South Korea said Tuesday it will pull out from a trilateral trans-Korea logistics project with Russia as it unveiled a new set of standalone sanctions chiefly targeting North Korea's financial and shipping networks.

The decision on the Rajin-Khasan logistics project in particular reflects Seoul's toughening line against Pyongyang as it had been the key piece of President Park Geun-hye's much-trumpeted “Eurasia Initiative.” 

Her administration had touted the program as a test bed for building confidence with the North and renewed collaboration with Moscow since its launch of the Eurasia vision in 2013.

The Russian-led initiative calls for refurbishing the North Korean port city of Rajin and laying a 54-kilometer railroad running through the nearby Russian town of Khasan to transport Russian products like coal.

South Korea’s KORAIL, POSCO and Hyundai Merchant Marine had been seeking to take over part of the Russian stake in RasonKonTrans, the Pyongyang-Moscow joint venture in charge of the project.

“It’s unsustainable to continue the review that the three-way consortium has been carrying out on our participation now that the fundamental business structure is falling apart,” an industry official said, requesting anonymity due to the sensitivity of the matter.

Despite concerns over a possible souring of Russia ties due to Seoul’s about-face, officials here dismissed such speculation, saying the relationship is on “solid” footing including at the leadership levels.

“The Rajin-Khasan project, which is essentially a civilian one incepted over economic logics by the two countries’ businesses with the cooperation of the governments, is now difficult to advance given the international community’s sanctions movement in line with the UNSC resolution and our own measures,” said Kim Hong-kyun, chief nuclear negotiator and special representative for Korean Peninsula affairs at the Foreign Ministry.

“If there is progress in North Korea’s denuclearization, however, we would be able to reconsider whether to restart the project. We have provided sufficient explanations in advance to the Russian side that our latest steps were inevitable in light of the North’s nuclear test.”

By Shin Hyon-hee (heeshin@heraldcorp.com)