rapid fire: Nuclear-powered submarines / NewJeans and Corporate Korea’s crisis management

Welcome back to Korea Kontext. It’s time for me to increase the tempo to bring you more timely analysis. My new format will be two or three ‘rapid fire’ briefs like this one each week, with a ‘deep dive’ coming once a month.

Your feedback is always welcome. While I’m preparing a deep dive on Minjoo’s criminal justice reform, I’m open to your ideas: [email protected]

Is Seoul ready for nuclear-powered submarines?

Why it Matters: The ROK-US submarine deal is less about Seoul’s long-held ambitions and more about Washington’s urgent need to bolster its anti-China naval capacity—a move that hands Korea’s defense industry a massive opportunity and an equally massive diplomatic headache with Beijing.

Just like everyone else, I was surprised to learn that nuclear-powered submarines were on the ROK-US summit table this week in Gyeongju. Seoul has a long history of pursuing its acquisition, but I don’t recall much of the discussion recently—the ROK Navy has been more eager to get aircraft carriers.

From Washington’s point of view, President Trump’s decision to give it a go isn’t hard to understand. US Navy’s nuclear-powered submarine fleet is an endangered species; from what we’re hearing from the current status of the AUKUS deal, UK’s manufacturing capacity for nuclear-powered subs is a joke. Washington is going to need some help from Seoul and Tokyo to build submarine fleets to counter Beijing in the region.

It’s no secret that Japan’s new Prime Minister Dakaichi Sanae also seeks to build them in Japan, and I don’t see any reason for Mr Trump not to opt in. It could also be the beginning of the end of the non-proliferation regime, but it’s too early to say.

From Seoul’s point of view, however, it is a bit harder to understand the deal. Be careful of what you wish for, people say, you know. Is President Lee fully aware of its consequences? Beijing will definitely not be happy about it, all the more after Mr Lee himself mentioned the need for tracking “Chinese submarines,” although his office later tried to backtrack the remark.

It doesn’t bode well with the fact that Mr Lee and the ruling party have been trying hard to maintain their own definition of “balance” between the two superpowers. Do they have a change of mind now? My guess is it’s more likely that they are approaching it as purely a defense industry boosting policy. Mr Lee sent his chief of staff as a special envoy to Europe to boost defense exports last week, but I don’t see a big opportunity there for the reasons I described previously.

Albeit some limitations—for example, building them in the Philly Shipyard, as prescribed by Mr Trump, will prove excruciating; at least Hanwha is going to have something to relate to TSMC soon—this is a huge opportunity for Seoul. The question is whether Seoul is up to live with the consequences—aside from Beijing’s ire, running nuclear-powered submarines requires a strategic vision for the region and beyond, which Seoul has never had.

Housing policy was never Minjoo’s strong suit

Why it Matters: The Lee administration is repeating the Moon administration’s failed housing playbook of tackling soaring prices with financial repression. This is alienating younger generations, and with the opposition in disarray, the only clear winner is Seoul’s incumbent conservative mayor, Oh Se-hoon.

Fighting a housing market surge with financial repression didn’t work well under the Moon Jae-in administration, but the Lee administration somehow thinks it could work this time.

Some ruling party politicians suggest raising property taxes as the final solution. The idea was a long shot when first proposed and partly implemented in the Roh Moo-hyun administration, and even more so today. One undeniable fact is that Minjoo is the established majority now—the most coveted areas around Gangnam still vote for conservatives, but many of the other areas in Seoul that enjoyed the price surge have voted for Minjoo.

Others argue that the answer lies in more housing supply in Seoul. As though they’ve just discovered a vast land of wilderness in the wild west and named it Seoul. Even if they manage to squeeze out some land by lifting green belt regulations and scrapping plans to build parks in the city—not sustainable at all, the current housing subscription system favors older generations by design, leaving out younger generations who are growing more indignant at what they see as a rigged game of wealth.

Minjoo is certain to lose some votes, but it is not clear who’s going to win them. As with many issues of Korean politics nowadays, conservatives are too incompetent and in disarray to devise a comprehensive strategy to offer an alternative to what the ruling party has or failed to deliver.

However, the current Seoul mayor Oh Se-hoon now has more chance to win the election next year. Just like everything else in Korean politics, own goals, not regular goals, decide which side is going to win.

NewJeans and Corporate Korea’s crisis management

Why it Matters: The court’s ruling against NewJeans highlights a classic vulnerability in Corporate Korea: a complete failure in crisis management. A high-stakes “chicken game” driven by emotion has effectively destroyed one of K-pop’s greatest assets, benefiting no one.

It was pretty obvious from the beginning that Min Hee-jin, the godmother of NewJeans, and her “babies” were not going to win the court case, in which they argued for cancellation of a contract that Ms Min apparently didn’t bother to review thoroughly.

There must be something we don’t know yet that can turn things upside down, I thought. The career of her “babies” depends on it.

Well, turns out there was none.

Reasonable governance is not something Korean business is famous for, but Korean entertainment scene has had too much success and global limelight before a voice of reason sets in its culture. Former employees speak of unbelievable stories about its premodern corporate culture.

Across all of Corporate Korea, one big noticeable void is that of risk assessment and crisis management. There has been plenty of time and people around Ms Min to defuse the conflict and dissuade her from hitting the gas pedal in the chicken game. No one did, even her expensive lawyers. At the expense of one of the greatest successes in K-pop history.

I still hear their songs a lot walking down the streets of Seoul, and sigh, imagining what we would be enjoying had there been some “deal” to mitigate the confrontation. Chances are very slim that Hybe would let the NewJeans members go now.

By the way, Ms Min is reported to have established a new agency. A talented A&R executive like her can start over and over, but would there be a second chance for her “babies”?

Postscript: Pyongyang and Tokyo

There was no surprise meet-up between Mr Trump and Chairman Kim Jong Un.

Some were expecting much more about it than others. Chung Dong-young, the unification minister, has been working around the clock to give Pyongyang a breakthrough, which also includes parroting Pyongyang’s talking points. Given the tepid responses from South Korean citizens so far, I’d suggest that he should be given his paycheck from Pyongyang, not Seoul.

Well, I can understand him. This is going to be his last chance in office. Before disappearing into irrelevance, he wants to bring about something that could revive his name. (I learned that Mr Chung has been trying so hard to reach out to Pyongyang even months before he was appointed to the office.)

Now I hear Mr Chung is trying to broker something between Pyongyang and Tokyo. But the nature of the thing is a bit dubious for me. Even if he can pull it off, I doubt there will be any room for his name in it.