A Russian bank which has received multiple sanctions exemptions since 2016 to serve as a limited banking channel into North Korea participated in high-level discussions in Pyongyang at the end of last week, according to an official report from Russia’s Ministry for the Development of the Far East (MDFE).
The report, released on Monday, said at least one representative from “CB (Commercial Bank) Sputnik” held meetings with North Korean officials during the June 6-8 visit of a 12-person economic-focused delegation to Pyongyang, led by head of the MDFE Alexander Kozlov.
It did not provide further details regarding the participants or content of specific meetings involving Bank Sputnik, though it is possible talks involved the bank’s role in plans to boost bilateral trade in addition to its other recent work with the DPRK.
March saw Kozlov suggest transactions in rubles instead of other currencies could serve efforts to establish an internet-based “trading house” and other methods of increasing trade, and that the banking channel issue would also be part of the equation.
The bank was granted an exemption from the UN Security Council sanctions committee on North Korea in August 2016, but only to facilitate transactions of UN agencies working in the country.
The channel broke down in September 2017, however, after the DPRK’s Foreign Trade Bank (FTB) complained of persistent problems accessing cash required to carry out its correspondent role giving funds to the agencies on behalf of Sputnik.
Bank Sputnik has yet to respond to NK News’s questions regarding its visit to Pyongyang last week.
MOMENTUM, DESPITE SANCTIONS
Kozlov was quoted in the report this week as saying to his counterparts in Pyongyang that he wanted “to emphasize that all areas of trade and economic cooperation between our countries will be discussed strictly within the framework of Russia’s obligations” under UN sanctions.
The goal of boosting trade without violating sanctions was also a key topic discussed during the 9th DPRK-Russian Intergovernmental Committee (IGC) for Cooperation in Trade, Economics, Science, and Technology in March in Moscow.
In comments carried by Russian outlet FinMarket, Kozlov told that meeting that it is “difficult to solve the issues of export-import operations due to the ban on bank transactions,” but that Moscow was continuing to discuss “the application of settlements in rubles” for bilateral trade.
“I am sure that in the near future our financial institutions will agree on a protocol on the procedure for the use of funds that can be sent for development projects,” he added.
Bank Sputnik’s presence in Pyongyang last week could thus be related to both increasing bilateral trade ties as well as settling other currency-related issues as they push ahead with a cross-border road bridge and other infrastructure projects.
This week’s MDFE report said Kozlov and other representatives from his ministry, the Russian Ministry of Economic Development (MED), and the foreign ministry “exchanged views on trade and economic cooperation” and how these can be achieved through new methods such as the electronic “trading house.”
The “main purpose of our visit is to agree on concrete steps to implement the agreements reached during” the late April summit between the two countries’ leaders in Vladivostok, he reportedly said.
In addition to expanded high-level talks with officials such as Kozlov’s co-chair of the IGC Kim Kim Yong Jae, the two sides also held “workshops with representatives of industry departments.”
Joint projects discussed, according to the MDFE report, included utilizing the Khasan-Rajin railway for transport and logistics, and pushing forward with the cross-border road bridge that has been a key item in bilateral talks throughout recent months.
At the conclusion of his trip, the Far East development minister said that “many issues were discussed in detail” and that the two sides had “agreed” on many points, but declined to provide further details.
In March 2016, the UN passed Security Council Sanctions Resolution 2270, banning joint ventures in finance and correspondent bank relationships between North Korean and foreign banks, though a UN committee soon after granted an exemption for Bank Sputnik in August.
Under that decision, they were allowed to establish a correspondent relationship with the FTB, but it was expressly limited to “facilitating the transactions of United Nations agencies to the DPRK.”
Bank Sputnik began to receive money from the UN through Germany’s Commerzbank AG, while the FTB provided money to the UN agencies in Pyongyang from its own “fund,” according to a series of 2017 letters previously reviewed by NK Pro.
But Commerzbank pulled out of the arrangement in September 2017, which, compounded by FTB complaints of not being able to receive cash from Sputnik to pay back the money released to the UN agencies through its own fund, led to the official breakdown of the tenuous banking channel.
According to an October 2017 letter from UN Resident Coordinator in Pyongyang Tapan Mishra, Sputnik also signaled its unease despite receiving the exemption to work with the FTB, requesting the UN 1718 sanctions committee expressly permit them to transfer rubles to the FTB to allow UN agencies to resume utilizing the channel.
Bank Sputnik received an additional exemption to release almost four million euros in cash to the FTB in February 2018, but the existing lack of legal procedures to provide cash transfers or electronic transfers remained.
Meanwhile, UN agencies working in North Korea continue to rely on employees bringing in cash on their persons needed for fuel, paying local workers, and other expenses, and the banking channel issue remains a key complaint from the agencies in carrying out their humanitarian work.
Edited by Oliver Hotham
Featured image: Russian Ministry for the Development of the Far East
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