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S. Korean firms joining Russian-led project in N.K. reflects national interest: gov't

2013/11/13 20:53

SEOUL, Nov. 13 (Yonhap) -- The move by South Korean companies to join a Russian-led development project in the North Korean port of Rajin reflects greater national interests, Seoul's unification ministry said Wednesday.

The ministry, in charge of all inter-Korean relations, said plans by a South Korean consortium to buy a stake in RasonKonTrans, the Russian-North Korean joint venture, can strengthen ties between South Korea and Russia and create greater opportunities for all sides. The project, first launched in 2008, cost Pyongyang and Moscow US$340 million.

It said the memorandum of understanding, signed on the sidelines of summit meeting between South Korean President Park Geun-hye and Russian President Vladimir Putin earlier in the day, did not mean Seoul was abandoning its so-called May 24 blanket ban that prohibits all economic and personnel exchanges with the North.

The ban has been in place since 2010, after Seoul accused Pyongyang of sinking one of its warships near the sea border in the Yellow Sea. Seoul at present only permits humanitarian assistance exempt from the sanctions rule.

"This project is special, and efforts will be made to assist visits by South Koreans who have to go to the North to carry out due diligence," said a ministry official who declined to be identified.

He added that while an investment does conflict to some extent with Seoul's ban, it is slightly different, since companies will be buying stakes in the Russian company.

"It will be an indirect form of investment and not the direct kind that has been banned so far," the source said. However, he conceded the move marks the first time that investments into a North Korean project have been authorized.

South Korean businessmen from steelmaker POSCO, Hyundai Merchant Marine Co. and Korea Railroad Corp. are expected to go on fact-finding missions to Rajin and check the rail line linking the port city with the Russian town of Khasan.

Under the project, aimed at utilizing North Korea's ice-free port, Russia aims to transform Rajin into a logistics base linked to its Trans Siberian Railway (TSR). If the project makes headway, Rajin can be used by South Korean companies to send cargo by rail to Europe using the TSR.

On the controversy that may arise from "bending" the rules, the ministry official said the government is willing to review other indirect forms of investments involving other countries if proposed.

"If a proposal is submitted, it will be judged in terms of the nature of the project, the effect it will have on cross-border relations and North Korean attitude," he stressed.

yonngong@yna.co.kr

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