Risks lurk in economy-first diplomacy in Middle East

President Park Geun-hye speaks during a summit with Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan at the Al Mushrif Palace in the United Arab Emirates capital on March 5. It was Park’s second visit to Abu Dhabi since she became president in February 2013. Abu Dhabi was Park’s third stop during her recent trip to four Gulf Cooperation Council (GCC) countries. The other countries were Kuwait, Saudi Arabia and Qatar. / Yonhap

Experts put forth compassionate corporatism

By Kang Hyun-kyung

The transcripts of President Park Geun-hye’s summits with the leaders of four Gulf Cooperation Council (GCC) countries are evidence that she made her utmost effort to help Korean companies gain a stronger presence in the emerging markets.

Park reiterated that Korean companies have proven track records in know-how, advanced technology and strong work ethics, noting that this made them ideal partners for Kuwait, Saudi Arabia, the United Arab Emirates and Qatar in their pursuit of diversifying their economies into the non-oil sector.

The president made those remarks during summits with the leaders of the four GCC countries to help Korean companies win bids to construct roads, bridges, oil refinery facilities and World Cup stadiums there.

The presidential office said that 44 agreements calling for cooperation between Korea and the GCC countries in renewable energy, public health, ICT and food-processing industries had been signed on the sidelines of Park’s summits with the leaders.

Experts said that there is no question that President Park’s trips to the GCC countries will help upgrade bilateral relations because they agreed to expand ties from energy to the non-oil industry.

But they cautioned about risks in the post-GCC summits diplomacy if the government sticks to its economy-first diplomacy.

The question is how locals view Koreans and Korean businesses, and whether their images can be improved, they said.

Jang Ji-hyang, a research fellow of the Middle East and North Africa Center at the Asan Institute for Policy Studies in Seoul, regretted that too much focus had been placed on business diplomacy during the presidential visits.

She said that economy-first diplomacy could trigger a backlash from the local people, as they might feel that issues about which they really care were not addressed.

Shin Jae-hyun, left, former ambassador for energy and resources cooperation during the Lee Myung-bak administration, speaks during a discussion with two Middle East experts regarding President Park Geun-hye’s recent trip to four Gulf Cooperation Council countries at the Asan Institute for Policy Studies in Seoul on March 6. Jang Ji-hyang, center, a research fellow of the institute, and Lee Kwon-hyung, an economist at the Korea Institute for International Economic Policy, joined the roundtable discussion organized by The Korea Times. / Korea Times

“I’m afraid that the local people will have felt that Korea is only interested in doing business with them while turning a deaf ear to the plight facing them,” she said during a roundtable interview with The Korea Times at the think tank on March 6.

Jang said terrorism is one of the headaches with which the Middle Eastern countries have been grappling.

“President Park didn’t address the Korean government’s efforts to fight terrorism following the brutal killings and bombing attacks by the militant Islamic State (IS) group,” she said. “I thought it would have been better if President Park addressed the Korean government’s humanitarian support to people suffering from the IS attacks, and willingness to fight against the militant group during those summits.”

Some experts agreed that Korean companies’ single-minded pursuit of profits in the market awash with liquidity may clash with the local culture that respects trust-based partnerships.

Lee Kwon-hyung, head of the Middle East and Africa Team at the Korea Institute for International Economic Policy (KIEP) in Sejong City, proposed Korean companies embrace compassionate corporatism to prevent a possible clash between their profit-seeking activities and the local culture.

“Businesses can mull ways to give back to the community by organizing charity events or cultural programs. They can provide free Korean language class to those who want to learn it,” Lee said.

The economist said having a pool of local people who have an understanding of Korean culture and are fluent in the language would benefit Korean companies because they can hire some of them as local staff.

He proposed the role of the private sector as a bridge-builder amid speculation that the government-led efforts to spread the Korean culture in the Middle East could backfire.

“I understand that Korean dramas and K-Pop are popular among some young people in the region. But it remains uncertain if the rest of the people there, including political elites, are thrilled about the spread of hallyu because some dramas and K-Pop have elements that can clash with the local culture,” the state-run KIEP economist said.

The governments of Korea and UAE signed an agreement allowing each other to establish cultural centers in the other’s country.

Expectation game

Senior presidential secretaries characterized the nature of President Park’s trips to the four GCC countries as so-called “sales diplomacy.”

They said the president launched summit diplomacy to help Korean companies, which have been suffering from economic slowdown at home, find business opportunities in the region.

Presidential aides used the term the “Second Middle East boom” to refer to the untapped business opportunities in the non-oil sector, and suggested that the 44 agreements signed on the sidelines of Park’s talks with the four GCC leaders were the summit outcome.

Shin Jae-hyun, a lawyer and avid watcher of Middle Eastern affairs, questioned if the characterization of President Park’s GCC trips as sales diplomacy was appropriate.

“Counterpart countries could have felt uncomfortable about such terminology because it could sound unpleasant to them.”

The creation of sales diplomacy terminology reflects how Korean presidents have become the victims of the expectation game when taking overseas trips.

Shin, former ambassador for energy and resources cooperation under the Lee Myung-bak government (2008-2013), said that “sales diplomacy” was coined in the late 1990s or the early 2000s to counter skepticism about presidential visits to foreign countries.

“At the time, there was criticism about presidents’ overseas trips because the public expected concrete, visible outcomes following the summits with foreign leaders. As there were no such immediate outcomes, some alleged that presidential trips were a waste of taxpayer money,” he said.

As public skepticism grew, Shin said diplomats strove to devise rhetoric that could quell such criticism, and tried to link presidential trips to something that can create business opportunities overseas.

Since then, numerous non-binding agreements have been signed on the sidelines of Korean presidents’ summits with the leaders of countries endowed with resources and energy. Most of the agreements have not led to expected results afterwards, or have not been properly followed on after the summits.

Such lackluster post-summit implementation led to criticism that summit results are overblown.

KIEP economist Lee countered such criticism. The economist said that summit talks are symbolic and leaders are not supposed to reach particular business contracts at such highest-level talks.

“The best possible outcome of a summit talk will be that it can create momentum for bilateral relations. Leaders usually address key agendas broadly to draw general support from their counterparts,” he said.

“Businesses are responsible for following up the summit outcomes.”

Pharmaceutical industry benefits from GCC summits

The pharmaceutical and food-processing industries are thrilled about the outcome of President Park Geun-hye’s summits with the leaders of four Gulf Cooperation Council countries.

They are optimistic that new business opportunities will be created there as a result of a set of agreements signed between the two sides on the sidelines of Park’s summits with the Gulf leaders.

JW Pharmaceutical and BC World Pham signed agreements with their Saudi counterparts to export approximately $200 million worth antibiotics and medicine

technology to the Middle Eastern country which has sought to build a pharmaceutical cluster there to improve public health.

It was signed on the sidelines of the Korea-Saudi Arabia summit. A source who is familiar with the pharmaceutical industry said that optimism runs high.

But he said it remains to be seen whether such agreements will result in real contracts in the forthcoming years, saying it will take four or five years to figure that out. Hopes are high in food-processing companies, too, following the

Korean government’s signing of an agreement with the United Arab Emirates calling for its cooperation in certified halal products, on the sidelines of a

Korea-UAE summit.