South Korean President Lee raises concerns about U.S. investment demand

South Korean President Lee Jae-myung says his country could face a financial crisis if it accepts the Trump administration’s investment demands without certain safeguards.

Speaking to Reuters ahead of the United Nations meetings in New York, Mr. Lee said he still wants a U.S.-South Korea trade deal once the conditions are met.

In particular, Mr. Lee said South Korea needs a currency swap arrangement to orchestrate the massive U.S. investments President Trump wants.

“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,” he said.

Big corporate debts, asset devaluation and other factors weakened the South Korean economy and depleted its foreign exchange reserves in the late 1990s. The situation forced the country to accept a rescue package from the International Monetary Fund.

Mr. Lee, a liberal, took office in June after Yoon Suk Yeol, a conservative, was removed from office for briefly imposing martial law.

Seoul is trying to finalize the trade deal-in-principle that it struck with the White House in late July. Under the terms, the U.S. would impose a 15% tariff on South Korean goods, instead of a higher levy, and South Korea would invest $350 billion in U.S. projects. 

Seoul would also purchase $100 billion in liquefied natural gas or other energy products. 

The deal followed a template set by Japan, which called for Tokyo to invest $550 billion in U.S. projects at Mr. Trump’s discretion.

The South Korean leader tried to distinguish between his country and Japan.

Mr. Lee said Japan has twice its $410 billion in foreign exchange reserves, enjoys an international currency with the yen and maintains a currency-swap line with the U.S.

Beyond currency concerns, Mr. Lee said South Korea-funded projects should be commercially viable.

“Reaching detailed agreements that guarantee commercial reasonableness is now the central task, yet it also remains the biggest obstacle,” Mr. Lee told the wire service.

Also, Mr. Lee said a recent U.S. immigration raid of a Hyundai Motor battery plant in Georgia caused dismay back home, given that more than 300 South Korean workers were arrested, but he does not think it will harm the bilateral relationship.

“I do not believe this was intentional, and the U.S. has apologized for this incident, and we have agreed to seek reasonable measures in this regard, and we are working on them,” he said.

The Washington Times reached out to the White House for comment on Mr. Lee’s concerns.

Mr. Lee does not plan to meet with Mr. Trump during the U.N. General Assembly in New York, though he would like to bring trade matters to a close instead of letting them extend into the new year.

“We should end this unstable situation as soon as possible,” he said.