South Korea’s Joint Chiefs of Staff confirmed this week an early end to the annual Ulchi Freedom Shield exercise, six days ahead of schedule, after President Trump ordered the Pentagon to scale the joint drills back by roughly half.
Seoul’s compliance followed the president’s public complaint over South Korea’s refusal to join his war on Iran, despite the presence of 39,000 American troops there.
As Seoul accepted the reduction, the president also pressed aides toward a fall meeting with Kim Jong-un, possibly during November’s Asia-Pacific Economic Cooperation summit in Shenzhen.
Nothing here looks accidental. Nearly six months after Iran’s closure of the Strait of Hormuz convulsed oil markets, the war Trump launched to halt Tehran’s nuclear programme has begun sorting East Asia into winners and losers.
The split owes little to any country’s virtue. It follows instead the accident of dependency. Those bound to Washington’s goodwill or the dollar’s stability absorb the price. Those without such bonds gain room to manoeuvre.
Seoul Watches Its Old Alliance Thin
Seventy years of partnership with Washington did not spare South Korea from an abrupt halving of joint exercises. The president ordered the cut because he judged Seoul insufficiently helpful over Iran.
The reduction doubles as the opening gesture in his renewed courtship of Kim Jong-un, whom aides are reportedly pressing to meet as early as the autumn.
The president describes the outreach as personal, built on what he calls a “very good relationship” with the North Korean leader, and treats Seoul’s discomfort as beside the point.
South Korean officials support engagement with Pyongyang in principle, though they worry a shallow deal would damage Washington’s standing with allies.
Seoul’s position, once anchored in a treaty, now rests on presidential temperament, a foundation liable to move without notice.
Tokyo Pays for the War in West Asia
Japan felt through currency as much as through its army. The yen fell past ¥163 to the dollar in July, its weakest level since 1986, as the Strait of Hormuz closure lifted energy import bills for a country that buys most of its oil from the Gulf.
Washington and Tokyo intervened jointly in early August, their first coordinated action of this kind since the aftermath of the 2011 earthquake, and the currency recovered only part of its loss.
Tokyo’s answer has spread well past monetary policy. Prime Minister Sanae Takaichi lifted decades of restriction on lethal arms exports in April and approved a record defence budget, telling the public “no single country can now protect its own peace and security alone.”
Thousands gathered outside the Diet the week before to defend the pacifist constitution her cabinet is unwinding. Their protest and her policy describe one country deciding, under financial and diplomatic pressure it did not choose, how much of its post-war settlement it can still afford.
Beijing Turns Restraint Into Leverage
China’s position looks different because its exposure to Hormuz proved manageable, not existential. Between February and June, Beijing cut crude imports by 5.5 million barrels a day, enough to have lowered the global benchmark price by over $30. Its economy kept growing regardless.
The United Arab Emirates’ withdrawal from OPEC in May, alongside constrained Gulf production, left the cartel weaker just as China’s demand proved elastic enough to move prices on its own. “China is the new OPEC,” one oil-trading executive put it.
Those months also saw Xi Jinping visit Pyongyang, his only overseas trip this year, restoring a relationship he had let cool since 2019. Trade between the two countries has returned to levels last seen before the pandemic.
North Korea’s economy owes little to global energy markets and even less to Washington’s approval, so the war that unsettled Tokyo and Seoul left Pyongyang comparatively undisturbed and freer to negotiate from a position of strength.
Evidently, some countries built reserves of oil and patience across decades. Others built alliances on paper promises instead, promises now tested by a president who prefers audiences to treaties.
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