Alexander Galushka: South Korea Shows Interest in Developing North Sea Route
Alexander Galushka, Minister of the Russian Federation for the Development of the Far East, visited Seoul where he held a series of meetings and talks with the South Korean officials and representatives of business community. In the exclusive interview given to the agency TASS, he told about the prospects of a pipeline construction from Russia to South Korea via the territory of the DPRK and creation of an energy bridge, and about the outburst of interest of the South Korean investors in the territories of advanced development in the Russian Far East. He also touched on the prospects of bi- and trilateral cooperation with the Korean peninsula nations.
— Could you tell us about the outcomes of your visit to the Republic of Korea?
— The visit was very eventful, it included the negotiations with South Korea’s officials, including Mr. Song Young-gil, the Head of the Committee for North Economic Cooperation, Minister of Commerce, Industry and Energy (MOTIE) Mr. Yoon Sang-jick, Minister of Oceans and Fisheries (MOF) Mr. Kim Young-suk. We also met with a number of Korean companies that would like to consider investment opportunities in the Russian Far East.
Among them there were representatives of different sectors of economy: energy, shipbuilding, transportation, logistics, agriculture, fish processing, timber processing – an extensive range of possible areas of cooperation. The projects are at different stages of readiness, however, Korean businessmen are very positive about our cooperation. Naturally, my trip also included meetings with experts who are involved in analytical work concerning Russia.
The key meeting within the first block of negotiations was the one with Mr. Son Young-gil. Let me remind you that the Republic of Korea’s President Moon Jae-in stated in his speech in Vladivostok that he would like to see close cooperation between the Ministry for Development of the Russian Far East and the Committee on North Economic Cooperation. Our meeting actually laid the foundation for this cooperation – we discussed the roadmap for the implementation of ‘nine bridges’ of cooperation between Russia and South Korea, reaching a high level of mutual understanding in the way of this plan. However, the most important thing, in my opinion, is that we agreed on regular communication that in the videoconferencing mode between the Ministry for Development of the Russian Far East and the Committee on North Economic Cooperation there will be working discussions on the specific positions of this plan. We have also agreed that we will be working together in a larger context, not only at summits. I consider it very important as it will enable us to work fast and efficiently.
Our Korean partners and Mr. Son Young-gil paid special attention to the issues of energy cooperation, and they showed the desire to implement the initiatives of our president to create a large Asian energy ring in practical terms. For their part, they are ready to take the first necessary steps for this.
In this regard we held negotiations with Korea Electric Power Corporation (KEPCO). We also agreed that by the end of the year we will form the energy cooperation roadmap, together with special participation of KEPCO, who are keenly interested in this.
We also discussed, of course, the issues of active attraction of Korean businesses to the Russian Far East. Let me remind you that the President of the Republic of Korea, speaking at the Eastern Economic Forum in Vladivostok, said that, in his opinion, it is his country that is the best partner for Russia in the development of the Russian Far East. I believe we have to do our best to implement this practically, primarily because of Korean investors arrival to the Russian Far East..
We have also agreed that the Committee on North Economic Cooperation and the Ministry of Commerce, Industry and Energy (MOTIE) will provide support to open the representative office of the Agency of Far East in Seoul for attracting investments and supporting exports. It is to open till the end of the year. We have agreed that the event will be by time accompanied by a road show for Korean investors and business people featuring the opportunities for investing and conducting business in the Far East. We have agreed that the event will be timed by a road show for Korean investors and business people featuring the opportunities for investing and doing business in the Russian Far East. We have passed on to the Korean side the package containing these features as well as the package of promising projects.
This is the main content of our discussions with government officials and companies. With the companies, we also talked about specific segments, special projects, about what and when to do, what steps to take to start all this in the Russian Far East.
I can share my feelings: they are very positive. This was not my first visit to Seoul, but for the first time I was involved in business-like talks focused on specific issues, details and practical aspects of our trade and economic cooperation as well as on implementation of investment projects in the Russian Far East.
— In terms of the cooperation you mentioned in the energy sector, do you already have any specific agreements and solutions?
— We have discussed only the outline of the issue so far. In our talks with Mr. Son Young-gil and Minister of Commerce, Industry and Energy (MOTIE) Mr. Yoon Sang-jick, we have paid special attention to the fact that both sides are willing to develop this sector.
Korea Electric Power Corporation (KEPCO) has a desire to implement model projects in the Russian Far East, referring to investments in new power capacities and the modernization of existing ones.
According to the representatives of the company, the upgrade, know-how of which is available from KEPCO, the efficiency of the existing power capacities can be increased by 30 percent.
KEPCO has also shown interest to the issue of the energy bridge from Russia to South Korea via the territory of the DPRK. From our side, of course, there are no contraindications; we need to work all this out in a professional and detailed manner, in the form of an agreed plan of measures. We want to do this before the end of the year.
— How real is the energy bridge project in the current conditions of tension and confrontation on the Korean Peninsula, connected with Pyongyang's nuclear missile experiments?
— Communicating with our South Korean counterparts, I consistently stressed that if we really want to do this, we need to move on to a normal tripartite format for discussing these projects. Now this is impeded by the fact that the Russian side has to engage in shuttle diplomacy: first communicating with South Koreans, then informing the North Koreans of the outcomes of the talks then discuss the things with North Koreans, and inform about it the South Koreans and so on. The three of us have to sit down to the negotiating table and discuss and implement the trilateral projects.
It was very gratifying for me that Mr. Son Young-gil expressed his readiness to this format of joint work, to such a format for discussion. This is undoubtedly a step forward in comparison with what was before.
For our part, we will be urging our North Korean partners to shift to this format.
— What is the current state of the «Khasan Rajin» project?
— The «Khasan-Rajin» project has been withdrawn from the sanctions of the UN Security Council. I would like to remind you that the Russian Railways have invested approximately RUB 10 bln into the modernization of railways and the port, and the North Korean side has created the necessary conditions to implement this project.
We realized that the South Korean side is interested in these projects. During the talks, it was said that they would like to return to these projects. We do not have any objections to that. We are going to work out the scheme for cooperating with South Korean partners more closely.
— Have the recent nuclear and missile tests by the DPRK affected the trilateral projects?
— Naturally, any actions related to escalating the military situation on the Korean peninsula do not facilitate trade or economic cooperation, nor do they contribute to easing tension.
— What is your forecast for the prospects of trilateral economic cooperation with South Korea and the DPRK, such as export of Russian gas to South Korea via the territory of the DPRK to the Republic of Korea, as well as the construction of Trans-Korean railway and its connection with Trans-Siberian railway? The latter project has been discussed for over 10 years already, without any progress so far.
— The initiatives and the directions, which were announced by the new leader of the Republic of Korea in Vladivostok, can give a new impetus to these projects. I consider that the responsible approach consists of us doing our best to implement all these proposals in practice.
In fact, during our talks the issue of Russian gas supplies to South Korea has been sounded much accented. It is good for Russia; we are interested in gaining access to the South Korean gas market. We discussed the LNG supplies options and the South Korean side stated its readiness to go back to the trilateral project of building a pipeline from Russia to South Korea via the territory of the DPRK. Let me remind you that in 2011, we almost agreed on this and there was a high degree of readiness for the implementation of this project, a high degree of thoroughness.
This is trilateral project, which implies that the wishes of all the three sides have to coincide to make it happen. It is beneficial for Russia, and the South Korean partners are interested, which means we have to go back to it.
— During the Eastern Economic Forum, President of the Republic of Korea Moon Jae-in announced the concept of Russian-Korean economic cooperation based on "nine bridges". Which of these directions do you consider as most promising? Moreover, what is the primary interest of the Russian Far East?
— Declaring these ‘9 bridges’ the South Korean leader spoke about the Russian Far East as the region of prime importance in the cooperation between Russia and Korea. We are close to this position, and we would like to see Korean businesses to come to the Russian Far East bringing in their investments and to work successfully there starting new enterprises, establishing new factories, and creating jobs. There are all the conditions for that. If something is missing, we are ready to work to meet investment needs.
This is our approach to all: to Russian businesses, Japanese, Chinese, Singaporean, and Indian. Moreover, we see how thanks to that new enterprises being launched in the Russian Far East. We are ready to go the same way with the Koreans. In addition, of particular importance for us are direct Korean investments in the Russian Far East, of course, primarily in high-tech sectors with high added value, in those activities where the most highly productive jobs are created.
— What is the situation with South Korean investment in Russian territories of advanced social and economic development (TADs) and the free port of Vladivostok?
— Up to a certain moment there were none, the first nine projects with the investment in amount of US$400 million came quite recently. For the first time, in Khabarovsk we held the Day of the Korean Investor, it added us more prospective projects for US$ 250 million.
The amount of potential investments discussed during this visit with Korean officials and investors already exceeds the existing amounts, which were mentioned above. These are much more substantial amounts and now we will work hard to make it come into practice.
Let me emphasize that declarative statements were already before, and now there is a specific business conversation, which ends either with resolving issues or with concrete business mission plans until the end of this year, when investors will go to see the sites, where they can locate their manufacturing facilities. Everything will go with our support.
I would also like to inform you that we have launched the electronic form of submitting applications for residence at the TADs and the free port of Vladivostok. Everything is done online, without any papers; it is all fast and convenient.
— Are there any shifts in the implementation of the joint project with South Korea to build a hotel infrastructure in the Primorye gambling area?
— I expect them to happen. I have met the president of “Kangwon Land” company. They consider the project attractive, they would like to fulfill it. The company is state-owned, Minister of Commerce, Industry and Energy (MOTIE) Mr. Yoon Sang-jick whom they report has expressed his readiness to review the project attentively and support it. This is the result of the discussion of this project in Seoul.
We have also had a very meaningful discussion with Lotte Group concerning their further involvement in the tourist industry development in the Russian Far East and investments in tourist infrastructure. I believe there are all the reasons for us to expect positive outcomes.
— Does South Koreaт side show any interest in developing the Northern Sea Route (NSR)?
— I will not deny that South Korean side has been raising this issue in detail and consistently. Previously, there were no such initiatives. It occurred for the first time when Mr. Son Young-gil came to Moscow in the capacity of President Moon Jae-in’s special envoy. We had a meeting and he displayed great interest in the NSR.
As a result, at the recent negotiations with the Korean business, we agreed to organize a test convoy and work together on the optimal economic organizational model for this route. This will allow us to accomplish the task given to the Ministry for Development of the Russian Far East by the President of Russia to prepare the model of developing NSR as a global transit corridor between Europe and Asia, including also for container shipments.
Transit is an important part of the development of the NSR, the other part is connected with the development of the offshore area, and naturally, because of offshore projects, it will develop.
It is interesting that our Korean partners came with calculations rather than statements. They already have preliminary estimates, and are eager to make testing convoy. Moreover, Minister of Oceans and Fisheries (MOF) Mr. Kim Young-suk said during the talks that in principal, they are ready to build icebreakers for the NSR. Earlier we did not hear such words from our South Korean partners.
— With what do you attribute this sudden rise of interest of South Korean business to the Russian Far East? Did the visit by Moon Jae-in to the EEF play a role here or is it a natural process?
— I believe it is a coincidence. On the one hand, the political leaders of South Korea are keen on cooperating with Russia, but on the other hand, after the third EEC South Korean business saw the examples of success, new niches and opportunities. I think these two factors have coincided and have complemented one another.
By Stanislav Varivoda
Photo by Valery Sharifulin / TASS photohost agency