The government is seeking a new measure aimed at finding a new growth engine for the economy and establishing peace on the Korean Peninsula. Amid constant nuclear and missile threats from North Korea, attention turns to whether the so-called “New Northern Policy” unveiled by South Korean President Moon Jae-in will provide momentum to tackle the precarious situation. Here is Lee Hae-jeong, researcher from the Hyundai Research Institute, to explain the policy in detail.

President Moon announced a “New Northern Policy” in his keynote speech during the third Eastern Economic Forum that kicked off on September 7 at the Far Eastern University in Vladivostok, Russia. He said that cooperation among Northeast Asian countries for the successful development of the Far East would be another fundamental solution to the North Korean nuclear issue. The new vision seeks to create a huge economic territory that would expand from the Korean Peninsula and the Russian Far East to Northeast Asia and Eurasia. Moon said that South Korea and Russia should join forces and start their economic projects right away, indicating that South Korea will actively participate in the development of the Russian Far East. For economic cooperation, Moon proposed placing nine bridges between the two nations. The nine bridges here refer to nine different areas, including natural gas, railroads, seaports, electricity, Arctic shipping routes, shipbuilding, labor, agriculture and fisheries.

N: The key point of the New Northern Policy is to build a Eurasian economic community through cooperation between South Korea and Russia. President Moon suggested the “nine bridges” as detailed action plans. The plans call for the development of Arctic shipping routes, the establishment of infrastructure such as railways, seaports and roads, and simultaneous cooperation in various areas, including agriculture and fisheries as well as logistics. By executing the plans, the two countries will hopefully be able to create a successful model of economic cooperation. If that happens, the economic territory on the Korean Peninsula will expand into Eurasia, naturally inducing North Korea to join the development projects. That means the North Korean nuclear issue will also be resolved.

The term “Northern Policy” was coined by the Roh Tae-woo government in South Korea back in 1988. Seoul has since stressed the importance of cooperating with the North. Unfortunately, the policy has produced no substantial results due to the North Korean nuclear crisis and international sanctions on Pyongyang. Lately, South Korea has begun to emphasize the need to secure a future economic growth engine, stabilize regional security, and diversify its diplomacy. This has brought about a renewed interest in the Northern policy. President Moon has recently visited Russia and presented the new Northern Policy designed to ease geopolitical tension in Northeast Asia and create an environment for long-term peace and cooperation. I think he aims to settle peace and achieve prosperity in the region through economic cooperation between the two Koreas and in Northeast Asia.

The initiative has been introduced as a new measure to achieve regional peace and create a new growth engine at the same time. The European Union was able to overcome the scars of World War II and the tension of the Cold War to eventually achieve integration. But it was not political negotiations that initiated the integration. As an economic cooperation framework, like the European Coal and Steel Community, President Moon’s new policy has the purpose of defusing tension on the Korean Peninsula through economic cooperation among nations and attaining mutual growth. Economic cooperation between South Korea and Russia, in particular, is highly feasible. The Russia-led Eurasian Economic Union is a new, promising market that is rich in resources, including natural gas. It has a combined population of 180 million, with its gross domestic product amounting to 1.6 trillion US dollars. But the blue ocean market with great growth potential has seen little development and investment, and its industrial base is rather weak. In contrast, South Korea boasts advanced technologies, while it lacks natural resources. In other words, South Korea and Russia have mutually complementary economic structures, and this raises the possibility of bilateral cooperation. The two sides also have similar policies.

Under its new East Asia Policy, Russia seeks to develop the Far East through cooperation among countries in the Asia-Pacific region. The policy is similar in many ways to South Korea’s new Northern Policy. Russia pursues the balanced development of its territory by joining the growing market in East Asia. It is advocating the new East Asia Policy with an aim of rebuilding itself as a powerful country over the long term. The policy has a goal of boosting economic and diplomatic cooperation with the nations in the Asia-Pacific region, including China, South Korea and Japan. The Moscow government hopes to reassure its status in the region by developing the relatively less developed Far East area. The Seoul government, on its part, wants to expand economic cooperation in Northeast Asia through joint projects with the northern region. The two policies share a similar goal, and there is a high possibility that the two nations will expand their cooperation.

The Russian Far East is where both Russia and South Korea have major interests. Russian President Vladimir Putin has pushed for his new East Asia Policy aimed at developing the Far East and Siberia since his third presidential term started in 2012. On a similar note, South Korea has tried to find a way to promote investment and cooperation in the same region in an effort to gain a new growth engine and achieve regional stability. The policies supported by the two nations have many things in common, so they could be closely connected. But the problem is that risk factors always reside in this volatile region.

The geopolitical risks triggered by the North Korea nuclear issue, which is still up in the air, can be a negative factor that may jeopardize Seoul’s new policy. Also, the U.S. and the European Union have been strengthening sanctions on Moscow in response to Russia’s military intervention in Ukraine in 2014, the alleged Russian hacking into the 2016 U.S. presidential election and the North Korean nuclear issue. The sanctions, if prolonged, may have a negative impact on South Korea’s new Northern Policy, which requires cooperation with Russia in energy and logistics. Strong international sanctions against North Korea, in particular, are bad news for the policy. Joint projects involving South Korea, North Korea and Russia include the connection of a cross-border inter-Korean railway with the Trans-Siberian Railway, as well as the establishment of a power grid. For the trilateral projects, North Korea’s participation is essential. But North Korea has been under international sanctions as a result of its relentless nuclear weapons development. So, both South Korea and Russia find it difficult to carry out their respective policies.

While the new South Korean policy has an optimistic blueprint, it faces a number of obstacles. To implement the policy, it is necessary to build the “nine bridges,” including the connection of railroads and the development of ports. But it is impossible to build the infrastructure without North Korea’s participation. At present, North Korea is subject to tough sanctions imposed by the international community due to its sixth nuclear test. In this situation, it isn’t easy to even mention economic cooperation with North Korea. What will be necessary for South Korea to fulfill its grand vision?

To execute the policy successfully, it is necessary to adopt a two-track approach so the multilateral cooperation framework that includes North Korea will not stand in the way of bilateral or multilateral ones that do not include the North. There are some joint programs that were once carried out but later suspended, such as the Rajin-Khasan project. The resumption of those programs may provide new momentum to realize the new South Korean policy or the idea of a new economic map for the Korean Peninsula. Also, South Korea could push for new programs through the Greater Tumen Initiative or utilize existing mechanisms for international cooperation. For example, it could use the Asian Infrastructure Investment Bank to secure funds.

The new Northern Policy is an ambitious vision that could expand an economic map of the Korean Peninsula and elicit a change from North Korea. The government should hopefully come up with a variety of action plans so the policy will act as a steppingstone to peace and prosperity in Northeast Asia.