Korea and Obama’s Economic War

Having crossed the Pacific after a humiliating defeat in the midterm elections, U.S. President Barack Obama departed from Seoul with a dark grimace. Because the U.S. electorate so passed judgment on the failure of the economic recovery, the president’s primary objective during his tour in Asia was to use diplomacy to put a shaky economy back on the right track. On one hand, there was the push to correct the current account deficit and create jobs by facilitating exports through a free trade agreement. On the other hand, there was the wielding of unfair trade to punish those countries that had taken what could have been American jobs.

The March of Tribulations at the “China Power Check” G-20 Summit

Obama has also visited India, Indonesia, Korea and Japan, implementing a multifaceted strategy of political checks and public participation to contain the economic and political clout of an increasingly aggressive China. In this foreign tour, Obama essentially drew a map of the network of G-20 East Asian allies that could help keep China in check.

However, the anticipated ROK-U.S. Free Trade Agreement was not cinched, and the G-20 Summit was nothing but a march of tribulations. The G-20 Seoul Summit will no doubt be remembered as the first incident on the international stage since 1945 in which the U.S. received concentrated fire from other participating nations.

The U.S. pushed to set a numerical target on excessive current account surpluses or deficits (both to be limited to 4 percent of GDP), targeting China for its handling of the exchange rate. This proposal was met with collective opposition, given the recent U.S. decision to implement $600 billion worth of quantitative easing to artificially reduce the value of the dollar. As the U.S. had reneged on its duty as a hegemon to supply international public property, countries such as China and Brazil, along with primary Western powers such as Germany, France and the U.K., unsurprisingly criticized the American proposal. Help from the American “network” of India, Indonesia and Japan stopped at silence. Although a lonely U.S. was able to save face by getting all countries to agree on guidelines that assess the current account balance, it also grimly stood by to witness the reality of China’s rising might.

And what of Korea? The G-20 is a premier international institution in which Korea has continued to take part. It was, however, the U.S. that first invited Korea to the ministerial G-20 meetings established in 1999 in the aftermath of the Asian financial crisis. It was yet again the U.S. that upgraded the G-20 to a summit of world leaders immediately after the 2008 global financial crisis, ensuring that Korea would be a member of this premier international forum. Even being able to host the Seoul Summit was only made possible through U.S. assistance. Korea thus diligently supported the U.S. during the Seoul Summit. As a country with a current account surplus of slightly over 4 percent, as well as the frequent tendency to intervene in foreign exchanges to support major exporting companies, Korea ran about attentively trying to mediate the reactions to the U.S. proposal for numerical targets.

“All in the same boat.” As if to be born in the same lotus flower of the heavens, this is a figure of speech that signifies the convergence of beings in the same conduct and fate, without regard to good or evil. Achieved with the help of the U.S., the G-20 Seoul Summit was able to bestow on Korea an immense amount of both tangible and intangible assets. Even the Seoul Development Consensus for Shared Growth was adopted. The problem is knowing to what point and until when Korea will continue to follow the U.S. The Seoul Summit explicitly showed the limitations of declining U.S. hegemony and demonstrated Chinese tenacity in the knowledge game. Korea was reminded once again how the future of its people would be determined by the tenor of U.S.-China relations.

Korea Must Embrace Both China and the U.S.

Having long since focused on U.S. diplomacy while crying out for a “global Korea,” Korean diplomacy is now at a crossroads. To survive between the U.S. and China, there is a demand for a more network-based thinking, one that not only maintains relations with the U.S., but also with China and all surrounding nations. Korea must also cultivate a soft power that would allow it to secure the independent status of an emerging nation. This could be achieved by creating knowledge-based international standards in places of multilateral diplomacy like the G-20. It is important to seek out practical strategies that would allow Korea to act as a bridge to emerging nations, as seems to have been the aim at the Seoul Summit. A policy network that draws from the knowledge of diverse domestic actors must also be built. Both the G-20 and Obama’s lonely economic war have presented us with a great deal of tasks. The time has come for all to awaken from the excitement of the G-20 Summit and establish, in earnest, a more multifaceted diplomatic strategy.