Russia – North Korea Trade Development To Increase As Kim Visits Russia – But Not Enough To Avoid The Need For A US Nuclear Deal.

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Op/Ed by Chris Devonshire-Ellis

The North Korean leader Kim Jong-Un has made his first trip to Russia, and is in the Far Eastern Port city of Vladivostok at a summit with Russian President Vladimir Putin. North Korea shares a border with Russia, which along with China has lomg maintained the integrity of the North Korean state. The visit comes in the aftermath of Kim’s failed second summit with US President Donald Trump, which despite the two leaders exclaiming mutual ‘friendship’ and respect got nowhere in terms of disarmament, apparently mainly due to the perceived bellicose attitude of US National Security Advisor John Bolton by the North Koreans.

KIm’s visit to meet Russian President Vladimir Putin then is an interesting one; Moscow and Beijing both want to see North Korea lose its nuclear weapons but at the same time appreciate its need for weapons so secure its independence in the face of perceived American aggression towards it. As the Russian President commented when I asked back in 2001 at APEC in Shanghai if North Korea could be admitted to APEC as an Observer nation, “It’s a very difficult situation.”

Neither Russia or China want to see North Korea implode as this will mean regime change, millions of refugees and the likely consequence of having a strong US presence via South Korea’s acquience and reliance on the American military right on their borders. The United States on the other would absolutely like this to occur, with the prospect of weapons sales and military operations with the ability to be placed in such close proximity to Beijing (Pyongyang to Beijing is just 800km) and the Russian Far East and proximity to Vladivostok, where the Russian nuclear submarine fleet is based (684 km).

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Kim’s Russian strategy is therefore likely to be, as attempts to get the United States to lift sanctions failed, to agree to increased bilateral trade and security with Moscow to replace the intended financial fillip an easing of sanctions would have delievered. There are considerations. Russia’s border with North Korea is just 18 miles, following a small section of the Tumen River which serves as the dividing line. It is underdeveloped, has no customs area and consequently, most bilateral trade passes via China, which increases costs. Both sides wish to correct that by building a second bridge between them. The existing, an currently only infrastructure connection between Russia and North Korea is the so-called “Friendship Bridge”, essentially a rail track using a dual gauge because the Russian railroad system uses a track gauge of 1,520mm while the North Korean system uses 1,435 mm. The bridge is served by the Khasan station in Russia and the Tumangang station on the North Korean side of the river. It also carries the second, back up fiber optic system leading into North-Korea with a connection to the global Internet via Russia’s TransTelekom provider, itself a subsidiary of the Russian national railway operator Russian Railways. This was put in place after North Korea’s primary internet connection through China Unicom, running over the Sino-Korean Friendship Bridge was targetted by a DDoS attack in 2017. Cross-border infrastructure development then is likely to focus on a second Tumen River bridge.

In terms of trade, both countries have a long history of bilateral trade, although this has diminished considerably since the Boris Yeltsin years, when Russia preferred to establish increased ties with South, rather than North Korea. As a result of both this and Russia’s compliance with United Nations sanctions against Pyongyang, Russia-North Korean trade is now just 3% of North Korea’s total. That represents significant areas of improvement, although much of North Korea’s wealth is in the ground in the form of minerals, rare earths and outdated industrial equipment. It could however offer access to potentially lucrative fishing grounds off North Korea’s eastern coast into the Sea of Japan and also possesses a sizable garment finishing industry. Looking for finance, Kim will need to demonstrate that North Korea has something to sell.

At present, North Korea’s total exports are valued at about US$1.78 billion, although once smuggling is taken into account the figure could be ten times that. Clearly something needs to give. My view is that President Putin will probably cut Kim a bit of slack but not enough to encourage him to ditch the United States completely in terms of trying to negotiate a lessening of sanctions. President Trump has said he is open to the idea. President Putin will probably try and push Kim down that path too, new Tumen bridge or no bridge. Ultimately, Moscow would prefer the United States to finance Pyongyang, and that means Kim will need to renegotiate his position on the nuclear issue and sanctions with Washington. A third Trump-Kim summit can be expected later in the year.

About Us

Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm advises businesses and governments on investment into Asia and has done since 1992. Chris has also served as Vice-Chair of the UN Greater Tumen Initiative, working with the governments of Russia, China, and North Korea, and has often visited Pyongyang. He is now based in Moscow. Please contact us at asia@dezshira.com or visit us at www.dezshira.com

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DPRK Business Monthly: March 2019

This regular publication looks at current international, domestic, and peninsular affairs concerning North Korea while also offering commentary and tourism information on the country.


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