Mideast war and Korean economy

With the danger of war spreading in the Middle East, it is feared that the Korean economy will be impacted. Hence, the Korea Trade-Investment Promotion Agency (KOTRA) and related organizations and firms engaging in trade activities held an emergency meeting Monday to hammer out measures for coping with the situation. In particular, KOTRA has been providing a three-stage contingency plan with a view to minimizing the potential damage to Korean firms' export-import activities with its regional office as the center.

According to the KOTRA plan, the first stage is to grapple with the standoff and sporadic armed clashes between Israelis and Palestinians, the second-stage plan is concerned with the potential development in which Lebanon, Syria and other neighboring Arab states intervene into the conflict in support of Palestine, and the third stage is the case in which all Arabic nations, including Iraq, Egypt and Jordan, come to side with the Palestinians. KOTRA's analysis is that now is the interim stage between the first stage and the second stage. Noting that the Israeli-Palestine conflict is now spreading from the Gaza Strip and West Bank regions to Lebanon and Syria, the officials in charge of Africa and the Middle East assessed that unless a dramatic turnaround takes place, the current situation would be heading for the second stage.

In the first stage, there is little impact on trade with the Middle East nations and Korean projects now under way in the region. But in preparation for the second stage, KOTRA is studying measures to primarily ensure the safety of the Korean workers in the region. The agency also instructed its officials and the workers of firms in the region to send prompt reports to the home agency on up-to-date developments in the Middle East situation. If and when the situation is headed for the third stage, there is the possibility that all the Arab nations will unite against Israel and West, as witnessed in 1973, sparking a grave oil shock. The agency stressed that in this context, a contingency plan needs to be worked out to cope with even the worst scenario, in consideration of Korea's heavy dependence of its fuel needs on Mideast oil, as well as the persistent oil price hikes.