By Troy Stangarone

In recent years, the perception of Korea on the global stage has begun to change. This shift is partly a reflection of Korea’s emerging economic stature. While China may get much of the press, decades of economic success have led other developing nations to view Korea as a model for economic development, a role which Korea has begun to embrace.  At the same time, Korea’s own economic growth has seen it become one of the top ten trading nations and an emerging voice in global economic forums such as the G-20.

While Korea’s economic success has brought it a more significant role on the global stage over the last few years, that same success has also expanded Korea’s national interests around the globe. This is perhaps nowhere more evident than in the Middle East, where Korea’s interests and relations are rapidly changing.

While the Middle East has long been a source of energy imports, Korea’s own trade with the region was often limited, though the region was a significant source for construction projects. In the last decade alone, Korean exports to the Middle East have grown from only $7.1 billion in 2001 to $34 billion last year, or nearly two-thirds of Korea’s exports to the United States. At the same time, the Middle East remains a key supplier of energy to power the Korean economy with the region accounting for about 87 percent of Korea’s oil imports and nearly 50 percent of its imports of natural gas.

Korea’s dependence on the Middle East for energy and its success in developing export markets in the region gives Korea a strong interest in peace and stability in the region. At the same time, Korea is seen as a more attractive partner in the Middle East. In a recent interview with the Korea Times, Saudi Arabia’s Ambassador to the Korea said that “The Kingdom pays special attention to its relationship with the Republic of Korea, in recognition of Korea’s leading role in the international community.”

The enhanced standing that Korea is developing in the region was evident on President Lee Myung-bak’s recent trip. Ostensibly about securing commitments for increased oil supplies from the region in anticipation of cooperating in U.S. sanctions efforts towards Iran, President Lee left the region with an agreement to raise Korea’s relationship with Turkey to that of a strategic partnership, the establishment of a high level cooperation committee to handle cooperation between Qatar and Korea on economic and security issues, and an agreement to negotiate a defense cooperation pact with Saudi Arabia, which will send its first military attaché in Asia to Korea.

On the economic side, President Lee also saw benefits. With indications that Korea is preparing to cut its imports of oil from Iran (which accounts for roughly 10 percent of Korea’s oil imports) by upwards of 50 percent, Korea secured a pledge from Saudi Arabia to make the difference in any oil shortage and a new 20 year contract to supply crude oil to Korea.  Qatar also agreed to a 20 year contract to provide Korea with an additional 2 million tons of liquefied natural gas per year.

With the region as a whole undergoing significant political change, Korea’s growing ties with Turkey could also be a strategic benefit to Korea in the long run as many of the transitioning governments in the region look to Ankara as an exemplar of Middle Eastern democracy. To those ends, Korea and Turkey are already in the process of negotiating an FTA that could serve as a broader Middle East export platform for Korea and the two sides also agreed to resume talks on the construction of two nuclear reactors in Turkey. If successful, the talks would represent the second major nuclear contract for Korea after its 2009 deal to build four plants in the United Arab Emirates.  

However, despite growing ties to the Middle East, Korea also finds itself more exposed to instability in the region. The current confrontation with Iran has put the majority of Korea’s oil imports at risk should tensions over Iran’s suspected nuclear program break out into conflict, while the tumult of the Arab Spring has impacted Korea’s exports to some of the impacted nations in the region, such as Libya where exports fell from $1.4 billion in 2010 to a mere $181 million in 2011. While not as extreme a drop, even exports to Egypt fell from a high of $2.2 billion to $1.7 billion as a result of the transitions taking place in the region.

Korea has been able to benefit from increasing exports to the Middle East as part of a conscious strategy to diversify its export markets. Beyond the Middle East, Korea has also made increasing inroads into Latin America and Africa and has developed a strategy of using FTAs to ensure that Korea is not dependent upon any one market for its exports. At the same time, while Korea has been pursuing more renewable resources and energy efficiency under its “Green Korea” policies, it has not yet been able to successfully diversify the sources of its energy imports.

In the long run, Korea is likely to benefit substantially from enhanced ties with the Middle East. If new, democratic governments in the region are able to expand the benefits of economic growth to the wider population, Korea would likely benefit from increasing consumer markets in the region. However, as its energy and economic ties to the region increase, Korea will also find itself increasingly caught in the conflicts of the region. So far, Korea has managed to navigate these challenges in the Middle East well, as long as it continues to do so it will likely see its status in the region rise. 

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute. The views expressed here are his own.

The photo is from the dead pixel’s photo stream on flickr Creative Commons.

By Troy Stangarone

In his remarks before Congress, President Lee Myung-bak pledged to help Libya through its transition saying “We will take part in the international effort in bringing democracy to Libya and rebuilding its shattered economy.”  While Korea’s efforts in helping Libya are laudable, Korea may also be in a position to help utilize lessons from its own development to help with the transition in the Middle East.

In the aftermath of the Korean War, Korea had very little industry or resources with which to develop its economy. However, over the last sixty years Korea has gained a wealth of experience as it successfully made the transition from developing to developed economy. Since 2004, Korea has sought to share that knowledge with other developing countries, and to that end the Korean government has supported the Korea Knowledge Sharing Program. As of 2010, the program has been involved in research and consultations with approximately 20 countries and 200 topics and counts among its successes the Kuwait Five-Year Economic Development Plan, the establishment of the Vietnam Development Bank, and the Navoi Free Economic Zone of Uzbekistan.

Beyond its own efforts, Korea sought to place the issue of development on the agenda at the Seoul G-20 Summit as it worked to become the ‘bridge’ between the developed and developing world. While not what was envisioned at the time, marrying Korea’s efforts through its Knowledge Sharing Program with an augmented version of the G-20 development agenda agreed to in Seoul might be an ideal means to provide and coordinate technical economic assistance from Korea and other G-20 nations. Critically, the G-20 agenda also includes a knowledge sharing component. Since the G-20 includes both advanced and developing nations, it may be viewed in a positive light in the region and have more practical experience to draw on.

At the same time, much like Egypt, Tunisia, and Libya, Korea has experienced a transition from dictatorship to democracy. Each of these nations would benefit from technical assistance with the transition to democracy as they build democratic institutions and organize free elections.  This may especially be the case in Egypt where concerns over backsliding by the military in the transition to democracy have already begun.  Korea could share its lessons from this difficult process as well.

A successful transition and stability in the Middle East matters for Korea as well. Many of these markets had seen significant increases in exports from Korea over the last decade before the Arab Spring took hold. Taken as a whole, the Middle East and North Africa now imports roughly two-thirds of what the United States imports from Korea. The region is also a key source of energy for the Korean economy. Korea currently imports nearly three quarters of its oil from the Middle East, as well as a significant portion of its natural gas.

The transitions in the Middle East have created a great deal of uncertainty in the region over the last year.  However, they also represent a challenge for the international community that seems to be ideally suited for Korea’s participation as it seeks to become more of a global player and to share its experiences with other developing countries.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade for the Korea Economic Institute. The views represented here are his own.

Photo by mbaudier, Flickr Creative Commons