It’s in Australia’s interests to resolve the South Korea – Japan spat

Seoul and Tokyo aren’t getting on well. What started as quarrels over whether Japan has shown appropriate contrition for its wartime occupation of Korea has mushroomed into a fierce trade dispute and a suspension of intelligence sharing.

The resolution of this dispute between East Asia’s two most powerful democracies is in Australia’s interests. At a speech delivered last week to the Lowy Institute, Prime Minister Scott Morrison recognised this, noting that the ‘Indo-Pacific would be even stronger if Japan and [South Korea] can overcome their recent tensions’. Behind Morrison’s comments is an issue that cuts to the heart of Australian strategic policy in the Indo-Pacific.

Maintaining strong ties with both Japan and South Korea is crucial to Australia’s geoeconomic strategy. Japan is our second largest two-way trading partner and South Korea the fourth largest. Together, they made up just over 16% of our total international trade in 2017–18. We have free trade agreements with both countries, and they’re considered reliable markets for Australian exporters. Ensuring that this remains the case will be vital to building resilience in our economy, which relies to a large degree on trade with China.

The importance of Japan and South Korea to Australia is also geopolitical, as the government’s 2017 foreign policy white paper noted: ‘The Indo-Pacific democracies of Japan, Indonesia, India and the Republic of Korea are of first order importance to Australia, both as major bilateral partners in their own right and as countries that will influence the shape of the regional order.’

Strengthening our ties with liberal democracies such as South Korea and Japan may also be a way of balancing China’s increasingly aggressive behaviour in East Asia.

Australia’s objective in the Indo-Pacific, as set out in the white paper, is to support the United States in fostering a region that’s free from authoritarian coercion and open to international trade. That could be done by integrating the Indian and Pacific oceans in a way that allows India to support Japan’s effort to balance China. If these regional powers balanced China effectively, the Indo-Pacific’s maritime commons would be safe for Australian trade and Beijing’s ability to coerce Canberra would be curtailed.

Tokyo’s vision for the Indo-Pacific seems to be in near perfect alignment with Canberra’s. Japan views freedom of navigation and overflight as ‘international public goods’ that it can help provide. Just as Canberra hopes for an Indo-Pacific free from authoritarian coercion, Tokyo regards the ‘peaceful settlement of disputes’ as essential to regional stability.

South Korea could play a vital role in securing the free and open Indo-Pacific that both Canberra and Tokyo desire. Like Japan and Australia, South Korea relies on freedom of navigation for its maritime trade. South Korea is also a liberal democracy that has good reason to worry about being pulled into China’s orbit. Mutual interests ought to be pulling Canberra and Seoul together.

However, Seoul’s behaviour hasn’t been in close alignment with Canberra’s views on balancing China’s power in the Indo-Pacific. Since taking office in 2017, President Moon Jae-in has put two policies at the forefront of South Korea’s regional strategy. First is the ‘new northern policy’, which is designed to reintegrate the Korean peninsula into Eurasia by improving infrastructure networks. Second is the ‘new southern policy’, which is focused on increasing South Korea’s influence by building infrastructure across Southeast Asia. The goal of Moon’s policies is to make South Korea a significant middle power among the coastal countries that ring Eurasia.

Building relationships with the Russian and Chinese states is crucial to Moon’s regional strategy. Last year he met with Vladimir Putin in Moscow in an attempt to improve economic ties with Russia, attract Russian gas exports to Korea and extend trans-Siberian rail links to the city of Busan. Moon has described Xi Jinping’s signature Belt and Road Initiative as being complementary to South Korea’s bid to strengthen regional trade in Southeast Asia. South Korea has hedged at precisely the time Australia needs it to double down on relationships with other democratic powers in the Indo-Pacific.

Seoul’s hedging is geared towards becoming less reliant on Japan. Building off a more amicable relationship with North Korean leader Kim Jong-un, Moon has proposed the development of an ‘inter-Korean peace economy’ that he believes could allow the Korean peninsula ‘to catch up to Japan’s dominance’. While integrating North and South Korea would undoubtably entail costs, modelling from Goldman Sachs suggests that a unified Korean economy could be larger than Japan’s and those of all other G7 nations bar the United States 30 or 40 years after unification. Should Moon’s strategy succeed in the long term, the likeliest result would be a Japan with less influence in the Indo-Pacific.

Moon’s regional strategy differs from those articulated in Tokyo and Canberra. While both powers say they want to maintain strong trade links with China, Japan and Australia imagine an Indo-Pacific order in which liberal democracies collaborate to balance an increasingly assertive China. Without reconciliation with Tokyo, South Korea could be tempted to imagine a region in which non-aligned powers of the Eurasian rimlands work to balance a historically revisionist Japan.

Australia’s vision for the Indo-Pacific is predicated to some degree on Japan and South Korea maintaining a close diplomatic relationship. If Japan were seen as a friendly power in Seoul, Tokyo could bring South Korea’s regional strategy into closer alignment with its own vision for the Indo-Pacific. Doing so would advance Australia’s vision, though Japan currently lacks the goodwill needed to bring South Korea into the Indo-Pacific orbit. Therefore, Australia needs to think creatively about how to achieve that objective while Seoul’s regional strategy is still in its early stages.

China could create a regional balance that serves its interests by feigning a desire to promote reconciliation between Seoul and Tokyo while working behind the scenes to play Korea off against Japan. To avoid such a scenario, Australia must do more than hope that China doesn’t capitalise on these tensions.

Morrison should work to position Australia as a genuine, neutral friend that can mediate between Seoul and Tokyo. This would require a degree of diplomatic creativity and ambition that Canberra might find uncomfortable. However, the costs of inaction are likely to outweigh the risks of failure. Australia’s diplomacy must live up to the demands of its Indo-Pacific strategy.