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A Renaissance in Russia-North Korea Relations?

By Troy Stangarone

During the Cold War, Russia served as North Korea’s primary trading partner and provider of security guarantees. As the Cold War came to an end, however, Russia reoriented its foreign policy towards the West and relations with North Korea were downgraded as Moscow sought closer ties with Seoul. That may be changing. In recent months there have been indications that relations could again be warming between Russia and North Korea.

Today, North Korea has become dependent upon China. China’s share of North Korea’s trade has grown from 41.6 percent in 2007 to 57.1 percent last year. This is similar to North Korea’s dependence on the Soviet Union when the Cold War was coming to an end. In 1988, trade between the Soviet Union and North Korea had grown to $2.8 billion, accounting for 56 percent of North Korea’s two-way trade.

With the ending of the Cold War the relationship began to change. Military cooperation and Russia’s obligation to defend North Korea slowly came to an end, and trade began to dry up after Mikhail Gorbachev converted all of the Soviet Union’s trade relations to commercial terms. What had been North Korea’s most important trade relationship has fallen to a mere $62 million in two-way trade in 2010 according to the WTO’s Trade Map.

That has begun to change recently as North Korea seeks aid and investment for its economy in advance of 2012. However, increased economic ties between Russia and North Korea have long been blocked by Pyongyang’s inability to pay off Soviet era debt, but the two sides have recently found a way to address this issue. Under the current proposal, Moscow would forgive 90 percent of North Korea’s debt and reinvest the remaining 10 percent in projects in North Korea.

At the recent summit in Ulan-Ude, Russia provided North Korea with 50,000 metric tons of grain as food aid and the two sides agreed to explore the development of a gas pipeline through North Korea that would supply Russian gas to South Korea. The project would potentially provide North Korea with $100 million in transit fees per year, or about five times as much as it currently receives in wages from the Kaesong Industrial Complex with South Korea.

Russia is also undertaking other economic development projects in North Korea. It recently repaired a rail line connecting Khasan in Russia to Rajin in North Korea, where it is building a container terminal.  It has also expressed an interested in ultimately connecting the Trans-Siberian Railway to the Inter-Korean Railway, perhaps as part of the gas pipeline project.

On the security front, Russia and North Korea have also announced they will conduct joint naval exercises in 2012. The exercises will focus on joint search and rescue operations.

As cooperation between Russia and North Korea has increased, Seoul has grown weary. Improved ties between Moscow and Pyongyang, however, are unlikely to be a challenge for South Korea. Russia’s interests in North Korea ultimately have little to do with North Korea itself, but rather a means to a larger ends.

After the Cold War, Russia’s influence in Asia and the Korean peninsula began to wane and its cooperation with North Korea is part of its efforts to restore its influence in the region, while at the same time integrate the Russian Far East into East Asia.

The Russian Far East has some of the world’s largest deposits of oil and natural gas and the pipeline to South Korea will help Russia diversify beyond its current Europe customers and help to put pressure on China in its negotiations with Russia. Even linking the Trans-Siberian Railway with the Inter-Korean Railway is more about connecting Russia to South Korea than greater ties with North Korea.

If Russia is to find new markets for its natural resources, as well as potentially entice South Korean capital to help modernize Russia, it needs stability on the Korean peninsula and a direct connection to South Korea. This will require it to improve its ties with North Korea, which could also enhance its influence in the region, meeting both of Russia’s goals for its policy towards the region. Ultimately, though, increased ties with Pyongyang are more about South Korea than North Korea.

Troy Stangarone is the Senior Director of Congressional Affairs and Trade for the Korea Economic Institute. The views expressed here are his own.

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2 Responses to “A Renaissance in Russia-North Korea Relations?”

  1. Anonymous says:

    The article approaches some interesting topics, but it is a bit vague. For example, the debt can be seen not simply as a stumbling block, but as a bargaining tool. Russia knows fine well the DPRK can’t afford to pay it, but to get nothing for it would be unacceptable. Therefore, Russia uses it as a reminder to DPRK that the amount payable can be bargained for other opportunities. Let’s not forget that Russia has already forgiven amounts from various nations, most notably Cuba and Mongolia. In this case, as pointed out by the author, the pipeline and railroad opportunities can be seen as the catalyst for wiping large chunks of the debt.

    Also interesting is the issue of diplomacy between Russia, DPRK and ROK. Looking back at the history of relations between the three, it can be seen that Russia requires relations with both to have any sort of influence in the region, and in particular with the ROK. When the USSR dissolved and Russia broke off ties with the DPRK to try and engage with ROK, a number of analysts viewed this as a positive step. However without the ties to the DPRK, Russia had no other avenues of interest to the ROK. They saw Russia as useful because they in turn could influence the DPRK. It was only with the rise of Putin, who re-established ties with DPRK, that Russia began to hold more relevance to ROK. This will be one of the key factors in the future integration of Russia in the region, as I think you may have been alluding to at the end of the article. The naval exercises can be seen as a display of this process, and an attempt to assert Russian importance for the area.

    On the side-issue of Putin likely returning to power in Russia, this will be interesting for Russia-DPRK relations. It was the personality of Putin that helped bring these countries closer again. Leaders like Kim Jong-Il prefer to deal with strong characters, or at worst small groups with concentrated power. Putin was able to display this kind of leadership, and gain the attention of Kim through his personality. Kim felt that Putin might be able to get him what he needed, and vice-versa. It was only when they both realised this wasn’t going to work out that relations died again from around 2003-2004. Will Putin likely returning to power re-ignite that understanding? It will be very interesting to see. Certainly if you look at the economic records between both nations during the Putin era, the trade levels match almost exactly the status of diplomatic relations. I think he’ll give it a try, particularly as he may be dealing with Jong-Eun instead of Jong-Il. What better way to gain influence than be one of the first to get close to the new leader and earn his trust? Very interesting times ahead on that front.

    In my own view, relations can only really improve, and the potential is there. But I would wager that Russia would be happy to draw the line at improving infrastructure and energy flows to the ROK.


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