SEOUL — 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.

Seoul and Washington verbally agreed to a trade deal in July in which the US would lower President Donald J. Trump’s 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.

PRAISES TRUMP’S HANDLING OF HYUNDAI RAID
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.

Mr. Lee said South Koreans were naturally angered by the “harsh” treatment of the workers — the Trump administration published images of them in shackles — and has warned it could make companies wary of investing in the United States.

But he said the raid would not undermine the bilateral alliance, praising Mr. Trump for offering to let the workers stay. Mr. Lee said he did not believe it was directed by Mr. Trump but was the result of overzealous law enforcement.

“I do not believe this was intentional, and the US has apologized for this incident, and we have agreed to seek reasonable measures in this regard and we are working on them,” he said.

Mr. Lee’s office says there is no plan for him to meet Mr. Trump in New York and that the trade talks are not on the visit’s agenda.

STUMBLING BLOCK IN TRADE TALKS
Commerce Secretary Howard Lutnick has said South Korea should follow Japan’s deal with the United States. He said Seoul either needs to accept the deal or pay the tariffs, using the Trump administration’s depiction of foreign governments paying the levies, which are instead paid by US importers.

Mr. Lee, asked if he would walk away from the deal, said: “I believe that between blood allies, we will be able to maintain the minimum amount of rationality.”

South Korea has proposed a foreign exchange swap line with the US to reduce the shock of the investments on the local market for the won currency. Mr. Lee did not address how likely the US was to agree or whether that would be enough for the deal to go forward.

He said South Korea is different from Japan, which struck a trade deal with the US in July. Tokyo has more than double South Korea’s $410-billion foreign exchange reserves, an international currency in the yen and a swap line with the United States, Mr. Lee said.

Seoul and Washington have said in writing that any investment projects must be commercially viable, but working out the details is proving difficult, he said.

“Reaching detailed agreements that guarantee commercial reasonableness is now the central task — yet it also remains the biggest obstacle,” Mr. Lee said. Proposals during working level talks provide no assurance of commercial viability, making it hard to bridge the gap, he said.

Mr. Trump says the investments will be “selected” by him and controlled by the US, meaning Washington would have discretion over where the money will be invested.

But Mr. Lee policy adviser Kim Yong-beom said in July that South Korea had added a safety mechanism to reduce financing risk, including supporting commercially feasible projects rather than providing unconditional financial support.

Mr. Lee said South Korea and the United States do not disagree on increasing Seoul’s contributions toward its own defense, bolstered by 28,500 US troops on the Korean peninsula, but that Washington wants to keep security and trade talks separate.

“We should end this unstable situation as soon as possible,” he said, when asked whether talks could extend into next year.

TENSIONS WITH NORTH KOREA, CHINA, RUSSIA
Mr. Lee has sought to reduce tensions with nuclear-armed North Korea. Pyongyang has rebuffed the South’s overtures, and Mr. Lee said he was not optimistic about the prospect of inter-Korean talks for the time being.

During their meeting, Mr. Lee encouraged Mr. Trump to try to meet again with North Korean leader Kim Jong Un during Mr. Trump’s trip next month for an Asia-Pacific summit Mr. Lee will host in the South.

Mr. Lee told Reuters his government does not have detailed information on the status of any talks between Washington and Pyongyang. “It is our judgement that they are not engaging in concrete conversations,” he said.

He said he shares his predecessor Mr. Yoon’s view that North Korea’s military cooperation with Russia is a significant threat to South Korea’s security. But he said it is not enough to respond in a simplistic way to the issue, which must be addressed through dialogue and coordination.

The North Korean leader and Russian President Vladimir Putin stood shoulder to shoulder this month in Beijing when Chinese President Xi Jinping hosted them at a massive military parade and summit.

Mr. Lee said there is increasing confrontation between a socialist camp of countries and a capitalist, democratic camp that includes Seoul, and South Korea’s geography threatens to place it on the frontier of any conflict with the other camp.

He said there is an escalatory spiral of rivalry and tensions where South Korea, Japan and the United States deepen cooperation and China, Russia, and North Korea work more closely together.

“This is a very dangerous situation for Korea, and we must find an exit ramp out of the escalating military tensions,” Mr. Lee said. “We must find a way for peaceful coexistence.” — Reuters

LONDON/TORONTO — Britain, Canada, Australia and Portugal all recognized a Palestinian state on Sunday in a move borne out of frustration over the Gaza war and intended to promote a two-state solution, prompting a furious response from Israel.

The decision by four nations from the West, which has traditionally allied with Israel, aligned them with more than 140 other countries also backing Palestinians’ aspiration to forge an independent homeland from the occupied territories.

Britain’s decision carried particular symbolism given its major role in Israel’s creation as a modern nation in the aftermath of World War Two.

“Today, to revive the hope of peace for the Palestinians and Israelis, and a two-state solution, the United Kingdom formally recognizes the State of Palestine,” said Prime Minister Keir Starmer.

“The man-made humanitarian crisis in Gaza reaches new depths. The Israeli government’s relentless and increasing bombardment of Gaza, the offensive of recent weeks, the starvation and devastation are utterly intolerable.”

Other nations, including France, are expected to follow suit this week at the United Nations General Assembly in New York.

Israeli Prime Minister Benjamin Netanyahu condemned the move.

“I have a clear message to those leaders who recognize a Palestinian state after the horrific massacre of Oct. 7: You are giving a huge reward to terrorism,” he said, referring to Palestinian militant group Hamas’ 2023 attack on Israel that triggered the nearly two-year war in Gaza.

“And I have another message for you: It will not happen. A Palestinian state will not be established west of the Jordan River.”

The Hamas-led attack on Israel killed 1,200 people and saw 251 others taken hostage, according to Israeli tallies.

Israel’s ensuing campaign in Gaza has killed more than 65,000 Palestinians, most of them civilians, according to local health authorities, spread famine, demolished most buildings and displaced most of the population — often multiple times.

PALESTINIANS WELCOME RECOGNITION
“It is a human duty of every respectful and free human being in the world to support Palestinians during the ordeal they are going through and Britain’s role now comes within this,” said Sharaf Al Tarda, a Palestinian resident of Hebron in the Israeli-occupied West Bank.

Hamas welcomed the move but said it must be accompanied by “practical measures” to end the war in Gaza and prevent Israel from annexing the West Bank.

Palestinian President Mahmoud Abbas said recognition would help pave the way for the “State of Palestine to live side by side with the State of Israel in security, peace, and good neighborliness.”

Mr. Starmer wrote to Mr. Abbas to confirm Britain’s decision, noting that London had backed a Jewish homeland in 1917 while also pledging to protect the rights of non-Jewish communities.

Western governments have been under pressure from many in their parties and populations angry at the ever-rising death toll in Gaza, images of starving children and their states’ inability to rein in Israel, even continuing to provide arms.

Londoners voiced mixed reactions on Sunday.

“A whole lot needs to happen and peace needs to come to that region,” said 56-year-old charity director Michael Angus. “This is the first step in actually acknowledging that those people have a right to have somewhere to call home.”

Announcing his country’s decision, Canadian Prime Minister Mark Carney said it would empower those seeking peaceful co-existence and the end of Hamas. “This in no way legitimizes terrorism, nor is it any reward for it,” he added.

Portugal’s Foreign Affairs Minister Paulo Rangel said this recognition was a “fundamental line of Portuguese foreign policy.” Speaking to reporters at the headquarters of Portugal’s permanent mission to the United Nations in New York, he said: “Portugal advocates the two-state solution as the only path to a just and lasting peace… a ceasefire is urgent.”

The United States, Israel’s closest ally, did not comment immediately on the decision by three of its allies to recognize a Palestinian state, but President Donald J. Trump has previously made clear he opposes such a move.

Israeli Security Minister Itamar Ben-Gvir said he would propose that the cabinet apply sovereignty in another Israeli-occupied Palestinian territory, the West Bank. That would represent de facto annexation of land seized in a 1967 war.

BRITAIN PLAYED A KEY HISTORIC ROLE
British troops captured Jerusalem from the Ottoman Empire in 1917, and in 1922 the League of Nations awarded Britain an international mandate to administer Palestine during the post-war deal-making that redrew the map of the Middle East.

Mandy Damari, the British mother of released British-Israeli hostage Emily Damari, told Reuters on Sunday that Mr. Starmer was “under a two-state delusion” given that the Gaza Strip’s government was still Hamas whose mission was to destroy Israel.

“He is rewarding Hamas for the 7^th October barbaric and savage attack on Israel when the hostages are still not back, the war is not over and Hamas are still in power in Gaza.”

Husam Zomlot, head of the Palestinian Mission to the UK, watched on his phone as Mr. Starmer announced Britain’s recognition of a Palestinian state.

At the London headquarters of the mission, which may now be upgraded to an embassy, there were smiles and embraces.

“Today is a moment when the UK Prime Minister and the British government, on behalf of their people, stand and say: ‘We must correct history, we must right the wrongs’,” Mr. Zomlot said. — Reuters

BRUSSELS/BERLIN — Some of Europe’s biggest airports battled to restore normal operations on Sunday after hackers disrupted automatic check-in systems, with Brussels asking airlines to cancel half of Monday’s flight departures due to persistent problems.

Hackers on Friday targeted check-in and boarding systems provider Collins Aerospace, owned by RTX, disrupting operations at London’s Heathrow – Europe’s busiest airport, Berlin Airport and in Brussels.

Passengers faced long queues, cancellations and delays on Saturday. While the disruption eased significantly in Berlin and Heathrow on Sunday, according to airport officials and data, delays and flight cancellations were continuing.

In a statement early on Monday, Collins said it was working with four impacted airports and airline customers, and was in the final stages of completing the updates needed to restore full functionality.

A spokesperson for Brussels Airport said Collins Aerospace had not yet delivered a secure, updated version of the software necessary to restore full functionality, prompting the airport to seek the flight cancellations on Monday.

Brussels Airport said 50 of Sunday’s 257 scheduled departures had been cancelled to avoid long queues and last-minute cancellations. A day earlier, 25 of the planned 234 outgoing flights were cancelled, the airport operator said.

RTX said on Saturday it was working to fix the issue as quickly as possible, and that the disruption could be mitigated with manual check-in operations.

It said the incident had impacted its MUSE software, which is used by several airlines.

One passenger flying from Brussels said the disruption to his journey had been minimal.

“For me, it was business as usual. For those poor souls who didn’t do online check-in or have bags to check, they may be waiting a bit,” he said.

Berlin Brandenburg Airport said on Sunday some problems persisted but that a manual workaround was in place.

“Occasionally, there are longer waiting times at check-in, boarding, baggage handling and baggage reclaim. Delays to departing flights today are in line with a normal operating day,” it said.

Heathrow said early on Sunday that work was continuing to recover from the check-in system outage. It added that “the vast majority of flights have continued to operate”.

An analysis by aviation data provider Cirium said delays at Heathrow were “low”, Berlin had “moderate” delays, while Brussels had “significant” delays.

Regional regulators said they were investigating the source of the hacking, the latest in a string of hacks to hit sectors from healthcare to autos. A breach at carmaker Jaguar Land Rover halted production, while another caused Marks & SpencerMKS.L losses in the hundreds of millions of pounds. — Reuters