South Korea’s decision on Thursday to join a China-led infrastructure investment bank is expected to enhance its ties with China and underdeveloped countries in Asia, potentially including North Korea, which the bank is expected to support, analysts said Friday.

They also noted the decision may not hurt Seoul’s long-standing alliance with Washington, given that there has been progress in the efforts to ease the U.S.’ concerns over transparency and the governance structure of the bank.

The U.S. has shown its disapproval of the Asian Infrastructure Investment Bank, apparently thinking that it is part of China’s attempt to challenge the existing multilateral institutions such as the World Bank and Asia Development Bank, and revise the U.S.-led financial order.

“When there has been so much discussion and progress in the efforts to improve the governance structure of the bank, it might have been weird for South Korea not to join the bank,” said Kim Tae-hyun, diplomacy professor at Chung-Ang University.

“There was a need to reduce Seoul’s heavy diplomatic reliance on the U.S. If Seoul had opted not to join the AIIB when many others including Britain, France and Germany have applied, Seoul might have ended up being perceived as a country influenced too much by Washington.”

Along with the possible deployment of an advanced U.S. missile defense battery to the peninsula, the AIIB was one of the trickiest diplomatic issues for South Korea, as Seoul has sought to maintain its security alliance with Washington and economic partnership with Beijing.

Seoul’s participation in the AIIB would pave the way for South Korean firms’ business involvement in a host of massive infrastructure projects in Asia. According to the Asia Development Bank, the demand for infrastructure investment in Asian countries will amount to some $730 billion each year at least until 2020.

The investment could also flow into the impoverished North Korea, which could help lay the groundwork for the reunification of the Korean Peninsula, experts said.

“When the investment fund for the ADB is not getting any bigger due to financial challenges in the U.S. and other reasons, the AIIB can play a role in boosting investment for development projects in Asia, potentially including North Korea,” said Park Won-gon, international relations professor at Handong Global University.

“With the AIIB possibly playing a role in improving infrastructure conditions in the North, South Korea can facilitate its efforts to prepare for national reunification.”

South Korean President Park Geun-hye has paid much policy attention to the preparation of national reunification, calling it an economic bonanza not only for Korea but for the entire region. But her efforts have made little progress due to the longstanding nuclear standoff with the communist regime.

Under the so-called Dresden declaration that Park made in Germany a year ago, Seoul laid out a more specific blueprint of its vision to support the North. The declaration involves addressing inter-Korean humanitarian issues; helping establish basic infrastructure in the North; and restoring homogeneity among all Koreans.

The AIIB’s investment schemes could help facilitate Seoul’s push for the Dresden declaration, observers noted.

On Friday, a day before the first anniversary of the Dresden declaration, Seoul’s Unification Ministry urged the North to positively respond to it. Pyongyang maintains that the declaration is part of Seoul’s efforts to unify the peninsula by absorbing the North.

“It is regrettable to see that the North has misunderstood the declaration and taken a passive stance over our proposals,” said the ministry in a commentary. “Should the North respond to our proposals in the declaration, this would be a framework to foster mutually beneficial relations and enhance mutual understanding.”

Meanwhile, Washington did not offer any specific comments over Seoul’s participation in the AIIB, reiterating that the AIIB should heed international standards and calls for transparency.

“I am not going to react or comment on their decision. I would say in general we’ve seen a number of countries make decisions to join the bank. That is their decision,” State Department spokesman Jeff Rathke said at a regular press briefing Thursday.

“We certainly hope that as we stress the importance of international standards and transparency, that there will also be voices for those same values.”

By Song Sang-ho (sshluck@heraldcorp.com)