South Korea

38 North | English | AcademicThink | Jan. 23, 2026 | North Korea

The latest US National Security Strategy (NSS) marks a significant shift in Washington’s approach to the Korean Peninsula by excluding North Korean denuclearization as a central concern and redirecting deterrence responsibilities primarily onto allies, especially South Korea. This shift reflects a reprioritization in US strategy that reduces direct engagement and increases South Korea’s burden in managing North Korea, resulting in a more volatile and unpredictable security environment.

North Korea views this strategic retrenchment as an opportunity to strengthen its position by adopting a more confrontational stance toward South Korea, potentially codifying a hostile inter-Korean doctrine at its upcoming Ninth Party Congress. Its military provocations serve a dual purpose: challenging South Korea’s control over contested maritime and air defense zones in a calculated manner to avoid large-scale escalation, and provoking political divisions within South Korea related to responses and the credibility of US extended deterrence.

South Korea is responding to these provocations by significantly increasing its defense budget and investing in advanced military capabilities, signaling a shift toward greater self-reliance and reduced dependence on the US nuclear umbrella. Discussions on indigenous nuclear options and strategic assets have entered mainstream political debate, reflecting growing doubts about the reliability of US deterrence.

The absence of North Korea from the US NSS increases the risk of an accelerated arms race on the Peninsula, compounded by US global strategic actions that raise perceptions of unpredictability and willingness to use force. This dynamic incentivizes both Pyongyang and Seoul to engage in competitive military buildup and riskier postures, especially around sensitive zones like the Northern Limit Line and Korea Air Defense Identification Zone, with a heightened chance of destabilizing escalation.

Underlying this situation are flawed assumptions within US policy that ambiguity and burden-shifting will maintain stability. Without clear communication, senior-level coordination, and explicit crisis management policies—including well-defined red lines—burden-shifting encourages risk-taking by all parties. The evolving arms competition and alliance asymmetries on the Peninsula increase the likelihood of costly miscalculations and military adventurism unless strategic signaling and allied coordination improve significantly.

Joongang Ilbo | English | News | Jan. 23, 2026 | Geopolitical Conflict and Disputes

Unification Minister Chung Dong-young visited peace trail routes and designated education sites near the demilitarized zone (DMZ) between the two Koreas on January 21, 2026. The visit was escorted by the U.S.-led United Nations Command (UNC), which cited the tour as part of a designated DMZ education and orientation program. Fifteen sites have been designated for such programs to ensure safety and stability in the area.

During the visit, Minister Chung walked the established ROK Peace Trail routes located south of the DMZ's southern boundary, which extend from Ganghwa to Goseong near the inter-Korean border. The UNC, responsible for enforcing the armistice from the 1950-53 Korean War and overseeing DMZ activities, emphasized the importance of maintaining control and stability in the buffer zone between South and North Korea.

The article also references ongoing contention regarding control over DMZ access between South Korea and the U.S., with the UNC opposing South Korea's bill to take control of DMZ access, stressing the need to avoid politicizing the area.

Joongang Ilbo | English | News | Jan. 23, 2026 | Regulation

Korea’s financial regulators are considering permitting leveraged exchange-traded funds (ETFs) tied to individual stocks like Samsung Electronics and SK hynix to address capital outflows and reduce pressure on the won. This review is focused exclusively on single-stock leveraged ETFs and does not extend to increasing leverage limits on index-based ETFs beyond the current 2x restriction. Currently, regulations prevent single-stock leveraged ETFs by capping the weight of any single stock at 30 percent, meaning domestic launch of such products would be a first if approved.

The move follows concerns raised after 2x leveraged ETFs linked to Samsung Electronics and SK hynix were listed in Hong Kong last year, resulting in significant domestic capital outflows as Korean investors accessed these products overseas. Korean retail holdings of U.S. stocks have surged to $171.9 billion by January 2026, nearly quadrupling since 2022, with substantial investments in leveraged ETFs unavailable in Korea, including 3x leveraged Nasdaq-100 products and 2x leveraged single-stock ETFs like those tracking Tesla.

Critics warn that leveraged ETFs carry high risks due to negative compounding effects, where losses can exceed those of the underlying assets during volatility, posing a danger especially to retail investors who form a significant share of the Korean market. Experts caution that loosening these rules may increase speculation, short-term trading, and market volatility, potentially worsening the "Korea discount," or undervaluation of Korean stocks compared to global peers.

Some economists argue that regulatory intervention aimed at exchange-rate stability through such ETF policy changes provides only short-term relief. They suggest focusing on managing excessive daily volatility and promoting long-term investment incentives rather than facilitating leveraged ETF usage, which could amplify instability in the market.