South Korea’s Yoon lifts martial law after political gamble

South Korean President Yoon Suk Yeol said he will rescind his martial law decree, giving in to the parliament’s opposition just hours after his dramatic move imposing it that shook markets and surprised other world leaders.
Yoon said in a televised address early Wednesday that he will “accept the National Assembly’s demand and lift the martial law through a cabinet meeting.” The cabinet has approved nullifying the order, according to Yonhap. 
Yoon, 63, stunned the nation, lawmakers and investors earlier by declaring martial law in a high-stakes move he claimed would prevent the opposition from trying to paralyze his administration amid a political rift that’s now set to deepen markedly. 
The stock market will open as usual, according to the finance ministry. Amid thin trading in the New York session, the won dropped as much as 2.9% to 1444.65 per dollar on the martial law declaration before paring losses after authorities pledged to stabilize financial markets. 
Bank of Korea’s monetary board, which unexpectedly cut the key rate last week, will hold an extraordinary meeting at 9 am local time to discuss steps to shield the economy and markets.
The South Korean leader’s political future will be put to test after his daring move, which caught even his fellow party members and foreign allies like the US by surprise. South Korea’s opposition called for Yoon to step down.
Yoon “is now doomed to face impeachment,” said Rory Green, an economist at research firm TS Lombard who worked almost a decade in Asia. A presidential election will then be held, probably early in the second quarter of 2025, he said, and the opposition Democratic party will be “strong favorites” to win.
In his earlier televised address, Yoon said, “I request the National Assembly to immediately stop the reckless acts of paralyzing the functions of the state through repeated impeachments, legislative manipulation and budget manipulation.”
After Yoon announced he would lift the decree, South Korea’s Joint Chiefs of Staff said its troops that had been mobilized for the martial law declaration have returned to their original posts as of 4.22 am, Yonhap reported. No unusual activities have been spotted from North Korea, it added.
The move was viewed by analysts as a risky political play that was likely to backfire rather than an attempt to return to military-led regimes of the past. With his own government and party kept in the dark, Yoon created a chaotic moment that left him isolated and even further from controlling the political agenda going forward. 
Early Wednesday morning, 190 lawmakers in the 300-seat parliament unanimously voted to demand the lifting of martial law. 
The president had said his move was intended to protect freedom and constitutional order, that it wouldn’t have an impact on South Korea’s foreign policy, and that it would help eradicate the influence of North Korean supporters. 
A proclamation released after the address banned all political activities and strikes and said media would be subject to control of the Martial Law Command.Korean assets were battered during New York trading. 
The finance minister and central bank chief met and promised to provide unlimited liquidity to markets if needed. The Bank of Korea will meet early Wednesday, just a week after a surprise rate cut partly triggered by heightened uncertainty generated by US President-elect Donald Trump’s election victory. 
Adding to the sense of chaos, the nation’s largest union federation called a general strike in defiance of Yoon’s order.
The shock announcement to impose martial law for the first time since the democratization of South Korea in 1987 caught even Yoon’s own party off guard. Han Dong-hoon, leader of Yoon’s People Power Party, condemned the move and vowed to stop it, in a sign of the president’s increasing isolation and his lack of consultation.
The move also surprised the White House, prompting Deputy Secretary of State Kurt Campbell to say that the Biden administration was watching the developments with “grave concern.”
Yoon’s abrupt decision came after months of wrangling and deadlock in parliament between the president’s minority government and the main opposition Democratic Party, but with little expectation that the president would take such a drastic step. 
The opposition has been trying to force its budget proposal through parliament and has submitted an impeachment motion against the chief prosecutor after months of also trying to get Yoon’s wife prosecuted. Adding to the fractious political rift, the DP’s leader has faced multiple court cases and was convicted last month of election-law violations, barring him from running for president if it is finalized.
Amid the political standoff, Yoon had vetoed a string of bills passed by parliament and at times angering his own party. His latest act ramped up tensions considerably domestically, while also creating high uncertainty abroad for the outlook of one of the world’s key suppliers of semiconductors and a stalwart US ally in an increasingly complex security environment in Asia.
Even though the martial law order lasted less than a day, the political instability it will generate is set to last two or three years, according to Lee Won-Jae, a sociology professor at at Kaist Graduate School of Culture Technology in Daejeon.
“Martial law has lost its effect, so from this moment on, all state institutions exercising physical force, including the military and police of the Republic of Korea, are obligated not to follow unlawful or unfair instructions,” Han, the leader of Yoon’s party, said in a Facebook post.
Yoon’s moves came at a time of high uncertainty for the nation as its trade-dependent economy faces potential tariffs from Trump’s incoming US administration. Bloomberg Economics estimates that full imposition of tariffs on China, South Korea and other US trading partners could reduce Seoul’s exports to the US by as much as 55%.
Meanwhile, North Korea continues to present a security concern as it deepens its ties with Russia, having sent thousands of troops there to help in Moscow’s war against Ukraine. Russia’s defense minister visited Pyongyang last week in the latest sign of talks between the two countries. Russia may help provide North Korea key technology for its weapons programs including its intercontinental ballistic missiles.
“We shouldn’t be fooled – this has nothing at all to do with North Korea and all to do with domestic politics,” said Defense Priorities Fellow Daniel DePetris. 
China suggested its citizens residing in South Korea keep calm and try to avoid going outdoors for anything non-essential, the country’s embassy said in a post on social media Tuesday night. The embassy also asked Chinese citizens to comply with official orders from the Korean government and “use caution” over sharing political opinions.
“The domestic uncertainty adds to the external pressures in recent weeks as the market is starting to price in the rise of higher US tariffs under the new Trump administration,” said Aroop Chatterjee, a strategist at Wells Fargo. “Korea is an open economy sensitive to shifts in global export demand and spillovers from a weaker China.”
While it remains to be seen if the short-lived declaration of martial law will have a lasting impact on markets and the economy, Yoon’s high-stakes move is certain to knock confidence in his leadership and his reliability as a bullwark of democracy in a nation with many authoritarian neighbors. 
“US officials look to South Korea now as a beacon of democracy so for a president to pull a fast one like this is certainly shocking and unprecedented.” said DePetris.
“From a near-term policy standpoint, apart from the market disruptions, uncertainty could also arise in the event of cabinet changes,” Goldman Sachs Group Inc. analysts Goohoon Kwon and Kamakshya Trivedi wrote in a note Tuesday.