Korea, Russia poised to step up economic cooperation

Will Russian President Vladimir Putin`s Seoul visit signal a turning point in efforts to boost economic cooperation between Russia and South Korea?

Seoul-Moscow economic ties briefly flourished after the two normalized diplomatic relations in 1990, but have been extremely depressed over the past four to five years. Two-way trade reached just $2.8 billion last year, which meant that Russia was Korea`s 20th largest trading partner. Moscow`s failure to repay $1.8 billion in loans that Korea made to the former Soviet Union drastically reduced local confidence in the Russian economy. Russia also adopted a less confident view of Korea after it fell victim to the 1997 currency crisis.

But there are indications that Korea-Russia economic cooperation is poised to enter a new phase. Dr. Chung Yeo-Chon of the Korea Institute for International Economic Policy said, ``We cannot see Russia as a big market, but it is a country with great possibilities if we take into account its political and economic situations.`` Prospects of completing large-scale projects like the effort to link the Trans Siberian Railway (TSR) and Trans Korean railways and exploit gas fields in Russia are brighter than at any other time thanks to the settlement of a framework for reconciliation in Northeast Asia.

If the railroad connection and exploitation of the Irkutsk gas field proceed as planned, South Korea, North Korea and Russia will all benefit. The project to connect the Kyongwon Line (Seoul-Wonsan in the North) will support South Korea`s aim to become the hub of international transport in Northeast Asia. Using the network would enable Korea to halve its cargo transport costs. Russia and North Korea would profit from tolls on vehicles and transport dividends. Moscow is also expected to make money by tapping its gas fields, while Seoul would be able to secure a stable flow of resources and North Korea would collect fees for allowing the construction of pipelines within its borders.

However, there are still many problems that must be resolved before tripartite cooperation gets fully underway. Among them are Russia`s unpaid loans, the challenge of raising funds and unstable economic conditions in the two countries.

Fortunately, the Russian economy has quickly recovered since Putin took office, with growth reaching about 7 percent last year. During Putin`s visit, the two countries are expected to achieve a breakthrough in the form of successful negotiations by the members of the joint Korea-Russia economic committee.

Lee Byong-Ki eye@donga.com