Kim Hong-Ji / Reuters Park Geun-hye speaks to supporters during her campaign rally in the South Korean city of Cheonan on Dec. 17, 2012, two days before she won the presidential election

Updated: Thursday, 09:25 p.m.

After a tight race, South Korean voters last week picked Park Geun-hye of the establishment Saenuri Party as their next President. Park, the daughter of South Korea’s Cold War–era strongman Park Chung-hee, defeated challenger Moon Jae-in of the center-left Democratic United Party in a contest focused on domestic issues like regulating big business and improving the lot of the middle class. While both candidates said the economy needed opening up and diversifying, Park proposed a more moderate style of reform than her rival. On the foreign policy front, however, she could well usher in bigger changes.

South Koreans used to joke that their country was a “shrimp among whales” because it is flanked by the giants China and Russia, as well as Japan and, of course, the other and more bellicose Korea to the north. Today, however, South Korea is an emerging power. It is the world’s 11th biggest economy, sixth biggest exporter and on track to become the eighth biggest trading nation. And because it lies in a geopolitical hotspot, with an economy dependent on exports, the new President’s direction of foreign policy will matter. “[South] Korea is one of the most connected countries in the world,” says Troy Stangarone of the U.S.-based Korea Economic Institute of America. “Both its role in Northeast Asia and globally will probably be shaped by the next administration.”

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Park’s foremost challenge when she takes office in February will be North Korea. The outgoing government of President Lee Myung-bak, a no-nonsense former corporate CEO, reversed 10 years of so-called sunshine policy — a conciliatory approach to Pyongyang that saw two summits, the South’s investments in the North and reunions of family members separated by the Korean War. Lee adopted a stern approach, cutting off dialogue and humanitarian aid over Pyongyang’s unwillingness to drop its nuclear-weapons program.

When North Korea torpedoed the South Korean naval ship Cheonan in March 2010, the Lee Administration blocked nearly all trade with the North. Later that year, Pyongyang shelled South Korea’s Yeonpyeong Island, which lies about 12 km from North Korea’s coastline. Lee ordered the South Korean military to prepare for retaliatory strikes on the North’s missile bases in the event of further provocation. He also canceled inter-Korean Red Cross talks that were scheduled to occur two days after the shelling. This past year, Pyongyang’s failed long-range rocket launch in April and a successful launch earlier this month further strained relations between the two Koreas. “There’s a sense that something has to give,” says Hahm Chai-bong, head of the Asan Institute for Policy Studies in Seoul.

Park looks as if she will be doing the giving. Despite Pyongyang’s persistent recalcitrance, Park believes that improving bilateral relations will help persuade North Korea to curtail its nuclear program as well as set the two Koreas on a path of reunification — the “100% completion of Korea,” as she has termed it. During her campaign, she distanced herself from Lee’s North Korea policy, even though they belong to the same political party, and pledged to rebuild ties with Pyongyang. Her confidence-building measures — she calls them “trustpolitik” — include the renewal of humanitarian aid to the North and re-establishing social and cultural exchanges.

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The hope of cordial relations with the North is painfully idealistic, if not naive. The only certainty about the conduct of the Pyongyang regime is its erraticism. A softer approach by Seoul toward North Korea also requires striking a delicate balance among key stakeholders: the U.S., China and Japan. While China, Pyongyang’s chief ally and patron, advocates engagement with North Korea, Japan and the U.S. favor containment.

Seoul’s relationships with China and the U.S. are perhaps the most crucial. “[South] Korea is in that unique position where its largest economic partner is China and its top security partner is the U.S.,” says Stangarone. Relations with China became strained under Lee, who was affronted by Beijing’s failure to condemn the attack on the Cheonan. They may improve with Park’s softened stance toward Pyongyang.

The Lee Administration saw a strengthening of ties with the U.S., which maintains an extensive military presence on the Korean Peninsula. Washington waived certain visas for South Korean visitors to the U.S., and the two countries ratified and implemented a bilateral free-trade agreement. This week, the Obama Administration also proposed to sell advanced spy drones to Seoul to help it monitor military movements in the North. But Park’s conciliatory policy toward Pyongyang runs the risk of “a disconnect with the policies that Washington [wants] to pursue,” says Ellen Kim, a Korea expert at the Center for Strategic and International Studies in Washington, D.C.

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Park takes office amid other tensions. South Korea and Japan, a former brutal colonizer of the peninsula, are in a territorial tug-of-war over islets that the South Koreans call Dokdo and the Japanese Takeshima. The quarrel was precipitated by Lee’s visit to one of the islets in August—seen as a nationalistic ploy to boost support for the then struggling Saenuri Party in the run-up to the election. With Lee gone and Saenuri winning the election, that particular conflict will probably retreat to the background. Still, Park is likely to bring up other contentious issues with Japan, especially concerning “comfort women,” a Japanese euphemism for Korean and other Asian women who were forced to work as sex slaves for Japan’s military during World War II. Although Tokyo issued a statement in 1993 acknowledging and apologizing for “comfort women,” some officials want a watered-down version of the statement, and some Japanese textbooks downplay the existence of wartime sex slaves. (China and Japan, meanwhile, are squabbling over other islands further south, which are called Diaoyu in Chinese and Senkaku in Japanese; Beijing also has another fight going with several Southeast Asian governments over the sovereignty of islands and waterways in the resource-rich South China Sea.)

At least rational dialogue with Japan is possible. Indeed, Japan’s new Prime Minister Shinzo Abe is sending special envoys to both Beijing and Seoul to try to cool things down. The same cannot be said for North Korea. Park says she is willing to meet with the young North Korean leader Kim Jong Un and has boldly promised to “open a new era on the Korean Peninsula.” There is no telling, of course, whether that era will be any better than the last.

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