South Korea Takes Two-Track Approach: U.S. Investment and Hormuz Security

South Korean President Lee Jae-myung has ruled out sending troops or military assets to the Strait of Hormuz in any capacity that would draw Seoul into the ongoing conflict between the United States and Iran.

The announcement came the same day Lee said negotiations over South Korea’s $350 billion investment commitment to Washington had encountered new difficulties, highlighting the pressure Seoul faces in managing two major issues with its key ally.

“On the issue of troop deployment, I can say this: There will be no deployment that involves or intervenes in the war,” Lee said at a news conference at Cheong Wa Dae on Friday. “We have upheld that principle until now. That principle will remain unchanged going forward.”

South Korea’s Hormuz Calculus

The Strait of Hormuz, a narrow waterway between Iran and the Arabian Peninsula, has faced sustained disruption since the United States and Israel launched joint attacks on Iran on Feb. 28, 2026. South Korea depends on the strait for more than 60% of its crude oil imports, making the waterway’s security an important economic and energy concern for Seoul.

U.S. President Donald Trump has repeatedly pressed Seoul to contribute naval assets to efforts to secure the waterway. In early September, media reports described possible preparations involving P-8 maritime patrol aircraft, an explosive ordnance disposal team and a logistics support ship, prompting domestic opposition to any South Korean military deployment.

The presidential office rejected those reports, saying the claims were “different from the facts” and that discussions on practical contributions were continuing.

Lee didn’t entirely rule out a maritime presence. He said South Korea had a responsibility to protect Korean ships, oil routes and nationals, while considering an expanded role for the Cheonghae Unit, the Korean Navy’s anti-piracy force deployed in the Middle East.

The Cheonghae Unit has operated in the Gulf of Aden since 2009 as part of efforts to protect vessels from Somali piracy.

Lee acknowledged that the distinction between protective operations and involvement in the conflict could become difficult to maintain.

“People are concerned because the boundary could become unclear and the two could become mixed together,” he said.

The $350 Billion Investment Snag

The Hormuz announcement came alongside a separate disclosure that raised questions about the progress of the economic pillar of the U.S.-South Korea relationship.

Lee said a near-final agreement on the first project under South Korea’s $350 billion U.S. investment commitment had been returned to negotiations because Seoul found some of the terms difficult to accept.

“I was told we were close to an agreement, but from what I saw in the details, there were some parts that were difficult to agree with, so we are still discussing them,” Lee said.

The investment framework stems from an agreement reached at the Asia-Pacific Economic Cooperation summit in Gyeongju in October 2025. Under the arrangement, South Korea committed to $350 billion in U.S. investments, including $150 billion for shipbuilding and $200 billion for semiconductors, energy, artificial intelligence and other strategic industries. In return, Washington reduced tariffs on South Korean exports from 25% to 15%.

South Korea’s National Assembly formalized the arrangement in March 2026 by passing the Special Act on Investment in the United States with 226 votes in favor and eight against. The Korea-U.S. Strategic Investment Act entered into force June 18, 2026.

The current working-level talks include discussions over the size of investments for individual projects and mechanisms for allocating profits and losses.

“The issue of investment in the US is a very complex and difficult task,” Lee said, “We only invest in projects that are commercially reasonable. The law also requires us to assess how commercially reasonable they are.”

The requirement that investments meet a standard of “commercial reasonableness” has become a point of discussion as Seoul and Washington move from the broader investment framework to specific projects.

Industry Minister Signals Progress, With Caveats

Industry Minister Kim Jung-kwan said Sept. 14 that the two sides were “close to an agreement on many issues,” while noting that several matters remained unresolved.

A National Assembly briefing on the first investment project, which was expected to precede a formal announcement by Washington, was postponed as negotiations continued.

Seoul has capped annual outflows from the strategic investment fund at $20 billion as officials seek to limit pressure on the won. Finance officials have previously warned that large currency outflows could put additional pressure on the South Korean currency.

Lee said Seoul would maintain its position in the negotiations.

“National interests are extremely important. I do not think we should be swayed by any relationship, pressure or coercion,” he added, “We are engaged in intense discussions and negotiations to structure the projects in a way that does not undermine the Republic of Korea’s national interests and benefits both Korea and the United States.”