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Generational Dynamics Web Log for 29-Apr-2019
29-Apr-19 World View -- South Korea's weapons industry boosted by end of North's 'Charm Offensive'

Web Log - April, 2019

29-Apr-19 World View -- South Korea's weapons industry boosted by end of North's 'Charm Offensive'

South Korea's network of anti-missile defenses

by John J. Xenakis

This morning's key headlines from

Note: This article was originally published by Baillie-Gifford investment management firm on March 9. Updates since them: North Korea has tested a low-altitude cruise missile, and Kim Jong-un has met with Vladimir Putin.

South Korea's weapons industry boosted by end of North's 'Charm Offensive'

Sohae Launch Facility in North Korea, March 2, 2019
Sohae Launch Facility in North Korea, March 2, 2019

New satellite imagery shows that North Korea has begun a rapid rebuilding of the Sohae Launch Facility, used for testing long-range ballistic missiles.

The Sohae facility has been inactive since August 2018, when North Korea committed to dismantle it in order to "prove" that it was denuclearizing. North Korea demanded a reduction in sanctions in exchange, which was refused. The US agreed to temporarily end large military drills with South Korea, and has recently extended that to a permanent ban, after the Hanoi summit ended in failure. At the same time, the US demanded from North Korea a list of all nuclear and missile development sites, and a timeline to dismantle all of them, which North Korea has refused.

It's not clear if this is play-acting by the North Koreans, or whether it represents a plan to return to open testing of long-range ballistic missiles. At the very least, it appears to signal a final end to the "charm offensive" between Kim Jong-un and Donald Trump, and their mutual declarations of love and devotion to one another, and a return to fear that there will be a military confrontation with North Korea.

Based on history, this fear should give a boost to the South Korean weapons industry. According to the Stockholm International Peace Research Institute (SIPRI), South Korea has previously responded to the belligerence of North Korea by developing weapons systems, for both domestic use for sales overseas, with the intention of becoming a major exporter.

History of South Korea's indigenous weapons industry

After being devastated by the Korean War in the 1950s, South Korea was one of the world’s largest importers of military equipment and technology for decades - mostly from the US. But slowly, starting the 1960s, South Korea has progressively developed a sophisticated indigenous arms industry, first for its own armed forces and, increasingly, for export. South Korean exports have steadily increased since the early 2000s, and now cover a range of high-technology weapons systems delivered to customers around the world.

The buildup has been rapid. South Korean arms-producing companies’ combined sales totalled US$8.4 billion in 2016, with a 20.6% rise in sales compared to 2015. According to budget plans announced in January, South Korea plans to spend over $84 billion on new military capabilities over five years.

South Korean weapons company LIG Nex1 is aggressively pursuing international weapons sales, and participated last month in the International Defence Exhibition (IDEX) 2019 opening in Abu Dhabi with a slew of its precision-guided munitions. The company's exhibit included the medium-range surface-to-air missile KM-SAM Cheongung, the short-range anti-air guided missile Shingung, the lightweight torpedo Cheongsangeo (Blue Shark), the anti-tank guided weapon Hyungung and the counter-battery radar II.

Chinese fury and revenge over THAAD

The KM-SAM Cheongung is playing a significant role in South Korea's defenses to a North Korean missile attack. North Korea has for decades been exposed to North Korea’s large and diverse arsenal of tactical and intermediate-range ballistic missiles.

The most controversial component of South Korea's growing missile defense system is the Terminal High Altitude Air Defense (THAAD), supplied by the United States military. THAAD is designed to shoot down ballistic missiles on their terminal trajectory as they plunge down to their targets.

The US has for years asked South Korea's government to permit deployment of THAAD systems in South Korea. South Korea demurred, mainly because of opposition from China, though agreed in 2014 to allow it in principle. Then, because of North Korea's aggressive schedule of nuclear and missile tests, South Korea agreed to a surprise deployment of two THAAD launchers starting in March, 2017, approved by the conservative president, Park Geun-bye. When liberal president Moon Jae-in took office in May, 2017, he rejected any further THAAD deployment. But then North Korea tested a powerful new long-range ballistic missile on July 29, 2017, and Moon had a change of heart, and approved further THAAD deployments, four more launchers in addition to the two already deployed.

Chinese officials were infuriated and became almost hysterical. Why would the Chinese object to the deployment in South Korea of an anti-missile system that would protect South Korea from North Korean missiles? Chinese media provided the answer:

"The X-band radar can snoop on Chinese and Russian territories as it can spot at least 2,000 km. Seoul claims that it will adopt the radar with a detectable range of 600-800 km, but the mode change can be made at any time in accordance with the needs of the U.S military that will operate the THAAD battery in South Korea."

In other words, the Chinese were furious because the THAAD system includes "over the horizon" radar that would provide early warning to the American military of a missile attack from China.

China expressed its fury with South Korea in more than mere words. China banned tour groups from visiting China, removed popular South Korean TV dramas from the internet. China also forced the closure of 75 South Korean Lotte stores in China, resulting in $179 million in losses to the company.

China particularly ordered the Chinese living in China and in South Korea to boycott Lotte deparment stores, owned by Lotte Group, a South Korean multinational conglomerate. China decided on this punishment because it emerged that Lotte had agreed to a land swap that would allow THAAD to be deployed on a piece of land previously owned by the company. The enraged Chinese imposed harsh economic sanctions, particularly targeting Lotte Department Stores in China and South Korea with a boycott.

A correspondent living in Seoul has wrote to me in April 2017 to describe the devastating impact of the actions by China:

"China's economic boycott of Korea over THAAD has hit the country like a ton of bricks. I went to the flagship Lotte department store today, and it was practically empty. I have friends who own their own businesses, and they tell me they are facing bankruptcy because of the loss of Chinese customers. The thing is, Koreans, by and large, hate the Chinese. This embargo is only heightening the hatred. I think this embargo has finally woken people up to the fact that China is an existential threat to Korea. ...

I can't believe how much the mood here has flipped. The word 'changed' would be inappropriate. Things are different now. I feel sick."

By November 2017, relations between China and South Korea had deteriorated substantially, and it was clear that the THAAD systems would not be removed. So China backed down. In a surprise announcement, China agreed to remove the harsh economic sanctions that it had imposed on South Korea. However, it imposed conditions, and suggested that the economic sanctions and boycotts would be reimposed if the conditions are not met.

South Korea's network of anti-missile defenses

China had one more objection to THAAD: China said that THAAD is useless because it is not designed to intercept North Korean missiles, which travel at too low an altitude for THAAD.

That's an interesting argument because it's partially true. When North Korea attacks the capital city Seoul, which is in the northern part of South Korea, it will use low-altitude missiles for that attack. However, THAAD is used as protection from ballistic missiles that North Korea will use to attack the southern part of South Korea. So what will protect Seoul?

This brings us back to the the KM-SAM Cheongung medium-range surface-to-air missile system and its new PIP missile interceptor, manufactured by LIG Nex1 and other South Korean firms.

THAAD and KM-SAM work together to create an anti-missile defense network. While THAAD defends against high-altitude ballistic missiles, KM-SAM can defend against low-altitude aircraft and missile attacks. The American-made Patriot anti-missile systems also provide a tactical layer of defense.

Late last year, LIG Nex1 signed a 499 billion won ($450 million) mass production contract with the South Korean government to produce KM-SAM systems. Other companies, including Hanhwa System, Hanhwa Defense, Hyundai and Kia, will participate in the mass production. According to LIG Nex1, KM-SAM is attracting high interest in overseas market due to its excellent operational performance, and it is expected to be exported on a large scale in the future.

However, the KM-SAM has plenty of competition. Last month, the Colombian Air Force selected Israel's Barak-8 system over South Korea's KM-SAM and other similar systems from Canada, Spain, the United States and France. Yonhap (15-Feb-2019) and NK News (11-Jan-2019) and National Interest (24-Feb-2019) and Army Recognition (13-Sep-2018) and AFP (20-Jul-2018) and Jerusalem Post (20-Feb-2019)

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(Comments: For reader comments, questions and discussion, see the 29-Apr-19 World View -- South Korea's weapons industry boosted by end of North's 'Charm Offensive' thread of the Generational Dynamics forum. Comments may be posted anonymously.) (29-Apr-2019) Permanent Link
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