Features | Politics | East Asia

Russia Eyes Korean Peninsula

Economic ties between Russia and South Korea are flourishing. But nuclear worries still complicate ties with Pyongyang.

Despite the Russian Federation’s obvious geographic claim to Pacific nation status, East Asian nations generally haven’t viewed it as a major regional player. This is in part due to the traditional European focus of Russian leaders, but also the fact that Russia simply doesn’t have the strong economic and institutional ties necessary to make its presence felt in East Asia.

But recent Russian moves suggest it’s hoping to change this perception.

Of course, Russian policymakers have already worked hard to maintain a central role for the country in the Six-Party Talks, a framework that, like the United Nations, bolsters Moscow’s claims to great power status. But this month Russian President Dmitry Medvedev took the opportunity ahead of the G-20 meet in Seoul to underscore some key points in his country’s Korean diplomacy.

Russian officials have frequently stressed their opposition to North Korea’s continued possession of nuclear weapons. This is hardly surprising—they don’t want yet another nuclear-armed state bordering their country, especially one that’s armed with inaccurate missiles and that’s ruled by an erratic, dynastic dictator.

In addition, Russia fears that North Korea’s nuclear-armed ballistic missiles could encourage further nuclear proliferation in East Asia and beyond, as well as the spread of missile defences in response—neither of which would enhance Moscow’s security. With this in mind, the Russian government has voted in favour of UN Security Council resolutions demanding that Pyongyang cease testing missiles and abandon its nuclear weapons.

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Medvedev brought much the same message to Seoul. During his stay, he reaffirmed through a dozen or so bilateral agreements and various statements the importance of developing economic links between the two Koreas and Russia, the need to maintain peace across the Korean Peninsula and the importance of resuming the Six-Party Talks and ending North Korea’s nuclear programme.

Indeed, it’s the economic realm—so often overlooked by the international media—that’s seeing some of the most interesting developments. For example, Russian entrepreneurs envisage converting North Korea into a transit country for Russia’s energy and economic exports to South Korea and other East Asian countries. They also want to sell additional items to South Korea and secure high-technology investment from the country.

Although the Russian and South Korean economies are similar in size overall, they have quite different strengths—bilateral commerce primarily involves Russia exchanging its natural energy resources, mostly oil and natural gas, for South Korean machinery and equipment.

As a result, economic ties between the two countries have improved considerably in recent years, especially in high-technology sectors. According to the latest figures published by the Korea International Trade Association, two-way commerce amounted to $12.4 billion in the first nine months of this year, 20 percent more than for the whole of 2009. Medvedev said Moscow hopes bilateral trade will exceed $17 billion for the entire year.

Such ties would surge if the countries are able to realize their ambitious schemes for massive transportation and energy projects. During his trip, Medvedev revived plans to link the Trans-Korean and Trans-Siberian railways. ‘We repeatedly discussed this project and believe it's interesting both from a commercial and most importantly a political point of view,’ he said, urging the Korean governments to resume talks that would set the project in motion. If it happens, it would have a significant impact on trade by decreasing transportation costs and delivery times. Prior to Medvedev's arrival in Seoul, Kremlin adviser Sergei Prikhodko also said Russia wanted to see the construction of an electricity transmission line between the two Koreas.

Plans for an overland natural gas pipeline were mooted years ago, but have faced repeated difficulties due to commercial infighting among Russian energy companies, the inability of Russia and China to negotiate a mutually acceptable agreement that would allow Russia to send gas to both China and South Korea, and North Korea’s erratic position regarding the trans-peninsular pipeline project.

In the meantime, though, Russia and South Korea signed an enormous natural gas deal in September 2008 estimated to be worth about $90 billion under which South Korea will import 10 billion cubic meters of Russian gas annually over a 30-year period, beginning in 2015.

More recently, at this year’s G-20 Business Summit, Russia’s Gazprom signed an agreement to start talks in December about the possibility of delivering natural gas to South Korea beginning in 2017. Gazprom Chief Executive Officer Alexei Miller confirmed that the intended volume would be as much as 10 billion cubic meters and it’s a measure of Russia’s growing ties with Asia that Gazprom’s deliveries to Asia could soon reach—for the first time—volumes comparable with those shipped to Europe.

But trade between the two isn’t just about what Russia can do for South Korea. For example, one new theme among Russian firms is applying South Korean firms’ advanced technologies and entrepreneurial skills to help modernize Russian industries and the economy.

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‘We are ready not only to trade,’ Medvedev said in Seoul, ‘(South) Korean companies have a lot of experience in applied technologies and in their commercialization.’ He added that South Korean firms ‘not only bring money and jobs, but also what is most important—modern technologies.’

Before his trip, Medvedev had said that his government was eager to attract investment to the Russian Far East and that it also planned to prioritize sectors including computers, telecommunications, medical technologies, civil nuclear technologies and energy efficiency. He also noted Russian interest in learning about South Korea’s Daedeok Innopolis innovation centre as a potential model for Russia’s new Skolkovo innovation centre and Russky Island university.

But the interest isn’t all one way. At a joint November 10 press conference at the Blue House in Seoul, South Korean President Lee Myung-Bak demonstrated his own government’s interest in stimulating South Korean investment in Russia by praising an agreement their justice ministers had signed granting South Korean business people and their families extended visas to work in Russia. Under the terms, they can apply for three-year work visas following the expiration of their initial one-year visa.

Meanwhile, South Korean investment in Russia is continuing to expand. In 2009, South Korea invested about $1.3 billion in the Russian economy; nearly $500 million of this total was direct investment. Early this year, meanwhile, the Hyundai Motors Corporation completed construction of its new car assembly plant near St. Petersburg, producing 100,000 automobiles each year.

But while South Korean ties are flourishing, relations with North Korea are more complex.

In an interview published in South Korea’sJoongAng Ilbo newspaper on the eve of his visit to Seoul, Medvedev said he was worried about North Korean nuclear activities near Russia’s borders. In addition, he described the country’s nuclear programme as ‘a systemic challenge to the international nuclear non-proliferation regime.’ The Russian government also joined other leading nuclear powers in releasing a UN report that asserts that North Korea annually exports about $100 million worth of missiles and other arms in violations of international sanctions imposed on it.

Still, Medvedev stressed his country wasn’t giving a blank cheque to those seeking to pressure Pyongyang. For example, he voiced opposition to strong sanctions that could contribute to North Korea’s collapse—Russian officials emphasize changing Pyongyang’s behavior, not its regime.

Like their South Korean colleagues, Russian policymakers favour a ‘soft landing’ for Kim Jong-il’s regime—a gradual mellowing of the country’s domestic and especially foreign policies, including the renunciation of nuclear weapons. Such a benign outcome would avoid the feared consequences of precipitous regime change—humanitarian emergencies, economic reconstruction, arms races and military conflict. But while Russia has blocked draft UN resolutions imposing severe sanctions on North Korea or even authorizing the use of force, policymakers have supported some penalties to ensure that Moscow remains a central player in the international response to the Korean issue.

But while Russia’s support for a soft landing is clear, there’s one thing that is uncertain—how Russia feels about the prospect of the future reunification of the two Koreas. If reunification did take place, it could mean, for example, that a substantial share of South Korean investment for Russia would instead be diverted towards North Korea’s rehabilitation.

And of course there’s one more concern with reunification. Russian policymakers would almost certainly feel uncomfortable at the prospect of US forces being deployed in a country that, if unified, would share a border with the Russian Federation.