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After three days of meetings in Pyongyang during the second summit in the history of their countries, Roh and North Korea's reclusive leader Kim Jong Il on Thursday issued a far-reaching joint declaration on "peace and co-prosperity," highlighted by the creation of a peace zone on their volatile western sea border and the launch of mammoth cross-border economic projects, such as the renovation of the North's dilapidated roads and railways.
Sweeping projects also include a development of the North's southwest port city of Haeju as a special economic zone and construction of two shipbuilding complexes in the North's western and eastern ports. Under the summit agreement, the South will also expand the existing Kaesong industrial park, created just north of the border following the first inter-Korean summit in 2000.
A private think tank in Seoul estimates the cross-border economic projects will cost South Korea some US$11.2 billion. The development of the Haeju special economic zone would cost about $4.6 billion, according to Hyundai Research Institute run by Seoul's Hyundai business conglomerate, which is at the forefront of South Korean business ties to North Korea. An additional $300 million would be needed to improve the infrastructure at the Haeju port.
About $2.5 billion will be necessary to expand the Kaesong industrial complex, while construction of tourist facilities around the North's highest peak, Mount Paekdu, is expected to cost $1.3 billion, Hyundai Research said in a report. Under the summit agreement a direct air route will be opened for South Korean tourists between Seoul and Mount Paekdu, the highest peak on the Korean peninsula located on the border with China, which calls it Mount Changbai.
Refurbishing the 500-kilometer railway line between Kaesong and the North's industrial city of Shinuiju, bordering China, could cost $1.5 billion, the think tank said. The South would also need to spend $300 million to pave the 166-kilometer highway between Kaesong and Pyongyang. In addition, $200 million will be used to build two shipyards in the North.
The estimated cost of US$11.2 billion, when financed over five years, is equivalent to 8.75 percent of the North's gross domestic income and 0.25 percent of the South's gross domestic product, Hyundai Research said.
Seoul's largest daily, the Chosun Ilbo, says over $50 billion would be necessary to implement inter-Korean economic cooperation projects. The state-run Korea Development Bank estimates the cost of projects to rebuild the North Korean economy at $65 billion over 10 years.
In the face of growing concerns about the financial burden on the South's shoulders, the presidential office said the private sector is expected to bear most of the cost of the projects. Roh convened a Cabinet meeting on Friday to ask ministers to clarify the issue of expenses in future inter-Korean cooperation projects, referring to concerns about the financial burden. He also ordered Cabinet ministers to devise a roadmap to carry out the summit agreement to help ensure full implementation under the leadership of his successor, saying the roadmap was necessary to prevent confusion for the next administration.
At a press briefing, Roh's spokesman called for public support for the summit agreement, saying inter-Korean joint economic and industrial projects would eventually help South Korea overcome its economic obstacles and emerge from geographic isolation.
"The repaired roads and railways in the North will greatly benefit the South," the spokesman said, describing South Korea as a virtual island as its only land border is with North Korea, meaning it relies on air and sea transport for its goods. South Korea has longed to reopen regular transport through North Korea to enable it to transport products to mainland Asia and Europe and fuel its export-driven economy. It wants the regular cross-border rail services to reconnect the inter-Korean railroad to the trans-Siberian railway.
But the conservative opposition has vowed to scrutinize the summit agreement, which will need parliamentary approval to be implemented, criticizing Roh for placing a tremendous burden on South Korean taxpayers when he leaves office in February. In a bad omen for the costly cross-border projects, the opposition Grand National Party has been projected by major public opinion polls to win a landslide victory in the presidential election slated for Dec. 19. The party has pledged to link economic aid to the North to its disarmament process and criticized Roh for offering unconditional aid packages.
