(EDITORIAL from Korea JoongAng Daily on June 16)

Put together totally for postwar dangers after the Iran battle
As Washington and Tehran transfer to finish the battle, Korea should brace for lingering inflation, vitality insecurity and a more durable diplomatic panorama.

The US and Iran agreed on Monday to signal a memorandum of understanding ending the warfare that started with U.S. airstrikes on Feb. 28. The settlement comes 106 days after the battle erupted. For Korea, which has suffered from disruptions to world provide chains, the information is welcome.

But the tip of the warfare is not going to return the world to its prewar state. Financial dangers will stay, whereas shifts in geopolitical energy relations would require nations to adapt to a altering worldwide order.

First, Korea ought to draw classes from the extreme impression brought on by the closure of the Strait of Hormuz. The battle uncovered the vulnerability of provide chains that rely closely on particular sea lanes and vitality sources.

Even when maritime visitors returns to regular, efforts to diversify vitality imports and strengthen financial safety should proceed. Korea must also actively take part in worldwide discussions on future preparations to take care of protected navigation by way of the strait and, the place needed, contribute to strengthen its affect.

Policymakers should additionally stay vigilant in managing the economic system. The top of the warfare is unlikely to deliver an instantaneous finish to Korea’s “three highs” — excessive change charges, excessive inflation and excessive rates of interest.

Broken oil services within the Center East will take time to recuperate, whereas logistics networks could not normalize for months. Inflationary pressures and forex volatility are due to this fact prone to persist.

Central banks all over the world, together with the Financial institution of Korea, have already signaled the opportunity of additional price will increase. Larger borrowing prices may place extra burdens on households and companies whereas weakening consumption and deepening inequality.

The postwar interval might also create new alternatives. Iranian media have reported that Tehran introduced Washington with a $300 billion reconstruction plan. If reconstruction proceeds, a considerable infrastructure market may emerge throughout the Center East.

The federal government and personal sector ought to work collectively to safe an early foothold in these initiatives. Korean firms possess in depth expertise in building, engineering and industrial improvement and may gain advantage from new demand.

The battle can also be anticipated to reshape worldwide politics. Divisions inside the trans-Atlantic alliance grew to become extra seen in the course of the warfare, whereas China seems poised to develop its affect within the Center East amid shifting regional dynamics.

The Trump administration might also search larger safety and financial contributions from allies, arguing that they need to bear extra accountability for sustaining stability.

In opposition to this backdrop, Korea should put together for a extra advanced diplomatic setting. The federal government ought to concentrate on minimizing potential burdens whereas maximizing nationwide pursuits. The top of the warfare shouldn’t be considered as the tip of danger. Moderately, it marks the start of a brand new section during which financial safety, vitality resilience and diplomatic agility will develop into much more necessary.
(END)