This is the ninth piece in a series looking at how the issues identified in KEI’s annual “10 Issues to Watch for on the Korean Peninsula” series and other issues of note developed in 2022. The original “10 Issues” piece can be found here.
Shortly after Russia’s invasion of Ukraine, South Korea announced that it would enforce sanctions on Russia by the United States and the European Union. These sanctions and the effects of the war have had a direct impact on South Korean trade, but have also potentially impacted South Korea’s policy towards North Korea.
As result of South Korea’s enforcement of sanctions on Russia, imports from Russia fell 10.4 percent compared to the same period through November 2021. South Korean exports declined 34.7 percent. This contrasts with South Korea’s trade overall which saw imports increase by 21.2 percent and exports grow by 7.8 percent.
In addition to the overall decline in trade, there was a sharp decrease in exports of strategic items such as electrical equipment and semiconductors that could support Russia’s war effort. Exports of electrical machinery, which includes semiconductors, fell nearly 50 percent. Exports of semiconductors were down a steeper 65.8 percent, while exports of memory chips have almost completely stopped.
South Korea has also begun reducing imports of most Russian energy products. Imports of LNG were down 36.1 percent by volume through November, while imports of crude petroleum were down 55 percent by volume and refined petroleum products by 70.1 percent. However, imports of Russian coal are up 14.3 percent.
The war has also significantly impacted South Korea’s trade balance. For the first time since the Global Financial Crisis, South Korea is projected to run a trade deficit. While not the only factor, the sharply rising costs of energy from Russia’s war can be seen in South Korea’s projected trade deficit. Energy imports have increased by $78.1 billion in 2022, while South Korea’s trade deficit was $47.5 billion over the same period.
Russia’s war in Ukraine will also likely have implications for South Korea’s approach to North Korea. Previous proposals for engagement with North Korea have included the development of a pipeline across North Korea to bring Russian gas to South Korea. In light of Russia’s weaponization of energy exports to Europe, cooperation with North Korea on a pipeline for Russian gas is more of a strategic risk than opportunity for engagement.
Russia’s use of drones and attacks on civilian targets will also likely influence South Korean views on the potential tactics North Korea may use in the event of a conflict.
Troy Stangarone is Senior Director and Fellow at the Korea Economic Institute of America. The views expressed here are the author’s alone.
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