It is not an easy choice for South Korea to decide about participating in two initiatives, one spearheaded by the US and the other by China. The US insists on South Korea joining its Terminal High Altitude Area Defense (THAAD) system, which is said to be a missile defence system to protect South Korea against any military adventurism by North Korea. However, the THAAD may allegedly be used to spy on China and Russia, and so the latter forbid South Korea’s participation in any such system. In another move, China has been quite active in the establishment of the Asian Infrastructure Investment Bank (AIIB), which has been seen as a serious challenge to the existing international and regional economic arrangements that are largely dominated by the West and Japan. China is being quite persuasive in getting South Korea on board by offering it a founding member status. However, the US is not happy with the AIIB initiative and would like South Korea to keep away from it.

The contest between the US and China for the Asia-Pacific has made it difficult for South Korea to choose between THAAD and AIIB purely on the basis of its self-defined national interests. South Korea, has been trying to emerge as a middle power in regional politics since 2009, and finds it regressive to go back to either/or choices between the US and China. Under the rubric of its middle power diplomacy and as part of its ‘New Asia initiative’, South Korea became active in providing Official Development Assistance (ODA) to some of the poorest countries in the world, participated more actively in the various international organisations, and more importantly, tried to inject new positive agendas in regional politics by supporting ‘green growth’ etc. The global presence of South Korean companies and the popularity of South Korean cultural products in neighbouring countries, known as as ‘Hallyu’, have provided further impetus to South Korea’s rising stature in the region. South Korea’s attempt to balance between the US and China also emanates from its desire to play a more autonomous and constructive role between them, and this is considered a sine qua non of its emergence as a middle power.

Pragmatic realities also demand that South Korea should avoid taking sides between the two countries in any disagreement between them. The US military presence in South Korea and its security commitment to Seoul has been an undeniable fact for decades. However, China is also emerging as an important partner for South Korea by being its number one trading partner, in addition to its key role in South Korea’s dealings with North Korea. South Korea would thus like to maintain good relations with both the US and China for these practical reasons as well.

However, the dilemma South Korea faces on the THAAD and AIIB front is a difficult one. The best option, which has been prescribed by many scholars and even policy-makers and politicians in South Korea, is that it should join both initiatives. By doing so, South Korea would not be seen as defying either the US or China, and will be a position acceptable to both. Already, the US has diluted its position on South Korea joining the AIIB from ‘being unacceptable’ one year ago to ‘South Korea could decide by its own’, and there are chances that China would also come to terms with South Korea joining the THAAD.

However, the AIIB with China and the THAAD with the US do not go well with South Korea’s behaviour as a middle power, which would suggest a relatively more autonomous space in its policy-making. The AIIB is an economic platform and network led by China with whom South Korea already has massive economic exchanges; joining the AIIB therefore would not bring any fundamental shift in its bilateral relations with China or the US. Already, many close friends of the US such as the UK have declared their participation in it, and it would not be a big issue if South Korea also decides to joins. However, THAAD is different. Many scholars disagree with the claim that it is aimed at North Korea - they claim that its real targets are China and Russia. The skeptics say that the THAAD would not be very effective in averting the North Korean threat as the geographical proximity between South and North Korea is very close. Moreover, it is also said that South Korea has been trying to develop its own indigenous Korean Anti-Missile Defense (KAMD) system. For all these reasons, at the beginning, South Korea said that it was not interested in the THAAD. Furthermore, joining the THAAD would strain South Korea’s relations with both China and Russia and thus would hamper South Korea’s middle power diplomacy.

So, a rational choice for middle power South Korea would be to join the AIIB but to refuse the THAAD. But the choice for South Korea as an American ally would be to join the THAAD and not the AIIB. South Korea announced its decision to join the AIIB on 26 March 2015 but is yet to make its position clear on the THAAD. It would interesting to see what choice South Korea makes, as it would determine South Korea’s approach to regional politics in the future as well as its own place in its emerging dynamics.