December 22, 2024

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Two new reactors are planned for the Dukovany nuclear plant in the Czech Republic, but political instability in South Korea casts doubt on the nation’s ability to secure the deal. (Getty Images)

South Korea’s political crisis, triggered by President Yoon Suk Yeol's short-lived martial law declaration, is casting doubt on several of his administration's cornerstone industrial projects and the country’s ability to navigate trade challenges.

The initiatives facing increased uncertainty include a multibillion-dollar nuclear power deal in the Czech Republic and the Donghae deepwater gas field development.

The instability comes at a critical moment for South Korea, as shifting global dynamics, including Donald Trump’s return to the US presidency, demand clear and decisive leadership.

Czech nuclear power plant project faces uncertainty

When President Yoon took office, one of his top priorities was revitalizing the nation's nuclear power industry.

The sector had been significantly weakened under the previous Moon administration, which pushed a strong anti-nuclear policy. Yoon’s administration reversed course, restarting halted domestic reactor construction projects and extending the operation of aging plants.

On the international front, Yoon sought to position Korea as a global leader in nuclear power. The government secured its spot as the preferred bidder for a 24 trillion won (about $16.9 billion) nuclear power plant project in the Czech Republic, with plans to export a total of 10 nuclear reactors by 2030.

Yoon himself traveled to the Czech Republic to personally promote Korea’s nuclear technology and reliability, marking the deal as a cornerstone of his economic vision.

However, the ongoing impeachment proceedings have raised doubts about the future of these initiatives.

“The entire sector, from project funding to international contracts, depends heavily on government policy,” an industry official said on condition of anonymity. “With the president’s term now uncertain, the outlook is grim.”

Speaking at a briefing in Prague on Sep. 19, Ahn Duk-geun, minister of trade, industry and energy, criticized opposition allegations about dumping orders in South Korea’s nuclear power plant contract with the Czech Republic, calling them “unfounded fake news.” (Getty Images)

The Czech nuclear project, in particular, faces increased scrutiny. The Czech Republic is set to finalize its contractor selection in March 2025, but lingering doubts about South Korea’s policy stability could jeopardize the deal.

During the bidding process, Czech officials had expressed concerns about the potential for South Korea to revert to a de-nuclearization policy if the political winds shift.

Daewoo Engineering & Construction, the construction contractor for the Czech project, downplayed the immediate impact of the impeachment.

“This is a long-term project that the Czech government has been planning for six years,” a Daewoo representative said. “While the political situation in Korea is a factor, we believe the Czech government will evaluate the bid on its merits.”

Experts are less confident. Park Jong-woon, a nuclear engineering professor and former researcher at Korea Hydro & Nuclear Power, believes the deal is on shaky ground.

“Even without the impeachment, the project faced hurdles due to Westinghouse’s intellectual property disputes and South Korea’s declining competitiveness in the global nuclear market,” he said. “This project is likely to be abandoned no matter what. Korea should focus on maintaining its existing reactors rather than pursuing unprofitable export deals.”

Donghae gas field project stalls 

President Yoon’s domestic energy ambitions are also faltering. The Donghae gas field development project, announced in June as a key step toward energy security, has already faced fierce resistance from the opposition party.

Last month, the Democratic party slashed the project’s 49.7 billion won budget for 2025, effectively freezing its progress.

The Donghae Gas Field platform, situated 58 kilometers off the coast of Ulsan's Yeongil Bay, was operated by the Korea National Oil Corporation until 2021. (Korea National Oil Corporation)

Officials at the Korea National Oil Corporation, which oversees the Donghae project, are concerned.

“Internally, there’s growing fear that this project could be canceled (if the president is impeached),” a KNOC insider said.

Trade policies in limbo

The latest political crisis couldn’t come at a worse time for its global trade strategy. On Jan. 20, Donald Trump will begin his second term as US president, raising concerns about heightened protectionist policies, including tariffs on key trade partners.

Korea faces a narrow window of opportunity to prepare for the changing US policy landscape, but the impeachment proceedings and the resignation of key cabinet members are leaving the government ill-equipped to respond.

To make matters worse, Yoon’s cabinet has been thrown into disarray. Key figures, including Trade Minister Ahn Duk-geun, have already offered their resignations amid the impeachment crisis.

Huh Yun, a trade expert at Sogang University and chair of the Trade Policy Advisory Committee, emphasized the urgency of resolving the political turmoil.

“The first few months of the next US administration will be crucial for shaping global trade policies,” Huh said. “If Korea fails to respond strategically during this window, we risk losing influence in key negotiations. Political instability at home will only weaken our bargaining position on the global stage.”

By Moon Joon-hyun (mjh@heraldcorp.com) and Hwang Joo-young (flylikekite@heraldcorp.com)