Tumen River project running into problems<\/p>\n
Mark J. Valencia examines the potential of the only existing
\nmultilateral inter-governmental institution for economic
\ncooperation in Northeast Asia.<\/p>\n
The United Nation's Development Program's much-touted Tumen
\nRiver Area Development Project (TRADP) has run into problems and
\nskeptics are pronouncing it dead in the water, if not dead all
\ntogether. The hope was that economic cooperation would break down
\npolitical barriers that have made the region a flash point for
\ndecades. But Russian and Chinese reservations at the July 1994
\nmeeting of the Program Management Committee in Moscow derailed
\nthe previously agreed Tumen River Area Development Corporation.<\/p>\n
The Corporation was to be run by the three riparian countries
\nto lease land and attract foreign investment. And on Oct. 31, the
\nUNDP closed its New York office having exhausted its US$3.5
\nmillion budget. The role of the UNDP has now been reduced to a
\nliaison office in Beijing. Although talks and studies in the
\nriparian countries continue, the key question being raised is
\nwhether the TRADP idea and process can survive without an
\nimplementing mechanism to drive it forward.<\/p>\n
However, these doomsayers ignore the fact that the fundamental
\ndriving forces for development of that area remain and, indeed,
\nare long-term trends. The original concept was to combine
\nJapanese and South Korean capital, know-how and technology with
\ncheap Chinese and North Korean labor to exploit and process
\nnatural resources from the Russian Far East and Mongolia. China
\nstill wants to develop its economically-backward northeast and to
\nregain access to the sea either through a Tumen River port or by
\nleasing facilities at warm water ports in Russia and North Korea.
\nMongolia continues to seek trade as well as investment in its
\nmineral rich east from its Asian neighbors, and also needs access
\nto the sea, particularly for exports of raw materials.<\/p>\n
North Korea is proceeding with development of its
\nRajin\/Sonbong Special Economic Zone (SEZ) and wishes to use the
\nTumen River project as a vehicle to attract and perhaps help
\nguarantee foreign investment. As evidence of its commitment, it
\nhas approved the concept of land leasing. Indeed, North Korea is
\ngreatly disappointed that the corporation idea has been stalled.<\/p>\n
South Korea has an abiding special interest in China's Yanbian
\narea with its roughly two million ethnic Koreans, and wishes to
\nuse the project as well as direct investment in China's North
\nKorean border area as a means for cooperation and confidence-
\nbuilding with North Korea. Indeed it hopes the project will help
\npersuade North Korea to shift slowly to an open-door policy.<\/p>\n
South Korea's motives are also economic. Low fixed costs and
\ncheap Korean-speaking labor can combine to produce value-added
\nconsumer goods for South Korea as well as an eventual market for
\nSouth Korean products. Kim Young-Sam's Nov. 7, 1994, declaration
\nliberalizing South Korean investment in North Korea is a positive
\ninitial step to promote direct investment in the Rajin-Sonbong
\nSEZ. Although North Korea responded critically to President Kim's
\nmove, it did invite representatives to visit the North. South
\nKorean companies have already begun planning for such investment.
\nThe Korea Maritime and Port Administration has applied to the
\nMinistry of Science and Technology to develop ports in the zone.
\nAnd Samsung plans to invest in the Hunchun-Rajin\/Sonbong rail
\nlink and to finance the development of Rajin port. These projects
\nrepresent the first direct South Korean investment in the North,
\nalthough the risk is being hedged by investing through a Chinese
\ncompany.<\/p>\n
Russia remains mired in its own economic difficulties and is
\nconcerned that the project will compete with its existing sea
\nports and ground transportation facilities. Moreover its
\nconstitution does not yet allow foreigners to lease land. And
\nthere is some concern that the project would harm its coastal
\nwetland environment as well as attract hordes of Chinese and
\nNorth Korean immigrants. Nevertheless, Russia realizes that the
\nfuture of its Far East is in trade and investment with its Asian
\nneighbors. Thus it wants to see how the Tumen project and the
\nRussian Far East will fit in a broader Regional Development
\nStrategy before fully backing the project.<\/p>\n
In keeping with Russia's concern, the original somewhat narrow
\nTRADP has now been supplanted by a large vision encompassing the
\narea between Hunchun, Chongjin and Nakhodka, and is focused on
\nmore modest objectives. Long-term and large-scale projects such
\nas building 11 specialized harbors and a rail hub have been put
\naside in favor of improving existing ports and conducting small-
\nscale projects as quickly as possible. Such practical
\ncooperation, which consists more of coordinating the existing
\ninfrastructure efforts of the riparian countries, is more
\nrealistic at this stage.<\/p>\n
Although the TRADP dream has been blurred and blunted, there
\nhave been considerable achievements to date. The Tumen River
\nproject is the only existing multilateral inter-governmental
\ninstitution for economic cooperation in Northeast Asia.
\nThe area has gone from a forbidden no-man's land to one of
\nrelatively easy access. Border trade, particularly between Russia
\nand China, has greatly expanded. There has been incremental
\ngrowth throughout the area. The Phase II TRADP agreement has been
\nsigned and the emphasis has been changed to a regional
\ndevelopment strategy.<\/p>\n
A Trilateral Coordination Committee has been established to
\ncontinue the TRADP. Rail links are being built between China and
\nNorth Korea, and China and Russia. Japan has started to provide
\nofficial assistance to the Russian Far East. Three free economic
\nzones have been established -- Hunchun, Rajin\/Sonbong and
\nNakhodka. Trade and investment missions to the area are being
\nsponsored by Unido. There has also been some progress in
\nharmonization of regulations among the three riparian countries
\nand some degree of joint planning. In general, political barriers
\nhave been lowered and confidence has risen.<\/p>\n
A recent region-wide meeting of the non-governmental Northeast
\nAsia Economic Forum in Niigata, Japan, suggested some possible
\nnext steps for the TRADP. One way around the sticky questions of
\nnational sovereignty would be for each of the nations to
\nestablish Tumen River Development Authorities. These authorities
\ncould then be linked by a broader Tumen River Management
\nAuthority comprised of both the riparian countries and regional
\ninvestor countries. This authority would facilitate, promote and
\ncoordinate development plans, regulations and activities in the
\narea. This would serve to minimize bureaucracy and the lack of
\naccountability which plague many developing countries. Another
\nimportant facility would be a Tumen River International
\nCommercial Bank. This would be an innovative interim solution to
\nshort-term needs for liquidity as well as a lubricant in day-to-
\nday exchanges of goods and services, imports and exports.<\/p>\n
It is clear that the short-term future of the TRADP will be
\nthe separate development of individual zones. But when regional
\ndemand for regional cooperation reaches a certain threshold, the
\nremaining impediments to trade and investment will melt away.
\nIndeed, the area is almost certain to eventually become a
\ncommercial transportation and telecommunications crossroads.<\/p>\n
In the meantime, the Northeast Asia Economic Forum based in
\nHawaii and chaired by Lee-Jay Cho might provide a neutral non-
\ngovernmental locus of discussions to bridge the gap between
\nconcept and official inter-governmental implementation.<\/p>\n
Mark J Valencia is a Senior Fellow at the East-West Center,
\nHawaii, U.S.A..<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tumen-river-project-running-into-problems-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}