Moon Jae-inVladimir Putin

Moon in Russia: Gas pipeline no longer a pipe dream

Russia established North Korea after World War II, but in recent decades has been marginalized in the region; warming economic ties with South Korea may help it regain a strategic position

June 23, 2018 1:01 PM (UTC+8)
Russian President Vladimir Putin (right) and his South Korean counterpart Moon Jae-In, during a press conference on the outcome of their meeting in the Kremlin on June 22, 2018. Photo: Alexei Druzhinin / Sputnik via AFP

South Korean President Moon Jae-in was to wrap up a three-day visit to Russia on Saturday after he watched his national soccer team take on Mexico in a World Cup match in Rostov-on-Don, but the real outcome of his trip goes well beyond the football pitch.

With Russian President Vladimir Putin seeking to leverage his nation’s hosting of the World Cup, Moon’s trip looks like a diplomatic coup for Russia – and possibly an economic boost for Russia and both North and South Korea.

On Friday, Moon summited with Putin; the day prior he had met with Prime Minister Dmitry Medvedev and addressed the Duma, the Russian parliament – a first for a South Korean president.

Moon’s discussions covered a broad range of issues, including winning the support of Putin for the (as yet, uncharted and un-started) process of North Korean denuclearization.

However, the main meat of his visit appeared to be economic – notably exploring the possibility of linking South Korea to the Russian Far East via pipelines, electricity grids and rail lines running through North Korea, and also commencing talks on a free-trade agreement (FTA).

“President Putin and I have agreed to launch business projects to prepare for potential trilateral cooperation involving South and North Korea and Russia,” Moon said in a press conference. “Launching joint research on connecting railroads, electrical grid and natural-gas lines will be a starting point.”

Russian LNG pipeline for South Korea?

Under Moon’s “New Northern Policy,” Seoul sees cooperation with Moscow taking place over nine “bridges” – gas, rail, electricity, shipbuilding, job creation, the Northern Sea Route, seaports, agriculture and fishing. The most promising initiatives could include linking Russia and South Korea with rail lines, LNG (liquefied natural gas) pipelines and their electric grids via North Korea.

The possibility of running rail and LNG pipeline links between Russia and South Korea via North Korea was first explored during the Southern administration of Kim Dae-jung (1998-2003).

The détente spreading across the region in the wake of North Korean leader Kim Jong-un’s repeated pledges to denuclearize offers these long-mooted plans new life – but are heavily dependent upon Kim’s good faith.

The détente spreading across the region in the wake of North Korean leader Kim Jong-un’s repeated pledges to denuclearize offers these long-mooted plans new life – but are heavily dependent upon Kim’s good faith

A Russian LNG pipeline would be a welcome source of power for South Korea, a net energy importer. However, there have long been concerns that running a pipeline through North Korea would grant Pyongyang leverage over South Korea’s power supply.

“Among the trilateral cooperation on the railway, electricity, and energy, connecting railways appears to be most likely,” Moon said during his meeting with Medvedev on Thursday, agencies reported. In his speech to the Duma he talked about extending the Trans-Siberian all the way through the Korean Peninsula to the port of Busan, on South Korea’s southeast coast. On Friday, Moon and Putin agreed to begin research into this linkage.

However, compared with a pipeline, rail links through North Korea would require massive investment, given the dilapidated state of the rail network in the country and the rugged terrain on the mountainous east side of the peninsula. That capital would almost certainly have to come from South Korea, but would have the benefit of linking the South – a de facto island – to the Eurasian mainland.

According to a 2007 study by The Far Eastern Transport University in Khabarovsk, southeastern Russia, dispatching exports from the Northern Pacific via the Trans-Siberian Express, then on to the European rail network, would accelerate shipment speeds by two and a half to three times compared with sea transport.

On Friday, Seoul’s Ministry of Trade, Industry and Energy announced that it had signed eight memoranda of understanding with Russia’s Energy Ministry and state utility firms to expand cooperation in energy, industry and investment between the nations, Yonhap news reported. The agreement includes a joint study to investigate the feasibility of cross-border energy projects.

“South Korea and Russia will jointly conduct studies on connecting the power grid between the two nations,” the ministry said in a release. “It is expected to provide a blueprint for connecting a power grid between two Koreas and Russia when conditions are met in the future.”

FTA to get under way

In addition, during their extended summit, Moon, Putin and their delegations agreed to kick-start a bilateral FTA.

“The two leaders agreed to start local processes for the launch of FTA negotiations between South Korea and Russia in the service and investment sectors first,” a joint press release said. An MoU was signed on the launch of FTA negotiations, along with 11 other agreements that call for bilateral cooperation and exchange in areas including information and communication technologies (ICT), Yonhap reported from Russia.

“To achieve the goal of US$30 billion in trade and 1 million in the number of visitors between the two countries by 2020, the two leaders agreed to work for practical cooperation that can actually benefit the people of the two countries,” said a joint statement.

Last year’s trade volume was $19 billion, Korean media reported.

Russia seeks role in Northeast Asian game

The summit was the first between Russia and South Korea in 19 years, and is a win for Putin amid the World Cup festivities. Prior to the tourney starting, the Kremlin had said, “There will constantly be lots of heads of state and government coming to different matches,” according to Reuters. “It will not just be a huge global celebration of sport, but also an intense flow of guests at the highest level.”

In the past two decades, Russia, which shares a narrow border with North Korea, has struggled to play a role in peninsula affairs given the dominance of China and the United States in the region.

Having set up the North Korean state after World War II, Josef Stalin’s USSR abandoned North Korea to its fate when the Korean War turned against it, leaving Mao Zedong’s China to save Kim Il-sung’s nation with a costly and bloody military intervention. Since the collapse of the Soviet Union, Russia has been increasingly marginalized, as China, with its surging economy, took on the role of North Korea’s main trade partner, leaving Moscow – which both first- and second-generation North Korean leaders Kim Il-sung and Kim Jong-il visited – related largely to the role of diplomatic backer.

While Russia was at the table during the now-defunct Beijing-sponsored Six-Party Talks on North Korean denuclearization, its regional economic and strategic profile has been shrinking. Tellingly, the suddenly summit-hungry North Korean leader Kim Jong-un has met with Moon twice, Chinese President Xi Jinping three times and US President Donald Trump once – leaving Putin, who has extended an invitation to Kim, a distant fourth (assuming that Kim accepts his invitation, as seems likely).

Putin has invited both Moon and Kim to the annual Eastern Economic Forum in Vladivostok, though neither has yet confirmed his intention to attend.

Facing hostility and sanctions from Western Europe due to the Ukraine crisis, Putin has sought to pivot to the East, but his hope of luring Japanese and South Korean investment into the Russian Far East has met with limited success. The climatically extreme region was devastated during the economic chaos of the Boris Yeltsin years, and remains underpopulated, despite various settler incentives offered by Moscow. Questions hang over the rule or law, and its potentially vast mineral wealth is largely untapped.

Indeed, in his meeting with Moon on Thursday, Medvedev seemed particularly interested in luring South Korean investment into natural gas in the Russian Far East.

Still, Moon’s final engagement in Russia may prove disappointing. A lackluster South Korean side lost 1-0 to Sweden in their first World Cup game, indicating that a victory against Mexico, who have already beaten powerhouse Germany, is unlikely.

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