Russia writes off $11 billion North Korean debt

Russia writes off $11 billion North Korean debt

SEOUL - Agence France-Presse
Russia writes off $11 billion North Korean debt

North Koreans flip colored cards to form a giant North Korean flag during an Arirang mass games performance in Pyongyang, North Korea, on Sunday, Sept. 9, 2012. (AP Photo/David Guttenfelder)

North Korea said yesterday that it had signed an agreement with Russia settling an estimated $11 billion debt owed by Pongyang that dates back to the Soviet era. Russian authorities also confirmed the deal.

The North’s state news agency KCNA said the agreement was signed Monday in Moscow, but gave no details of the terms involved.

“The North-Russian debt adjustment pact will pave the way for the two countries to further expand economic cooperation between them,” the KCNA report said.

Russian Deputy Finance Minister Sergei Storchak had made a rare visit by a top Russian official to Pyongyang in May to discuss settling the outstanding debt.

The Izvestia newspaper reported last year that Russia would write off 90 percent of the total sum - estimated at $11 billion - and that the other 10 percent would be spent on joint development projects in North Korea.

Investment in energy, health, and education

Following his visit, Storchak confirmed that part of the settlement would involve investment in energy, health and education projects in the isolated Stalinist state.

The debt had been discussed in August last year at a rare summit in the Siberian city of Ulan-Ude between North Korea’s late leader Kim Jong-Il and Russia’s former president Dmitry Medvedev.
Kim Jong-Il died in December and was succeeded by his son Kim Jong-Un.

Until recently, talks on the issue had seemed deadlocked with Moscow insisting Pyongyang needed to acknowledge that it owed the money to Russia as the successor of the Soviet Union But Moscow is keen to pursue several projects with its neighbour, including a trans-Korean railroad, the construction of an electricity line and a pipeline carrying Russian gas to South Korea via the North.