Sunday

24th Mar 2019

Opinion

Europe could lose out in North Korean bonanza

  • Brussels' slowness in adapting its policy to the changing circumstances in North Korea could mean that European firms find investment opportunities gone because others got there first (Photo: Flickr)

North Korea's economy is in transformation.

While the main focus is on Pyongyang's nuclear programme and recent summit between US President Donald Trump and North Korean leader Kim Jong-un, a more important change for the future of the country and the world at large is taking place.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Indeed, ongoing marketisation is now irreversible as the ranks of middle class North Koreans continue to swell. And Europe risks missing out if North Korea continues to reform its economy and investment flows into the country.

Since Kim came to power he has been pursuing the development of North Korea's nuclear programme and economy in parallel.

Now that Pyongyang has achieved a nuclear deterrent, Kim is free to focus on economic reform.

Actually, this is what he announced at a recent meeting of the North Korean Workers' Party. And this is one of the key reasons why Kim launched a diplomatic offensive including two summits with South Korea, two visits to China and the summit with President Trump.

Pyongyang is aware that economic reform can only be fully successful with foreign investment and technology. He is looking for both.

Others have noticed.

South Korean president Moon Jae-in wants to improve relations with North Korea not only for ideological reasons. He sees the great economic promise that a reformed North Korea would bring to his country.

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities.

Likewise, China and Russia are supportive of the flurry of North Korean diplomatic activity, among others, because their companies stand to benefit from it.

Even president Trump has stated that he foresees American investment in North Korea if rapprochement between both countries continues.

A growing number of European companies in sectors ranging from construction and energy to food and textiles have also seen this change. Subsidiaries based in Seoul are reporting back to their headquarters.

European NGOs still operating in North Korea are being asked about tangible changes on the ground. European embassies in Pyongyang are reporting these changes to their home countries.

This shows that many in Europe stand ready to support North Korea's economic reform process, and make a profit in what could become a 'new Vietnam or China'.

Unfortunately for Europe, policy could derail this process. The EU maintains bilateral sanctions on North Korea going well beyond the UN's multilateral regime.

The official line of the EU is that removal of bilateral sanctions or work to ask for the withdrawal of UN sanctions is not on the agenda.

This is a mistake. Sanctions made sense when North Korea was scaling up its missile and nuclear programme.

They are counterproductive to European business interests now. Likewise, the refusal of some member states to allow the rekindling of the official EU-North Korea dialogue suspended in 2015 is at odds with the current policy of its strategic partner – South Korea.

Without such a dialogue, the EU's diplomacy (or lack thereof) could harm its own economic interests.

The argument that Brussels should not prioritise economics over its key goals in North Korea also misses an important point. Namely, these goals can be better achieved by supporting its reform process.

The EU's 'critical engagement' policy seeks to prevent Pyongyang's proliferation of weapons of mass destruction and nuclear technology. North Korea's proliferation is a cash-generating exercise.

Pyongyang would not need to continue with it once it attracts foreign investment. Likewise, improvement of the human rights of the average North Korean is far more likely with economic reform.

'New Vietnam'?

The cases of Vietnam and China prove this. Today, ordinary Vietnamese and Chinese are freer and richer than previous generations. Middle classes demand and get more freedoms. There is no reason to think that North Korea would be an exception.

Some European businesses could always find ways to benefit from North Korea's opening up even if the EU does not change its policy. Aid, for example, could be used to send much-needed medical equipment or fertilisers to the country.

Construction firms could be part of infrastructure building projects that the South Korean government, the AIIB and others stand ready to implement. Sectors not covered by the current sanctions regime such as tourism also offer investment opportunities.

Ultimately, however, North Korea could be a 'new Myanmar' for European businesses.

In other words, Brussels' slowness in adapting its policy to the changing circumstances in North Korea could mean that European firms find investment opportunities gone because others got there first.

As Kim continues to push for economic reforms and the rest of the world seeks engagement partly out of economic interest, the EU should consider the interests of its own firms and allow them to compete on a level playing field.

Dr Ramon Pacheco Pardo is KF-VUB Korea Chair at the Institute for European Studies of Vrije Universiteit Brussel, and senior lecturer in International Relations at King's College London

Analysis

Trump befriends Conte, depresses EU

Most EU leaders found US president Donald Trump "depressing" at the G7, but one of them - Italy's Giuseppe Conte - made a new friend.

Macron is confusing rigidity with strength

Jan Zahradil, EU Commission president Spitzenkandidat for the European Conservatives and Reformists Group, responds to Emmaneul Macron's European vision ahead of the May elections.

A compromise proposal for the Article 50 extension

At this week's summit, EU leaders should extend Article 50 until the May European elections. But they should postpone the effective date of the UK's withdrawal from EU rights, rules, and regulations for another year - to May 2020.

Catalan independence trial is widening Spain's divides

What is really needed is not the theatre of a rebellion trial, but a forensic examination of whether public funds were misused, and a process of dialogue and negotiation on how the Catalan peoples' right to self-determination can be satisfied.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Italy should capitalise on Brexit

Now that the UK is leaving, Italy can, and should, step up. It is the third largest country and economy in the EU. Spain and Poland follow, but they are significantly smaller economically and population-wise.

The Magnitsky Act - and its name

It is disappointing that so many MEPs in the Socialist and Green group caved in to Russian interests, in fear of challenging a plutocratic regime, by saying 'no' to naming the Magnitsky legislation by its rightful name: Magnitsky.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Join EUobserver

Support quality EU news

Join us