Amidst ongoing discussions to bolster economic ties, South Korea and the United States are navigating significant challenges in finalizing a substantial investment agreement. The proposed collaboration, potentially worth $200 billion, focuses heavily on nuclear projects, yet discord over technical designs and financial commitments is hindering progress.
A central point of contention lies in the construction of eight nuclear reactors in the U.S., with a split between Westinghouse’s AP1000 reactor designs and South Korea’s APR1400 technology. While South Korea is prepared to allocate approximately $120 billion to nuclear-related initiatives, resistance from U.S. officials and Westinghouse regarding the inclusion of the APR1400 has complicated negotiations. Additionally, South Korea’s pursuit of a 15% to 20% stake in Westinghouse, aiming for voting rights and a board position, contrasts with Westinghouse’s preference to limit Seoul’s ownership to less than 10%.
Beyond nuclear energy, South Korea is eyeing involvement in a U.S. project for processing spent nuclear fuel, as well as a prospective liquefied natural gas project in Alaska. However, uncertainties surrounding construction costs and potential long-term returns persist as significant hurdles.
Funding schedules are another area of dispute, with the U.S. reportedly seeking over $9 billion from South Korea by year’s end. In contrast, South Korea had initially planned to begin with smaller investments in 2026, scaling up in 2027. This discrepancy adds to the complexity of reaching a consensus.
The intricacies of calculating investment returns also pose challenges. South Korea advocates for successful project profits to compensate for losses in other ventures, opposing the U.S. preference for assessing returns on a project-by-project basis. Under the proposed framework, the U.S. would receive 90% of net profits after recovering principal and interest, a point of concern for South Korea, which fears bearing losses from unprofitable projects.
Despite these unresolved issues, both nations remain committed to negotiating the details of the investment package. South Korea’s Industry Ministry emphasizes that the finalization of projects, funding structure, and investment arrangements is still under discussion, highlighting the ongoing efforts to align both countries’ economic and energy strategies.