Impact of Middle East Crisis Disrupts Yoon's Diplomatic Schedule... Investment Cooperation Accelerates

The armed conflict between Israel and the Palestinian militant group Hamas is reverberating throughout the Middle East, causing disruptions to President Yoon Suk-yeol's diplomatic schedule, including the postponement of the visit by the President of the United Arab Emirates (UAE). However, the government plans to accelerate investment cooperation efforts to minimize the negative impact of the international situation on the South Korean economy.

According to the Presidential Office on the 13th, UAE President Mohammed bin Zayed Al Nahyan has decided to postpone his visit to South Korea, which was scheduled for mid-month. This is due to the Israel-Hamas conflict escalating into a full-scale war, affecting the entire Middle East region.

Although President Mohammed's visit has been postponed, the government maintains that there will be no disruption to the implementation of the detailed aspects of the $30 billion (40.5 trillion KRW) investment from the UAE. Since President Yoon's state visit to the UAE in January, the UAE sovereign wealth fund Mubadala's Strategic Investment Partnership (SIP) team and South Korea's Ministry of Economy and Finance's Financial Investment Support Group (public investment related to central and local governments) and Korea Development Bank's UAE Investment Cooperation Center (private investment including corporate investment and finance) have been conducting two-track consultations. The Ministry of Economy and Finance and Korea Development Bank have already visited the UAE for meetings and hold frequent video conferences, so the government explains that there are no issues with the cooperation status. The UAE delegation also visited South Korea in May and held various consultations, including meetings with individual companies. At that time, the two countries jointly selected six priority investment sectors: energy, information and communication technology, agricultural technology, biotechnology, aerospace, and cultural content, discovering potential investment opportunities worth approximately $2 billion. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho plans to hold the Korea-UAE Economic Joint Meeting in July to strengthen economic cooperation between the two countries.

President Yoon Suk-yeol, on a state visit to the United Arab Emirates (UAE), is walking towards the simulation training ground with UAE President Mohammed bin Zayed Al Nahyan at the Barakah Nuclear Power Plant on January 16 this year (local time).
[Image source=Yonhap News]

Senior Secretary for Economic Affairs Choi Sang-mok told reporters the day before, "Since discovering the $2 billion investment opportunities, we have submitted about 30 investment proposals to the UAE and are identifying an additional 20 or so." In addition, there are plans to thoroughly prepare for economic issues such as energy and supply chains. At the emergency economic and security review meeting held by President Yoon on the 11th, government officials reported that they would continue to monitor the volatility of the domestic financial market and real economy in response to movements in international oil prices and exchange rates. Regarding this, Senior Secretary Choi also stated, "The trade cooperation and energy sector orders that President Mohammed was supposed to discuss during his visit will be announced around next week."

However, as the UAE is known as a major player in 'K-defense,' the defense sector activities that UAE officials planned to conduct by attending the Seoul International Aerospace and Defense Exhibition (ADEX) 2023 are expected to be somewhat delayed. Initially, the UAE government side planned to receive a briefing on the long-range surface-to-air missile system (L-SAM) that was showcased during the National Armed Forces Day parade during this visit.

Meanwhile, the situation in the Middle East is becoming increasingly serious. Israel has bombed the Gaza Strip in response to Hamas's rocket attacks and human rights violations, and recently there are signs of a ground troop advance. Middle Eastern Islamic countries such as Saudi Arabia and the UAE, excluding Iran which is suspected of backing Hamas, support Palestine but are distancing themselves from Hamas. The United States has also taken steps to isolate Hamas. Secretary of State Antony Blinken plans to visit Jordan, Qatar, Saudi Arabia, and the UAE sequentially by the 15th, starting with Israel. Accordingly, President Mohammed, who postponed his trip to South Korea, is expected to meet with Secretary Blinken in the UAE to discuss solutions to the Middle East crisis.

This content was produced with the assistance of AI translation services.