The first shipment of Russian coal to arrive in Korea through the North Korean port of Rajin docked in Pohang on Saturday, possibly ushering in a new era of logistics for Korea.
Some 45,000 tons of coal from Russia made its way to Rajin on the newly restored Rajin-Khasan railroad, which connects Russia and North Korea. From there, via the Rajin rail transshipment terminal, it was taken to Pohang on a Chinese-registered vessel. If the pilot project proves successful and efficient, a consortium of South Korean companies is likely to join the RasonCon Trans, a joint venture between Russia and North Korea, by buying some of the Russian side’s 70 percent stake.
On Nov. 13, 2013, President Park Geun-hye and Russian President Vladimir Putin signed an MOU allowing Korean companies to join the RasonCon Trans. KORAIL, POSCO and Hyundai Merchant Marine would take part in the railway and harbor projects of the Rajin-Khasan logistics partnership as a pilot tripartite project.
Using the overland route from Russia to Rajin and the shipping lane from Rajin to Pohang is expected to lead to savings of about 10-15 percent in freight costs and time. However, the Rajin-Khasan project has other, perhaps greater, implications as well.
The Rajin-Khasan logistics partnership could be used to transport South Korean exports to Europe, cutting down the delivery time and freight costs. Indeed, the Rajin-Khasan route is the first stage in Park’s Eurasia Initiative, which envisions connecting the Trans-Korean Railway to the Trans-Siberian Railway.
As for the 2010 economic sanctions against North Korea that ban economic cooperation with North Korea, with the exception of the Gaeseong industrial complex, the administration has indicated that the RasonCon Trans would be an exception as well, clearing the way for the South Korean consortium to invest in the Russia-North Korea joint venture.
This may be an opportune time to consider lifting the 2010 sanctions made in response to North Korea’s sinking of the Cheonan. Creating exceptions undermines the strength of the sanctions, whose usefulness has been questioned. Such selective waivers are unfair to other companies that are being prevented from doing business with the North.
While the administration keeps up the pressure on North Korea to improve its human rights record, it should also look for ways to engage Pyongyang, and business activities are one way to achieve this. Even North Korea’s then-ambassador to Russia, Kim Yong-jae, said at a press conference earlier this year, “We are absolutely positive that inter-Korean economic contacts and trilateral relations and projects involving Russia contribute to an improvement of inter-Korean relations and the unification process.”
The administration should also remember that without any engagement with the North, Seoul will have no leverage against Pyongyang.
