[North Korea and the World] Structural Changes and Reconstruction of World Order Triggered by the Iran War

YouTube link: https://www.youtube.com/watch?v=vIbvofk0I8s

■ Author: Park Won-gon _Director, North Korea Research Center, East Asia Institute. Professor, Department of North Korean Studies, Ewha Womans University.

■ Contact and Editing: Lim Jae-hyun_Research Fellow, EAI

    Inquiries: 02 2277 1683 (ext. 209) | jhlim@eai.or.kr

Video Script

Hello, and thank you for watching Park Won-gon's North Korea and the World. Today, I would like to continue our discussion on the Iran-Israel war. The reason we are continuing to cover this topic is its immense impact; it is considered a war of significance that could represent a turning point not only for the Korean Peninsula but also for the global order. Following up on our previous discussion, I will outline the broad implications of this war. Briefly on the current situation, following the first round of negotiations, a second round is highly likely to take place in Islamabad, Pakistan, between the U.S. and Iran.

Regarding the process so far, the U.S. presented approximately 15 to 20 conditions for a ceasefire, to which Iran initially responded with about five conditions, later adjusted to around ten, according to media reports. What is significant is that after the first round of negotiations, reports suggest the issues have narrowed down to two or three key points. The core issue revolves around whether Iran will possess the right to enrich uranium. The central questions concern how to handle approximately 440 kg of 60% enriched uranium, and these two issues are the crux of the matter.

Changes in the U.S.-China Strategic Competition Landscape

Other unresolved issues include the blockade of the Strait of Hormuz, the U.S. initiating a counter-blockade during the first round of negotiations, and the third issue is Israel's ongoing attacks on Hezbollah in Lebanon. These are considered the most significant agenda items. Beyond these, issues such as the lifting of economic sanctions and the release of frozen assets will be discussed in conjunction with the nuclear issue of uranium enrichment. Therefore, it is assessed that these three major agenda items are likely to be discussed between the U.S. and Iran around next week. Today, I will discuss the significant impact this war could have on the global order. I will cover approximately four aspects. The first is the apparent U.S. withdrawal from the U.S.-China strategic competition. The National Security Strategy was released in the U.S. last November, followed by the National Defense Strategy in January. Both of these strategy documents clearly identified China as the primary competitor. Although the intensity is less than previously discussed, there are no expressions labeling China as an enemy or a threat, or defining China itself as a threat. However, the overall crucial point is that China is considered the U.S.'s greatest competitor, and responses to this are prioritized. Yet, the question inevitably arises as to whether the U.S. possesses the capacity and will to effectively implement this strategy amidst the current war. The strategy of focusing on the Indo-Pacific, ultimately aimed at containing China, is bound to falter significantly. Firstly, a substantial amount of military equipment has been deployed. While not the entire Patriot or THAAD battalions in Korea have been moved, it is highly probable that a significant portion of missiles has been redeployed to the Middle East. Although U.S. and South Korean authorities have not officially confirmed this, movements have been sufficiently observed. Consequently, the overall U.S. military capacity, its military strength intended for this region, has undoubtedly diminished compared to before.

China, seizing this opportunity, is judged to be enjoying a so-called 'period of strategic tranquility.' While the U.S. is preoccupied with the Middle East, China is making substantial progress in its desired strategic development directions. It has gained an opportunity to eliminate its vulnerabilities and enhance its national strength. The recently released Five-Year Plan in China highlights three core objectives: reducing reliance on external economies, advancing industrial technology, and increasing supply chain self-sufficiency. For instance, in the realm of artificial intelligence competition, the U.S. is currently focused on generative AI. In contrast, China is rapidly commercializing robotics technology beyond generative AI, leading the world in aspects such as price competitiveness, and widening the gap considerably. China is diversifying its investments in areas such as robotics, beyond 5G to 6G, and what is termed cutting-edge AI. Conversely, the U.S., engaged in war, inevitably faces reduced fiscal capacity and political focus. China is exploiting this situation. Therefore, as the conflict prolongs, the balance of U.S.-China competition is likely to quietly tilt towards China. The advantages and capabilities of the U.S. in its relationship with China are weakening due to this war.

Europe's Enhanced Autonomous Defense

Secondly, Europe's self-reliance is likely to accelerate. A Wall Street Journal analysis article published the day before yesterday highlighted that a core objective is to establish a military structure that can at least sustain itself even if the U.S. withdraws from NATO. Specifically, three pillars are reportedly being prepared. The first is the 'post-U.S. NATO scenario,' which involves utilizing NATO's existing command and logistics structure but enabling European nations to continue operations independently, even if troops or strategic assets are withdrawn. Currently, NATO's existing command and logistics structure is U.S.-led. In the absence of the U.S., NATO's capacity to manage this independently is considered insufficient. However, following President Trump's strong remarks, the goal is now to develop the capability to manage this independently in the event of U.S. withdrawal. This is the first pillar. The second is a rearmament plan at the European Union level. The EU plus the UK can be considered NATO, but this refers to a rearmament plan at the EU level. This includes initiatives such as 'Debuise's Redness 2030' announced in 2025 and a European rearmament plan involving approximately 800 billion euros. The continued active pursuit of this plan is being reaffirmed through the current war. Furthermore, defense spending is projected to increase from 2.5% to 3% of GDP by 2030, with President Trump strongly advocating for 5%, which includes indirect costs.

In practice, this involves increasing spending to around 2.5% to 3% of GDP and establishing a European defense industrial ecosystem, alongside developing advanced systems such as drones and AI. This indicates that a rearmament plan is being prepared at the European level. The third and arguably most crucial aspect is the shift in Germany's stance. Germany has historically been hesitant to take a proactive role. However, through the current Iran conflict, Germany is demonstrating its capacity to lead even in the absence of U.S. support. Tangible evidence includes Germany's declaration to spend approximately $750 billion on defense over the next four years, as of 2029. Germany's annual defense budget is around $189 billion, which would place it third globally.

This expenditure, exceeding $1 trillion by the U.S. and approximately $400 to $500 billion by China, makes Germany's $189 billion annual defense budget comparable to a wartime economy. Such a significant investment is likely to become a crucial asset for a new form of European self-reliance. The division of roles within Europe is also becoming more concrete. Germany possesses a formidable defense industry. While South Korean indigenous weapon systems currently appear to surpass German ones in some areas, German designs form the basis for many weapon systems. Despite not having significantly developed its defense industry since the Cold War and into the post-Cold War era, the ongoing conflicts, starting with the Russia-Ukraine war and now the Iran conflict, could lead to a substantial resurgence of its industrial capabilities. Furthermore, Poland, bordering Russia, is taking on the role of frontline defense. France and the United Kingdom, possessing nuclear capabilities, are positioned to handle nuclear deterrence and power. This reflects the heightened sense of crisis in Europe. Consequently, in response to the current Iran conflict, Europe is preparing for self-reliance. It is important to note that this does not imply Europe's active intention to sever ties with the U.S., but rather a recognition that if the U.S. withdraws, Europe must fill that void.

Increased Instability in Global Energy Supply Chains

Third, the global energy supply chain is being destabilized. We are all experiencing this firsthand, aren't we? Oil prices in South Korea are rising, and global oil prices continue to increase. While President Trump often makes unsubstantiated claims, he argues that rising oil prices benefit the U.S. as an oil exporter. However, oil prices are determined by the global economy, and U.S. oil prices are also rising. The average price of gasoline at U.S. gas stations is currently approaching $4.50 per gallon, which is extremely high. For context, before the Iran conflict, the average price was $2.80; prices could exceed $5, nearly doubling. This directly impacts the perceived economic indicators in the U.S., making it highly likely to negatively affect President Trump's political prospects.

Not only the U.S. but the global energy supply chain is in turmoil. The Secretary General of the International Energy Agency has described this conflict as the greatest threat to global energy security in history. Within three weeks of the conflict's outbreak, oil prices surged by 55%. As you know, the Strait of Hormuz is a critical chokepoint, through which approximately 20% of the world's oil and 33% of liquefied natural gas pass. Consequently, blockades are leading to fuel rationing, reduced working hours, and factory shutdowns in various locations, and South Korea is no exception. Nations worldwide are treating energy not merely as a commodity but as a weapon for survival, and are increasing their strategic oil reserves. China is one of the most proactive countries in this regard. Europe is accelerating its transition to renewable energy, and South Korea is also seeking to reduce its dependence on the Middle East. Therefore, the energy supply chain, which previously operated on market principles, is transforming into a battlefield for survival competition among nations. This is the third impact of the current Iran conflict on the global order.

Restructuring of the Middle East Order and the Role of the U.S.

Finally, the fourth impact is the restructuring of the Middle East order. Pro-U.S. Gulf monarchies had effectively formed alliances with the U.S. and entrusted their defense to it. However, this conflict has presented a moment of truth for them to critically re-evaluate the value of their alliance with Washington. In the early stages of the war, the U.S. deployed its missile defense network to protect Israel, leaving the Gulf region's infrastructure relatively exposed. We have seen reports of Gulf monarchies being attacked, and while some attacks are intercepted by existing air defense systems, many breaches have been reported. Consequently, a perception is solidifying among Gulf monarchies that in a choice between their security and Israel's, the U.S. will prioritize Israel's security. This is not only evident in the current situation but also in past events, such as the 2019 attack on Saudi Aramco facilities, where the U.S. did not respond proactively. Another incident involved Israel's strike on Hamas negotiators in Doha in 2025, which the U.S. ultimately failed to prevent. The accumulation of such events has inevitably led to growing distrust of the U.S. among these Gulf nations. While it is unlikely that these countries will immediately turn their backs on the U.S., they are likely to shift away from a U.S.-centric order towards a strategically neutral position. The implications of this shift are considered highly significant.

South Korea's Complex Challenges and Response Strategies

So, what about South Korea? Our situation has also become considerably complex. In terms of security, cooperation with the U.S. is considered irreplaceable. However, this war presents new challenges from three directions simultaneously: U.S.-China competition, alliance autonomy, and energy restructuring. Therefore, we must seriously consider whether a strategy relying on a single pillar is appropriate. The world is rapidly shifting from a rules-based order to a power-based order. In this turbulent environment, multi-layered and more complex responses are becoming increasingly urgent. That concludes my remarks for today. Thank you.