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Academic Paper Series Korea Economic Institute of America ACADEMIC PAPER SERIES January 22, 2014 How Expanding Trans-Border Transportation Networks Will Impact South Korean-Mongolian Energy Cooperation: Using the Greater Tumen River Initiative to Realize the Eurasia Initiative By Dr. Alicia Campi Abstract Introduction The Greater Tumen Initiative (GTI) is a regional cooperation The Greater Tumen Initiative (GTI), originally called the Tumen River mechanism among Republic of Korea, People’s Republic of Area Development Programme (TRADP), is a regional cooperation China, Democratic People’s Republic of Korea, Mongolia, mechanism among Republic of Korea, People’s Republic of China, and Russian Federation which is supported by the UNDP. GTI Democratic People’s Republic of Korea, Mongolia, and Russian member governments established this mechanism with the goal Federation which is supported by the United Nations Development of strengthening economic and technical cooperation to obtain Programme (UNDP). In 1995, GTI member governments signed greater growth and sustainable development in Northeast Asia agreements to establish this mechanism with the goal of particularly in the Greater Tumen Region. The GTI focuses on strengthening economic and technical cooperation to obtain the priority areas of transport, trade and investment, tourism, greater growth and sustainable development in Northeast Asia energy, with environment as a cross-cutting sector. For South (NEA), particularly in the Greater Tumen Region. The GTI focuses Korea, the GTI represents an important opportunity to actualize on the priority areas of transport, trade and investment, tourism, the Eurasia Initiative announced by President Park Geun-hye in energy, with environment as a cross-cutting sector. The GTI vision is October 2013. The Eurasia Initiative is a proposal to link rail and for a partnership for prosperity among neighbors, with the goal to road networks, energy, and logistics infrastructure from Korea’s become an effective platform for regional economic cooperation, Busan across the Eurasian continent to Europe in a modern ‘Silk expanding policy dialogue, improving business environments, and Road Express.’ One potential energy mineral resource partner contributing to NEA peace and stability. for the ROK could be Mongolia. The GTI transportation grid The core decision-making institution is the GTI’s Consultative design meshes completely with Mongolia’s intention to re- Commission, composed of vice-ministers from GTI member orient its mineral resource customers from China to consumers governments. The Commission’s role is to foster support for in Korea, Japan, and Europe. Establishing a new cross-border regional cooperation and development, and promote mutual transportation network should strengthen ROK-Mongolian understanding. It convenes annually to discuss key policy issues energy cooperation. and cooperation projects, and hosts joint sessions with strategic partners and local governments. Key words: ROK-Mongolia, railways, transportation networks, In addition, the GTI works closely with international partners Greater Tumen River Initiative, Eurasia Initiative to jointly promote the region and hosts both the NEA EXIM Dr. Alicia Campi is a Visiting Fellow in the Edwin O. Reischauer Center for East Asian Studies at Johns Hopkins School of Korea Economic Institute of America Advanced International Studies. This paper is the sixty-third in KEI’s Academic Paper Series. As part of this program, KEI 1800 K Street, NW Suite 1010 commissions and distributes approximately ten papers per year on original subjects of current interest to over 5,000 Korea watchers, government officials, think tank experts, and scholars around the United States and the world. At the Washington, DC 20006 end of the year, these papers are compiled and published in KEI’s On Korea volume. www.keia.org For more information, please visit www.keia.org/aps_on_korea. How Expanding Trans-Border Transportation Networks Will Impact South Korean-Mongolian Energy Cooperation: Using the Greater Tumen River Initiative to Realize the Eurasia Initiative 1 ACADEMIC PAPER SERIES Banks Association and the Local Cooperation Committee. It has minerals. While these rich coal, copper, gold, petroleum, natural established strong partnerships with regional governments, gas, rare earth, and uranium resources could be moved to willing international organizations, and the private sector to jointly Korean customers, it is just as probable that they will find new initiate cooperative activities. With both a skilled and low-cost economic partners in Asia and across the Pacific. Thus, GTI labor pool, the Tumen River basin site is at the crossroads of members are likely to overcome any present political impasses vital trade, transport and energy routes. Rich in gas, oil and to realize the goal of greater transportation integration. minerals, the region has easy access to affluent markets and hundreds of millions of NEA consumers. Increased regional cooperation is projected to not only lead to economic prosperity and sustainable development, but also to contribute significantly to regional solidarity and stability.1 For South Korea, the GTI represents an important opportunity to actualize the Eurasia Initiative announced by President Park Geun-hye in October 2013.2 The Eurasian Initiative is a proposal to link rail and road networks, energy, and logistics infrastructure from Korea’s Busan across the Eurasian continent to Europe in a modern “Silk Road Express.” One potential energy mineral resource partner for the ROK could be Mongolia. Mongolia, for its part, is a rapidly developing resource economy rich in coal, natural gas, petroleum, copper, gold, and uranium, but Greater Tumen River Basin overwhelmingly dependent on China as its customer because of poor northeast outbound transportation routes. It is determined to find new mineral customers in Northeast Asia to break the GTI Ulaanbaatar meeting of October 30- Chinese monopoly over its economy and diversify trade partners. November 2, 2013 The GTI transportation grid design meshes completely with The 14th meeting of the Consultative Committee of the GTI Mongolia’s intention to re-orient its valuable mineral resource and Northeast Asia Economic Cooperation Forum was held customers from China to consumers in Korea, Japan, and Europe. in Ulaanbaatar, Mongolia from October 30 to November 2, Active ROK partnering initiatives for railway development 2013. Vice Ministers of GTI member nations discussed regional with Mongolia and Russia to improve regional transport cooperation and development strategy in the NEA region, infrastructure and ease trans-border transportation passages reaffirmed the significance of GTI in building regional partnership would have an immediate impact on the existing Jilin, China for common prosperity, and reviewed transforming its strategic international cooperative demonstration zone, which includes direction into an independent organization by 2016.4 The focus the participation of 48 South Korean companies and 48 Chinese of the discussions evolved from GTI’s Integrated Transport regional governmental agencies and businesses.3 Furthermore, Infrastructure & Cross-border Facilitation Study for the Trans- this new railway development project coupled with Chinese GTR Transport Corridors released in February 2013.5 As the NEA railway construction traveling towards North Korea will connect region has enormous potential for development, especially in the Tumen and Yalu Rivers as well as link North Korea’s major port arrangement and infrastructure construction, one of the cities with China and other regional countries. These efforts, then, prime challenges discussed at this year’s Consultative Committee have the potential to boost the construction of NEA international session was how financing institutions can meet demand from transit corridors and promote the cross-border economic and the private sector, and what kind of channels and mechanisms energy cooperation sought in the Eurasia Initiative. can be provided in bringing about regional economic prosperity? Any new rail development undertaken by South Korean companies The Northeast Asia Economic Forum, which facilitates dialogue also holds specific benefits for each of the GTI countries and on NEA economic and development cooperation, took place should spur competition over Mongolian and Siberia-Russian immediately following the Consultative Commission meeting. 2 ACADEMIC PAPER SERIES This session focused on the legal status of the GTI program and Ulaanbaatar Railway’s expansion. Innovation and financing has assessed project implementation on consolidating structures been sought from China and Russia. In October 2013 Mongolia of trans-border transportation passages and simplification of agreed to establish a working group with China to oversee border entrances. The Forum brought together more than 100 the construction of new road, rail and pipeline infrastructure delegates from GTI member governments, the business sector, connecting the two countries with Russia. A Mongolian official and financing associations.6 explained that landlocked Mongolia aimed to become a “transit corridor” to facilitate trade between its two giant neighbors and This round of consultation established the Northeast Asia reduce the costs of delivering Russian commodities like oil and EXIM (Export-Import) Banks Association, which consists of the natural gas BSE 1.16 percent to Chinese markets.9 EXIM banks of the ROK and China, the Developmental Bank
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