On June 27, 2012, the Middle East and North Africa (MENA) Center at the Asan Institute for Policy Studies hosted a roundtable examining the causes, characteristics, and potential consequences of the rapidly growing economic ties between South Korea and the Middle East. The roundtable discussion, titled “The ‘Second Middle East Boom’ and the Search for South Korea’s Middle East Strategy,” invited leading Korean experts from government, the construction industry, and the research and academic community to share their views and insights on the major trends and developments shaping Korea’s economic relationship with the Middle East.
The roundtable made the following five recommendations for the Korean government:
- Limit exposure to Gulf Cooperation Council oil-producers by recalibrating focus on newly emerging democracies such as Iraq and Libya.
- Significantly increase spending on public diplomacy initiatives including health and education development assistance for states making democratic transitions, especially Tunisia and Egypt.
- Attempt to maintain commercial relations with Iran, especially among small and medium enterprises, while continuing to abide by international sanctions against Iranian oil.
- Deepen the political relationship with Turkey as a balancer against unchecked Saudi and Iranian influence on smaller, more vulnerable states.
- Support and facilitate the growth of Islamic finance as a major form of long-term capital and investment in the region.
Session I: “Domestic Changes in South Korea and the Middle East”
Dr. JANG Ji-Hyang, Director of the Middle East and North Africa (MENA) Program at the Asan Institute for Policy Studies, opened session one, titled “Domestic Changes in South Korea and the Middle East,” by discussing some of the central features of what is popularly known as the “Arab Spring.” Dr. JANG’s presentation noted that few people had predicted the uprisings, and that, moreover, even fewer could have imagined the vastly different trajectories that each of the uprisings would eventually take. In particular, she highlighted three general paths that appear to have been dominant: (1) the largely successful, non-violent uprisings in Tunisia and Egypt; (2) the alternating reform/repression response in the oil-rich Gulf Cooperation Council states; and (3) the counter-revolutionary push-back and intra-state violence that has occurred in Libya, Yemen, and Syria. Consequently, Dr. JANG noted that given the variety of state responses to the initial protests across the region, South Korea’s Middle East policy would require a diversification of investment and engagement priorities that recognized these differences. For instance, a continued dependence on GCC oil supplies that ignored the region’s changing dynamics may not be in Korea’s long-term interests, particularly with the resurgence of alternative suppliers in newly democratizing states.
Dr. BYUN Young-Hark, Assistant Professor at the Catholic University of Daegu, next spoke on the changes in South Korea’s overseas investment strategy since the 1970s, during Korea’s first wave of investment and construction in the Middle East. He noted that the trend from labor-intensive construction to technological and skills-based involvement was a positive process that needed to further supported. In contrast, Dr. BYUN argued that the growing dominance of the Middle East construction market by larger Korean conglomerates could have problematic implications for future competition as small and medium-sized companies are marginalized. Dr. BYUN also highlighted the challenges that MENA states, and particularly GCC states, face vis-a-vis their institutional capacities. Specifically, he pointed out that, despite significant progress in recent years, the region was not yet fully-democratic or held publically accountable. In addition, there was a low level of institutionalized decision-making process in the region in relation to weak administrative capacities. Given that the current ‘gold rush’ would eventually stagnate, Dr. BYUN argued that there was a need to re-assess the country’s long-term investment strategy in the Middle East.
Mr. KANG Myong-Il, Director of the Africa-Middle East Division at the Ministry of Foreign Affairs and Trade, opened the discussions by pointing out that despite the limits to the government’s current Middle East policy, there were currently no alternative strategies available. Mr. KANG noted that Korea’s Middle East policy was in fact a combination of the sometimes-competing agendas and strategies of different government agencies, notably the Ministry of Foreign Affairs and Trade, the Ministry of Strategy and Finance, and the Ministry of Knowledge Economy. Each ministry accords different priorities to areas such as construction, the energy trade, defense and security relations, and political development, meaning that compromise and constant evaluation are important facets of the government’s overall policy. Mr. KANG also emphasized the importance of simultaneously developing both the ‘hardware’ of a strong construction and investment regime, and the ‘software’ of deep bonds through supporting social welfare projects and promoting inter-cultural exchanges. e further noted that Korean firms were pioneering social projects such as the building of schools and hospitals that were having a positive influence on Arab public opinion towards Korea.
Ms. AHN So-Yeon, Assistant Manager in the Global Oil Research Team in the Oil Research and Information Center at the Korea National Oil Corporation, commented that since the “Arab Spring,” there had emerged significant opportunities for non-GCC oil-producers to expand their market share as international attention re-oriented toward alternative suppliers. Ms. AHN suggested that the two events having the greatest impact on Korea’s economic engagement with the region were the political changes created by the “Arab Spring,” and also the ongoing problems related to international sanctions against Iran. While GCC oil supplies had not been significantly affected, she noted that the loss of trade with Iran was forcing the Korean government to seriously evaluate its dependence on any one supplier.
Session II: “South Korea and the Middle East in a Changing International Order”
The second session, titled “South Korea and the Middle East in a Changing International Order,” was opened by Dr. IN Nam-sik, Associate Professor in the Department of European and African Studies at the Korea National Diplomatic Academy. Dr. IN began by contending that the countries likely to exert the greatest influence on the future of the “Arab Spring” would be the region’s two major non-Arab states, Turkey and Iran. He further emphasized the importance of political Islam – from the secularist model of Turkey to the Wahhabi-royal family combination in Saudi Arabia and the clerical system in Iran – in defining regional attitudes and shaping inter-state allegiances. Finally, he concluded by noting that Islamist groups such as al-Nahda in Tunisia and the Muslim Brotherhood in Egypt are, for better or worse, poised to play a critical role in the future of MENA domestic politics.
Dr. BAI Byoung-Inn, Assistant Professor in the Department of Political Science and International Relations at Kookmin University, concluded the presentations by arguing that Korea should not rely too heavily on the ‘Second Middle East Boom’ as the foundation of its engagement strategy with the region. He posited that the current boom is inherently unstable because it is a temporary phenomenon based upon high oil revenues and continued infrastructure spending in the Middle East, factors that are unlikely to remain static. Consequently, Dr. BAI suggested that Korean firms should adopt a more conservative and cautious market entry strategy based on diversified, sustainable investments.
Reviewing the presentations of the two speakers, Mr. JUNG Chang-Goo, Director of the Policy Research Division at the International Contractors Association of Korea, expressed optimism that the Korea-Middle East relationship would continue to improve even after the ‘Arab Spring’ and the current construction boom have passed. Mr. JUNG cited the need for an active strategy that continues to develop the relationship in a dynamic manner. Furthermore, he highlighted how, despite the recent drop in oil prices, GCC states were continuing to invest heavily in infrastructure and development projects. This was in contrast to the general perception that the construction boom was dependent on high oil revenues.
Finally, Mr. CHUNG Tae In, Deputy Director of the Africa-Middle East Division at the Ministry of Foreign Affairs and Trade, emphasized the importance of Iran to Korea’s economic interests in the region. For instance, he pointed out that Korea’s trade with Iran was far greater than that with all of the GCC combined; the sheer size of which is often over-looked in discussions about sanctions. Mr. CHUNG emphasized that Korea’s economic relationship with the Middle East is not simply contingent upon its relationship with the GCC, but rather that it included ties with a variety of states. Consequently, there was a need to try and maintain some continuity in its trade relationship with Iran even as Korea shifts to pressure it over its nuclear program.
Despite being a region of vital political, economic, and strategic importance to Korea, the participants noted that there was a distinct lack of public interest in the momentous domestic changes currently unfolding across the Middle East and North Africa. Yet, this is a region that cannot be neglected. The roundtable participants all agreed that fostering greater public awareness and interest in both Korea and the Middle East must be an essential component in strengthening the relationship. Regarding the ‘Second Middle East Boom,’ the roundtable critiqued the viability of relying solely on the current boom as the basis of Korea’s engagement with the region. The participants’ consensus was that Korean engagement with the region was on the cusp of a watershed moment, one of that would be more diverse and multi-faceted than ever before, and that this necessitated innovative policy reforms.
Date/Time: Wednesday, June 27, 2012/ 1:45pm-5:30pm
Venue: Conference Room (2F), The Asan Institute for Policy Studies