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North Korea: A Business Opportunity?

For Russia, North Korea is not the only -- or necessarily the biggest -- threat to the long-term security of its Far East possessions. Indeed, with China increasingly seen as coveting Russian resources, territory and access to the Sea of Japan, an argument can even be made that, for all its nuclear ambitions, North Korea represents more of a business opportunity than a risk.

For Russia, North Korea is not the only -- or necessarily the biggest -- threat to the long-term security of its Far East possessions. Indeed, with China increasingly seen as coveting Russian resources, territory and access to the Sea of Japan, an argument can even be made that, for all its nuclear ambitions, North Korea represents more of a business opportunity than a risk.

Ignoring US calls to freeze foreign investment until North Korea abandons its nuclear program, business interests around Vladivostok, the capital of the Primorye region, are already looking at projects that might strengthen links. Engineers have crossed the border on a nostalgia trip, visiting cargo facilities and an idle refinery in the North Korean port of Najin, 40 km inside Korea, built by the Soviets in the days when the two were Communist brethren and economic allies.

The area bordering the two countries -- which blocks China's access to the Sea of Japan -- may soon ring to the sounds of construction. The Russians have inspected the railway connecting North Korea's coastal northeast to the southern tip of Russia's Far East with the aim of improving the link as far south as Najin, and there are plans to build the first highway bridge between the two countries, and to export Russian goods, including oil products, via Najin. Getting the refinery going after a five-year gap would provide tangible benefits to nearby Vladivostok, enabling it to stop shipping in products by rail from the closest Russian refinery nearly 1,000 km away.

The Russians also have excess capacity at the Bureyskaya hydroelectric station -- described as the biggest-ever infrastructure project in post-Soviet Russia when it opened last summer -- that they could sell to energy-starved North Korea, and, possibly, South Korea.

Unlike the good old days, when Soviet aid flowed unchecked, all the new investment is tied to gaining equity in the abandoned projects. Unless the Russians can make money, they won't invest a ruble in the refinery, the new highway or the port, even if this gave them more leverage over the "Hermit Kingdom."

This business-oriented approach contrasts with that of the US and Japan. Focused almost entirely on ending North Korea's nuclear program, they view economic development as a carrot-and-stick affair aimed at changing its behavior. Originally, they had hoped that Russia might use its historic ties to exert influence. They have since turned to China, encouraging it to raise its regional diplomatic profile to match its growing economic clout.

Sergei Darkin, governor of Primorye, the resource-rich region that borders China to the west and North Korea to the southwest, appears happy to strengthen ties with North Korea. He is more cautious about China, speaking recently of the "absolute imbalance" of population, pointing out that just over 7 million people live in the entire Russian Far East, while 120 million Chinese live immediately across the border. By contrast, North Korea has 18 million.

In a bid to gain access to the Sea of Japan, China has been pushing Russia to sign a 49-year lease to convert a cargo port in the Far East into an exclusive Chinese economic zone. Reports suggest the Chinese have not only built a six-lane highway to the Russian border, but have also ordered Chinese companies not to use Russia's Far Eastern ports until Russia bows to their demands. The Russians are understandably reluctant. Instead, they have decided to develop the port themselves -- perhaps in joint venture with the Chinese -- to exploit China's demand for access without ceding control.

With unneighborly demands like that, it's perhaps not surprising that North Korea doesn't look so bad.

Author: Sam Maxwell

Source : Neftegaz.ru