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[Analytics] There will be no winner in the Japan-South Korea dispute

South Korean protesters hold up cards during a rally to mark the South Korean Liberation Day from Japanese colonial rule in 1945, in Seoul, South Korea, on Aug. 15, 2019. The sign reads "No. Japanese Prime Minister Shinzo Abe." (AP Photo/Ahn Young-joon). Sketched by the Pan Pacific Agency.

Pan Pacific Agency | COMMUICATION AGENCY FOR PACIFICA REGIONS

A few short years ago it appeared, on the surface at least, that Japan and South Korea had finally put the past behind them and were ready to take their relationship forward. A 2015 agreement was supposed to “finally and irreversibly” resolve the “comfort women” issue, and was hailed as a “potentially dramatic breakthrough between the neighbors and rivals.” Sebastian Maslow, Paul O’Shea specially for The Diplomat.

Amid the hubris, nationalists on both sides expressed their anger, and there were immediate anti-agreement protests in both Tokyo and Seoul. The 2017 presidential impeachment and elections in South Korea ushered in a change from a conservative to a progressive administration under Moon Jae-in, who had been openly critical of the agreement. A year later the agreement was shredded.

Today, Japan-South Korea relations lie in tatters, as both sides have taken steps to escalate a standoff over the compensation of Korean forced labor and comfort women mobilized during Japan’s 35-year colonization of the Korean Peninsula.

The feud has resulted in the “weaponization of trade relations,” as Japan imposed export controls on materials used in South Korea’s high-tech industry and removed Seoul from its “white list” of trusted trade partners – only to provoke similar measures in response. The current flare-up has precedent: relations between Japan’s Junichiro Koizumi and South Korea’s Roh Moo-hyun, as well as Yoshihiko Noda and Lee Myung-bak more recently, were dogged by historical issues. Yet the current dispute marks a clear break in both countries’ dealings with historical legacies. The unfolding trade war, triggered by Japan’s export controls, as well as the subsequent South Korean boycott of Japanese goods indicate that both sides are locked in an escalatory spiral, jeopardizing the close economic ties that have developed since the 1960s. The separation of political and economic issues has been a pillar of Japan’s post-war diplomacy, while South Korea’s focus on economic development ensured that history did not capture the relationship.

This arrangement has changed fundamentally. South Korea today is a consolidated democratic state with a globally competitive economy. Amidst the geostrategic changes in Asia, for South Korea’s elites, the “1965 system,” under which Seoul enjoyed military protection from the United States and deep economic ties with Japan, has outlived its purpose. Japan’s new conservative leaders, in the meantime, have pledged national rejuvenation following the country’s lost decades. Both developments forged new nationalisms that have removed constraint in bilateral politics.

The critical juncture for the current crisis in bilateral relations can be traced to Park Geun-hye’s impeachment in 2017. Her departure, and the election of Moon, signaled the death of the agreement and a shift in Japan-South Korea relations. Ties deteriorated even further after Japan accused a South Korean navy vessel of locking onto a Japanese Maritime Self-Defense Force patrol aircraft with its fire-control radar. As the crisis entrenched, Japanese Prime Minister Shinzo Abe and Moon did not convene for talks during the G-20 summit in Osaka, and thus missed an opportunity to recover some trust.

The latest crisis started in 2018 after South Korea’s High Court ordered Japanese companies to compensate victims of forced wartime labor. Japan has refused to accept the rulings as it claims that relevant treaties signed in 1965 in order to normalize diplomatic relations have resolved questions of wartime compensation. Accusing the Moon administration of violating principles of international law, Abe rejected Seoul’s proposal to establish a foundation to handle the damage claims. In the meantime, Seoul refuses to consider Abe’s proposal for arbitration by the International Court of Justice. Thus, with no resolution in sight, South Korea’s courts have approved the seizure of assets held by Nippon Steel & Sumitomo Metal Corp and Mitsubushi Heavy Industries to pay damages to the South Korean wartime laborers. While Japan has demanded political intervention, Moon has pledged respect for the separation of powers.

In his bid for a pan-Korean nationalism and Korean unification, Moon pledged the building of a “peace economy.” On March 1, 2019, in his speech commemorating the centennial anniversary of the uprising against Japan’s colonial rule, he reminded the Korean people of Japan’s past role in causing ideological divide, thus urging political unity in his pledge for a “new Korean Peninsula.” In his brand of nationalism, Moon foresees a North-South unification that will ultimately resolve Korea’s economic vulnerability vis-à-vis Japan. Japan, in the meantime, is accused of obstructing the peace process. However, a unified and strengthened industrial base is a mammoth task, and will not be achieved overnight. Dissent has already emerged over Moon’s Japan policy, highlighting the risks for an already struggling economy in which more than 30 percent of the high-tech supplies come from Japan.

In Japan, Abe has long fanned an anti-(North) Korean sentiment as he nourished a hard line against Pyongyang and historical revisionism questioning Japan’s role in coercing “comfort women.” Thus, Moon’s approach to both issues has prompted a strong rebuke from Japan’s conservatives. Abe and his Liberal Democratic Party have failed to deliver on core pledges, i.e. constitutional revision, resolution of the North Korean abduction issue, and the return of the Northern Territories from Russia. Thus, between the June G-20 meeting and the July upper house elections, increased pressure on Seoul helped to mobilize the nationalist vote and comfortably return an LDP coalition majority. More than 70 percent of the Japanese public have expressed support for Abe’s export controls against South Korea.

The domestic and geostrategic implications of the current crisis are profound. First, Seoul has threatened to pull the plug on the intelligence sharing General Security of Military Information Agreement (GSOMIA) as a result of the ongoing conflict. If that happens, the standoff will undermine the deterrence of the U.S.-Japan-South Korea security triangle. Second, while Japan has pledged to support a liberal international economic order, Abe’s use of a Trumpian trade policy has raised fundamental doubts over Tokyo’s future global role. Disregarding the difference in the relative strength of national economies, the meshing of politics and trade will undermine Tokyo’s reputation in the long run. The demand of political intervention in the Korean legal process further leaves Tokyo open to accusations of hypocrisy in terms of its rhetorical emphasis on “the rule of law.” Third, Japan’s cutting of economic ties with South Korea will likely result in intensifying trade between South Korea and China and a push for more independent South Korean production. Increased competition with Japan’s regional production networks eventually will contradict Abe’s pledge of economic reform. Fourth, foreign economic pressure on South Korea will strengthen the role of the chaebol, whom Moon has vowed to rein in. Finally, Moon’s plan of a “peace economy” and eventual Korean unification is more likely to succeed with regional economic and security cooperation.

Despite these and other negative ramifications of the ongoing feud, for the moment domestic political gains have been prioritized. Looking forward, in the absence of the United States as an effective mediator, and with no prospect of change in leadership in either state until 2021 at the earliest, this conflict may have legs. Indeed, it may be a symptom of the broader geopolitical shifts in East Asia, and thus represent a “new normal” in Japan-South Korea relations. At the very least, it seems unlikely that we will see a return to the status quo ante any time soon.

Sebastian Maslow is Research Fellow at the Institute of Social Science, the University of Tokyo. His research focusses on Japan’s international relations and East Asian security affairs.

Paul O’Shea is Associate Senior Lecturer at the Centre for East and South-East Asian Studies at Lund University. His research focuses on East Asian international relations.

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