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South Korea’s middle power aid diplomacy

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The South Korean ambassador delivers South Korean donation of KF94 masks donates to Argentina, Buenos Aires, Argentina, 14 August 2020 (Photo: Embajada de Corea del Sur ante Argentina / Latin America News Agency via Reuters Connect)

In Brief

Official Development Assistance (ODA) is likely to become an increasingly important part of South Korea’s middle power diplomacy in Asia. Although South Korea expresses eagerness to adopt global norms in this space, the pace, scope and degree of their adoption will depend on the standards and criteria of key actors such as the South Korean foreign and economic ministries, with their different and path-dependent results.

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To outside observers, South Korea’s ODA remains state interest-centric, selectively observing global norms set by the OECD. Part of the explanation may be South Korea’s historical transformation from ODA recipient to donor. While the ODA to South Korea significantly contributed to its economic development, the globalisation of Seoul’s economy and the establishment of the Korean International Cooperation Agency (KOICA) meant that the South Korean Government started to provide ODA to partner countries in a systemic way from the early 1990s.

When KOICA was established in 1991, its ODA was worth US$57 million. By 2010, South Korea’s ODA expanded to more than 20 times that size. South Korea finally joined the OECD’s Development Assistance Committee (DAC) — the traditional donor club of advanced countries — in 2010.

Joining the committee means that South Korea pledges to abide by global DAC norms and incorporate them into its ODA governance and practices. Despite the Moon Jae-in government’s strong rhetoric here, some norms have failed to become localised.

South Korea maintains, inconsistent with global ODA norms, a high portion of concessional loans when grants are recommended by the DAC. Since its DAC accession ten years ago (2010–2019), its share of concessional loans has been 37 per cent compared to the DAC average of 5 per cent. More concerning is Seoul’s ratio of ‘tied’ ODA — aid given on the condition that it be used to procure goods or services from the provider — of almost 50 per cent. South Korea has the highest ratio of ‘tied’ aid among DAC members, despite the fact that ‘untying’ ODA is strongly recommended by the DAC.

South Korea’s ODA is also heavily skewed towards Asia, and its priority partners include upper middle income countries — many of which need ODA less than least developed or lower middle income countries. A significant proportion — almost 40 per cent — of South Korean ODA went towards economic infrastructure and production in 2019, while humanitarian assistance was merely 2 per cent.

Most studies of South Korean ODA suggest it serves the country’s national and strategic interests. While others argue that South Korea’s ODA should serve humanitarian values and goals, few deny the primacy of state interests, with many arguing that South Korea’s ODA can serve both state and humanitarian purposes without flouting global ODA norms.

South Korean governments have tried to meet this challenge. The South Korean Framework Act on International Development Cooperation was completely revised in 2020. The changes included global ODA norms emphasising poverty reduction, human rights, gender equality, sustainable development and humanitarianism — even though pursuing state interests is also a clearly stated objective. South Korea’s five year mid-term ODA strategy more strongly than ever links its ODA commitments with its foreign and economic priorities like the ‘New Southern’ and ‘New Northern’ policies.

This bold move by was enabled by the complex network of global ODA governance in the 21st century. ODA commitments made by traditional donors have stalled since the global financial crisis nearly 15 years ago, and development financing has been insufficient to achieve the UN’s Sustainable Development Goals.

Yet South Korea’s active approach to ODA has become common among traditional DAC members like the United States, the United Kingdom, Australia, Canada, and Denmark — not to mention emerging donors like China.

In this enabling environment, South Korea has recently expanded its ODA disbursement and sought a more active role in bridging the interests of different ODA stakeholders. In the 10 years since its DAC accession, South Korea’s ODA volume averaged annual growth of 12 per cent — the highest among DAC members that otherwise averaged 2 per cent. In terms of its capacity, concentration and commitment, as well as its creativity to manoeuvre among different stakeholders and build coalitions, South Korea is well suited to pursue ODA as a middle power.

Still, South Korea’s ODA must be analysed in terms of domestic norms and political structures rather than through the ubiquitious concept of state interests.

The state-centrism of Seoul’s ODA strategy have been shaped via the identities and norms of ODA supervisory ministries, which gained much of their 50 year ODA experience when South Korea was a recipient nation. This explains the co-existence of conflicting values in South Korean ODA, and Seoul’s less than full accommodation of global ODA norms.

As long as its pursuit of state interests is not seen as one-sided and its ODA to some extent serves global public goods, ODA will remain a successful part of South Korea’s middle power strategy.

Seung-Kwang (Jeffrey) Choi is a PhD student in the School of Social Sciences at Monash University, Australia.

This work was supported by the Core University Program for Korean Studies through the Ministry of Education of the Republic of Korea and Korean Studies Promotion Service of the Academy of Korean Studies (AKS-2017-OLU-2250002).

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