China, Russia to cooperate on N. Korea talks (The Korea Herald) China and Russia will continue to work closely together to resume the long-stalled multilateral talks on North Korea's nuclear program, China's foreign minister said Tuesday.

Pyongyang’s house prices on the increase Pyongyang’s property market is facing tight supply caused by increasing demand, according to recently published work from professor Jung Eun-lee.

THAAD’s efficacy in dispute (The Korea Herald) Amid controversy over the U.S.’ potential deployment of an advanced missile defense battery here, defense experts are focusing on its military efficacy.

President Xi Jinpeng of China takes on Mr Jiang Zemin, the 'big fish' of Chinese corruption in government and industry

Mr Jiang Zemin is at the point of being arrested in China for massive corruption.Taking precautions, Mr Xi Jinpeng, President, Chairman and the leader of the massive ongoing anti-corruption pogrom now in place in the Peoples Republic, has been moved to a very secure location. 
Mr Jiang is the 'big fish' in continental Chinese corruption and a former Premier and former member of the Standing Committee of the Communist Party of the Peoples Republic of China/Politburo, with strong links to the Triads, and, up until today, controller of all large corruption in the South of China from Shanghai to Hong Kong...thus the riots of recent times organised, under the 'tent' of pro-democracy, to display clearly to Beijing that Mr Jiang Zemin still has great social and political power on his side. 
No one has ever taken on Mr Jiang Zemin,'til now. By having the political capacity and power to do so, Mr Xi Jinpeng eclipses even Chairman Mao Zedong in terms of the full reach of his authority and the total strength of his power base in The now Giant and now rapidly and functionally Reforming Peoples Republic of China.

An interesting Festival today: Chinese Tomb Sweeping Day.

Mr Jiang

Mr Xi

North Korea declares no-sail zone

North Korea declares no-sail zone over East SeaNorth Korea declared a no-sail zone over the East Sea, raising concerns over another missile launch, a South Korean news agency reported on March 6.
Visit NK News for more

North Korea and Singapore: Two families, two nations
The death of Lee Kuan Yew on March 23 is a reminder of the intriguing parallels between North Korea and Singapore and the importance of context in deciphering events.
Visit NK News for more

North Korea to ship more coal to South
A second shipment of Russian coal will be sent from the DPRK’s Rajin port to Pohang in South Korea no later than early May, a report from Arirang news agency said on March 6.

NK Russia and SK

N. Korea agrees to discuss projects with Russia, South Korea

Minister for Far East Development: Russian investors required for large scale projects, experts remain skeptical

March 23rd, 2015

Leo Byrne

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North Korea has agreed to discuss trilateral cooperation with Russia and South Korea on creating advanced development zones in the Russian Far East, according to Voice of America (VOA).

Russia’s Minister for Development of the Russian Far East Alexander Galushka told VOA that North Korea made the agreement during a Moscow visit from Trade Minister Ri Ryong Nam in late February.

The minister added that Russian investors might also be necessary.

“As this is a large project, new participants will be required. However, this is the prerogative of the business to attract new members,” Galushka said by email to VOA.

Although Galushka did not give further details on the project, recent reports indicate Russia is looking to cooperate with South Korea on hydroelectric and electricity transmission initiatives in the Russian far-east.

While South Korean companies appear to be downplaying their involvement, Russian company RAO Energy System of East have already commissioned a feasibility study to export power to North Korea’s Rason region.

Russian interest in North Korean infrastructure has been on the up in recent years. The DPRK’s northeastern neighbor bankrolled upgrades to North Korea’s Rajin port and the construction of rail line linking the two countries.

Despite Galushka’s comments, experts remain bullish on how far further trilateral projects will go.

“So far this project seems positive as [one of] Russia’s top official publicly commented about it. It shows that the two nations’ ties are getting stronger,” Lee Seog-ki, a senior researcher at the Korean institute for Industrial Economics & Trade (KIET), told NK News.

“But making a deal is one simple problem, carrying it out is what requires lots of time and effort … Russia’s economy is worse than ever, and the Russian public companies are famous for being not trustworthy. I highly doubt if the Russian company (which is to invest on this project) will full fill their part of the bargain,” Lee added.

Last week Russia and North Korea declared that 2015 would be a “Friendship Year” between the two countries. The move was the latest in a string of high profile visits and reports on proposed cooperation.

Recently released trade figures however tell a different story, with only small scale exports from the DPRK to Russia last year.

Featured Image: Coated with gold by kishjar? on 2013-08-18 20:19:31

Russia and North Korea

Looking at history to determined what Pyongyang, Moscow may want in bilateral economic relations

April 2nd, 2015

Bulychev

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The recent invigoration of Russian-North Korean ties raises interest in the history of Russia’s involvement in Korean affairs. Does the recent upsurge have a solid basis that can be counted on to ensure a long-term Russian involvement in the new era? Why would North Koreans, treating foreigners as suspect, “open up” to Russians? A book, recently published in Russia, entitled The Uneasy Neighborhood: Problems on the Korean Peninsula and Challenges for Russia contains a lot of information to answer these questions and also to understand the basics of Russia’s policy regarding Korea.

The book, authored by a team of Russian Koreanists, both mature and quite young, analyzes both the internal situation and the prospects for economic development in both Koreas, as well as the two Korean states’ relations with the great powers. The most interesting data relates to the USSR/Russia’s relations with North Korea.

The book argues that the historic truth is that the USSR liberated Korea from Japanese occupation and then exerted great assistance to restore and develop the economy of the North, reduced to rubble during the Korean War. Although the economy was modeled along the lines of Stalinist industrialization, this process made it possible for North Korea to utilize its natural resources through the use of Soviet technologies. By 1982 the plants and enterprises built with Soviet assistance and based on Soviet technology produced 63 percent of the nation’s electrical power, 33 percent of its steel, 38 percent of rolled steel, 50 percent of oil products, 25 percent of coke and 42 percent of its iron ore. By unofficial calculations of the Russian experts (based on some unpublished reports of Soviet ministries and organizations, related to foreign economic activity) the USSR assisted the DPRK in the construction of 85 infrastructure projects.

Several thousand North Korean specialists got their higher education in the USSR

By the beginning of the 1980s the USSR provided the DPRK with 2,800 technology packages in areas as varied as geology, machine-building, metallurgy, chemical industry, food and fisheries, the energy sector, agriculture, etc. Also Soviet design bureaus provided documentation for 193 capital construction projects, designs for 742 pieces of equipment, more than 1,100 units of technological documentation and 5,300 documents detailing industrial standards. Several thousand North Korean specialists got their higher education in the USSR. Academic cooperation also flourished as the DPRK Academy of Science was created with the help and along the lines of its USSR counterpart and Russian and Korean scientists undertook such major projects as the Geological Survey of North-East Korea and South of (USSR) Maritime district, to name but one.

The USSR was the biggest market for North Korean goods. Although the list was limited (about 60 major items), imports from the DPRK satisfy USSR demand for some items to a considerable extent: For example, imports from North Korea accounted for 71.2 percent of its magnesite clinker imports, 75.3 percent of cement, 75 percent of chlorinated lime, 15.8 percent of pig iron, 15.1 percent of corn starch, as well as cold-rolled stock, zinc and lead, fruits, electrical engines, etc. At the same time the USSR was the major supplier of oil, coke and coking coal, chemical products, machinery and equipment. Also, the Soviet Union had to deliver raw materials and semi-finished products for enterprises, created with Soviet assistance (they stopped functioning after the abrupt termination of economic cooperation in 1990s, which led to de facto de-industrialization of North Korea).

TRADE PRICE HAGGLING

…many Soviet commodities and much equipment were delivered to DPRK on a ‘friendly’ prices basis, while the actual world price would be much higher

The total USSR aid until the breakup of the Soviet Union, when it was terminated, amounted in current world market prices to about $40 billion by the same calculations. It should be noted that this figure reflects the real volume of aid while official statistics would tend to decrease it – simply because many Soviet commodities and much equipment were delivered to DPRK on a “friendly” prices basis, while the actual world price would be much higher. It should be noted, also, that many North Korean commodities were of no demand on markets beyond the USSR, so the prices were quite arbitrary.

Every year foreign trade officials of the two countries would sit down to agree on the prices on which the goods would be delivered. Although theoretically these prices should have been based on world market prices in U.S. dollars, converted into the so-called “clearing rubles” at a fixed official rate of about 0.6 rubles per dollar (so the “clearing rubles” were a de facto pseudonym for dollars), the reality was quite different. The sides would start by presenting their price suggestions with a reference to global statistics (someone joked that, if communism were to win at the international level, we should leave Switzerland capitalist so as to have a basis for “market prices”), but then the real “tit-for-tat” negotiations started.

Moscow has eyed development of the Russian Far East in its dealings with Korea. Wikimedia Commons

Usually parity was sought within the narrow list of the so-called “free currency commodities,” meaning the goods in demand on the global market, i.e. oil form Soviet side and non-ferrous metals and magnesite clinker from North Korean side. The result of these tedious negotiations was a list of commodity prices of bilateral trade, which was very far from real global prices. Most of it was kept secret. Based on these prices, the yearly Trade Protocol was signed that provided for equal costs of deliveries during the year as the “clearing rubles” mechanism was not supposed to result in any imbalances beyond the goods supplied on the basis of long-term credit, agreed at the government level.

The cost of “turnkey plants” supplied to North Korea was even further from reality and mostly depended of the supplier’s ability to force finance quotas from the Soviet budget authorities, as the supplies were effected on the basis of Soviet credit, which everybody understood would never be returned. For example, in the mid-1990’s, when the Korean Peninsula Energy Development Organization (KEDO) started to calculate the price tag for a hypothetical nuclear LWR power plant, similar to one agreed upon between the USSR and DPRK in 1985, Russian experts were amazed (probably along with North Koreans, who never disclosed it), that this price in dollar terms was several times higher than the USSR-type nuclear power plant (a Soviet credit for it was used only partially). Although the Soviet side, especially in 1970’s-80’s tried to get some payback, mostly in the form of deliveries of the production of the Soviet-built enterprises (like car batteries, wire, etc.) only a fraction of the debts were ever received. The Soviet side had to formally re-finance themselves by providing additional credit.

TRADE IMBALANCE AND BREAKDOWN

The North Korean side was in the habit of under-fulfilling their export obligations according to the bilateral yearly trade protocol, which by the middle of year, would result in a growing imbalance in USSR exports vis-à-vis DPRK exports. North Korea would usually explain it in political terms, as the need to concentrate all force on “fighting American imperialism and its South Korean puppets” and pledged to increase deliveries to make up for the loss during the remaining months, asking the Soviet side not to decrease supplies of the goods essential for the functioning of North Korean basic industries (such as oil and coking coal), on a political level as a last resort.

…by the early 1990s, when the ‘fraternal economic relations ended, the Russian side calculated (North Korea’s) debt at 3.6 billion rubles – about $6 billion

However the Soviets nevertheless tried to “regulate” their supplies not to let the imbalance (“saldo of bilateral payments”) become too big, as this required providing North Korea with unsolicited credits, which the DPRK had no resources to repay. As is widely known the result by the early 1990s, when the “fraternal economic relations” ended, the Russian side calculated the debt at 3.6 billion rubles – about $6 billion according to the above-mentioned official rate. Of course, much of this debt was related to armament supplies, which are not reviewed in this article, and North Koreans were indignant when Russia calculated this portion of debt in the same manner as the “civil” portion, claiming that the “USSR in fact paid for its own security on the Eastern flank.”

The contradictions continued to accumulate during the perestroika period while the ability and desire of the USSR, under the new pro-reform leadership, to assist the North Korean regime decreased. On November 2, 1990, even before the breakup of the USSR, North Korea had to sign an agreement on payments in free currency in bilateral trade that essentially ended the era of cooperation. Trade plummeted, credit assistance was suspended, bilateral programs frozen, Russian technicians left North Korea, raw materials and spare parts supplies from Russia virtually stopped, and this led to a halt in production of a major part of North Korean industry.

So what does the DPRK want from Russia now? Does it expect the revival of the Soviet-era partnership when Russia would invest in new projects in North Korea without clear guarantees on return on investments? Does it think that due to the growing confrontation with the West, that Russia can provide preferential treatment to North Korean requests? Does it expect Russia to use its remaining technological potential to restore industrial objects (especially in energy sector) once built with its help? Does it expect Russia to become “a bridge” to get financing from South Korea in the framework of trilateral projects?

All these questions become more and more relevant with the nearing of the Kim Jong Un’s possible first visit to Russia in May. We will try to speculate further on it in part two.

Featured Image: Russia_President_Putin_Korea_Visiting_01 by KOREA.NET - Official page of the Republic of Koreaon 2013-11-13 18:20:57