South Korean Lee Keum-seom (L), 92, meets with her North Korean son Ri Sung Chol (R), 71, during a separated family reunion meeting at the Mount Kumgang resort on the North's southeastern coast on August 20, 2018. - Dozens of elderly and frail South Koreans met their Northern relatives on August 20 for the first time since the peninsula and their families were divided by war nearly seven decades ago. (Photo by KOREA POOL / KOREA POOL / AFP) / South Korea OUT / REPUBLIC OF KOREA OUT        (Photo credit should read KOREA POOL/AFP/Getty Images)
KOREA POOL/AFP/AFP/Getty Images
South Korean Lee Keum-seom (L), 92, meets with her North Korean son Ri Sung Chol (R), 71, during a separated family reunion meeting at the Mount Kumgang resort on the North's southeastern coast on August 20, 2018. - Dozens of elderly and frail South Koreans met their Northern relatives on August 20 for the first time since the peninsula and their families were divided by war nearly seven decades ago. (Photo by KOREA POOL / KOREA POOL / AFP) / South Korea OUT / REPUBLIC OF KOREA OUT (Photo credit should read KOREA POOL/AFP/Getty Images)
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In this photo provided by South Korea Presidential Blue House via Yonhap News Agency, North Korean leader Kim Jong Un, left, and South Korean President Moon Jae-in embrace each other after their meeting at the northern side of the Panmunjom in North Korea, Saturday, May 26, 2018. Kim and Moon have met for the second time in a month to discuss peace commitments they reached in their first summit and Kim's potential meeting with President Donald Trump. (South Korea Presidential Blue House/Yonhap via AP)
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In this photo provided by South Korea Presidential Blue House via Yonhap News Agency, North Korean leader Kim Jong Un, left, and South Korean President Moon Jae-in embrace each other after their meeting at the northern side of the Panmunjom in North Korea, Saturday, May 26, 2018. Kim and Moon have met for the second time in a month to discuss peace commitments they reached in their first summit and Kim's potential meeting with President Donald Trump. (South Korea Presidential Blue House/Yonhap via AP)
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(CNN) —  

South Korean President Moon Jae-in wants more than just peace with North Korea, he envisions an economic and diplomatic push that will transform northeast Asia to the degree the European Union has shaped that continent.

There are just two problems: he only has one five-year term in office to do so; and the United States, South Korea’s most important ally, may not be on board.

As relations between the two Koreas continue to improve, with Moon due to visit Pyongyang next month for a third summit with North Korean leader Kim Jong Un, negotiations between North Korea and the US have run into trouble. The longer this goes on the greater the potential for a rift to develop between Washington and Seoul.

“Things will definitely get complicated if (and) when the diplomacy seriously stalls,” said Oliver Hotham, managing editor of the Korea Risk Group. “There will definitely be those in (Seoul) who will be furious with the US.”

01:27 - Source: CNN
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Transformative peace

In a speech last week, Moon set out an ambitious economic vision not just on the Peninsula but around the broader region, comparing his plan to the European Coal and Steel Community which eventually gave birth to the EU.

Such a plan would dramatically transform and connect the twin Korean economies, and give South Korea a land link to the rest of the Asian continent, potentially opening up hugely lucrative trading and infrastructure links.

Departing from his previously ebullient praise for US President Donald Trump’s role in bringing North Korea to the negotiating table, Moon emphasized “the importance of recognition that we are the protagonists in Korean Peninsula-related issues.”

“Developments in inter-Korean relations are not the by-effects of progress in the relationship between the North and the United States,” he said. “Rather, advancement in inter-Korean relations is the driving force behind denuclearization of the Korean Peninsula.”

While this may be true, there is a risk that any stall in negotiations between Pyongyang and Washington could hamper the two Koreas’ plans. North Korean state media warned last week an ongoing deadlock in talks was “turning the seething expectation and hopes of the world people into impatience and disappointment.”

This is largely due to the “natural wedge” which exists between Washington and Seoul, with the former focused on denuclearization above all else and the latter looking towards a broader peace regime, Jeong-ho Roh and Adena Peckler of the Center for Korean Legal Studies at Columbia University said in an email.

“This wedge has not necessarily been developed by North Korea, but North Korea is leveraging it – by pressuring Seoul to now convince Washington to ease sanctions, while delaying discussion of concrete steps for denuclearization,” they added.

In an editorial Tuesday, the North Korean state-run newspaper Rodong Sinmun said “the adoption of a war-end declaration is a task that brooks no further delay.”

“Its adoption is of weighty significance in ensuring the peace and security of the Korean peninsula and the world, to say nothing of the confidence-building between (North Korea) and the US and the improvement of their relations,” it said.

In a statement made to CNN Wednesday, a South Korean government spokesman said Washington and Seoul “have been in very close coordination and cooperation in the process of building peace mechanism on the Korean Peninsula including a declaration of the end of the Korean War.”

01:16 - Source: CNN
Source: N. Korea seeking 'bold move' from US

Treaty tribulations

Technically, the Korean War which broke out in 1950 has not ended, a 1953 armistice agreement stopped fighting but did not evolve into a legally binding peace treaty.

Both Koreas have made clear their desire for just such a treaty, and Moon has promised to declare an end to the war by the end of this year, perhaps during his trip to the North next month.

While a formal peace regime officially ending the Korean War would need buy in from the US and China – the other participants in the conflict – experts agree that there is nothing to stop the two Koreas declaring an end to the war themselves, or signing a bilateral peace treaty.

Both Koreas shut down a handful of guard posts along the DMZ Wednesday, according to officials in Seoul, part of a process of gradual demilitarization of the heavily fortified border.

This could enable South Korea to lift sanctions and move forward with greater economic engagement with the North, plans for which Moon has been promoting. That would leave Washington in an awkward spot, Roh and Peckler said, “the US can either not recognize a bilateral peace treaty as a legitimate and legal end to the Korean War, or actively block South Korea from signing it.”

Doing so could alienate Seoul and the broader international community, and leave North Korea to take “center stage in the establishment of an internationally recognized peace process at the exclusion of the United States.”

Seoul’s desire to continue ramping up economic engagement stems from Moon’s insistence that doing so will benefit not only his country’s northern neighbor but also South Korea itself.

In his speech last week, he cited research from a state-run organization which found inter-Korean economic cooperation could be worth upwards of $150 billion across the next 30 years.

Most important, for Moon as well as business and worker interests in the South, is the linking of rail networks, ending South Korea’s geographic isolation and connecting it to China and the rest of the Asian continent.

“I propose the creation of the East Asian Railroad Community today, encompassing six Northeast Asian countries and the United States,” Moon said. “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. It will then lead to the creation of East Asian energy and economic communities.”

02:40 - Source: CNN
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Stalled talks

The Rodong Sinmun complained last week of “those opposed to dialogue provided the (US) negotiating team with a truncheon called ‘theory of suspected north Korea’s secret nuclear facilities,’ a fiction, driving it to derailing dialogue.”

This conforms with reports citing unnamed administration officials that the US has requested a full accounting of North Korea’s nuclear assets before moving forward with talks or any potential economic relief.

Around the same time, the US moved to sanction companies based in Singapore, China and Russia accused of violating restrictions on trade with Pyongyang, as Washington attempted to maintain its strategy of “maximum pressure” which the Trump administration has claimed let to the detente with North Korea in the first place.

This has led many observers to expect an imminent collapse in talks, with the Economist Intelligence Unit (EIU) saying the most likely scenario is that at some point in the near future negotiations “fall apart owing to misaligned expectations and distrust.”

“The levels of bilateral trust and long-term commitment required for a phased denuclearization scenario are unlikely to be achieved under the current US administration,” EIU analyst Anwita Basu said.

If they are to be saved, it will likely fall to Moon to do so, repeating the South Korean President’s previous role in salvaging the Singapore summit after Trump abruptly called it off in May.

“South Korea can really play the good cop to Washington’s bad cop, being a more sympathetic ear to Trump’s hard line on denuclearization,” said Hotham. “There’s certainly disagreement between Seoul and Washington on the speed at which all this peace stuff should unfold, but that disagreement actually helps this dynamic in many ways.”

Moon may lose patience however, if Washington dragging its feet on reaching a compromise with Pyongyang means a significant delay to his plans for economic engagement, which depend on lifting at least some sanctions in the near term. And he may not be the only one.

“If some forces in Seoul as well as those in Beijing and Moscow want to see the peace process move faster than the denuclearization process then this could be a potentially challenging point of contention,” said Duyeon Kim, a Seoul-based adjunct senior fellow at the Center for a New American Security.

While Kim was skeptical of how much of a wedge a bilateral peace treaty would be, she agreed that Moon’s plan can only be achieved via sanctions relief, though she added that if there is widespread dissatisfaction with the speed of the overall peace process “Beijing and Moscow could very well lift sanctions and not implement their obligations under UN security council resolutions.”

Nor are other parties likely to be willing to see a return to the threats and saber-rattling which characterized Trump’s earlier approach to North Korea, leaving the US President potentially sidelined on the one foreign policy issue he has seen the most success on.