Whatever Happened to Russia’s Korea Projects?

In August 2011, Russia signed what appeared to be a momentous agreement with North Korea (Democratic People’s Republic of Korea—DPRK), an accord that marked Kim Jong Il’s last great foreign policy accomplishment. North Korea’s Supreme Leader’s last major foreign policy initiative was the August summit with Moscow where he announced his willingness to resume his country’s participation in six-party talks on giving up nuclear weapons without preconditions, i.e. no preconditions for denuclearization and no apologies, regrets, etc. for the North’s 2010 attacks on South Korean (Republic of Korea—ROK) ships and territories. He also accepted Moscow’s long-standing idea to discuss a trans-Korean gas line that would begin in Siberia, traverse the DPRK to the ROK, and pay North Korea $100 million annually once the pipeline opens in 2017 (kremlin.ru, August 24, 2011). Russia also joined the DPRK in conducting joint naval search and rescue operations, is discussing forgiving North Korea’s debt, and is also moving forward on its century-long dream of a trans-Siberian–trans-Korean railway (TSR-TKR). Yet, as of Kim’s death in December 2011, neither the railway nor the pipeline is a done deal. Nor has there been much progress in the ten months since then in moving these projects forward.

To be sure, there are some inherent obstacles involved in doing so. Indeed, negotiating a multi-national gas pipeline, especially with such deeply entrenched adversaries as the two Koreas, is by definition a protracted process that can be reversed at any time. Second, the exigencies of domestic consolidation seem to be the driving force in the new North Korean regime’s policies. This means reshaping the governing coalition, discussing economic policies at home, and in foreign policy: discussions with or about China and the United States, North Korea’s principal interlocutors. Nonetheless, Russia is still pushing this agenda and has scored at least one objective, namely writing off North Korea’s debt, as discussed below.

Russian Foreign Minister Sergei Lavrov has admitted that North-South tensions on the Korean peninsula present obstacles to realizing tripartite projects like the projected gas pipeline. However, the pipeline through North Korea to South Korea, a similar power line, and the TSR-TKR projects are still on the books, and negotiations continue (Interfax, September 6). Nevertheless, the political problems—leaving aside the technical problems of building a pipeline across the peninsula, agreeing on the volumes of gas to be sent and the price—are still considerable. As one Russian report pointed out, the key obstacle is the absence of a legal framework for this project because there is no Russo-DPRK agreement on bilateral gas cooperation. As a result, “all current planning is no more than wishful thinking rather than concrete and goal-oriented steps waiting to be taken as soon as commercial terms are agreed on” (https://russiancouncil.ru/en/inner/?id_4=770).

As this report also points out, there is no bilateral accord between Pyongyang and Moscow. Moreover, no accord on gas cooperation, let alone much of anything else, is currently being discussed by the two Korean governments. And the absence of that accord retards progress on key issues of technical implementation, even if Russia is technically and politically ready to move forward. Third, the author points out that because Moscow has no leverage over Pyongyang, it cannot guarantee either to North Korea or, perhaps more importantly, to South Korea that energy deliveries will be safe and secure. Given the other two states’ lack of influence upon North Korea, Russian energy deliveries to South Korea can be held hostage at any time North Korea wants to do so. These considerations preclude any rapid movement to realizing this gas pipeline, which is a key component of Russia’s overall Asia policy as well as its Korea policy (https://russiancouncil.ru/en/inner/?id_4=770). And this is true even though South Korea’s Finance Minister Bahk Jae-wan recently proposed resuming talks with Russia on a bilateral economic agreement that would open the door to further growth of those two states’ bilateral trade and economic relations (Yonhap, August 29).

On the other hand, after protracted negotiations Russia agreed to forgive North Korea’s $11 billion debt, which in any case Pyongyang could not pay back. According to Deputy Finance Minister Sergei Storchak, Russia applied classic terms of the Paris Club—i.e. conversion of the debt into dollars at an appropriate exchange rate, an initial discount and the use of the balance of the debt for so called “debt for aid operations” (Interfax, September 16; RIA Novosti, September 18). Apart from clearing up this problem and opening the door partially to an uptick in Russian trade with North Korea, Moscow’s decision appears to be in line with a more general policy of forgiving the debts of poor countries like North Korea and also Kyrgyzstan, which cannot, in any case, repay their debts, in return for both enhanced investment and trade operations, and in Kyrgyzstan’s case, a military base (Pravda.ru, September 20). Nevertheless, Russia is unlikely to get any kind of enhanced military presence in North Korea, and any truly substantive increase in economic presence awaits the DPRK’s economic reform, something we have yet to see. Moreover, it is unlikely that China will not react by trying to minimize any such Russian presence and further enhance its already relatively large presence in the North Korean economy. Meanwhile, the six-party talks remain deadlocked, and Moscow’s policy of awarding benefits like debt forgiveness to Pyongyang in return for no discernible conditions has yet to produce meaningful results or to move the gas program, Moscow’s key objective, forward.