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. Last Updated: 07/27/2016

Russia May Cut North Korean Debt

Russian and North Korean officials held talks late last month about writing off or reducing Pyongyang's debt to Moscow of more than $8 billion, Interfax reported Friday.

Finance Ministry officials from the two countries discussed the issue in Moscow, Interfax said, quoting a spokesman for Konstantin Pulikovsky, the head of Russia's side of a bilateral governmental commission.

Russia could have much to gain economically and politically by cultivating ties with Kim Jong Il's regime. North Korea is hungry for Russian coal and minerals and for skilled technicians to rebuild Soviet-made refineries and factories that have gone idle.

"All I can confirm is that talks on this question really did take place," Interfax quoted Pulikovsky's spokesman, Yevgeny Anoshin, as saying. He said the first session of a bilateral technical and economic cooperation body in six years could be held next year, possibly in March, and that the debt would be discussed, the agency reported.

Russia, with its oil profits, has written off or eased the debt burden of several countries in Asia and the Middle East that had close ties with the Soviet Union, as President Vladimir Putin has sought to bolster trade and political relations with those nations and counter U.S. and Chinese clout.

Pulikovsky had suggested in November that Russia might be considering forgiving a portion of North Korea's debt, saying that its size was estimated at just over $8 billion and that "when it comes to restructuring this debt, what counts most is to determine methods and forms for this process."

Pulikovsky, a former Putin representative in the Far East, which shares a short border with North Korea, accompanied the reclusive Kim on a train trip through Russia in 2001 and traveled to North Korea in 2005 for the 60th anniversary of the founding of the country's communist party.

The Soviet Union was once a stalwart supporter and donor for North Korea, but bilateral ties withered after the 1991 Soviet breakup, and analysts say China has far more influence with Pyongyang than Russia.

The volume of bilateral trade in the first half of 2006 was $67 million, a fraction of an estimated more than $2 billion annually around the time of the Soviet collapse.

Russia is involved in six-nation talks aimed at persuading Pyongyang to give up its nuclear weapons programs. Its officials have suggested that the U.S. position has been too tough, undermining chances for major progress, and have urged the United States and North Korea to settle a dispute over financial issues.

The North ended its boycott of the six-nation talks after the United States agreed to discuss its campaign to penalize it for its alleged financial crimes, but the latest round of the talks, held in China last month, ended in deadlock.