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Russian business enters the DPRK through the Far East

Russian business enters the DPRK through the Far East

Vitaly Survillo

Chairman of the Business Council of Russia - North Korea, Vice-President of "Business Russia"

On February 24, the visit to Russia of the Minister of Foreign Economic Affairs of the DPRK, co-chairman of the Intergovernmental Commission on Trade, Economic and Scientific and Technical Cooperation between Russia and the DPRK, Lee Ryong Nam, began. The North Koreans' program includes visits to almost a dozen Russian cities and negotiations with federal and regional authorities, with business. What's on the agenda? EastRussia was told about this by Vitaly Survillo, chairman of the Russia-DPRK Business Council - a new structure formed in January 2015.

- Vitaly Yurievich, recently, trade and economic cooperation between Russia and the DPRK has noticeably intensified. It is believed that the impetus for rapprochement was the settlement of the debt of the Democratic People's Republic of Korea to the Russian Federation on loans provided by the former USSR. Is it so? What prospects does such a rapprochement open to Russia?

- Today there is a real opportunity to increase trade between Russia and the DPRK to $ 1 billion by 2020. Moreover, all economic relations will be built exclusively on mutually beneficial terms. There will be no return to the Soviet model of relations.

As for the loans of the former USSR, let's be honest: this debt was largely virtual. The Soviet government issued loans for political reasons, on non-market concessional terms, without taking into account the specific possibilities for their return. That is, in practice, we would hardly ever recover "real" money from the DPRK.

Therefore, the intergovernmental agreement that entered into force last year on the settlement of the DPRK's debt to the Russian Federation untied the knot that hindered the interaction of the two countries in the trade and economic sphere. It made it possible to return in one form or another the maximum that can be returned, but most importantly, it opened the way for establishing truly mutually beneficial cooperation, which would make it possible to compensate for the lost funds with new economic prospects.

- There was a lot of news about the DPRK - mutual visits, agreements. What would you note of the significant changes in bilateral relations?

- The DPRK and the Russian Federation have confidently switched over to mutual settlements in rubles. There is a good practice for the participation of labor from the DPRK at facilities in the Far East, in particular at construction sites in the Khabarovsk Territory. Russians who come to the DPRK for business purposes began to receive multiple-entry visas. We even managed to solve such a problem as providing access for Russian business travelers to modern means of communication and communications - now the Internet and mobile communications are available to us in Pyongyang. This was the result of the active work of the Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation between the Russian Federation and the DPRK.

- How do you see the role of the Russia-DPRK Business Council, of which you were recently elected Chairman? What are the first tasks to be solved?

- The idea of ​​creating the Council, proposed by the Minister of the Russian Federation for the Development of the Far East, Alexander Galushka, was supported by the Trade and Industrial Board of Russia, the Ministry of Foreign Affairs of Russia, the Embassy of the Russian Federation in the DPRK, and the Ministry of Economic Development of Russia. A fundamentally new format of interaction is being created: Russian investments and supplies in exchange for access to natural resources. The Russia-DPRK Business Council in this format will act as a coordinator for business: we will take an inventory of existing bilateral cooperation projects, assist investors and businessmen in entering the DPRK markets, and help Russian companies establish trust with the Korean side. The first meeting of the Business Council will take place this week - February 25.

- What projects in North Korea are of interest to Russian business?

- A striking example of the implementation of a new model of trade and economic cooperation with the DPRK is undoubtedly the RasonConTrans project (co-investor of the project - the Russian Railways Trading House), which includes the modernization of more than 50 km of railways from Hasan station (Primorsky Krai) to Rajin station (DPRK) and modernization of the commercial port of Rajin for handling bulk cargo and containers. In early November 2014, a test consignment of coal to South Korea has already passed along this route. Within the framework of future formats of trilateral cooperation (Russia - DPRK - Republic of Korea), the prospects for this transport and logistics project are very high.

Another major infrastructure project is Pobeda. As part of the "Victory", it is planned to modernize the DPRK railways with the participation of Russian companies in exchange for access to the country's natural resources. The estimated cost of the project is $ 25 billion. In accordance with the signed agreement, 20 thousand kilometers of track superstructure, as well as tunnels, bridges and station tracks will be reconstructed within 3,5 years. The expenses of Russian organizations will be covered by supplies of coal, rare earth and non-ferrous metals and other resources from the DPRK.

Also today the focus of our attention is the construction of the Russia-South Korea energy bridge, the bulk of which falls on the infrastructure of the DPRK. The Russian company RusHydro has already announced a tender for the feasibility study of this project, the partner is the largest South Korean hydro generator K-Water.

Also Russian entrepreneurs show interest and desire to become residents of the Kaesong project in North Korea. The North Korean side officially supported such participation. By the way, currently in the Kaesong complex there are more than 120 South Korean companies that have established production of consumer goods, including clothes, shoes, watches, household appliances and other products.

- Are there any grounds for confidence that the Korean side will fully fulfill its obligations?

- The decisions on the abolition of visas for entrepreneurs, on the transition of settlements to rubles by the Korean side were implemented quite quickly. This testifies to the direct intention of the DPRK to actively and dynamically develop cooperation with our country, whether it is about trade relations, investment projects or the use of labor resources.


Survillo Vitaly Yurievich

Specialist in international economic relations, worked in the structure of the Ministry of Foreign Affairs of the USSR and the Russian Federation. Vice-President of the All-Russian public organization "Business Russia". Member of the General and Coordinating Councils of the All-Russian public organization "Business Russia". Head of the working group "Improving customs administration" at the Agency for Strategic Initiatives. Public Ombudsman for issues related to the elimination of violations of the rights of entrepreneurs in the customs area. Adviser to the Minister of the Russian Federation for the development of the Far East on a voluntary basis.

Photo: RIA "Vostok-Media"

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