Article Cont'd (Part 2)
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5. Early warship building – the 1970s to 1980s
The security environment in South Korea underwent rapid shifts during the 1970s for the following reasons: (1) increased North Korean threats from the maritime domain, (2) South Korea’s doubt in the U.S.’s commitment to the Korean Peninsula’s maritime security and (3) the continued government subsidies to the shipbuilding industries. Trade continuously increased from the 1970s to the 1980s, but it was not a primary factor in warship construction. In fact, the ROK Defence White Papers of 1967 and 1968, which reflected South Korea’s security environment, did not emphasise the need to protect SLOCs. The 1967 White Paper mentioned that the “protection of major sea routes” was one of the missions of the ROKN, but it did not necessarily imply the protection of SLOCs and did not provide a detailed plan for this
[34]. The 1968 Defence White Paper did not even include the protection of sea routes as one of the ROKN’s missions
[35]. This demonstrates that the idea of using the navy as a means to protect SLOCs did not exist in South Korea’s defence strategy from the late 1960s to the 1970s. This implies that increased trade, a key driving factor for the South Korean shipbuilding industry, did not contribute to warship construction during the 1970s and 1980s.
Instead of commercial reasons, security concerns were the driving force behind the development of South Korea’s shipbuilding capabilities during this time period. In particular, the increased North Korean threat in maritime areas has been a primary factor behind South Korea’s demand for improved naval capabilities. The DPRK increased its maritime military provocations in the late 1960s, building on its enhanced naval capabilities and influenced by the Vietnam War. As mentioned earlier, due to significant North Korean provocations along the land border, South Korea heavily invested in its ground forces. However, due to budget constraints, Seoul could not allocate the same level of resources to its naval forces. Moreover, because of the Vietnam War, the ROKN allocated more resources to amphibious and maritime transportation capabilities to support the ground forces deployed to Vietnam. In contrast, the DPRK increased its investments in assets capable of directly targeting South Korean surface assets, such as submarines and coastal artillery. Consequently, Pyongyang gained naval superiority in the late 1960s, resulting in several critical naval incidents
[36],
[37].
Along with North Korea’s enhanced naval capabilities, South Korea has started to doubt the U.S. commitment to the Korean Peninsula, particularly in the maritime domain. Especially, different interpretations of the Northern Limit Line (NLL) between South Korea and North Korea have been a key driving factor of this suspicion. The NLL is a maritime line drawn by U.S. General Mark Clark in 1953 after the armistice of the Korean War to limit the maritime operations of both South Korean and North Korean forces. However, there is no clear legal definition of this line, which means that interpretations vary depending on each party. For instance, South Korea regards it as a de facto maritime border between South and North Korea. Consequently, the crossing of this line has been seen as a violation of the armistice treaty by Seoul
[38]. Meanwhile, the U.S. does not consider the line a maritime border between South and North Korea. As a result, Washington classifies conflicts in the NLL as incidents in international waters and does not regard them as violations of the armistice treaty
[39]. Pyongyang was aware of this difference and, therefore, chose maritime provocations as a more convenient option to minimise U.S. involvement.
The two significant cases that showed the increased North Korean maritime threats and disparity between South Korean and the U.S. maritime security concerns during the late 1960s were (1) the sinking of ROKS
Dangpo in 1967, and (2) the capture of United States Ship (USS)
Pueblo in 1968. ROKS
Dangpo was a ROKN patrol craft that had seen service in the USN before being transferred to South Korea. The sinking of ROKS
Dangpo occurred in January 1967 when South Korean fishing boats crossed the NLL. ROKS
Dangpo pursued the fishing boats to prevent further movement. Unfortunately, without warning shots, North Korean coastal artillery struck ROKS
Dangpo, resulting in the deaths of 39 ROKN sailors in action
[40]. Following the sinking of ROKS
Dangpo, Admiral Kim Young-kwan, the Chief of Naval Operations of the ROKN, visited the U.S. 7th Fleet and Commander, Naval Forces Korea to discuss a response to the incident. However, the U.S. was opposed to retaliation due to the potential for escalation. Instead of retaliating against North Korea, the USN persuaded Admiral Kim to pursue diplomatic actions in coordination with the UNC on the Korean Peninsula. Nevertheless, the UNC criticised the South Korean side due to the NLL infiltration, highlighting a clear divergence in security concerns between the South Korean government and the U.S. in the maritime domain
[41].
The capture of the USS
Pueblo occurred in January 1968, a year after the sinking of ROKS
Dangpo. USS
Pueblo was a U.S. intelligence ship that operated near the Korean Peninsula for intelligence collection purposes, rather than combat. Unfortunately, USS
Pueblo was not fully equipped with weapon systems, and the North Korean Navy, with enhanced capabilities, easily captured it. Not only did North Korean Navy patrol boats contribute to the capture of USS
Pueblo, but MiG-21 fighter jets were also involved in this operation. This shows that there was a clear naval capabilities gap between Pyongyang and Seoul. What was even more shocking than the incident itself was the response of the U.S. government to it, which deeply unsettled South Korean leadership. Similar to the sinking of ROKS
Dangpo, South Korean leaders, including President Park, sought to retaliate against North Korea, but their request was rejected by the U.S. government
[42]. This was an especially critical time for the U.S. government due to the upcoming November 1968 election. The United States was already heavily involved in the Vietnam War, while the general U.S. public was against the use of military force in Asia
[43]. Ultimately, the U.S. pursued a diplomatic approach with North Korea to secure the return of the captured sailors of USS
Pueblo. This further heightened the concerns of South Korean leadership regarding U.S. commitment to the security of the Korean Peninsula.
The two events above eventually led South Korea to consider self-armament of naval assets and the Nixon Doctrine has become a driver of indigenous warship building option for South Korea. The Nixon Doctrine was President Richard Nixon’s foreign policy towards Asia, which was announced in July 1969. In it, President Nixon emphasised Asian countries taking responsibility for their own security, which heightened South Korea’s security concerns
[44]. After the announcement of this doctrine, the U.S. Military Assistance Program to South Korea transitioned to Foreign Military Sales. Consequently, U.S. military assets were no longer available at lower prices. The South Korean government had to consider the development of its own warship building
[45].
South Korea’s indigenous warship-building plan commenced in the early 1970s following the implementation of the ‘Patrol Boat Acquisition and Domestic Building Policy’. The ROKN itself was primarily responsible for this development plan. The primary focus of the South Korean government during this period in terms of warship development was on creating small-sized, multi-purpose gunboats. South Korea’s main goal at this time was to deter North Korean infiltrations across the NLL, particularly by Pyongyang’s rapid boats. As a result, large-sized warships, such as frigates and destroyers, were not the main focus of this development initiative
[46]. One of the first Korean-built ships delivered to the ROKN was the ROKS
Haksaeng. ROKS
Haksaeng was approximately 75 tonnes in size, classified as a patrol killer, and had a speed of 40 knots. This vessel was specifically designed to counter small-sized but fast North Korean gunboats, which were the primary naval assets initiating skirmishes along the NLL
[47]. While the design of the
Haksaeng class was managed by the ROKN, the construction of the ship was a separate matter, requiring the support of the shipbuilding industry. The Korea Shipbuilding Corporation, previously mentioned in the discussion of the 1960s commercial shipbuilding section, was chosen as the shipbuilder for the
Haksaeng class, as there were no other shipbuilders in South Korea capable of constructing steel ships, except for the Korea Shipbuilding Corporation. This serves as an example illustrating how South Korea’s commercial shipbuilding technology from the 1960s transitioned into warship-building capabilities during the 1970s.
While the government led the warship building efforts, it concurrently invested in expanding shipbuilding infrastructure. The South Korean government subsidised shipyards during this period, some of which are still in use today, including Okpo Shipyard and Ulsan Shipyard. During this time, the construction of Okpo Shipyard was proceeded by the Korea Shipbuilding Corporation and Ulsan Shipyard was built by Hyundai Heavy Industries, which were continuously subsidised by the government even after the 1960s. President Park’s interest in the defence industries is evident in a number of primary sources. According to the South Korean government’s 1973 New Year inspection tour report, the development of the defence industry was highlighted as one of the priorities of the Ministry of National Defense. More specifically, the document stated:
The development of the defence industry has now become a key priority for national security. I suspect that the U.S. military assistance programme will be halted once South Korea completes the 5-year military equipment development plan, with the exception of certain specialised equipment. This implies that U.S. military assistance will be completely suspended around 1980. We have only seven to eight years remaining. During this time, we must continue to advance our defence industry while developing technology and capabilities
[48].
This clearly shows that the suspicion towards U.S. security commitment to the Korean Peninsula played an important role of South Korea’s defence industry development during the 1970s. Furthermore, both defence industry and shipbuilding capability development were regarded as key agendas of the Park administration. According to the speech:
I will continue to expand our shipyards… By 1981, South Korea aims to be ranked among the top ten shipbuilders in the world… We will further advance the defence industry development plan to enable us to acquire significant assets and equipment domestically
[49].
President Park, motivated by suspicion of U.S. security commitment, implemented the
Yulgok project, which aimed to subsidise domestic defence industries. As a part of the project, Hyundai Heavy Industries received subsidies to build the first domestic South Korean destroyers between 1978 and 1980. Considering that the first South Korean warship delivered to the ROKN in 1972 was a small patrol boat, the rapid progress within six to eight years was quite remarkable.
Furthermore, a state-owned enterprise, the Korea Shipbuilding Corporation, began the process of privatisation during this period, and Okpo Shipyard was acquired by another chaebol enterprise, Daewoo, in 1978. During the privatisation of the shipyard, the government chose Daewoo over Hyundai Heavy Industries, which had already received government subsidies throughout the 1960s to 1970s, as Hyundai Heavy Industries did not wish to acquire an additional shipyard. As part of the deal, the government provided significant benefits to Daewoo, including extra subsidies and tax exemptions
[50]. This demonstrates that even the privatisation process of the shipbuilding industry was influenced by the government’s decision. In 2023, this company was acquired by the Hanwha Group and is now known as Hanwha Ocean, one of the major shipbuilders in South Korea. Overall, the development of the shipbuilding industry in South Korea during the 1970s was influenced by the increasing North Korean maritime threat, concerns about U.S. commitment to the Korean Peninsula, and ongoing government subsidies. This trend continued into the 1980s when the South Korean government was still under military dictatorship.
6. The end of the Cold War and sustained shipbuilding – the 1990s-2000s
The 1990s marked a significant shift in South Korea’s shipbuilding industry due to two key reasons. Firstly, the military dictatorship came to an end in 1988 following South Korea’s first democratic election. Secondly, the collapse of the Soviet Union in 1991 had a profound impact on the security environment of the Korean Peninsula. These two factors meant that the subsidies previously granted to chaebol companies under the military dictatorship were no longer available, and North Korea lost the security reassurance provided by the Soviet Union. In fact, the Shipbuilding Industry Promotion Law, which had justified the ROK government’s subsidies to chaebol shipbuilders, had already been abolished in 1986
[28]. Consequently, unconditional funds from the government were no longer available for the shipbuilding industry. Furthermore, South Korea had surpassed North Korea in both military and economic capabilities, which might have led to decreased interest in maintaining warship construction. In fact, many countries reduced their active investments in the shipbuilding industry due to the collapse of the Soviet Union. For example, major shipbuilders in Australia and Canada ceased operations in the 1990s due in part to the diminished maritime threat posed by Moscow
[51].
Nevertheless, the South Korean shipbuilding industry thrived during the 1990s without substantial government subsidies. This was possible because shipbuilding companies no longer relied on them, due to the strength of the commercial shipbuilding ecosystem that had grown up. As a result, South Korea’s shipbuilding industry continued to expand throughout the 1990s, and by 2000, the ROK had become the largest commercial shipbuilder in the world. In terms of export value, this accounted for 4.8 per cent of the country’s manufacturing exports, which amounted to around 8.2 billion USD as of 2000
[52]. This meant that South Korea’s shipbuilding industries could survive without warship demands from the government.
Meanwhile, North Korean military threats from the maritime sector continued to drive South Korea’s warship construction. Despite South Korea surpassing North Korea’s military capabilities as of 1976, Pyongyang continued military provocations
[5]. Due to gaps in conventional military capabilities, North Korean military provocations since the late 1970s were largely limited to asymmetric operations, such as infiltrations of special forces crossing the NLL. Furthermore, while the number of land-based skirmishes decreased, sea-based skirmishes actually increased during the 1990s and 2000s. Between the 1960s and 1980s, North Korea engaged in a total of 61 sea-based military provocations. However, during the 1990s, this number increased to 107 times, and by the 2000s, it had risen to 180 times
[33].
Three critical cases during this time period were (1) the North Korean Infiltration of Gangneung in 1996, (2) the First Battle of Yeonpyeong in 1999, and (3) the Second Battle of Yeonpyeong in 2002. The first case demonstrated North Korea’s submarine operation capabilities, while the second and third cases revealed the necessity of continuous development of surface warfare capabilities. In September 1996, North Korean special operations forces infiltrated the South Korean city of Gangneung, located on the east coast of the ROK, using a submarine. Their goal was to assassinate President Kim Young-sam, but the ROKN could not detect the North Korean submarine until it crossed the NLL and before the North Korean Special Forces had landed
[53]. Although the North Korean infiltrated forces were captured and killed, South Korea was only able to detect them because the North Korean submarine was wrecked due to adverse weather conditions. This incident clearly highlighted the ROKN’s limited anti-submarine warfare (ASW) capabilities, leading to further development of ASW capable warships.
The First and Second Battles of Yeonpyeong took place in 1999 and 2002. The Battles of Yeonpyeong held significant importance in South Korea’s threat perception as they marked the first direct naval skirmishes between the two Koreas since the 1970s, occurring near the NLL in the Yellow Sea. In the First Battle of Yeonpyeong, the ROKN successfully defeated the North Korean Navy without any casualties, but the ROKN lost six sailors during the Second Battle of Yeonpyeong
[54]. As a result of the direct naval clashes near the NLL, the ROKN saw an increased demand for better patrol boats, leading to the development of new patrol craft
[55].
Apart from these cases, there were other threats that prompted the ongoing development of advanced ROKN warships, including North Korea’s nuclear programme. North Korea’s nuclear development ultimately heightened the demand for anti-missile capabilities within the ROKN, which, in turn, led to the development of South Korea’s Aegis system-equipped destroyers. Continued maritime threats from North Korea contributed to South Korea’s demand for submarines as well.
All of these warships, including ASW-equipped destroyers and frigates, advanced patrol boats (now known as Patrol Killer Guided-Missile - PKG), Aegis system-equipped destroyers, and submarines were constructed by chaebol shipbuilders that grew during the government subsidies of the 1960s and 1970s. Three ASW-capable guided-missile frigates (FFGs), also known as the
Incheon-class FFGs, were designed and built by Hyundai Heavy Industries. Seven advanced PKGs, also known as the
Yoon Youngha-class PKGs, were designed and constructed by HJ Shipbuilding & Construction Co., Ltd., which originated from the Korea Shipbuilding Corporation. Aegis system-equipped guided-missile destroyers (DDGs) of the
Sejong the Great-class DDGs were designed and constructed by Hyundai Heavy Industries and Daewoo (now known as Hanwha Ocean). Finally, ROKN submarines built during the 1990s and 2000s were all constructed by Hyundai Heavy Industries and Daewoo as well. Notably, all of these are companies that build commercial ships together with warships.
7. Conclusion
What have we learnt from South Korea’s shipbuilding history from the 1960s to the 2000s? First of all, the conventional logic of sea power acquisition can also be applied to explain the South Korean case. During the 1960s, the increasing maritime commerce initially drove South Korea’s demand for shipbuilding capabilities, and commercial shipbuilding companies began their businesses during this time. Secondly, military threats play a crucial role in warship construction. Even though South Korea’s maritime trade increased during the 1960s and drove the ROK to develop its commercial ships, it did not automatically translate into warship building capabilities because the threat posed by North Korea was limited during the 1960s.
Nevertheless, the heightened maritime threat presented by the DPRK in the late 1960s completely transformed the landscape of South Korean warship construction in the 1970s-1980s. During this period, South Korea’s commercial shipbuilding expertise transitioned into warship building capabilities. Notably, chaebol companies that had received government subsidies during the 1960s became key players in warship construction during the 1970s-1980s. This demonstrates that government subsidies can play a pivotal role in the early-stage development of the shipbuilding industry.
Following the end of the Cold War, unlike many Western countries that discontinued their shipbuilding industries due to the collapse of the Soviet Union, South Korean shipbuilding industries persevered. This can be attributed to two factors: a robust ecosystem sustained by ongoing commercial shipbuilding and persistent North Korean threats. Throughout the 1990s-2000s, South Korean shipbuilding industries continued to thrive, driven by increased demand for commercial ships. On the warship front, ongoing North Korean provocations led to heightened demand for the development of advanced warships.
While commercial interests and threats have previously been discussed as driving forces in shipbuilding industries, the South Korean case provides unique insights into the importance of investing in both commercial shipbuilding and government subsidies in the early stages. These lessons can be applied to other developing and middle power countries. Notably, the significance of domestic shipbuilding industries is growing in the Indo-Pacific region due to heightened strategic competition in the maritime domain. Consequently, several developing and middle power states have expressed interest in developing indigenous shipbuilding capabilities, but the starting point can be ambiguous. By following the South Korean example, policymakers should consider subsidising companies for both commercial ships and warship construction. It will be important to carefully time the withdrawal of government subsidies to these shipbuilders, ensuring they can sustain the firm’s economy without government support.
However, this approach may not be efficient for developed economies like Australia and Canada, where labour costs are high. In such cases, a viable option for government subsidies could involve building high-value commercial ships alongside warships. For instance, even in countries with expensive labour costs like Italy and Germany, the construction of cruise ships is a notable high-value industry. Italy’s Fincantieri, for example, not only builds cruise ships but also warships, showcasing that commercial shipbuilding can be sustained in developed economies. Another example would be the development of green energy commercial ships. Given the rapid climate change, ships using renewable energy sources are gaining prominence as a future high-value project. While the initial subsidies may be substantial, the long-term benefits of investing in the shipbuilding industry, especially in highly competitive maritime security environments, can outweigh the costs.
Author Statement
The author declare that this manuscript is original, has not been published before and is not currently being considered for publication elsewhere.
The author confirm that the manuscript has been read and approved by myself and there are no other persons who satisfied the criteria for authorship but are not listed.
CRediT authorship contribution statement
Dongkeun Lee: Writing – review & editing, Writing – original draft, Resources, Project administration, Methodology, Formal analysis, Conceptualization, Investigation.
Declaration of Competing Interest
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Acknowledgements
The author would like to thank anonymous reviewers and Professor Douglas Guilfoyle for their insightful comments.
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