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5 Jun, 2014 15:13

Russia and N. Korea switching to trade in rubles

Russia and N. Korea switching to trade in rubles

Russia and North Korea have agreed to settlements in rubles in all trade between the two countries. North Korea has also agreed to ease the visa regime and activate mobile and internet services for Russian business executives.

The move will help to support and simplify trade and business cooperation between the two countries, Russia's Far East Development Minister Alexander Galushka said in a statement Thursday.

“Settlements in rubles will begin starting from this month. Such an opportunity will emerge between Russia and the DPRK [Democratic People’s Republic of Korea] – the first accounts have already been opened at Russian banks,” said Galushka after a meeting between the two countries’ intergovernmental commission.

In return, North Korean authorities have said they will simplify visa requirements for Russian investors and employees of Russian companies in North Korea.

“The opportunity is emerging for Russian entrepreneurs and employees of Russian companies working in the DPRK to receive multiple-entry visas using the simplified procedure,” Galushka said.

“It means we can already say that considerable progress has been made in this crucial segment of our relations. It has become possible thanks to our joint work and the goodwill of the Korean side,” he added.

Galushko also said that trade between the two countries had increased to $500 million this year up from $112 million in 2013, and that he hopes it will go up to $1 billion.

Thursday’s announcement comes after Russian President Vladimir Putin signed into law an agreement that will write off much of Pyongyang’s Soviet-era loans on May 5.

The agreement, which has been ratified by all of Russia’s legislative chambers, will give a discount of 90 percent on the debt, which is in excess of $11 billion.

The remaining $1.09 billion must be paid in six-monthly repayments over a period of 20 years.

Political commentators in the west have interpreted Russia’s cozying up to North Korea as a result of the US and EU’s response to the crisis in Ukraine and part of a broader move by the Russian leadership to diversify its options in Asia and the Pacific and move away from over reliance on trade with the EU.