[NATO-IP4 Forum] ② US-China Maritime Power Transition and the Readjustment of Indo-Pacific-Europe Alliances: Possibilities and Challenges of the NATO-IP4 Maritime Network, and the Reconstruction of Alliance Hierarchy | Inhwan Oh, EAI Senior Fellow

YouTube Link : https://www.youtube.com/watch?v=_RzyRTW5AQ8&si=Vy8ZDxOBcQQV-5Tu

Video Script

US-China Maritime Power Competition and South Korea's Role as a Middle Power

Good morning. I am Oh In-hwan, a senior research fellow and head of business development at the East Asia Institute. The topic I will present today, as discussed in Session 2 and by Dr. Shim Sung, is that non-traditional security, advanced technologies, and supply chains are excellent areas for NATO IP4 cooperation. Session 2 will likely feature extensive discussions on this matter. My presentation will primarily focus on maritime and naval competition. Within this context of maritime and naval competition, there are various ongoing collaborations between South Korea and the United States, as well as the IceSpect initiative involving the US, Finland, and Canada. My central argument is that South Korea, as a middle power, could proactively conceptualize and propose networking initiatives to connect these fragmented cooperative efforts by leveraging NATO IP4 platforms, especially at a time when the US does not place significant importance on NATO IP4.

Japan, for instance, frequently proposes ideas like the 'nuclear power nation' concept and actively discusses initiatives such as the Quad. The concept of the Indo-Pacific was initially coined by the German geopolitician Karl Haushofer, but it did not gain traction due to the Nazi regime. Its modern revival is attributed to former Japanese Prime Minister Shinzo Abe. While Japan has been proactive in generating ideas and concepts, South Korea has relatively underutilized its capabilities in proposing networking ideas. The weakening of NATO IP4 under the Trump administration, after being pursued by both the Trump and Biden administrations, presents an opportunity for us to propose networking ideas and leverage the NATO IP4 platform for connectivity.

In this process, issues related to existing alliance hierarchies may arise. The hub-and-spoke online system, led by Japan and established under the 1951 San Francisco Treaty system, positions Japan as a quasi-core hub. Japan may exhibit some reluctance regarding this aspect. Furthermore, the existing networking among Anglo-Saxon countries, represented by Pai-I and its associated army and naval C4 ISR cooperation systems, forms the existing alliance hierarchy. Attempting to establish new networking within this framework could lead to conflict or tension. Resolving this, particularly within the context of South Korea-Japan relations, will be crucial.

As I will explain later, we have become the largest shareholder of Austal, an Australian defense and shipbuilding company, by acquiring a 19.9% stake. Austal is involved in the small frigate project for Mitsubishi Heavy Industries, which is undertaking Japan's small destroyer project. This has led to significant opposition from Japan, which fears that its small destroyer technology could be leaked to the largest shareholder, a South Korean company. The US granted approval, and Australia also approved after review, allowing the deal to proceed. This creates a unique situation where a South Korean company is the largest shareholder in an Australian firm involved in Japan's destroyer project. Japan is displeased with this development, citing technology leakage as the stated reason.

The US's Dispersed Maritime Cooperation Structure and Its Background

However, we also possess shipbuilding and naval technology and can construct vessels independently. This argument about technology leakage is merely a pretext. Politically, Japan's apprehension stems from the fear of losing leadership in the Asian network and being challenged in its quasi-core node status. Therefore, my presentation will explain why the US employs these fragmented networking approaches, covering MARS, IceSpect, and the foundational AUKUS. This is driven by the ongoing US-China maritime power competition. In the initial part, I will outline the structure of the US-China maritime power competition up to 2050 and then introduce the US's various responses.

This includes IP4 countries such as South Korea, Canada, and Finland. Within this framework, there are possibilities for re-adjusting our alliance hierarchy and ascending. I will examine the factors that might resist or challenge this, as well as potential internal challenges. Finally, I will conclude by discussing the opportunities for elevating alliance status and adjusting hierarchies, while also acknowledging the accompanying increased responsibilities and risks. The US has discussed the first island chain maritime defense line, but South Korea has not actively participated. Last year's Shangri-La Dialogue, for instance, featured presentations by Secretary Hagge that excluded South Korea, while including the Philippines, Australia, and Japan. However, during a presentation by Under Secretary Kolbe at the Sejong Institute, a hub similar to ours, South Korea was included in the discussion. This appears to be a first. I have been closely monitoring this, and South Korea's inclusion is significant. While one might dismiss this as a mere coincidence within the first island chain discussions, South Korea has consistently been excluded from maritime defense line discussions, even when the first island chain was mentioned. Only the Philippines, Australia, and Japan were typically cited. South Korea's inclusion this time indicates a potential opportunity to elevate our alliance status by effectively utilizing these networking initiatives. However, this also entails greater responsibility and risk. Therefore, I believe it is necessary to discuss the extent of our potential involvement internally. I will conclude my remarks here.

Current Status and Outlook of US-China Maritime Power Competition

Regarding the US-China maritime power competition, it appears it will continue until 2050. It will be difficult for the United States to make a comeback between 2025 and 2030. Naval vessel construction plans are made on a 30-year basis, so long-term trends are already set. The number of vessels fell below 300 in 2003 and has since fluctuated between 270 and 300. By current standards, the US has approximately 292-293 vessels. In quantitative terms, the maritime power competition, i.e., the number of combat vessels, China already surpassed the US between 2015 and 2020. Estimating China's naval vessel count for this year at 395, the difference is about 100 vessels.

It remains uncertain whether the US can further supplement and increase its vessel numbers in the future. 2049 is the year for President Xi Jinping's vision to make China a global military power, and while the US naval vessel construction plan sets goals up to 2025, we must wait and see how much it can actually build. There will be at least a rebound, and it may rise above 300 vessels after 2030. China's vessel count does not include the China Coast Guard or Chinese maritime militia. Unofficially, more smaller vessels could be included. In terms of quality, the US still holds an advantage in firepower, displacement, and vessel types. The US possesses 11 carrier strike groups, while China has built 3 and is constructing a fourth. Of course, in peacetime, only about 3-4 carrier strike groups are operational. Qualitatively, the US may be overwhelmingly superior, but victory within the first island chain is not guaranteed, especially when overwhelmed by quantity. Therefore, the reason deterrence within the first island chain is continuously emphasized lies here.

If auxiliary support vessels, missile-equipped patrol boats, and corvettes are included when counting vessels, China's vessel count surpassed the US as early as 2005. However, excluding these by conventional standards, the maritime power competition can be seen as occurring between 2015 and 2020. Conservatively estimating, considering qualitative aspects, if the US includes all vessels and China excludes smaller vessels and missile-equipped patrol boats, the US vessel count would resemble the pink dotted line. Realistically, excluding smaller missile-equipped vessels due to qualitative differences, the vessel counts overlap during the current period of maritime power competition, particularly between 2025 and 2030. Former INDOPACOM Commander Admiral Davidson mentioned in 2010 that Xi Jinping might prepare for an invasion of Taiwan, but this is debated. What is certain is that Xi Jinping ordered preparations for military operations against Taiwan by 2027. Whether this refers to an invasion, a blockade, or preparations to secure victory regardless of the outcome, hardliners view it as an invasion, while a conservative perspective sees it as preparation for military operations. For China, an invasion of Taiwan, if it fails, would be a matter directly linked to the legitimacy of the regime, thus requiring confidence in a 70-80% success rate, which is questionable.

This is a distribution map of the Chinese Navy's vessels. The lighter colors represent smaller vessels, namely frigates and corvettes, and it is evident that the lighter colors have sharply increased. The bottom part shows nuclear-powered submarines; previously numbering just over ten, they have recently increased to 32. Nuclear-powered vessels are also rapidly increasing. This data is from 2023, meaning it is three years old. What about the US? As I mentioned, vessel numbers are projected to decrease from 2024 to 2029, according to the 2025 naval shipbuilding plan. In any case, vessel numbers will decrease from this year until 2029. Then, after 2030, there will be a rebound, and as you can see in the diagram, the increasing portion consists of smaller vessels. The US is also facing various pressures, so the best it can do is build many small vessels. The increasing segments include small vessels, small landing combat vessels, and small surface combat vessels.

Recently, the 'Golden Fleet' concept was announced, which involves building many small vessels. However, Trump argued that larger vessels should be built. He stated that we also need to build larger destroyers. The plan, which includes the largest destroyers, was announced last December. Until last year, the US Navy aimed to build many small vessels to reduce the numerical gap. The rebound period is after 2030, and it is unlikely to be implemented as planned, considering the US shipbuilding capacity.

The number of vertical launch system (VLS) cells can be used as an indicator of firepower, as a higher number of VLS cells allows for the launch of more munitions. While the US naturally has a higher proportion, China's increasing VLS count is gradually narrowing this gap. This is the fleet deployment as of February 2nd. The Gerald R. Ford carrier strike group, originally in the Mediterranean, was moved to the Caribbean. Reports indicated its movement to the Caribbean two to three months before Operation Maduro, and The Wall Street Journal reported an increased possibility of military operations against Maduro in October of last year. We can see the Ford strike group positioned here. Although there are 11 strike groups in total, only three to four are operational at any given time due to maintenance and other factors. As emphasized in the US National Security Strategy (NSS), the focus is on the Western Hemisphere, with the primary base in the Pacific located at Yokosuka, Japan. The Abraham Lincoln carrier strike group is also deployed to address the Iran and Middle East region. The European theater is currently empty.

US Fiscal Constraints and Strategic Priorities

This situation is highly unusual. Scholars like Niall Ferguson question whether the US can effectively allocate its budget, not just its power projection capabilities. His argument that a nation's decline begins when its federal deficit exceeds its defense spending became a reality two years ago. The interest alone on the US defense budget, often referred to as the 'trillion-dollar country,' already exceeds a trillion dollars, leading to potential government shutdowns. Shutdowns occurred during the Obama administration and recently, resulting in inability to pay civil servant salaries, among other issues. In the long term, this is a critical situation, and therefore, the US appears to be focusing on the Western Hemisphere and then addressing Asia, specifically China. Even if Trump leaves office and a new president takes over, the strategic direction may not change due to these realistic structural constraints.

The lighter colors have sharply increased, meaning small vessels have surged, as you can see. The section at the very bottom represents nuclear-powered submarines; there were not many, perhaps just over ten, but they have recently increased to about 32. Nuclear-powered vessels are also rapidly increasing for China. Since this is data from 2023, it is already three years old. What about the US? As I mentioned, numbers are projected to decline from 2024 to 2055.

Ultimately, the numbers are projected to decline, and this is in accordance with the 2025 naval vessel construction plan. The numbers are set to decline. Therefore, regardless of any measures, the total number of vessels will decrease from this year through 2029. After 2030, there will be a slight rebound, but as you can see in this figure, the increase is in smaller vessels. This is because the US is facing pressure from various fronts, so the only option available is to build numerous small vessels. Thus, looking at the increasing segments, you will see small vessels, small landing combat vessels, and small surface combat vessels.

Following this, the 'Golden Fleet' concept was recently announced. The idea behind it is that while many small vessels were being built, Trump felt that larger vessels should also be constructed. He believed we must build larger vessels, specifically our destroyers. Thus, incorporating the largest destroyers into the plan, it was announced last December, around Christmas. Interestingly, at that time, the decision was made to build larger destroyers. Until now, based on last year's figures, the US Navy has tried to build more small vessels. This is because the numerical gap needs to be reduced. However, the rebound period is after 2030. Furthermore, it is judged to be difficult to implement this as planned, considering the US shipbuilding capacity.

And regarding firepower, an indicator we can consider is the number of vertical launch systems (VLS). This is because the more VLS cells there are, the more firepower can be launched from the platform. The US naturally has a higher proportion. The VLS ratio is high, but it appears to be decreasing. This is because China's number of VLS cells is steadily increasing. This situation has also unfolded in this manner. And this represents the fleet deployment as of February 2nd. The Gerald R. Ford carrier strike group was originally in the Mediterranean.

It moved to the Caribbean. It was originally in the Mediterranean, and two to three months before Operation Maduro, it moved to the Caribbean. Reports emerged in October that this carrier group had moved to this location, and The Wall Street Journal already reported in October last year that the possibility of military operations against Maduro had increased. Therefore, we can see the Ford strike group positioned here. As you can see, although there are a total of 11 strike groups, only about three to four carrier strike groups are actually deployed due to maintenance requirements. As emphasized in the US National Security Strategy (NSS), the priority is the Western Hemisphere; it is currently in the Western Hemisphere, continuously engaged in military preparations. Its main base in the continental Western Hemisphere is there, and the Pacific fleet's homeport is in Yokosuka, Japan. Also, since operations in the Iran and Middle East region are ongoing, the Abraham Lincoln carrier strike group is positioned there. Consequently, the European theater is currently somewhat empty.

This situation is highly unusual. Scholars like Niall Ferguson can cast doubt on whether the US can effectively allocate its budget, in addition to its power projection capabilities. Niall Ferguson's writings state that a great empire's decline begins when its federal deficit exceeds its defense spending, a situation that materialized two years ago.

The defense budget, which we refer to as a 'trillion-dollar' budget, exceeds one trillion dollars. However, the interest alone on this budget already exceeds a trillion dollars. This is why there have been recent government shutdowns. Such events can occur. There was a shutdown during Obama's presidency and another one recently. In such cases, civil servants cannot even be paid their salaries. This situation is also critical from the US perspective. In the long term, it is a critical situation. Therefore, it seems the US is focusing on the Western Hemisphere, and after that, the Indo-Pacific region, specifically China, should be the priority. The strategic direction will remain the same. Although Trump may step down in three to four years and a new president may take office, I believe the direction may not change due to realistic structural constraints.

South Korea's Shipbuilding Capacity and Redefining its Role within the Alliance

This aspect may continue until 2020. Therefore, beyond mere adjustments in naval force deployment, an alliance role is necessary for rebuilding naval power production, maintenance, and long-term shipbuilding capacity. South Korea is the most suitable partner for this, while Japan is already involved in MRO (Maintenance, Repair, and Overhaul) business and operates in Yokosuka. Furthermore, since we have already surpassed Japan in shipbuilding, and indeed both China and Japan, there was a maritime action plan last April. A plan was supposed to be submitted last November, but its contents are unknown.

It is unknown whether it was submitted, whether it was submitted but not released to the public, or if the plan itself was not formulated amidst the confusion. Initially, the plan was to rebuild shipbuilding capacity through coordination among various government ministries. In December last year, Trump unveiled the 'Golden Fleet' concept, aiming to build larger destroyers, believing that small vessels alone were insufficient. This 'Golden Fleet' concept also faces several constraints, particularly protectionist shipbuilding laws. It remains to be considered whether our companies can circumvent these laws and if acquiring Austal could be an effective workaround.

US Dispersed Response Strategy and South Korea's Networking Opportunities

The US is implementing a fragmented response strategy. It is continuing with Pillar 1 and Pillar 2 initiatives. In the Quad, the Philippines has been added, replacing India, to form an 'S-Quad' for maritime security cooperation in the South China Sea. We are pursuing the 'MASCAR' initiative, which we proposed, and obtained approval for the nuclear-powered submarine program at our request. Additionally, the 'Icebreaker' project, involving Canada, Finland, and the US, is underway to build icebreakers, as the US only possesses two.

Russia possesses 40-50 icebreakers, and the West is focusing on this issue. Due to the shortage of icebreakers, Trump granted Finland a presidential waiver. Although building ships overseas is prohibited under US domestic law, a presidential waiver can be issued for national security reasons when rapid construction is needed in the short term. Trump proactively allowed this, and several icebreakers are already under construction in Finland.

The US is also planning to build several icebreakers domestically and is responding in various fragmented ways, including the 'Golden Fleet' concept. From our perspective, we can consider whether there is a networking concept that can link these efforts through the NATO IP4 platform. Since Trump has no intention of linking them, the US is responding in a fragmented manner, assigning the task of building needed icebreakers to Finland or Canada, shipbuilding to South Korea, and addressing South China Sea issues through the S-Quad.

From our perspective, could we develop a networking concept that leverages the NATO IP platform proactively to increase our functional and physical contributions, thereby leading to an elevation in our political alliance status? We could also utilize programs like NATO DIANA.

Clashes with Existing Alliance Hierarchies and Cooperation Challenges

This may conflict with the existing San Francisco System, the Pai Ice-centered system, and particularly Japan's role and status as a 'Nordic' (likely referring to a key node). Competition is inevitable in submarine projects involving South Korea, Japan, Australia, European nations, and Canada. It is questionable whether cooperation will be effective while each country navigates US tariffs and neo-protectionist policies. Given that European leaders continue to visit China, it is also uncertain how well we can manage relations with China. Pillar 2 initiatives like NATO DIANA and ITP fall under non-traditional areas and can be utilized without conflict, but what will be their influence in traditional security domains?

Pillar 1 involves sharing the core technology of nuclear propulsion among historically trusted groups. Japan has also received US approval for Cooperative Engagement Capability (CEC) technology. Although our request was denied, Australia and Japan received approval. This refers to real-time shared platform technology that allows Aegis ships to receive and strike based on real-time data provided by US or Australian reconnaissance aircraft, thereby compensating for the limited radar range of Aegis ships. South Korea possesses Aegis ships but lacks this technology and our request was denied.

Possibility of Cooperation in Nuclear-Powered Submarines and CEC Technology

Japan has received approval, and Australia has also been approved, making Japan effectively a quasi-Curse (likely referring to a key partner in advanced technology sharing) role, although not officially designated as such. While it may be difficult for South Korea to join this framework, is there a possibility of obtaining or utilizing CEC technology through various platforms? Since approval for nuclear-powered submarines has been obtained separately, this can be leveraged. In the early days of the Biden administration, NATO IP4 carried significant symbolic and political weight, but now, there may be ways for South Korea to advance through practical and functional cooperation.

Instead of expanding the alliance, let us consider the possibility of entering the sub-structure of a maritime force generation and maintenance network, and from there, building up alliance contributions functionally and physically. New Zealand, Germany, Italy, and others have visited Japanese waters to support sanctions against North Korea and conducted joint exercises, but these are short-term, temporary activities. Beyond this, are there ways to utilize the US's fragmented networks within the NATO IP4 platform?

Proactive Signals and South Korea's Strategy for Expanded Contribution

There are several proactive signals. MASCAR has so far only proceeded with MR (likely referring to a specific type of vessel or capability). The auxiliary support vessel project was progressing towards an award to HD Hyundai in conjunction with Huntington Ingalls, but it has stalled since last year. This marks the first venture into naval vessel projects, specifically for auxiliary support vessels, not combat vessels. While a phased approach could lead to combat vessels, auxiliary support vessels are currently the most likely outcome. If this proceeds well, the US may request combat vessels in the future.

This could be a very proactive signal. A method to circumvent US domestic law is to acquire major defense and shipbuilding companies that are highly active within the US, such as those in Australia or New Zealand. Just as Coupang operates in both the US and South Korea, our acquisition could bypass US protectionist legislation. The acquisition of Austal would contribute to forming a North American shipbuilding industry network.

Companies pursue profits, so it appears this was already underway. A proactive signal in the Icebreaker project is the granting of a presidential waiver, which is unprecedented and made me question its feasibility even as I analyzed it. It was granted due to short-term necessity, similar to President Reagan's waiver for Pakistan's nuclear development in 1979. The fact sheet from the South Korea-US summit explicitly mentions cooperation on fuel procurement methods and the amendment of the ROK-US Atomic Energy Agreement.

The Dilemma of Strengthening Nuclear Armament and Commitment to Non-Proliferation

Although uncertain, if this succeeds, we can be recognized as a subject that performs strategic functions through actual and physical capability contributions. If operating nuclear-powered submarines, and if we possess enrichment and reprocessing technology, we could potentially possess nuclear weapons, more so than with the option of indigenous development for fuel procurement. Concurrently, commitments to the non-proliferation regime must be further strengthened. Internal nuclear armament enhancement may not be strategically beneficial. The challenges lie in the non-proliferation regime, internal nuclear armament enhancement, and the rejection of CAC technology. Japan opposed our nation's rise internally.

They opposed the acquisition of the Ostal, and also opposed the Mogami-class destroyer project, but ultimately, the United States and Australia used them first. This is a point that requires further consideration in the traditional security domain. Trump cooperates with Canada on icebreaker vessels, but does not consider elevating Canada's alliance status at all. He dismissed Prime Minister MacKay's speech.

Opportunities for Advancement in Alliance Hierarchy and Associated Responsibilities and Risks

While there are opportunities to redefine and ascend the alliance hierarchy through potential, physical, and functional cooperation, greater responsibilities and risks may follow. Internal discussions are needed on how to balance these. Reflecting on the possibility of being included in the primary defense line has become apparent. This was discussed at the Hague Session and the Shangri-La Dialogue last year.

The concept of deterrence along the first and second island chains is consistently discussed. This includes the Philippines, Taiwan, Japan, and Australia, but South Korea has never been included. At the Reagan National Security Forum last year, only the Pacific Chain was mentioned. When Secretary of Defense Colby visited, he explicitly included South Korea, specifying Japan, the Philippines, the Korean Peninsula, and other regions in the vicinity. The reason South Korea was not included in discussions regarding the first island chain in official documents may stem from its perceived lesser geographical importance compared to Japan. However, the current situation appears to reflect these changes.

We must consider that this entails increased demands on us, and while our alliance status and influence may rise, so too will our responsibilities and risks. Therefore, our planning should take this into account. Thank you.

Oh, In-hwan, Senior Researcher at EAI, Lecturer at Seoul National University.