Russia Agrees To Write Off 90 Percent Of North Korea's Debt

Brookings

Russia Writes Off 90 Percent Of North Korea Debt, Eyes Gas Pipeline -- Reuters

* Russia writes off almost $10 billion North Korea's debt
* Russia eyes gas pipeline, railway via North Korea to South Korea

(Reuters) - Russia's parliament has agreed to write off almost $10 billion of North Korea's Soviet-era debt, in a deal expected to facilitate the building of a gas pipeline to South Korea across the reclusive state.

Russia has written off debts to a number of impoverished Soviet-era allies, including Cuba. North Korea's struggling communist economy is just 2 percent of the size of neighbouring South Korea's.

The State Duma lower house on Friday ratified a 2012 agreement to write off the bulk of North Korea's debt. It said the total debt stood at $10.96 billion as of Sept. 17, 2012.

The rest of the debt, $1.09 billion, would be redeemed during the next 20 years, to be paid in equal instalments every six months. The outstanding debt owed by North Korea will be managed by Russia's state development bank, Vnesheconombank.

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My Comment: The goal of having Russian natural gas shipped to Asian markets has been around for a long time .... but this is the first time that serious money is being committed. As for economic sanctions against North Korea .... no one in North Korea or South Korea are complaining about this project, and from the Russian perspective .... as tensions over Ukraine continue to escalate.... Asia is becoming a more stable market for their gas than Europe.