North Korea and Russia announced a set of measures to facilitate trade and cooperation following an intergovernmental commission held near Vladivostok on Thursday, according to Interfax News Agency.
Russia’s Far East Development Minister Alexander Galushka said that the two countries had agreed to switch settlements in roubles and that Russian investors working on DPRK projects would benefit from exclusive terms.
“Settlements in rubles will begin starting from this month. Such an opportunity will emerge between Russia and the DPRK. The first accounts have already been opened at Russian banks,” Interfax reported Galushka as saying.
The two countries also agreed to minimize red tape and legislative barriers in order to facilitate Russian investment in the DPRK.
“We have agreed on a special mechanism to support priority projects in North Korea – this mechanism implies the signing of relevant agreements at the Intergovernmental Commission with the purpose of removal of administrative barriers and any other impediments to these projects,” Galushka said.
The Russian minister also noted that the terms would not be available to investors from other countries, including China.
“There are indications (that the) North Korean “upper” have instructed economic organizations to promote ties with Russia at the expense of China, so we see the same old balancing game as in 1960-1980s.” Professor Georgy Toloraya Executive Director on Russia at the BRICS National Research Committee told NK News.
It was also announced that the Russian owned investment company Basic Element would refurbish the East Pyongyang thermal power plant. The construction of the plant was originally sponsored by the Soviet Union in late eighties and it now provides power and hot water to the city’s eastern suburban districts.
Basic Element’s owner, billionaire Oleg Deripaska also owns the world’s largest aluminum company Rusal, which is also looking to make inroads into the DPRK.
“We are glad to note that the interest of such Russian companies as Rusal, Mostovik and Zarechnaya has been growing recently. We have started active consultations on large and promising investment projects in various spheres, including coal extraction, railroad and automobile transportation and the extraction of rare metals,” North Korean Ambassador to Russia Kim Yong Jae said in March at an event celebrating the signing of the 65th USSR-North Korean agreement on economic cooperation.
The Russian company will also assess data concerning DPRK copper and anthracite reserves, with a view to sending a team of specialists in 2014.
Galushka said that the hopes for the agreement were to increase bilateral turnover from $112 million in 2013 to $400-500 million in the near future.
“Our primary objective is one billion trade turnover. This objective looks attainable to all parties to the negotiations,” Galushka said.
According to the ITC trade map, Russia is North Korea’s third largest trade partner, however china dominates the DPRK’s trade landscape with a balance nearing eight billion dollars.
“Russia can be no substitute for China, as we pursue only commercially profitable projects and the businesses have yet to see whether initially attractive North Korean proposals, say, on minerals, can be effectively implemented.” Professor Georgy Toloraya told NK News.
Picture: Lazyhawk, Creative Commons
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