International Cooperation and the Logistics Market in Northeast Asia: Problems and Prospects for North Korea

Abstract

IntroductionIn the past, because of political tensions and environmental reasons, the border region of Russia, China, and North Korea did not receive much attention, especially in terms of economic growth potential, even though specialists had designated the area "natural economic territories" in the early 1990s.1 The border region, however, is now increasingly reattracting attention from Northeast Asia experts because of its potential as a treasure trove of natural resources and a global logistics hub. Although, in the political point of view, conflicts of interests between North Korea/South Korea, China/Russia, Russia/Japan, and Japan/China are still unresolved, regional cooperation for the mutual benefit of all parties-especially in trade, investment, and energy supply-is being increasingly reassessed.In this region, Russia has planned to diversify its natural resource exports, balance regional development within the country, and expand its regional political influence. China has accelerated its efforts to develop its three northeast provinces (Heilongjiang, Jilin, and Liaoning), secure its way out to the East Sea (Sea of Japan), and improve accessibility to natural resources, such as oil and gas buried in Russian Siberia.2 North Korea spurs development of its Rason Special Economic Zone (SEZ) in order to overcome prolonged economic difficulties.3 South Korea searches for ways to secure energy resources along with its efforts to develop logistics routes connected throughout the Eurasian continent, which was highlighted in 2013 in the "Eurasia Initiative" of the Park Geun-hye government.4 Japan places top priority on ensuring resources near the Tumen River estuary as well. The "northern region," frequently called as such by South Koreans since the late 1980s-and which includes the border areas between Russia, China, and North Korea, part of the Russian Far East and Siberia, and part of Northeast China-has reemerged as a crucial juncture because of the mutual interests of all parties interlinked in the economic and the political spheres.5In addition, because of climate change and the progress of global warming, the availability of a potential route to the Arctic Ocean is emerging. Moreover, this situation increases the availability of Russian Far East ports and natural resources development in the northern region. Logistics infrastructures and their operating systems to access the resources therein are still vulnerable. The closed customs system between China and Russia could be a constraining factor for building a seamless cross-border logistics system. The most critical barrier to growth, however, would be the disconnected maritime and/or inland logistics network to North Korea, under the influence of political factors. As a way to solve political tensions with isolated North Korea, economic cooperation in the northern logistics market (including the Korean Peninsula, China, and Russia) presents itself as a necessary task to accomplish. To achieve this goal, an understanding of the current status and implications of the northern logistics market and prospecting in the direction of future changes are necessary.Historical Background of the Northern Economic Bloc6RussiaImperial Russian territorial advancement toward the present Russian Far East began with the Treaty of Nerchinsk in 1689, signed with Qing China to define the respective boundaries mainly along the Amur River.7 Subsequently, Russia advanced to Alaska in 1741.8 During the decline of the Qing in the mid-nineteenth century, Russia conquered Vladivostok in 1859 and established the present borderline of the Russian Far East.9 In 1891, Russia started constructing the Trans-Siberian Railway (TSR), completed in 1903.10 With the demise of Imperial Russia, the Soviet Union established fifteen regions for economic development from 1920 to 1957, setting up nineteen basic economic regions, including Siberia afterward. The rapid growth of this region attempted by the Soviet Union was based on rich physical resource endowment, while scarcity of the labor force was supplemented with enforced migration by the state authorities. …