How Korea's New Railroad Will Change Northeast Asia
Summary
South Korea and North Korea have agreed to re-establish a rail link
that has been broken for half a century. The inter-Korean rail
link, while symbolic, also lays the groundwork for overland
transportation links from East Asia to Europe via Russia and China.
While this promises economic growth and integration in the region,
it may also spur increased competition between Russia and China, as
they vie for a greater share of the Eurasian shipping.
Analysis
South and North Korea agreed to re-connect a rail line that links
Seoul with Pyongyang, during ministerial level meetings on July 31.
The agreement to rebuild and upgrade the Seoul-Shinuiju railway
lays the groundwork for a proposed international railway that would
link East Asia with Europe, via Russia's Trans-Siberian Railroad.
The expanded overland transportation service will enhance the
economic integration of East Asia and Russia's Far East. In linking
its economic future with Asia, Moscow will in turn attempt to wield
greater influence in East Asia - particularly in the Koreas and
Japan - potentially triggering greater competition with China.
The agreement to rebuild the 12-mile missing link along Korea's
western coast and through the heavily fortified Demilitarized Zone
(DMZ) is part of a larger effort to integrate and upgrade the
transportation infrastructure on the Korean Peninsula. The plan
also includes upgrading the North Korean section of the track,
which runs 318 miles from Seoul through the DMZ, through Pyongyang,
and terminates in Shinuiju, on the border with China.
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The rail line will fundamentally change the nature of trade and
industry in the region. First, it will set the stage for industrial
development in a reunified Korea; a large portion of South Korea's
new industrial developments in North Korea will be along the
western coast. The rail line would allow rapid and efficient
transportation of materials, finished goods and equipment between
South Korean businesses and their affiliates and factories in the
North.
More importantly, the new link is intended to dramatically cut
shipping time between Northeast Asia and Europe. The rail line is
the first step in South Korean President Kim Dae Jung's "iron Silk
Road," which will link South Korea by land to Europe and Central
Asia. According to South Korea's Ministry of Construction and
Transportation, connecting South Korea to Europe via the Trans-
China Railway will reduce shipping time from three weeks by sea to
one week by rail. South Korean estimates suggest that North Korea
stands to gain $100 million a year in railway fees if the
connections become operational.
The creation of a greater Eurasian railway system could reshape
economic relations between Northeast Asian nations as well as
relations with Russia. South Korea has already begun to redefine
the Korean Peninsula as the hub of the region, with spokes leading
out to Russia, China and Japan.
On the grandest scale, South Korea is positioning itself as the
vital link in a chain that will connect Europe to Asia and Asia,
via the Pacific, to North and South America. The plan includes the
new international airport in Inchon, better harbor facilities and
high speed rail lines that connect Pusan in the Southeast with
Shinuiju in the Northwest, as well as Mokpo in the Southwest with
Ranjin in the Northeast. These would connect in the North with
Russian and Chinese rail lines, and in the south with Southeast
Asian shipping routes and a potential undersea rail line from Japan
to Pusan.
The link via China is to be followed by links from South Korea to
Russia's Trans-Siberian Railway, according to reports. Russia has
for some time urged North Korea to open its rail lines to allow
transshipment between Russia and Korea - and further between Europe
and East Asia. Russian President Vladimir Putin was reported to
have broached the subject during his landmark visit to Pyongyang in
July.
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But the real beneficiary in this will be Russia. For Russia, the
prospect of serving as a land-route from East Asia to Europe offers
tremendous economic possibilities. Russia's Far East has, until
recently, suffered from Moscow's neglect. Under Putin, Russia has
at least voiced an intent to shift its attention to Asia, and build
up the deteriorated economic infrastructure of the Far East.
Russian infrastructure in the region, however, has deteriorated
significantly since its heyday during the Cold War. In 1981, for
instance, the Trans-Siberian railway carried 20 percent of
container traffic between Japan and Europe. Such land-based trade
all but evaporated after 1996. In 1998, power to portions of the
Trans-Siberian Railway was cut by Russia's Unified Energy System,
because of unpaid bills. Since 1998, the railway has been the
frequent target of strikers.
Clearly, though, Moscow and other regional governments are
positioning these rail links as new and efficient routes for
shipping. Japanese shippers stand to save between 10 percent and 15
percent on overland transportation to Europe - and cut weeks off
transport times, according to a representative of the Transport
Service System, a subsidiary of the Trans-Siberian Railway. While
Japanese Ministry of Transportation figures are more conservative -
predicting that two to three days can be saved - they suggest that
if the Trans-Siberian Railroad is kept in good operating order, it
can once again provide a competitive shipping route to Europe.
Russia will gain revenues and will attempt to entice investors to
develop its Far East. Moscow's economic policy will increasingly
focus on Asian capitals, as well, competing for influence with
Beijing.
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