Relations of Two Koreas Are Sinking with the Sunken Warship, What Next?

On March 26, a South Korean warship, the Choenan, sank in the Yellow Sea after a powerful explosion. Though more than one-half of the ship’s sailors were rescued, 46 perished. While the final results of the subsequent investigation by the government and the public and military intelligence agencies are expected to be announced as early as mid-May, South Korea’s defense ministry has confirmed that a powerful explosion outside the warship was the main cause of the incident. Based on the evidence thus far, South Korea and many external media sources have been suspicious about North Korea’s involvement. Critics who strongly believe in the North’s involvement argue that the North wanted to use the Choenan incident as a display of military power to boost global attention prior to returning to the six-party talks. Nevertheless, North Korea has so far strongly denied its involvement and reacted strongly against such suspicions. Even if the investigation reveals that the allegations are true, South Korea’s government would not have many options to respond.

Military Action Unlikely, Economic Sanctions Ineffective

Despite the South Korean government’s comments that it has not ruled out military action, a military reaction is unlikely due to the high opportunity cost and the current government’s economy-focused policies. South Korea’s President Lee Myung-Bak will focus his energy on featuring the strength of South Korea’s economy as a host of G20 summit in November 2010, and will likely choose economic sanctions over a military engagement.

Yet, the effectiveness of economic sanctions is questionable. The South and North have had three different channels for inter-Korea economic exchange such as the Sunshine policy (i.e. subsidizing food and aid), Mount Kumgang tourism and the Kaesong industrial zone. However, all three channels have already been closed or under threat. The Sunshine policy has been stopped since the Lee administration took over the government with its tough policy toward North Korea. Mount Kumgang tourism has also been closed since 2008 after a South Korean female tourist was shot by a North Korean soldier. Furthermore, North Korea has announced that it will confiscate all properties of South Korean companies at the Mount Kumgang resort and kicked most of the South Korean staff, except for sixteen people, out from the resort in April 2010. The Kaesong industrial zone has also faced challenges due to the sluggish process of the negotiation between the two countries regarding customs clearance. Due to large differences of opinion, it is unlikely that substantial results will be achieved in the near future. In addition, while the inter-Korea relations are drastically slowing, many experts are concerned that the North may also expel South Korean companies from the Kaesong industrial zone and shut down it.

As most of South Korea’s options for pressuring North Korea’s economy are ineffective, the South Korean government has tried to internationalize this problem by bringing the issue to the UN Security Council, which may increase the importance of China’s role.

China, an Important Ally

The importance of China’s role in the Cheonan incident has emerged due to its close relationship with both South and North Korea.  While North Korea depends on China for 80% of its food and commodity trade, South Korea exports over 20% of its total exports to China. Due to China’s strong military power and close economic relationship with both countries, it is expected to become an important ally to mediate between the South and the North. In addition, while South Korea is showing strong efforts to bring this issue to the UN Security Council, China, one of the five veto-wielding permanent members of the council, will be one of the key countries to pass the resolution. Because of its importance, President Lee had the bilateral summit with Chinese President Hu Jintao on April 30, 2010 at the Shanghai Expo and asked the Chinese government to be closely involved in coordinating the after effects of the Cheonan incident. North Korea’s leader, Kim Jong-il, is also looking to strengthen its ties with China and met with President Hu Jintao in China in the beginning of May 2010.

Impact on Regional Elections

The results of the Cheonan incident investigation will have a significant impact on the regional elections due on June 2, 2010. Regardless of the outcome of the investigations, the current government will likely face criticism about its crisis-management abilities and will be under pressure to reform the security system and  defense policy of its ministry. However, as the Cheonan incident has prompted concerns about the domestic security condition and raised tension in Han peninsula (known as Korean peninsula), it will provide advantages to the rightwing and conservative ruling party, the Grand National Party (GNP). In contrast, the main opposition party, the United Democratic Party (UNP), will be disadvantaged due to its friendly attitude toward North Korea and strong support for the Sunshine Policy. In addition, the UNP’s plans to stimulate its popularity with the first anniversary of the former president Roh Moo-Hyun’s death on May 23, 2010 might be affected.

Future Economic Policy

The sinking of the Cheonan will not have a substantial direct effect on the South Korean government’s economic policy. However, as the results of local elections are expected to affect the next half of the current government’s term and future general and presidential elections due in 2012, both main parties are focusing on the outcome of the Cheonan incident and its impact on the elections ahead. Nevertheless, it is clear that the high suspicion of the North’s involvement and cold relations between the North and South will provide advantages to the GNP, the ruling party, at the local elections. The victory of the GNP in the local elections will support the Lee administration to continue with its current growth-focused economic policies. Moreover, coupled with over a one-half majority at the national assembly, the victory at the local elections will strengthen the political power of the Lee administration and help accelerate several government projects such as the four-river projects and constructing the SeJong Special city.

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