Ranson Lo | 8 March 2024

Summary

• South Korea emerged as the world’s 9th largest arms exporter in 2022. 

• The rapid development of the Korean private arms industry could provide a more abundant and cheaper alternative for Europe to American suppliers to strengthen the collective defence of the continent. 

• South Korea is highly likely to further develop its arms industry amid increasing military capabilities and tensions with North Korea. 

According to the Stockholm International Peace Research Institute (SIPRI), South Korea became the world’s 9th largest arms exporter in the five-year period between 2018 and 2022 with 2.4% of the global share. This is an increase of 1.3% from 2013 to 2017. South Korea has remained in a state of war with North Korea since the Korean War in the 1950s because the two sides never signed any peace agreements. Seoul has one of the largest military spending in proportion to the total budget at 2.7% in 2022 at approximately KRW 61 trillion (USD 46.37 billion). 

The funding for the research and development (R&D) of the domestic arms industry was bolstered and accelerated after President Richard Nixon withdrew American troops from the Korean Peninsula in 1969. The Korean arms industry has become increasingly popular amid the Ukrainian War, as it presents itself as a cheaper and more reliable alternative to its American and European counterparts, with arms sales hitting a record high of USD 17 billion in 2022, up from USD 7.25 billion in 2021. 

Poland, one of South Korea’s largest customers, has entered deals to purchase approximately 1,000 K2 fourth-generation battle tanks, 150 K9 self-propelled howitzers, and K239 Chunmoo self-propelled multiple launch rocket systems (MLRS). Poland’s switch to South Korea for arms resulted from the slow production of American and European arms, as Lockheed Martin failed to meet Warsaw’s need for the High Mobility Artillery Rocket Systems (HIMARS) that have been crucial in Ukraine’s counterattack campaigns against Russia. Warsaw’s switch to Hyundai Rotem’s K2 tanks was also of a similar nature, as they can be produced at five times the pace of the German Leopard 2 tanks made by Krauss-Maffei Wegmann.

The efficiency and mass production of the South Korean arms industry is facilitated by the existing semiconductor production lines, which are essential for arms R&D and production, as the country takes up approximately 20% of the global supply. The South Korean arms contracts are more favourable with fewer restrictions for the buyers, as the equipment licenses are cheaper than those from American and European companies. This is alongside allowing the recipient nations to purchase the licenses and mass-produce equipment with their domestic workforce. Apart from the element of job creation, the localisation of weaponry production and transfer of technologies are also more efficient. The production enables the buyers’ development of military production and industry, hence accelerating the modernisation of equipment and improving collective defence, notably for the NATO alliance under increasing threat of Russian aggression. 

Forecast

• Short-term

  • South Korea is almost certain to continue its development of the arms industry due to geopolitical tensions and incentives for stronger cooperation with NATO. 

• Long-term

  • South Korea is likely to emerge as an alternative supplier to the US arms industry with cheaper options, thus bolstering the defensive capabilities of countries with smaller military budgets. 

  • An increase in South Korean military capabilities is likely to strengthen the country’s geopolitical standing in East Asia as the region’s democratic champion. This is because Japan’s forces remained heavily restricted by Article 9 of the Constitution and norms established after the Second World War to deter the rise of militarism.