Tag Archive | "russia"

New North Korea Sanctions: The Best that Could be Expected

By Troy Stangarone

After North Korea’s sixth nuclear test, there were expectations that the United Nations would pass a new round of sanctions that would potentially be debilitating for North Korea. Early discussions included bans on exports of oil to North Korea and cutting off North Korea’s use of overseas laborers to earn hard currency. Steps that far were always unlikely, but based on initial reporting of the expected measures in the new sanctions resolution and a review of a recent draft of the new sanctions resolution, the United States likely achieved the best result it could have hoped for in a new round of UN sanctions.

With the last round of UN sanctions having been passed only on August 5 and barely implemented, there was likely always going to be resistance to harsh new sanctions before member states had a chance to determine if the last round of sanctions were having an effect. It takes time for sanctions to take effect and states such as China and Russia most likely would not want to pile on a significant amount without knowing how the new sanctions would impact North Korea.

Additionally, complete bans on exports of oil to North Korea and the use of North Korean laborers were always unlikely, despite the serious nature of North Korea’s most recent nuclear test. While the Global Times and others suggested that China should end its supply of oil to North Korea if it tested another nuclear weapon, Beijing also has concerns about the long-terms stability of the regime in Pyongyang, concerns it is unlikely to let go of in the near future.  China wasn’t the only one to back off of the suggestion of cutting off North Korea’s oil supply — Russia also quickly dismissed suggestions of an oil embargo. Without Russia’s support both in the UN and as a potential supplier of oil to North Korea, stringent sanctions on oil were unlikely.

Banning the use of North Korean labor was also always a longshot. China and Russia are the two largest consumers of North Korean labor, and Russia in particular was unlikely to support a complete ban, as North Korea supplies an important source of labor in the sparsely populated Russian Far East.

That being said, the new resolution does move the process forward in terms of restricting North Korea’s ability to earn hard currency and to limit its imports of oil. Much as initial caps on North Korean exports of coal, the new resolution would place a cap on North Korea’s imports of refined petroleum at 500,000 barrels for the rest of 2017 and 2 million for subsequent years. Also similar to the coal caps, it would require states to report their exports to the United Nations on a monthly basis.

It also places a softer cap on exports of crude oil to North Korea, which China provides to Pyongyang as aid. The soft cap limits exports to the amount exported in the prior year, but since China does not report its exports of crude to North Korea and there is no reporting requirement for crude, there is still the potential for China to export more than would be expected to North Korea.

The new restrictions on use of North Korean labor, while a step forward, are also potentially exploitable. While it would prohibit countries from issuing work permits for North Korean nationals except for humanitarian purposes or for objectives consistent with prior UN resolutions, it also allows contracts signed prior to the resolution to continue. This means that we are not likely to seen a reduction in North Korean workers abroad soon.

The resolution also contains a ban on the export of North Korean textiles, potentially reducing North Korea’s earnings of hard currency by $800 million. While this will remove one of North Korea’s major remaining export items, textiles are also a labor-intensive industry. By banning exports of textiles, this also removes one potential tool for reshaping North Korea over time — developing a larger consumer base that can eventually pressure the regime internally.

While this may have been the best that could be achieved at the United Nations, it is disappointing that China and Russia would not support more robust sanctions against North Korea. While the new sanctions continue to restrict North Korea’s ability to earn hard currency, more should have been done in response to North Korea’s test of a thermonuclear device. By holding back on more stringent sanctions, China and Russia risk sending a signal to North Korea that it should not be worried about strict consequences for their actions.

Despite China and Russia’s reluctance to go along with more stringent sanctions, it is important for the United States and its allies to continue to maintain Moscow and Beijing’s cooperation. This is not a problem that the United States can solve on its own.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from United Nations Photo’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (1)

How Might Russia Respond to an Accident at North Korea’s Yongbyon Nuclear Facility?

This is the second in a series of six blogs looking at a nuclear crisis at North Korea’s Yongbyon nuclear facility. Other pieces will look at the prospective issues of a nuclear crisis in North Korea from the perspective of North Korea, Japan, China, South Korea, and the United States.

By Khrustalev Vladimir

In the case of hypothetical accident with depressurization and ejection of radiation from a North Korean nuclear reactor: what actions might Russia take?

To start: the author must notify that the text written below is the author’s opinion and does not contain the information from inside documents of Russian authorities. Nevertheless, the possible Russian actions in this situation are rather predictable.

Firstly, Russia’s actions will be set by the scale of accident. And the scale of accident is determined by some objective limitations that are related to particular qualities of the working North Korean reactor.

It has rather low thermal power (not more than 30 megawatts) – so the supposed ejection of radioactive materials is hardly significant enough to be a threat for the life and health of Russia’s adjacent territories population.

For comparison – the full thermal power of Chernobyl’s RBMK-1000 was 3200 megawatts. So the full thermal power of North Korean reactor is less than 1 percent! It is the thermal power that determines the speed and volume of accumulated radioactive materials and also the potential energy intensity of different accidents with a thermal explosion. Even if we take the maximum valuation of territory recommended for evacuation (in big part just as precautionary measure) in areas adjacent to Chernobyl disaster – we’ll see only 2600 square kilometers. Any significant disaster’s effects (not all of them were dangerous) were recorded on the territory about 200 thousands square kilometers in size. In case of a hypothetical accident with the North Korean reactor we can unhesitatingly reduce these figures by 1-2 orders!

The supposed zone of occurrence of any conditions dangerous (at least potentially) for life and health is the territory of one or several neighboring counties. It is the maximum. Most of the accident scenarios set local effects.

Nevertheless Russia can’t ignore the hypothetically dangerous emergency situation. In many ways because the experience shows that any nuclear accident is perceived by citizens disproportionally dramatically to the actual hazard level. So, primarily the enhanced control of the radiation situation will be taken and the civil defense structures work will be implemented. Also, an awareness campaign for adjacent Russian regions’ (primarily Primorsky region) citizens about the current situation will be held.

Also, the Russian Federation (in case of a disaster that does not threaten Russia, but is still serious) will evacuate Russian residents who are in the potentially dangerous regions of North Korea. At the same time, Pyongyang will be offered neighborly assistance in eliminating the disaster’s effects. Russian specialists have unique experience in this field, have appropriate technologies, machines, equipment, and etc. In case of a nuclear accident our country is ready to offer help to any neighboring country and North Korea is not an exception.

From the point of view of the foreign policy approach the Russian Federation’s position basically implies any country’s inside freedom of choice to accept or reject help in this kind of situation. Therefore, efforts will be made to counteract attempts to use this accident for any kind of interventional actions against North Korea. Whenever possible there will be attempts to apply for external assistance in the specified formats of the UN and IAEA.

The most likely external partners in undertaking the operation are China, Belarus and Kazakhstan. With the last two countries mentioned there exist substantial communication in the nuclear field including the matters related to elimination of the consequences of any kind of nuclear activity.

From the technical point of view: the Russian Far East territory has sufficient stocks of materiel including some for in the case of nuclear accidents. The transport aviation operations of the Ministry of Emergency Situations or (in case of a lack of necessary equipment) the Ministry of Defense can be easily used for delivery of the needed volumes of materiel to North Korea. In the most prompt scenario the cargo will be delivered to the needed location in less than 24 hours. Most likely it won’t be necessary to deliver special heavy machinery (capable of functioning in the nuclear accident zone and providing protection to the personnel from radiation).  It will be easier to consult with the local specialists about the best ways of equipping common construction and the military machinery of North Korea with additional shielding. Russia has corresponding experience from the Chernobyl disaster. And North Korea would have appropriate industrial facilities.

Regarding the humanitarian aspect: the Russian Federation will also be ready to provide help for the evacuated civilian population with medicine and food supplies and other needs.

The other aspect is helping people affected by radiation. Probably (in case of other party’s agreement and medical possibility) the patients will be even evacuated to Russia for therapy. Our country has appropriate medical and scientific institutions that are highly practically experienced in healing such patients. Also, Russia is ready (if needed) to support corresponding specialists deployment to North Korea for work with injured people!

As for the situation with North Korean nuclear facilities: Russia does not accept any forceful actions against North Korean nuclear facilities in principle.

Firstly, an attack against these facilities could create consequences much more significant than just an accident. The point is that the impact can cause the depressurization of nuclear waste storage and spent nuclear fuel reprocessing facilities. Their destruction at the same time with the reactor would create a completely different hazard level – including the territory of Primorsky region that is adjacent to North Korea.

Secondly, such an attack would be considered a dangerous precedent for the destruction of nuclear facilities in another country’s territory. If such actions are taken by the U.S., Moscow will have to raise the limits of what is permissible in its foreign policy and to change a number of approaches to American activities near Russian borders. Also Moscow will have to accelerate joint activities in the area of collective security with China.

Therefore the Russian position implies the necessity of dialog and mutual concessions between Pyongyang and Washington. It also implies the destructiveness of both the approach in which only Pyongyang must make concessions and the threats of force against the North Korean nuclear complex.

Khrustalev Vladimir is a Russian defense analyst and editor-in-chief and author of “Northeast Asian Military Studies” (NEAMS.RU). The views expressed here are the author’s alone.

Photo from mariusz kluzniak’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (5)

Moon Must Not forget Moscow in North Korea Denuclearization Policy

This is the ninth in a series of blogs looking at South Korea’s foreign relations for the new Korean administration. The series also includes blogs on relations with North KoreaChina, the United States, Japan, the European Union, ASEANAfrica, the Middle East, and Latin America

By Jenna Gibson

As a candidate and since he has taken office, Moon Jae-In has paid little attention to Russia, and the few comments he has made have revolved almost entirely around Moscow’s role in North Korea denuclearization talks.

According to a policy book released ahead of the election, Moon intends to develop a “strategic partnership” with Russia, which consists of two points: “Strengthen the cooperation to resolve North Korea nuclear issue and develop ROK-DPRK-Russia cooperation accordingly,” and “Expand economic cooperation such as co-developing the North Pole Route, energy, etc.”

In a call with Russian President Vladimir Putin on May 12, Moon focused on the first point, emphasizing a need to work together with Russian on the DPRK issue and return to the negotiating table, according to a YTN report. And he named lawmaker and former Incheon mayor Song Young-gil, who has received an award from the Russian government for increasing exchanges between the two countries,  as his special envoy to Moscow.

But critics have pointed out that Moon seems to be de-prioritizing the Russian relationship. In his inaugural address, for example, he said “I will not rest until peace is settled on the Korean Peninsula. I will fly to Washington, Beijing and Tokyo, if needed, and I will also go to Pyongyang, if conditions are met.” Note that he has mentioned visiting five of the Six Party Talks member countries – but there is no mention of Russia in the entire speech.

This oversight likely won’t play well in Moscow, at least according to a forthcoming paper on Russia’s view toward North Korea sanctions by the Carnegie Endowment’s Alexander Gabuev, which he recently presented at KEI.

“A lot of Russian policy is driven by this very emotional feeling of making Russia great again, making Russia seen as an international big player,” he said. So if Russia is sidestepped through things like unilateral sanctions (or being omitted in a policy speech about DPRK policy), that will not play well in Moscow.

Further, Russia’s goals on the peninsula may be fundamentally different than what Moon has in mind. “Since military strikes on North Korean facilities or removing the leadership is not an option, there is not so much Russia can do to stop it,” Gabuev said, “So literally we pay lip service to the denuclearization mantra, but in real terms Russia doesn’t see it as a realistic option, or as a threat.”

In order to move forward, President Moon must be careful to include Russia in his strategy and public statements about denuclearization, especially if he maintains his stated goal of resuming the Six Party Talks. And he must also be thinking about how to use Russia’s position of cautious cooperation on the North Korea issue to his advantage.

One of the ways Moon can do this is to lean more heavily on the second point laid out in his policy paper – increasing cooperation with on the economic front. According to Russia scholar Stephen Blank, Russia’s North Korea policy is intrinsically tied to economics, as he wrote in a KEI paper in 2015. “The fundamental purpose of Russia’s Korean policy is to preserve peace in Korea and Asia generally, as peace is indispensable to any development of Siberia and the RFE [Russian Far East] on the basis of foreign and domestic trade and investment.”

If President Moon can harness this goal, he can simultaneously fulfill his pledge of remaining open to more engagement with Pyongyang while also giving Moscow more incentive to lean harder on denuclearization.

Russia plays a unique role in the international community when it comes to dealing with North Korea. While Moscow and Beijing generally agree on the imperative of maintaining stability above all else, Russia also feels an underlying need to assert its position at the table to be seen as an important international player. For President Moon Jae-In, keeping this second piece in mind will be key to working with the international community as he begins to shape his North Korea policy.

Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone. KEI intern Gwanghyun Pyun contributed research to this post.

Photo from Larry Koester’s photostream on flickr Creative Commons.

Posted in North Korea, slider, South KoreaComments (2)

U.S. Bilateral Relationships in Asia: Public Perceptions and Uncertainty

By Juni Kim

Despite being only February, 2017 has already had an eventful new year. Japan recalled its ambassador from South Korea over the ongoing “comfort women” controversy, the South Korean field of presidential candidates is starting to take shape, and the new Trump administration has signaled potential shifts in the status quo of U.S. bilateral relationships. All of these developments amount to a great deal of uncertainty over key relationships in Northeast Asia, and the coming months should prove to be interesting, to put it mildly.

The Chicago Council on Global Affairs, in association with other policy institutes worldwide, recently released a new study examining public opinions in America and Northeast Asia. Although the surveys in the study were conducted before the U.S. presidential election and the South Korean presidential impeachment, they provide a snapshot into global public opinions that will likely be affected by the significant events of the past few months.

With the Trump administration signaling the stabilization of U.S.-Russian relations and the fallout from President Trump’s contentious phone call with Australian Prime Minister Malcolm Turnbull, it will be worth watching how American public opinion regarding both bilateral relationships may change in future polls. The Russian relationship had previously been seen by Americans as souring, with a majority of survey respondents believing that U.S.-Russian relations were worsening in 2016, while only a scant 5% of Americans thought so of U.S.-Australian relations. Unlike these two divergent examples, the new administration has made efforts to reassure South Korea of the strength of the U.S.-South Korean relationship, with President Trump even calling the relationship “ironclad” on a phone call with acting South Korean President Hwang Kyo-ahn.

Chicago Council Numbers 2 (002)

The importance of U.S.-South Korean relations is underscored by similar threat perceptions of North Korea. The overwhelming majority of both the U.S. and South Korean public believe the North Korean threat is either critical or important. The U.S. presidential transition and the impeachment of South Korean President Park Geun-hye have not prevented the administrations of both nations from understanding this threat. It was no mistake South Korea and Japan were the first overseas destinations selected for newly confirmed Defense Secretary Jim Mattis, which indicated that both Asian allies remain vitally important to U.S. security interests. Both the U.S. and South Korea would be wise to continue to signal to North Korea the continuing strength of the relationship and deter any potential provocations.

Chicago Council Numbers 3

Still, North Korea may decide to throw a wrench into an already uncertain global situation for its own political purposes. The recent events of Iran’s missile test and the ensuing announcement by the Trump administration to put Iran “on notice” are undoubtedly being closely watched by the North Korean regime. Their calculus on when to conduct provocations will likely be affected by the severity of the U.S.’s response. Even with the uncertainty present in both the U.S. and South Korea, North Korea remains a highly volatile wild card that could test the new presidencies at any time. Regardless of how North Korea acts, both the general public of America and South Korea are likely to continue to place high priority on North Korea’s weapons programs.

Juni Kim is the Program Manager and Executive Assistant at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

Photo from Dickson Phua’s photostream on flickr Creative Commons.

 

Posted in North Korea, slider, South KoreaComments (0)

A Look Back at the Korean Peninsula in 2015

By Troy Stangarone

As we look back at the events that helped to shape the Korean peninsula in 2015, it is also an opportunity to review the events we highlighted on The Peninsula in our annual 10 Issues to Watch For on The Korean Peninsula in 2015 blog and the key events that we did not predict.

Looking back at the 10 issues raised in last year’s blog, all have resonated on the Korean peninsula this year, but not all in the ways we thought they might. On five of the issues, things have largely played out as we expected, while one did not and for four others the outcomes are less clear.

Here’s a brief look back at the 10 issues and what happened:

1.      Dealing with North Korea: Understanding North Korea is never easy and it is only made more difficult by the regime’s continued pursuit of nuclear weapons. One area we highlighted to watch in 2015 was progress on North Korea’s weapons programs and discussion of the deployment of the U.S. Thermal High Altitude Area Defense (THAAD) system in South Korea to protect against the nuclear and missile threat from North Korea. While North Korea took a major step towards developing submarine launched ballistic missiles, which would give it a second strike capability, South Korea has indicated it will not be discussing the deployment of THAAD with the United States. On this issue, our prediction was half right as North Korea has continued developing its weapons programs, but there has been less progress on deploying THAAD, or some other missile defense system than we expected.

2.      Key Summits in 2015: Here we highlighted a series of key summits for the year ahead. While Kim Jong-un ultimately did not go to Russia for the May 9th ceremony commemorating the end of World War II or make any international visits, thus eliminating the prospect of a meeting with South Korean President Park Geun-hye, each of the summits played a key role this year. Japanese Prime Minister Abe Shinzo did make a positive statement on issue of history with the 70th anniversary of the end of World War II approaching, even if it did not meet everyone’s hopes. Trilateral summits among Korea, China, and Japan also resumed. Lastly, Indian Prime Minister Narendra Modi held a bilateral summit meeting with President Park in what could become an important relationship in the future.

3.      Korea-Russia Relations: In 2014, North Korea began courting Russia and our expectation was that greater cooperation would be announced at a meeting between Kim Jong-un and Russian President Vladimir Putin. However, that meeting never happened and cooperation between the two seems to have fizzled. Though, Russia and South Korea did announce efforts to expand relations at the end of the year.

4.      Better Relations Between Korea and Japan: Here our key insight was correct, as the bilateral summit meeting took place between President Park and Prime Minister Abe after Prime Minister Abe had issued his statement on World War II. At the summit meeting, both sides agreed to work on resolving the Comfort Women issue and recently announced that resolution laying the groundwork for improved relations between the two countries.

5.      Constructing Legacies: With President Barack Obama’s term in office coming towards an end, our expectation for 2015 was that he would seek to build on his legacy as president, but not look to North Korea for a potential legacy issue. While President Obama has cemented deals on Iran’s nuclear program and climate change, there has been no progress on North Korea. For President Park, the agreement reached with North Korea in August to reduce tensions seemed to be a way forward, but subsequent talks with North Korea failed to make progress.

6.      Two Major Moves on Trade: South Korea has had an ambitious free trade agenda  that we expected to continue in 2015 with two major efforts – concluding and implementing an FTA with China and making efforts to join the Trans-Pacific Partnership (TPP). The FTA with China was implemented in December, but while South Korea has continued to express interest in joining TPP, the agreement’s late conclusion has limited Seoul’s ability to join.

7.      A New Nuclear Energy Cooperation Agreement: The United States and South Korea were looking to conclude a new agreement on civilian nuclear cooperation, or 123 agreement, to replace an extension to the 1974 agreement that was set to expire next year. The two sides successfully reached an agreement in June of 2015 and updated agreement is now in effect.

8.      The Diversification of South Korea’s Energy Supplies: South Korea is highly dependent on imported fuel with more than 85 percent of its petroleum imports passing through the Strait of Hormuz. Our expectation was that in 2015 South Korea would begin to diversify those supplies. While there have been efforts to import more condensate from the United States, low petroleum prices have made imports of U.S. LNG less attractive. However, now that Congress has passed legislation allowing for the export of oil, this will be an issue to continue to watch in the years ahead.

9.      Samsung’s Future and Its Frenemy Relationship with Apple: After a loss of market share in key markets such as China and India for its smartphones, as well as falling revenues and profits, 2015 was expected to be an important year for Samsung to reverse its fortunes while managing its beneficial and competitive relationship with Apple. While Samsung saw an increase in profits in the 3rd quarter, it was due to strong results in the semiconductor and display sectors as its smartphone segment continued to face challenges. It relationship with Apple continued to remain complex as Samsung has appealed part of their legal case with Apple to the U.S. Supreme Court, but also been chosen by Apple to supply microprocessors and displays for the iPhone.

10.  Feeling the Effects of Social Change in Korea: This was perhaps our most bold insight for 2015 and in truth one that reflected more long-term trends rather than issues that might specifically come to a head over the past year. As South Korea ages and continues to grow in prosperity, it will face the social changes that come with those trends. The level of social welfare and the definition of what it means to be Korean are issues that will continue to shape South Korea. Some social issues, such as public health, came to the fore in 2015 due to outside events such as the spread of Middle East Repertory Syndrome.

Beyond the issues we expected to see addressed in 2015, other important developments included:

1.      North Korea’s Provocation in the DMZ: On August 4, two South Korean soldiers were maimed after stepping on landmines placed by North Korea in areas of the DMZ that are known to be patrolled by South Korea. This raised tensions along the DMZ as South Korea responded by resuming broadcasts from loudspeakers across the DMZ and North Korea threatened to attack the loudspeakers. The crisis was ultimately resolved as the two sides reached an agreement for North Korea to apologize, South Korea to suspend the broadcasts, and the two sides to arrange for a reunion of separated families.

2.      October Family Reunions: One of the positive outcomes of the August provocation was the two sets of family reunions held in October. The first family reunion saw some 100 South Koreans meet their family members for the first time since the Korean War and another 250 were able to do so during the second reunion.

3.      Agreement on the Comfort Women: While not accepted by all of the Comfort Women, the agreement by Japan to issue an apology and provide compensation was one of the major unforeseen events of 2015.

4.      Middle East Repertory Syndrome (MERS): South Korea faced a medical emergency earlier this year as MERS spread through the country causing the death of 38 individuals and another 16,000 to be quarantined.

5.      The Passing of Kim Young-sam: A former activist for democracy who later became president of South Korea passed away at the age of 87.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Eugene Lim’s photostream on flickr Creative Commons.

Posted in Inter-Korean, North Korea, slider, South KoreaComments (0)

North Korea Looking Abroad

By Matthew Nitkoski

Nearly six years ago, the last attempt at multilateral engagement with the Democratic People’s Republic of Korea ended with the secretive Kim regime vowing to continue its uranium enrichment program. In the intervening years, neither allies nor enemies have been able to convince Pyongyang to halt its nuclear efforts and the fragile North Korean economy has continued to face debilitating sanctions. Unwilling to reverse course on its military program, the isolated Kim regime has begun reconsidering its foreign policy position and has made new attempts to increase trade and investment with its Asian neighbors.

North Korea’s desire to find new trading partners is partially spurred by its deteriorating relationship with China. Xi Jinping has yet to meet with Kim Jong-un, but has already had several high-profile meetings with South Korean President Park Geun-hye. Already strained diplomatic relations between Pyongyang and Beijing have been further weakened by a series of high-profile murders by North Koreans sneaking across China’s border. These grisly events have given Chinese citizens pause when considering their relationship with Kim’s regime. Recent internet commentary reflects the country’s worsening opinion and the ongoing debate in Chinese society over support for North Korea.

For its part, the Chinese Communist Party is weary of supporting a regime that gladly receives food and economic assistance, but is unwilling to accept diplomatic advice. With Chinese imports accounting for around 60% of the nation’s food and energy, Kim Jong-un is also eager to reduce his dependence on Beijing. With Beijing pursuing improved relations with Seoul over issues as diverse as trade policy and cybersecurity, Pyongyang has sent out a number of diplomatic missions to garner economic support as it reforms itself and seeks self-sufficiency.

The Kim regime has primarily focused on improving trade relations with Russia, and both Moscow and Pyongyang have taken positive steps towards enhancing their economic ties. Although Russia is suffering its own economic woes due to sanctions and a collapsing currency, Moscow has made a serious effort to signal its intentions. In 2014, Russia finalized the cancelation of $10 billion of North Korea’s $11 billion debt that had accrued during the Soviet Era. The Kremlin expects that this gesture of goodwill will facilitate the construction of a gas pipeline covering the Korean peninsula, but also acknowledges that North Korea could contain profitable investments opportunities.

Moscow is continuing its efforts to improve ties with Pyongyang and, last week, the Russian Chamber of Commerce created the Council for Cooperation with North Korea. Established with the ambitious goal of doubling trade figures to $2 billion by 2020, the Council indicates that both Moscow and Pyongyang are serious about developing cohesive economic ties. Kim Jong-un has responded positively to these advancement and is rumored to be considering a trip to Russia to attend ceremonies marking the 70th anniversary of the end of the World War II. This high level diplomatic visit would serve as a capstone to a period of increasingly friendly relations between the two countries.

North Korea has also recently made attempts to engage various Southeast Asian countries in an attempt to diversify its economic relations. In August of 2014, North Korean Foreign Minister Ri Su-yong visited Laos, Vietnam, Myanmar, Indonesia, and Singapore and, while his official itinerary and talking points remain secret, many view this as an overt attempt to strengthen economic ties. Last month, Pyongyang reiterated its interest in the fast-growing region by sending Vice Foreign Minister Ri Kil-song to seven Southeast Asian countries. These renewed attempts at economic cooperation coupled with plan to develop 13 special economic zones signal North Korea’s willingness to experiment with reform and become more self-reliant in the face of souring relations with China.

The recent round of missile tests are a clear signal that Kim Jong-un will maintain his hawkish military stance. With renewed six-party talks predicated on North Korea’s nuclear disarmament, Pyongyang is seeking ways to circumvent the long-standing economic sanctions by strengthening economic ties with its Asian neighbors. Kim Jong-un is wary of any foreign interference in domestic affairs, and his moves to diversify the North Korean economy are clear attempts to reduce his country’s reliance on Beijing. The recent statement by Daniel Russel, the Assistant Secretary of State for East Asian and Pacific Affairs, could act as encouragement for Kim Jong-un as he balances reform with firm party control.

Last week, Assistant Secretary Russel advised that, “A change in North Korea does not need to be a regime change as the example of Burma shows.” Kim Jong-un clearly understands the unique challenges he will face as the leader of North Korea, and these recent attempts at engaging the international community signal his intent to develop the state economy. While it seems unlikely that the regime will suddenly revise its status quo, these political overtures are clear indications of North Korea’s attempt to stake out its own claims for economic opportunity and solidify its political independence.

Matthew Nitkoski is a MA candidate in International Affairs at the Elliot School for International Affairs at George Washington University and an intern at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Adam Barker’s photostream on flickr Creative Commons.

Posted in North Korea, sliderComments (0)

What Happens to the North Korea Pipeline Now?

By Troy Stangarone

Nutritional aid might not be the only cost of North Korea’s recent failed satellite launch.  Only a few months prior to Kim Jong-il’s death there had been significant discussion of building a pipeline to transmit Russian gas through North Korea to the South. North Korea had indicated that it would be willing to take part in the project and South Korean President Lee Myung-bak had agreed to work closely with Russian President Dmitry Medvedev to push the project forward. Now, only a few months into the new regime under Kim Jong-un there are real questions if the project is viable.

On the surface, the pipeline made sense for all parties involved at the time and Kim Jong-un had indicated his support for the project in April. The Russian Far East is rich in natural resources, including natural gas, and tapping the South Korean market would allow Russia to diversify its exports away from European markets and place pressure on China in their stalled gas talks. For South Korea, which is dependent on imports for its energy needs, the pipeline promises a supply of natural gas potentially 30 percent below what it currently pays. For North Korea, which is seeking to prop up its economy the project presents the prospect of a significant infusion of hard currency from the estimated $100 million dollars in annual transit fees the pipeline would provide. Everyone would seem to have something to gain.

Under Kim Jong-il, one could have been fairly confident that the political risk surrounding the project could be managed based on the experience of the Kaesong Industrial Complex. While Pyongyang has sought raises for workers beyond the contractual agreement between North and South Korea in the complex, it has also refrained from interfering in the complex’s operations during periods of heightened tensions between the two sides.

Russia and South Korea in their talks in the fall had also taken steps to try to disincentivize North Korea from interfering in the pipeline. Russia would be responsible for the transit fees, and has indicated that it’s willing to structure the contract so that it is responsible for delivering the gas to South Korea if Pyongyang were to interfere with the pipeline. Additionally, South Korea has proposed running the pipeline to Seoul before it cuts back up to Pyongyang, meaning North Korea would cut off its own gas supply if it were to interfere with the pipeline. These steps would take away potential leverage that North Korea would gain from the pipeline, but still leave the possibility that Pyongyang could try to tap the pipeline upstream for its own uses. The project had been promising enough that Gazprom and Kogas held talks as recently as April 9 to discuss the commercial parameters of the project.

However, with North Korea having defied international consensus to conduct its satellite launch, made suggestions that it will turn parts of  Seoul to “ashes”, and a third nuclear test in the offing it would only seem prudent for all of the parties involved to reassess their positions in the project. Even if the rhetoric coming out of Pyongyang is dismissed as par for the course, the prospect of a significant financial return for the regime from the pipeline has not tempered the regime’s actions. At the very least it would seem there is a significant prospect of the project being delayed. After the missile launch the United Nations Security Council statement stated that “If North Korea chooses to again defy the international community, then the Council has expressed its determination to take action accordingly.” Pushing forward with the pipeline project in this environment could send both the wrong message to the new regime in Pyongyang and lead to the unfortunate appearance of providing the new regime with a significant cash infusion at a time when it has taken multiple actions condemned by the international community.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade for the Korea Economic Institute. The views expressed here are his own.

Photo from Leftik’s photo stream on flickr Creative Commons.

Posted in Inter-Korean, sliderComments (3)

What Putin’s Return Means for Russia and the Korean Peninsula

By Dr. Richard Weitz

During his campaign for the Russian presidency, Vladimir Putin wrote several lengthy articles detailing his views and policy recommendations. In his foreign policy treatise, Putin devoted a surprising amount of attention to North Korea.

Putin writes that, “We have consistently advocated the denuclearization of the Korean Peninsula – exclusively through political and diplomatic means — and the early resumption of Six-Party Talks.” At the same time, Putin says that. “I am convinced that today it is essential to be particularly careful. It would be inadvisable to try and test the strength of the new North Korean leader and provoke a rash countermeasure.

“In coming years, “We will continue conducting an active dialogue with the leaders of North Korea and developing good-neighborly relations with it, while at the same time trying to encourage Pyongyang to settle the nuclear issue. Obviously,” Putin adds, “it would be easier to do this if mutual trust is built up and the inter-Korean dialogue resumes on the peninsula.”

In some ways Moscow is well-situated to serve as a key mediator in international efforts to resolve the disputes between North Korea and South Korea. Not only does it have good relations with both Koreas, but Russian economic and security interests would be bolstered by a lengthy period of harmony and stability in the Koreas.

For starters, Russia shares ethnic and historical ties with Koreans as well as a 17-km long border with the DPRK. This proximity ensures Russian interest in participating, even indirectly, in any multilateral dialogue concerning the Koreas.

More importantly, Russian policy makers seek to enhance Russia’s integration with the flourishing East Asian region. Securing additional South Korean, Chinese, and Japanese investment and trade would help revitalize the Russian economy, especially the lagging but strategically significant region of the Russian Far East (RFE). Russia’s trade relations with the major East Asian nations of Japan, South Korea, and China falls far behind these three countries’ economic interactions with each other.

Russian entrepreneurs envisage converting the DPRK into a transit country for Russian energy and economic exports to South Korea and other Asia-Pacific countries. Such a development would further Russia’s integration into East Asia as well as revitalize Moscow’s ties with North Korea. They have discussed linking a trans-Korean railroad with Russia’s rail system, which would allow Russia to become a transit country for South Korean trade with Europe, which now involves mostly long-distance shipping. Furthermore, Russian planners want to construct energy pipelines between Russia and South Korea across DPRK territory.

This bright scenario has one major problem: it cannot occur without a reduction of tensions on the Korean Peninsula. For this reason, Russian diplomats have regularly engaged in high-profile Korean diplomacy.

Unfortunately, a decade of Russian diplomacy has had little impact on regional affairs. Breaking with precedent, Vladimir Putin visited Pyongyang in July 2000 to bolster and reenergize ties. The new Russian president also hoped to bolster his diplomatic credentials. But his efforts failed to secure a tangible agreement, souring Moscow on Pyongyang for several more years.

Almost a decade later, both Russia and China each sent two high-level delegations to Pyongyang in 2009. The DPRK’s leader, Kim Jong Il, decided to meet with Premier Wen Jiabao and PRC Defense Minister Liang Guanglie, however, he did not so much as greet Foreign Minister Sergey Lavrov or Russian parliamentary leader Sergey Mironov.

Russia’s problem is that its economic and political influence in the Asia-Pacific region is too limited. The territorial dispute with Tokyo over the South Kuriles/Northern Territories excludes a genuine Russian-Japanese partnership. Although Russian ties with Beijing and Washington are better, Chinese and U.S. diplomats focus their Korean diplomacy on Pyongyang, Seoul, and each other. In order to increase their regional influence, Russian officials must become more conciliatory towards Japan, and less beholden to China.

Dr. Richard Weitz is a Senior Fellow and the Director of the Center for Political-Military Analysis at the Hudson Institute. The views expressed here are his own.

Photo from Jonathan Davis’ photo stream on flickr Creative Commons.

Posted in North Korea, slider, South KoreaComments (1)

A Renaissance in Russia-North Korea Relations?

By Troy Stangarone

During the Cold War, Russia served as North Korea’s primary trading partner and provider of security guarantees. As the Cold War came to an end, however, Russia reoriented its foreign policy towards the West and relations with North Korea were downgraded as Moscow sought closer ties with Seoul. That may be changing. In recent months there have been indications that relations could again be warming between Russia and North Korea.

Today, North Korea has become dependent upon China. China’s share of North Korea’s trade has grown from 41.6 percent in 2007 to 57.1 percent last year. This is similar to North Korea’s dependence on the Soviet Union when the Cold War was coming to an end. In 1988, trade between the Soviet Union and North Korea had grown to $2.8 billion, accounting for 56 percent of North Korea’s two-way trade.

With the ending of the Cold War the relationship began to change. Military cooperation and Russia’s obligation to defend North Korea slowly came to an end, and trade began to dry up after Mikhail Gorbachev converted all of the Soviet Union’s trade relations to commercial terms. What had been North Korea’s most important trade relationship has fallen to a mere $62 million in two-way trade in 2010 according to the WTO’s Trade Map.

That has begun to change recently as North Korea seeks aid and investment for its economy in advance of 2012. However, increased economic ties between Russia and North Korea have long been blocked by Pyongyang’s inability to pay off Soviet era debt, but the two sides have recently found a way to address this issue. Under the current proposal, Moscow would forgive 90 percent of North Korea’s debt and reinvest the remaining 10 percent in projects in North Korea.

At the recent summit in Ulan-Ude, Russia provided North Korea with 50,000 metric tons of grain as food aid and the two sides agreed to explore the development of a gas pipeline through North Korea that would supply Russian gas to South Korea. The project would potentially provide North Korea with $100 million in transit fees per year, or about five times as much as it currently receives in wages from the Kaesong Industrial Complex with South Korea.

Russia is also undertaking other economic development projects in North Korea. It recently repaired a rail line connecting Khasan in Russia to Rajin in North Korea, where it is building a container terminal.  It has also expressed an interested in ultimately connecting the Trans-Siberian Railway to the Inter-Korean Railway, perhaps as part of the gas pipeline project.

On the security front, Russia and North Korea have also announced they will conduct joint naval exercises in 2012. The exercises will focus on joint search and rescue operations.

As cooperation between Russia and North Korea has increased, Seoul has grown weary. Improved ties between Moscow and Pyongyang, however, are unlikely to be a challenge for South Korea. Russia’s interests in North Korea ultimately have little to do with North Korea itself, but rather a means to a larger ends.

After the Cold War, Russia’s influence in Asia and the Korean peninsula began to wane and its cooperation with North Korea is part of its efforts to restore its influence in the region, while at the same time integrate the Russian Far East into East Asia.

The Russian Far East has some of the world’s largest deposits of oil and natural gas and the pipeline to South Korea will help Russia diversify beyond its current Europe customers and help to put pressure on China in its negotiations with Russia. Even linking the Trans-Siberian Railway with the Inter-Korean Railway is more about connecting Russia to South Korea than greater ties with North Korea.

If Russia is to find new markets for its natural resources, as well as potentially entice South Korean capital to help modernize Russia, it needs stability on the Korean peninsula and a direct connection to South Korea. This will require it to improve its ties with North Korea, which could also enhance its influence in the region, meeting both of Russia’s goals for its policy towards the region. Ultimately, though, increased ties with Pyongyang are more about South Korea than North Korea.

Troy Stangarone is the Senior Director of Congressional Affairs and Trade for the Korea Economic Institute. The views expressed here are his own.

Posted in North Korea, sliderComments (2)

Five Considerations for a Gas Pipeline Through North Korea

By Troy Stangarone

After more than a year of heightened tensions over the sinking of the Cheonan and the shelling of Yeonpyeong Island a proposed gas pipeline from Russia to South Korea through North Korea is potentially changing the factors on the ground.  Ever since Kim Jong-Il and Russian President Dmitry Medvedev agreed in principal to construct a pipeline through North Korea in late August, a project that only a few months ago would have seemed inconceivable is quickly moving towards reality as all three sides move closer to an agreement.

The project dates back to a 2008 summit between Russia and South Korea where a tentative deal was reached for Russia to supply South Korea with 7.5 million tons of gas a year for a 30 year period starting as early as 2015. The initial plan left open the option of supplying the gas via either pipeline or tanker, but with a pipeline being the preferred option due to the lower cost of transport. While a potential economic win for South Korea, there are five potential issues to consider for any pipeline through North Korea.

Could the pipeline change inter-Korean relations? This is ultimately a commercial agreement and should be judged on those merits. While some officials in South Korea and Russia have suggested that the pipeline deal could lead to a change in inter-Korean relations, any expectations beyond the easing of tensions needed to complete the project may be expecting too much. In fact, because the pipeline would be an easy money earner for North Korea, it could undermine incentives for greater North-South cooperation.  The only incentive for North Korea would be to ensure that the checks continue arriving, not that it considers a major rethink of its relations with South Korea.

Can North Korea be trusted with a pipeline?  The simple answer is no. Disputes between the North and South will make the pipeline a tempting target for North Korean officials to use as leverage against South Korea. This is not merely a reflection of the North Korean regime. Few would argue that North Korea is a more open or dependable regime than the Ukraine which has in the past shut down gas flows to the European Union in disputes with Russia. At the very least, North Korea can be expected to try and extract higher transit fees in the future has it has done with the Kaesong Industrial Complex. At the worse, it may attempt to use the pipeline for leverage over South Korea on other issues.

Can South Korea minimize or eliminate North Korea’s leverage over the pipeline? The simple answer to this is yes, and early indications are that South Korea is attempting to protect itself against North Korean attempts to leverage the pipeline. One idea that has been suggested is for Russia to provide a 30 percent discount on gas as compensation if North Korea were to interfere with the pipeline. However, there are other steps South Korea could take as well. If Russia were contractually obligated to ensure that the agreed upon amount of gas is delivered to South Korea via pipeline or tanker and Russia were required to cover any requests for an increase in transit fees, it would reduce any leverage North Korea might gain from the pipeline and the risks for South Korea.

Is this the best way to engage North Korea? If long-run goal is to encourage reforms in North Korea and reduce tensions between the North and South, this is not the best option. For North Korea the deal is primarily about the infusion of hard currency. It is expected to make $100 million dollars in annual transit fees and land leases for the project. This would represent about five times the revenue that North Korea earns annually from salaries in the Kaesong Industrial Complex. However, unlike the project at Kaesong, no meaningful skills or best practices are transferred to North Korea.  There is no need for a greater interaction between North and South Koreans if they are not involved jointly with the construction or maintenance of the pipeline.

Does the pipeline make commercial sense for South Korea? This will be the deciding factor on whether South Korea moves forward with the pipeline project. As a nation with no domestic energy reserves the pipeline project could potentially secure the equivalent of nearly 30 percent of South Korea’s gas imports from 2009. In addition, the project has been estimated to reduce its price for natural gas by up to 30 percent. Those are compelling economic incentives for South Korea to move forward with the project. However, there is one other issue to consider. With new retrieval techniques expanding the global supply of natural gas, will the potential for reduced prices in the future make a 30 year contract with Russia at a fixed price less attractive in the long-run?

Troy Stangarone is the Senior Director for Congressional Affairs and Trade for the Korea Economic Institute. His views are his own. 

Posted in Inter-Korean, sliderComments (1)


About The Peninsula

The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.