Russia, North Korea Strike Deal: Improved Railway for Mineral Resources
by Yonho Kim November 08, 2014
A senior Russian official said Russia and North Korea are expanding economic ties through a rare joint project that would overhaul the North's railway system.
Recently, the two countries reached a deal that calls for Russia to improve North Korea's railway network in return for access to the North's mineral resources.
According to press reports, Moscow plans to put $25 billion into modernizing more than 3,000 kilometers of the North's railroads over 20 years.
"The railway modernization project will be funded through the implementing of the product sharing agreement. It's the result of our discussion with the DPRK's party. The process of field work and mining will go hand in hand with the process of railway modernization," said Alexander Galushka, Russia's minister for the development of the Russian Far East, in an email sent to VOA.
Galushka said a group of Russian firms, including Mostovik, a construction company, is participating in the project.
The joint venture is titled Pobeda, which means victory in Russian.
The Pobeda project began late last month with a groundbreaking ceremony for the renovation of the railway. It connects the two stations in the Jaedong coalfields in the North's South Pyongan province and the country's west coast port of Nampo.
North Korea is known to have vast reserves of resources, including uranium, iron ore, magnesium and other minerals, a critical source of funds for the cash-strapped country.
Some economists believe mining is helping Pyongyang improve its ailing economy.
According to Bank of Korea, South Korea's central bank, the North's gross domestic product grew by 1.1 percent last year.
Galushka expressed optimism about the prospect of the joint project, calling it the result of "a pragmatic business calculation."
"Our country and the DPRK are historically connected by long business relationships. There is no doubt then on the success of our ventures," said Galushka.
The Russian official, however, admitted that updating the North's aging railway would meet some challenges.
"There is a need for deployment of some metalworking industries on North Korean territory. The training of qualified staff from the locals is a challenging task,' the official said.
Analysts said Pyongyang and Moscow share political and economic incentives for the project. Among these analysts is Georgy Toloraya, director of Korean programs at the Institute of Economy at the Russian Academy of Science.
'The Korean peninsula, centered in a crucial neighboring area, has become a vital component of (Russian President Vladimir) Putin's 'Look East' policy, a now central foreign policy strategy in the wake of the breakdown in relations with the West," said Toloraya.
His comments were posted Thursday in an article on 38 North, the website of the U.S.-Korea Institute at the Johns Hopkins School of Advanced International Studies.
Toloraya said Pyongyang's main motive for reaching out to Moscow is to avoid economic "overdependence" on Beijing.
Jee Abbey Lee contributed to this report.
|Join the GlobalSecurity.org mailing list|