South Korea’s Yoon Suk Yeol faces calls to resign after failed martial law order

Today’s agenda: French no-confidence vote; Bundesbank chief calls for spending reform; China-Saudi ties warm; visual investigation on Russia’s killer drones; and Martin Wolf on the price of US prosperity

Good morning. We turn to the political crisis in South Korea, where President Yoon Suk Yeol is facing pressure to resign after abandoning an attempt to impose martial law and purge the country of “anti-state forces”. Here’s what we know so far.

How did the crisis unfold? Yoon’s martial law order followed simmering tensions with the parliament’s opposition majority, which he claimed was plotting rebellion and harbouring North Korean sympathies. Lawmakers last week voted to cut almost $3bn from his proposed 2025 budget, slashing funding for his office, senior prosecutors and the police. Yoon said the cuts forced his hand as they would turn South Korea into a “drug paradise” filled with “public order panic”. Opposition leaders have accused him of authoritarian tendencies and said they have been persecuted by prosecutors allied with Yoon.

But analysts said the order would have been difficult to implement, with his low public support and lack of backing in his own party. “He sounded like a politician under siege, making a desperate move,” said Leif-Eric Easley, a professor in Seoul. Yoon lifted the order after it was rejected unanimously by lawmakers.

What has the fallout been? Opponents have called on Yoon to resign or face impeachment, and his own party is discussing whether he should leave. Senior aides have offered to quit en masse, while the country’s leading umbrella labour group has launched an indefinite strike until he steps down.

The crisis has alarmed international allies. Planned defence talks and joint military exercises with the US this week were postponed, while Swedish Prime Minister Ulf Kristersson delayed his scheduled visit to Seoul.

In markets, South Korea’s Kospi stock index fell as much as 2 per cent this morning. The won declined to a two-year low yesterday before strengthening against the dollar after officials set aside $35.4bn in stabilisation funds and pledged “unlimited” liquidity.

As protests continue in Seoul, our reporters will bring you the latest here.

Here’s what else we’re keeping tabs on today:

• Economic data: The OECD has its global economic outlook, while the Federal Reserve publishes its Beige Book on economic conditions across the US.

• French politics: Michel Barnier’s three-month-old administration is likely to collapse when far-right and leftwing opposition parties hold a no-confidence vote today. Read the FT View on the potential chaos to come.

• Central banks: European Central Bank chief Christine Lagarde addresses a European parliament committee hearing in Brussels. Chris Giles interviews Bank of England governor Andrew Bailey at the FT’s Global Boardroom event at 9am GMT. Register to watch online.

For more on monetary policy from Chris Giles, sign up here for his Central Banks newsletter if you’re a premium subscriber, or upgrade your subscription here.

Five more top stories

1. Exclusive: The head of Germany’s Bundesbank has called on Berlin to soften its tough spending rules, warning that Europe’s largest economy faces a “complicated” and “weak” outlook. The central banker called for changes to the so-called debt brake, which bans the government from borrowing more than 0.35 per cent of GDP in any fiscal year. Read the FT’s full interview with Joachim Nagel.

2. Exclusive: Chinese exports and investment are pouring into Saudi Arabia as the kingdom’s demand for green tech deepens a relationship once defined by oil sales. The warming relations challenge business ties with Riyadh’s traditional western partners such as the US and complicate the outlook for Donald Trump’s administration.

• US-China: Beijing has banned shipments to the US of several minerals and metals used in chipmaking and military applications, in retaliation for new export controls from Washington.

3. Syrian rebels have reached the outskirts of Hama, one of the country’s largest cities, dealing another blow to Bashar al-Assad’s regime. If the rebels seize control of Hama, it will be the first time the regime has lost control of the city since the civil war erupted after a 2011 popular uprising against Assad. We have the latest here.

4. Cryptocurrencies representing a euthanised grey squirrel, a Thai pygmy hippopotamus and a cartoon dog have exploded in value since last month’s US election, with Dogecoin outperforming bitcoin over the past month. Here’s how Trump’s win has triggered a “memecoin” boom.

5. Investors have gone too far in their bets on the near-term potential of artificial intelligence, Vanguard has warned. Despite optimism that AI would prove as revolutionary as the adoption of the personal computer in the 1980s, here’s why the $1tn asset manager says there is risk of a “correction” in stock prices.

Visual investigation

Civilians in Ukraine’s Kherson have been, since midsummer, the target of an experiment without precedent in modern European warfare: a concerted Russian campaign to empty a city by stalking its residents with attack drones. The FT investigates how Moscow’s machines have killed dozens and injured hundreds over more than 9,500 attacks.

We’re also reading . . . 

• A selfish parting act: Joe Biden has robbed Democrats of the chance to occupy the higher ground by becoming the first US president to pardon an offspring, writes Edward Luce.

• Japan’s chip ambitions: The government is backing a start-up that aims to upend the economics and geography of the semiconductor industry. Can it succeed?

• Meritocracy in aristocracy: In his first column for FT Wealth, Earl Charles Spencer writes about a historic house in England and how dynastic family inheritance has evolved.

Chart of the day

The sustained prosperity of the US is astounding, writes Martin Wolf. Few western countries have higher real incomes per head. But what does US exceptionalism mean when combined with potent indicators of low welfare?

Take a break from the news

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