Why US labeled South Korea ‘sensitive,’ and what’s at stake

The US designation of South Korea as a “sensitive country” — a move made in early January but only revealed by Korean media last week — has triggered shock waves through Seoul, provoking a reckoning over why Washington tacitly applied such a classification to its treaty ally.

The controversy has intensified, with rival parties engaging in a blame game at the National Assembly, clashing over its causes and ramifications, while the US Department of Energy has remained silent on the rationale behind the designation.

At the heart of the dispute is whether discussions in South Korea about nuclear armament and nuclear latency, along with the shock of President Yoon Suk Yeol's short-lived Dec. 3 martial law declaration, were the deciding factor in Washington's decision.

The inclusion of South Korea — a US treaty ally — on the list, which also includes US adversaries such as China, Iran, Russia and North Korea, has left Seoul shocked. It is highly unusual for a treaty ally to appear on such a restricted list, and the decision, discovered around two months after it was made, caught South Korea off guard.

Foreign Minister Cho Tae-yul told the National Assembly last week that the government learned of the designation just a few days before Hankyoreh newspaper reported it on March 10 through unofficial channels, and had never been officially notified by Washington.

“It is not common for US allies to be placed on the sensitive countries list. The closest equivalents would be Israel and India, neither of which are treaty allies but are close partners of the United States,” Troy Stangarone, deputy director of the Indo-Pacific Program at the Woodrow Wilson Center, told The Korea Herald on Tuesday. “However, South Korea was previously on the sensitive country list from 1981 to 1994, so this is not unprecedented.”

Andrew Yeo, the SK-Korea Foundation Chair at the Brookings Institution's Center for East Asia Policy Studies, seconded the view.

“Some close partners such as Taiwan and Israel also appear on the list as well. But there are no treaty allies included, so it does seem unusual for South Korea to have been included on the SCL,” Yeo told The Korea Herald on Wednesday.

Concerns are mounting over its broader consequences, particularly for bilateral cooperation in science and technology, with the list set to take effect on April 15. The South Korean government has pledged to spare no effort to have the country removed from the list before mid-April.

At the same time, a reckoning is unfolding in Seoul over the potential long-term repercussions of continued public advocacy for nuclear armament and the pursuit of nuclear latency — especially in fields such as nuclear energy, advanced technology and nuclear reactor exports.

Seoul's Foreign Ministry said Monday night that the South Korean government had “identified after contacting the US side that the decision stemmed from security-related issues involving research institutes under the auspices of the Department of Environment, rather than foreign policy issues.”

The ministry also said the US side has confirmed that South Korea’s listing “will not have a significant impact on bilateral technology cooperation, including joint research.”

The DOE, which is responsible for energy policy, nuclear security, energy security and nuclear nonproliferation efforts, operates 17 national laboratories in nuclear energy and other cutting-edge scientific research such as AI and quantum technology, making it a key partner for South Korea in such cooperation.

Joseph Yun, charge d'affaires ad interim at the US Embassy in Seoul, according to a Yonhap report Tuesday downplayed concerns over South Korea’s designation on the DOE’s sensitive country list, stating that it was due to the “mishandling of sensitive information” during exchanges involving Korean students, researchers and possibly some government workers at national laboratories under the DOE.

“The revelation that the Biden administration placed the ROK on the sensitive list was as much of a surprise to me as it was to others,” Yeo told The Korea Herald via email, referring to South Korea by its official name, the Republic of Korea. “Acting Amb. (Charge d ’Affaires) Joe Yun’s comment that South Korea’s designation was due to mishandling of sensitive information among researchers was meant to defuse anxiety in Seoul, although it doesn’t explain why South Korea seemed unaware of the designation until recently.”

Observers believe that the Foreign Ministry's explanation is reasonable and acceptable, and the DOE's designation likely has a technical basis. However, many find it difficult to accept this explanation at face value. Without a clear statement from the DOE, the possibility that other factors did not influence the decision cannot be ruled out.

“Based on information provided to Congress by DOE, it appears that an attempt to take sensitive information from the Idaho National Laboratory to South Korea was the triggering factor for DOE’s move to designate South Korea. There are indications that there may have been other failures to comply with protocol in US labs,” Stangarone said.

According to a May 2024 DOE Inspector General report, a contractor was terminated for attempting to board a flight to South Korea with export-controlled nuclear reactor design software. The termination took place at Idaho National Laboratory under the DOE between Oct. 1, 2023 and March 31, 2024.

“Until the US government gives a full accounting of why the move was taken to place Korea on the sensitive countries list we cannot be sure other factors did not contribute as well," Stangarone added.

Olli Heinonen, a distinguished fellow with the Korea program at the Stimson Center and 38 North, said, “Since the list is maintained by the Department of Energy and not by the US State Department, the reasons might be primarily technical in nature.”

Heinonen pointed out the US might detect indications of South Korea seeking to develop nuclear technologies for dual use have both civilian and military applications. Some of the most important examples are reprocessing spent fuel and uranium enrichment, which can be applied to nuclear power but also to weapons production.

The South Korean authorities have asked the US to ease restrictions under the civil nuclear cooperation agreement — or 123 Agreement — prohibiting such activities.

“If the ROK is going to develop such capabilities, the activities would start with relevant R&D scientists, and the DOE may have noticed such signs, or the US may want to block such activities from the very beginning,” Heinonen told The Korea Herald on Tuesday.

“However, the recent debates in South Korea about having its independent nuclear deterrence — and certainly the attempt by President Yoon to implement martial law —could have also impacted the decision," he continued.

Heinonen’s remarks align with broader concerns voiced by other experts, who noted that while technical problems may have been a primary reason, South Korea's political environment cannot be overlooked.

“It is possible that the South Korean Foreign Ministry’s explanation — that the decision was unrelated to these policy issues and instead stemmed from security concerns regarding research institutes under the Department of Energy — holds some truth,” Lami Kim, a professor of Security Studies at Daniel K. Inouye Asia-Pacific Center for Security Studies, a US Department of Defense institute, told the Korea Herald on Tuesday.

Though speculative at this stage without a clear explanation from the DOE, Kim pointed out that the range of contributing factors for the DOE’s designation remains broad.

“There are many possible reasons, ranging from prominent South Korean politicians and experts repeatedly advocating for nuclear armament to concerns over the stability brought about by Yoon’s self-coup, particularly amid rising speculation that he sought to provoke North Korea into a military conflict. However, South Korea’s broader security vulnerabilities also present legitimate reasons for concern,” Kim said.

“In the end, all of these factors likely played a role in the DOE’s decision.”

Experts warned of the far-reaching consequences of South Korea’s designation, particularly for nuclear energy cooperation between the allies and, further, for South Korea’s nuclear reactor exports.

“South Koreans will be subject to additional scrutiny on projects with DOE going forward, but the designation could also make it less likely that the United States would agree to allow South Korea to engage in the recycling of spent nuclear fuel or uranium enrichment given the higher level of scrutiny,” Stangarone said.

Echoing this sentiment, Lee Chun-geun, an honorary fellow at the Korea Institute of S&T Evaluation and Planning, warned that South Korea's addition to the sensitive country list will raise another barrier to its effort to acquire technology for reprocessing spent fuel — key for further developing its nuclear reactor exports.

South Korea is one of the few nuclear reactor exporters in the world. Nuclear reactor importers expect a comprehensive package, from the management to the recycling of spent fuel, and therefore greater autonomy in the nuclear fuel cycle is crucial for South Korea as an exporter.

Unable to pursue conventional spent fuel reprocessing, South Korea has instead sought to develop pyroprocessing technology, which differs from PUREX (Plutonium Uranium Redox Extraction) in that it does not produce separated weapons-usable plutonium.

Seoul and Washington are conducting joint research on pyroprocessing — the core of the updated Korea-US civil nuclear cooperation agreement signed in 2015.

Lee pointed out, “Even in the ongoing joint research on pyroprocessing, experiments are conducted using US spent nuclear fuel, not South Korea’s, and take place in US facilities.”

Lee explained this was why South Korea’s designation matters for joint research.

“We are seeking to develop this technology while striving to gain recognition that it 'has nothing to do with nuclear weapons' in order to strengthen our independent position through nuclear reactor exports. But the US has been reluctant to approve it, raising concerns over its potential nonproliferation risks,” Lee said. “If South Korea is designated as a sensitive country, it will create yet another hurdle for reactor exports in the long run.”

Lee underscored that South Korea shouldn't deem the DOE designation “as a single event — it’s just the beginning.”

“Should South Korea be designated, the US will closely monitor our actions and review every exchange of information. Every single activity of ours will be reported (to DOE authorities), and if they detect concrete actions, restrictions for Korea could be further strengthened,” Lee said.

“In other words, the US has set the groundwork for tighter controls. What matters is not being at the lowest level of the list but the fact that we’re on the list by itself is where the problem begins.”

Adam Mount, director of the Defense Posture Project at the Federation of American Scientists, told The Korea Herald on Tuesday, said, “We should expect continued South Korean interest in nuclear proliferation to have consequences for the bilateral relationship, including technical cooperation.”

Yeo, however, suggested that if acting US Ambassador Yun’s remarks are taken at face value, South Korea’s designation on the list may really not be that significant and could be lifted if Seoul addresses security concerns.

“In that case, I would expect the Trump administration and the ROK government to take the necessary steps to remove the ROK from the SCL to enable scientific cooperation to move forward without obstacles,” Yeo said.

“However, if the ROK remains on the list, or if Trump officials decide to use the ROK’s designation on the SCL as a bargaining chip or leverage related to negotiations over trade or security issues, this could lead to mistrust between the two allies," he said.