[EAI Special Report Series] Evaluation of the First Year of the Yoon Suk-yeol Administration and Tasks for the Next Four Years ①: Foreign Affairs and Security

The foreign policy environment facing the Yoon Suk-yeol administration is characterized by complex macro-level transitions and multi-layered crises, unlike any previous administration. The global order is undergoing fundamental changes, and the confluence of various factors makes accurate future prediction difficult. The intermingling of crises at multiple levels in various forms also presents significant challenges for response.

The foreign policy tasks that the Yoon Suk-yeol administration should pursue in the future can be summarized as follows: 1. Supplementing future-oriented value diplomacy; 2. Pursuing Korean-style integrated security; 3. Re-globalization of reciprocal economic cooperation; 4. Strengthening advanced technology innovation diplomacy; and 5. Leading the promotion of emerging diplomacy. A key task is how to realize these objectives in ROK-US and ROK-China diplomacy and how to concretize them in the Indo-Pacific strategy newly presented by South Korea. Furthermore, this report proposes policy objectives to be pursued in ROK-Japan relations, future North Korea policy, and inter-Korean relations.

I. ROK-US Strategy

South Korea now possesses the national strength and status of a mature middle power or an emerging developed country. Instead of expending all national strength and resources on pursuing short-term national interests, it is time to engage in strategic planning that looks towards the long-term future, establishes plans akin to grand strategy, and increases policy resources.

Values and identity are crucial elements supporting such strategic considerations. The Yoon Suk-yeol administration has articulated its foreign policy objectives as a global pivotal state by presenting values of freedom, peace, and prosperity. It also emphasizes the values and foreign policy directions that South Korea should pursue as global citizens. For a middle power to pursue universal values and for an emerging developed country to pursue strategies based on its values and identity on major global issues is a natural course of action given South Korea's national strength. Value diplomacy and national interest diplomacy are not contradictory; pursuing values can enhance national interests, and national interests themselves are among the important values.

South Korea is a model nation that has realized liberal democracy and has evolved from a recipient of aid to a donor. It is also a country with a remarkable economic development record and the potential of a cultural powerhouse. Applying this identity and these values to concrete foreign policy requires highly sophisticated and complex strategic thinking. It is not possible to pursue the same values uniformly across all issues, and the balance between values and short-term national interests must be meticulously calculated.

The United States currently perceives the world order as divided between liberal democracy and authoritarianism, and pursues its national interests through this lens. While this dichotomy may seem plausible at first glance, it also presents limitations in pursuing an inclusive international order. The Yoon Suk-yeol administration, while pursuing the value of liberal democracy, also emphasizes an inclusive order, thus requiring more intense deliberation on the nature of the order that aligns with South Korea's national interests and the inclusion of various countries. A comprehensive blueprint is needed to determine how to engage with countries not belonging to the liberal democratic camp, such as North Korea and China, through in-depth diplomacy to adjust national interests, create common interests, and realize the world order that South Korea pursues.

Following the ROK-US summit in April, the Yoon Suk-yeol administration announced that ROK-US relations have been strengthened in five areas—security, industry, science and technology, culture, and information—based on a value-based alliance. The United States is pursuing an 'integrated deterrence' strategy based on its overwhelming military power. This is a macro-level plan that aims to maintain US military superiority across multiple domains—land, sea, air, cyber, space, electromagnetic, and cognitive information—while establishing a cooperative framework for integrated deterrence with allies, pursuing the integrated use of nuclear and conventional forces, and combining military and non-military means.

Underpinning this integrated deterrence is the rapid advancement of new technologies. The future global military order will be different from the past, realized through automation and unmanned combat, and multi-domain integration. In this regard, the ROK-US alliance is a valuable policy asset for South Korea's sustained development within the future military order. South Korea must continuously build a Korean-style integrated security system to possess indispensable national capabilities in the future military order. When integrated security based on new technologies is combined with extended deterrence, a future-oriented deterrence strategy can be newly established to counter North Korea's nuclear weapon development and attempts at use.

South Korea's efforts to establish integrated security are possible not only through the development of military power but also through future-oriented endeavors that consider the development of military strategy and non-military means. South Korea has achieved peace and prosperity within the current world order, and war between major powers is a future condition that must be strictly avoided for South Korea. South Korea must pursue its military security strategy in a way that prevents military conflict between major powers while maintaining the status quo and prevents the hot zones in the Asian region from becoming theaters of military conflict.

The global economic order is also undergoing rapid changes. The trend of anti-globalization stemming from headwinds against globalization, the persistent impact of the COVID-19 pandemic, and the strategic competition between the US and China have delivered significant shocks to the global economic order. The US and China are each striving to build resilient supply chains, a process often referred to as decoupling. Along with the anti-globalization trend, US-China decoupling has presented economic dilemmas for many countries. The trend of US-China decoupling over the past approximately five years is gradually being adjusted realistically. At the ROK-US summit held in Bali, Indonesia, in November last year, a basic direction for ROK-US relations based on mutual cooperation and reciprocity was established, and a certain level of consensus was reached between the US and China on diplomatic restoration and joint response to transnational threats.

Since Secretary of State Blinken's speech at George Washington University in May last year, the US has demonstrated changes in its strategy toward China, culminating in speeches by Secretary of the Treasury Janet Yellen and National Security Advisor Jake Sullivan in April of this year. Recently, the US has explicitly stated the goals of its external economic strategy as 'de-risking' and 'diversifying,' acknowledging that complete economic decoupling from China is impossible. However, it also points out that selective and strategic decoupling in advanced technologies with security implications is unavoidable, and that it is difficult to move towards the existing multilateral economic order and re-globalization without addressing China's unfair economic practices.

However, senior US officials are stating that the core objective of ROK-China relations is to promote cooperation through constructive engagement and healthy, responsible competition. Ultimately, the future global economic order will likely be characterized by a cautious pursuit of the restoration of the liberal order amidst the trend of strategic re-globalization, while fiercely pursuing individual national interests.

South Korea must also carefully readjust its security and economic relations with the US and China within this complex order of cooperation and competition, and strive to restore the liberal, multilateral order that is the axis of South Korea's prosperity. This process will require coordination and negotiation with the evolving industrial and technological policies of the United States, and will involve a certain readjustment of existing economic cooperation relations with China.

The future world order will be shaped not only by strategic competition and conflict among major powers but also by how humanity jointly addresses the transnational threats it faces. South Korea has been striving to address critical transnational threats such as health crises, climate change, environmental crises, and nuclear non-proliferation. In this process, cooperation with the United States not only doubles the efficiency of South Korea's policies but also contributes to the enhancement of the world order. In particular, the non-proliferation sector, intertwined with the North Korean nuclear issue, has significant implications for South Korea's emerging issue diplomacy, and in the Washington Declaration, South Korea pledged to adhere to the nuclear non-proliferation regime. This should not be understood solely as a declaration to forgo indigenous nuclear armament in favor of extended deterrence against North Korea. It is a crucial policy objective in that, recognizing that a world with nuclear proliferation is fatal to both South Korea and humanity, it adheres to the universal value and policy direction of nuclear non-proliferation and guides North Korea towards the path of denuclearization. It is important to strengthen ROK-US cooperation in addressing transnational threats while simultaneously seeking security solutions and strategies for North Korea.

II. ROK-China Strategy

ROK-China relations stand at a critical historical juncture, with existing modes of cooperation weakened and new drivers of cooperation yet to be secured, due to the influence of exogenous variables such as the escalating strategic competition between the US and China, global economic recession and supply chain instability, the COVID-19 pandemic, and the advancement of North Korea's nuclear capabilities. In this situation, if negative mutual sentiment between the two countries continues long-term and becomes structural, there is a possibility that ROK-China relations could deteriorate into a chronic conflict, with weakened drivers for relationship development. Particularly, given that ROK-China relations involve the most diverse and frequent human and material exchanges globally, there is a high probability that negative perceptions will mutually influence each other, leading to complex conflicts and clashes that are difficult to predict. Relations with China must fundamentally maintain a principle of 'mutual respect' for the heterogeneity of values and systems, while gradually restoring exchanges and cooperation, which were suspended due to the pandemic, starting from the private sector, to manage and prevent negative sentiments from becoming entrenched.

US-China relations possess characteristics of strategic competition, and competition and confrontation are likely to escalate in the future. Nevertheless, both the US and China are continuing dialogue and negotiations, seeking crisis management, and sharing the need for cooperation on global issues such as the environment, indicating that the situation still unfolds in a complex manner.

The Xi Jinping regime, despite consolidating power, faces complex domestic and international challenges such as a slowdown in growth. Therefore, it seeks to secure time and space for economic recovery by delaying full-scale power competition with the United States as much as possible. In fact, China highlights a frame of 'pressure versus resistance,' resisting the US's pressure and offensive, but simultaneously sends messages that it needs to 'restore relations with the US to a healthy and stable normal track.'

In essence, US-China relations, while maintaining a confrontational stance, may also explore compromises depending on the situation and specific areas. Recently, countries participating in the US-led anti-China coalition, such as Germany, France, Australia, Saudi Arabia, and Japan, have also been restoring a certain level of cooperative relations with China, and China is actively responding to this. Therefore, it is necessary to formulate South Korea's China diplomacy strategy while keeping open the possibility of complex changes in US-China relations.

Given that ROK-US and ROK-Japan diplomacy have achieved certain results through summit meetings, it is now imperative to meticulously review the impact on ROK-China diplomacy and ROK-China relations, and based on this, to systematically establish the direction and strategy for ROK-China diplomacy. Considering the comprehensive nature of ROK-China relations, a systematic coordination mechanism among government ministries is required to formulate policy measures through inter-ministerial cooperation. In particular, ROK-China diplomacy must be conceived as a high-order equation that considers the relationships among various actors such as the US, Japan, and North Korea.

The US-led de-sinicization offensive is likely to proceed in different ways and at varying intensities depending on the sector. Furthermore, compromise between the US and China may be sought in some areas. Accordingly, South Korea now needs to meticulously and systematically calculate the profits and losses resulting from de-sinicization. Based on this, it is necessary to establish an internally comprehensive and systematic strategy regarding the scope, areas, and extent of South Korea's participation in response to requests to join the US-led de-sinicization efforts.

In the short term, there is a possibility of continued conflict and tension in ROK-China relations. It is necessary to establish channels for preemptive communication and post-incident management regarding potential areas and domains of conflict with China. In the medium to long term, new cooperative agendas that create incentives for China to cooperate with South Korea must be developed. Based on this, measures to secure various means and leverage for diplomacy towards China must be devised. Policy tools towards China should be comprehensively identified and established not only in the political and security domains but also in economic, scientific-technological, environmental, cultural, and value-based areas.

It is necessary to expand the basis for cooperation between South Korea and China, focusing on cross-border non-traditional security issues (environment, health, maritime, etc.). These areas are sensitive issues that can constantly cause conflict due to the characteristics of the adjacent ROK and China. Therefore, it is necessary to create an opportunity for the recovery of bilateral relations by transforming these major conflicts into new drivers and motivations for cooperation between the two countries.

To prevent the solidification of a new Cold War-like structure of ROK-US-Japan versus ROK-China-Russia surrounding the Korean Peninsula, it is necessary to simultaneously pursue various forms of multi-stakeholder cooperation, such as six-party talks involving ROK-US-China, ROK-China-Japan, South-North-US-China, South-North-Japan-China, and South-North Korea-US-Japan-China-Russia.

III. Indo-Pacific Strategy

In November 2022, the Yoon Suk-yeol administration introduced the 'Korea-ASEAN Solidarity Initiative (KASI)' and in December, published the 'Indo-Pacific Strategy.' At the end of May 2023, it will host the 'ROK-Pacific Island Countries Summit' in Seoul. By pursuing a comprehensive regional policy encompassing security and economy at the multilateral level, the South Korean government has clarified its principles and direction, which is commensurate with its status as a global pivotal state.

The Yoon Suk-yeol administration's Indo-Pacific Strategy is characterized by 'strategic thinking' that defines the regional space broadly, a declaration of intent to contribute substantively to comprehensive regional security, and the promotion of multi-stakeholder alliances with regional middle powers. First, it sets a broad scope for the Indo-Pacific space to include European countries such as France and the United Kingdom. The regional geopolitical and geo-economic competition is approached not as China versus the US, but as China versus the 'West,' interpreted as an intention to enhance security cooperation with the 'West.' The invitation of South Korea, Japan, Australia, and New Zealand (Asia-Pacific Partners: AP4) to the North Atlantic Treaty Organization (NATO) summit held in June 2022 was a symbolic event demonstrating the potential linkage between NATO and the US's Indo-Pacific allies.

Second, while South Korea has historically expressed principled support for the peaceful resolution of disputes in the South China Sea, the rule of law, and freedom of navigation and overflight, it has maintained distance from sensitive regional security issues. To dispel criticism arising from this and enhance South Korea's security standing, it has expressed its intention to actively engage in responding to comprehensive regional security issues, including maritime security. Third, the intensifying competition between the US and China in the Indo-Pacific region poses a serious threat to most regional countries, including South Korea. Therefore, it has emphasized the need to revitalize multi-stakeholder alliances centered on regional countries, moving away from a US-China centric approach.

If the framework for our Indo-Pacific strategy was established during the first year of the Yoon Suk-yeol administration, it is now time to move into the implementation phase. At this juncture, the following points should be considered. First, as the Indo-Pacific is increasingly becoming bloc-oriented, we must secure a certain standing by actively contributing to comprehensive security in the Indo-Pacific region from within the US-led network. The US finds it difficult to counter China alone in the Indo-Pacific region and is actively utilizing the US-led network. For example, at the third Quadrilateral Security Dialogue (Quad) summit in 2022, it was agreed to launch the 'Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA)' working group. Europe is also contributing to enhancing maritime domain awareness capabilities in the Indo-Pacific region by operating the 'Critical Maritime Routes in the Indian Ocean (CRIMARIO)' project. In this context, where US Quad countries and major European countries like France and the UK are participating in Indo-Pacific maritime security, South Korea must increase its maritime security cooperation with these key countries in the US-led security network.

Second, while cooperating with the US Indo-Pacific strategy, our primary core interest region is Northeast Asia, including the Korean Peninsula, and China's core interests cannot be disregarded in resolving the North Korean issue. In particular, the Taiwan issue is a core interest of China's core interests. Therefore, it is advisable to refrain from direct or indirect expressions of intent and actions related to Taiwan's unification or independence. In fact, as long as the US and China do not head towards catastrophe, maintaining the status quo appears to be a more realistic scenario than a sudden change in Taiwan for a considerable period. Currently, it is more urgent to establish our position on the 'showdown of forces' in the Taiwan Strait between the US and China and the 'maritime patrol' in the East China Sea than on a sudden change in Taiwan.

Regarding 'maritime patrol,' it is noteworthy that the US has recently explicitly expressed its intention to jointly participate in the 'maritime patrol' conducted by the Philippines. This is interpreted as a quid pro quo for the Enhanced Defense Cooperation Agreement (EDCA) signed between the US and the Philippines in 2014, which allowed the US to deploy strategic assets to five Philippine military bases, and the Philippines' opening of four additional military bases to the US in February 2023. Three of the four additionally opened bases are located on Luzon Island, close to Taiwan. The Philippines is also discussing 'joint patrols' with Australia and Japan, and it is highly likely that South Korea will be requested to participate, given its commitment to enhance substantive contributions to regional maritime security in the 'Indo-Pacific Strategy.' If South Korea participates, it must uphold the rationale of contributing to regional non-traditional security and avoid any mention that might allude to the Taiwan situation.

Third, to lay the foundation for multilateral security cooperation that is relatively free from the strategic competition between the US and China, we must strengthen bilateral and multilateral cooperation with major middle powers in the Indo-Pacific region, such as Japan, Australia, India, Indonesia, and Vietnam. First, there is a need to actively promote trilateral cooperation among South Korea, Indonesia, and Australia (KIA). Considering Indonesia's economic rise and its status as a leading ASEAN nation, along with the economic and military capabilities of Australia and South Korea as upper-middle powers, this multi-stakeholder consultative body has a high potential to become a significant security and economic consultative body in the region.

Another multi-stakeholder consultative body could be a combination of South Korea-Australia-ASEAN or South Korea-Australia-Pacific Island Countries. South Korea and Australia could jointly undertake development cooperation projects in Southeast Asia and also pursue joint development cooperation projects in the South Pacific, which is increasing in strategic importance. Just as South Korea and Australia regularly hold 'ASEAN Policy Dialogues,' it is worth considering proposing a 'South Pacific Solidarity Initiative,' similar to the 'Korea-ASEAN Solidarity Initiative (KASI),' in consultation with Australia, a leading country in the South Pacific.

Furthermore, with the improvement of ROK-Japan relations, multilateral cooperation involving South Korea, Japan, and regional countries has become possible. If ROK-China-Japan summit talks are resumed, we could propose 'TCS +,' such as TCS-ASEAN, TCS-Europe, TCS-PIF (Pacific Islands Forum), TCS-SCO (Shanghai Cooperation Organization), and TCS-BRICS (Brazil, Russia, India, China, and South Africa), using the 'Trilateral Cooperation Secretariat (TCS)' as a platform.

Following the launch of the Yoon Suk-yeol administration, expectations for our comprehensive regional policy in the region have risen with the KASI, the 'Indo-Pacific Strategy,' and the 'ROK-Pacific Island Countries Summit.' With high expectations comes the need to present concrete implementation plans. Currently, our government is operating a 'Task Force' led by the Ministry of Foreign Affairs to coordinate Indo-Pacific policies across various government departments. However, the priority should be to secure an independent budget for the implementation of the Indo-Pacific strategy and to reorganize the responsible organizations. Consideration should be given to establishing a 'control tower' within the National Security Office and creating a new position for an Indo-Pacific Ambassador at the Ministry of Foreign Affairs.

IV. ROK-Japan Strategy

One of the key foreign policy objectives of the Yoon administration's first year was the improvement of ROK-Japan relations. Upon taking office, the Yoon administration focused particularly on a solution to the forced labor issue as a condition for improving ROK-Japan relations, proposing a 'third-party payment' plan in March, which elicited a positive response from Japan. This created an opportunity for improving relations, but at the same time, negative public opinion domestically regarding the proposed solution has spread, creating a dual challenge of advancing diplomacy towards Japan for normalization while simultaneously cultivating favorable public opinion at home.

The most significant factor defining the Yoon administration's ROK-Japan relations is the variable of US-China strategic competition. The series of closely spaced meetings over the past six months—including the ROK-US summit in January, the ROK-US-Japan foreign ministers' meeting in February, the ROK-Japan summit in March, the ROK-US summit in April, and the ROK-Japan summit and ROK-US-Japan summit in May—suggests a strengthening diplomatic trend of trilateral cooperation among South Korea, the US, and Japan to counter China's strategic challenges. The revision of Japan's three security documents in December last year, the announcement of South Korea's Indo-Pacific strategy, and the revision of Japan's FOIP (Free and Open Indo-Pacific) in April of this year also support this trend. On one hand, there is the need for ROK-US-Japan security cooperation not only to respond to the advancement of North Korea's nuclear-missile capabilities but also to check China as a strategic challenger. On the other hand, there is increasing demand for ROK-US-Japan economic and technological cooperation as a result of the pressure to reorganize supply chains due to the progress of US-China economic/technological decoupling.

In this context, the trend of improving ROK-Japan relations should be viewed as a combination of the external factor of US-China relations and the internal factor of leadership changes in both ROK and Japan. Future ROK-Japan relations will unfold within the framework of ROK-US-Japan cooperation, and the South Korean government's policy response must be aligned with this.

Future ROK policy towards Japan must move beyond the existing framework that has dealt with bilateral historical, political, economic (e.g., ROK-Japan FTA), security, and cultural issues, and instead adopt a multilateral perspective, approaching partnerships within multilateral and multi-stakeholder frameworks. While centering on ROK-US-Japan cooperation, a cautious diplomatic stance must be maintained to avoid excluding China, and ROK policy towards Japan should be adjusted within this context. In particular, given the disparity in leverage (negotiating power) concerning China between South Korea and Japan, a strategy that appropriately embraces China through close dialogue and coordination between the two countries should be adopted.

Second, efforts must be made to expand the scope of ROK-Japan cooperation. While past ROK-Japan cooperation aimed at (traditional) security and liberalization in trade and investment, future cooperation should expand to supply chain cooperation, advanced technology cooperation, and addressing common threats faced by both countries, such as climate change, infectious diseases, and the challenges posed by low birth rates and aging populations (demographic cliff), including healthcare, finance, and the depopulation of rural areas.

Third, efforts to address historical issues must be pursued in a balanced manner alongside future-oriented cooperation. The opposition party maintains that future-oriented cooperation is impossible without confronting the past in a way that meets the expectations of the Korean people, while the ruling party and the Japanese government argue that future-oriented cooperation can overcome the past. The correct approach is to pursue multifaceted cooperation oriented towards the future while simultaneously addressing historical issues. In the case of historical issues, beyond urging apologies from Japanese leaders, measures to commemorate comfort women and forced labor victims should be continuously pursued at both government and private levels. This will help restore the trust relationship with Japan lost over the past decade and secure domestic trust in ROK policy towards Japan.

From a longer-term perspective, it is important to take the lead in preparing a (tentative) 'ROK-Japan Cooperation Post-2025 Future Vision' for future generations, in line with the standards of a new future civilization, in commemoration of the 60th anniversary of the normalization of ROK-Japan diplomatic relations in 2025.

V. Economic Security Strategy

Economic security, a term that was somewhat unfamiliar just a few years ago, has now become very familiar to us. This signifies that the focus of economic security strategy has shifted from general principles to specific measures, and it is time to establish more detailed strategies and systematic implementation mechanisms. The characteristics of South Korea's economic strategy pursued since the launch of the current administration are as follows. First, continuity and change in economic security strategy have occurred simultaneously. In terms of continuity, South Korea's economic security strategy fundamentally maintains a reactive nature. It focuses on responding to changes in the external environment, such as the economic security strategies of other countries, economic coercion, and supply chain disruptions. Meanwhile, the scope and level of cooperation with the United States have expanded and deepened. South Korea has pursued an economic security strategy that reacts to the economic security strategies of major countries, including the US and China, and this characteristic is fundamentally maintained in the current administration.

Continuity and change simultaneously demonstrate the strengths and limitations of South Korea's economic security strategy. On the positive side, it is responsive to major countries' economic security strategies, such as the US's supply chain reorganization strategy, China's economic coercion, the institutionalization of Japan's economic security strategy, and the European Union's (EU) strategic autonomy, and shows focus in responding to key issues. On the other hand, it has been pointed out that because the economic security strategy focuses on responding to issues or current challenges, it has certain limitations in terms of strategic response based on broader and long-term principles.

Second, the nature of the ROK-US strategy has been strengthened. The existing economic security strategy tended to prioritize managing risks related to China while maintaining ROK-US relations. The experience of China's economic coercion following the decision to deploy THAAD in 2016 significantly influenced the direction of South Korea's economic security strategic response. This characteristic is clearly evident in the policy direction of diversification from China set during the process of responding to supply chain disruptions that surfaced with COVID-19. Even broadening the scope, the response to Japan's de facto economic coercion through policies to strengthen competitiveness and self-sufficiency in 'materials, parts, and equipment' also represents the practical necessity for South Korea's economic security strategy to focus on responding to the offensive strategies of countries other than the United States. Meanwhile, the current administration's economic security strategy shows a characteristic where the relative importance of the ROK-China strategy has somewhat decreased as the ROK-US strategy forms the central axis. This is a differentiating characteristic compared to the economic security strategies of other countries, which are largely centered on their China strategies. The EU's newly pursued 'de-risking' strategy is a plan to secure strategic autonomy by meticulously analyzing risks related to China and formulating response strategies. It is, in effect, a strategy towards China. The current administration's economic security strategy has a dual nature of upgrading the ROK-US alliance to a 'global comprehensive strategic alliance' and managing uncertainties originating from the US, as exemplified by the Inflation Reduction Act (IRA). In this aspect, it strongly emphasizes cooperation with the US and risk management strategies. In this process, the relative importance of the ROK-China strategy has tended to decrease.

Third, there has been progress in ROK-Japan relations. By resolving the issue of the 'whitelist,' South Korea and Japan have significantly increased the potential for cooperation in economic security. In particular, the points of cooperation with Japan have increased not only at the bilateral ROK-Japan level but also at the trilateral ROK-US-Japan cooperation level. The improvement of ROK-Japan relations, in addition to ROK-US cooperation, has also strengthened the clarity of South Korea's economic security strategy.

The clear direction of the economic security strategy during this administration can be considered a major change. This provides an opportunity to move away from an issue-centric economic security strategy and seek a transition to an economic security strategy based on principles and values. In particular, considering the environmental changes where the US, in line with the EU, is pursuing de-risking and diversification rather than decoupling, as confirmed by the successive remarks of US Treasury Secretary Janet Yellen and National Security Advisor Jake Sullivan in April 2023, it is necessary to consider these changes. The subtle but significant shift in the US's strategy towards China presents an opportune moment for South Korea to seek a cautious transition in its economic security strategy. South Korea needs to engage in intense and systematic deliberation to transition its economic security strategy, including its strategy towards China, by leveraging the new trends in the economic security strategies of major countries like the US and the EU.

First, a systematic review and analysis of profit and loss calculations are required. The benefits of increasing the level of cooperation with the United States are clear. However, it is necessary to preemptively review the fact that as the focus of the US economic security strategy is on containing China, it can be fluidly changing and sometimes entail the burden of policy alignment with the US. Since the US-China strategic competition is only 'the beginning of the beginning,' the possibility of change is always open, and the key is how to resolve the burden of policy alignment accordingly.

Second, the economic security strategy of the 21st century faces situations where conflicting goals must be pursued. Enhancing self-reliance in advanced technologies while maintaining inclusivity for cooperation with other countries is a prime example. To integrate seemingly conflicting goals within a single framework and pursue them effectively, it is sometimes important to secure strategic flexibility. A balanced approach between strategic clarity and flexibility needs to be sought.

Third, the issue of incorporating regional cooperation strategies into the economic security strategy. With the US's return to the Trans-Pacific Partnership (TPP) being unlikely, and the momentum of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) somewhat weaker than expected, the US is pursuing the Indo-Pacific Economic Framework for Prosperity (IPEF). However, IPEF also has the limitation of unclear incentives for participating countries, leading to increased uncertainty in the future Indo-Pacific regional order. The government needs to concretize regional cooperation strategies for establishing an inclusive regional order, as advocated in the 2022 Indo-Pacific Strategy. To this end, it is necessary to broaden the horizon of the economic security strategy by encompassing not only ROK-US and ROK-China strategies but also ASEAN and India. A sequential approach to promoting regional strategies is also required. In the short term, this includes pursuing cooperation to strengthen supply chain resilience, and in the medium to long term, establishing an early economic system.

Fourth, in the medium to long term, there is a need for harmonization between economic security strategy and economic diplomacy. Economic security strategy can be seen as a shield to counter an opponent's offense, and sometimes a spear that may need to be used. It is important to note that economic diplomacy plays the role of an interface that helps to use the shield and spear more effectively. The core of economic diplomacy lies in securing partners for cooperation, which can be considered a kind of gap in South Korea's economic security strategy. Cooperation with like-minded countries is important for this reason. Cooperation with like-minded countries, while not preventing economic coercion, can limit its effects and, when we take offensive action, help to multiply its effects.

Fifth, strategic economic cooperation in relations with Japan is mainly discussed in relation to economic security. In terms of the adjustment of globalization (especially global supply chains) due to changes in the strategic environment, both countries should make joint efforts for cooperation in strategic industries and technologies and for securing supply chain resilience. However, at the same time, they must also strive to restore a rules-based free and open international economic order by appropriately controlling the expansion of exclusive industrial policies and managed trade. While existing ROK-Japan cooperation aimed at liberalization in trade and investment, future cooperation needs to focus on supply chain cooperation and advanced technology cooperation, and also increase the necessity for joint cooperation on challenges such as healthcare, finance, and the depopulation of rural areas, stemming from the demographic cliff (low birth rate and aging population) that both ROK and Japan face as common threats.

In this regard, South Korea's accession to the CPTPP is a very important task. The CPTPP is gradually evolving into an economic network among core US allies and partners. With the accession of Japan, Australia, Singapore, and two partners of the United States-Mexico-Canada Agreement (USMCA) (Canada and Mexico), and the United Kingdom, it is emerging as a powerful multilateral organization that can secure influence over the United States and control its self-centered external economic policies. As China has also expressed its intention to join, the CPTPP is emerging as a key mechanism for setting global rules and norms beyond the Indo-Pacific region, showing the potential to incorporate China into the Indo-Pacific regional order and engage with it structurally.

Both South Korea and Japan, which achieved high growth within the liberal world order and have also experienced the damage of economic coercion, must cooperate to minimize the risks of global decoupling and pursue re-globalization as a more inclusive and resilient globalization based on liberalism.

VI. Policy Toward North Korea

Since the launch of the Yoon Suk-yeol administration, North Korea has continued its hardline policy, the 'frontal breakthrough strategy,' established at the 7th Plenary Meeting of the 8th Central Committee in December 2017. Notably, at the 6th Plenary Meeting of the 8th Central Committee in 2022, it re-declared the inter-Korean relationship as a 'confrontational relationship' and presented an action plan, stating, 'Concrete countermeasures against the U.S. and confrontation have been declared, moving toward practical action.'

Under this policy, North Korea has rejected the Yoon Suk-yeol administration's Audacious Initiative. In response to President Yoon Suk-yeol's Audacious Initiative announced in his August 15th Liberation Day speech in 2022, Kim Yo Jong issued a statement the following day, August 19th, titled 'Do Not Dream a Foolish Dream.' She criticized the initiative as 'the most disgusting thing is that they read out nonsensical remarks about a 'bold and comprehensive audacious initiative' that could dramatically improve the economy and people's livelihoods if we stop nuclear development, which is beneath our dignity and beyond our scope, and transition to practical denuclearization.' This expressed North Korea's refusal to accept the 'security-economy exchange' model proposed by the Audacious Initiative.

However, the Yoon Suk-yeol administration's North Korea policy is not the primary factor driving the deterioration of inter-Korean relations over the past year. Even if the Yoon administration had pursued the progressive administrations' 'active engagement' with North Korea, it is unlikely that North Korea would have moved towards improving inter-Korean relations. According to the aforementioned frontal breakthrough strategy, North Korea had thoroughly excluded the Moon Jae-in administration, which attempted 'unconditional engagement' after December 2019. Therefore, the current deterioration of inter-Korean relations should be understood as a result of North Korea's pursuit of a long-term strategy, the frontal breakthrough, aimed at maximizing nuclear capabilities through ideological struggle and self-reliance.

The Yoon Suk-yeol administration's Audacious Initiative can be evaluated as a North Korea policy with principles distinct from the Moon Jae-in administration's 'unconditional engagement.' In particular, strengthening deterrence is indispensable in a situation where North Korea is maximizing its nuclear capabilities. Enhancing readiness against North Korea, such as strengthening extended deterrence through the ROK-U.S. Washington Declaration and establishing the Korean-style three-axis system, is essential. North Korea itself acknowledges the effectiveness of the Washington Declaration in deterring it. The ROK and the U.S. have clearly conveyed the message that the use of nuclear weapons by North Korea would lead to the end of the North Korean regime, which is considered to have had a significant deterrent effect on North Korea. Immediately after the ROK-U.S. summit, Kim Yo Jong criticized the 'Washington Declaration' as 'a product of the culmination of extremely hostile and aggressive actions and policies against the DPRK.' In a commentary on April 30th carried by the Korean Central News Agency (KCNA), she also criticized the 'strengthened' extended deterrence by stating, 'We are proposing a 'Nuclear Consultative Group' to actively involve the puppets in negotiations related to the 'operation of nuclear forces.'' This confirms the significant effectiveness of the Washington Declaration and the Nuclear Consultative Group from North Korea's own perspective.

However, the Yoon Suk-yeol administration's efforts to resolve the North Korean nuclear issue through diplomacy are relatively limited. Among the three principles of the Audacious Initiative—deterrence, abandonment, and dialogue—efforts toward dialogue are virtually absent. Although the joint statement of the recent Washington Declaration and the ROK-U.S. summit included the phrase, 'President Biden and President Yoon reaffirmed their commitment to diplomacy with North Korea as the only means to achieve lasting peace on the Korean Peninsula and urge North Korea to return to negotiations,' the lack of any mention by the two presidents in speeches or press conferences has rendered it insignificant.

Although the Audacious Initiative initially declared the principle that deterrence, abandonment, and dialogue operate concurrently, the prevailing assessment is that it has shifted to an approach of 'deterrence and abandonment first, then dialogue.' In essence, the Audacious Initiative is interpreted as a 'denuclearization first, then reward' model.

The denuclearization of North Korea, the core of North Korea policy, requires a dual approach that maximizes the costs of possessing nuclear weapons while also guaranteeing the maximum benefits of abandoning them. Over the past year, the Yoon Suk-yeol administration has successfully strengthened extended deterrence, expanded ROK-U.S.-Japan security cooperation, and enhanced sanctions in coordination with the U.S., thereby increasing the costs for North Korea to possess nuclear weapons. However, it has failed to propose the benefits North Korea could receive upon abandoning its nuclear weapons. In other words, North Korea policy, including denuclearization, requires deterrence and dialogue—'push' and 'pull'—to operate concurrently in the same phase, necessitating the following 'Audacious Initiative 2.0.'

First, 'deterrence and abandonment' must be balanced with 'dialogue.' The government needs to send a clear message regarding its North Korea policy. Considering that it is currently understood as 'denuclearization first, then reward,' it must clearly declare that deterrence and dialogue operate concurrently in the same phase. Furthermore, actively considering restructuring the three principles of deterrence, abandonment, and dialogue into '4D' by including 'Development' is necessary.

Cooperation with the U.S. must be pursued more proactively. South Korea needs to take a leading role in increasing the priority of the North Korean nuclear issue in the Biden administration's diplomatic agenda. Additionally, it is necessary to consolidate the various proposals regarding North Korean denuclearization being raised within the U.S. Proposals advocating for partial denuclearization and a freeze on long-range missiles, which essentially recognize North Korea as a nuclear-weapon state, must not be accepted. The U.S. government must fully share the ultimate goal of North Korean denuclearization as 'complete, verifiable, and irreversible denuclearization (CVID).

The benefits of denuclearization must be specified. Creative models must be developed that can guarantee the North Korean regime while not undermining South Korea's defense capabilities until North Korea achieves complete denuclearization. When denuclearization negotiations resume, the corresponding measures to be provided to North Korea must be meticulously linked to North Korea's denuclearization steps, going beyond mere sharing between South Korea and the U.S.

Economic cooperation measures for future prosperity should be expanded. Considering North Korea's characteristics as a competitor to the South Korean system, a model for North Korean economic development through globally expanded cooperation needs to be specifically presented. North Korea is also sensitive to its economic dependence on China, so there is a possibility of acceptance for measures such as utilizing international organizations or establishing multilateral economic cooperation frameworks.

Cooperation measures should be developed to help North Korea evolve into a knowledge-based nation capable of devising new strategies for self-reliant denuclearization, security, and prosperity. While persuading North Korea, which uses nuclear weapons as a state symbol and practices politics of display, is a painstaking process, efforts should be made to guide North Korea to realize on its own that it cannot maintain its current path of prioritizing nuclear weapons for the next 30 years and to choose a new nation-building model.■

■ Author: Park Won GonDirector, EAI Center for North Korean Studies; Professor, Department of North Korean Studies, Ewha Womans University.

■ Author: Park Jae JeokProfessor, Graduate School of International Studies, Yonsei University.

■ Author: Sohn YulDirector, EAI; Professor, Graduate School of International Studies, Yonsei University.

■ Author: Lee Dong-ryulDirector, EAI Center for Chinese Studies; Professor, Department of Public Administration, Dongduk Women's University.

■ Author: Lee Seung JooDirector, EAI Center for Trade, Technology, and Transformation; Professor, Department of Political Science and International Relations, Chung-Ang University.

■ Author: Jeon Jae SungDirector, EAI Center for National Security Studies; Professor, Seoul National University.

■ Author: Ha Young SunChairman, EAI; Professor Emeritus, Seoul National University.

■ Managed and Edited by: Park Ji Soo, Research Fellow, EAI

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