South Korea has raised alarms over the future of the MASGA (Make American Shipbuilding Great Again) project, warning that ongoing disagreements with Washington could derail the initiative entirely, reports KED Global.
The project, which is part of a broader $350 billion strategic investment framework between the two nations, is intended to bolster U.S. shipbuilding capacity with Korean technical expertise and capital support.
However, Korean officials have voiced frustration over stalled talks, signaling that unless a compromise is reached soon, the project may not proceed. A top policy advisor in Seoul recently stated that the MASGA initiative may be “difficult to even get off the ground” if current conditions persist.
Disputes Over Control and Profit Sharing
A key point of contention lies in how the $350 billion fund should be governed and who gets to control it. U.S. negotiators have reportedly proposed a structure that places Washington in a leadership role, potentially allowing it to retain a larger share of profits generated from joint ventures.
South Korea has pushed back strongly against this model, advocating instead for joint oversight and an equitable distribution of returns. Korean officials argue that their involvement is not simply financial, but strategic, and thus deserves a more balanced decision-making role in how funds are allocated and managed.
Structural Differences in Fund Deployment
Beyond control and profit-sharing, the two countries also differ fundamentally on the fund’s structure. South Korea sees the $350 billion as a guarantee limit rather than an upfront capital commitment. Korean policy institutions prefer a model that provides support on a case-by-case basis through loans, guarantees, and insurance—rather than direct equity investment.
Equity exposure, Seoul insists, will remain minimal, likely under 5%, with the remaining support flowing through its state financial arms such as the Korea Development Bank and the Export-Import Bank of Korea. Korean officials maintain that this model is better suited to safeguard public capital while still delivering the strategic impact both countries seek.
Industry Anxiety Over U.S. Equity Stakes
Meanwhile, comments from U.S. officials hinting at potential equity investments in South Korean shipbuilders have rattled domestic industry leaders. Concerns are mounting that such moves could lead to foreign influence in key national industries, erode management control, and undermine financial returns.
South Korea’s shipbuilding sector, a cornerstone of its export economy, has long been wary of foreign ownership. The idea of ceding control—especially in the context of military or strategic production—has raised both economic and political red flags.
Korean Government Mobilizes Countermeasures
In response, the South Korean government has moved swiftly to introduce legislation supporting the MASGA initiative under more favorable terms. Proposals include the creation of a dedicated shipbuilding cooperation fund, as well as the establishment of special zones in the United States for constructing and maintaining naval vessels.
Officials are also exploring options to dispatch skilled Korean craftsmen to support American shipyards, helping bridge the U.S. labor shortage in the maritime sector. These steps aim to strengthen cooperation while maintaining sovereignty over critical industrial assets.
Next Steps: Toward a Non-Binding Agreement
Despite the impasse, both sides appear interested in keeping the door open for further collaboration. Talks are reportedly shifting toward a non-binding memorandum of understanding (MOU) that could establish broad operational principles for the fund, even as detailed negotiations continue.
A task force, likely to be led by South Korea’s finance ministry and supported by policy-based financial institutions, is being considered to steer the project forward. The goal is to reach a workable framework that respects both sides’ priorities while unlocking the long-term strategic value of the partnership.
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Source: KED Global
