which compromise limited success. An earlier draft of the BOD included a clause on untying 100 percent of aid by 2015. But the United States and Japan objected based on U.S. concerns regarding the impact of possible aid cutbacks and Japanese interests in sustaining aid recipient demand for technology. Consequently, all reference to a time frame on untying aid was removed from the BOD. As the financial crisis constrains the ability of traditional donors to expand their aid levels, there is an additional need to mobilize private finance (e.g., foreign direct investment, public-private partnerships). However, emphasis on private sector donors also drew criticism. Concerns were expressed that an enhanced private sector role would shift responsibilities from traditional donors to private actors, and that development cooperation would degenerate to profit-driven motives. Another area where consensus could not be reached was on the question of how to build the future aid architecture. The OECD DAC Working Party for Aid Effectiveness—which spearheaded the execution and monitoring of aid effectiveness—sought agreement on a new global framework. Opinions differed on how to institutionalize the monitoring of Busan agreements. Lacking consensus, the Working Party's mandate was extended to June 2012, by which time it would establish monitoring indicators and advise on how diverse development actors including businesses and emerging donors can converge to form a global partnership. Despite these many disagreements, South Korea's role and contributions as the host country were widely acknowledged. Among post–World War II independent countries, South Korea is the only nation to have transformed from an aid recipient to a donor country, demonstrating that aid does indeed have a positive effect. South Korea received more than twelve billion U.S. dollars in aid from 1945 to the 1990s. With its own development experience of using aid successfully as part of its development and modernization, South Korea led the promotion of the "from aid to development" paradigm shift. South Korea also helped to achieve agreement on "differential commitments." South Korea, with the United States, played leading roles in the inclusion of gender empowerment in the BOD. Moreover, South Korea acted as a bridge between emerging and traditional donors. South Korea will also help include UN agencies like the UNDP and UNDCF in the processes for establishing the Global Partnership. Overall, how would one evaluate the final outcome of the Busan HLF? While expectations of a binding agreement were dashed, a new development cooperation framework (e.g., south-south and triangular cooperation) that consists of an inclusive partnership with emerging donors and private sectors was established. Thus, the Busan HLF provided momentum for a major shift in the discourse on aid effectiveness that can strengthen the impact of poverty reduction in developing nations. However, only time will tell whether the compromises made for this inclusive partnership will result in sincere efforts by all parties to implement their nonbinding commitments.

The United States' membership in the East Asian Summit (EAS) may mark a new step in U.S. involvement in East Asia. But East Asian regionalism does not currently provide an answer for how to institutionalize security cooperation in Northeast Asia. In that region, the global interests of the four major powers—the United States, China, Russia, and Japan—intersect in complicated ways with the divided Korean peninsula. The fourth trilateral summit between South Korea, Japan, and China was held in Tokyo last May, and since 1997 the three countries have regularly met on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit. These meetings demonstrate the need for a region-specific political dialogue and consultation, if not an independent institutional entity. The EAS and other ASEAN-led multilateral gatherings are mainly centered on Southeast Asia and pay less attention to Northeast Asian concerns, such as the Six Party Talks on the North Korean nuclear issue. However, it is unlikely that South Korea, Japan, and China will be up to the task of effectively addressing the challenges unique to Northeast Asia. Northeast Asian leaders at the tripartite meeting have failed to prove that subregional multilateral initiatives are more effective in addressing their needs for enhanced cooperation in finance, trade, and environmental protection, not to mention the absence of agreement on North Korea's nuclear brinkmanship and its military provocations against South Korea. This lack of progress can be explained by several interrelated factors: persistent nationalism and mutual mistrust caused by colonial history and war, territorial disputes, ideological confrontation throughout the Cold War period, U.S. engagement in the region based on a bilateral "hub-and-spoke" system, and the lack of political will in facilitating multilateral cooperation. Political and security matters are still perceived as contentious rather than cooperative. Despite these impediments to regional cooperation, the evolution of institutional arrangements in Northeast Asia is an irreversible trend. To facilitate regional security regime-building efforts, four interlinked conditions, or the "four Is," should be considered: interest, idea/identity, image, and institution. First, leaders of Northeast Asian states should identify and draw consensus on strategic interests through close and frequent consultations. In addition, they should be willing to put the interests of the region ahead of their own national interests, particularly on issues that affect the region as a whole. The second requirement is a common identity, shaped and strengthened by shared values, ideas, norms, and experiences. The role of the "epistemic community," a network of professionals and opinion leaders, is essential in conceptualizing regional ideas and identity and helping decision-makers pursue value-oriented regionalism. Third, the manner in which one state's general populace views another's will be pivotal in the establishing regional cooperation. Positive images will help reduce historical animosity and nationalist sentiment, and increase reciprocal regional communication, particularly when common interests diverge. Fourth, institutionalized cooperation is necessary to provide principles and rules for states to abide by to achieve regional objectives. However, institutional arrangements can only be meaningful if the first three conditions are satisfied. In addition to these requirements, current efforts to build a Northeast Asian security regime must grapple with two questions. How essential is ASEAN to East Asian regionalism? ASEAN states moved to an ASEAN+3 structure—bringing in Japan, China and Korea—to prove the credibility and relevance of the association, but they are anxious about their ability to remain in the driver's seat and control the future direction of the organization. To secure support for its centrality, ASEAN has sought to solidify its relationship with outside powers, particularly the United States. A second controversial question is how and to what extent the United States should be included in Asian regionalism. The current U.S. shift in policy from years of perceived indifference in Southeast Asia is related to the rising regional influence of China. Despite Beijing's eagerness for an "Asian-only" regional bloc, the inclusion of the United States in the upcoming 2011 EAS signals a shift of U.S. foreign policy vis-à-vis ASEAN's desire to remain central to the development of a regional architecture. While U.S. participation in the EAS is expected to balance growing Chinese influence in regional affairs, there is a risk that "smaller" regional states could be caught up in the divergence of interests between a possible future U.S.-China rivalry, as witnessed in China's expression of grave concern about the recent U.S.-led free trade pact, called the Trans-Pacific Partnership (TPP). In this circumstance, making the EAS process relevant to Washington and accommodating Beijing will be a tall order; smaller states may have to choose sides. There is also the possibility that the EAS could come into a wasteful competition with the Asia-Pacific Economic Cooperation (APEC), which would benefit the ASEAN+3 and the Northeast Asian community process. In this case, the question of U.S. participation could again become an issue. From a South Korean perspective, East Asian multilateral initiatives that exclude the United States would cause considerable apprehension. It is difficult for Seoul to discount its bilateral alliance with the United States, given that the success of South Korea's foreign policy relies heavily on what strategic choice North Korea makes and on regional dynamics that are mostly beyond its control. U.S. inclusion in the EAS is an important component of Seoul's regional strategic calculation. Thus, it would be difficult and undesirable to avert ASEAN centrality and U.S. involvement in the development of East Asian regionalism. But there is still a contradiction between the expanded EAS and efforts to establish a Northeast Asian security regime. Considering its geopolitical position among regional great powers, South Korea is not likely to play a balancer role. Even so, it could contribute by presenting a common regional vision and objectives and in developing strategic communications and mature negotiation skills. South Korea's initiatives and leadership in the East Asia Vision Group (EAVG) ten years ago and the second EAVG launched last month are a testament to how well the country is poised to coordinate differing interests, to expand shared ideas and identity among regional states, and to play a role in the genesis of a regional institution based on open regionalism (i.e., the EAS). The newly launched Seoul-headquartered Office of the Trilateral Cooperation Secretariat, which is composed of Japanese, Chinese, and South Korean officials, is expected to play a constructive role in managing regional affairs. Still, its success depends on whether to build a "bimultilateral cooperation framework," through which newly emerging multilateral mechanisms complement existing bilateral relations in the region. Success will also be determined by whether the character of a Northeast Asian security regime is open and acceptable to other regional groupings.

The U.S. Congress approved the Korea-U.S. Free Trade Agreement (KORUS FTA) on October 12, 2011, but it remains deadlocked in South Korea's National Assembly. Despite the Lee Myung-bak administration's confidence that the trade pact will be ratified, it has become a political hot potato in Korean politics. The current legislative stalemate seems quite puzzling in two respects. The first is that the debate has been concentrated narrowly on a provision outlining a process for investor-state disputes (ISD) settlement. The ISD clause allows U.S. investors to bring their disputes with the Korean government to an international arbitration panel instead of to a local court. Opposition parties including the Democratic Party (DP) claim that the clause favors Washington's interests at the expense of South Korea's sovereignty, and that it could derail the protection measures for local small-to-medium-sized firms and retailers, as well as local farmers. The ruling Grand National Party (GNP) defends the clause on grounds that it will not affect the autonomy of the government. The GNP emphasizes that the ISD clause was in the FTA text since the KORUS FTA was signed in 2007, and that its inclusion was endorsed under the leadership of then president Roh Moo-hyun and his party before it came to lead the opposition. Figure 1. Koreans' General Attitude Toward KORUS FTA Source: East Asia Institute/Gallup Survey   Figure 2. Koreans' Attitude Toward KORUS FTA Ratification Source: Realmeter Survey A second puzzle is that consideration of the KORUS FTA has been accompanied daily by violent scenes and protests whereas the Korea-EU (KOREU) FTA, modeled on KORUS, was ratified without major incident. Arguably the KOREU FTA opened up the Korean market wider than KORUS in some industries, such as satellite communication and the environment. At the time of KOREU FTA ratification in May 2011, some lawmakers from the Democratic Labor Party resisted, but the main opposition Democratic Party simply abstained. As Figure 1 shows, Korean support for the KORUS FTA has been steadily over 50 percent, except in May 2008. However, those who favored KORUS ratification have been below a majority in most surveys (as shown in Figure 2). This suggests that the real problem is not the absence of support for the KORUS itself, but insufficient safeguards against negative effects of the pact. These puzzles raise the question of why the KORUS FTA is so politically sensitive in Korea. Two significant changes in the Korean politico-economic landscape since the signature of KORUS trade deal that may explain this puzzle involve the current electoral cycle and an apparent ideational shift. First, there has been a dramatic change in Korean electoral politics following the October 26 by-elections this year. As Scott Snyder noted in his recent essay on the Council on Foreign Relations (CFR) blog "Asia Unbound," independent opposition candidate Park Won-soon won the Seoul mayoral race, which boosted the opposition and set back the KORUS FTA. The election result has allowed the opposition to feel more comfortable taking a hard-line stance toward KORUS ratification. Indeed, the Democratic Party published its own opinion poll on October 23, 2011, in which support for early ratification of KORUS was a mere 30 percent. Furthermore, Park won strong support from younger voters in their twenties to forties who have been the most critical of the KORUS FTA. According to a Realmeter opinion survey conducted on October 22, 2011, about 40 percent of respondents in their twenties and thirties opposed ratification of the renegotiated KORUS agreement, while only 34 to 37 percent were in favor of it. When asked about their support for the KORUS FTA process as a whole, 46.2 percent responded negatively (versus 38.5 percent), making younger voters far more negative toward the KORUS FTA than their older counterparts by margins of up to 30 percentage points. Thus, opposition parties hoping to capitalize on younger voters' distrust of the KORUS FTA ahead of next year's general and presidential elections may present a daunting barrier to KORUS ratification. Figure 3. Korean Opinion of National Policy Priorities Source: East Asia Institute Issue Briefing No. 102, August 2011 Second, there has been an ideational shift in South Korea since the 2008 global financial crisis, revealing South Korean judgments that neoliberal policies have failed. The experience of the crisis has undermined the economic rationale for FTAs in general and KORUS in particular. Korean public preferences have shifted in 2010 toward distribution and welfare over economic growth and the free market as a guiding principle of domestic political economy. Figure 3 shows that pro-growth discourse of the sort that President Lee has espoused had dominated the Korean national policy agenda up until 2009, but subsequently reversed itself. Respondents who favored policies designed to reduce economic polarization increased to 30.4 percent in October 2011 from 23.2 percent in December 2010. In contrast, support for economic growth as the top priority dropped from 19 percent in February 2011 to 14.6 percent in 2011. Despite the argument that the KORUS FTA would strengthen Korea's security environment, the importance the Korean public has placed on the issue of national security has dropped in relative importance from 11.1 percent in December 2010 to 4.4 percent in October 2011. In sum, the foundations for the KORUS FTA such as income growth, international competitiveness, and security externalities have been seriously shaken. President Lee's "fair society" slogan has also inadvertently hurt chances for KORUS FTA ratification. Domestic supporters of FTAs with Chile and the United States emphasize positive first-mover advantages such as export growth and market shares. But the "fair society" discourse encourages people to ask who will benefit most from FTAs, and some have concluded that the main beneficiaries are the "1 percent" of the population represented by large conglomerates versus small and medium enterprises (SMEs) and local retailers. The ISD clause had been taken for granted as a global standard by the majority of Koreans, a circumstance that explains why the provision was not controversial at the time of signing the KORUS FTA. But previously accepted global standards are now criticized for their association with financial failures that originated in the United States and the ISD provision—a signature component of the American FTA or bilateral investment treaty (BIT) model—has come under mounting criticism. A plurality (49.3 percent) of survey respondents view the renegotiated KORUS FTA as "humiliating" and as favoring U.S interests, whereas only 38.3 percent thought that it reflected "a range of interests." Since Korea depends less on the European Union (EU) than on the United States, the issues involved with the United States are far more sensitive in Korean politics, heightening potential for public criticism of the KORUS vs. the KOREU FTA. Rising nationalist sentiment associated with KORUS suggests that possible FTAs with neighboring East Asian economic giants China and Japan will be doomed as soon as they touch on issues of national sovereignty. Despite expected huge economic benefits from FTAs, historical and territorial disputes with China over its Northeast Project and Japan's claim to Dokdo/Takeshima (also known as the Liancourt Rocks) will hamper any attempt to strike an FTA deal with South Korea. Korea's FTA debate has become an illustration of the political limits on economic cooperation in East Asian international relations.