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Bordering on friendship

Seoul and Pyongyang have their own ideas about common prosperity. As both sides wish for more economic cooperation, it is unclear how this might take shape

By NewsChina Updated Jul.1

Investment from around the world, where you can have medical breakthroughs, an abundance of resources, innovative technology and new discoveries.” Underneath this voiceover, the screen shows images of car manufacturing assembly lines, a modern hospital, supermarket shelves full of food, robots, and the happy smiles of Korean people, including children on playgrounds. This is the “future” and the “new world” that US President Donald Trump presented to North Korean leader Kim Jong-un at their first meeting on June 12. It was the first time incumbent leaders of the two nations had met in more than 70 years.  

Later, the four-minute video produced by the White House was shown at Trump’s post-summit press conference at the Capella Hotel in Singapore. “I think he loved it,” Trump told reporters. He also showed Kim that North Korea has “great beaches,” where they could build “the best hotels in the world” instead of “exploding their cannons into the ocean.”  

During a night tour of Singapore’s landmarks on June 11, Kim Jong-un expressed his hope of learning from the knowledge and experience of the city-state. At the Marina Bay Sands hotel, he praised Singapore as “clean and beautiful,” reported the Korean Central News Agency (KCNA), the North’s official news agency.  

The North will stop nuclear and missile tests and “concentrate all efforts on building a powerful socialist economy and markedly improving people’s living standards through the mobilization of all human and material resources of the country,” according to KCNA. To achieve this, the country “will create an international environment favorable for socialist economic construction.” The plan was laid out at the 3rd Plenary Meeting of the 7th Central Committee of the Workers’ Party of Korea (WPK) on April 20.  

Trump has repeatedly expressed his willingness to support North Korea’s prosperity drive if the country annuls its nuclear program. He hopes that Pyongyang’s neighbors, including Seoul, will share the burden. Indeed, economic cooperation has long been a visible symbol of inter-Korean cooperation and connection, and is regarded by Seoul as a path to unification. Expectations for resuming and increasing economic cooperation have been high since this year’s historic Moon-Kim and Trump-Kim summits, as well as the North Korea’s decision to shift its efforts on economic growth.  
New Economic Map
According to a report from South Korea’s Yonhap News Agency on May 7, a week after the meeting between Kim Jong-un and South Korean President Moon Jae-in in Panmunjom, (known as the Joint Security Area, where the Korean War Armistice Agreement was signed in 1953), inquiries to tourism agencies on traveling to the northern border areas rose by half on 2017 figures. Yonhap journalists observed more tourists than ever at attractions around the Demilitarized Zone (DMZ), including the Third Infiltration Tunnel in Gyeonggi-do, the Dora Observatory, the Second Infiltration Tunnel in Gangwon-do and at Woljeong-ri Station (Iron Triangle Battlefield) 

The first commitment in the Panmunjom Declaration signed by Kim and Moon that has actually been implemented was putting a halt to the propaganda broadcasts from loudspeakers along the DMZ. The 545-kilometer stretch has been promoted by the South Korean government as a “zone of peace.” Indeed, right after the Moon-Kim summit was confirmed at the end of March, South Korea’s Tourism Organization established a team to promote DMZ tourism projects and local governments along the DMZ have stepped up promotion and development of attractions.  
Tourists are not the only ones with a growing interest in the border area. On June 8, a South Korean delegation led by Vice Unification Minister Chun Hae-sung became the first from the South to visit the inter-Korean factory park at North Korea’s border city of Kaesong in more than two years. It was shut down by Seoul in February 2016 in retaliation for Pyongyang’s nuclear tests the previous month. The Unification Ministry later announced that the delegation reported the exterior structure of the complex remained in good shape, but the interior was in need of renovation. The site produced US$3.2 billion in goods before it shut down.  

Boosting DMZ tourism and restarting the Kaesong Industrial Complex are part of Moon’s “New Economic Map for the Korean Peninsula.” Moon elaborated on this for the first time during the G20 summit in Berlin in July 2017 as a part of his peace initiative for the Korean Peninsula. It is included in his administration’s five-year plan, which was unveiled later that month. 

According to the Unification Ministry, the new economic map aims to drive growth by “building three economic belts and connecting them to the ‘Northern economy,’ including China and Russia.” A “single market” for the two Koreas is expected to come out of the cooperation. The Pan East Sea (Sea of Japan) Economic Belt will focus on energy and resources, linking Korea’s east coast with Russia. The Pan Yellow Sea (the West Sea) Economic Belt will develop logistics and transportation. An “environment-tourism belt” will turn the DMZ into a “tourism zone for ecology, peace, and security.” 

Crowds watch North Korean leader Kim Jong-un leave the Capella Hotel for a night tour around Singapore, June 11, 2018

Sunshine and Moonlight
In June and October 1998, Chung Ju-yung, founder of the Hyundai Group, a conglomerate in South Korea, transported around 1,000 cattle to North Korea during his visits there. He reached an agreement with the North to launch a tourism project at Mount Kumgang. This began dialogue and exchanges between the North and South for the first time since the end of the Korean War in 1953. By the end of 1999, ferries from Mount Kumgang had transported about 13,000 tourists from South Korea to the resort.  

Chung’s visit took place when then-President of South Korea Kim Dae-jung launched his Sunshine Policy toward the North, an approach of peaceful engagement and reconciliation. Economic cooperation was encouraged, with the launch of the Kaesong Industrial Complex in 2003 the most important example. Kim’ Dae-jong’s successor Roh Moo-hyun continued the policy. Roh believed a peaceful system would be made possible by a new order of free exchange built through economic cooperation, while setting aside disputes over the maritime boundary and fishing resources in the West Sea (the Yellow Sea). 

Unlike his predecessors, Moon Jae-in regards the New Economic Map for the Korean Peninsula as the final goal. The purpose of implementing the initiative and exploiting new economic potential in his five-year policy agenda is not to pave the way for political dialogues with the North, but to integrate the whole peninsula into the Northeast Asian economic cooperation system through the three belts. He believes this will drive prosperity in both the South and the North, which will grow into an inter-Korean common market and an economic community of shared prosperity. In his speech at the 72nd Anniversary of Liberation on August 15, 2017, he said that in achieving shared prosperity, “the North will naturally be able to realize that its security can be guaranteed without a nuclear weapon.” 

Moon personally delivered the documents and video of the ambitious vision to Kim Jong-un during their first meeting on April 27. So far there has been no direct response from Pyongyang. However, the idea of prosperity, which is stressed in the map, has been frequently mentioned by North Korean media since April, and “common prosperity,” as well as international cooperation, has also been hailed. 
Prosperity Tour
On May Day, North Korean Premier Pak Pong-ju, who also holds positions as a member of the Presidium of the Political Bureau of the Central Committee of the Workers’ Party of Korea and vice-chairman of the State Affairs Commission, laid out what prosperity looked like to him – machines rumbling in all industrial enterprises, good harvests in the fields and people’s laughter around the country. In his speech at the Third Plenary Session of the Seventh Central Committee of the WPK, Kim Jong-un required every department to obey the command of the cabinet when implementing the WPK’s economic policies, according to KCNA.  

Pyongyang has shown a strong desire for economic cooperation with Seoul since the days of the Sunshine Policy. Data from the Unification Ministry of South Korea shows that between 2002 and 2007, 22 out of 55 dialogues between the nations focused on economic affairs. In 2008, Lee Myung-bak became South Korean’s president and scrapped the Sunshine Policy. Though no official economic dialogue has been arranged this year, the North has shown a strong desire for communication. In the first five months of 2018, 544 personnel visited the South, more than the total in any year since the Lee administration began. In an editorial on May 16, KCNA included common prosperity in the list of goals that should be achieved by Koreans as soon as possible.  
The WPK’s plan also stresses developing close contact and dialogue with the international community. In his two meetings with Chinese President Xi Jinping between the end of March and early May, Kim Jong-un expressed a hope that the international community would provide economic support for his country alongside the process of denuclearization. The North Korean leader also visited China for a third time in the wake of the Trump-Kim summit, traveling to Beijing to meet Xi on June 19. 

Recently, North Korea has accelerated development of the Wonsan-Mount Kumgang international tourism zone which was established in June 2014. According to the KCNA reports on May 9 and 18, Wonsan city has accelerated construction of facilities for international tourists, like hotels, villas, indoor wading pools, pharmacies and schools for the study of the Korean language. Foreign reporters were invited to Wonsan when they went to witness the dismantling of North Korea’s northern nuclear test ground. Reporters arrived at Wonsan on May 26. Kim Jong-un inspected the construction site of a coastal tourism resort near Wonsan port, and mandated that construction be complete by next year’s Day of the Sun, which falls on April 15. 

On June 9, KCNA reported Kim’s inspection of a new seafood restaurant in Pyongyang. He instructed the restaurant to serve foreign guests, and praised it as another catering base that can represent Pyongyang, alongside the Okryugwan Restaurant known for naengmyeon, or cold noodle soup, which was served at the  welcome dinner of the Kim-Moon summit on April 27. 
Political Disturbance 
Politics is always at work in economic cooperation. In 2008, the joint tourism project at Mount Kumgang was suspended after a South Korean woman was shot dead by North Korean guards after apparently straying into a military area.  

Despite his ambitious proposal, Moon is very cautious about economic cooperation with the North. During his visit to the US in June 2017, he said he would not put the resumption of the Kaesong Industrial Complex and Mount Kumgang tourism on the agenda until dialogue on North Korea’s denuclearization had commenced. So far, Seoul’s Unification Ministry has not worked out a comprehensive plan on how to translate the new economic map into action on the ground. The economic departments of the Moon administration were not part of the preparation committee for the inter-Korean summit on April 27.  

Yonhap reported on May 2 that South Korea’s presidential Blue House had made clear that denuclearization must be achieved before further economic cooperation can commence. On May 8, a South Korean power company proposed building plants in North Korea. The government responded that it was too early to consider any specific economic cooperation projects when the issue of denuclearization and sanctions had not been resolved.  

In October 2007, at the second North-South summit since the Korean War, then-leaders Kim Jong-il and Roh Moo-hyun agreed to put economic cooperation first before political negotiations.  
However, the cooperation did not materialize. Six months later, new president Lee Myung-bak changed the engagement policy yet again, shifting to a policy of simultaneous economic cooperation and political negotiations.  

Political unrest also helped kill the Kaesong Industrial Complex project. In February 2016, Seoul halted its operation – it had been regarded by Seoul as an incentive for denuclearization. Pyongyang immediately froze all South Korean assets there. South Korean Unification Ministry data shows that bilateral trade with the North fell off a cliff, dropping from US$2.71 billion in 2015 to US$333 million in 2016.  

It was a bitter lesson for the South Korean companies involved, and many have expressed concerns about Moon’s idea of a new economic map for the peninsula. In a statement to Moon in October 2017, South Korean companies with factories in Kaesong said they supported the president’s new economic map, but they still had concerns leftover from the earlier scrapping of the project.  
Land and Air Links
At his meeting with Moon Jae-in, Kim Jong-un praised the PyeongChang high-speed train service, saying it impressed those who had been to the Olympic Winter Games there in February. Moon suggested inter-Korean high-speed trains were possible. Freight trains had shuttled across the North-South border more than 400 times from December 2007, but stopped in December 2008 when relations deteriorated.  

KCNA said the North and South had agreed at a high-level meeting at Panmunjom on June 1 on the time and venue of talks to construct a railway and roads connecting the eastern and western coasts of the Peninsula. No details were given. South Korean Deputy Prime  
Minister and Minister of Strategy and Finance Kim Dong-yeon disclosed in a TV interview on May 9 that the Ministry of Land, Infrastructure and Transport was discussing renovating the South Korean part of the railway between Seoul and Wonsan. He said the Unification Ministry predicted the project would commence in the first half of the year.  

The same day, Moon held a bilateral meeting with Chinese Premier Li Keqiang in Japan during the Japan-South Korea-China Trilateral Summit. Moon and Li agreed to consider a railroad connecting Seoul with China. They suggested China and South Korea should research this first. The two Koreas agreed in their June 1 high-level meeting that the two sides should exchange views about the plan.  

North Korea has not released any plan for the railroad. But it has facilitated potential cooperation with the South. On June 7, the Organization for Cooperation of Railways, which was set up in 1957 and is based in Poland, held a Ministerial Conference in Bishkek, capital of Kyrgyzstan. The 28 members, including China and North Korea, unanimously approved South Korea’s application. The nation’s previous attempts to join were all blocked by the North.  

North Korea also proposed a transport plan that needs the nod of its southern neighbor. On May 8, South Korean Foreign Ministry spokesperson Noh Kyu-duk told a press conference that the North has submitted a proposal to the International Civil Aviation Organization to open a flight route from Pyongyang via Incheon in South Korea to a third country. He said the Ministry of Land, Infrastructure and Transport was reviewing the case. On June 6, Air China resumed regular flights between Beijing and Pyongyang, which had apparently been suspended for 200 days due to a lack of demand.  

The Moon administration has been preparing for international cooperation for some time. In August 2017 he launched the Presidential Committee on Northern Economic Cooperation. Blue House spokesperson Park Soo-hyun said the task of the committee was to promote inter-Korean economic cooperation and realize the new economic map for the Peninsula. On September 7, 2017 at the Eastern Economic Forum in Vladivostok, Russia, Moon explained his vision for economic cooperation involving the Korean Peninsula, the Far East of Russia and Eurasia. The Blue House announced Moon would discuss the idea with Russian President Vladimir Putin during his three-day visit to Russia on June 21. The long-term plan is for South Korea to facilitate cooperation for North Korea with China’s Belt and Road Initiative and the US’s Asia-Pacific strategy.  
Limited Speed?
It won’t be easy to put the new economic map into action, in terms of either inter-Korean or international cooperation.  

Kim Dong-yeon said on May 9 that international financial institutions, including the World Bank, the International Monetary Fund, the Asian Development Bank and the European Bank for Reconstruction and Development have all called on the South Korean government to express its willingness to participate in North Korea’s reform and opening-up.  

However, Kim Dong-yeon said that North Korea has to first gain membership of international organizations from which Pyongyang would seek development funds. Candidates are required to first join the IMF, which requires a three-year review of their economic data. 

The two Koreas are yet to commence bilateral economic negotiations. According to South Korea’s Unification Ministry, no official talks have taken place between the two sides in the past three years. No private sector economic cooperation project has yet been approved by South Korea. No applications for social and cultural exchanges have been submitted since 2016.  
Less than 30,000 tons of cargo a year were transported between North and South Korea in 2016 and 2017 – the lowest since 2013 when road transport resumed, and one-twentieth of the peak. While both nations have launched tourism projects in the DMZ, no negotiations have taken place. Besides, the Blue House has repeatedly stated that economic cooperation will not restart immediately. All this means even if the cross-border railway were already in operation, there would be little cargo to be loaded onto trains. The Seoul-Sinuiju railroad once served as the main link between the North and South, but it was devastated by the Korean War. The two Koreas have attempted since early 2000 to repair and put it into operation, but its fortunes have turned on the ups and downs of political relations.  

Furthermore, the two Koreas disagree on the conditions of international cooperation. During his visit to Washington in June 2017, Moon noted that restarting the Kaesong Industrial Park and the Mount Kumgang tourism project need to take place within the framework of international cooperation and consultation with the US in advance. North Korea has insisted that common prosperity must be based on the principle of national independence.  

Moon’s new economic map could also exacerbate ideological divisions. In August 2017, he expressed his expectation that economic cooperation would facilitate the growth of a capitalist economy in North Korea that would make a difference to people’s ideas and even the country. He said that North Koreans who work at Kaesong would understand the rationale of earning their remuneration through work.  

Indeed, Kim Dae-jung promoted a similar idea of reform and opening-up in North Korea, but the North resisted. It was in the last year of the tenure of Kim Dae-jung’s successor Roh Moo-hyun in 2007 that Roh realized how strongly the rhetoric of reform and opening-up was opposed by the North. The decision to concentrate on economic growth at the April 20 WPK meeting was hence widely interpreted by international analysts as the North moving torward reform and opening-up. However, North Korea’s official media, including KCNA and  Rodong Sinmun, the WPK’s flagship paper, published commentaries saying capitalism is the road to doom and decay while socialism is the future of humankind.  

It is finally time for Koreans to talk about prosperity. Will the divisions on the path hinder their shared aspirations for cooperation and prosperity? It is a historic test for both Koreas.