South Korea, Romania pledge defence cooperation amid reports of contract in works

By Jack Kim and Joyce Lee

SEOUL (Reuters) - South Korean and Romanian leaders pledged on Tuesday to boost defence industry cooperation as Seoul pushes to establish itself as the world's fourth-largest arms exporter amid reports of huge additional contracts in the works.

President Yoon Suk Yeol hosted his Romanian counterpart, Klaus Iohannis, for a summit and pledged to increase cooperation in the defence industry, including joint production of weapons, a statement said.

South Korea's defence minister Shin Won-sik separately hosted Poland's deputy defence minister, Pawel Bejda, amid reports of an impending contract for Hanwha Aerospace to supply additional weapons systems and negotiations over financing.

South Korea has emerged as a major player in global defence exports, with Russia's invasion of Ukraine opening the door for its industries to sign large-scale contracts from Europe, the Middle East and Asia.

South Korea's major defence manufacturer, Hanwha Aerospace, is working on a deal worth 1 trillion won ($725.7 million) to supply K9 howitzer to Romania in what would be the first defence contract with that country, the Korea Economic Daily reported this year.

Hanwha declined to comment on the report.

The company said during an earnings conference call in February it would announce a weapons export deal with Romania in the first quarter, but there was no announcement.

Last year the company signed a memorandum of understanding with Romania’s state-run defence company to export its K9 self-propelled howitzer and infantry fighting vehicle.

Poland, which has been ramping up defence spending, has agreed to buy $22 billion worth of weapons from South Korea in the country's largest ever arms sale.

On Tuesday, South Korea's Dong-a Ilbo newspaper reported, citing defence industry sources, that Poland would sign a contract this week for 70 additional Chunmoo rocket artillery units worth $1.6 billion to be supplied by Hanwha Aerospace.

Hanwha declined to comment on the Dong-a report.

The visit by the defence delegation from Warsaw comes as the two countries have worked to expand South Korea's financing of the weapons purchases. Statutory caps on credit to facilitate such deals have acted as a constraint.

In February, South Korea's parliament voted to ease restrictions on the state export financing bank, which could aid in negotiations for the second phase of the deal with Poland, sources have said.

Poland has already agreed to buy more than 150 K9 howitzers for $2.6 billion and 288 Chunmoo rocket launchers. It has separately agreed to buy K2 tanks manufactured by Hyundai Rotem and fighter jets from Korea Aerospace Industries.

($1 = 1,378.0700 won)

(Reporting by Jack Kim. Editing by Gerry Doyle)