Russia writes off North Korea's Soviet-era debt

Featured - September 19th, 2012
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Russia cancelled 90% of North Korea’s decades-old debt in a move that could pave the way for deeper economic and political ties.

Russia’s finance ministry agreed to cut most of North Korea’s liabilities, worth around $11 billion, as part of policies of forgiving debts for impoverished countries, Financial Times reports. A further $1 billion will serve as a “debt-for-aid” programme for Russian projects into the isolated state, such as energy health and education. “The agreement marks the beginning of a new stage of development and financial relations between the Russian Federation and the Democratic People’s Republic of Korea,” a statement from the ministry said. This comes following the resumption of negotiations between former Russian President Dmitry Medvedev and late North Korean leader Kim Jong-il.

The move aims to strengthen ties between the two countries, in what would be North Korea’s second most important bilateral relationship next to China, which accounts for 70% of its foreign trade. North Korea and Russia engaged in several talks to jointly develop infrastructure.

Russia and China have regarded each other as allies in the international realm, particularly in their positions on the issues of Syria and North Korea. Both are nuclear-armed nations and are permanent members of the UN Security Council.