Russian President Vladimir Putin arrived in Seoul Wednesday morning with hopes of winning South Korean investment in the Russian Far East but experts say Mr. Putin faces significant hurdles convincing Seoul to commit to projects that also involve North Korea.

Mr. Putin has sought to develop the regions farthest away from Moscow since his earlier terms as president between 2000 and 2008, with the centerpieces being an upgraded railway network and oil-and-gas pipelines across Siberia.

The ultimate goal has been to extend the Trans-Siberian Railway and the pipelines to the Korean Peninsula – across North Korea to South Korea – becoming a key carrier for cargo and energy between East Asia and Europe.

South Korea has shown interest in participating – the rail link to its largest port Busan would mean big business from the entire region – but it has made little progress working with North Korea on the project.

Meanwhile, the railroads between Khasan, Russia and Rajin, North Korea were linked in late September, paving the way for Moscow to use the North Korean port.
Russia is expected to seek South Korea’s participation in the port’s modernization. But investment or participation in North Korean business ventures has been barred since the sinking of a South Korean naval warship in 2010 attributed to a North Korean attack. Pyongyang has rejected any involvement.
Without lifting this measure, any discussion about a transcontinental infrastructure network would be a non-starter, experts say.

An official that handles international rail projects at South Korea’s transport ministry said it hasn’t done a feasibility study on the potential inter-Korean network.
"The political obstacles are overwhelming,” said Andrei Lankov, a North Korea expert and a professor at Kookmin University in Seoul.

Given the problems of inter-Korean cooperation, Mr. Putin’s priority will be to secure Seoul’s investment in the broader Russian Far East, according to Jo Young-kwan, a visiting research fellow at the Korea Institute for International Economic Policy, a government-affiliated think tank in Seoul.

Russia has shown its preference for foreign investment rather than putting up its own capital, and gauging President Park Geun-hye’s and South Korean businesses’ interest would be of importance to Mr. Putin, Mr. Jo said.

But South Korean firms would need reassurances from Moscow about the political and economic stability of the region before making any commitments, according to Kim Sang-won, a Russian economy specialist and professor at Kookmin University.

One example of the problems: Hyundai Heavy Industries, Inc.’s electric transformer plant that opened in January 40 kilometers north of Vladivostok, Russia’s largest city in the Far East region, is struggling to operate normally due to problems with the local bureaucracy.

Because local officials are often directed by Moscow, thousands of miles away, the decision-making process is often arduous and slow, making the region unattractive to outside investors, a person familiar with the project said.

A Hyundai Heavy spokesman said the factory was in operation but declined to provide details of the current status.
Scores of diplomatic deals and minor economic agreements are expected during Mr. Putin’s visit to Seoul, including one that allows visa-free travel for both countries’ citizens.

1359 reads | 18.11.2013

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