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[Soyen Park] Why Korea’s next administration should prioritize Korea-India ties

April 10, 2017 - 17:45 By Korea Herald
As the Hollywood-esque impeachment showdown of South Korea’s first-ever president ousted by impeachment is now behind us, all eyes are on the next presidential election to be held May 9. With the election only weeks away, political circles are in a flurry over finalizing candidates, devising campaign strategy and setting out key policy pledges. It is largely expected that the next president will come from the Democratic Party of Korea, yet the experiences of Brexit and the US election in 2016 are a caveat to prophetic pronouncements. Regardless of who is elected, mending and rebalancing the country’s foreign relations will emerge as one of the most immediate and daunting tasks for the incoming administration.

Given the diplomatic quagmire South Korea currently finds itself in -- from North Korea’s ballistic missile test to China’s adamant opposition to the US Terminal High Altitude Area Defense anti-missile system, and from the Trump presidency to a rough patch with Japan -- it is not surprising that the foreign policy priority of the incoming administration will likely focus on the peninsula and its immediate neighbors. Unfortunately, the turbulence over Northeast Asia hints that Korea’s diplomatic capital could be exhausted long before it has the chance to turn to other priorities. Living in an age of rapid, unpredictable change, the next administration should seek to balance short-term and mid- to long-term priorities while not losing sight of the world beyond its neighborhood.

Looking to the future, India -- currently the world’s fastest growing large economy -- should draw the immediate attention and priority of the incoming administration. During Indian Prime Minister Modi’s visit to Korea in May 2015, both countries agreed to elevate bilateral ties to a Special Strategic Partnership from Strategic Partnership. Nomenclature aside, this represents a significant development considering that Russia and Japan are the only two other countries with which India has such partnerships. Korea has offered $10 billion for India’s flagship infrastructure development programs including smart cities, upgrading railways and power generation, and Modi has hailed Korea as an inspiration and crucial partner for India’s economic modernization.

Although Korea-India bonhomie has reached new heights in recent years, much remains to play for. Bilateral relations have been traditionally concentrated on economic ties. Given the sheer size of India’s domestic market, Korea’s commercial interests in Asia’s third largest economy are not surprising. The relative success of Korean companies in India, ranging from automobiles to consumer electronics to industrial machinery has long sustained bilateral economic engagement. The two countries signed the Comprehensive Economic Partnership Agreement in 2009, boosting trade and economic integration. In 2016, bilateral trade stood at $15.8 billion and cumulative foreign direct investment inflows from Korea to India touched $4.2 billion.

Despite its obvious allure, India’s economy has not always sailed with strong winds at its back. The country has long been considered the most attractive alternative to China, yet its prospects have floundered due to a string of corruption scandals that rocked the previous United Progressive Alliance governments. Since 2014, the Modi-led Bharatiya Janata Party government has been riding the mantra of “Sabka Saath, Sabka Vikas” (“together with all, development for all”). Its reform agenda has prioritized improving ease of doing business, increasing transparency, and liberalizing the FDI regime; not to forget the numerous flagship programs, including the “Make in India” initiative. Renewed optimism has led the World Bank and IMF to label India as a “bright spot in the global landscape.” FDI inflows have increased 50 percent in the past two years.

Modi’s vision for transforming India has rekindled Korean investors’ interests in the market of 1.3 billion people, which has a burgeoning middle class characterized by an increasingly consumerist culture. Korea’s trade and investment with the country, however, hasn’t matched this growth. To add to the challenge, competition is stiff. Neighboring Japan has been pushing its economic commitment to India to greater heights, pledging $35 billion of public and private investment for infrastructure development and committing to build India’s first bullet train from Mumbai to Ahmedabad. While India needs to continue on the path of economic and trade liberalization, Korea should seek to be an integral partner along the way.

Through a wider lens, the shift in power towards South Asia and Southeast Asia articulate India’s growing geopolitical role in the changing tide. In tow with its economic ambitions, India is also emerging as a responsible global stakeholder. As China looks to expand westward through its “One Belt, One Road” initiative, and the US flexes its muscle in Asia, both have reached out to the largest country astride the Indian Ocean. American (and Japanese) interests seek to project India as a regional bulwark against a potentially aggressive China; China hopes India will be a part of the OBOR initiative, which would legitimize its expanding influence. Closer to home, India still carries the geopolitical baggage of Pakistan, which is not trivial, yet India’s rise as a leading global power is real and underway.

Reading the barometer of the recent state election results in India, the Modi-led BJP government seems on course to secure a second term in office come elections in 2019. With ever greater consensus betting on this continuity, Korea’s next administration will continue to have a dependable partner in the subcontinent. The best time for Korea to ripen its relationship with India is now; the relationship between the two tigers could be a defining one for the future of the Indo-Pacific.

By Soyen Park

Soyen Park, a senior researcher at the Embassy of the Republic of Korea in India, watches the Indian economy as well as Korea-India bilateral economic relations. The opinions expressed in this article are the author’s own and do not reflect the view of the government.  -- Ed.