Published On: Tue, Sep 18th, 2012

Russia agrees to write off North Korea’s $11 billion debt

Russia said on Tuesday it agreed to write off 90 percent of North Korea’s $11 billion debt and would reinvest the balance in the reclusive Asian state, in a sign of closer engagement with Pyongyang under new leader Kim Jong-un.

North Korea flag

Moscow says the remaining $1 billion dates back to the Soviet Union from energy and education deals.

“It will be decided later by the parties for what purposes the funds received for the repayment of this debt will be used,” Konstantin Vyshkovsky, head of the debt department at the Russian Finance Ministry, told Reuters.

The remaining $1 billion would be used as part of a “debt-for-aid” program that would develop energy, health care and educational projects in North Korea, Mr. Storchak said.

“The restructuring conditions are standard in connection with our membership in the Paris Club, with a conversion into U.S. dollars at an appropriate discounted rate with the balance of the debt to be used for a debt-for-aid program,” he told Interfax.

“The decision on a settlement of debt is a significant step as it removes the obstacles for cooperation. Now credits can be granted,” said Alexander Vorontsov, an expert on North Korea at the Russian Academy of Sciences.

“The implementation of the three trilateral projects will contribute to the development of inter-Korean cooperation,” he said. “That in turn will facilitate progress in the six-party talks on its nuclear program.”

The deal comes as North Korea’s new leader, Kim Jong Eun, has sent cautious signals of reform and greater openness.


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- Writer and Co-Founder of The Global Dispatch, Brandon has been covering news, offering commentary for years, beginning professionally in 2003 on Crazed Fanboy before expanding into other blogs and sites. Appearing on several radio shows, Brandon has hosted Dispatch Radio, written his first novel (The Rise of the Templar) and completed the three years Global University program in Ministerial Studies to be a pastor. To Contact Brandon email [email protected] ATTN: BRANDON

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