YPS - Review

International Dynamics post-2008 and Korea's Strategic Diplomacy

Yejoon Seo

November 8th, 2024

The global financial crisis of 2008 was a turning point for modern great power relations; it disrupted economies across the world and reset relative economic weight amongst the major powers. At a time when the United States itself was in financial crisis mode, it issued enormous fiscal measures to put its economy on stable ground — but recovery was slow and expensive. Conversely, China both took advantage of the crisis as a propeller of growth across its economy and retracted its scope over the world, becoming increasingly viewed as a potent bulwark to Western economic hegemony. Among the most significant of China’s actions in this period was its creation of the Asia Infrastructure Investment Bank (AIIB).Established in 2014, the AIIB set up competition with US and allied-led institutions such as the World Bank and the International Monetary Fund (IMF), raising tensions between the U.S. and China. The AIIB was a sign of China's assertiveness that stood ready to remake the current international financial system and an implicit announcement that it intended to extend the reach of its power throughout Asia, indeed around the world.

While China was on the upswing, Washington had a corresponding reaction: it doubled down on its alliances in the Asia-Pacific theater—with Japan as its central pillar. Not only did this strengthen the US-Japan allyship over reaffirmed security commitments, it displayed to China that their sphere of influence was being met with opposition. With the location of South Korea between these two superpowers, it became a focal point in the region. On the one hand, South Korea has unique economic ties with China but on the other got a long-standing alliance with the U.S., thus positioning it between security and economy. To make the diplomatic climate in the region even more complicated, Japan had long-standing territorial and historical disputes with neighboring countries, particularly South Korea and China. The South China Sea also led to claims by the PH, again stoking tensions.

This environment demands that South Korea, whose prosperity stands at the intersection of great power rivalry, wield a geopolitical balancing act to preserve peace and wealth. Especially in the case of North Korea, where relations are so unpredictable, the U.S.-South Korea alliance remains essential for national security. At the same time, China is South Korea's biggest trading partner, offering economic advantages that cannot be ignored. By balancing security through the U.S. and economic prosperity with China, this dual commitment embodies “strategic ambiguity,” which in effect prevents South Korea from aligning against either power fully. In addition, deeper cultural integration with Japan could also promote regional understanding, historical tensions reduction and paved the way to a wider security cooperation. 

For South Korea too, a stable peace in the Korean Peninsula is high on the list of priorities. As North Korea continues its nuclear state project, peace is not only a domestic priority for South Korea; it also forms part of a regional stability strategy. To that end, engaging North Korea in dialogue — as difficult as this may be — is critical. But in pursuit of those diplomatic aims, Korea also has to closely coordinate with its U.S. ally, China and perhaps even Russia — all of which have an important interest in stability on the Korean Peninsula.

Personal Reflection

Pondering this state of affairs, I am left with the paradox of South Korea as a quasi-diplomatic bridge in East Asia. The rivalry between the U.S. and China underscores the realization that a one-sided economic approach is no longer an option for any nation given that even those at odds with each other are inextricably tied together by degrees of mutual dependence. Which proves that statecraft is rarely about black and white pledges of loyalty but a game of intertwined interests played with patience and maneuverability. This is best illustrated by South Korea, which successfully maintains substantial security relations with the United States and at the same time positive trade relations with China. It explores a trend toward “soft power,” or the use of things like cultural exchange and economic cooperation, which enables countries to exert influence without fighting.

Moreover, South Korea’s peace initiatives with North Korea reflect a broader trend toward seeking solutions beyond traditional military alliances. As global power shifts, smaller nations like South Korea can leverage their unique positions to promote stability and influence policy by connecting economic benefits with security goals. I believe that South Korea’s model may serve as a framework for other nations striving to navigate complex international rivalries, proving that diplomacy, if handled strategically, can offer a path to stability in even the most tense of geopolitical landscapes.

In addition, peace efforts undertaken by South Korea with North Korea indicate a wider move towards finding answers which do not rely upon traditional military pacts. Against a backdrop of shifting global power, smaller states such as South Korea can use their own distinctive assets to serve stability and shape regional policy by pairing economic rewards with security objectives. The South Korea model might be just what other countries need who are trying to break through difficult global rivalry situations, showing diplomacy — as long as it is executed astutely — can provide a route to peace amid serious geopolitical tensions.