Peacemaker or Political Hostage? Prospects for the Moscow-Busan “Iron Silk Road Express”

By | November 11, 2013 | No Comments

Cooperation and development via internal improvements: the Khasan-Rajin (Rason district) railroad | Image: Sino-NK Screengrab (PressTV)

Cooperation and development via internal improvements: the Khasan-Rajin/Rajin (Rason district) railway | Image: PressTV

As Juliette Morillot and Dorian Malovic observe at the austere beginning of their text Les Evadés deCorée du Nord, the point at which the Tumen River empties into the Sea of Japan feels rather like the end of the earth. Irrespective of national boundaries, Koreans have criss-crossed this region for hundreds of years, as laborers, migrants, slash-and-burn farmers, and observers. As a descendant of two such migrant-soldier-observers who spent four years in the Russian Far East, Kim Jong-un is well-positioned to open the gates to a renewed age of iron-limned cooperation between Russia and the state he leads. As Vladimir Putin shoulders his way into Seoul, Sabine van Ameijden writes a dispatch from the South Korean capital. – Adam Cathcart, Editor-in-Chief

Peacemaker or Political Hostage? Prospects for the Moscow-Busan “Iron Silk Road Express”

by Sabine van Ameijden

The DPRK’s northeast is once again the place to look for economic and political policy changes in the hermit kingdom. Since Rason Special Economic Zone’s 2009 rise in development, China has been the main investor in the borderlands. But now Russia is realizing its Eurasian dream by turning its gaze to the Korean Peninsula. The September 22 completion of the railroad between the Russian city of Khasan and North Korea’s Rason was a major breakthrough; infrastructure, it is well-known, has been a main stumbling block for the development of the North Korean port city. And the project will not end here. The ultimate aim is to extend the Trans-Siberian Railway, which will connect the cities of Moscow, Vladivostok, Rason, and Busan.

As a Seoul-Moscow summit looms, we need to more closely examine the economic and political viability of the “Iron Silk Road Express.”

Russian President Vladimir Putin, recently named Forbes most powerful person, is seeking to expand Russia's influence further east. | Image: World Economic Forum

Russian President Vladimir Putin, recently named Forbes most powerful person, is seeking to expand Russia’s influence further east. | Image: World Economic Forum

Putin in Seoul | On 12 November, Russian President Vladimir Putin will pay Seoul a two-day visit, during which he and South Korean President Park Geun-hye will sign an MoU addressing the railroad. Russia is considering a 34.3 percent share for South Korea in the project to adjust the cost sharing, which so far has been a 70 percent investment from Moscow, and 30 percent from Pyongyang. Possible members of the consortium to take on the ROK share are POSCO, Korail, and Hyundai Maritime.

As Scott Bruce has described, Russia’s ambitions for North Korea embrace railroad connections from Moscow to Busan. Such a connection would fulfill a long-held dream in the Kremlin and turn Russia into a major Eurasian trading route, offering a faster alternative to naval journeys. As South Korea will be on the eastern end of the trading route, Seoul is clearly eager to be logistically connected to the mainland. Furthermore, as the railroad would pass through the DPRK, it would be a prominent new component to the country’s infrastructure and boost the North Korean economy.

The success of this project also has the potential to strengthen security and stability in the region. Since the foundation of the DPRK and ROK, the two neighbors have been vying for international legitimacy. While South Korea, following a rapid industrialization  and democratization, ended up on top, North Korea became one of the world’s most isolated states when its economy took a dive and the leadership pursued a nuclear weapons program in violation of the international non-proliferation regime. Most analysts are skeptical of the Juche government’s ability to introduce necessary economic reforms without signaling the end of its own rule.[1] It is nearly impossible to liberalize the economy while preventing a political spill over.

Although North Korea might not become the next Asian Tiger under the rule of Kim Jong-un, transnational economic cooperation could create a a “soft landing,” preventing the sudden collapse of the DPRK, the nightmare of all its neighboring states. In a best case scenario, the trend toward more open borders could satisfy North Korea’s pressing economic needs and soften its military focus in order to pave the way for the normalization  of diplomatic relations between the Northeast Asian nations.

Economic and Political Realities | Unfortunately, North Korea has not proven to be a reliable investment environment. This year, the temporary closure of the Kaesong Industrial Complex (KIC) has been a huge setback for Special Economic Zones (SEZs) and economic policy change in North Korea. As the inter-Korean zone fell victim to political tensions, production plummeted and along with it potential investors’ confidence. Even though the complex reopened in September, companies are still struggling to resume business as financial and legal damage following the shutdown remain unresolved. North Korea’s call to suspend activity in the economic complex as diplomatic relations escalated exacerbates the risks involved when doing business in the world’s most isolated country.

The same argument of political risk has been put forward in regards to the stalled plans to build a Russia-South Korea gas pipeline, which would evidently pass through North Korea. In the run up to President Putin’s visit to Seoul, Russia’s Gazprom and South Korea’s Kogas reinvigorated negotiations on the pipeline. Nevertheless, according to Andrei Lankov, this project would require a more agreeable political climate. Under current conditions, it is not unreasonable to fear North Korea taking the pipeline “hostage to political games over which neither Moscow nor the company has any control.” Alternatively, an undersea pipeline could be built, but this would be a much more costly undertaking.

Train inbound to Rason | Image: Sino-NK Screengrab (PressTV)

Train inbound to Rason | Image: PressTV

Along the “Silk Road:” Messages to China | The Iron Silk Road has a lot of potential to transform the economic and political situation on the Korean Peninsula. Yet, looking at Russia’s recent diplomatic moves in Asia makes analysts wonder whether Russia is actually interested in transnational cooperation and regional development or merely trying to counterbalance China’s regional hegemony.

Since 2009, China has been vigorously investing in North Korea’s northeast, which stimulates the development of its own Jilin province. Besides being an attractive trade hub, Rason as a port city could also serve military strategic purposes in the future and allow access to the East Sea, as China’s Jilin province is landlocked by Russia and North Korea.

Last week, Russia and China agreed to strengthen their military ties. It appears that the two major powers share an interest in a politically stable and economically viable North Korean neighbor. Nonetheless, Russia has also reconfirmed its security cooperation with Japan, hosted the Indian prime minister, and will visit Vietnam before traveling to South Korea. Whether this means that Russian economic cooperation with North and South Korea is simply about business or is part of a political strategy to counter broader Chinese influence in the region matters to the extent to which these railroad transit plans will be executed.

An Asahi Shimbun piece from September points towards a fierce competition between Russia and China regarding development of the Rason SEZ. Perhaps we should be welcoming these two nations pushing for economic progress in North Korea, regardless of their motives in a broader power play. But, unfortunately, political motives, as we have witnessed with inter-Korean economic projects, do include the risk that when the diplomatic balance tilts, business agreements might be reneged on.

Timing Russia-DPRK Transnational Connections | The completion of the Khasan-Rason railroad is an important sign of progress in North Korea’s Northeast, where the Rason Special Economic Zone serves as a hub for capitalist experimentation. Moreover, an Iron Silk Road Express extending to Busan in South Korea has enormous potential for both economic and political relations between North Korea and its neighbors. Unfortunately, the initiative from Moscow cannot be perceived without some skepticism regarding the North Korean business environment and regional geopolitical conflicts. The shutdown of the Kaesong Industrial Complex confirms that Pyongyang is willing to sacrifice business to meet political ends. Now it is up to President Park and President Putin to demonstrate whether North Korea has been forgiven.

[1] See: Andrei Lankov, The Real North Korea: Life and Politics in the Failed Stalinist Utopia (New York: Oxford University Press, 2013); Victor Cha, The Impossible State: North Korea Past and Future(New York: Ecco, 2012); Nicholas Eberstadt, The North Korean Economy: Between Crisis and Catastrophe (New Brunswick: Transaction Publishers, 2012).

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