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South Korea considers arming Ukraine amid North Korean troop deployment

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South Korea’s conservative president, Yoon Suk Yeol, is considering direct arms supplies to Ukraine in response to North Korea’s deployment of troops on Russia’s front line.

Seoul has so far resisted calls from its Western allies to use its substantial stockpile of military hardware, preferring to provide only non-lethal aid to Kyiv. However, analysts and diplomats suggest that North Korea’s deployment of troops in the Kursk region of western Russia, reportedly as many as 8,000 according to U.S. officials on Thursday, is shifting South Korea’s stance.

Yoon and other senior officials in Seoul describe Pyongyang’s involvement in the conflict as a threat to South Korea’s security, noting the “valuable experience” North Korean troops could gain on the battlefield. They also worry that Moscow may share advanced military technology with Pyongyang in return for its support.

In response to the deployment, Yoon vowed not to “sit idly by.” His office confirmed this week that Seoul intends to send a delegation to Ukraine to monitor North Korean forces, following a phone call between Yoon and his Ukrainian counterpart Volodymyr Zelensky on Tuesday.

However, the prospect of arming Ukraine faces strong opposition from South Korea’s left-wing opposition, which holds a parliamentary majority. The opposition argues that Yoon’s hardline stance toward North Korea has pushed Pyongyang closer to Moscow.

“Arming Ukraine is an extremely dangerous idea that treats people’s lives like pawns in a chess game,” said Democratic Party leader Park Chan-dae at a recent rally organized by her party. She argued that South Korea has no direct stake in the outcome of the war. Park added that Yoon “should not involve South Korea in a proxy war with North Korea in a distant country,” warning that increased involvement could “risk triggering a military confrontation on the Korean Peninsula.”

“The South Korean government is caught between foreign partners urging it to do more and an opposition calling for restraint,” said Jeongmin Kim, a senior analyst at Seoul-based information service Korea Pro.

South Korea’s decades of preparation for potential conflict with North Korea, along with its formidable defense industry, have resulted in a vast stockpile of weapons, including artillery shells, tanks, howitzers, and surface-to-surface missiles. As a close ally of the United States, South Korea frequently attends NATO summits and supplies many NATO members. Analysts note that South Korea’s weaponry would be largely compatible with equipment already used by Ukraine’s armed forces.

“South Korea’s support for Ukraine could change the course of the entire conflict,” said Henry Haggard, a senior adviser at WestExec Advisors and former counselor for political affairs at the U.S. embassy in Seoul from 2021 to 2023. “Not only do Korean companies produce world-class weapons tailored for Ukraine’s needs, but they also have the manufacturing capacity to deliver essential arms at a pace that could make a difference when needed most,” he told the Financial Times.

South Korea has indirectly supported Ukraine by replenishing U.S. stocks of 155mm artillery shells. According to Ramon Pacheco Pardo, a Korea expert at King’s College London, South Korea is providing more shells to Ukraine, albeit through third countries, than all European countries combined.

Zelensky stated on Thursday that he had sent a representative to Seoul to make “detailed” requests for artillery and air defense systems in response to North Korea’s deployment to Russia.

However, Seoul has thus far refused to provide direct lethal assistance, citing the country’s Foreign Trade Act, which restricts arms exports “other than for peaceful purposes.”

An implicit understanding exists between Seoul and Moscow that South Korea will avoid sending lethal aid to Ukraine, while Russia will limit support to North Korea. But Pacheco Pardo noted that this understanding “has now come to an end.” He added, “I think the Yoon administration will provide lethal assistance to Ukraine if it has evidence that Russia is increasing support for North Korea, especially with technologies that could enhance Pyongyang’s missile, satellite, and other high-tech programs.”

On Wednesday, South Korean Defense Minister Kim Yong-hyun, during a meeting in Washington with U.S. Defense Secretary Lloyd Austin, remarked that it was “highly likely” North Korea was seeking Russian defense technology in exchange for troop deployments.

A European diplomat based in Seoul remarked that the South Korean government’s stance on arms procurement has “shifted” since the North Korean deployment, though it remains “very, very cautious.” The diplomat suggested that Seoul might wait for the U.S. presidential election’s outcome before making further decisions.

Jeongmin Kim noted that the Yoon administration may argue that providing lethal aid does not require parliamentary approval and would not violate the Foreign Trade Act, asserting that arming Ukraine would contribute to international peace by hastening the end of the war.

Such a decision, however, may face public opposition. According to a Gallup Korea poll conducted shortly after North Korean troops were reported in Russia, only 13% of South Koreans surveyed supported military assistance to Ukraine, while 66% favored limiting aid to non-military and humanitarian support.

ASIA

Japan’s exports rise despite global risks, boosted by China

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Japan’s exports rose more than expected in October, driven by strong demand from China and other parts of Asia, despite growing uncertainties in global markets.

Exports increased by 3.1% year-on-year, led by significant growth in shipments of chip-making equipment, particularly to China, according to the Finance Ministry’s report on Wednesday. This marked a rebound following the first drop in 10 months in September. October’s figures exceeded economists’ forecasts of a 1% rise and were also bolstered by increased shipments of medical products to the United States.

Meanwhile, imports edged up by 0.4%, defying expectations of a 1.9% decline. As a result, the trade deficit widened to 461.2 billion yen ($2.98 billion), compared to 294.1 billion yen in the previous month.

This stronger-than-expected export performance has raised optimism about Japan’s economic recovery. Although the country’s gross domestic product (GDP) expanded for the second consecutive quarter through September, the pace of growth has been tempered by the drag from net exports.

“Today’s data raises hopes that external demand will revive in the October-December quarter,” said Hiroshi Miyazaki, Senior Research Fellow at the Itochu Research Institute. “The Chinese government’s stimulus measures have stabilized its economy and reversed the prior decline.”

Exports to China rose by 1.5% last month, rebounding from a 7.3% drop in September, with semiconductor manufacturing equipment exports surging by nearly a third. These gains align with signs that China’s stimulus policies are beginning to yield results, driving growth in certain sectors and boosting consumer spending.

Notably, Japanese exports grew despite the yen’s strengthening against the dollar, averaging 145.87 yen per dollar in October—2% stronger than the previous year, according to ministry data.

The export rebound occurs against a backdrop of heightened concerns about global trade policies. Business leaders are bracing for the potential return of Donald Trump to the White House, with fears that his proposed tariffs—60% on imports from China and 20% on other nations—could disrupt international commerce.

Some regions are already experiencing a slowdown. Shipments to the United States and Europe declined by 6.2% and 11.3%, respectively, in October.

The Bank of Japan (BoJ) is closely monitoring these developments. BoJ Governor Kazuo Ueda noted on Monday that while the Federal Reserve’s prospects for a soft landing have improved, risks tied to the U.S. economy and their impact on global markets require careful consideration.

The most pressing concern for Japan’s trade outlook is the impact of potential U.S. tariffs. Historical data from the U.S.-China trade war (2018-2019) suggests that a 1% increase in export prices, including tariffs, led to a 0.35 percentage-point reduction in profit margins for Chinese exporters, according to research from Stanford University’s Centre for Chinese Economics and Institutions. A similar scenario could hurt Japanese firms’ profitability, counteracting gains from the yen’s depreciation.

“We are not yet at a stage where Trump’s tariff policy is clearly impacting export volumes or exporters’ behavior,” Miyazaki told The Japan Times. “However, there remains significant uncertainty, and we must continue to monitor the policy stance of the next Trump administration,” he added.

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ASIA

IMF reviews Pakistan’s $7bn bailout

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An International Monetary Fund (IMF) team conducted an unscheduled visit to Pakistan last week to assess the country’s progress on the terms of its $7 billion bailout package. The surprise visit, coming less than two months after the loan’s approval, has raised questions about the future of the bailout program. IMF staff are expected to present their findings to the Washington-based executive board for review.

What prompted the IMF’s unexpected visit to Pakistan?

Several officials, speaking to Nikkei Asia on condition of anonymity, highlighted key factors prompting the visit. These included a $685 million shortfall in the government’s tax collection target for the first quarter of the current fiscal year and a $2.5 billion deficit in the external financing required under the bailout terms. Compounding these issues was the failed sale of Pakistan International Airlines (PIA), a key component of the IMF-recommended privatisation drive.

While routine IMF program review visits are standard, the timing of this visit—just seven weeks after board approval—has raised concerns. “This suggests significant difficulties in implementing the program,” said Naafey Sardar, an economics professor at St. Olaf College in the United States, speaking to Nikkei Asia.

Ikram ul Haq, a lawyer specializing in economic and tax policy, added, “The reality is that the government’s promises to the IMF have not been fulfilled.”

What were the key issues discussed?

The IMF raised the issue of the tax gap and urged action to ensure that Pakistan meets its annual tax collection target of $46 billion.

Islamabad was also asked to engage with Saudi Arabia and China, the largest investor, to bridge the external financing gap. Promised energy sector reforms and the repayment of billions of dollars of debt owed to mostly Chinese-backed power plants in Pakistan were also discussed.

Another issue was for the IMF to press provincial governments for more funds, such as the Benazir Income Support Programme, which provides a $2.1 billion annual cash transfer for poverty alleviation, currently paid for by the central government.

How does agricultural income tax fit into this picture?

As part of the loan agreement, Pakistan’s provinces missed an end-October deadline to harmonize their agricultural income tax laws with the federal income tax.

The IMF had previously said that Pakistan’s loan agreement would be in jeopardy if agricultural income remained largely untaxed. During the meetings, provincial government officials told the IMF that they would face significant difficulties in implementing a higher tax.

Economist Aqdas Afzal said such a move would face significant opposition from big landowners, who are disproportionately represented in the federal and provincial assemblies.

“Given the weak mandate of the current government, a higher agricultural income tax is unlikely as it could trigger major social and political unrest,” he added.

What assurances has the government given to the IMF?

Pakistan has assured the IMF that it will increase the provincial agricultural income tax rate by up to 45 percent. It has also pledged to meet annual tax collection targets and to continue reforms in the energy sector and state-owned enterprises.

“This is an ongoing dialogue process and there have been discussions [with the IMF] on energy and SOE reforms, the privatization agenda and public finance,” Pakistan’s Finance and Revenue Minister Muhammad Aurangzeb told local media.

Haq, a tax expert, said the government’s primary focus would be on meeting the six-month revenue collection target set by Pakistan’s Federal Board of Revenue, a government agency that regulates and collects taxes.

What are the challenges ahead for Pakistan’s loan agreement?

Meeting tough tax targets and implementing structural reforms are major hurdles for the government to overcome.

The IMF has previously cancelled other loan programmes when conditions were not met. Payments to Pakistan could be suspended or stopped altogether, which would be a serious blow to a country struggling with a sputtering economy.

The IMF is pressing for cuts in government spending.

“Structural reforms are being resisted by vested interests, making efforts to meet IMF conditions even more difficult,” Haq said.

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ASIA

Australia, Japan, and the U.S. seek to institutionalize cooperation ahead of Trump’s arrival

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As Asia prepares for potential instability ahead of Donald Trump’s potential return to the White House, Australia, Japan, and the United States are taking significant steps to strengthen their strategic partnerships.

Before Trump’s anticipated inauguration in January, U.S. Defense Secretary Lloyd Austin is working to reinforce Washington’s network of like-minded allies cultivated during President Joe Biden’s administration to counter China’s growing influence in the Indo-Pacific region. Under Biden, the United States has deepened defense ties with regional players such as Japan, South Korea, and the Philippines to address China’s expansionist strategies.

Austin’s first stop on this mission was Australia, where he joined his Australian and Japanese counterparts to announce that Japanese soldiers would now participate in an annual rotation alongside U.S. Marines in Darwin.

“Recognizing the critical role of the trilateral partnership in maintaining regional stability, we are committed to trilateral policy coordination and consultation on regional security challenges and contingencies,” the three nations’ defense ministers stated in a joint announcement on Sunday, emphasizing concerns over China’s growing regional presence.

In their statement, the ministers highlighted their “grave concern” over “destabilizing actions” in the East and South China Seas, specifically referencing “dangerous behavior” by the Chinese military toward Philippine vessels and other maritime actors. They also underscored the importance of maintaining “peace and stability” in the Taiwan Strait as a key regional priority.

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