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Korean peninsula

Why economic cooperation could be the stumbling block at the inter-Korea summit

South Korea’s support for sanctions aimed at halting North Korea’s nuclear goals limit Seoul’s power to help Pyongyang boost its economy, sources say

PUBLISHED : Tuesday, 24 April, 2018, 9:02pm
UPDATED : Tuesday, 24 April, 2018, 9:35pm

The leaders of North and South Korea might stumble over barriers to economic cooperation when they meet for their historic summit in the border village of Panmunjom on Friday, diplomatic sources said.

Although South Korea wanted to revive relations with a North Korea battered by United Nations and US sanctions, Seoul was not expected to present a detailed economic cooperation plan at the meeting, the sources said. 

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A source close to the advisory committee for the meeting between South Korean President Moon Jae-in and North Korean leader Kim Jong-un, said Seoul and Pyongyang were likely to draw up a “framework” for cooperation, but were not expected to nail down specifics for an economic partnership. 

This is in part because Seoul has endorsed UN Security Council Resolution 2375, which limits its scope for a deal on economic cooperation with Pyongyang. 

The measure, passed in September last year, limits the export of crude oil and refined petroleum products to North Korea and bans joint ventures with the hermit state in response to its nuclear and missile provocations.

South Korea would have to allow its allies and the UN to mediate any easing of sanctions before it could set any economic cooperation deal with North Korea. 

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Another barrier to a detailed economic agreement is the divide over the endgame in “denuclearisation”.

One diplomatic source said Seoul was expecting Pyongyang to confirm its commitment to denuclearisation at the meeting but the two Koreas had yet to agree on what that meant.

Seoul wants complete, verifiable and irreversible dismantling of Pyongyang’s existing nuclear weapons, while Pyongyang could insist on the withdrawal of US troops from South Korea.

A source said Seoul would therefore aim to reaffirm existing inter-Korean cooperation agreements on coexistence and prosperity, rather than a time frame for a diplomatic breakthrough.

“Reaffirming the existing agreements made by previous administrations, such as the June 15 joint declaration in 2000 and the October 4 joint declaration in 2007, will be discussed in the summit,” a South Korean parliamentary source said. 

The 2000 and 2007 agreements commit the two Koreas to cooperatively encourage investment, bolster infrastructure and provide preferential treatment to help each other thrive.

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Preparations for the summit have entered the final stage, with work under way at the building where the leaders will meet. 

It is not known how Kim will travel to the Peace House – on the South Korean side of the Joint Security Area within the demilitarised zone between South and North Korea. But officials are laying the way for him to walk across the border, which would symbolise reconciliation, South Korean officials said.

No North Korean leader has walked across the Military Demarcation Line since the Korean war ended with an armistice agreement in 1953. 

Since 1972, the two Koreas have signed a series of agreements designed to promote their mutual betterment as separate states, but the pacts ultimately have proved to exist in name only, especially in the past decade. 

Relations between Seoul and Pyongyang worsened after the sinking of the South Korean Cheonan corvette and the death of 46 South Korean sailors in the Yellow Sea in 2010. Seoul blamed Pyongyang for the deaths but Pyongyang denied responsibility. 

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As relations deteriorated, the last remaining symbol of inter-Korean cooperation, the Kaesong Industrial Complex, a joint industrial zone located in North Korea, shut down in 2016. 

But as North Korea’s economy reportedly turns further south amid UN sanctions, Pyongyang is now believed to be seeking immediate cooperation with Seoul. 

A February report from the Korea Development Institute found that Pyongyang’s imports and exports contracted during the second half of 2017 under the weight of the sanctions. 

The report, “Review of the North Korean Economy”, said that if sanctions continued at present levels, Pyongyang’s economy would continue to shrink this year. 

At the same time, Kim has begun stressing the importance of rebuilding the nation’s economy. 

State-run Korean Central News Agency said on Saturday that Kim had “clarified that at the present stage in which [North Korea] was successfully put on the position of the world-level politico-ideological and military power, it is the strategic line of the [Workers’ Party of Korea] to concentrate all efforts of the whole party and country on the socialist economic construction”. 

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The North Korean leader will implement the new strategic line to “concentrate all efforts on building a powerful socialist economy”, according to KCNA. 

Kim Soong-bae, a research fellow at Yonsei Institute of North Korean Studies in Seoul, said North Korea might demand economic cooperation with the South at the summit as a condition for peace. 

“North Korea’s decision to focus on economic development may seem surprising to the international society, yet it is a matter of course from the North’s perspective,” Kim Soong-bae said. 

He said that with Kim Jong-un’s regime secured through its nuclear weapons, the North Korean leader was now focusing on the economy to further solidify his legitimacy. 

However, South Korea’s limited strategic room at the summit would prevent Moon Jae-in from breaking away from international sanctions against Pyongyang. 

“Humanitarian assistance may not be announced due to its participation in sanctions,” Kim Soong-bae said. “There may not be a diplomatic breakthrough on Friday.”

Moon Chung-in, a special foreign affairs and national security adviser in Seoul, said Seoul could give Pyongyang political and economic assurances if the North agreed to freeze its missile programme, disclose its nuclear capacity and allow international inspections within its borders. 

Even if a detailed economic cooperation deal were not reached, simply reaffirming the validity of the existing agreements would significantly pave the way for peace on the Korean peninsula, Moon said. 

“If we just implement those agreements, there can be peace between North and South and between the United States and North Korea,” he said.