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RubricheBlue House 22Canberra and Seoul strengthen economic ties: howitzers and rare...

Canberra and Seoul strengthen economic ties: howitzers and rare earths.

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Moon Jae-in was the first foreign leader to visit Australia since the pandemic’s start. According to Nikkei Asia reports, the two Indo-Pacific countries signed, on December 13, 2021, an agreement worth $ 930 for the construction of a howitzers factory in the Australian state of Victoria. In addition, they have pledged to establish a stable exchange of raw materials between the two nations, including lithium, cobalt and rare earths. Could it be South Korea’s change of stance towards China? 

This article is part of a series dedicated to South Korean President Moon Jae -in’s last year in office.

The foreign policy of the Korean administration

The five years of the current tenant of the Blue House were marked by moments and encounters – and not meetings – of historical significance for the Korean peninsula, for instance, the joint declaration between North and South that took place on the occasion of the third inter-Korean summit in 2018. For the first time since the signing of the armistice in ’53, a North Korean Supreme Leader crossed the border between the two Koreas. While the Moon administration has firmly pushed for a rapprochement with the Democratic People’s Republic on the one hand, on the other, it has been characterized by a substantial departure from Japan. The lack of enthusiasm shown by Tokyo in the dialogue is evident if we thought of the lack of bilateral meeting during the G7 in June 2021, a meeting requested by Seoul and promptly rejected by Tokyo.

Furthermore, the approach mentioned earlier towards Pyeongyang does not go well with a strategy of military containment of the Dragon. From the South Korean point of view, Beijing represents an essential player in the pacification process of the peninsula. The fact is that President Moon Jae-in has signed an agreement to construct an artillery systems factory with a country, Australia, which is involved in both the AUKUS and the Quad, the institutions seen as opposing China. If, on the one hand, this gesture cannot necessarily be read as a promise of intent by the Country of the Calm Morning, on the other, it certainly makes us reflect if read in relation to the limitations imposed by China on the THAAD missile system in Korea at the beginning of the Moon mandate.

The actors and elements involved in the agreement

The signing was also attended by representatives of the Hanwa Group, the largest chaebol, one of the predominantly family-run South Korean conglomerates in the defence sector; since 2019, it has established a subsidiary in Australia that mainly deals with the artillery mentioned above and anti-infantry vehicles. Although the Asian and trade press does not mention it as far as English-speaking sources can tell, it is quite unlikely that the deal will come totally unexpected. In addition, the Hanwa Group owns factories and research laboratories around the world, including the United States and China, which makes us reflect on the fact that the interdependence of this agreement is not only regional but also global.

During the agreements, there was talk of the funds dedicated to the construction of a howitzer factory in Australia and the possibility of establishing a supply chain of rare earths, cobalt, lithium, and other minerals. Why is it almost more relevant to focus on this aspect than on the military? First of all, the microchip crisis was of such a broad scope that it led States to a real struggle to grab companies that were willing to build factories on their territory. Therefore, the procurement of raw materials represents a significant aspect in the production of these electronic components.

If the Sino-American competition is in the spotlight, its effects on the states involved in it, willy-nilly, are much less so. The CHIPS for America Act, for example, produces effects on the companies of the allied States in the Indo-Pacific to which the Washington public decision-maker could be indifferent. South Korea could be affected by US tax policies not only for microchips but also for electric batteries. While the Japanese Sony and the Taiwanese TSMC make deals and while the American Intel does the same with the European Union, strengthening relations with Australia would seem an almost obligatory choice, considering that the latter is part of the RCEP and the CPTPP at the same time.

The presidential elections of March 2022

In conclusion, the Republic of Korea finds itself in a strategic and economic ambiguity position that is not necessarily incompatible with Sino-American competition. US President Joe Biden himself, during his meeting with his South Korean counterpart, admitted that the best approach to the peninsula is “diplomatic and balanced”, one of the elements of opposition to his predecessor Donald Trump.

However, as well as the Korean non-participation in FOIP, the Japanese -American strategy for a Free and Open Indo-Pacific is not a foregone conclusion. The future tenant of the Blue House might seriously consider at least an informal adherence to the strategy in the form of a trilateral Washington-Tokyo-Seoul meeting. A possible change of Korean leadership does not necessarily translate into a clear stance against China. South Korean conservatives are historically closer to the chaebol than the democrats, the party of the current President. Therefore, the future of security and economic relations is still highly uncertain.

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