Connect to share and comment

Russia forgives North Korean debt, plans investment

Russia announced on Tuesday it had agreed to forgive 90 percent of North Korea's $11 billion debt.

Kim jong un saluteEnlarge
This undated photo released by North Korea's official Korean Central News Agency (KCNA) on Aug. 8, 2012 shows North Korean leader Kim Jong Un (C) saluting to pilots during a flight training at Unit 1017 of the Air and Anti-Air Forces of the Korean People's Army. (Stringer/AFP/Getty Images)

Russia announced on Tuesday it had agreed to forgive 90 percent of North Korea's $11 billion debt, and that it would invest the approximately $1 billion of remaining debt into the totalitarian state.

North Korea said via its state news agency, KCNA, "The North-Russian debt adjustment pact will pave the way for the two countries to further expand economic cooperation."

Konstantin Vyshkovsky, head of the debt department at the Russian Finance Ministry, told Reuters, "It will be decided later by the parties for what purposes the funds received for the repayment of this debt will be used." 

Invested funds will be allocated to health care, education and energy projects, according to the Wall Street Journal.

Agence France Presse reports Moscow hopes to curry favor with Pyongyang so it can build a trans-Korean railroad, an electricity pipeline and a gas pipeline that would transport Russia's gas though North Korea to South Korea.

"Nothing will happen immediately," Alexander Vorontsov, head of the Korean and Mongolian Studies department at a Russian Academy of Sciences institute, told Reuters.

He then added, "But the (debt) agreement is a success — first, it will improve economic cooperation with North Korea itself and this could gradually lead to the expansion of Russia's influence in Eastern Asia."

http://www.globalpost.com/dispatch/news/regions/asia-pacific/120918/russia-forgives-north-korea-debt