Finding our viability

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Finding our viability

The controversy over joining the China-led Asian Infrastructure Investment Bank (AIIB) and possible U.S. deployment of the Terminal High Altitude Area Defense (THAAD) advanced anti-missile system, has yet to simmer down. President Park Geun-hye maintained her own coolness, saying “There is no need to raise a fuss about being squeezed between global powers.” What she means is that we need not be too apprehensive about the responses from global powers and neglect our own interests, and she is right. But what she demands is highly responsive diplomacy based on a flexible strategic mindset to cope with diplomatic challenges from conflicts of interest between global powers - and the wisdom to use them to our benefit.

Since our country is geographically and geopolitically surrounded by foreign powers, we are required to have extraordinary insight and the diplomatic capabilities to quickly absorb new developments and respond to them. A history of periodic invasions by Japan and China during the Joseon Dynasty, Japanese colonial rule and the Korean War as well as the more recent foreign currency crisis in the late 1990s show the country had fallen victim to periods of great woe because its authorities and corporate enterprises did not see change coming. When you’re clueless you can’t react properly at all.

Can we be sure that we are any better today? Let’s take a look at our last-minute joining of the AIIB.

China did not initiate the idea out of the purely charitable intention of creating another development bank in Asia. It is part of a bigger vision and ambition of China to realign the U.S.-led global order to better reflect its newfound status as a global economic power as mighty as the U.S., and make its currency as globally important as the U.S. dollar.

China is not only strong-willed. It has the resources and persuasiveness to get the international community to join its campaigns. And why shouldn’t they? China is offering to help build infrastructures that will boost the potential of nations across the world. It is also undeniable that China punches below its weight in global economic affairs under the current order although the country is already the world’s largest economy in terms of purchasing power. The United States has a 17.69 percent stake in the International Monetary Fund while China’s stake is just 4 percent. Changing China’s stake is not easy because the U.S. holds the sole veto which would require approval from the U.S. Congress. So China was basically forced to launch its own version of the IMF, the AIIB, and managed to get many countries in the world to support it.

We should have been well aware of the developments and acted responsively from the beginning. We should not have just joined the organization, but we also should have played a pivotal role in its founding. We should have encouraged other countries with shared views to join and work to make the organization transparent and fair.

We should have played a more active role in seeking understanding from our key ally and economic partner, the United States, and even persuaded it to consider joining later. We should have accepted the eventuality of the AIIB’s creation whether the U.S. likes it or not and persuaded Washington to approve of its traditional allies like Korea and Australia playing substantial roles in the AIIB. At the same time, we needed to urge Beijing to make the new organization a global - not merely regional - lender open to the U.S. and running on a governance system in tune with global standards.

Such diplomatic endeavors would have brought about huge positive gains for Korea. China knows very well it cannot command the central position in the global economic order overnight. The U.S. and China are already deeply interwoven through trade, investment and finance. The two are so intertwined they will avoid outright conflict, which could be damaging to both economies. The new organization is also likely to work via compromises by both parties. We could find a role in establishing a middle ground.

China will continue its strategic effort to shape a China-led “new normal world order” by starting the work in Asia first. The U.S. will also keep rebalancing power in the strategically-important Asia-Pacific region. We will inevitably find ourselves with diplomatic challenges as China comes up with new initiatives to build its clout and the U.S. endeavors to contain it to a certain degree. We need not be dejected about our “Finlandization.” Instead, we must convert the challenges into new opportunities through wise statecraft and aggressive diplomatic capabilities. That is Korea’s viability.

Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, April 6, Page 28

*The author, a former finance minister, is an advisor to the JoongAng Ilbo.

BY Sa-kong Il

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