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South Korea
Intelligence for Better Decision Making
Special Prosecutor’s Probe Intensifies Into Ex-President Yoon Seok-yeol’s Martial Law Declaration and Obstruction Allegations
June 30, 2025 | Governance & LawSouth Korea’s special prosecutors are conducting a comprehensive probe into former President Yoon Seok-yeol over his declaration of emergency martial law, alleged obstruction of arrest, and related foreign exchange offenses.
**Cho Eun-seok’s special prosecutors office is investigating Yoon on multiple charges stemming from his December 3, 2024 declaration of emergency martial law, his alleged obstruction of arrest in January 2025, and associated foreign exchange offenses.**
Investigators accuse him of ordering the Presidential Security Service to block the execution of a Corruption Investigation Office for High-ranking Officials arrest warrant, directing the deletion of data from secure military phones, and convening a Cabinet meeting to approve the martial law resolution. They also allege he engaged in foreign exchange transactions linked to these events and tried to thwart the National Assembly’s efforts to lift the emergency martial law.
**On June 28 and 29, 2025, Yoon appeared in person at the Seoul High Prosecutors Office, arriving at 10:14 a.m.**
Prosecutors and police questioned him until around 7 p.m., then resumed from 8 p.m. until just before midnight. Although his stay spanned approximately 15 hours, active interrogation lasted about five hours, with scheduled lunch and dinner breaks to maintain his health and concentration. His security office managed meal and other arrangements throughout the sessions.
**In the morning, Police Superintendent General Park Chang-hwan questioned Yoon for about an hour on alleged obstruction of arrest and related charges.**
After lunch, Yoon’s legal team objected to Park’s role, citing his prior oversight of the arrest warrant execution and complaints Yoon had filed against him. When prosecutors refused to replace the interrogator, Park-led questioning and the probe into arrest obstruction and phone deletion charges paused for three hours.
**At 4:45 p.m., Deputy Chief Prosecutors Kim Jeong-guk and Jo Jae-cheol resumed questioning on the Cabinet’s emergency martial law resolution, alleged foreign exchange offenses, and efforts to block legislative action.**
Yoon cooperated fully, consenting to an additional 50-minute session around 9 p.m., though investigators had not completed all lines of inquiry by midnight. While he declined to sign the morning interrogation record, prosecutors consider his statements in that session valuable reference material.
**Throughout the proceedings, the office listed Yoon as the accused in official transcripts while addressing him with honorifics.**
After reviewing the weekend’s records, prosecutors plan to summon him again to finish outstanding inquiries. They noted that the Special Prosecution Act imposes no limit on summonses and pledged to coordinate future attendance times with his legal team to avoid excessively late sessions. Prosecutors also warned that they may pursue legal action under the act’s rebellion provisions against defense attorneys they deem to have spread false information.
**This appearance marked Yoon’s first before an investigative body in nearly five months—since his January arrest by the CIO and following his December refusal to comply with three prior CIO summonses—and occurred 85 days after his impeachment.**
Political tensions ran high outside the prosecutors’ office, where about 500 protesters demanded his arrest, countered by his supporters, and authorities deployed some 5,000 police officers to maintain order. Prosecutors have scheduled his next interrogation for 9 a.m. the following Monday and indicated they will summon additional Cabinet members and officials involved in the martial law meetings as part of the ongoing probe.
### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**
| Domain | Causal Chain | Possible Outcome |
|---|---|---|
| Politics | (state-of-emergency activation checks ↓ → policy-uncertainty index deviation ↑ → investor political-risk premium ↑ → FDI project postponement count ↑) | Elevated political risk perceptions will cause foreign investors to defer FDI projects in South Korea until emergency-power safeguards improve. |
| Governance & Law | (judicial independence score ↓ → contract enforcement time (days) ↑ → investor-state arbitration filings ↑ → investor confidence premium (credit-default-swap spread) ↑) | Falling judicial independence will provoke more arbitration filings and widen the sovereign credit-default-swap spread as investors demand higher confidence premiums. |
| Governance & Law | (anti-money-laundering compliance tier ↓ → sovereign governance-risk spread ↑ → average cost of capital (WACC) ↑ → business fixed-investment growth deviation ↓) | Weakening AML compliance will push up the sovereign risk spread, raise WACC, and lead to a shortfall in business fixed-investment growth. |
| Social Cohesion | (policing accountability regime ↓ → police-community complaint resolution time ↑ → protest-to-dialogue conversion ratio ↓ → protest attendance surge ↑) | Declining policing accountability will slow complaint resolutions, reduce protest-to-dialogue conversions, and trigger a spike in protest turnout. |
| Governance & Law | (emergency-powers statute checks ↓ → executive-decree issuance frequency ↑ → legislative gridlock duration ↑ → policy-volatility index ↑) | Eroded emergency-power checks will fuel decree issuance and legislative deadlock, driving up policy-volatility and deterring long-term planning. |
| Governance & Law | (campaign-finance transparency framework ↓ → campaign-spending totals & donor concentration ↑ → disinformation-campaign volume ↑ → misinformation-belief rate ↑) | Weakened campaign-finance transparency will concentrate donor influence, expand disinformation campaigns, and heighten citizens’ belief in misinformation. |
| Politics | (civil-society freedom of association laws ↓ → civic-participation rate ↓ → public-trust index in national institutions ↓ → protest attendance surge ↑) | Restricting freedom of association will dampen civic participation, deepen public distrust, and spark a surge in protest attendance. |
### BOTTOM LINE
- The intensifying probe into Yoon’s emergency martial‐law declaration and efforts to block legislative oversight will raise doubts about the robustness of South Korea’s statutory checks on executive emergency powers, heightening policy uncertainty and prompting foreign investors to defer or cancel planned FDI projects until safeguards are bolstered.
- Allegations that the former president ordered obstruction of his arrest and deletion of secure data will erode confidence in judicial impartiality, prolong contract enforcement timelines, encourage a surge in investor–state arbitration filings, and drive up the sovereign credit‐default‐swap spread as risk premiums climb.
- Scrutiny of Yoon’s alleged foreign‐exchange offenses tied to his martial‐law maneuvering is likely to draw censure from international anti‐money‐laundering monitors, potentially lowering South Korea’s compliance rating, widening its governance‐risk spread, raising the weighted average cost of capital, and dragging down business fixed‐investment growth.
- Revelations that state security services were mobilized to thwart an arrest warrant and erase military phone records will deepen public mistrust in policing accountability, slow complaint resolutions, weaken channels for protest‐to‐dialogue conversion, and spark surges in large‐scale street demonstrations that tax law‐enforcement resources.
- The precedent of unrestrained use of emergency‐powers without strong legislative or judicial counterweights may encourage future administrations to issue more executive decrees, entrench executive–legislative gridlock, amplify policy volatility, and complicate long‐term strategic planning by both domestic actors and overseas stakeholders.
- Threatening defense attorneys with rebellion‐charge proceedings for allegedly spreading false information will chill legal advocacy, undermine campaign‐finance transparency, concentrate donor influence, fuel sophisticated disinformation campaigns, and increase the share of citizens who accept misleading narratives as fact.
- Heightened legal risks for NGOs and civic groups stemming from the application of rebellion provisions will curtail freedom of association, depress formal channels of civic participation, further erode public trust in national institutions, and channel societal grievances into more frequent and larger public protests, deepening societal polarization.
South Korea Accelerates Drive for AI Sovereignty Amid Rising Chinese Competition
June 26, 2025 | CompetitivenessKorea's national push for global AI leadership
South Korea is intensifying efforts to achieve sovereignty and leadership in artificial intelligence, responding to rapid developments in global AI ecosystems and domestic strategic imperatives.
**Alibaba Cloud’s open-source model Qwen has outpaced Meta’s LLaMA and China’s DeepSeek R1 in the global large language model ecosystem.**
Since its 2023 release, Qwen has seen over 40 million downloads and more than 90,000 derivative models. In the past month alone, Qwen3-8B recorded about 1.5 million downloads, compared with LLaMA-3.1-8B’s 880,000 and DeepSeek-R1’s 150,000, demonstrating stronger active use on a single-model basis.
**South Korean corporations, including public agencies and financial institutions, have embraced Qwen for its superior Korean language processing and on-premises deployment options.**
Organizations value its seamless integration, cost advantages, and ability to maintain data sovereignty while leveraging advanced AI capabilities.
**Industry observers worry that China’s high-efficiency, low-cost AI offerings could erect technological barriers for local firms and undercut domestic foundational model developers.**
They draw parallels to China’s manufacturing strategy, noting similar government support and ecosystem development efforts now fueling AI research and deployment.
**Experts urge a fundamental redesign of South Korea’s AI strategy to secure technological sovereignty.**
They recommend building an independent open-source foundational model and broadening focus beyond core technical performance to include licensing frameworks, community engagement, model tuning and optimization, and international market expansion.
Professor Heesuk Lim of Korea University argues that Qwen’s leading performance in Korean language tasks underscores the urgent need for a sovereign South Korean AI model that will bolster the country’s position in the global market and reduce reliance on foreign technologies.
**During a June 24, 2025 visit to the personnel hearing preparation office in Seoul, Science and ICT Minister nominee Background Hoon expressed confidence in South Korea’s AI capabilities and outlined plans to deploy AI across all fields, foster widespread public utilization, and fulfill President Lee Jae-myung’s pledge to rank among the world’s top three AI powers.**
Drawing on his AI research and telecommunications experience, he emphasized close collaboration with experts, active cross-sector communication, and bold government investments in computing infrastructure and data resources, citing assessments such as Stanford University’s AI Index Report. He also highlighted the importance of integrating AI with basic science and industry, linking fundamental research to real-world applications, and incorporating private sector feedback to drive innovation.
**Bae Kyung-hoon, also nominated for Minister of Science and ICT and former director of LG AI Research Institute, reaffirmed the goal of elevating South Korea to a top-three global AI power.**
He pointed to LG’s Exaone 3.5 model’s inclusion in Stanford’s 2025 AI Index Report and expressed confidence in additional Korean AI models emerging this year. Acknowledging the need for substantially increased funding, Bae pledged to serve as a field-oriented minister who engages directly with experts and the public, and indicated that any restructuring of the ministry—including separating broadcasting and telecommunications functions—would follow a thorough understanding of his responsibilities.
### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**
| Domain | Causal Chain | Possible Outcome |
|---|---|---|
| Technology & Innovation | (Qwen’s rapid global leadership → cloud-computing cost benchmark ↓ → AI inference cost index shift ↓ → AI adoption GDP uplift ↑) | Declining AI inference costs drive widespread AI integration among Korean firms, accelerating productivity gains and lifting GDP growth. |
| Technology & Innovation | (Domestic embrace of foreign AI undermines local developers → university–industry tech-transfer framework quality ↓ → patent-to-product conversion rate ↓ → high-tech export volume surprise ↓) | Weakened tech-transfer and reduced patent commercialization lead to declining high-tech export volumes, causing downside surprises in export performance. |
| Technology & Innovation | (China’s state-backed AI ecosystem → cloud-service market concentration ↑ → domestic AI compute capacity (petaflop-days) ↓ → TFP three-year growth deviation ↓) | Heightened market concentration reduces domestic AI compute capacity, hindering large-scale AI workloads and slowing three-year TFP growth. |
| Technology & Innovation | (Call for a sovereign Korean AI model → R&D tax-incentive generosity score ↑ → R&D tax credit utilisation rate ↑ → unicorn creation count ↑) | Enhanced R&D tax incentives spur deep-tech venture growth, elevating the number of Korean AI unicorns. |
| Competitiveness | (Domestic reliance on foreign AI models → innovation-ecosystem robustness ↓ → early-stage VC deal count ↓ → private fixed-investment growth deviation ↓) | Reduced startup funding precipitates a pullback in private fixed-investment growth as firms delay technology and infrastructure investments. |
| Competitiveness | (Lack of open-source IP regime maturity → open-source contribution index ↓ → startup scale-up conversion rate ↓ → global export-market share shift ↓) | Lower open-source contributions diminish startup scale-ups and weaken the global export-market share of Korean AI products. |
| Technology & Innovation | (Regulatory sandbox / agile-regulation policy expansion → regulatory-volatility index ↓ → patent-to-product conversion rate ↑ → TFP three-year growth deviation ↑) | Expanded regulatory sandboxes boost patent commercialization, driving TFP growth back to or above historical trends. |
| Demographics & Human Capital | (Influx of foreign AI tools → STEM postgraduate enrolment growth ↓ → skill-mismatch vacancy-unemployment ratio ↑ → labor productivity growth (non-farm) ↓) | A thinning talent pipeline exacerbates skill mismatches, impeding non-farm labor productivity growth. |
| Competitiveness | (China’s AI offerings threat → data-localisation compliance cost ↑ → average cost of capital (WACC) ↑ → business fixed-investment growth deviation ↓) | Higher data-localization costs raise WACC and lead firms to scale back AI infrastructure investment, reducing business fixed-investment growth. |
| Technology & Innovation | (High-skill immigration policy openness ↑ → skill-mismatch vacancy-unemployment ratio ↓ → labor productivity growth (non-farm) ↑ → AI adoption GDP uplift ↑) | Greater high-skill immigration narrows skill mismatches, boosts labor productivity, and amplifies AI-driven GDP gains. |
### BOTTOM LINE
- Alibaba Cloud’s Qwen model has shifted global benchmarks for AI efficiency and cost, driving down cloud-computing prices and inference costs, which could enable broader adoption of AI tools across Korean firms and accelerate productivity gains that contribute to GDP growth.
- The rapid adoption of Qwen by public agencies and financial institutions highlights vulnerabilities in Korea’s domestic AI ecosystem, as reliance on foreign foundational models may weaken university–industry collaborations, reduce patent-to-product conversions, and lead to lower-than-expected high-tech export volumes.
- China’s state-supported, low-cost AI offerings threaten to concentrate the regional cloud-service market in the hands of a few providers, potentially diminishing domestic AI compute capacity, constraining large-scale research and development projects, and slowing three-year total factor productivity growth.
- Expert calls for a sovereign Korean open-source foundational model have prompted proposals to enhance R&D tax incentives and streamline licensing frameworks, measures that could boost R&D credit utilization and fuel the emergence of new AI unicorns in the local startup ecosystem.
- Heavy dependence on imported AI platforms risks undermining the robustness of Korea’s innovation ecosystem, as venture capitalists may pull back from early-stage deals, leading to weaker private fixed-investment growth and delayed expansion of AI infrastructure.
- Gaps in the open-source intellectual-property regime discourage contributions to shared codebases, which could lower Korea’s open-source contribution index, hinder startup scale-ups, and reduce the country’s share of the global AI export market.
- The expansion of regulatory sandboxes and agile-regulation frameworks is expected to reduce compliance uncertainty, accelerate the pathway from patent registration to commercial product, and restore total factor productivity growth to or above historical trends.
- Widespread use of advanced foreign AI tools could dampen the perceived need for advanced technical education, slowing growth in STEM postgraduate enrollments, exacerbating skill mismatches, and impeding non-farm labor productivity improvements.
- Stricter data-localization and security requirements intended to safeguard technological sovereignty may raise compliance costs, increase the average cost of capital for AI projects, and prompt firms to scale back capital-intensive investments in AI infrastructure.
- Relaxed high-skill immigration policies aimed at attracting AI engineers and researchers could help close skill gaps, reduce vacancy-unemployment mismatches, boost labor productivity in non-farm sectors, and further amplify the GDP gains associated with AI adoption.
Monitored Intelligence for South Korea - June 30, 2025
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157
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3
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5
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0
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0
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0
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0
Think
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0
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0
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0
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0
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0
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'절반의 성공' CBDC 한강 프로젝트…예금토큰 지갑 8만개 개설
Half Success in the CBDC Han River Project… 80,000 Deposit Token Wallets Opened
ET News | Local Language | News | June 30, 2025 | UndeterminedFinancial System Problems
The Bank of Korea's Central Bank Digital Currency (CBDC) experiment, known as the Han River Project, which began in April 2025, is concluding on June 30. The project achieved about 80,000 deposit token wallets, reaching 80% of its 100,000 participant target. However, it has been labeled a half success due to lower-than-expected user participation and utilization, primarily attributed to limited incentives for users to actively engage in deposit token payments.
Digital vouchers using smart contracts had minimal impact, with fewer than 1,000 participants, partly due to insufficient promotion. Ahead of a proposed second test, differences emerged between the Bank of Korea and the banking sector. Banks expressed concerns over the need for internal procedures and IT development to support follow-up tests, as well as the high costs—approximately 30 billion won—borne by banks, including node operation costs using Naver Cloud infrastructure.
The Bank of Korea plans to release a detailed report on the Han River project within a month but has not finalized the direction or plans for the second test. Officials indicated that they are carefully considering how the technical experiment should proceed amid rapidly changing market conditions. Industry opinions suggest that in South Korea’s well-established simple payment infrastructure, CBDCs need to find roles beyond retail payment efficiency and that collaboration between CBDCs and private stablecoins could offer complementary benefits.
초강수 대출규제…한도 얼마나 줄까[수도권 빚투 봉쇄②]
Ultra-Strict Loan Regulations… How Much Will the Limits Be Reduced? [Capital Region Debt Investment Crackdown ②]
Newsis | Local Language | News | June 30, 2025 | Regulation
Starting June 28, 2025, the South Korean government will enforce a cap of 600 million won on mortgage loans for housing in the metropolitan area and regulated regions. The loan-to-value ratio (LTV) for first-time homebuyers will be reduced from 80% to 70%, and borrowers must move into the purchased property within six months. Additional mortgage loans for home purchases in these areas are prohibited, and the total household loan volume control target will be cut by 50%.
These tightened regulations significantly reduce borrowing capacity, especially for high-priced homes. For example, a borrower with an annual income of 200 million won purchasing a 2 billion won home could previously borrow around 1.396 billion won; now, they are limited to 600 million won, a 57% decrease. Borrowers with lower incomes or purchasing less expensive homes see smaller or no changes in their loan limits, and first-time buyers benefiting from the special 70% LTV case remain unaffected.
The intent behind these measures is to curb the trend of acquiring high-priced properties by limiting the use of extensive personal financial resources. The Financial Services Commission has indicated readiness to implement further restrictions, including tightening LTV ratios further, expanding debt service ratio (DSR) rules to additional loan types, and adjusting mortgage loan risk weights if required.
오폐수가 전기로…두산, 바이오가스 기반 연료전지 개발 박차
Wastewater into electricity… Doosan accelerates development of biogas-based fuel cells
ZD Net Korea | Local Language | News | June 30, 2025 | UndeterminedTech Development/Adoption
Doosan Fuel Cell is advancing the eco-friendly energy transition by developing a hydrogen fuel cell powered by biogas. In collaboration with Korea Western Power, Doosan has created a hydrogen fuel cell model that uses biogas, a methane-rich gas produced from the decomposition of organic waste like wastewater, food waste, and livestock manure. This project, ongoing since 2021, allows biogas to be used directly as fuel or mixed with natural gas and other fuels to generate power.
The enactment of the Biogas Act in 2023 and the Ministry of Environment’s plan to increase biogas production from 360 million N in 2020 to 500 million N by 2026 is expected to boost demand for this new fuel cell technology. Doosan’s main product line includes phosphoric acid fuel cells (PAFC), which support multiple fuels, and the company is preparing to begin mass production of solid oxide fuel cells (SOFC) in the second half of 2025.
Doosan Fuel Cell aims to enhance fuel reforming technologies to enable hydrogen fuel cell power generation from any hydrogen-extractable energy source. By offering customized hydrogen fuel cell products compatible with various fuels, the company anticipates expanding its business opportunities significantly in the coming years.
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