CaliToday (22/9/2205): South Korean President Lee Jae Myung has issued a stark warning that his country's economy could spiral into a crisis rivaling the devastating 1997 Asian financial meltdown if his government accepts current U.S. demands in a stalled trade deal without critical safeguards.
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| FLE PHOTO: South Korean President Lee Jae Myung speaks during a South Korea-U.S. business roundtable at The Willard Hotel in Washington, D.C., U.S., August 25, 2025. REUTERS |
In an exclusive interview with Reuters, President Lee revealed that a verbally agreed-upon trade pact from July remains unsigned due to a high-stakes dispute over how a proposed $350 billion South Korean investment into the United States would be structured. The deal would see the U.S. lower President Donald Trump's tariffs on South Korean goods in exchange for the massive investment.
However, the nature of the U.S. demand has raised alarms at the highest level in Seoul.
"Without a currency swap, if we were to withdraw $350 billion in the manner that the U.S. is demanding and to invest this all in cash in the U.S., South Korea would face a situation as it had in the 1997 financial crisis," Lee said through a translator at his presidential office on Friday.
The explosive comments on the fragile state of negotiations with South Korea's most important military ally overshadow a crucial trip Lee is making to New York on Monday. There, he will address the United Nations General Assembly and become the first South Korean president to chair a meeting of the Security Council.
"Democratic Korea is Back"
Lee, a liberal, came to power in a June snap election after his conservative predecessor, Yoon Suk Yeol, was impeached and jailed for briefly imposing martial law. He has cast his U.S. visit as a mission to restore stability and tell the world that "democratic Korea is back."
But his agenda is complicated by a host of issues with Washington, including a recent massive U.S. immigration raid that detained hundreds of Korean workers, alongside the delicate trade talks.
Navigating a New Cold War
Beyond the economic friction, President Lee painted a grim picture of the global geopolitical landscape, describing an "escalatory spiral of rivalry" that threatens to place his country on the front lines of a new Cold War.
He noted an increasing confrontation between a "socialist camp" of China, Russia, and North Korea, and a "capitalist, democratic camp" that includes Seoul, Washington, and Tokyo. The recent summit in Beijing, where Chinese President Xi Jinping hosted the North Korean and Russian leaders, served as a powerful symbol of this alignment.
While Lee affirmed that he shares his predecessor's view that North Korea's military cooperation with Russia poses a significant threat, he cautioned against a simplistic, confrontational response. He argued that the issue must be addressed through "dialogue and coordination."
"This is a very dangerous situation for Korea, and we must find an exit ramp out of the escalating military tensions," Lee warned. "We must find a way for peaceful coexistence."
