Russia to write off North Korean debt

By Kim Young-jin

Russia’s finance ministry said Saturday it has agreed to a plan to write off 90 percent of North Korea’s debt of $11 billion, underscoring what observers say is an interest to boost economic ties with the Stalinist state.

The remaining 10 percent will be invested in joint projects in the impoverished North in education as well as medical and energy sectors, the ministry said on its website.

The agreement over the Soviet-era debt was struck during a trip to Pyongyang by Russian Deputy Finance Minister Sergei Storchak early this month and will soon be submitted to the Russian Cabinet for approval.

Russia has shown interest in projects with North Korea including a proposed pipeline that would send Russian gas across the country to the South and a Trans-Korean railroad.

The debt was on the agenda during a rare summit between late North Korean leader Kim Jong-il and then President Dmitry Medvedev last year in the Siberian city of Ulan-Ude. The leaders also agreed to the pipeline project at that time.

Analysts said Kim, who was in the process of handing power to his son, current leader Kim Jong-un, when he died in December, sought to balance the country’s reliance on China. Russia is said to seek stability on its shared border with the North.

The sides inaugurated a railway link in October between the far eastern city of Khasan to North Korea’s Rason, a special economic zone in its northeast that Pyongyang is fashioning into a transportation hub.

The region is still grappling with how to deal with Pyongyang, which claims to have developed a nuclear deterrent. Much speculation has centered on whether Kim Jong-un will implement economic reforms to fulfill the regime’s promise to emerge as a “strong and prosperous” state this year.

Kim’s trips to Russia and China in his final years were seen as a signal that the North could be planning such a move. But analysts say it faces an uphill battle as opening up would allow a greater flow of information into the repressed country.

While boosting economic prospects, Moscow in recent years has become tougher over the North’s provocative behavior, criticizing Pyongyang for its 2010 shelling of Yeonpyeong Island and its latest rocket launch.