S. Korea’s Lee says US demands would spark financial crisis

South Korea’s economy could fall into crisis rivaling its 1997 meltdown if the government accepts current US demands in stalled trade talks without safeguards, President Lee Jae Myung told Reuters.

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Seoul and Washington verbally agreed to a trade deal in July in which the US would lower President Donald J. Trump’ tariffs on South Korean goods in exchange for $350 billion in investment from South Korea, among other measures.

They have yet to put the agreement to paper because of disputes over how the investments would be handled, Mr. Lee said.

“Without a currency swap, if we were to withdraw $350 billion in the manner that the US is demanding and to invest this all in cash in the US, South Korea would face a situation as it had in the 1997 financial crisis,” he said through a translator.

In an interview in his office on Friday, Mr. Lee also spoke about a huge US immigration raid that detained hundreds of Koreans, as well as Seoul's relations with rival North Korea, neighboring giant China and Russia.

But trade and defense talks with the US, South Korea’s military ally and a top economic partner, are overshadowing a trip Mr. Lee makes from Monday to New York, where he will address the United Nations General Assembly and be the first South Korean president to chair a meeting of the Security Council.

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Mr. Lee, a liberal, took office in a June snap election after his conservative predecessor, Yoon Suk Yeol, was removed from office and jailed for briefly imposing martial law. Mr. Lee has sought to calm the country and its economy and said he plans to use his US visit to tell the world that “democratic Korea is back.”

Mr. Lee met Trump for their first summit in August, saying he had built a strong personal tie with the US leader, despite not agreeing on a joint statement or concrete announcement.

This month Trump’s administration rocked South Korea with the arrest of more than 300 South Korean workers at a Hyundai Motor battery plant in Georgia, with federal officials accusing them of immigration violations.