From polycrisis to polyopportunity

Ramon Pacheco Pardo
The author is a professor of international relations at King’s College London and KF-VUB Korea Chair at Brussels School of Governance, Vrije Universiteit Brussel.

Relentless U.S.-China competition. Russia’s invasion of Ukraine. Israel’s war with Hamas. The economic aftershocks of the Covid-19 pandemic. The challenge of climate change. And, let’s not forget, North Korea’s ongoing belligerence. We seem to live in a time of polycrisis, with doom and gloom all around the world.

For middle powers such as South Korea, this is a concerning outlook. After all, the assumption is that the great powers such as the United States and China have substantial freedom of action, yet middle powers can only implement a reactive foreign and economic policy.

Yet, with every new crisis comes a new opportunity. And South Korea is well positioned to seize this moment of “polyopportunity.”

Take the case of economic and tech competition between the United States and China. South Korean policy-makers and businesspeople are strong proponents of trade openness and WTO rules-based multilateralism. Yet, this world is not coming back any time soon. Economic security and derisking are not mere buzzwords: they are the reality of today’s global economy, led by the industrial policies of the ‘Big Three’ of China, the EU and the United States.

Seemingly, this would spell trouble for South Korea. Yet, the country attracted record investment of $18.7 billion and record investment pledges of $32.7 billion in 2023, according to the Ministry of Trade, Industry and Energy. And which sectors are benefiting the most from this vote of confidence by international investors? Above all, high-tech sectors such as chips, batteries, ships or cars. In other words, foreign firms and governments are bullish about the present and future of South Korean firms to continue to be world leaders in key sectors that will drive global economic growth.

Take the case of the announcement by Samsung Electronics and ASML that they will invest $760 million to build an advance chip plant in South Korea. In the past, firms such as ASML would have hesitated to invest in South Korea, which as a developed economy cannot compete with China or Southeast Asia based on cost. But as politics rather than market factors have become more central to economic decision-making, South Korea has become a more attractive partner thanks to its innovation-driven and stable economic environment.

It is thus no coincidence that Yoon Suk Yeol became the first foreign leader to visit the cleanroom of ASML in the Netherlands during his state visit last December. For foreign governments and firms, wooing South Korea has become a top priority.

South Korea’s growing arms exports also underscore the opportunities that the current polycrisis environment affords to well-positioned and strategically astute middle powers. According to Ministry of National Defense estimates, South Korean arms manufacturers signed deals worth $14 billion in 2023. This was a slight decline from a record high of $17.3 billion the year before. Yet it was the second-best year on record. Plus, it came with a more diversified set of customers, with the number of importers trebling and the number of weapon systems being sold doubling.

Europe remains alarmed by Russia’s invasion of Ukraine and more general aggressiveness. Turmoil in the Middle East continues, and has actually increased in recent months due to the conflict between Israel and Hamas as well as Yemen’s Houthi rebels threatening commercial vessels crossing the Red Sea. It is thus unsurprising that NATO members including Poland or Estonia and Middle Eastern countries including Saudi Arabia and the UAE are beefing up arms imports and defence agreements with South Korea. Plus, countries feeling threatened by China, including Australia or Malaysia in recent months, have also turned to South Korean arms manufacturers to get the infantry fighting vehicles and jet fighters that they consider central to their security.

In this respect, the prospect of an unreliable U.S. president such as Donald Trump taking office again, coupled with the ongoing instability in different world regions will only benefit South Korea. That is a key advantage of long-term cooperation between government and private firms in key sectors unaffected by domestic politics, something that South Korea excels at.

South Korea, thus, is not simply a pawn doomed to constantly react to the whims of great powers or a volatile global environment. It is an example of a middle power that is playing its cards very well in an unstable world. Some may call it a global pivotal state, as the Yoon government does. Beyond labels, it is a country seizing the polyopportunity that a world of polycrisis brings.