Amid an ongoing warming of relations, Russia and North Korea have agreed in principle to built a joint Asian trading house, Russia’s embassy in North Korea announced on Tuesday.
The announcement followed bilateral talks in Pyongyang this week on the subject of energy, trade and railroad transport between Minister for Development of the Russian Far East Alexander Galushka and the North Korean Minister of Foreign Trade Ri Ryong Nam.
“During the talks the two sides … agreed in principle on the establishment of a Korean trading house… to coordinate a substantial percentage of the export-import operations of bilateral trade,” a news update on the Russian embassies’ Facebook page said on Tuesday.
Russia’s Far East Development Ministry elaborated on the news in a press released Wednesday, saying that “one of the ways to optimize bilateral trade could be the establishment of an Asian trading house…”
“This mechanism involves the synchronization of Russian and Korean trading facilities, as well transaction (sic) support through the partner banks authorized to carry out trade in the national currencies of the two countries,” the press release explained, noting the two sides had agreed to ensure the first test transactions by the end of the year.
News of the trading house came as the end of a “Year of Friendship” between Russia and the DPRK was marked in Pyongyang this week. It also follows the April 2014 signature of an economic protocol agreement designed to raise bilateral trade between the two countries to a value of one billion dollars per year, by 2020.
The trading house “will be an important factor promoting the trade turnover between our countries…an organization commercially interested in the growth of the goods turnover will be established,” Galushka, the Russian minister, said in comments carried by Russia’s TASS news agency on Wednesday.
Despite the warming relations, not all are confident about the prospect of amplified trade between the two nations.
“The trade between North Korea’s trade with Russia is almost 70 times less than its trade with China, and this ratio tells everything,” Dr. Andrei Lankov, a Russian specialist of North Korea studies told NK News this week.
“NK-Russia trade has been stagnating and, actually, slowly sliding down for two decades, and this is not incidental: given the current structure of Russian and North Korean economy, two sides have little to trade.”
Since April 2014 Moscow and Pyongyang have outlined an array of mutual economic interests that include cooperation in trade, investment, transport, energy and natural resources, employment and interregional cooperation.
This year the two countries begun transacting in rubles, created a business cooperation council and appointed coordinators to handle specific, large scale cooperation projects.
And as of April 2015, data published by Russian business daily RBK said that North Korean workers in Russia had increased by 20%, with a total 47,364 North Koreans are at present working in Russia since the year began.
More recently, a delegation from North Korea’s Korean Zinc Industry Association visited eastern Russia to see a gold mine in Kolyma and to meet with local officials, suggesting one potentially lucrative area of cooperation between the two nations.
Yet despite the efforts, North Korea and Russia trade was down sharply in Q1 of 2015, according to data from the ITC Trade Map, making observers uncertain as to whether Moscow and Pyongyang’s trade goal could be feasible.
“The goal of $1 billion is not that realistic because both sides cannot make any huge profitable projects. Trilateral projects including South Korea are promising I think but bilateral projects between North Korea and Russia are limited,” Cho Han-bum of the Korea Institute for National Unification (KNU) told NK News this May.
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Featured Image: Kremlin sunset by John Leach on 2005-08-29 17:11:03