North Korea and Russia Agree to Open Port of Rajin

North Korea agreed with Russia to allow foreign ships enter and leave the port of Rajin. The agreement seems to show the North’s willingness to open the country partially under the mounting burden of economic sanctions.

Since 1991, North Korea had attempted a limited opening of the port as part of the Rason (formerly Rajin-Sonbong) Economic Special Zone Project. However, low participation of foreign investors and the nuclear crisis in 1994 derailed the opening.

Unlike the past, however, China and Russia now show keen interest in developing the port of Rajin. So many predict that this time will be different.

China and Russia in Competition-

The port of Rajin is a strategic point which borders Jilin Province in China and Primorsky Krai in Russia. The port`s sea level is deep enough to be advantageous for the development of the port. China and Russia are in competition for such development, and China is currently ahead of Russia.

China established the Rason International Distribution Company Limited through the joint investment of the People’s Committee Economic Cooperation Company in Rason. The Chinese company secured 50-year exclusive management rights to Port #3 and Port #4 in Rajin and a national highway which links Hunchun and Rajin.

Russia is also aggressively investing in Rajin with a plan to use the port as the distribution center of the Russian Far East; Russia seeks to sign a memorandum of understanding with North Korea to rebuild the railroad from Najin to Russia`s Hasan.

The Background of the Opening and its Implications to the North-

North Korea is said to hold a significant amount of investment promise as China and Russia rush to take the lead in the development project.

China agreed to spend 35 billion won in the construction of the industrial complex around the port of Rajin, including building the road between Hunchun and Rajin and developing the port of Rajin. Russia also expressed its intention to finance the 30 billion won project by remodeling railroad between Rajin and Hasan and renovating the port of Rajin.

Effects on the Inter-Korean Relations and the Opening of the North-

North Korea already opened seven ports, including Rajin, under the 2004 South-North Agreement on Maritime Transportation.

However, the agreement hasn’t produced anticipated results as processes are cumbersome and the quantity of goods transported is low. For example, the South still has to inform the North of the names of ships and crew, purposes, times, lists of cargo and other details three days before going to Rajin.

Using the port has a significant economic advantage for South Korea as exports to Europe can be shipped to Rajin and transported to Europe by TSR. This route costs less time and money than the current route (cutting up to three-fourths of costs and time). Therefore, once the port of Rajin is fully opened and becomes the hub of distribution for China and Russia, it is expected that ship operations between the two Koreas will increase.

weappon@donga.com