Moon Jae-In: South Korea’s Merkel?

Both leaders believed that economics and energy concerns locked their countries into a path of appeasing threatening neighbors.

South Korean President Moon Jae-in, left, and his wife Kim Jung-sook wave as they leave the presidential Blue House in Seoul, South Korea, Monday, May 9, 2022.

When South Korean President Moon Jae-In took office in May 2017, the Asian edition of TIME magazine hailed him as “the negotiator.”

Moon’s five-year tenure did hold true to this name in a way, as his presidency was peppered with negotiations and compromises with Pyongyang and Beijing. Yet tensions between Seoul and Tokyo remain high as historical strife between the two states persist, much to the dismay of U.S. decision-makers who anticipated cooperation between the Asian allies to push back on China’s ambitions in the Asia-Pacific.

More recently, Russia’s invasion of Ukraine and the subsequent international sanctions against Moscow have left South Korean business interests uneasy, and North Korea’s ongoing missile tests since January 2022 serve as a reminder that Moon failed to keep Pyongyang at bay.

Moon’s term ends on May 9, and his economic and foreign policies are up for scrutiny. Like Germany’s long-time Chancellor Angela Merkel, he has defined his country’s foreign policy as one cornered into appeasement in terms of economics and energy. As a result, both countries have their hands tied at a time when assertiveness is most needed.

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Moon and Merkel share the same traits of appeasement. Moon’s attempts to end North Korea’s nuclear and missile development through engagement took up most of his five years of diplomacy.

Since the inter-Korea summits in 2018, Moon has continuously appealed to Pyongyang for peace on the Korean Peninsula, sometimes with economic incentives. But North Korea’s hostile actions intensified after the failed North Korea-U.S. summit in Hanoi in February 2019. Pyongyang declared to further advance its weapons technology during the 8th Party Congress in January 2021 and closed communication channels with Seoul and Washington.

Moon was flustered when North Korea demolished the inter-Korea joint liaison office in June 2020. After expressing “regrets and warnings,” he continued to call for dialogue, including offering two end-of-war declarations at a United Nations. Although Kim Jong Un said inter-Korea ties could improve in recent letters exchanged with Moon, his statement rings hollow as he later vowed to “further strengthen” North Korea’s nuclear arsenal.

Pyongyang launched seven missile tests in January 2022, consisting of the latest hypersonic, short-range, and intermediate-range ballistic missiles. It further extended its provocations by allegedly launching an intercontinental ballistic missile and a platform for delivering tactical nuclear weapons during continued testing in March and April.

When dealing with the simmering China-U.S. competition, the Moon administration adopted “strategic ambiguity” as the core of its policy. It was not hesitant about hedging its alliance with the United States by establishing close relationships with China.

Back in his speech at the Beijing University in 2017, Moon went as far as stating that “China is a country high as a mountain, and even though South Korea is a ‘small country,’ it would be honored to share the ‘China dream.’” He has also kept silent upon Beijing’s controversial policies on Hong Kong and alleged abuses in Xinjiang.

Moon’s cautious China policy came from three main factors – trade, sanctions, and North Korea. South Korea’s economy is highly dependent on China, as about 25 percent of its total exports are sent to the Chinese market. Hence, South Korea’s economic vulnerability to China creates a persistent fear of damaging such economic benefits should the government in Seoul displease an increasingly sensitive Beijing.

South Korea’s vulnerability was made clear when China imposed unofficial economic sanctions on South Korea starting in 2017. Beijing targeted South Korean industries after Seoul deployed the U.S. Terminal High-Altitude Area Defense (THA) missile defense system in July 2016. Beijing views THA as a direct security threat, despite reassurances from South Korean and the U.S. that deployment was only aimed at defending against the North Korean missile threat. After THA deployment, China prohibited imports of South Korean cultural products, such as movies and dramas, and informally banned Chinese nationals’ tourism in South Korea. The economic cost amounted to a 18.7 trillion Korean won ($15.7 billion) loss for the South Korean tourism industry alone. The Moon administration, which was inaugurated right after China pushed ahead with its THA coercion, tightly restrained its policy toward China, wary of any further economic sanctions from Beijing.

Moreover, as inter-Korea talks stalled, Moon devoted his efforts to formally end the Korean War during the last year of his presidency. That only increased China’s role in South Korean foreign policy, as Beijing could play a role in inducing North Korea’s cooperation. When liberal democracies including the United States, Australia, and Japan boycotted the 2022 Beijing Winter Olympics over China’s human rights records, South Korea became an outlier as it sent a diplomatic delegation. Moon was hoping that, with the help of China, the Beijing Olympics could revive inter-Korea dialogues as the 2018 Pyeongchang Winter Olympics did. However, North Korea did not even take part in the Games, forestalling any hopes of a breakthrough.

Moon’s strategic appeasement of both China and North Korea has left South Korea’s alliance with the United States in jeopardy, but Beijing’s asymmetrical influence over Seoul remains unshaken.

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U.S. National Security Advisor Jake Sullivan was not shy in expressing that Moon’s aim to formally end the Korean War before denuclearizing North Korea is inconsistent with Washington’s security commitment in the region.

The ROK-U.S. joint military exercises were also stalled by Moon after 2018, for fear of provoking North Korea. This decision only shook the solidarity of the ROK-U.S. alliance and its preparedness against North Korea while achieving nothing in return.

This leaves South Korea’s current state strikingly similar to when Merkel left Germany. Much of Merkel’s decision-making fell under the mantra of “Wandel durch Handel” (change through trade), which assumed that through engagement and establishing trade relationships, states with problematic records would eventually liberalize. Germany used this policy with regard to China as well as Russia.

This doctrine explained why a country renowned for its democratic values and substantial influence on Europe’s largest liberal international organization was silent when action was needed.

The NGO Human Rights Watch urged Merkel to use her leverage to bring up the matter of Russian human rights activists in detention during her meetings with Russian President Vladimir Putin. It noted that the scale of Russia’s political repression was akin to the Soviet times and urged Merkel to voice up on the subject with her “principled voice.’”

Likewise, at the height of the sometimes violent Hong Kong pro-democracy protests in 2019, activists and demonstrators appealed to Merkel to use her influence to convince Beijing to honor its promises regarding the territory’s democracy, believing that Merkel’s first-hand experience with East Germany’s authoritarianism would help their cause.

Instead of answering the activists’ pleas, Merkel chose lethargy. While she did raise the topic of human rights to Putin and proposed a vague concept of EU unity, there were no follow-up actions. Likewise, the chancellor also signed a series of trade agreements during her many visits to China and welcomed further Chinese investment in Germany, earning Beijing’s praise as an advocate for closer Germany-China and EU-China relations.

Energy Dependence

Moon and Merkel also share a coincidental voluntary nuclear power phase-out policy, which eventually drove the two countries to suffer from energy dependence on foreign oil and gas.

Moon vowed to end South Korea’s nuclear power as soon as he took office in 2017, which at that time took up to 30 percent of South Korea’s energy sources.

Nuclear energy’s stake soon plummeted from 30.0 percent in 2016 to 23.4 percent in 2018, causing spiking electricity charges and leaving Korea Electric Power Corporation with its largest ever deficit, $15.8 billion, in 2021.

This abrupt cut-off of nuclear power threatened South Korea’s energy sovereignty by increasing energy dependence on natural gas exporters, especially Russia. In 2019, Russian coal made up 20 percent of South Korea’s total coal import, and 9.02 billion kilograms of Russian oil was pumped into South Korea in the same year.

Luckily, things could be changing, though it took a horrific wake-up call: Russia’s invasion of Ukraine in February. Although South Korea imported 2.98 million barrels of crude oil from Russia in March, the figure is 44 percent less than a year earlier. Industries are confident about a smooth phase-out of Russian oil, given ample alternatives to fill the void.

Yet until recently, Germany could not afford such alternative options. After abandoning nuclear energy hollowing the horrors of the Fukushima disaster in 2011, it failed to replace nuclear power with renewable sources. Instead, Germany took the easy alternative of importing Russian natural gas, with Russia’s Nord Stream 1 pipeline as the go-to.

Even as Russia annexed Crimea in 2014, Germany had already become too reliant on Russian energy and could only hope that dialogues could change Putin’s mind. Between occasional urging for Russia to address its human rights issues or security concerns from its neighbors, Merkel nonetheless pushed forward an additional pipeline from Russia, Nord Stream 2, to the alarm of Ukraine and much of the EU and the dismay of the United States.

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By the time Russia’s invasion of Ukraine erupted, over 40 percent of German electricity came from coal, oil, and gas. A handsome portion came from Russia: Russian gas had taken up 55 percent of the total gas imports.

Cornered Economics

Moon’s complacency has left his country’s economy at the mercy of a Beijing that is fully aware of the asymmetrical dependency in place.

South Korea’s reliance on China’s industrial resources left its main industries dependent on Beijing’s behaviors. According to the Korea Institute for Industrial Economics and Trade, 1,088 imported goods are considered vulnerable to China’s economic sanctions, including lithium and magnesium, which are crucial materials for South Korea’s lifeline industries.

Overreliance on Chinese resources created the urea shortage crisis in October 2021. Urea can breakdown nitrogen oxide pollutants produced from diesel engines into more environmental-friendly substances such as nitrogen, carbon dioxide and water. Urea is thus needed to run the Selective Catalytic Reduction (SCR) engines required by South Korea’s environmental regulations for trucks using diesel engines. As South Korea imported 97.6 percent of urea from China, its domestic distribution network was hard hit when China locked up its urea export. Trucks in South Korea had to stop their operations.

Despite China’s unofficial economic sanctions on South Korea for its THA deployment in 2017, Moon did not make any efforts to reduce trade dependency on Beijing.

Instead, he pledged a “three-noes” policy that excused South Korea from the U.S. missile defense program, capped THA deployments, and rejected any trilateral alliance with the U.S. and Japan. In the meantime, South Korea’s total exports to China took up roughly a quarter of the overall figure.

Moon’s appeasement did not reverse Beijing’s wrath. It only weakened South Korea’s position and sowed mistrust with the United States, while Beijing never fully lifted its unofficial sanctions on South Korea.

Moon was also initially hesitant to place sanctions against Russia amid escalating violence in Ukraine. It was not until the United States excluded South Korea from the list of countries exempted from the Foreign Direct Product Rules that Seoul hastily imposed export bans on strategic items, excluded Russia from SWIFT , and suspended transactions with key Russian banks.

Moon’s economic performance is reminiscent of Germany under the Wandel durch Handel mantra. Instead of liberalizing China and Russia as intended, this approach caused both South Korea and Germany to become reliant on autocracies as their economic and energy lifelines.

Amid the growing skepticism against China’s illiberal agenda and role as Europe’s strategic competitor, Germany’s automobile manufacturers like Volkswagen and Mercedes Benz were strengthening business growth in China. Automotive companies continued to call for more cooperation with China as German automobile executives hailed their “China First” market strategy and called the country a “home from home.”

They remained steadfast on their Xinjiang investments despite the country’s foreign minister saying that “no company can ignore the fact that hundreds of thousands of Uyghurs are being held in camps.”

“It would be very damaging if Germany or the EU wanted to decouple from China,” Volkswagen executive Herbert Diess was quoted as saying.

When finally acknowledging China’s position as the EU’s systemic competitor, Merkel warned against Europe decoupling from China, arguing that engagement is still fundamental.

Right before U.S. President Joe Biden’s inauguration, Merkel became a key force in pushing through the EU’s Comprehensive Agreement on Investment (CAI) with Beijing, despite expectations that Biden would support a multilateral stance against an assertive China.

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Both Berlin and Beijing were eager to close the CAI deal, which was only to be shelved months later when tensions between China and the EU became too acute.

Neither Russia nor China has grown fond of liberal values through hefty German trade deals and flattery. Instead, Germany became the subject of change through trade.

Ways Forward

The incoming Yoon administration is likely to encounter greater hardships than any of its predecessors. Russia’s invasion of Ukraine has pushed South Korea to make a choice: give up on either its 70-year alliance with the United States or sacrifice some short-term economic benefits.

Yoon’s manifesto suggests he would lean toward the United States and take a relatively anti-China stance. His pledge to deploy additional THA batteries would surely anger China, as would his hints about South Korea’s possible Quad membership. At the same time, such moves would increase the country’s deterrence against China’s expansion and North Korea’s provocations.

In addition, the Yoon-Biden summit in Seoul in May could possibly soothe the strained ROK-U.S. alliance. Considering the Quad summit in Tokyo immediately afterwards, Biden’s trip will set the stage for South Korea’s cooperation with the United States and Japan and even its possible Quad membership.

Yet Germany’s political quagmire proves that changes take time. Even with Chancellor Olaf Scholz’s declaration of Zeitenwende – a historical turning point – and a resulting sea-change in Berlin’s its willingness to provide Ukraine with heavy weaponry and address its reliance on Russian oil, Germany’s energy sector seeks ways to bypass international sanctions against Russian oil and Russia-friendly party old guards still wield certain influence.

If Moon and Merkel’s stories have proved anything, it is that the short-term mercantilist gains from accommodating neighboring bullies do not outweigh the costs to long-term economic and political security.

It is still unclear what the future Yoon administration could bring to South Korea in a political environment riddled with vested interests and easy ways out. But it is up to the next political leader to set the course straight.