Analysis. Moscow is particularly interested in a peace deal or denuclearization of the Korean Peninsula. Gas pipelines, new rail and maritime routes, and more trade with South Korea would all become possible.

Korean peace raises economic prospects in Russia and Asia

“Just a year ago, when Kim’s missiles were flying over the skies of South Korea, we could not even have imagined such a turning point in Asia,” confessed an official from the Russian Foreign Ministry to Izvestia, the Russian daily, at the Singapore Summit. Indeed, one of Putin and Lavrov’s main goals, until some time ago, was to turn down the heat between North Korea and the United States.

Endless visits between Japan, China, the Koreas and the Glass Palace weaved the canvas of dialogue. “We have always believed in it and we have never had a plan B,” the Russian official said. Above all, Putin has always argued that the people in Pyongyang were “anything but crazy. … They will rather eat grass than give up.”

Russia has been very keen on dialogue because peace is the only horizon that can play a significant role in the region. Although some Western media continue to portray Russia as a global superpower, Russia remains a regional power with limited financial penetration capacity.

“In Immanuel Wallerstein’s world-system theory, Russia is a semi-peripheral power and a semi-colony, even if of a special type,” said the russian sociologist Boris Kagarlitsky. The sentiment, despite its neo-marxist character, is also shared by Putin, who believes the collapse of the USSR in 1991 was in part determined by its desire to play a global role in the Brezhnev era. This does not mean that the end of the story has already been written.

According to Alexei Arbatov, specialist in international politics of the Russian Academy of Sciences, “with Trump everything is possible. But if he takes the Korean issue seriously, it will be a job that will last many years.”

The unpredictability of the White House is a factor that the Kremlin carefully evaluates: to this end, Russian analysts studied the Singapore meeting to see if Trump would come out of the format from the protocol. For the rest, with the American military bases well planted on South Korean territory, no one in Moscow had ever dreamed that it would be possible to make progress in the dialogue between the two Koreas without a central role for the United States.

Russia, for its part, is now ready to help its historic North Korean ally, and it would like to focus on the economic potential of thawing the peninsula. Russia is already an economic partner of Seoul. Last September at the Eastern Economic Forum, Moon Jae-in presented the economic program “Nine Bridges for Development,” which has provided for the next three years joint investment with Russia of $2 billion. In addition, the two countries have pledged to reach an exchange of $30 billion by 2020. South Korea, with its export-oriented economy, is obviously looking very carefully at the Russian market. In 2017, Korean leaders in the auto industry sold cars and accessories in the Federation market for $1.7 billion.

The joint ventures between the two most interesting and promising countries are linked to the development of maritime routes and the creation of port infrastructures, which are underdeveloped in the Russian Far East. The first step is the “Way to the North Sea,” which would reduce the distance between Vladivostok and St. Petersburg by 40 percent, and thus the transporting cost of South Korean goods in Europe. In this regard, Russia can provide atomic icebreakers and power plants, while Korea can offer ships as the world’s leading shipbuilder.

However, all eyes are focused on future prospects. In the event of the denuclearization of the region or even the unification of the two Koreas, the potential for Russian penetration would multiply.

Two major projects are in the works. The first is the “pipelines of peace”: the construction of a gas pipeline in South Korea across the territory of North Korea, which has been under discussion since 2017. This would be the cheapest way to export gas to South Korea, which is now buying gas at very high prices. At the same time, the pipeline would solve the problem of the power supply to the People’s Republic of China.

The second project is even more important. The idea is to connect the Trans-Siberian Railway to an inter-Korean railway, thus creating a faster route for freight transport in Europe. Just to give an example, for container transport from South Korea to Finland, it would only take 14-16 days instead of the 40-45 days it takes today.

At the same time, this would make it easier to connect with the Russian subsidiaries of Korean companies that have been operating in Russia for some time, such as in the industrial district of Kaluga (a province where wages are 25 percent lower than in Moscow) where Samsung electronics, KT&G cigarettes and Lotte Group confectionery are produced. The authorities in the Moscow region are already dreaming of the arrival of other Korean companies, to which a special economic zone could even be planned. The largest LG Electronics plant in Europe already operates near Moscow. Koreans have injected $350 million into this plant and are promising new investment in the future.

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