The Northeast Asian Energy Situation and the North Korean Factor

Abstract

IntroductionNortheast Asia consists of China, Japan, the two Koreas, the Russian Far East, and Mongolia. The Korean Peninsula stretches southward from the northeastern section of the Asian continent and faces the islands of Japan. Korea is the country where the interests and influences of the four big global powers-China, Russia, Japan, and the United States-are closely interlocked (see Figure 1 and Table 1). The United States is not part of Northeast Asia geographically, but has been deeply involved in all-important issues of this region since 1945. As a result, it is almost impossible for one to think of Northeast Asia without the United States. The peninsula has thus functioned as a land bridge between the Asian continental powers (China and Russia) and the oceanic powers (Japan and the United States) for both cultural exchange and military aggression.However, this land bridge has been broken since the end of World War II because the peninsula has been divided into two separate states, North Korea and South Korea. Northeast Asia is arguably considered to be the most dangerous region in the post-Cold War world, where the interests of three nuclear powers (the United States, Russia, and China) and three threshold nuclear countries (North Korea, South Korea, and Japan) are engaged.1Many view Northeast Asia as poised more for international conflict than for international peace because this region manifests the more general global North- South divide based on the divergence between market countries (United States, Japan, and South Korea) and socialist or transitional countries (China, Russia, and North Korea). This article questions this widely held view because the strategic role of North Korea in Northeast Asia will compel the United States and Northeast Asian countries to work together on the Korean issue for their energy supply and other important issues. The Northeast Asian countries are likely to work together for their national energy security because this region is home to major energy consumers such as China and Japan and a major energy producer, Russia. The United States has an incentive to support regional cooperation to prevent these countries from increasing their dependence on Middle East oil.This region has become a principal driver in the world energy markets, largely due to China's remarkable growth in demand. As the gap expands between consumption and production levels in Northeast Asia, the region's economic powers appear to be increasingly anxious about their energy security, and concerned that tight supplies and consequent high prices may constrain economic growth. The Russian Far East, with its vast proven energy reserves and relative geographic proximity to the Northeast Asian markets, is already an arena for competition between the Asian powers. On the other hand, energy has recently emerged as an area of regional cooperation. Such cooperation is expected to facilitate a wider spectrum of regional cooperation and sharpen the competitive edge of the whole region. A peaceful solution to the North Korean nuclear issue will be essential to build up political trust and institutions for such cooperation.The Energy Situation in Northeast AsiaThe enormous potential of the Northeast's energy market has been an American preoccupation almost from the time Secretary of State John Hay proclaimed the Open Door policy in 1900. It even became the theme for an improbably successful novel, Oil for the Lamps of China, by Alice Tisdale Hobart, a bestseller in the United States during the early 1930s. Drawing on her own experiences as the wife of a Standard Oil executive in China, Hobart turned the clash of corporate and Confucian cultures into a drama so compelling that it inspired two Hollywood movies and won her a loyal audience for a dozen other novels, travel books, and a memoir, most of them set in the Far East.Almost a century later, a real-life Asian drama is unfolding about oil and geopolitics that is likely to be unfamiliar even to devotees of financial journalism. …