Korea Inc. Would Get Faster Route to Europe If Peace Agreed

One dividend should a durable North Korea peace agreement be reached: South Korea’s tech gadgets could get to Europe in two-thirds of the time it takes today.

"The possibility of improved transportation networks is perhaps the most immediate benefit to South Korea, not to mention other neighboring countries," Juliana Lee, chief Asia economist at Deutsche Bank, wrote in a recent note. "Railway and road projects would integrate South Korea with the Eurasian continent. The railways would save South Korea about a third of the time or more it takes to transport goods to Europe, for example."

Much depends on whether a durable deal is reached, with U.S. and North Korean officials still locked in talks over a possible summit in Singapore. A critical issue for the U.S. is for North Korea to make a genuine commitment to give up nuclear weapons. If there is a breakthrough, the dividends for South Korea would be significant.

"Those benefits would include access to North Korea’s cheap, organized and literate workforce and its natural resources, integration with the Eurasian continent that would allow new, efficient transportation routes and a long-delayed gas pipeline, and the redeployment in civilian use of many of South Korea’s military personnel," Lee wrote in the note.

Still, it won’t come without a cost. Within South Korea, the benefits are likely to accrue more to the private sector, while the government foots most of the bill, according to Lee.

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