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2008/10/02 10:53 KST
NORTH KOREA NEWSLETTER NO. 23 (October 2, 2008)

   *** TOPIC OF THE WEEK

Seoul, Moscow Agree on Upgraded Partnership, Gas Pipeline Involving N. Korea

SEOUL (Yonhap) -- South Korean President Lee Myung-bak and his Russian counterpart, Dmitry Medvedev, agreed Sept. 29 to upgrade their bilateral relations from a comprehensive partnership to a strategic cooperative partnership and signed a large-scale natural gas supply deal expected to involve North Korea.

   At a Kremlin summit in Moscow, Lee and Medvedev agreed to work together to send Russian natural gas through a pipeline to South Korea via North Korea starting in 2015 and link the inter-Korean railway with the trans-Siberian railway for its eventual connection to Europe.

   The two countries expect the railway and pipeline projects will help stabilize the feeble security situation in Northeast Asia and eventually become a cornerstone for an economic community in the region. Analysts said Lee's official visit to Russia has resulted in important diplomatic achievements in terms of energy resources, economy and security diplomacy.

   Lee said his summit agreements with Medvedev to build a South Korea-North Korea-Russian natural gas pipeline and a South Korea-only port near the North Korean-Russian border, as well as linking the inter-Korean railway to the trans-Siberian railway (TSR) will help South Korea drastically reduce its international logistics costs.

   In a breakfast meeting with Korean reporters in Moscow, Lee described the potential economic benefits from the Russian-Korean gas pipeline as too attractive to be ignored by North Korea.

   In a separate meeting with Russian journalists, Lee expressed his willingness to hold talks with North Korea on the proposed Korea-Russia railway links. He said that the project will help facilitate peace and stability on the peninsula and will lay the groundwork for a Northeast Asian economic community.

   On Sept. 29, Lee and Medvedev agreed to promote the stalled project to connect an inter-Korean railway with Russia's trans-Siberian line, which stretches to Europe. "I believe North Korea will be interested in the railway project because it will yield considerable economic gains for the country," Lee was quoted as saying during a meeting with Russian journalists after the summit. "Russia will first discuss the matter with North Korea. I will also talk about it if I meet with the North Korean side."

   Lee added that the South is willing to help North Korea overcome its chronic food shortage and poverty, and he urged Pyongyang to abandon its nuclear weapons and open up to the outside world.

   Russia and North Korea agreed in August to begin rebuilding the railway section between North Korea's port city of Rajin and Russia's station called Khasan in the Primorye territory on Oct. 3. Russia will help rehabilitate the 54-kilometer railway section and plans to construct a container terminal and related infrastructure in Rajin.

   Lee said that the proposed continental railway project will not only economically benefit the three countries, but will also help ease tensions on the peninsula and advance peace in Northeast Asia.

   In a speech he gave at a Russian university on Sept. 30, he emphasized his commitment to the project and said that it is key to economic cooperation in the region. "The division of the Korean Peninsula is not only a barrier to peace and stability in Northeast Asia; it also impedes the connection between the Pacific and Atlantic, and between Asia and Europe," he told the faculty and students at Saint Petersburg State University.

   Lee's visit to Russia was the last round of his summit diplomacy with all four superpowers surrounding the Korean Peninsula.

   Explaining the significance of his successive summit diplomacy, Lee said to reporters in Moscow on Sept. 30, "The U.S., Russia, China and Japan could be among the superpowers related to Northeast Asia. Our upgraded relations with all four are actually a very important change. Its economic implications are enormous ... In the event of an emergency on the Korean Peninsula, the upgraded relations with the four would be very beneficial to us."

   A strategic partnership calls for expanding the scope and depth of exchanges in politics, military, foreign affairs, security and other sensitive fields.

   Lee and Medvedev also issued a joint summit statement and sealed a dozen MOUs calling for practical bilateral cooperation across the board, including the fields of politics, diplomacy, security, defense, energy, economy, aerospace and polar development.

   Lee also met with Russian Prime Minister Vladimir Putin in Moscow on Sept. 29 to reconfirm the landmark summit agreements on the upgraded partnership and closer cooperation in the development of energy resources and construction of logistics infrastructures. Lee attached particular meaning to his government's bid to build a Korea-only port and logistics complex on Russian soil near the Tumen River, which runs along its North Korean border.

   Lee's summit in Russia was also meaningful, as he and Medvedev agreed to work together to promote the denuclearization of the Korean Peninsula and peace in Northeast Asia.

   Regarding the North Korean nuclear issue, Lee said he and Medvedev agreed to work together to promote the denuclearization of the Korean Peninsula and peace in Northeast Asia. But Lee didn't mention whether he and the Russian leader exchanged views on how to deal with the shaky six-nation talks on disabling North Korea's nuclear weapons program.

   Russia's stance on North Korea drew strong interest, as the socialist North is now on the brink of restarting its nuclear weapons program shut down in July last year under a landmark disarmament deal with South Korea, the U.S., China, Russia and Japan.

   Medvedev said at a joint press conference with Lee that he wishes to see the continuation of inter-Korean political, economic and humanitarian contacts, urging the two Koreas to implement their 2007 summit agreements in Pyongyang.

   The Russian leader then declared that his government has strong interest in the rail connection between the Korean Peninsula and Russia, indirectly pressuring North Korea to cooperate in the envisioned tripartite rail and gas pipeline projects.

   Under the contract signed between Korea Gas Corp. and Russia's Gazprom, the Russian side is to send at least 7.5 million tons of natural gas annually for a period of 30 years through a long-distance pipeline running from Vladivostok in the Russian Far East to South Korea through North Korea. The volume of 7.5 million tons represents an estimated 20 percent of South Korea's annual natural gas consumption.

   "South Korea and Russia will also seek various other tripartite economic cooperation projects involving North Korea through the gas pipeline project, providing fresh momentum for inter-Korean economic cooperation," said the statement.

   Celebrating the 20th anniversary of the establishment of bilateral diplomatic ties in 2010, both countries agreed to hold various cultural and tourism events, while South Korea declared its support for Russia's entry into the World Trade Organization.

   Following the summit, Lee and Medvedev observed their Cabinet ministers sign 13 memoranda of understanding calling for strategic partnership in the fields of energy, resources, investment, industrial technology and information technology.

   The MOUs covered joint exploration of petroleum, uranium and other natural resources, construction of a Korea-only industrial complex near Moscow and exchanges between science and technology institutions of both sides.

   In addition, a consortium of Korea Electric Power Corp., Korea Resources Corp. and LG International will participate in uranium mine development projects to be carried out by a subsidiary of the Russian entity AtomRed-MetZoloto, known as ARMZ.

   Two-way trade between South Korea and Russia surged from US$4.18 billion in 2003 to $15.06 billion in 2007, representing annual average growth of 38 percent. South Korea's investment in Russia as of June this year totaled $1.5 billion, or 1 percent of the aggregate foreign investment in Russia. The investment has been rapidly growing in recent years, with a 3.6-fold increase reported last year.

   Addressing a joint meeting of South Korean and Russian business leaders in Moscow earlier on Sept. 29, Lee said he will seek to link the trans-Korean railway, or TKR, with Russia's trans-Siberian railway, known as the TSR, for its eventual connection to Europe.

   "The railway link between the two Koreas and Europe via Russia would help boost global peace and ease tensions in Northeast Asia, as well as on the Korean Peninsula. Subsequent infrastructure construction projects surrounding the Korean Peninsula-Europe railways will also be mutually beneficial."
Lee also said South Korea's strategic cooperative partnerships with both Russia and China will be very advantageous to the nation's national security in case of an emergency on the Korean Peninsula.

   "Pyongyang is expected to show an interest in the proposed gas pipeline link with South Korea and Russia, due to its considerable economic effects. The economic benefits for North Korea could be far bigger than its previous cooperation projects with South Korea in Kaesong and at Mt. Kumgang," said Lee at the meeting.

   "It may not be easy to persuade North Korea over the gas pipeline project immediately within this year. But if Russia actively spearheads the effort, negotiations with North Korea would be completed before gas pipelines are being installed (in the Russian section) between Vladivostok and Khasan," he said. But Lee said he was very careful in predicting the outcome of negotiations with North Korea, as it still remain unclear how the North will respond.

  (END)