Russia and the DPRK: the project "Victory"
According to a recent report by the Ministry of East Development, a group of Russian companies are planning to modernize the railways in the DPRK. The estimated project cost is 25 billion dollars.
As October 21 relayed TASS, Minister of the Russian Federation for the Development of the Far East Alexander Galushka spoke in Pyongyang at the ceremony dedicated to the new project “Victory”. “This is a significant investment project for any country in the world,” Galushka stressed.
According to him, the project of modernization of the DPRK railways is “a worthy continuation of positive trends in Russian-Korean cooperation, allowing to solve many problems that hindered the development of bilateral trade and economic relations.”
As for Russian companies, the Victory project for them is “a practical example of the implementation of a new model of trade and economic cooperation with the DPRK, involving the provision of investment in exchange for access to the natural resources of the DPRK.”
The bottom line is this: for North Korea, the project will provide for the reconstruction and modernization of the transport infrastructure, the restoration and modernization of the mining industry.
The Russian minister also noted that the project is “a real move towards reaching a bilateral agreement to increase the volume of trade between Russia and the DPRK to 1 billion dollars in the near future.”
Oleg Shishov, the general director of the Russian research and production association Mostovik, said that the NGO, together with the DPRK government, had developed a plan for the reconstruction of railways with a total length of 3,5 thousand km. The network of reconstructed railways was divided into ten sections. The design of the first section, Pyongyang East Nodal Station, is already underway.
22 October RIA News" reported that, according to the Ministry of Eastern Development, in accordance with the signed agreement “during 20 years 3,5 will be reconstructed thousands of kilometers of the upper structure of the track, as well as tunnels, bridges and station tracks. The expenses of Russian organizations will be covered by the supply of coal, rare earth and non-ferrous metals and other resources from the DPRK. ”
On Tuesday last week, the ceremony of laying the “golden link” for the reconstruction of the DPRK railways took place at the Pyongyang East Railway Station. The ceremony was attended by the co-chairs of the Russian-Korean intergovernmental commission on trade, economic and scientific and technical cooperation Alexander Galushka and the Minister of Foreign Economic Relations of the DPRK Li Rehn.
"Russian newspaper" referring to the website of the Ministry of Development and Development clarifies one important detail: Russia and the DPRK began to carry out calculations in rubles. And the operations are carried out just “within the framework of the implementation of agreements reached at the 6 meeting of the Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation between the Russian Federation and the DPRK under the leadership of the Minister of the Russian Federation for the Development of the Far East, Alexander Galushka.”
According to the information, a contractual base has already been created for the transition to ruble settlements between Russian and North Korean organizations: agreements have been signed between the Regional Development Bank, the Bank of Foreign Trade of the DPRK and the Korean Bank for Development Development. The first calculations in rubles have already gone.
В Gazeta.ru material appeared under the chilling title: "There is no such project and there will not be." Experts refuse to believe that such projects can exist in nature, the newspaper writes.
If we take the Russian standards and the state of the Russian railways, then this amount “looks too high,” Denis Ilatovsky, Logistics Director of SUEK, told the newspaper.
“Such a project does not exist and cannot exist,” said Alexey Bezborodov, General Director of the InfraNews research agency. "This is a common, non-binding declaration, and there is not and will not be any project."
The publication further notes that 25 billion dollars for the DPRK is an astronomical sum. According to the Central Bank of South Korea, in nominal terms in 2013, the DPRK's GDP reached 33,3 billion.
Finally, Mostovik, a contractor at government construction sites for the APEC 2012 Summit in Vladivostok and for the Olympics in Sochi, is in the process of bankruptcy due to billions of dollars in losses. The value of an organization’s assets is less than its debts 9 times, the publication reminds.
The newspaper also reports that in 2013, the trade turnover of Russia and the DPRK amounted to just 112 million, and in the spring of Moscow Moscow forgave Pyongyang almost the entire national debt - more than 10 billion.
Thus, the monetary component of the project, despite the calculations in rubles, is unlikely to be high. Of interest is something else: after all, it was initially stated that the transaction was almost barter. Roads in exchange for resources.
We quote once again the Ministry of Eastern Development: “The expenses of Russian organizations will be covered by supplies of coal, rare earth and non-ferrous metals, and other resources from the DPRK.”
Therefore, categorical statements by experts who deny the very possibility of major economic cooperation with the DPRK appear premature.
Regarding the latter News on this subject then October 24th TASS reported that the delegation of Russian businessmen headed by Alexander Galushka completed a five-day working visit to the DPRK. The project has started.
“The implementation of a commercial modernization transaction by Russian DPRK railway companies in exchange for North Korean mineral resources has been launched,” the Russian minister said in a speech.
TASS indicates that the delegation visited the Kaesong industrial complex, a zone of economic development in the city of Chondin.
Ildar Neverov, director of InMet, working in the metal-roll market, held talks with potential partners. “We found many topics for discussion,” he told TASS.
According to him, in the DPRK "ferrous metallurgy is developing quite dynamically." And Korean enterprises need raw materials for the production of high-quality steel. “Our company, which has such raw materials in Vladivostok and Nakhodka, would be interested to develop with Korean partners a scheme for barter or in the framework of the usual commercial cooperation in terms of supplying raw materials to metallurgical enterprises of the DPRK,” said Neverov.
Nikolai Kim, Vice President of the World Organization of Korean Businessmen, suggested that North Korean partners consider a project to build a food processing plant in the Kaesong industrial zone. “I am pleased with the outcome of the negotiations,” he told TASS.
Thus, the pessimism of experts who doubt the development of cooperation between the two countries on the basis of barter schemes is deprived of weighty arguments. Moreover, the DPRK is another step towards strengthening the national Russian currency in the world. Let even a small step.
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