The United States and Iran have reached a de facto ceasefire agreement 106 days after the war began. U.S. President Donald Trump said on social media on Sunday, "The deal with Iran has now been finalized." The Iranian government also stated that "a permanent and immediate ceasefire has been declared on all fronts, including Lebanon." The two countries will sign a ceasefire memorandum of understanding (MOU) in Switzerland on Friday and begin 60 days of final negotiations. The MOU appears to include the reopening of the Strait of Hormuz, Iran's nuclear dismantlement and a phased lifting of economic sanctions, and the creation of a $300 billion reconstruction fund by the United States. This is welcome news in that it removes one source of uncertainty for the Korean economy.
However, the aftershocks of the Iran war are likely to prolong the "three highs" of a high exchange rate, high interest rates, and high inflation. Even if the Strait of Hormuz reopens, supply chains for crude oil production and transport are not expected to normalize until the first half of next year. Moreover, the two countries are at odds over the details of key agenda items, including the handling of Iran's nuclear materials and the release of frozen funds. Iran has also not given up on imposing Hormuz transit tolls, which would drive up energy prices. With the possibility of the final agreement collapsing difficult to rule out, some have even called it a "60-day truce measure."
The Hormuz blockade clearly exposed the "weak link" in the Korean economy. The disruption in the supply of naphtha, a basic raw material, was severe enough to force the shutdown of numerous petrochemical plants. As upheavals in the international security order shake global supply chains, such a crisis could recur at any time. Now is the time to redraw a comprehensive strategy encompassing security, energy, and industrial policy in preparation for the energy supply chain crisis and the era of artificial intelligence (AI). Short-term measures against high oil prices, such as fuel tax cuts and oil price ceilings, have clear limitations and only add to the fiscal burden.
The government must accelerate efforts to diversify energy and raw material supply chains with Global South countries in Africa, Southeast Asia, and Latin America, and to secure alternative logistics networks. In particular, raising energy self-sufficiency by expanding renewable energy and revitalizing nuclear power is an urgent task. It is also important to seize the opportunity to participate in Middle East reconstruction projects, which will unfold as a national-level competition going forward, by mobilizing all diplomatic capacity as a public-private "one team." With a strong possibility that the Trump administration, after wrapping up the ceasefire with Iran, will pressure Korea to remove non-tariff barriers and move toward direct dialogue with North Korea, countermeasures must be carefully refined.
