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South Korean President Moon Jae-in, left, is seeking detente with the regime of North Korea's Kim Jong Un. © Moon photo by Reuters, Kim photo by KCNA/Reuters
North Korea Crisis

South Korea quietly weighs economic cooperation with North

Sanctions stand in the way of potentially lucrative energy opportunities

SEOUL -- South Korea is considering a resumption of economic projects with North Korea, but officials are choosing their words carefully since Pyongyang is still subject to international sanctions and the U.S. is still insisting on "maximum pressure."

With detente seemingly setting in on the peninsula, Finance Minister Kim Dong-yeon hinted that the ministry has some plans for economic cooperation with the North. "I think of the issue, but it is not appropriate to [speak] about this now because the president asked us to deal with North Korean affairs very carefully, like handling a fragile glass cup," Kim told reporters.

Seoul appears concerned about crossing lines set by the United Nations. Most recently, in December, a Security Council resolution limited the supply of crude oil and refined petroleum products to the North, while also banning the country from exporting its food and agricultural products.

But there are also rumblings that South Korea and its state enterprises are eyeing joint projects. Local media reported on Thursday that state-run Korea Expressway Corp. wants to build a highway connecting the South Korean border city of Munsan and Kaesong, a North Korean border city where the neighbors ran a joint industrial complex until 2016.

The highway company denied the reports but admitted it is preparing for changes in the Seoul-Pyongyang relationship. Korea Expressway's CEO is Lee Kang-rae, a former four-term lawmaker with the governing Democratic Party of Korea, raising the possibility that the company may be trying to support President Moon Jae-in's policy of engaging the North.

Experts say there are opportunities for South Korea to help the North develop renewable energy and even nuclear power plants if sanctions are lifted, as North is constantly suffering from inadequate supply of energy. In 1994, North Korea agreed with the U.S. in Geneva to give up its nuclear weapons program in exchange for security guarantees and help building light water reactors for peaceful purposes. The arrangement later collapsed.

"It is possible to support North Korea's renewable energy projects through [South Korea's] official development assistance program, after the country becomes a normal country," said Kim Kyung-sool, a senior researcher at the state-run Korea Energy Economics Institute in Ulsan. "South Korean companies can help establish eco-friendly energy facilities in North Korea, and they can share the certified emissions reductions from this."

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