Image by Korea.Net

‘When whales fight, the shrimp’s back is broken.’

The South Korean government has long viewed itself in terms of this proverb when it comes to its relations with the People’s Republic of China and the United States. The two great powers, in their battle for influence over the Asia-Pacific region, often require that South Korea pick a side. South Korea is once again at a crossroads between the two nations over membership in China’s Asian Infrastructure Investment Bank (AIIB) and participation in the U.S. Terminal High-Altitude Area Defense (THAAD) umbrella. Rather than practicing subordinate and passive diplomacy in relation to these two issues, the South Korean government must utilize its position as a “middle power” to pursue a more assertive position between the U.S. and China in order to advance its own economic and security goals, especially with respect to North Korea. South Korea can prove the proverb wrong and gain from the clash of titans if it finds the right mixture for both tightening and loosening its economic and military ties between China and the United States.

On March 28^th, South Korea turned in their application to join the AIIB just before the March 31^st deadline. China had been pressuring South Korea to join the bank since its formal declaration of the project in April 2014. Despite its interest in becoming a founding member, South Korea delayed its decision due to Washington’s vocal opposition to such a move. The tension further intensified as China warned President Park Geun-hye against allowing the U.S. to deploy THAAD in South Korea as part of a trans-Pacific missile defense system. Walking on eggshells, South Korea made the AIIB deadline only after a softening of U.S. rhetoric due to Britain, Italy, France and Germany’s collective decision to join the Bank.

On March 31^st, the Park Administration dismissed any tension between membership in AIIB and THAAD announcing they are separate policy issues that will be decided based on “principle and consistency.” However, some critics believe that South Korea is eventually going to fulfill the U.S.’s wish to deploy THAAD batteries in return for it being “allowed” to join the AIIB.

These critics are correct that AIIB and THAAD should not be viewed as separate policy strategies, but are wrong in saying that Seoul needs to satisfy both countries. South Korea could use its newly earned status as a founding member of the AIIB and also reject THAAD. If it did so, it would set itself up as a counter to China’s unchecked economic influence within the organization and gain Chinese cooperation over North Korean security issues. As for the United States, it may have to taste a bitter loss this time.

South Korea can gain much through membership in the AIIB by addressing a major shortcoming in the supply of easy-to-acquire infrastructure financing for developing Asian nations outside the established rubric of the U.S. dominated World Bank, and the U.S. and Japan dominated Asian Development Bank (ADB). Yet the U.S. is right to be wary about China’s unchecked dominance in the AIIB, and Korean membership in the AIIB will be meaningless if it means trading one master for another. It is crucial for South Korea to work with the other founding members, especially within the EU, to minimize China’s disproportionate voting power. If shareholding is determined according to respective size of GDP (guiding principle of the governance structure), China will have a 30% share. South Korea would hold the 4^th largest share by voting rights, though this only would amount to a mere 5%. Additionally, South Korea should not forget that the THAAD card that can be played in exchange for greater economic say in the Bank.

Although AIIB offers clear economic benefits for Seoul, THAAD is different. Despite the U.S. insistence that it is the best system to protect South Korea against any North Korean ballistic missile launches, it could also be used to counter China and Russia. Therefore, joining THAAD would only provoke China to build enhanced countermeasures and reaffirm ties with the North. Even if reaffirmation of China-North Korea relations is not realized in any meaningful way, it is clearly against South Korea’s national interest to provide even a nominal ally to North Korea. Moreover, skeptics say that the THAAD would not be very effective in averting the North Korean threat as the geographical proximity between South and North Korea makes the margins for error very slim. Instead, Seoul’s indigenous Korean Anti-Missile Defense (KAMD) is the better alternative. There is no need for South Korea to involve itself in another interminable round of Sino-American posturing over missile defense. Although the U.S. will be sour for sometimes at the rejection, South Korea’s status as a vital economic and security partner will prevent any real worsening of relations.

South Korea needs to realize that it holds critical economic and military leverage as a ‘middle power’ and so can take advantage of its position between the East and the West. South Korean foreign policy is too passive, always bending to the demands of either the United States or China depending on the degree of pressure applied. Such diplomacy can only produce zero-sum policies. South Korea should ensure that the path it takes is its own and not one determined by the whales.

Image courtesy of Korea.net