Yoon's martial law declaration triggers 'uncertainty risk'

The national chaos that began with President Yoon Suk Yeol’s declaration of martial law last Tuesday has now entered its second week, but the ruling People Power Party and government have failed to regain control of the political situation. As a result, the "uncertainty risk" continues to spread rapidly, escalating into a total crisis in the economy, diplomacy, and security sectors.

Financial markets were rocked on Monday. That day, the KOSPI closed at 2,360.58, down 2.78% from the previous trading day, while the KOSDAQ plummeted 5.19% to 627.01. According to the Korea Exchange, individual investors, in particular, were engaged in "panic selling," with roughly 900 billion won worth of domestic stocks sold off. The won-dollar exchange rate also spiked, briefly surpassing 1,438 won during the session, and was at 1,437.0 won by 3:30 p.m., up 17.8 won from the same time on Friday.

With only 41 days remaining until the inauguration of U.S. President-elect Donald Trump on January 20 next year, there is growing concern in the diplomatic community about the aftermath of the "all-stop summit diplomacy." In addition to demands for renegotiation of the defense cost-sharing agreement, some have even suggested a direct deal between President-elect Trump and North Korean leader Kim Jong Un. However, the close summit diplomacy that the ROK-US alliance had hoped for in the early stages of a regime change now appears increasingly unlikely. Given Trump’s focus on personal relationships between world leaders, there are rising concerns within the South Korean government about how to move forward with a summit, which had previously been prioritized. "I understand that President-elect Trump’s side is waiting to see until the political situation, including President Yoon’s whereabouts, is settled and stabilized," a diplomatic source revealed.

On Monday, the Ministry of National Defense publicly stated that the legal command of the military currently belongs to the president, despite the previous day’s comments by People Power Party leader Han Dong-hoon, who insisted that President Yoon would not interfere in state affairs. Should North Korea provoke the South, the controversy surrounding the exercise of military command could further escalate, creating a significant security risk.


Hyung-Jun Hwang constant25@donga.com