Back to the future, the northern part of the Korean peninsula is beginning to resemble turn-of-the-(20th)-century Korea, with a decaying dynasty and foreign powers vying for influence.
Further demonstrating his nostalgia for the Soviet Union, President Vladimir Putin’s revanchist Russia is making a bid to re-establish its influence in North Korea. With a history of playing suitors off against each other (when will we ever learn?), Pyongyang appears to be more than a willing dance partner. As Steph Haggard observed in an earlier post, Russia has written down Soviet era North Korean debt, signaled willingness to invest in a number of projects in the extractives sector, as well as gas terminal and a land freight terminal in the North Korean port of Rason. North Korea has simplified visa procedures for Russian investors, including unprecedented rights to use their cell phones. Russia has responded by including the Rason region in its $23 billion plan to develop its Far Eastern provinces, and has been pushing the extension of the east coast rail line to South Korea, and touting plans for a gas pipeline. South Korea has announced a pilot project to import a small quantity of Russian coal via Rason.
Form appears to be following function. Last month, Rodong Sinmun gave front page coverage to a congratulatory message from Putin on the 66th anniversary of the nation’s founding, while burying Chinese President Xi Jiping on page 3. (At least he was fully clothed.) And it wasn’t an aberration: the paper placed a message from the CCP congratulating North Korea’s leadership on page 3, alongside Kim Jong-un’s congratulatory message to Syrian President Bashar al-Assad for his upcoming birthday.
It has not gone unnoticed that President Xi has met with South Korean President Park Geun-hye multiple times, while managing to avoid Kim Jong-un. And as any economist will tell you, when the Finance Minister has to publicly deny an exchange rate devaluation is planned, it’s time to short the currency. So when the octogenarian head of the Supreme People’s Assembly, Kim Yong Nam is wheeled out to assert that everything is good between Beijing and Pyongyang you know that, well, the marriage is troubled.
In the words of the Chosun Ilbo, the showpiece Hwanggumpyong Island project “looks derelict.” Never the most promising of ventures, the conservative newspaper asserts that the project died with its patron, Jang Song-taek. And at this year's trade fair in Dandong, North Korean participation is down 30 percent. The number and value of business deals were apparently down as well.
Presumably this tilt toward Moscow—however justified as a means of diversifying political and economic contact— is a temporary blip: the case for North Korean-Chinese economic integration is overwhelming. In the meantime, however, Pyongyang seems happy to dance with its old partner wearing new duds. To the south, Seoul says that it is holding firm on sanctions. But will insecurity and jealousy win out?