• Reuters, Bloomberg


North Korea’s ruling family has long dreamed of a state-of-the-art rail system linking its major cities with each other and the wider world.

Now leader Kim Jong Un is looking to capitalize on an easing in international tensions to advance plans for a high-speed rail network to rival those in Europe and South Korea.

Kim has instructed officials to seek partnerships with countries such as South Korea and France, according to a South Korean broker with knowledge of the matter and a senior North Korean diplomat.

Engineers and consultants in South Korea say they are also drawing up plans for possible rail projects with the North.

Both Koreas see new railways as a key that could unlock regional trade and tourism, connecting the Korean Peninsula with Russia, China and beyond.

But the plans face numerous hurdles — not least wide-ranging sanctions on doing business in North Korea over its pursuit of nuclear weapons in defiance of the United Nations, and the country’s unstable electricity infrastructure.

Officials in both Koreas hope rail projects might be exempt from U.N. sanctions under a provision allowing some “non-commercial public utility infrastructure.”

A senior North Korean diplomat told the French Senate in June the country would like to partner with France on railway construction, specifically naming Alstom, the maker of the iconic TGV bullet train, and the French national railway operator SNCF as potential partners.

“There are subjects and fields that aren’t impacted by sanctions,” said Kim Yong Il, North Korea’s chief delegate at UNESCO in Paris, according to a previously unreported transcript of his remarks.

South Korea adopted Alstom’s technology for its KTX bullet trains introduced in 2004. The system is about six times faster than the North’s aging rail networks.

But it is far from clear how infrastructure would be defined under the United Nations sanctions, and the French rail operators said they had no plans to team up with North Korea.

“Given the international context surrounding North Korea, such cooperation is not conceivable, which is what SNCF communicated,” a spokeswoman said.

A month before his death in 1994, national founder Kim Il Sung, Kim’s grandfather, said a railway connecting two Koreas, China and Russia could generate North Korea $1.5 billion annually from transporting commodities.

Kim Jong Un publicly expressed admiration for South Korea’s railways during a summit in April. Kim told South Korean President Moon Jae-in that his sister and delegation were in awe of South Korea’s bullet trains, which they traveled in to get to the Pyeongchang Olympics in February.

In May, foreign journalists took 12 hours to travel 415 km (260 miles) by train to watch the demolition of North Korea’s nuclear test site in Punggye-ri, averaging just 35 kph. The same distance would take about 2½ hours by South Korea’s KTX.

A bullet train system in North Korea could take at least five years to build and cost up to $20 billion, according to experts and railway executives.

Seoul and Pyongyang have discussed trans-Korean rail networks since the first inter-Korean summit in 2000.

A December 2015 North Korean investment brochure says Pyongyang aims to build an “international rapid transit railway” to promote its special economic zone in the western city of Sinuiju, bordering China.

The plan included converting some of the rail line to the capital into a “high-speed railway system,” according to the brochure.

In a statement carried by state media in 2015, Kim said a high-speed railway should be built between Pyongyang and a new international airport near the capital.

Kim also has more ambitious plans to build a high-speed railway linking Pyongyang to South Korea and China, a South Korean businessman said, citing North Korean officials charged with economic development.

“Kim is eyeing foreign currency earnings from ticket sales, and officials are pursuing a multinational consortium under his instruction,” said the businessman, who asked not to be named due to sensitivity of the matter.

Seoul, too, has seen potential benefits from such a tie-up. In 2015, a state-run railway association estimated trans-Korean railways linking the peninsula to China and Russia could halve the time to transport freight, and generate substantial transit fees for the South.

In mid-August, Moon proposed setting up an “East Asian Railroad Community” that includes the United States and North Korea. He said the new economic community would connect his country’s railroads to those of other Northeast Asian nations, and compared the group to the coal and steel community that helped pave the way for the European Union.

“The community will expand the horizon of the Korean economy to the northern part of the continent and become the main artery of mutual prosperity in Northeast Asia,” Moon said, adding that the group could lead to similar energy and economic groupings. “It will initiate a Northeast Asian multilateral peace and security system.”

Ahn Byung-min, a member of the South Korea’s presidential committee on economic cooperation with the North, said, “In the past, the inter-Korean rail project was simply linking disconnected lines, but now it’s about working on practical ways to modernize rails, operate them and create economic value.”

But a bullet train for the North has not been discussed in early talks with Pyongyang, Ahn said.

“Realistically, it will only come up later on the agenda, because it involves a lot of money and complicated logistics,” Ahn said.

South Korea is budgeting 504 billion won ($450 million) next year for cross-border economic projects such as the modernization of North Korea’s roads and railways, up 46 percent from this year. It did not provide a breakdown for railways.

Seol Young-man, chief executive of Korea Engineering & Construction, said his firm is working on a high-speed railway and highway pitch for the South Korean government.

“We have to be prepared and ready to take initiative in competing against China and Russia in rebuilding North Korea’s rails and working with Kim Jong Un on economic cooperation,” Seol said.

A joint Chinese project to build hydropower stations in North Korea’s border region, as well as Russia’s rail project to transport Russian coal to a North Korean port have both received U.N. sanction exemptions.

But many risks remain in doing business with North Korea, including its secrecy and chronic power shortages, said Lee Chul, former president of South Korea’s state-run railroad operator.

“For railroad cooperation between South and North Korea, we thought it would be really good to understand the North’s railroad conditions,” said Lee, who met North Korean officials in 2006 to discuss restoring inter-Korean railways. “But North Korea considered it almost like military secrets and wouldn’t let us see.”

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