Contents
Korean Creator Beloved by China
Current Korea · Written by Sohn Ji-ae
Momentum for Peace
Dialogue to Continue
South Korea has played a crucial role in orchestrating long-stalled talks with North Korea,
holding three inter-Korean summits last year and helping arrange two historic rounds of U.S.-North Korean talks.
Though Washington and Pyeongyang¡¯s latest meeting was cut short with no agreement,
the momentum for dialogue on peace on the Korean Peninsula is expected to continue picking up.
President Moon Jae-in (right) and North Korean leader Kim Jong Un on April 27, 2018 walked to the South Korean side of the inter-Korean border in Panmunjeom.
Korea welcomed the month of February with good news: its risk of sovereign default was at its lowest level since the global economic crisis of 2007-08. According to data from the Korea Center for International Finance, the credit default swap (CDS) premium, a gauge of the default risk of an issuing entity, on the nation¡¯s benchmark five-year bonds for foreign exchange stabilization averaged 32 basis points as of Jan. 31. This was lower than the figures for major economies such as the U.K. and France, with a lower figure meaning lower risk.
As recently as September 2017, Korea¡¯s CDS premium had soared to 76 basis points mostly because of North Korea¡¯s missile tests and jitters in the global economic market. The lower default assessment in February this year thus means that despite trade tension between the U.S. and China and its consequent impact on the global economy, Korea has weathered the slowdown. Its current account surplus for the 21st straight year and large foreign currency reserves were cited as reasons behind the low default risk. The primary factor, however, was mounting anticipation of the second North Korea-U.S. Summit from Feb. 27-28 in Hanoi, Vietnam.
The ever-changing diplomatic landscape on the peninsula over the past year has positively impacted the CDS premium, highlighted by improving inter-Korean relations as seen through the PyeongChang 2018 Winter Olympics, three inter-Korean summits and the first U.S.-North Korea Summit in Singapore.
Unpredictable Journey
The economic benefits of a more peaceful peninsula such as the low CDS premium are goals President Moon Jae-in has pressed for since his inauguration for the sake of better ties with Pyeongyang.
President Moon said improved inter-Korean relations and cross-border collaboration will benefit both Koreas economically, as well as boost peace and security across the region and around the world. To this end, he has played a crucial role in brokering U.S.-North Korea summits, as dialogue between Washington and Pyeongyang is crucial in achieving his objectives. His behind-the-scenes orchestration led to two peace talks between both sides, first in Singapore and then in Vietnam.
President Moon sought more tangible progress from the Hanoi summit to help facilitate inter-Korean flagship projects such as restarting the Gaeseong Industrial Complex and tours to the North¡¯s scenic Geumgangsan Mountain. To his disappointment, the talks ended with no agreement due to irreconcilable differences between the demands of both Pyeongyang and Washington.
President Donald Trump (left) on Feb. 27 holds a summit with North Korean leader Kim Jong in Hanoi for the second time following the first in Singapore on June 12, 2018.
Keeping the Ball Rolling
President Moon, however, seems undeterred despite the stalemate seen in Hanoi and has instead stayed hopeful that progress will come in the near future. In a speech to mark the centennial anniversary of the March First Independence Movement, he pledged that his administration will continue to help the U.S. and the North reach an agreement on denuclearization.
¡°We will push ahead with a bold transition toward a new Korean Peninsula regime. We will establish a permanent peace regime on the basis of our unwavering will, close coordination with the U.S. and a settlement in Pyeongyang-Washington talks,¡± he said.
Though dialogue between the U.S. and North Korea returned to square one after their failed talks in Hanoi, President Moon said he firmly believes that the latest meeting has helped the leaders of both countries get a better understanding of each other and build more trust. He added that Seoul¡¯s role has become more important to help both sides reach a ¡°complete settlement by any means.¡±
Both U.S. President Donald Trump and North Korean leader Kim Jong Un in Hanoi showed their commitment to holding more dialogue, and a fourth inter-Korean summit between President Moon and Kim is also possible, perhaps in the South Korean capital of Seoul. Thus a crucial part of the peace process is to keep the ball rolling and not lose momentum despite experiencing bumps on the road.
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