New Directions for Tumen Programme


As a relatively new participant in the challenges and opportunities surrounding economic cooperation in Northeast Asia, I must defer to others on how best to proceed. However, my experience in Southeast Asia where I have been a Senior Advisor since 1992 for the ADB-sponsored programme of economic cooperation among the six Mekong countries, may prove useful in charting new directions for the UNDP-supported Tumen River Area Development Programme .

The Tumen Programme in Brief
The Economic and Political Context for the Programme
Conceptual Problems with the Tumen Programme
New Directions for the Tumen Programme
Medium-Term Priorities
Grounds for a Renewed Regional Cooperation Effort
Concluding Remarks

The Tumen Programme in Brief

For those unfamiliar with the Tumen Programme, the UNDP initiated discussions in 1991 leading to agreement among five Northeast Asian countries to cooperate in the economic development of the following areas:

- the Rajin-Sonbong Free Economic and Trade Zone, in the Democratic People's Republic of Korea;

- Eastern Mongolia;

- the Yanbian Korean Autonomous Prefecture in northeast China, and

- the Primorsky Territory in the far east of the Russian Federation.


Collectively, these areas are referred to as the Tumen Region and connecting hinterland. The Tumen River serves as a border where China, DPRK and Russia meet, hence the name for the Tumen Programme. The Republic of Korea is the fifth member of the Programme, providing much needed financial and technical support.

Since 1995, the Programme has been guided by the following institutional framework:

- the Tumen River Area Development Consultative Commission, which comprises representatives - at the Vice Ministerial level - from the five member countries of the Programme; the Commission identifies common interests and opportunities for cooperation and sustainable development, and promotes investment in Northeast Asia and the Tumen Region; the Chairman of the Commission rotates on an annual basis among the member countries;

- the Tumen River Area Development Coordination Committee, which comprises representatives - again at the Vice Ministerial level - from the three riparian countries that share the Tumen river; the Committee coordinates economic development of the Tumen River Economic Development Area, especially as it relates to trade and investment facilitation;

- the Tumen Secretariat provides advice and support for the above two inter-governmental bodies, and it is the implementing agent for activities and initiatives agreed to under the Programme;

- national teams are inter-ministerial working groups which include representatives of several Ministries; in the case of DPRK, for example, the national team includes the, State External Economic Affairs Commission, the Korean Committee for the Promotion of External Economic Cooperation, and the Rajin-Sonbong Zone Government; each national team has a national coordinator.


After an initial $3.5 million allocation to the Programme, and top-ups to ensure continuity, the UNDP has committed another $3.2 million over the 1997-99 period. This too will likely be topped-up, to enable activity in 1999 to match that budgeted for 1998. Contributions by other UN agencies, the ROK the Nordic countries, and the Programme member countries add another $2 million to $3 million to the financial resources. Also, the Global Environmental Fund has agreed to provide $5 million to develop a Strategic Action Plan for the Tumen Region; the project is expected to commence later this year, with particular attention to water pollution of international waterways and biodiversity loss.

Increasingly since 1996, the Programme has supported a number of pragmatic activities designed to promote sustainable economic development and regional economic cooperation - the original twin objectives of the Programme. Prominent among these activities have been investment promotion programmes, tourism development, environmental initiatives, and efforts to reduce cross-border impediments to the freer flow of goods and people. A detailed study is underway of current and likely long-term trends in cross-border transport, and a pre-feasibility study was recently completed of a rail link between eastern Mongolia and the Tumen region. A series of forums and workshops have been held concerning the main sectors included in the Programme, and there have also been a number of study tours on various topics.


The Economic and Political Context for the Programme

The economic and political context for the Tumen Programme has been difficult, especially during its early phases. The collapse of the Soviet Union resulted in precipitous declines in the economies of the Russian Federation, Mongolia, and DPRK, three of the four core countries in the Programme. Indeed, it appears that these three economies and their respective areas included in the Tumen Region, declined by some 50 percent during the 1990s.

In recent years. Mongolia has started to show renewed growth but at a moderate rate. The outlook for 1998 and beyond has been clouded by failing commodity prices (copper and cashmere) and serious weaknesses in its financial system. Mongolia is land locked and has no road or rail access linking it directly to the Tumen gateway and the Sea of Japan (or Eastern Sea).

With respect to the Russian Federation, transition to a market-based economic system has been slow with frequent set-backs due to policy changes or other governance problems. The "big bang" approach to the transition appears to have been ill-advised. Over the past year the Asian financial crisis has greatly compounded Russia's difficulties, raising the prospect of default, steep currency devaluation, hyper-inflation and social breakdown; fortunately, another IMF rescue package has just been concluded. In addition to these developments, the Primorsky Territory has been hard hit by a number of other factors including: massive cuts in the national defense budget with consequent loss of port-related and local expenditure; uncompetitive user charges for the Trans-Siberian Railway and now disruptions to trains by striking coal miners; energy shortages and breakdowns in other critical infrastructure; and poor national/local government relations together with widespread corruption.

DPRK's problems appear to reflect hesitation concerning economic policy changes; unlike Viet Nam and China with their variants of market socialism, DPRK has maintained a more orthodox central planning system. DPRK has adopted new trade partners since collapse of the Comecon system including with ROK and Japan, but total trade (i.e.,, exports plus imports) in 1997 amounted to only $2.2 billion compared to $4.7 billion in 1990. Data presented to a recent donor meeting for DPRK show its GDP declining from approximately $20 billion in 1992 and 1993 to $10 billion in 1996; GDP per capita is now less than $500, or half what it was in the early 1990s. DPRK's GDP appears to have continued to decline in 1997 and 1998, reflecting the impact of the Asian financial crisis and natural disasters. Alternative drought and floods have severely affected agricultural production, resulting in widespread starvation and malnutrition.

China' s impressive growth stands in contrast to the rest of the Tumen Region. While northeast China has lagged the extraordinary performance of the southern coastal provinces, it is evident that the major cities and towns in the area are prospering. Chaugchun, Jilin, Yanji, Tumen City, Hunchun and Jilian Province generally have benefited from foreign investment and the market buoyancy of China. To the end of 1997, approximately $450 million in foreign investment had been disbursed in the Yanbian Korean Autonomous Prefecture. Trade has been growing at a rapid pace, both domestic and international. Of course, recession in several countries in Asia and steep currency devaluations by ROK, Thailand, and Indonesia and the weakening Japanese yen, have affected China's export performance. In response, the Government is attempting to offset the slowdown in growth by an extensive infrastructure programme. This latter initiative may be fortuitous for northeast China and the Tumen area, as infrastructure deficiencies are one of the main impediments to rapid growth and trade. Another impediment to rapid growth is the large number of unprofitable state-owned enterprises.

ROK has been very badly affected by the Asian financial and economic crisis. Despite a $57 billion rescue package by the IMF, the private sector is heavily burdened by corporate debt - made worse by high interest rates and the increased cost of servicing foreign-dominated debt with a greatly depreciated won. Numerous large companies are hovering on the brink of bankruptcy. Ironically, recent strengthening of the won is viewed as a mixed blessing, as it weakens ROK's export position vis-a-vis Japan and other competitors. ROK's set-back is a set-back for the Tumen Programme, as it was becoming a major source for trade, investment and tourism for the Tumen Region. At the very least, ROK's difficulties will delay projects such as industrial parks planned by the Korean Land Development Corporation in the Nakhodka Free Economic Zone in Primorsky Territory and the Rajin-Sonbong Economic and Free Trade Zone in DPRK.

In summary, economic conditions in the Region have hardly been conducive for the UNDP-supported Tumen River Area Development Programme.

Nor has the political climate been conducive, Relations between Russia and China have thawed only slowly, and seemingly particularly slowly along the Primorsky Territory border with China where top military security prevailed throughout the cold war. Even now, the Hunchun-Kraskino border crossing in reminiscent of Check-Point Charlie in the former East Germany, As noted in a recent article in the Economist (June 27. I 99s), Russia closely guards Vladivostok and the surrounding territory, perhaps out of lingering worries about a too sparsely populated territory that is remote from Moscow and that used to belong to China and Korea, The much more sensitive relationship, of course, is between the two Koreas. ROK's new President, His Excellency Kim Dae Jung, is making overtures to ease the relationship - with some effect . However, this process has only just begun and it will take time and a good deal of confidence building before relations between the two Koreas show any semblance of normalization. For its part, DPRK is showing signs of wanting to improve relations with its northeast Asian neighbors, including with Japan. Again the process will b~ slow. Even Mongolia has reservations, sandwiched between China (with deep-seated cultural differences) and Russia (with its large state enterprise transplants now defunct). It is easy to understand why Mongolia's support for economic cooperation largely focuses on breaking the country' s land-locked nature.

As in the case of economic conditions, the political climate in Northeast Asia has hardly been conducive to the Tumen Programme's objective of promoting regional economic cooperation,


Conceptual Problems with the Tumen Programme

On top of everything else, conceptual problems have clouded the Tumen Programme. In a well researched analysis, Professor Richard Promfret. University of Adelaide, Australia, has detailed the early trials of the Programme - including an ambitious but unrealistic attempt to establish a Tumen River Area Development Incorporated Company. The authors of this concept envisaged a new Hong Kong in the heart of the Tumen Region built on land leased from China, the Russian Federation and DPRK. Thereby, an internationally managed cross-border Tumen River Economic Zone would be created. They also envisaged $30 bullion in investment in infrastructure in the Tumen Region a staggering amount for a population of only 4 million.

Reservations by Russia about leasing land for this grand scheme, and well-founded doubts by all countries that the infrastructure plans could be even remotely realized, led in 1998 to a more conventional and institutional approach to development and economic cooperation. As described earlier, there are now formal agreements concerning the institutional framework for the Tumen Programme. Also, the five member countries have signed a Memorandum of Understanding concerning protection of the Environment, These formal agreements entailed a good deal of consultation.

This raises questions about their utility, and whether they detracted from concrete regional cooperation initiatives. According to Professor Promfret, "there has much talk and little action on trade facilitation and infrastructure coordination".

Economic cooperation initiatives in other regions provide lessons about what works effectively, and what to avoid. (1) ASEAN, for example, appears to have suffered from an overly complex institutional and decision-making system, and a highly bureaucratic Secretariat. One of the lessons to be drawn from regional .cooperation programmes is the desirability of simple procedures and informal institutional arrangements. The ADB-sponsored programme of economic cooperation in the Greater Mekong Subregion has focused on infrastructure linkages and has deliberately shied away from formal arrangements entailing intergovernmental ratification.

(2) The Tumen Programme has continued to evolve and, as also noted earlier, since 1996 it has become more results oriented. That is, there has been less emphasis on major studies (3) and more emphasis on investment promotion, tourism development, protection of the environment and cross-border issues. However, while these activities have been highly relevant to local area development or interests, many of the activities have had little to do with regional economic cooperation. The lions share of Programme resources since 1996 have been devoted to initiatives of local or national benefit rather than regional benefit. Particularly questionable have been vehicle purchases, and some overseas study or promotional tours. While the initial phases of the Programme favored international consultants, it would appear that the most recent phase has favored national and local interests. The UNDP, with the concurrence of the Tumen member countries, is determined to refocus the Programme.

(1) See Myo Thant, Min Tang, and Hiroshi Kakazu, Growth Triangles in Asia, Second Edition, Oxford University Press ADB 1998

(2) A comparison of the two approaches was presented by Dr. Husband to the ERINA Northeast Asia Economic Conference, Niigata, Japan, February 1998; See Regional Economic Cooperation in Northeast Asia; Lessons from Experience in Southeast Asia.

(3) An exception was a $361,000 study on financial requirements in the Region. See Asia-Pacific Institute/UNDP, ROK, Study of the Commercial and Investment Banking Needs in the Tumen River Economic Development Area, July 1997


New Directions for the Tumen Programme

The comparative advantage of the Tumen Programme is regional economic cooperation - not local area development Indeed the Tumen Programme provides a unique forum for the five participating countries to identify and act upon regional initiatives. These include initiatives to open borders and to resolve cross-border environmental and other problems or challenges of shared interest. In particular, the Programme can and should give priority to infrastructure projects vital to linking the Region and to creating a favorable investment climate.

Why is regional economic cooperation so important? Essentially, because it is integral to the process of globalization. Regional economic cooperation and global economic integration more generally, allows for the sharing of human capital and natural resources. By encouraging trade and investment, regional economic cooperation facilitates technology transfer, management know-how, and market access. Through specialization in higher value-added crops, labor intensive light manufacturing, and resource extraction, productivity and competitiveness are strengthened, In this manner, employment opportunities and living standards are improved, And by addressing environmental issues cooperatively, cross-border problems can be resolved. Further, environmental standards can be adopted to prevent industries migrating to areas seeking to compete unfairly through lax environmental policies and regulations, Most importantly, regional economic cooperation complements better political relations; the peace dividend is the ultimate benefit, allowing governments and businesses in the region to interact with trust and confidence in meeting the needs and aspirations of the people.

Area or local initiatives that have dominated the Tumen Programme over the past two years are better left to country programmes of the UNDP, World Bank, ADB and other development agencies (notably Japan's OECF and JICA). Aside from having no comparative advantage in area or local initiatives, Programme resources are too limited to support multiple objectives. After some persuasion, the member countries have tentatively agreed that the Tumen Programme should focus exclusively on regional economic cooperation.

With a singular focus on regional economic cooperation, projects selected for support under the Tumen Programme should have one or more of the following features:

- it facilitates commercial relations among the participating areas of the Region (e.g., by improving the transportation or telecommunications linkages, or reducing the non-physical impediments to the free flow of goods and people);

- it contributes to realizing development opportunities involving two or more of the areas in the Region (e.g., development of energy projects requiring regional cooperation to most efficiently rationalize distribution among energy deficient and energy surplus areas;

- also, regional cooperation to promote tourism development);

- it contributes to mitigating cross-border problems (e.g., reducing pollution of international water-ways and other environmental "externalities"); and/or

- it contributes to meeting some common resource or policy needs (e.g., regional cooperation to address human resource development needs, such as control of comlnunicable diseases - tuberculosis and HIV/AIDS; also, cooperation in certification and standards for technical trades contributes to labor market development and mobility).

Normally, projects selected for support under the Tumen Programme should involve two or more of the member countries.

The distinction between what classifies as a regional project and what is best left to country programmes is not always clear. A case in point is investment forums. Even local-based investment forums generate at least some regional benefits, through drawing business people to the region and encouraging cross-border production chains. However, Programme resources are limited and must be used to greatest effect if a significant contribution to regional economic cooperation is to be achieved. Thus, to the extent possible, Programme support for investment forums should be directed to enhancing the regional dimension.

What does this mean in practice? First, it means providing generic material about the Tumen Region. That is, material that describes the investment opportunities and climate on a regional basis. This is important, especially since the Tumen Region is still relatively unknown and international investors have become much more discriminating in light of the Asian financial crisis. The Programme should relay the improved political relations in the Tumen Region, and the economic strengths associated with rich natural resources, a well-trained pool of highly competitive labor, and the gateway advantages of the Region. When the opportunity presents itself, as at the Northeast Asia Economic Forum in Tottori Prefecture, Japan, Programme participants should promote the Region as a. whole to interested investors, governments and other observers

Second, the Tumen Programme should assist local-based investment forums to promote infrastructure projects linking the Tumen Region. To accelerate development in the Tumen Region, infrastructure deficiencies must be overcome. However, the financial requirements associated with this task are very large; investments are needed in every field, including transportation, energy, telecommunications, water supply, and waste disposal. Governments in the Region are having a very difficult time coping with these requirements. A partial solution is to mobilize private sector participation in investment in infrastructure. While BOT-type investment will not be viable in most cases, there are likely many opportunities for joint public/private investments in infrastructure. The Tumen Programme should be instrumental in helping to formulate the structured financing necessary to make public infrastructure projects "bankable", Only by acting as a catalyst for resource mobilization can the Programme hope to make a significant contribution to regional economic cooperation .

This latter point relates to another new direction for the Programme - the Tumen Region as a subject for regional cooperation in Northeast Asia more generally. It should be recognized that the Tumen Region is comprised of small areas of large countries. The Primorsky Territory is a small and remote portion of the Russian Federation, as is the Yanbian Prefecture and the Rajin-Sonbong Zone of China and DPRK, respectively. Eastern Mongolia is not even contiguous to the Tumen River area In many respects, the Tumen Region is at the perimeter of national concerns. This is reflected in the lack of ownership of the Programme; national governments have yet to demonstrate the conlmitment required to make regional economic cooperation effective. This is especially the case of the Russian Federation, but greater involvement by all governments concerned is needed. National involvement is essential for opening borders and in other ways facilitating the free flow of goods and people.

The Tumen Programme must help demonstrate the benefits of regional economic cooperation in Northeast Asia. Further, it must help create a process for identifying and implementing key regional economic cooperation initiatives. To this end, it may be desirable for the Programme to establish a Council of Eminent Persons, following the lead of APEC and the Northeast Asia Economic Forum. Council members would be expected to have the attention of the most senior levels of national and local governments, and the business community, enabling regional economic cooperation initiatives to be brought to the prompt attention of influential authorities. To ensure substance in such a process, the Programme needs to harness the input of senior economists and other experts in Northeast Asia and abroad, including of the Northeast Asia Economic Forum. Information well documented and presented can be a powerful tool for change.

In summary, the suggested new directions for the Tumen Programme are three-fold:

- adoption of the sole objective of regional economic cooperation, leaving local development initiatives to country programmes of other donor agencies, including UNDP' s country programmes;

- greater partnership with the private sector, particularly so as to help mobilize resources for infrastructure linking the Tumen Region; and

- a wider vision for the Programme, wherein it is seen as a catalyst for regional cooperation in the Northeast Asia context, and wherein the Programme is less input or activity driven and more results oriented.


Medium-Term Priorities

In light of experience to date, and the suggested new directions for the Tumen Programme, a tentative list of medium-term priorities is as follows:


1. Key Transportation Infrastructure

- completion by the year 2000 of the highway improvement from Yanji-Tumen-Hunchun, and from Hunchun to Quanhe/Wonjong at the China/DPRK border;

- a tunnel under construction will cut through the main mountain barrier to the gateway;

- completion by the year 1999 of the coast highway improvement from Rajin to Sonbong, and from Sonbong to Wonjong;

- this will bypass another mountain barrier to the gateway; reconstruction of the Kraskino-Zarubino-Slavyanka highway in Primorsky Territory;

- opening of the rail line from Hunchun to Kraskino, and completion of marshaling yards and handling facilities in Kraskino;

- upgrading of the rail line between Tumen City and Rajin and upgrading of the rail line between Tumen City and Hunchun;

- extension of the Changohun-Arxan rail line to the Mongolian-China border, and to Tamsag Bulag just inside Mongolia to link with a proposed road from Ulaan Baatar;

- upgrading of port facilities in both Primorsky Territory and the Rajin-Sonbong Zone;

- designation of Yanji Airport Terminal as an international airport;

- opening of a helicopter service from Rajin to other cities in DPRK, and to Vladivostok and Yanji.


2. Key Cross-Border Facilities

- upgrading of the DPRK Wonjong border crossing facility;

- opening of the Hunchun-Kraskno border to foreign travelers;

- easing of travel restrictions at the Khasan border crossing between Russia and DPRK;

- reduction of non-physical impediments to the free flow of goods and people at all three border points;

- agreement among China, DPRK and ROK on a Memorandum of Understanding allowing for the opening of a ferry service between Sokcho, ROK and Rajin, DPRK passengers would proceed overland to Hunchun and to Mt. Chanbaisan which is a cultural site for Koreans.


3. Energy Infrastructure

- consideration of a power grid system in the Tumen Region, to rationalize energy production and use among surplus and deficit areas;

- BOT investments in energy generation to replace outdated facilities (e.g., Sonbong power plant);

- regional cooperation in introducing energy demand management measures (e.g., marginal cost pricing and energy conservation technologies).


4. Telecommunications

- loop the telecommunications systems linking the Tumen Region to reduce costs and improve reliability.


5. Investment Promotion

- establish a regional network of business centers, capable of promoting local areas in a regional context;

- develop detailed information about the Tumen Region and make available in a useable format for investors;

- initiate pre-feasibility studies concerning key infrastructure projects, and make available to potential investors or partners with the public sector;

- conduct investment forums in selected centers in Asia, North America and Europe, to enhance awareness of investment opportunities in the Tumen Region;

- establish the Tumen/Northeast Asia Investment Corporation, designed to enhance the bankability of infrastructure projects and, thereby, private sector investment;

- promote such projects in local-based investment forums.


6. Tourism Promotion

- improve access to the Tumen Region (easing of visa restrictions, opening of Yanji Airport to international traffic, opening of Sokcho-Rajin ferry service);

- improve product development (eco-tourism, circuit of tourism "jewels", tourism services); improve recognition (cooperation with PATA and WTO, cooperation in promotional material;

- establishment of a regional facility for coordinating tourism activities,


7. Human Resource Development

- regional cooperation in standards and certification for key trades, so as to facilitate greater cross-border labor mobility; regional' cooperation in technical training, so as to encourage centers of excellence;

- regional cooperation in halting the spread of communicable diseases (e.g., tuberculosis, HIV/AIDS).


8. Environment

- identification of main cross-border problems (e.g. industrial pollution of international waterways and biodiversity loss);

- development of a regional strategy for dealing with these problems; commencement of the GEF/SAP initiative in 1998;

- greater use of economic instruments to protect the environment (e.g., polluter pay principle);

- involvement of international community (e.g., tradable pollution rights, establishment of an international park for protection of tigers and leopards).


This list goes well beyond the current Programme. Some elements, such as infrastructure projects, are being undertaken by the governments independently of Programme financing. This illustrates the Programme as a framework for regional economic cooperation, rather than as simply a fund for financing activities. The list and the approach would, of course, require the endorsement of the member countries. It would also require a more successful degree of resource mobilization than has been the case to date.

Resource Mobilization: The Tumen/Northeast Asia Investment Corporation

Resource mobilization must derive from three sources: the member countries themselves, the donor community, and the private sector. In terms of the member countries, the critical determinant for four of the five participants is getting their economies back on course. ROK has been an important contributor to the Programme, but its current circumstances can be expected to lead to resource constraints. At the very least, one would expect more careful assessment of the proposed use of funds. In the case of the DPRK, Mongolia and the Russian Federation, it is unlikely that their economic difficulties will be resolved in the near term. It will be hard to convince these countries to finance their participation in Programme, workshops and the like, which the UNDP would welcome as a demonstration of ownership. Even the annual $25,000 contribution expected of the member countries has been difficult to collect in some cases. In contrast, China has been a generous supporter of the Tumen Secretariat. Very importantly, also, it is investing heavily in infrastructure key to success of the Tumen Region as a gateway for international trade.

Resource mobilization from the donor community has been disappointing. While participation by donor agencies at the annual intergovernmental meetings of the Tumen Programme has been good, it has not been matched by offers of financial support. The Nordic countries have been an exception. Other countries must be drawn into the Programme, including the United States and Japan. The latter have a strong strategic interest in regional economic cooperation in Northeast Asia. However, to gain greater support from the donor community the Programme must demonstrate real value added. It is hoped that the new directions for the Programme outlined above will win the approval of the donor community.

Resource mobilization from the private sector has been growing rapidly, reflecting transition to more market-based systems by the core member countries. By the end of 1997, approximately $900 million in foreign direct investment had been dispersed in the Tumen Region. As mentioned earlier, $450 million of this was in the Yanbian Korean Autonomous Prefecture $350 million was in Primorsky Territory, and the balance in the Rajin-Sonbong Zone. Of particular note, two-thirds or more of these amounts have been dispersed since 1993. Indeed, before the 1990s, foreign investment in the Tumen Region was minimal. In addition to investment in labor intensive industries such as textiles, some corporations - including Hyundai of the ROK - have been involved in port projects and other infrastructure.

Still, private sector participation in infrastructure has been limited. This must change if the Region is to accelerate infrastructure investment. In today' s gloomy financial climate, however, this is a tall order. To assist in making such investments more attractive and viable for the private sector, the Programme is exploring the possibility of establishing a special purpose financing facility termed the Tumen/Northeast Region Investment Corporation.

As outlined in a draft Prospectus for the Investment Corporation, it will act as a catalyst for co-financing and mobilizing capital, especially market and private sector capital. The Corporation will complement other multilateral financial institutions, rather than attempting to duplicate their functions. Its distinct role will be to :

- partner private capital with public capital, thereby leveraging public sector funds committed to infrastructure and non-infrastructure projects;

- assist small and medium-sized enterprises to gain access to commercial financing;

- administer special purpose funds for technical training in financing and for environmental dimensions of development projects.

Establishment of the Corporation will very much depend on how the proposal is viewed by potential sponsors or supporters - including the multilateral financial institutions.


Grounds for a Renewed Regional Cooperation Effort

Participation in the Tumen Programme requires a certain act of faith, In addition to believing strongly in the merits of regional economic cooperation, the participant has to believe that the member countries are serious about implementing measures to more closely integrate their economies. Regional cooperation is ultimately dependent upon the commitment of all involved to make it work.

There are grounds for optimism. Borders are opening among the member countries and trade has increased significantly. The infrastructure is improving and the elements fundamental to making the gateway concept a reality are nearing completion. Some progress has been made on "software" issues, such as visa permits, and more progress on these issues would sustain the Programmes, during this period of financial uncertainty. Private enterprise is trans-border, helping to nudge former adversaries into more cooperative relations. Trust and confidence among the member countries appears to be growing, and there are special opportunities to assist the two Koreas in their aspirations for eventual unification. An institutional framework is in place for promoting regional cooperation initiatives, and the member countries are utilizing this framework to pursue dialogue on sensitive issues. There appears to increasing awareness of shared interests- including protection of the environment.

There are also grounds for pessimism, including the adverse consequences of the Asian financial and economic crisis and longer standing questions about the real interests of each of the countries. On balance, however, a renewed effort to promote regional economic cooperation in the Tumen Region, and by extension in Northeast Asia, would seem well worthwhile. There is a great deal at stake in improved economic relations - including better political relations. It is hoped that the new directions outlined for the Tumen Programme will make a substantive contribution to a "Golden Triangle" - based on the Region's strengths as a gateway for international trade, its rich natural resources and its skilled and highly competitive labor force.


Concluding Remarks

This presentation has reviewed both the challenges and the opportunities for regional economic cooperation in the Tumen Region. Perhaps proponents of the Tumen Programme will find that it overstates the challenges and understates the opportunities. However, the private sector is very adept at identifying opportunities. The more serious task is to resolve impediments to letting markets work. Participants in regional economic cooperation must be willing to engage in a free and candid exchange of views. We must be willing to acknowledge the problems and face up to them squarely. Most importantly, member countries in the Tumen Programme, and potential supporters such as Japan, must be willing to put aside past differences and embrace the promise of a better future.