Although North Korea finds itself at odds with much of the international community, it appears that cooperation between Moscow and Pyongyang is on the rise. Last week the Russian government agreed to forgive nearly all (90 percent) of North Korea’s outstanding debt. The DPRK accumulated around $11 billion in debt to Moscow during the soviet-era, and, like all debts incurred by the North Korean regime, were never paid off. The specifics of the deal will have Russia forgive approximately $9.9 billion, with the remaining $1.1 billion to be invested in joint Russian-North Korean projects.
At a quick glance, the Russian rationale for the deal seems clear. The North Korean economy has been struggling terribly for decades, and the prospect of the DPRK’s ability (and willingness) to ever pay off their loans in full was extremely unlikely. What’s more, the two countries have had strong connections in the past, most notably during the Cold War era.
What’s striking about this deal, though, is the fact that until recently Russia had been firm in their demands for Pyongyang to pay-off their debts. When the Iron Curtain fell in the 1990s, relations between the two countries came to an abrupt halt. Russia officially recognized South Korea and immediately began to demand North Korea’s debts repaid. Relations between Moscow and Pyongyang did not continue until the election of Vladimir Putin in 1999 – and even then relations were not perfect. Although Putin was a man whom previous leader Kim Jong-il perceived as a Russian leader he could finally “do business with,” the issue of North Korean debts remained throughout the 2000s, as Russia continued to brush-aside requests from Pyongyang for debt forgiveness.
So why did Putin forgive the DPRK debts now? Russia’s new-found generosity regarding North Korean debts stemmed primarily from talks last year. In August of 2011, the late Kim Jong-il and former Russian President Dmitry Medvedev met in the Siberian city of Ulan-Ude to discuss the debt and other bilateral issues. One of the main discussion topics was the proposal to build a Trans-Korean gas pipeline from the Russian border, through North Korea, to supply considerable amounts of gas (over 10 billion cubic meters annually) to South Korea. Such a project could seemingly benefit Russia greatly. The pipeline was proposed under the guise of uniting the Korean peninsula in a common cause, thereby promoting inter-Korean relations. If the pipeline succeeded, Russia would receive credit for the improved relations, and would have the added bonus of being directly connected to South Korea’s booming economy.
Instead, however, North-South relations have only gotten worse, which has spurred some analysts to question Russia’s initial motivations for their generosity toward the North. An article yesterday in the Korea Herald, for instance, accused Putin of “trying to help Kim Jong-un consolidate political power and overcome mounting economic difficulties.” The article notes how Moscow is continuing to find itself more isolated, and that perhaps Putin’s motivation is to rekindle relations with an old anti-American ally:
Russia is desperately running out of friends on the international stage. With Libya and Syria having already become victims of the “Arab Spring,” Moscow is scrambling to buttress dictatorial regimes in its vicinity. Anti-Americanism and curtailed political freedoms once again have become the primary criteria in gaining Kremlin sympathies. Belarus, Iran, the countries of Shanghai Cooperation Organization, and now North Korea, have all received special treatment from the increasingly anti-Western Russia … Moscow is now returning to an East Asia policy that echoes of the Cold War. Instead of reprimanding Kim Jong-un for his provocative actions and belligerent rhetoric, Putin is dumping trillions of tax-payers’ roubles into supporting a friendly dictator.
Whatever the motivations, it does seem that the Asia-Pacific region is once again becoming “a theater for large-scale geostrategic games where powerful empires scrum in a noxious struggle for domination,” as it was in the Cold War era. And at the moment, Russia (and China), may be siding with their old Cold War buddy.