South Korea's Post-Crisis Model Offers Lessons for Iran to Enhance Economic Resilience

Iran can draw valuable lessons from South Korea's strategic response to the crisis in West Asia and apply them to its own economic development system. South Korea's journey from crisis management to shaping a future economic architecture serves as a compelling example for countries facing geopolitical uncertainty, supply chain vulnerabilities, and technological changes.

Vulnerability to Energy Risks

As Asia's fourth largest economy, South Korea produces virtually no oil domestically, importing over 93 percent of its total energy consumption. This figure has consistently exceeded 90 percent since 1995. The country's dependence on Middle Eastern crude oil has increased: from approximately 61 percent in 2021 to 73.7 percent in 2024. This trend accelerated after Western sanctions were imposed on Russian oil. Furthermore, reliance on Middle Eastern oil, a critical raw material for the petrochemical industry, is even higher.

The Strait of Hormuz is a transit route for about 25 percent of global seaborne oil shipments and nearly 20 percent of global liquefied natural gas (LNG) shipments. According to an analysis by the U.S. Energy Information Administration (EIA), about 84 percent of the oil and 83 percent of the LNG passing through this vital choke point ultimately reach Asian markets, including China, India, Japan, and South Korea. Therefore, the recent crisis in West Asia seriously impacted energy markets, the stock exchange, and the South Korean won against the dollar, once again exposing the structural vulnerability of this export-oriented economy.

Measures Taken in Response to the Energy Crisis

In response to the crisis, the South Korean government proactively secured and stockpiled a total of 273 million barrels of crude oil from West Asian producers and alternative supply routes (including Kazakhstan) until the end of the current calendar year. The oil sector rapidly diversified its supply portfolio: leading new sources of oil imports became the United States (24.7 percent), India (23.2 percent), Algeria (14.5 percent), the United Arab Emirates (10.2 percent), and Greece (4.5 percent).

Paradigm Shift in Policy

The most significant transformation during this period is a fundamental shift in the criteria for evaluating the success of South Korea's economic policy. While previous key indicators were reducing production costs and increasing productivity, the focus today is on the concept of 'economic resilience.' This concept implies ensuring the continuity of production, exports, and employment even amidst war, sanctions, pandemics, or global transport disruptions, with economic security equated to defense security.

This shift in approach manifested in several practical decisions: the creation of a new ministerial council for comprehensive management of the 'three long-term crises' (inflation, exchange rates, and interest rates); the introduction of 'tax credits for domestic production' for strategic goods; and, as an unprecedented measure, the implementation of a retail price cap on gasoline and diesel fuel for the first time since the 1997 Asian Financial Crisis. International media, including The New York Times, covered this policy cautiously, as its financial burden ultimately falls on oil refining companies, and some analysts consider it a short-term and costly solution.

Macroeconomic Management and Monetary Policy

This approach was institutionalized at the macroeconomic level. In the 'Economic Strategy for the Second Half of 2026' (announced on July 5), the government established a 'joint market monitoring meeting' to simultaneously track macroeconomic, financial-currency, and housing markets, as well as a formal ministerial council for 'macrofinancial stability,' comprising the Ministry of Economy and Finance, the Bank of Korea, the Financial Services Commission, and the Financial Supervisory Service. The goal was to keep consumer inflation below 3 percent in the second half of the year through unprecedented subsidies on agricultural and livestock products (July-August, with a budget injection of 1 trillion won), stabilizing electricity and gas tariffs, and increasing winter energy subsidies for households. The Bank of Korea maintained the base interest rate at 2.5 percent. Market analysts view the won-to-dollar exchange rate, which reached a range of 1,500 won per dollar at the peak of the crisis, more as a 'temporary crisis premium' driven by US interest rates, capital outflow, and uncertainty in West Asia, rather than a new long-term balance; it is projected to return to the 1,400 range within one to three years. In this context, the government began developing a roadmap for the 'internationalization of the won' and establishing a strategic investment account in the Korea Investment Corporation (KIC) to transform it into a more comprehensive national welfare fund.

Four-Stage Supply Chain Resilience Strategy

When developing the 'Economic Strategy for the Second Half of 2026,' the South Korean government presented a formal four-stage system for managing strategic goods. Unlike the previous uniform approach, this system assigns different policies to each product category based on its specific vulnerability profile:

Stage One: Domestic Production

Goods that can be produced domestically must become independent of imports through tax credits for domestic production, production subsidies, and investment support.

Stage Two: Expansion of Strategic Reserves

Unlike before, when the focus was solely on crude oil, the list of strategic reserves now includes oil and urea (fertilizer/automotive fuel). Starting in August 2026, a new reserve accumulation model was introduced on a pilot basis, where the government directly stores and supplies contracts. A specialized strategic mineral base is currently under construction in the Samneung industrial zone.

Stage Three: Diversification and Foreign Investment

For goods that are unsuitable for either domestic production or cost-effective storage, the government, utilizing national welfare funds (including the recently established strategic investment account in KIC), invests in foreign mines, processing, and smelting facilities, and secures priority supply rights.

Stage Four: Targeted Financial Support

Through the Supply Chain Stabilization Fund, the limit for low-interest loans for goods dependent on more than 80 percent of one country was increased from the previous 90 percent to 100 percent (full amount).

In the critical minerals sector, the government identified 10 out of 33 nationally strategic minerals for Level 1 management and set a goal to increase the pace of 're-supply' (processing) of these minerals from the current approximately 2 percent to 20 percent by 2030.

Energy Cooperation with the Persian Gulf

One of the most important developments following the Hormuz crisis that receives less attention is the deepening of South Korea's energy cooperation with Persian Gulf countries. Saudi Arabia agreed to store a significant volume of its crude oil in strategic South Korean storage facilities. Previously, a similar model was applied by the UAE's energy company ADNOC in partnership with the Korea National Oil Corporation, granting Korea priority supply rights in case of a global disruption. Kuwait also signed a two-year agreement to store 4 million barrels of oil in the port of Ulsan, South Korea.

As a result of this trend, the three major oil producers in the Persian Gulf—Saudi Arabia, the UAE, and Kuwait—have recognized South Korea as a key strategic hub for storage and supply guarantees in East Asia. This sends a clear signal to Iranian economic players: while regional competitors are concluding long-term infrastructure and warehousing agreements with South Korea, similar potential for rethinking energy and petrochemical relations between Iran and Korea, within existing frameworks, warrants study and pursuit.

Semiconductor Industry Megaprojects

At the 'National Report on Korea's Three Megaprojects' meeting on June 29, 2026, in the presence of the President and senior executives from Samsung and SK, the South Korean government presented the '3S+1F' strategy (Speed, Fortress, Leadership, Full Support) for the semiconductor industry. According to this strategy, the country's memory manufacturing capacity will double over the next five years.

The 3S+1F Strategy

The 3S+1F strategy, presented by the South Korean government in 2026 to strengthen the semiconductor industry, is a response to increased competition from the US, China, and Taiwan, as well as concerns over global supply chains. This strategy has four main pillars, each reinforcing a dimension of Korea's competitive advantage.

The first pillar, 'Speed,' relates to accelerating the completion of existing production centers, especially in Yongin and Pyeongtaek. The Korean government believes that in the semiconductor industry, time is more important than capital. Accordingly, it focused its planning on four areas: reducing the time required to obtain factory construction permits; accelerating the connection of electricity, ultra-pure water, and gas; streamlining environmental review processes; and rapidly approving research budgets. Simply put, if building a factory used to take three years, the goal is to minimize that period as much as possible.

The 'Fortress' concept involves expanding semiconductor clusters across the country (geographical and industrial dimensions). The idea is that Korea's semiconductor industry should no longer depend solely on the Seoul metropolitan area (Yongin, Pyeongtaek, Incheon) but should create a national network of specialized centers. The plan includes: creating the second-largest chip production center in the southwest with investments of about 800 trillion won and four new factories; investing 81 trillion won in Chungcheong to transform the region into a center for advanced packaging and HBM; and developing clusters of materials, components, and equipment, as well as technologies such as power semiconductors, in the southeast and Taegeon region.

The dimension of technological leadership, termed 'Leadership,' focuses on ensuring that Korea leads in future technologies such as next-generation memory, AI chips, Edge AI, defense semiconductors, and new technologies. The government allocated over 30 trillion won for research and development and commercialization over a 15-year period. Areas include multi-billion won investments in R&D, development of next-generation DRAM and NAND, sub-2 nm technologies, AI-focused HBM memory, and three-dimensional chip packaging. The goal of leadership in new technologies is to keep companies like Samsung and SK hynix several generations ahead of their competitors.