This year was marked by a sudden outburst of political exchanges and economic negotiations between North Korea and Russia. In March and April, Pyongyang was visited by Rustam Minnikhanov, president of the Republic of Tatarstan, Alexander Galushka, Russian minister for the Development of the Far East, and Yuri Trutnev, Russian vice-premier.
In early June, North Koreans declared that Russian companies operating in North Korea would henceforth enjoy a number of unprecedented privileges. Russians would be allowed to use the internet without restriction and would be issued visas under greatly simplified regulations. Finally, it was also declared that transactions between the two countries would be undertaken not in US dollars but Russian rubles.
All these changes indicate that relations between Moscow and Pyongyang, long limited to purely political exchanges and token gestures, might be changing.
It is possible that Russia is making a comeback, rejoining the Korean variant of the modern-day Great Game.
Broad smile politics
Once upon a time, Russia (or rather the Soviet Union) was the major sponsor of the North Korean state. While relations between Moscow and Pyongyang were often strained and almost always uneasy, until the early 1990s Soviet aid was the major reason why North Korea was able to keep its head above water economically.
After the collapse of communism, strategic calculations changed and the newly established Russian Federation halted aid. Trade declined to one-tenth of its former levels almost overnight. Such changes pushed North Korea into a state of economic collapse, with its economy having always been remarkably inefficient and dependent on aid.
The North Korean leadership have been looking to Russia with a measure of hope since at least the early 2000s. In recent years, the North Korean official media’s coverage of Russia has been remarkably positive – unlike the 1990s, when the North Korean press was full of horror stories about the chaos and suffering of Russian people.
In the 1990s, Russia took a rather pro-Western stance and its relations with the Kim dynasty in Pyongyang became frosty. However, from around 2000, relations began to show signs of improvement – not least because of the steadily growing anti-US bent of Russia’s foreign policy. It is remarkable that Vladimir Putin became the first Russian head of state to ever visit North Korea (None of the communist-era general secretaries ever bothered to undertake such a trip.)
However, trade between the two countries has yet to recover. In fact, volumes have steadily declined, and over the last 10 years it has fluctuated around the $100m mark. As international trade goes, this essentially means that there have not been any meaningful economic exchanges between the two countries.
This stands in marked contrast with North Korea’s fast growing trade with China. In the early 2000s, the Chinese leadership obviously made a strategic decision to aid in the long-term survival of the Kim dynasty. Thus, they began to subsidise and encourage trade with North Korea as well as provide it with a significant amount of aid.
In the mid-1990s, North Korea’s trade with China roughly equalled its trade with Russia, but nowadays Sino-North Korean trade volumes hover around the $6.5b mark, exceeding Russo-North Korean trade volumes by some 60 times.
In search of more sponsors
Therefore, North Korean diplomacy has been remarkably successful in squeezing direct and indirect aid from China. Now China controls some three quarters of North Korea’s foreign trade. It is also, by far, the most significant provider of humanitarian assistance to Pyongyang.
This situation is seen as worrisome by North Korea’s elite. They have always been careful to not put all their eggs in one basket, having always striven to have at least two (preferably mutually antagonistic) great power sponsors. The aim was to extract the maximum amount of aid possible, while not coming under any undue influence. Their current dependence on China has been seen as worrisome in Pyongyang, and in need of fixing.
From 2005 to 2006, the North Korean leadership began to signal its displeasure with Chinese economic pre-eminence in North Korean trade. North Korean cadres were issued with classified documents that warned against excessively cosy relations with China and the Chinese. The North Korean press also began to hint at the fact that Chinese spies were operating in the country.
Thus, North Korean diplomats have worked hard to find other possible economic partners. The need was for a country that was willing to subsidise trade with North Korea and would also be sufficiently distant from China.
Russia changes course
The North Korean leadership have been looking to Russia with a measure of hope since at least the early 2000s. In recent years, the official media’s coverage of Russia has been remarkably positive – unlike the 1990s, when the North Korean press was full of horror stories about the chaos and suffering of Russian people. The tone changed around 2000 and Putin’s policies have been presented quite favourably by the North Korean media. The North Koreans almost unconditionally welcomed the recent annexation of the Crimean peninsula by Russia.
However, for a long time, the Russian government did not pay this charm offensive in Pyongyang much attention. Some token diplomatic gestures notwithstanding, the Russian government showed little interest in the prospect of subsidising trade with North Korea – and without such subsidises there is little compatibility between the economies of the two countries.
Since the late 1990s, there has been talk of building a trans-Korean railway to connect Russian railways with South Korea, thus intensifying Russian economic interactions with South Korea. Another similar project is the proposed natural gas pipeline that would also traverse North Korea in order to deliver gas to the south. However, there has been next to no movement on either of these two projects. The reason was obvious: necessary investments are too large given the political risks.
Until recently, Russia remained a relatively passive observer on the Korean peninsula. Things have begun to change since the start of the Ukrainian crisis – the latter led to a dramatic increase in bad feelings between Russia and the West. In this new situation, the Russian government seems to be far more inclined to support an assortment of anti-Western forces across the globe.
The aim seems to be to create a worldwide anti-hegemonic front. Apart from ideology, there might be some solid geopolitical reasons for such a strategy which would probably help to divert US resources and also increase Moscow’s bargaining power vis-a-vis Washington. This is the reason why the deterioration of relations with the West have neatly coincided with an unprecedented boom in economic relations between Moscow and Pyongyang.
So far, there is little doubt that the two sides would like to improve their trade relations. Recently, Galushka said that both sides intend to increase the annual trade volume to the $1bn mark by 2020. If realised, this will merely make Russia into a minor player in North Korea’s foreign trade – after all, it still will be merely one sixth of the current Sino-North Korean trade volume. But can such a goal even be met?
The long-term near-absence of trade between the two countries was by no means incidental. Russian companies have little interest in what North Korea has to offer. On the other hand, North Korea does not have the money to pay market prices for Russian imports.
A number of joint projects are now under discussion, largely related to the development of transport infrastructure and mineral resources. However, such projects are only likely to be viable if the Russian government is prepared to use resources to subsidise such undertakings. Such support might be of a rather indirect nature – like, say, promises of political favours and preferential treatment to those Russian companies that would agree to take the risk and invest in the uncertain North Korean economy.
Given the size of the Russian economy, this is not going to be all that expensive comparatively. Nevertheless, it remains to be seen whether the Russian government has the will to promote such exchanges in the long-run with North Korea.
Andrei Lankov is professor of Korean Studies at Kookmin University, Seoul. He is the author of ‘The Real North Korea: Life and Politics in the Failed Stalinist Utopia’.