„South Korea remains the largest Asian investor in Poland in terms of cumulative investment value. [ … ] It is in Poland’s interest to convince Korea that the success of development projects in Ukraine and the stable functioning of South Korean investments in the region will require a lasting improvement in the security situation,” writes Oskar Pietrewicz from the Polish Institute of International Affairs (PISM).
The President of South Korea Yoon Suk-Yeol paid an official visit to Poland between 12 and 14 July. The first trip of a South Korean leader to Poland in 14 years took place on the 10th anniversary of the establishment of a strategic partnership between the countries. It is part of the intensification of bilateral relations, in which, in addition to important economic ties, defense issues and cooperation for the post-war reconstruction of Ukraine play an increasingly important role.
Yoon Suk-Yeol’s visit to Poland was preceded by his participation in the NATO summit in Vilnius, during which he took part in a special meeting of the Alliance with its four partners from Asia and the Pacific (Japan, Australia, New Zealand and South Korea, the so-called AP4). In Warsaw, Yoon met with President Andrzej Duda and Prime Minister Mateusz Morawiecki. The talks focused mainly on cooperation in the areas of economy, energy and defence. The parties signed three intergovernmental agreements on cooperation in the promotion of trade and investment, development of transport infrastructure and reconstruction of Ukraine.
Yoon was accompanied by a large business delegation consisting of representatives of 24 conglomerates (chaebols), 41 small and medium-sized enterprises and 24 organizations and business associations. In addition, the Presidents chaired the Korea-Poland Economic Forum, which was attended by more than 260 representatives of Poland and 120 SouthKorean companies. On this occasion, 33 detailed cooperation agreements were signed in the areas of nuclear, hydrogen and renewable energy, electromobility and reconstruction of Ukraine, among others.
Economic cooperation and reconstruction of Ukraine
Yoon’s visit confirmed the crucial importance of economic cooperation in bilateral relations. In 2022, the value of trade exceeded USD 10 billion (an increase of 15.4 percent compared to 2021). Imports from the Republic of Korea prevailed, which translated into an increase in Poland’s trade deficit by 19.8 percent year-on-year, to USD 8.2 billion. However, this mainly pertains to global value chain supply trade, for instance Poland exports to third markets e-car batteries manufactured in South-Korean owned factories in Lower Silesia.
South Korea remains the largest Asian investor in Poland in terms of cumulative investment value (USD 4.5 billion in 2021). South Korean companies are mainly active in the following sectors: electromobility (production of batteries for electric cars: LG Energy Solution, SK IE Technology, SK Nexilis), electronics (production of household appliances and RTV: LG Display I Electronics, Samsung Electronics), chemicals (production of polypropylene and PET granulate: Hyundai Engineering, SK Chemicals) and research and development (development of software for smartphones and TVs: Samsung Electronics). Polish investments in South Korea are insignificant (in 2021 there were disinvestments worth USD 33.8 million). They are limited to the activities of Selena (construction chemicals) and Towimor (shipbuilding).
Since 2019, Poland and South Korea are developing cooperation in the areas of nuclear energy and infrastructure. The potential of cooperation in the construction of a nuclear power plant and the development of small nuclear reactors (SMR) make South Korea an attractive partner in the energy transition of the Polish economy. PGE PAK Nuclear Energy is in talks with Korea Hydro & Nuclear Power (KHNP) about a feasibility study for the construction of a nuclear power plant in Konin-Pątnów. In October 2022, government and business representatives from both countries signed letters of intent on this issue. Since 2019, Poland and South Korea have been holding talks on the construction of the Central Communication Port (CPK), in which the strategic adviser is Incheon-Seoul airport. In June 2023, CPK signed an agreement with the Korea National Railway and Dohwa Engineering consortium to design a 70 km high-speed railway between Katowice and Ostrava. The second plane connection with Korea that is to be launched between Wrocław and Seoul in November 2023 (the other one is Warsaw-Seoul) will also contribute to boosting business relations.
The South Korean government sees Poland as a key partner in the post-war reconstruction of Ukraine. This is evidenced by the agreements signed during the visit and the agreement concluded in May between the Polish Investment and Trade Agency (PAIH) and the Korea Overseas Infrastructure & Urban Development Corporation, a fund supporting SouthKorean companies in foreign public-private projects. Companies from South Korea are interested in cooperation with Poland in projects that include construction, transport infrastructure, SMR and information technology (IT).
Arms purchases and cooperation of defence industries
After the Russian aggression on Ukraine, Poland expressed interest in buying weapons from South Korea and establishing a broad cooperation in the field of defence. In accordance with the framework agreements of 2022, Poland intends to acquire 1,000 K2/K2PL tanks, 672 K9/K9PL self-propelled gun-howitzers, 48 FA Light Combat Training Aircraft‑50 / FA‑50PL and 288 K239 Chunmoo rocket launchers. The existing executive contracts are worth USD 12.4 billion net and provide for the purchase and delivery from South Korea the following: 180 tanks by 2025, 212 gun-howitzers by 2026, 218 rocket launchers by 2027 and all aircraft by 2028.
The remaining equipment is to be partially produced in Poland from 2026 as part of the cooperation of defense industries from both countries (its terms are still being negotiated). The Polish goal is that domestic plants not only produce, but also service, repair and modernize the SouthKorean weapons. The most advanced talks concern tanks and gun-howitzers. The license for K2 provides for their production not only for Poland, but also for export. At this point there are no implementing agreements defining the details of supplies for the Polish army and division of labor in the field of production, service and repair. The K239 launchers are already mounted on the Polish Jelcz chassis and integrated with the domestic Topaz fire control system, and in the future they can be produced, serviced and modernized in Poland along with the missiles used in them. In addition, in 2026, a service center for FA-50 aircraft is to be established in Poland.
For Poland, defense cooperation with South Korea arises from the urgent need to fill the gaps after the transfer of weapons to Ukraine and from the long-delayed need to replace post-Soviet equipment. It also fits into the plans to increase the size of the Polish army and expand the potential of the national defense industry in cooperation with foreign partners. Thanks to the contracts, South Korea has become the second, after the United States, partner of Poland in terms of arms imports. The agreements concluded with Poland have a record value in the history of the arms industry of South Korea. Thanks to them, it can enter the markets of other NATO countries, so far dominated by American and European manufacturers. When compared to its competition, especially in Germany, the South Korean arms industry stands out thanks to speedy delivery and flexibility with regard to cooperation in production and R&D with Polish businesses. 28 K2s, 48 K9s and 2 FA-50s have already arrived in Poland – and another 10 aircraft and 18 missile launchers will arrive by the end of the year.
Conclusions and perspectives
Yoon Suk-Yeol’s visit strengthens political relations between Poland and South Korea., complementing the intensive economic and defence industry cooperation in recent years. The talks in Warsaw indicate a significant potential for further development of relations.
Intergovernmental agreements and an agreement between PAIH and the Federation of Korean Industries, which brings together the most important companies in South Korea, can serve to deepen cooperation in the areas of trade, investment and infrastructure. Poland and Korea are also finalizing talks on admitting Polish poultry, beef and pork to the South-Korean market. The announced large participation of South Korean companies at the September Defense Industry Fair in Kielce indicates that South Korea is rady to cooperate in further projects, including joint development of the next generation tank, armored personnel carriers and a multi-role fighter jet. Poland’s priority remains to develop cooperation beneficial from the point of view of the operational needs of the Armed Forces of the Republic of Poland and the prospects for the development of the Polish defense industry. Due to the import of equipment from the Korean Peninsula, Poland has an increased interest in the security situation in the Indo-Pacific, including through cooperation with South Korea and other partners and allies in the region.
The weapons purchased by Poland from South Korea will increase NATO’s defense and deterrence capabilities against Russia. This strengthens South Korea’s ties with the Alliance and contributes to the improvement of security in Central and Eastern Europe. Supporting Ukraine, also visited by the Korean President, also adds to this goal. Despite appeals by the Polish government for military support for Ukraine, including the supply of ammunition, South Korea focuses on humanitarian and development assistance. The Polish-South Korean cooperation in the post-war reconstruction of Ukraine may prove to be the most fruitful. It is in Poland’s interest to convince South Korea that the success of development projects in Ukraine and the stable functioning of South Korean investments in the region will require a lasting improvement in the security situation, which can be ensured by the supply of weapons to the invaded state.