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. By writing off most of the sum owed by North Korea, one of the world's poorest countries, Russia granted a level of forgiveness in line with debt reduction deals it has given to its most impoverished debtors.
Moscow said the remaining $1 billion or so of the debt racked up by Pyongyang when it was a client state of the Soviet Union would go towards energy and education deals as well as development aid. "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.
Parts of the international community have been seeking to re-engage with North Korea since the death of Kim Jong-il, amid hopes that his son and successor would seek ways to end years of isolation and poverty. Analysts believe infrastructure deals will likely be a big part of the investments, including in railway and power lines. Russia is also considering building a gas pipeline to energy-hungry South Korea - which Alexander Vorontsov, head of the Korean and Mongolian Studies department at a Russian Academy of Sciences institute, said Pyongyang would be bound to welcome.
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