Putin’s return to presidency may strengthen Moscow’s engagement with two Koreas


In his phone conversation with President Lee Myung-bak days after being reelected Russian president on March 4, Vladimir Putin pledged to help improve inter-Korean ties and discussed a deal for Russia to pipe natural gas to South Korea through North Korea.

Putin was quoted by aides to Lee as saying he would “pay attention” to the project to build a gas pipeline passing through the three nations.

The remark reflected the Russian leader’s determination to carry out the project, the aides said. They noted that it had not been discussed in consultations on the phone call with Putin, who will return to the presidency in May after serving as prime minister for four years.

Putin attended a ceremony in Vladivostok last September to open the gas pipeline from Sakhalin Island to the port city in the Russian Far East. Industrial sources here say the section of the pipeline was built in consideration of the possibility of being extended to South Korea through North Korea.
 
Seoul officials see Putin’s interest in the pipeline deal as showcasing the aggressive approach he is expected to take once he is back as president to expand Russia’s presence on the Korean Peninsula and in Northeast Asia.

“During his first two presidential terms in 2000-08, Putin was very active in promoting Moscow’s influence in areas where its strategic interests were involved,” said Ko Jae-nam, a Russia expert at the Korea National Diplomatic Academy, a training and research institute affiliated with the Foreign Ministry.

“With all his experience and capacity, he is likely to come forward more aggressively than in his days as prime minister,” Ko said.

When he took the helm of Russia at the turn of the millennium, Putin sought to balance Moscow’s policy toward the peninsula, which had been tilted toward Seoul under the rule of his predecessor Boris Yeltsin, and assume a mediating role in settling tensions over Pyongyang’s nuclear arms and missile programs.

He visited Pyongyang in July 2000 and traveled to Seoul in February 2001. He received then North Korean leader Kim Jong-il in Moscow in August 2001 before they met again in Vladivostok a year later.

Putin’s attempt to mediate in the standoff with the North was frustrated as Pyongyang pushed ahead with test-firing ballistic missiles and detonating nuclear devices.

Aggressive approach

Diplomatic observers in Seoul say he is expected to reactivate Moscow’s role in helping ease tensions on the Korean Peninsula, which are set to escalate in the wake of Pyongyang’s satellite launch planned for mid-April. Seoul and Washington view it as a pretext for testing military missiles in violation of U.N. resolutions.

“Putin will seek to establish Russia’s initiatives in resolving North Korean issues as part of efforts to ensure substantive results in the Asia-Pacific Economic Cooperation summit set for September (in Vladivostok),” said Ko.

In the process, Moscow may provide Pyongyang with incentives, such as military equipment, loans and food aid, as well as siding with it to some extent at multilateral talks on dismantling its nuclear arsenal, observers here note.

They say Seoul needs not necessarily view Russia getting closer to North Korea as “negative,” arguing Moscow’s approach toward Pyongyang is based mainly on practical interests.

North Korea no longer carries importance as an ideological and military ally for Russia, which now values it as a gateway to markets around the Pacific basin, they indicate.

Russia, which shares a 17 km border with North Korea along the Tumen River, wants wider access to the Rajin-Seonbong special trade zone and port facilities on its northeastern coast.

“Taking into account Russia’s pragmatic intent, South Korea might be placed to benefit from leaving a mediating role to Putin,” said Park Hyo-sik, head of the Korean-Russian Association.

Former Foreign Minister Han Sung-joo suggested in a recent commentary that Seoul try to ensure Moscow will be conducive to resolving the dispute with North Korea and encourage it toward reform and openness.

Officials here say Putin will also continue enhancing cooperation with South Korea, whose investment, technology and economic expertise are needed to carry out his plans to develop resources, build infrastructure and modernize industrial structure.

Russia may regard South Korea as the most suitable partner for development projects in Siberia as it is wary of China’s expansion and feels uneasy about a long-standing territorial dispute with Japan.

Trilateral projects

“Putin is attempting to solidify Russia’s specific status in Northeast Asia,” said Park, noting progress in his push would put on track trilateral projects involving Russia and the two Koreas, including the gas pipeline deal and the linkage of the Trans-Siberian Railroad to the inter-Korean railway.

As shown in his phone conversation with Lee last month, Putin is poised to focus on expediting the deal to ship Russian natural gas to the South through the North as a most effective way to heighten Russia’s strategic presence in Northeast Asia beyond the Korean Peninsula.

During a meeting with Lee in St. Petersburg in November, Russian President Dmitry Medvedev tried to ease Seoul’s worries over the safe operation of the section of the pipeline that would pass through North Korea.

Medvedev pledged that Russia would assume the risk arising from the pipeline’s passage through the North and take the responsibility for any halt in the gas shipment.

At their earlier summit talks during Lee’s visit to Russia in 2008, the two leaders agreed to a memorandum of understanding on a deal for South Korea to import at least 7.5 million tons of natural gas annually, about 20 percent of its demand, from Russia through a pipeline beginning in 2015.

Officials involved in the project say Lee is also determined to implement the project, which he hopes will be passed down as one of his key presidential achievements. In his autobiography titled “There is no myth,” Lee says he came to take an interest in the idea to bring Russian natural gas here through North Korea when he served as a construction company CEO in the 1980s.

If completed, the pipeline would provide Russia with a new market for its natural gas and enable North Korea to earn up to $100 million per year in transportation fees, industry officials say.

Kim Jong-il made clear Pyongyang’s support for the project during his talks with Medvedev at a military base in Siberia months before he died on Dec. 17.

Russia needs to build the pipeline all the more as it is seeking to find new customers for its natural gas amid Western European countries’ moves to reduce their reliance on Russian energy.

Some analysts predict Russia may see an end to the era of easy money from natural resources ― which has underpinned Putin’s rule for the past decade ― probably halfway through his third presidential term that is to come.

The Russian economy may hit a wall in years to come, swinging into budget and current account deficits, unless oil prices nearly double again, which experts see as unlikely. Natural gas prices have remained low in recent years.

The deteriorating economic conditions would restrain Putin’s means to finance his election pledges to raise wages for federal workers and an ambitious military spending program, dimming the prospect of extending his rule to 2024 by being elected to another six-year term.

Corresponding response

Although motivated by Russia’s own geopolitical and economic considerations, Putin’s initiatives toward the Korean Peninsula are likely to receive a corresponding response from both Seoul and Pyongyang, which have their own reasons to boost ties with Moscow, experts here say.

Pyongyang may need Moscow as a foil against its overwhelming dependency on Beijing for nearly everything, including food and oil. Kim Jong-il attempted to keep a minimum balance in North Korea’s ties with the two giant neighbors by adding a trip to Russia to a string of visits to China in the years to his death.

Seoul officials may also find it a good strategy to broaden relations with Russia as a counter to North Korea’s increasing hostility and a supplement to South Korea’s reliance on the U.S., which is distracted by conflicts in the Middle East.

The Seoul government, which has been frustrated with Beijing’s intransigence in putting pressure on Pyongyang, may find a room to increase its leverage between China and Russia amid Putin’s diplomatic push, some observers here say.

“Both the government and businesses need to work out measures to positively respond to Russia’s approach,” said Ko of the diplomatic academy.

Park, who heads the Korean-Russian Association, wants Seoul to go so far as to “degrade the relationship with the U.S. to some extent” to maximize the potential of cooperation with Russia.

“Now is the time for (South) Korea to solidify economic cooperation with Russia to ensure a stable source of energy and diversify overseas markets for its products,” he said.

With Moscow expected to take more liberal economic policies under Putin’s new term, experts here see the room for business cooperation with Russia will be expanded.

“It has yet to be seen but if Putin is to take steps to improve his country’s investment climate and competitiveness, it will surely help expand South Korean businesses’ advancement into the Russian market,” said Min Ji-young, a researcher at the Korea Institute for International Economic Policy, a state-funded think tank in Seoul.

South Korea’s accumulated investment in Russia stood at $1.89 billion as of the end of 2011, accounting for less than 1 percent of its total overseas investment.

Korea exported about $10.3 billion worth of goods including cars, electronic appliances and petrochemical products to Russia last year, with imports amounting to around $10.8 billion, according to figures from the Korea International Trade Association. Russia’s share of its trade volume has remained below 2 percent.

With South Korean companies expected to find more opportunities to participate in infrastructure and resources development projects in Siberia and the Russian Far East, prospects for cooperation are also promising in aerospace, electronics, shipbuilding, machinery and information technology, experts say.

“We should not be preoccupied only with energy and resources projects,” said Min. “What is now needed is to take a long-term approach to become a comprehensive partner with Russia.”

By Kim Kyung-ho (khkim@heraldcorp.com)