New Asia infrastructure bank may build bridge between North and South Korea

South Korea’s decision to join the China-led Asian Infrastructure Investment Bank (AIIB) yesterday may have far reaching consequences not just for infrastructure, but for geopolitics as well.

Initially, South Korea was thought unlikely to become a member by the 31 March deadline owing to its close relationship with the US, and the US’s frosty response to the idea of a development bank led by China.  

Kim Tae-hyun, diplomacy professor at Chung-Ang University, told the Korea Herald that the country would have found it difficult not to join after a number of America’s allies in Europe applied for membership.  

He said: "There was a need to reduce Seoul’s diplomatic reliance on the US. If Seoul had opted not to join the AIIB when many others including Britain, France and Germany have applied, Seoul might have ended up being perceived as a country influenced too much by Washington." 

The road to reunification?

Should the North respond to our proposals in the declaration, this would be a framework to foster mutually beneficial relations and enhance mutual understanding– South Korean Unification Ministry

Seoul’s participation in the AIIB could pave the way for South Korea’s formidable construction and engineering sector to become involved in a host of infrastructure projects in its own back yard. According to the Asia Development Bank (ADB), the demand for infrastructure investment in Asian countries amounts to some $800bn a year in the decade to 2020.  

The investment could also flow into North Korea, and commentators have speculated that this could  lay the groundwork for an eventual reunification of the Korean Peninsula. 

Park Won-gon, international relations professor at Handong Global University, told the Korea Herald: "When the investment fund for the ADB is not getting any bigger due to financial challenges in the US and other reasons, the AIIB can play a role in boosting investment for development projects in Asia, potentially including North Korea. 

"With the AIIB possibly playing a role in improving infrastructure conditions in North Korea, South Korea can facilitate its efforts to prepare for national reunification." 

A bit like Germany

Park Geun-hye, the president of South Korea, has called preparations for national reunification, "an economic bonanza, not only for Korea but for the entire region".  

In the "Dresden declaration" that Park made in Germany a year ago, she drew a comparison between German reunification and Korea. 

In it, she proposed replacing the demilitarized zone with a peace park and an international railway. She said: "This international peace park will presage the replacement of tension with peace, division with unification, and conflict in north-east Asia with harmony.   

"If South and North Korea could shift the adversarial paradigm that exists today, build a railway that runs through the DMZ and connect Asia and Europe, we will see the makings of a genuine 21st century silk road across Eurasia and be able to prosper together." 

So far, Pyongyang has taken the line that the declaration is just part of Seoul’s efforts to absorb it, which disappointed the South’s Unification Ministry. "It is regrettable to see that the North has misunderstood the declaration and taken a passive stance over our proposals," said the ministry. "Should the North respond to our proposals in the declaration, this would be a framework to foster mutually beneficial relations and enhance mutual understanding." 

Washington has not commented on Seoul’s decision to participate in the AIIB, except to say it won’t be commenting. "I am not going to react or comment on their decision," State Department spokesman Jeff Rathke said at a regular press briefing yesterday. "I would say in general we’ve seen a number of countries make decisions to join the bank. That is their decision." 

Image: The "Bridge of no return" at Panmunjeom, on the border between South North Korea

Story for GCR? Get in touch via email: [email protected]

Latest articles in News