Revival of Relations with South Korea

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First-ever South Korean PM’s visit significant development

Prime Minister of the Republic of Korea, Chung Hong-won, made a four-day official visit to Islamabad on 13-16 April. The visit was significant as it was the first-ever undertaken by a South Korean leader since the establishment of diplomatic ties between the two governments in 1983.

North East Asian dynamic economies play a crucial role in Pakistan trade and economy. The region is also Pakistan’s largest trading partner. According to the IMF Direction of Trade Statistics, Pakistan’s trade with China, Japan, and South Korea has been recorded at US$15 billion in 2011. The two-way trade between Pakistan and China is about US$12 billion with US$2.2 two-way trade with Japan. Pakistan-South Korean trade has been recorded around US$1.5 billion for the same period. Pakistan exported goods worth US$ 901.6 million to South Korea but imports were around US$ 669.9 million for the same period. These exports were higher than Pakistan’s exports to Japan in 2011.

At the joint investment cooperation summit organised by the Board of Investment (BOI) and Korea Trade Promotion Agency (KOTRA) on April 14, Prime Minister Chung Hong-won was the chief guest. Korea is keen to expand relations with Pakistan, especially in trade, energy, politics, and to enhance people-to-people exchanges. Pakistan offered Free Trade Agreement (FTA) to South Korea to expand trade and investment under which immense facilities would be provided to businessmen of both countries in multiple areas. To facilitate finances, Pakistan has also asked to open a branch of Korean bank in Pakistan. Over ten thousand Pakistanis work in South Korea.

It was well-known that South Korean development was based upon Pakistan’s Second Five Year Plan (1965-70). Both countries’ economic relationship used to be non-complimentary up to the 1970s but after the latter’s attainment to development, it began to supply Pakistan with machinery and equipment. In the liberalization of Pakistan economy, South Korean Chaebols(multinationals) such as Daewoo, Samsung, and Hyundai have played a significant role by business expansion.

By investing US$93 million in FDI in 1993-4 South Korea emerged as the second largest source of foreign investment in Pakistan. After that South Korean investment steadily declined. Last year, South Korea investment in Pakistan was recorded US$25 million.

Daewoo played a pivotal role in the construction of the Lahore-Islamabad Motorway (M-2). Half of the Motorway loan was offered by Daewoo and the remaining half was offered by the Korea First Bank. The total principle loan was US$630 million. M-2 was constructed during 1992-97 but the change of four governments in Pakistan gave a serious blow to the fast and scheduled construction of the motorway.

After the October 12, 1999, Daewoo shut down its offices in Islamabad as a vengeful attitude was displayed by the Musharraf Government against Daewoo’s projects. These projects were penalized. (The writer of this article used to be Daewoo’s Adviser/Analyst at that time.) Daewoo Express Bus and Daewoo City Bus in Lahore set up new benchmark in public transportation in Pakistan.

It is now long after 1999 that South Korean companies have been showing interests in Pakistan. Credits must be given to the PML-N government once again bringing Daewoo and Korean companies back. Therefore, the visit of the Prime Minister Chung Hong-won is a significant development in moving diplomacy and economic relations between the two countries.

There is a need to give a correct perspective of Pakistan’s policy toward the Korean War (1950-53). The war was a testing time for Pakistan. It was one of the first countries that offered military assistance to the United Nations effort during the Korean War. However, this assistance could not materialise for one or the other reason.

Nevertheless, Pakistan emerged as the supporter of the United States in this conflict that provided the basis on which the future course of relationship between Pakistan and South Korea could be established. Pakistan recognised both North and South Koreas as two separate independent political entities but avoided taking sides. Pakistan extended support to Korean unification through peaceful means without external interference in accordance with the North-South Communiqué of 1972.

In line with its policy to support peaceful unification of the two Koreas, Pakistan welcomed the first-ever Korean summit held in Pyongyang in June 2000. Pakistan also supports the Six-Party Talks to resolve the differences between the two Koreas. Pakistan and South Korea established consular relations in 1968.

Regarding high level visits by Pakistan dignitaries, President General Muhammad Zia ul Haq visited Seoul in 1985. Prime Minister Muhammad Khan Junejo and Prime Minister Benazir Bhutto visited Seoul in 1988 and 1996 respectively. President General Pervez Musharraf visited Seoul in 2003. Prime Minister Shoukat Aziz visited South Korea in 2005 and President Asif Ali Zardari undertook a state visit to Seoul in 2012.

Overdue for long, the visit of Prime Minister Chung Hong-won has melted down the ice from the South Korean side. Another aspect of this visit is that he came to Pakistan after attending the Boao Forum in Hainan Province of China. This is an increasing Asian regional understanding. Culturally, the Ghandhara region of today’s Pakistan has a splendid influence on the Korean Peninsula as Buddhism spread to China, Korea, and Japan in the 8th Century. In short, the revival of diplomatic and economic relations would give a new boost to both nations in a multidimensional way.

Views expressed are of the author and do not necessarily reflect the views of ISS or of the Government of Pakistan.