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Eyeing Pipeline, Russia Forgives North Korean Debt

Tyler Durden's picture




 

Submitted by Zachary Zeck via The Diplomat,

On Friday Russia’s parliament voted to write off roughly 90 percent of North Korea’s debt as Moscow seeks to build a gas pipeline through the Hermit Kingdom.

This weekend Reuters reported that Russia’s Duma voted to write off roughly $10 billion worth of the debt that North Korea owes Moscow from the days of the Soviet Union. The vote ratified an agreement made in September 2012, after a meeting between then-President Dmitry Medvedev and then-North Korean leader Kim Jong-il in Siberia in the summer of 2011.

At the time the agreement was first announced, The Guardian reported, citing Russia’s Finance Minister Sergei Storchak, that Moscow would forgive “90% of the debt and reinvest $1bn as part of a debt-for-aid plan to develop energy, health care and educational projects in North Korea.” Russian experts hailed the agreement as a sign that North Korea’s leadership was looking to initiate market style reforms in the reclusive country.

The Reuters report from this weekend said the deal ratified by the Duma on Friday would leave North Korea with about $1.09 billion worth of debt to Russia. North Korea would pay off that amount in six-month installations over the next twenty years. It also summarized Storchak as saying that the money Pyongyang pays back would be reinvested into North Korea.

North Korea was a strong ally of the Soviet Union during the Cold War, and Russia has forgiven the debt incurred by other Soviet allies like Cuba. However, the decision to forgive Pyongyang’s Soviet-era debt is most likely geared toward trying to bolster Russia’s plans to build a gas pipeline from its Sakhalin Island fields to South Korea via the North. The pipeline, which would also be accompanied by a railway, would reportedly carry 10 billion cubic meters of gas to South Korea annually. The gas would come from Russia’s state-owned energy company, Gazprom.

Moscow has been pushing for the Korean gas pipeline and railway for years as part of its strategy to diversify its energy markets away from Europe and toward Asia. This general goal has gained new urgency in the wake of Russia’s clash with the West over the Ukraine and Crimea.

The plan got a boost from Seoul over the weekend when South Korea’s Unification Ministry announced on Sunday that it had approved a trip to Pyongyang by Choi Yeon-hye, the president and CEO of the Korea Railroad Corp. Choi will lead a South Korean delegation to the Organization for Co-Operation between Railways (OSJD) meeting in the North Korean capital scheduled for April 24-28. Chinese and Russian rail officials will also be at the meeting, according to South Korean media outlets.

+++++++++

This appears to play right into the fictional letter we published here regarding the real state of Russia and their strategy.

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Tue, 04/22/2014 - 23:15 | 4685342 Truther
Truther's picture

Fuck JPM, Nuland and the rest of the banker bitches. Check mate assholes

Tue, 04/22/2014 - 23:21 | 4685361 Newsboy
Newsboy's picture

I forgive North Korean debt, too.

:-)

Tue, 04/22/2014 - 23:21 | 4685364 Tengri Temujin
Tengri Temujin's picture

Don't stop there forgive our student loan debt also :)

Wed, 04/23/2014 - 00:33 | 4685489 Soul Glow
Soul Glow's picture

The only way to ask for debt is with a tank.  New Cold War bitchez.

Wed, 04/23/2014 - 04:06 | 4685696 HardAssets
HardAssets's picture

If he'd buy up the debt of Americans and then forgive it . . .

well Putin would have a lot of people in the heart of the USA ready to become Russian citizens

Wed, 04/23/2014 - 06:14 | 4685787 Super Broccoli
Super Broccoli's picture

so you mean americans are bitches one can buy ?

Wed, 04/23/2014 - 08:12 | 4686020 actionjacksonbrownie
actionjacksonbrownie's picture

.gov

Tue, 04/22/2014 - 23:40 | 4685402 wee-weed up
wee-weed up's picture

A Ruskie pipeline! The Nork Pillsbury-Doughboy ought to love this! What better way to make sure the US will think twice before attacking his little hell-hole country.

Tue, 04/22/2014 - 23:42 | 4685417 SnobGobbler
SnobGobbler's picture

...smells like a sanction..

Wed, 04/23/2014 - 00:03 | 4685449 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Snip from the article:

"Russian experts hailed the agreement as a sign that North Korea’s leadership was looking to initiate market style reforms in the reclusive country."

Aha ha ha ha ha ha ha ha  !!!!

Wed, 04/23/2014 - 00:21 | 4685472 remain calm
remain calm's picture

10 Billion dollars. That ain't shit, wait till we write off our 17 trillion dollars. We will show all you ass holes when we default on all those IOU's. We won't ask for forgiveness, We don't want forgiveness, we arej ust going to shit on you one last time. USA USA.

Wed, 04/23/2014 - 11:32 | 4686670 Leaping Lizard
Leaping Lizard's picture

No need to write off the USSA debt.  Just buy up all the Zimbabwe fiat not in the septic and stamp USSA on it.  Why bother to default when we all can be rich?

Wed, 04/23/2014 - 10:32 | 4686408 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Snip from the article:

"Russian experts hailed the agreement as a sign that North Korea’s leadership was looking to initiate market style reforms in the reclusive country."

Aha ha ha ha ha ha ha ha  !!!!

Remember, it's from The Diplomat, so any connection to reality is purely accidental.

Wed, 04/23/2014 - 00:05 | 4685450 DoChenRollingBearing
DoChenRollingBearing's picture

Yes!  Like they could pay it off, even just 10%.

Wed, 04/23/2014 - 00:09 | 4685457 CrashisOptimistic
CrashisOptimistic's picture

A few FYIs.

N Korea actually pays for the oil it burns (which isn't much).  They pay in coal, of which they have a lot.

S. Korea has one of the largest LNG import terminals in the world.  That's good, though clearly it's not enough for them.  And there is the rule of thumb that about 25% of the energy in a barrel of natural gas is used up freezing it down to LNG temps.  So this pipeline makes for cheaper gas for them.

N Korea will become a spigot holder, like Ukraine to southern Europe.  Nothing good will come of this for S. Korea.

 

 

Wed, 04/23/2014 - 01:12 | 4685539 DoChenRollingBearing
DoChenRollingBearing's picture

"Nothing good will come of this for S. Korea."

I think you are right.

Wed, 04/23/2014 - 07:31 | 4685930 Wahooo
Wahooo's picture

Until they unify with the north and align with china. There is little in the future for sticking with post-war alignment with the US.

Wed, 04/23/2014 - 02:39 | 4685641 SDShack
SDShack's picture

N.Korea just becomes a bigger pawn on the chessboard. Scratch that, probably like a Knight or a Bishop. S.Korea isn't the only one that will regret this. I have said for a long time that Taiwan will be the first Asia Domino to fall. I still stand by that. China will use "containing" the Norks as the ultimate leverage for the West to abandon Taiwan. S.Korea and Japan come after that.

Wed, 04/23/2014 - 10:00 | 4686293 Omen IV
Omen IV's picture

Wrong!

with Russia at the other end of the string the Maximum Leader in N Korea will be a good boy and ...this is a game changer for Soth Korea and then Japan across the channel

S Korea since the 60's have been Naptha based for Fertilizer production (just one example) - like Namhae Chemical - N very very expensive - lower cost for LNG feedstock but still high coming from SA, Qatar and USA - with compression, decompression eating up north of 25% of energy plus capital cost very high for ships and facilities both ends - this will lower their cost by at least $3.00 MMCF probably more

same with Japan

so USA Cheneire Business Plan......busted -  the rest aint going anywhere building other facilities - BK time!

Chess is not a game for amateurs like Kerry and Obama - Rope a Dope Time  - for aging Palookas like Kerry just like Sonny Liston -

time after time as you watch the decisions from Nuland forward it is clear they dont have critical path analysis for all possible permutations / outcomes and how the counter will work - CIA / NSA / State Dept are all dinosaurs only suitable for small countries that can be easily bullied  --- go back to Venezuela boys or Iraq! 

one country after another is slipping from the US orbit -  final turn of the screw will be the reserve currency

Barack Bretton Woods Hussien Obama is not coming out of the woods!

Wed, 04/23/2014 - 10:03 | 4686301 Omen IV
Omen IV's picture

Wrong!

with Russia at the other end of the string the Maximum Leader in N Korea will be a good boy and ...this is a game changer for Soth Korea and then Japan across the channel

S Korea since the 60's have been Naptha based for Fertilizer production (just one example) - like Namhae Chemical - N very very expensive - lower cost for LNG feedstock but still high coming from SA, Qatar and USA - with compression, decompression eating up north of 25% of energy plus capital cost very high for ships and facilities both ends - this will lower their cost by at least $3.00 MMCF probably more

same with Japan

so USA Cheneire Business Plan......busted -  the rest aint going anywhere building other facilities - BK time!

Chess is not a game for amateurs like Kerry and Obama - Rope a Dope Time  - for aging Palookas like Kerry just like Sonny Liston -

time after time as you watch the decisions from Nuland forward it is clear they dont have critical path analysis for all possible permutations / outcomes and how the counter will work - CIA / NSA / State Dept are all dinosaurs only suitable for small countries that can be easily bullied  --- go back to Venezuela boys or Iraq! 

one country after another is slipping from the US orbit -  final turn of the screw will be the reserve currency

Barack Bretton Woods Hussien Obama is not coming out of the woods!

Tue, 04/22/2014 - 23:21 | 4685362 Tengri Temujin
Tengri Temujin's picture

Now with Eastern Ukraine down the line looking to join back up with the motherland, all those pipe making steel mills and Railway and railcar manufacturing factories will be put to good use.  What is also great is that some punk ass oligarch will lose most of his value.

Wed, 04/23/2014 - 07:11 | 4685897 neidermeyer
neidermeyer's picture

90% ,, hahahahahahahaha ... never let them off the hook entirely ... leave them with that 10% open balance ,, let them borrow more .. then take 3x what they owe... THAT'S THE WAY!

Wed, 04/23/2014 - 14:23 | 4687342 Jumbotron
Jumbotron's picture

Yeah....I'm all good with the whole fuck the bankers meme.

But the ugly paradox that is Peak Cheap Energy is once you tap more sources to provide energy to more people....and especially if the price drops because of that opening up of new supplies....the quicker you drain the existing resource.

Then you are in a vicious loop of sticking more straws into the ground in ever more hostile environments thus driving the cost right back up to historical highs and beyond.

Russian and China will be checkmating themselves in our lifetimes.

Tue, 04/22/2014 - 23:18 | 4685352 Cognitive Dissonance
Cognitive Dissonance's picture

Events appear to be accelerating. Never in my memory do I remember the USA sucking so much hind teat. It seems everything is going to plan.

Tue, 04/22/2014 - 23:20 | 4685357 g'kar
g'kar's picture

Surrendering hegemony hoping no one notices?

Tue, 04/22/2014 - 23:32 | 4685392 KickIce
KickIce's picture

I don't think they're surrendering it as much as having it jerked out from under their feet.  The East has figured out that the West brings nothing but misery.

Wed, 04/23/2014 - 00:13 | 4685463 palmereldritch
palmereldritch's picture

So when the petro-dollar reserve currency finally collapses (as planned) there will now be another evil cartoon villain to blame, demonize and name as a suspect in global terror events yet to be planned...errr...discovered

I thought the CIA/MIC ran that NK douche nozzle keeping him supplied with enough low-level nukes to keep SE China and Japan off-balance?  Or perhaps they do and Vlad is all about the petro-dollar demise theatre.

Gonna have to blame someone when this shit show catches on fire I guess...certainly not the FED, BOE and BIS for their financial tyranny and mismanagement to date...

...a fiat/theft system they constructed as an unavoidably limited ponzi set to implode and now to have that cataclysm potentially covered by the economic chaos provided by The Amazing Vlad as he does his illusion act and pulls the petro-dollar rug out from underneath an already collapsing reserve currency with impeccable timing...and look over there...he just  pulled a gold-backed SDR global currency out of his hat.

History shows that all ponzis must end.  The ponzi artist know this and typically will just flee with the money hoping to avoid arrest and prison.  This particular group of Globalists, being the sophisticated criminals that a century of corruption and deceit have refined, lack the technology (one assumes) or desire to flee the planet so they would plan a collapse of this scale with misdirection, multiple benefit and resurrection in mind.  

They will be offering the solutions or synthesis so it is logical that they must invoke a palatable anti-thesis to avoid any connection to themselves...So then, cue Putin et al? Something to consider perhaps in light of recent experiences where a careful reading of official history through the lens of newly discovered perspectives thanks to the Internet (See Antony Sutton) means the apparent is rarely the truth.

Wed, 04/23/2014 - 07:38 | 4685942 KickIce
KickIce's picture

No one's exactly pure and innocent in this game, the East's record on human rights is less than stellar but at least up until this point they've been minding their own business.  (I'm talking since the cold war and perhaps the main reasoning is because we've become the dominant super power.)  The problem is we've been using the bully pulpit for so long that I'm sure there's a lot of resentment built up, and everyone enjoys watching the bully fall.

As far as the West as long as we allow the Rothchilds to remain in control we'll eventually become a nation of renters and ironically more and more like the East.  The plan is to cause so much misery and then to repackage the same system in different wrapping.  The politicians will of course take the blame while the money changers are content to remain in the background.  It'll be something on par with when JP Morgan offered to bail out the United States in 1907.

Wed, 04/23/2014 - 03:58 | 4685692 The Navigator
The Navigator's picture

CD, agreed. Everyday brings 100 new unbelievables compared to 30 years ago or 50 years ago when it was just 1 "the Cuban missle crisis"

Now there's 100 different "fronts" (economic, political, geopolitical, financial) that we have to be concerned with to just maintain OUR status quo (retain our 2nd, 1st, 4th amendment rights and our IRAs, SS funds, property rights).

The battle is on on fronts and a normal guy can't keep up with all that's going on, yet prepare for what may come.

I need 2 of me to keep up on the real news, 4 of me to make the money I need, and 8 of me to prepare against the shit these guys are bringing at me.

I'm out numbered and through taxes, I'm paying for this out-numbering.

"I've seen the enemy, and it's me"

Wed, 04/23/2014 - 14:25 | 4687351 Jumbotron
Jumbotron's picture

Events ARE accelerating but not really to any "plan".

It's simply a matter of the cost of "input resources".  And the one input resource that rules them all is Cheap Energy.  That is now gone.

Everything else is derived from that.

Tue, 04/22/2014 - 23:19 | 4685356 Kirk2NCC1701
Kirk2NCC1701's picture

Chekhov has raised three thumbs up for a Czech mate.

Wed, 04/23/2014 - 01:46 | 4685588 UGrev
UGrev's picture

But he still can't say "Nuclear Vessel" correctly.. :)

Tue, 04/22/2014 - 23:24 | 4685373 SilverIsMoney
SilverIsMoney's picture

Every day we get closer... the USA will not outright collapse but it will not remain the sole Superpower much longer either. No one has a chance at our military but if you can collapse our economy and currency it matters little how advanced we are militarily if we cannot pay our slaves to die for our corporations, banks, and resources.

Tue, 04/22/2014 - 23:32 | 4685391 john39
john39's picture

The roman legions were once unstoppable.

Wed, 04/23/2014 - 01:51 | 4685590 UGrev
UGrev's picture

Perhaps not from a monetary hit like that alone, but the repercussions of the loss of purchasing power by another 5, 10, 15% as all that petro-dollar money comes slushing back into play, would send people into sticker shock. 

An already struggling lower class would start to go hungry real quick.. and when a huge demographic goes hungry.. they go looking for ways to eat; not all of them are friendly.

Wed, 04/23/2014 - 04:33 | 4685707 intric8
intric8's picture

Fuck, boys! This is why life is so irking. Putin is loyal to the sovereignty of Russia, even to the point where he's patronized washington as a show of good faith. The man wants peace, plain and simple. Discontent with peace, America has fucked putin over and over since the early days of W., circa 2001. Now Putin is at wits end, sick of u.s. meddling, and tries to work out a deal having cheifly economic considerations with pyongyang. question now is, is putin playing right into the hands of the nc warplanners? The media can label him an old commie even further now, and say he's consorting with 'axis of evil' north korea. I feel sorry for that guy. We can have peace boys, its on the table at any given time but our fucking country does NOT want it. Whose grand scheme is really afoot here? Who eschews peace for constant unrest, and what is their fucking end game?

Wed, 04/23/2014 - 10:46 | 4686455 Omen IV
Omen IV's picture

"Now Putin is at wits end"

No he is NOT - he is methodical - every step coming out in sequence but are the type of deals that have been in the works for years

he is "Opening the Kimona" one step at a time

Tue, 04/22/2014 - 23:29 | 4685385 anonnn
anonnn's picture

FYI Jeju 1948 massacre under US military authority:

S. Korea's current president just visited Jeju Island in aftermath of the ferry sinking and she is not popiular there.

FYI Jeju Island was where U S military authorities knowingly encouraged the 1948 massacre of civilians by Korean police/troops under their direct authority. Estimates are that 80,000 Jeju villagers were deliberately shot to death.

Currently, the US military is building a large naval base there which for years has been protested by the citizens of Jeju. Refer to the massacre in above paragraph.

See this documentary for detail:

 

https://www.youtube.com/watch?v=4PAOHsHlXGM 

Tue, 04/22/2014 - 23:34 | 4685396 SWCroaker
SWCroaker's picture

Um, where are they trying to get the pipeline to?   South Korea? 

So, let me get this straight.   Russia wants to sell gas to South Korea, and is going to pay to construct a pipeline thru South Korea's most ardent enemy, North Korea, who will never never ever even think about shutting that pipeline down or blowing a section or two up to kick South Korea in the nads.

I'm on planet stoopid.

Tue, 04/22/2014 - 23:43 | 4685418 Comebackkid
Comebackkid's picture

I think you have identified an important half of the big picture. I think one of the benefits for both N. Korea and Russia would be to get S. Korea energy dependent on resources from the North. Hopefully, even bring Japan into the sway of those benefiting from the Russian pipelines.  Make them dependent and they will be much more likely to play ball in the future when you can eliminate the energy that they have come to depend on. 

Wed, 04/23/2014 - 00:28 | 4685470 mrpxsytin
mrpxsytin's picture

wow... is this seriously the US mindset? Or is your system of propaganda that good that it is able to indoctrinate you so absolutely?

Why do you have to assume such malicious intent with these arrangements? Are Russians like the forces of Sauron or something? 

Can't this simply be free market forces at play between a willing buyer and willing seller? How did our propaganda get so severe that we automatically assume that an economically valid deal is actually some sinister plot? 

God damn the Americans have become paranoid!!!

Apologies if you're not actually a US citizen. But I just can't think of any other nationality that would have such a mindset...

Your comment is just so irrational I had to write this spiel. I'm Australian. Do you think we make our export deals with China because we have some sinister plan to get them hooked on high grade iron ore? "Yeah, let's get those Chinese hooked on our ore and then we'll have them by the balls!"

No, we sell our ore to China because it makes economic sense. That is it. Why must you assume the worst with Russia?

Wed, 04/23/2014 - 00:37 | 4685494 Serenity Now
Serenity Now's picture

You obviously don't know a thing about North Korea.

Wed, 04/23/2014 - 00:48 | 4685508 WMM II
WMM II's picture

hey!!! ask me!!! ask me!!!

i know something about north korea.

its a country whose leader fits finely into the group photo of the smilin putin-czar and his merry band of followers.

:)

Wed, 04/23/2014 - 00:54 | 4685518 Freddie
Freddie's picture

NK already sends "workers" to cut timer in Russia for hard currency.  These workers are essentially slaves.  The pipeline will bring more money into NK and the deal will happen.  NK is a mess but they will gladly accept the pipeline, chape gas and transit fees.

Wed, 04/23/2014 - 02:06 | 4685611 Serenity Now
Serenity Now's picture

Yep, prison camps.  I don't think there will be a pipeline, though.  The NK regime can't be trusted by any nation, and it would be too expensive for Russia.

Wed, 04/23/2014 - 02:41 | 4685643 UselessEater
UselessEater's picture

A good chance the pipeline does go ahead. Russia is very busy making deals at the moment across Asia and Sth America and with China - long term repositioning for financial and geo political gain as the USA sinks.

http://www.reuters.com/article/2014/04/19/uk-russia-northkorea-debt-idIN...

 

Wed, 04/23/2014 - 02:56 | 4685659 Serenity Now
Serenity Now's picture

Maybe so.  But the pipeline through NK story is old.  It's not that I don't believe Russia wants to expand its pipelines.  It's that you have to wonder why Russia wouldn't put a pipeline through Mongolia into China.  It's ridiculous to go through NK to SK.  First of all, NK was decimated after the Soviet Union fell.  They would need to be completely rebuilt (and fed!) for this to happen.  I know everyone here loves Russia these days, but Russia doesn't have the money to take on NK as a satellite state like back in the Soviet Union days.  

South Korea always plays along with these things, by sending delegates and what not, so they can be a part of the information gathering.  That's all.  They don't want NK to have any more power over SK than already exists.  

There's a lot of anti-American sentiment on this website lately, for whatever reason.  But it's a mistake to think that Asia is a cohesive unit in any way.  Those nations despise each other.  It's just a Western media hype that the world only hates the US.  

Wed, 04/23/2014 - 03:41 | 4685687 UselessEater
UselessEater's picture

I'm not being anti-American, while I dislike the MIC, the rise and cooperation of Russia, China and nations across the middle east, asia and sth america etc makes me more nervous.

I distrust the geo-political shift thats starting, the demise of the USA by the hands of a small corrupt "elite" is an artificially created play, bringing together normally opposing or distrusting nations.

Tribes unite when they smell a chance to over throw a strong competitor or enemy. After they win the tribes start fighting again. Those who can't see the risk of Russia and China rising are foolish.

 

Wed, 04/23/2014 - 04:08 | 4685697 Serenity Now
Serenity Now's picture

UselessEater,

Okay, I understand you a little bit better.  I'm glad you're not anti-American.  :)

I personally don't think that China, Russia, and the other Asian nations are working together the way the media wants us to believe.  They despise each other.  

It's also true that Russia and China are NOT in good economic shape.  The media lies about that, too.  

Russia is flexing its muscles on the oil and gas front.  But they aren't a superpower on the world stage.  JMHO.

Wed, 04/23/2014 - 10:57 | 4686504 Omen IV
Omen IV's picture

Niave!

pipelines to Europe / China / Korea / Japan - alliances with Syria to block pipeline / Iran as partner / SA gets rid of Bandar and looking to "diversify" and end chechen financing?

Virtually no debt 3% of GDP vs US at 104% - reserve currency in the works with China and China - coordinating  - rattling chains in China Sea

all the while Obama touts LNG which cant be competitive with shale gas that is expensive to drill and ship and he has touted USA world power status and Russia is the "regional power"?

hmmm i dont get it

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