Leaders agree to reconnect railways, roads, normalize Kaesong operations

The leaders of the two Koreas agreed Wednesday to hold a groundbreaking ceremony to link roads and railways within the year, in a move affirming willingness to resume business cooperation “to develop the nation’s economy in a balanced manner” on the Korean Peninsula.

The two sides also agreed to normalize stalled operations of the Kaesong industrial park and the Kumgangsan tour program “as conditions ripen.”

“The two sides agreed to pursue substantial measures to further advance exchanges and cooperation based on the spirit of mutual benefit and shared prosperity, and to develop the nation’s economy in a balanced manner,” read a joint statement signed by South Korean President Moon Jae-in and North Korean leader Kim Jong-un during their summit.

“The two sides agreed to hold a ground-breaking ceremony within this year for the east-coast and west-coast rail and road connections,” it stated.

The two sides will also discuss ways to create a special economic zone on the western coast and a special tourism zone on the eastern coast.

Although the leaders showed willingness to push forward railway projects and reconnect roads, the plans depend on whether there will be changes in the global community and UN sanctions, which remain intact.

The plans Moon and Kim agreed to pursue run against the United Nations’ wide range of economic sanctions on North Korea. The railway project is subject for review by the UN’s subcommittee on North Korea sanctions. The fate of the joint Kaesong industrial park and Kumgangsan tourism program also remains unclear, as sanctions prohibit the transfer of cash to North Korea and ban operations of joint ventures with any North Korean entities, according to experts and reports.

Opposition from the US is likely as President Donald Trump has reiterated that there will be no sanctions relief unless North Korea becomes a completely nuclear-free state.

The plan to hold a groundbreaking ceremony for railways and coastal roads comes five months after the two Koreas agreed to modernize and reconnect rail and road systems at the first summit between Moon and Kim in the truce village of Panmunjom.

The two Koreas have since conducted field studies on linking railways across the peninsula, but not much progress has been made so far.

Businesses also watched cautiously plans related to normalizing operations of the joint industrial park in Kaesong, citing sanctions and the past experience of North’s volatile moves.

It has been two years since the Seoul government shut down the operation of the manufacturing site in retaliation against the North’s nuclear and missile provocations.

Meanwhile, Hyundai Asan, operator of the Kumgangsan tour program under Hyundai Group, welcomed the leaders’ apparent willingness to resume the project, saying the company hoped for a favorable environment to immediately restart the business.

“Hyundai Group will thoroughly prepare for (further) joint economic cooperation based on (the group’s) exclusive right to operate infrastructure building projects in North Korea, not just Kaesong and Kumgangsan,” the group said in a statement.

Hyundai Asan holds sole business rights granted by Pyongyang to construct power plants and expand existing plants in the North. It could also lead railroad projects relinking Seoul and the North’s Sinuiju and Wonju, and the Kumgang line that used to connect the South’s Cheorwon and the North’s Naekumgang before the 1950-53 Korean War.

By Cho Chung-un (christory@heraldcorp.com)