Economic security between Korea and Latin America

Step by step, a realignment is taking place in a world that had turned the page, supposedly, to the Cold War.

A handful of countries support the invasion of Ukraine. One hundred forty-two members of the U.N. condemned it at the General Assembly. And 41 chose to abstain, representing about two-thirds of the world’s population.

The geopolitical impact of the invasion is made more acute by the disruption of commodity prices in energy and food. That is why it may seem logical for Korea to see Latin America mainly as a source of grain and fuels for its economic security.

Economic security, however, goes well beyond such narrow focus. In the Dominican Republic, it is tied to resilience: the capacity of a system to withstand and “bounce back” from shocks, while resisting tensions inherent to its normal operations.

Governance is a primary source for national resilience and thus for economic security. Such governance was demonstrated when it came to containing COVID-19 while minimizing the economic impact of restrictions without paralyzing society.

The wise choices made that allowed for a quick recovery, however, are not being matched today in many countries that keep prices at artificially low levels through subsidies, delaying, for instance, the long-sought substitution of fossil fuels for cleaner options by consumers.

The flip coin of price controls is trade protection in the name of food sovereignty, which results in the opposite effect: prices are kept at artificially high levels, fanning the flames of inflation for essential foodstuffs.

If food security were the goal, existing free-trade agreements could be allowed to help in the fight against inflation, by increasing domestic supplies of cheaper imported food. The lengthy procedures applied in Korea — of up to 10 years — to the approval of new imports could be then reconsidered.

Well before today’s debate on economic security, discussion was under way on key aspects that can be addressed through Latin American and Korean collaboration.

Consolidating recovery needs growing markets where exports can be sold dependably.

Accelerating the energy transition to overcome the dependency on conventional fuels requires stable sources of critical minerals for the manufacture of semiconductors, solar panels, wind turbines and fuel cells.

Strengthening supply chains demands that essential products for security — such as medical devices, medicines and electronics — be manufactured in countries committed to democracy, freedom and the rule of law.

And ensuring the resilience of supply chains to future shocks — sanitary, financial or of any other type — requires nearshoring: the decentralization of production to countries located geographically close to destination markets.

When Latin America grows, so does the size of its middle class, demanding more cars and domestic appliances. These are products where Korea competes successfully, by providing the best quality at the most affordable prices.

Through free-trade agreements with most Latin American countries — although not yet with mine — Korea can compensate in my region for any loss arising from crises elsewhere.

Additional opportunities are there as well for the energy transition. Latin America is still addicted to fossil fuels, in large part because a decoupling between the growth of the economy and of energy consumption is still pending.

Working with Korea’s nimble players we can manage our existing infrastructure better, while minimizing CO2 emissions and eventually replacing conventional for alternative energy sources in electricity generation and transportation. Only then will we be self-sufficient in energy, further reinforcing our own economic security.

Latin America has plentiful supplies of critical minerals required for the energy transition, such as copper in Chile and Peru, lithium in Argentina and Bolivia and bauxite and ferronickel in the Dominican Republic, among the many valuable resources available widely in my region.

Latin America has decades of experience in the manufacture of medical devices and medicines — both chemical and biological. Some countries are making serious inroads into electronics as well.

Moreover, our geographical location with respect to Europe — reachable in less than nine hours by plane and less than nine days by vessel from the Dominican Republic — as well as to the U.S., further consolidates the potential of Latin America as an ideal destination for Korean investments in export-oriented manufacturing, in order to diversify their supply chains.

This will generate new jobs for our productive labor force, reducing migratory pressures and providing resilience for all against future shocks, thus allowing for more efficient deliveries in the future.

By taking advantage of nearshoring opportunities, Korean investors could reconcile redundancy with efficiency to achieve resiliency. This will be a major step forward in consolidating the Latin American geopolitical commitment to the economic security we need in these uncertain times.

It is the least we can do for our cherished economic and political freedoms, as emphasized by Korean President Yoon Suk-yeol in his inaugural speech.