"What Will Our Country Live On Now?"... The Korean Economy Driven Not by Jackpot but by a Sense of Crisis [Reporter’s Notebook]

Korean Economic Leadership Focused on East Sea Oil
R&D Policy Lacking Sense of Crisis

Yeongilman Sea, Pohang, Gyeongbuk [Image source=Yonhap News]

"What will our country live on now?"

Over the past week, conversations with industry insiders always ended this way. News broke that oil and gas worth over 2,000 trillion won at current market value had been discovered in the East Sea, yet people worried about how to make a living. Many dreamed of the 'oil-producing country dream' that no one had even imagined before during the past seven days. However, the industry remained calm. This was because they knew well that the oil drilling industry is capital- and technology-intensive and that success requires a long-term, meticulous approach in the carbon-neutral era. Ironically, concerns about the next source of income arose from the 'East Sea oil.'

The most excited was our government. President Yoon Suk-yeol held his first national briefing since taking office and mentioned the potential success of the East Sea oil and gas field. Issues in politics, economy, society, and security that the president had not chosen to brief on flashed through minds: economic issues like the U.S. Inflation Reduction Act (IRA) and CHIPS Act, major disasters, medical and political conflicts, and various allegations. On the 3rd, President Yoon entered the briefing room with Minister Ahn Duk-geun of the Ministry of Trade, Industry and Energy and raised expectations by mentioning the estimated maximum reserves of 14 billion barrels in the East Sea oil and gas field. The stock market was the first to react. Just hearing the word 'oil' caused the stock prices of related companies to soar. Someone said, "Aren't we now living in a country where we don't have to worry about pensions or apartments?"

The discovery of oil and natural gas would be the hope of the entire nation. However, East Sea oil has not moved beyond the realm of possibility. Dr. Vitor Abreu, owner of 'Actgeo,' which was responsible for the in-depth physical exploration analysis, hurriedly visited Korea and held a press conference on the 7th. He said, "This project is promising, but the fact that no cumulative hydrocarbons have yet been discovered is a 'risk,' and only drilling can reduce uncertainty."

Putting aside the possibility and jackpot potential of East Sea oil, it was a week to worry about our economic leadership. Is oil drilling currently the top priority for our economy? We still do not know the potential reserves, and even if discovered, economic feasibility must be considered. Our economy currently faces complex and multifaceted crises both domestically and internationally, including geopolitical risks, bloc formation, climate crisis, and high interest rates.

The driving force behind Korea's economic growth was neither oil nor a jackpot won by chance. The strength of our economy came from a sense of crisis and tension. Perhaps because this country was born without a single drop of oil or a handful of lithium. We have always worked with a yearning and urgency for the next source of income. The absence of the next source of income was synonymous with the possibility of starving again. Starting from wig factories, Korea's economy has replaced its main industries with those demanded by the times: textiles, petrochemicals, automobiles, shipbuilding, steel, semiconductors, batteries, and more. Without raw materials, we always pondered production efficiency and better processes.

Now, the Korean economy must worry not about resource poverty but leadership poverty. The leadership that thinks about and executes the next source of income has disappeared. Neither the government nor large corporations talk about research and development (R&D) projects looking 10 or 20 years ahead anymore. While emphasizing the importance of the R&D budget, this year's R&D budget was drastically cut. The poverty of our leadership relying on a single shot is evidence of the Korean economic crisis.