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This week Andray presented a report at the US-Korea Institute at SAIS exploring the contours of current economic interactions in the Tumen region, where China, Russia and the DPRK meet, concluding that by-and-large, the integration of the region is held back by the strategic and political concerns of distant capital cities.
There are long-term forces at work here, such as Moscow’s concerns over Chinese dominance in the sparsely populated Russian Far East. This legacy of mistrust frames cross-border interactions and despite recent warm relations, major cross-border cooperation remains limited. There are also relatively recent roadblocks to cooperation, such as Beijing’s opprobrium over North Korea’s nuclear program. This has prevented the implementation of pre-2013 plans to link Rason – North Korea’s northeastern special economic zone – to the electricity grid in Jilin Province, in Northeastern China.
Russia’s commitment to its strategic priorities in the Ukraine has led to sanctions and a recession that have also hurt prospective trade and investment relations in the Tumen region. So while Pyongyang has hoped to rebalance its economic relations away from China and towards Russia, it has been frustrated by a general lack of interest in North Korea amongst Russian companies as well as the recession that has limited their capacity to invest abroad. This is despite Moscow forgiving 90 percent of North Korea's $11 billion Soviet-era debt. Russia, for its part still seeks to broker cooperative projects that will link the Russian Far East with South Korea, through North Korea. Its dreams of a gas pipeline and cooperative rail projects have made little progress in the face of inter-Korean political concerns.
That said, trade and investment does occur, despite the myriad of issues between the three countries. The single major cooperative project has the refurbishment of part of a North Korean port and the rail line linking the pier to Russia. This project has yet to move significant volume, however and its profitability remains in doubt for the time being. Significant investment by China and South Korea into Hunchun – China’s southeastern most city in the region – suggest a hope that future connections through both Russian and North Korean ports will facilitate an increased flow of both goods and people. These international linkages, however, remain limited.
For several years, rail development by Russian and road construction by China in Rason suggested that the region was beginning to knit together. Rason could be described a something of a hub for the region and it had concurrently given more autonomy by Pyongyang and was engaging in something of a public relations campaign. Since the 2013 purge of Kim Jong Un’s uncle, Jang Song Taek, and Pyongyang’s third nuclear test, the SEZ appears to have less autonomy and has attracted less interest from its neighbors.
The potential for integration in this region remains large, if limited by the relationships and strategic concerns of faraway capitals. Its future depends very much on how these relations develop over time.