How Escalating Tensions Between the U.S. and Iran Affect South Korea

The impact of the rising tension between Iran and the United States is not solely bilateral. Its impact can be felt globally and shapes U.S. interests elsewhere in the world. As U.S. Secretary of State Mike Pompeo meets with his South Korean and Japanese counterparts in California this week, the case of South Korea illustrates how a potential war against Iran does not only mire the United States in yet another war in the Middle East, but also stresses and strains a crucial U.S alliance in East Asia.

South Korea has long had a significant level of economic exchange with the Middle East. As an industrial power, the South Korean economy depends heavily on Middle Eastern petroleum, which makes up more than 70 percent of South Korea’s oil imports. The Middle East, in turn, has been a robust market for South Korea’s manufactured products and construction know-how. When the South Korean economy was in the early stages of development in the 1970s, the Middle East was one of the first markets that welcomed South Korean products and services that were not yet tested internationally. Between 1975 and 1980, 85.3 percent of the foreign currency earned by South Korea came from the Middle East.

South Korea has had military involvement in the Middle East as well — sometimes as a part of a U.S.-led initiative, other times on its own. South Korea sells military equipment such as missiles, armored cars, and helicopters to countries like the United Arab Emirates (UAE), Turkey, Iraq, and Saudi Arabia. South Korea sent a division of 3,600 soldiers to Iraq in 2003, the third largest contingent within the Multi-National Force – Iraq, trailing only the United States and United Kingdom in troop size. In 2009, South Korea pledged to give military assistance to the UAE in case of a national security-related emergency as an undisclosed side deal that accompanied the UAE’s decision to hire South Korean companies to build nuclear power plants in the country. (The side deal was later revealed in 2018 following a small domestic scandal, which effectively cancelled the pledge.)

South Korea’s relationship with Iran, which officially began in 1962, followed a similar pattern. A major reminder of South Korea-Iran relations is the “Teheran-ro,” a boulevard in Seoul’s Gangnam district which is today one of the busiest streets of Seoul. The road, named after Iran’s capital to commemorate the visit of Tehran’s mayor to Seoul in 1977, is now the street address for numerous glass-and-steel skyscrapers hosting major corporations, banks, and law firms. (Tehran also has a “Seoul Road,” although its status within the city is not quite as iconic as Teheran-ro is in Seoul.)  

Despite having begun during the Pahlavi Dynasty, South Korea’s relationship with Iran survived the Iranian Revolution of 1979  and until recently, South Korea was Iran’s third largest trading partner, trailing only China and India in trade volumes. Iran, in turn, was South Korea’s third largest supplier of petroleum as of 2017, after Saudi Arabia and Kuwait. In addition, Iranians are enthusiastic consumers of South Korean pop culture, as Korean dramas and K-pop have gained a rabid following there. The South Korea-Iran relationship reached a new height in 2016 when then-South Korean president Park Geun-hye visited Tehran to meet with Iran’s President Hassan Rouhani and hold the first-ever summit meeting between the two countries. Park’s visit was occasioned by Iran’s entry into the international nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA), which lifted the sanctions against Iran and opened new diplomatic and economic possibilities for South Korea.

U.S. sanctions have complicated South Korea’s relationship with Iran, however. In 2010, for example, a major business deal whereby Iran’s Entekhab Industrial Group would have acquired South Korea’s Daewoo Electronics failed, in part because Entekhab had difficulty closing the deal as U.S. sanctions intensified. Mohammed Reza Dayyani, owner of Entekhab, brought an investor-state arbitration against the Republic of Korea and prevailed in 2018, handing South Korea its first-ever defeat in an investor-state arbitration. After the United States withdrew from JCPOA under the Trump administration, South Korea’s economic relationship with Iran was all but extinguished. In May 2019, the Trump administration terminated the waiver for importing Iranian crude, taking South Korea’s import of Iranian petroleum to zero. Because of the sanctions, the South Korean government cannot even pay out the $68 million it owes to Dayyani as a result of the arbitration loss.

The Trump administration’s killing of Iranian General Qassem Soleimani complicated the matters for South Korea even further. Although the tensions somewhat subsided following Iran’s missile attacks against American facilities in Iraq, the likelihood of a military engagement between the United States and Iran remains quite high. South Korea’s military may be embroiled in this standoff. Before the killing of Soleimani, South Korean president Moon Jae-in was facing a difficult request from the Trump administration to quintuple South Korea’s contribution for hosting U.S. troops in the country. One of the ways in which Moon’s negotiators pushed Washington to climb down from this outrageous demand was to offer sending South Korea’s naval ships to the Strait of Hormuz, to join the U.S. maritime operation guarding the oil tankers in the sea. South Korea would do so by diverting its Cheonghae unit, which is currently operating off the coast of Somalia as a part of the international effort to combat piracy.

The Moon administration was also reportedly leaning toward dispatching the South Korean navy to the Strait of Hormuz — until the killing of Soleimani dramatically altered the calculus. Following the missile attacks on January 8, the Islamic Revolutionary Guard Corps issued a statement that “all allied countries of the U.S.” will be targets of military retaliation if attacks are launched from bases in their countries. In a media interview, Iran’s ambassador to Seoul raised the possibility of severing diplomatic relations if South Korea sent troops to the Strait of Hormuz. (Ambassador Badmchi Shabestari later denied directly mentioning the possibility of severing diplomatic ties.) Should South Korea’s navy join the U.S. operation, several hundred South Korean soldiers currently deployed in Lebanon and the UAE, as well as over two thousand South Korean civilians living and working in the Middle East, may be exposed to retaliation by Iran’s military or Iran-backed militia groups. 

Should the U.S.-Iran tensions boil over to a war, the South Korean military would be joining yet another U.S.-led war in the Middle East — which is not an appealing prospect for Moon Jae-in administration. When South Korea sent troops to Iraq in 2003, the liberal administration led by then-president Roh Moo-hyun took a significant hit in support as over 70 percent of the South Korean public opposed joining the Iraq War. That memory must be particularly vivid for Moon, who began his political career as Roh’s senior presidential staff. A recent poll indicates that 48 percent of South Koreans opposed sending troops to the Strait of Hormuz, with 40 percent in favor. The gap between the two will likely widen if the U.S.-Iran conflict turns even more kinetic. 

Perhaps sensing Seoul’s hesitation, Ambassador Harry Harris is pressuring Moon by publicly demanding South Korea send its navy to the Strait of Hormuz. Yet the South Korean government remained cagey, as Foreign Minister Kang Kyung-wha said in response to a legislator’s query: “the stance of the United States and ours cannot always be the same… when considering bilateral ties with countries in the Middle East. We have sustained economic ties with Iran for a long time.”

With the looming threat of North Korea’s nuclear program and the increasingly illiberal China, South Korea is emerging as one of the most critical allies of the United States in East Asia, reprising the role of West Germany during the Cold War. But the Trump administration, characteristically, has been testing this alliance, as can be seen from the extortionate demand for fivefold increase in defense contribution.  There is no indication that this White House is even considering the impact of its actions that will be felt on the U.S.’s East Asian allies. With the specter of yet another war in the Middle East, the United States is in danger of alienating an irreplaceable partner, who is located in the part of the world that will determine the course of this century.