Canada's submarine decision exposes limits of K-defense exports

Hanwha Ocean lost Canada's next-generation submarine procurement program, valued at up to 60 trillion won ($38.6 billion), to Germany's TKMS on Tuesday. Despite an all-out effort by both the South Korean government and industry, Canada ultimately chose Germany, a fellow member of the NATO. President Lee Jae Myung responded on social media by saying the experience would strengthen South Korea's submarine technology and competitiveness, adding that the bold challenge of South Korea's defense industry would continue.

The outcome, however, should prompt reflection rather than satisfaction that South Korea competed on equal terms with one of the world's leading submarine builders. Explaining the decision, Canadian Prime Minister Mark Carney emphasized Canada's "strategic security," saying Germany's submarines would provide full interoperability within NATO and support joint operations. The Canadian government likewise described the procurement as one that advances Canada's broader commitment to collective security with its allies.

The decision suggests that South Korea's traditional defense export strategy, built around competitive pricing, reliable delivery and industrial cooperation, is becoming less effective in NATO markets, particularly in Europe, which has emerged as the world's fastest-growing defense market following the war in Ukraine.

As strategic rivalry between the NATO alliance and China and Russia deepens, procurement decisions are increasingly influenced not only by military capability but also by political alignment. The question is no longer simply which country builds better weapons. It is also which country is regarded as a trusted security partner.

Against that backdrop, South Korea should ask how NATO members view its security posture. Seoul has limited its support for Ukraine largely to humanitarian assistance and nonlethal military aid despite Russia posing what many NATO members consider a direct threat. Even as Moscow expands military cooperation with North Korea and openly opposes sanctions against Pyongyang, South Korea has taken few visible countermeasures. Such perceptions inevitably shape defense partnerships.

Similar trends can be seen elsewhere. Among the Indo-Pacific Four countries that have strengthened cooperation with NATO, Australia and New Zealand have entrusted, or are considering entrusting, major naval construction projects to Japan rather than South Korea. Publicly disclosing special diplomatic efforts and even revealing proposed incentive packages during overseas bidding may also have created unease among Eastern European countries, long the largest buyers of South Korean weapons.

President Lee is visiting Turkey for the NATO summit. His meetings with allied leaders should become an opportunity to examine why South Korean defense exports appear to be losing momentum and to rethink an export strategy for the next stage of South Korea's defense industry. Technological excellence remains essential, but in today's security environment it is no longer sufficient on its own.