Threat of Korean Peninsula war muddies the Austal deal waters
Only months after Defence Minister Richard Marles smoothed the way for the sale of Australian warship builder Austal, a South Korean trade expert has raised the spectre of war with the North.
Only two months after Defence Minister Richard Marles smoothed the way for Hanwha to buy Australian warship builder Austal, one of South Korea’s economic and trade experts has signalled a heightened threat of war with North Korea following recent escalating tensions.
Seonjon Kang, a professor at a think tank within South Korea’s Department of Trade and Economic Studies that is part of the country’s Institute of Foreign Affairs and National Security, said the threat of an invasion by its northern neighbour was considered substantial, although she added that the probability of it happening was not high.
“It may not be an all-out war, but there is a higher threat,” Professor Kang said.
Speaking in Seoul as part of the Australia-Korea Media Exchange Program hosted by The Walkley Foundation, Professor Kang said tensions had escalated after the summit last month between North Korean leader Kim Jong-un and Russian President Vladimir Putin, who made his first visit to North Korea’s city of Pyongyang in 24 years.
This comes only weeks after the hostile move by North Korea to send air balloons over the South Korean border filled with garbage.
North Korea is understood to be making between 12 and 18 nuclear warheads every year, and currently has the capability for about 100 nuclear weapons.
Professor Kang said South Koreans had become “desensitised” to the North Korea threat and, while some conservatives wanted to arm South Korea with nuclear weapons, they were a minority.
Despite this, South Koreans were on edge ahead of November’s US presidential election.
As the US election campaign heated up, South Koreans were watching closely, as a win for Donald Trump could compound the heightened tensions, Professor Kang said.
The Australian earlier reported that Mr Trump’s cosying up to North Korean dictator Kim was considered one of the hallmarks of his earlier presidency.
Professor Kang said she believed Mr Trump would deal with North Korea more directly, as he did when in power, meeting with the North Korean leader in 2018 and 2019, and Kim “will like that idea”.
But the exact impact would depend on the compromise between both leaders as to whether it increased or lessened the threat for South Korea.
Secondly, the number of US troops stationed in South Korea would probably fall.
The Wall Street Journal previously reported that Mr Trump had demanded that Seoul greatly increase how much it paid for the US troops stationed in the country, despite the US and South Korea being military allies since the Korean War.
In 1991, the two countries concluded the first of a series of agreements under which Seoul provided funds and other support to defray the Americans’ cost of keeping troops there.
However, Mr Trump had long insisted that South Korea pay more, with plans to potentially reduce the 28,500 US troops stationed in South Korea in 2020.
Under Mr Trump’s leadership, trade agreements would also probably be affected, Professor Kang said, pointing to Mr Trump’s initial tariffs while in power. The tariffs were on items such as solar panels, washing machines, steel and aluminium, which protected some industries while pressuring Canada, Mexico, Japan and South Korea to revise their trade relations with the US, the Wall Street Journal has reported.
Professor Kang said South Korea was focused on the US and saw it as an important ally. While it has been attempting trade diversity for seven years with countries such as Australia, it had been gradual and not a big change.
She said her view was “never say never” when it came to the possibility of reunification with North Korea, whether peaceful or some other way, adding that South Korea’s constitution left it open to the possibility.
Meanwhile, North Korean threats create pause for thought for Australian defence officials and government ministers.
In early May, Defence Minister Richard Marles endorsed a potential South Korean takeover of Australia’s biggest homegrown defence company, Austal, as he flagged a “much deeper” defence relationship with the key Asian partner, also looking to diversify some trade away from China.
Before the latest escalating tensions, the Defence Minister said the government would not stand in the way of Korean defence giant Hanwha’s $1bn bid for Perth company Austal – Defence’s monopoly shipbuilder in Western Australia.
His comments came as Korean Defence Minister Shin Won-sik confirmed his country was looking at participating in AUKUS’s “Pillar II” technology-sharing partnership, which Japan is also considering joining.
Mr Marles’s statement undermined Austal’s claim that Hanwha’s bid was unlikely to receive Foreign Investment Review Board approval.
Newly announced rules to favour bids by friendly countries for national security assets were likely to bolster Hanwha’s case.
Austal was named last year as the government’s strategic shipbuilder at WA’s Henderson shipyards, south of Perth, where eight new general purpose frigates will be built for the navy. Its American subsidiary also has extensive US Navy contracts, ensuring a say for the Pentagon over the sale of the company.
Hanwha owns the world’s second-largest shipyard and has been building vessels for more than 50 years, including warships and submarines for South Korea, the UK and Norway.
It is one of four foreign firms vying to build the frigates for Australia and has built a new Geelong factory for infantry fighting vehicles and howitzers for the army.
In the US, Hanwha has recently purchased another ship builder, Philly Shipyard, which carries out government work.
The areas of focus outlined by some Australian defence experts with Austal under Hanwha’s ownership have been around the supply chain, a South Korea invasion from North Korea or hacking incident where the enemy nation gains access to the blueprints of Australia’s warships.
The nuclear-armed North has been reinforcing its border in recent months, adding tactical roads and laying more landmines, which has led to “casualties” among its troops due to accidental explosions, South Korea has said.
South Korea has called Russia’s treaty with the North a “grave concern”, with a senior official saying Seoul would “reconsider” its policy of not sending arms directly to Ukraine.
Putin said South Korea “has nothing to worry about”. But he warned Seoul not to supply weapons to Kyiv.
The author travelled to South Korea as a guest of the Walkley Foundation.
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