Misperception of Russia

By Andrei Lankov

If the international media is to be believed, there has been a dramatic revival in relations between Moscow and Pyongyang in the last year. One can often come across claims that Russia is going to replace Beijing as North Korea’s major sponsor. Such statements are repeated frequently, thus many are beginning to take them more seriously than they deserve to be.

Indeed, the last year has been marked by a level of political exchanges that the two countries have not seen since the late 1980s, and there is even talk of Russian President Vladimir Putin becoming the first foreign leader to meet Kim Jong-un. The recent shipment of Russian coal via the North Korean port city of Rason, where a joint Russian-North Korean company rents a renovated pier, attracted much attention. The Russian construction company Mostovikis is about to begin a mammoth renovation of North Korea’s railway system ― getting paid in the form of mining rights for undeveloped deposits of non-ferrous metals and rare earth.

It is easy to see the political rationale behind this ostensible rapprochement. North Korean leaders are increasingly wary of China’s large economic influence over their country ― for North Korea, China is now the sole provider of aid and also controls over 75 percent of North Korea’s foreign trade. Pyongyang is fearful that Beijing will try to use its economic leverage to influence its political decisions.

Thus, the North Korean leaders are looking for an alternative, and Russia seems the natural choice. It helps that due to the Ukrainian crisis, Russia is now on a collision course with the West. Thus, many in Pyongyang’s elite circles, credulously believing the hyperbole in the Western media, think Russia is now becoming a latter day Soviet Union ― only too willing to shower North Korea with generous aid and subsidies.

However, such expectations are founded on misperception. While Russia indeed does not mind having better relations with North Korea (why should it?), it is not going to become North Korea’s fairy godmother. Exchanges with Russia will succeed only so long as they are based on reciprocity, thus remaining profitable not only for the North Koreans, but also for the Russians.

There are two reasons why Moscow will not become Pyongyang’s sponsor. First, unlike the old Soviet Union, modern Russia is not willing to spend any significant amount of money on satisfying its foreign policy ambitions and buying prestige. There is an important caveat: this does not apply to areas like Georgia and Ukraine that were once a part of the Soviet Union ― but North Korea has never been a part of the Soviet Union.

Second, the recent collapse in the global price of oil is bound to deliver a significant blow to the Russian budget, making Moscow still less willing to spend money on such ephemeral things as prestige, advancement and influence peddling. The decline of the rouble exchange rate which has nearly halved in the last two months is a vivid reminder of the future problems. President Putin and his government will need all money it can get to be spent inside Russia.

Hence, Russia will only be involved in projects that are reasonably profitable, like the shipment of coal through Rason. The problem is, however, that there is relatively little potential for such mutually profitable projects because the economies of Russia and North Korea are not all that compatible. What North Korea has to sell, namely minerals, seafood and cheap labour, are of little interest for Russia, while North Koreans have no hard currency to pay regular prices for Russian exports.

It is worth remembering that in the last year North Korea’s trade with China was $6.45 billion, while its trade with Russia was a meagre $0.12 billion, an impressive ― if often overlooked ― 60-fold difference. It is remarkable that the provisional data for this year shows that this already meagre amount actually shrank, in spite of all the media fuss about the alleged Moscow-Pyongyang axis.

It seems that transit rights and transportation are the only areas with potential for mutually profitable projects. But even in those areas, large-scale Russian investment is only possible if the risks are sufficiently low.

Therefore, one should treat all this media fuss with a great deal of healthy scepticism. Russia might ― and hopefully will – find some ways to make money in North Korea, and it will be good for the North Koreans, too. However, it is not going to become another sponsor of Pyongyang, as North Korean leaders are bound to realize soon.

Professor Andrei Lankov was born in St. Petersburg, Russia, and teaches at Kookmin University in Seoul. You can reach him at anlankov@yahoo.com.