 President of Eurasia Group |
Korea Times Correspondent
BEIJING ― South Korea's security future lies with the United States, but its economic future lies with China, therefore, it should forge an effective "two-track strategy" to balance between the two powers. However, that would be a delicate task, said an internationally noted expert on the relationship between politics and economics.
In the aftermath of the Cheonan incident, South Korea made a smart move to bring in the United States, its strongest ally, and that helped Seoul garner wide international support in condemning North Korea for its torpedoing of the navy frigate on March 26.
Beijing's reluctance to point the finger at Pyongyang and blame it for the attack, however, has damaged its relationship with Seoul, making the already pro-American Lee Myung-bak administration further align with Washington.
Some even voiced that South Korea and the United States should speed up a pending free trade agreement process as a way to bolster their alliance.
But "economically speaking, South Korea's future is China. That's very clear," said Ian Bremmer, the president of Eurasia Group, a global political risk research and consulting firm, which has headquarters in New York and offices around the world.
"I think what we need to recognize is that South Korea's long-term economic interest is really much more aligned with China. The growth of bilateral trade between the two countries is overwhelming. But its security interest is much more aligned with the U.S.
"That makes it harder for South Korea to create an effective policy because it has to balance relations with the two countries very carefully," he said.
Bremmer, whose firm advises financial institutions and governments on how political developments influence markets, said the Cheonan incident already took its toll on investors' sentiment on South Korea.
"We are seeing our clients in the financial sector starting to ask us about it," he said in an interview, conducted in mid-June.
Bremmer said Seoul has to be careful not to give Pyongyang any pretext for further armed provocation.
"Kim Jong-il has nukes. And he has incentives to do things that will whip up domestic fervor against South Korea to maintain his own support in the regime. South Koreans are in an incredibly, incredibly vulnerable position. And they have to be very careful not to intentionally or even unintentionally provide North Koreans with excuses for further provocation," he said.
The Cheonan incident has also provided a platform for the U.S. to solidify its geopolitical influence in the volatile East Asia, making China, its regional rival, wary.
Seoul and Washington are planning military exercises, with possible participation of the U.S. aircraft carrier George Washington near the disputed inter-Korean sea border, the site of the sinking, in a "show of force" against Pyongyang.
China has frowned upon the move, as it sees the area its "backyard."
The Global Times, the international arm of the official People's Daily newspaper, warned: "Having a U.S. aircraft carrier participate in joint military drills off China's coast would certainly be a provocative action."
China also expressed its displeasure with Seoul's two-track hedging strategy of forming close economic ties with Beijing on the one hand, while aligning militarily with the U.S. on the other.
"Sharing the benefit of China's economic power while guarding against China by bringing in an outside military presence has been vitiating trust in East Asia and is delaying development of the region," the newspaper said on Thursday.
Beijing doesn't just warn, but also woos. A think tank under Tsinghua University, President Hu Jintao's alma mater, proposed South Korea form an East Asian "currency alliance" together with Japan and China.
China is already South Korea's largest export destination, and the bilateral trade is larger than the total trade South Korea has with the U.S. and Japan combined. In the first four months of this year, the trade volume skyrocketed 48 percent over the same period last year, according to China's Ministry of Commerce.
Analysts say China will use South Korea's economic dependence as a bargaining chip to expand its political muscle, pulling Seoul away from the U.S. political sphere of influence and nudging it closer to Beijing.
South Korea can reduce China's advance if it can be impervious from the pull of its economic black hole. But Bremmer is not optimistic.
"The economic integration between South Korea and China has been ongoing and will continue in the future," he forecasted.
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