Publication: Eurasia Daily Monitor Volume: 5 Issue: 193

Russia and South Korea pledged to upgrade their relationship to a strategic partnership and to strengthen energy ties, but the latest spate of optimistic official pronouncements came as a reminder of similar earlier pledges.

Following summit talks in the Kremlin, Russian President Dmitry Medvedev and his South Korean counterpart Lee Myung-bak pledged to boost bilateral trade, as well as railway and energy cooperation. Both leaders also indicated plans to upgrade bilateral ties to the “strategic partnership” level (Interfax, RIA-Novosti, September 29-30).

Bilateral economic cooperation was important against a background of a global financial crisis, Medvedev said, and called for increasing bilateral trade up to $20 billion this year. In 2007 bilateral trade reached $15 billion, up by 50 percent over the previous year and by 6.8 times over the $2.8 billion in 2002, according to the official Russian statistics. From January to June, bilateral commerce reached $9 billion or 42 percent over the same period last year. This included $3.8 billion in Russian exports to South Korea, an increase of 74 percent over the first six months of 2007 (Interfax, September 29).

Russia and South Korea agreed to cooperate in space research, including development of the South Korean KSLV-1 spacecraft, due to be launched in the second quarter of 2009. Both sides also agreed to liberalize bilateral trade, and South Korea voiced support of Russia’s World Trade Organization membership bid. Medvedev advocated a non-nuclear status for the Korean Peninsula, and both leaders voiced concern over North Korea’s decision to suspend dismantling its nuclear facilities (Interfax, RIA-Novosti, September 29).

Bilateral top-level contacts have long been accompanied by “partnership” talk. In 1994 former South Korean President Kim Young-sam visited Moscow and agreed to form a “constructive partnership” with Russia. In September 2004, following summit talks in the Kremlin, then-President Vladimir Putin and his South Korean counterpart then-President Roh Moo-hyun pledged to forge a “comprehensive partnership of mutual trust.”

Some provisions of the September 29 bilateral agreements echoed earlier pledges. Russia, for example, encouraged South Korean plans to develop energy resources in the Russian Far East and build petrochemical and gas-chemical production facilities there, according to the joint statement. Both sides also pledged to cooperate in joint development of the West Kamchatka off-shore hydrocarbon deposits (Interfax, RIA-Novosti, September 29).

In 2004 Russia and South Korea also pledged to boost “large-scale bilateral and international projects in developing Russia’s Far Eastern and Siberian oil and gas fields.” The two nations promised to support long-term delivery of Russian natural gas to South Korea. In September 2004 Russia’s state-owned Rosneft and Korea National Oil Corporation signed a $250 million agreement to explore Kamchatka and Sakhalin Island oil reserves. KNOC had expected exploration to begin in 2005 and anticipated securing 1.7 billion barrels of oil reserves from the deal, which was slow to materialize.

In the past, both sides clinched a major petrochemical deal. In September 2004 Russia’s Tatneft oil company and South Korea’s LG International (LGI) signed an agreement in Moscow to build a joint $3 billion petrochemical complex in Nizhnekamsk, Tatarstan. The agreement failed to materialize, however, and the government of Tatarstan is now moving ahead with Nizhnekamsk project on its own.

Russia and South Korea were interested in major joint projects, including a link between the Trans-Siberian and Trans-Korean railways, Medvedev said. The two leaders pledged to connect these railways and construct a Hasan-Rason line. During the summit talks, Lee Myung-bak reportedly said that his country’s cooperation with Russia would also serve to revive the North Korean economy (Interfax, RIA-Novosti, September 29-30).

A link between the Trans-Siberian and Trans-Korean railways would open up the 5,400-mile (9,000-kilometer) Trans-Siberian railway to East Asian trade. Such a link would create a fast, cheap route for South Korean exports to Russia and the rest of Europe and would earn Russia lucrative transit fees for goods crossing its vast territory. The state-run Russian Railways (RZD), formerly Russian Railways Ministry, has long been preparing to extend the Trans-Siberian Railroad across the Korean Peninsula.

In August 2001 Moscow and Pyongyang said in a joint statement that their countries would cooperate closely to create “a railroad transport corridor” linking the Koreas with Russia and Europe. In April 2004 railway experts from the three countries held their first trilateral meeting, at which they agreed on the need to create an international consortium to finance the estimated $3 billion for the plan.

The latest joint statement on plans to connect Russia’s Trans-Siberian and the Trans-Korean railways came as a carbon copy of similar earlier pledges. In September 2004 Putin and Roh agreed to speed up efforts to link the Trans-Siberian Railway with South Korea’s rail network, via North Korea.

The rail project has been thought to be a political rather than an economic enterprise, because the cost of moving cargo from South Korea to Europe by rail is estimated to be about 30 percent higher than by sea. Nonetheless, on September 8 RZD head Vladimir Yakunin pledged to start construction on October 3 of the Hasan-Rason line to connect the Russian and North Korean railways.

On September 29 Gazprom and Kogas signed a memorandum of understanding on potential Russian gas supplies to the Korean Peninsula, including construction of a Trans-Korean gas pipeline. South Korea agreed to import 10 billion cubic meters (BCM) of natural gas per year from Russia for 30 years starting in 2015, in a deal that could total a $90 billion over the project’s lifetime. On September 30 Gazprom said that both sides had agreed to draft the project’s feasibility study by the end of 2010.

The Trans-Korean gas pipeline project has been discussed for more than a decade. In 1997 North Korea reportedly agreed to a pipeline exporting Russian natural gas from Siberia to South Korea. Pyongyang’s agreement was vital to the 3,000-mile (5,000-kilometer) project, which could provide the North with energy and transportation fees. However, the gas pipeline project still remains on the drawing board.

Despite repeated optimistic official pronouncements, there has been little, if any, actual progress in projects to extend the Trans-Siberian Railroad, build the Trans-Korean gas pipeline, and initiate other projects. Hence it remains to be seen whether the latest agreements between Russia and South Korea will fare better than similar earlier plans.