25.1.17

Seoul: No Delays to THAAD Deployment

On Monday, the acting South Korean President Hwang Kyo-ahn stated there would be no delays to the deployment of the THAAD (Terminal High Altitude Area Defense) missile defense system by the United States intended to protect South Korea from missile attacks by North Korea. The decision had been reached between the U.S. and impeached President Park Geun-hye, who is currently under investigation for a corruption scandal. The latest concerns over a delay to THAAD’s deployment involved a possible conflict of interest: the Lotte group, a Korean conglomerate, owns the land where THAAD will be deployed, but also owns a large number of duty free shops that gain most of their revenue from Chinese travelers. China objects to THAAD and has already used indirect means to hinder its deployment. A Lotte official stated that it will abide by the original terms of the deal with the U.S. and South Korean governments.
The Cipher Take: The threat to Lotte’s revenue is not a small one. As much as two-thirds of revenue from these duty free stores comes from Chinese travelers, and Lotte also operates several department stores in China. Beijing has previously exerted leverage aimed at stopping THAAD by limiting the travel of Korean pop stars into China and holding up the import of South Korean cosmetic products—two of South Korea’s most lucrative exports. Despite being aimed at North Korea, Beijing objects to THAAD on the grounds that its sensory equipment could be used to surveil China. The acting South Korean president has stated he will not bend to China’s demands, but if the impeachment trial ends with Park removed from office, then a new president could overturn the decision, leaving South Korea and the 27,000 U.S. troops stationed there vulnerable to the growing North Korean nuclear threat.

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