North Korean talks with the United States went about as well as their ability to repay debt

 

The recent breakdown of talks between North Korea and the United States have once again brought the North Korean regime into the limelight. Fairly recently around 28 February president Trump stated:

“There is tremendous potential in North Korea and I think he [Kim] is going to lead it to a very important thing economically. I think it’s going to be an absolute economic power.”[1]

However, in light of this the North Korean government have gotten into the habit throughout its lifetime starting in 1948 of being completely unwilling and unable to honour any of its debts. North Korea’s debt levels have hit an all time high with the unlikeliest of places, Sweden. The North Korean debt has hit over $302 million[2]. This unpaid bill includes over one thousand model 144 Volvos and mining equipment which were shipped to North Korean back in the 1970s. growing by $13 Million in one year.

In 1979 North Korea had to renegotiate the majority of its loans only to default one year on its loans one year later in 1980[3]. By 2000 north Korean debt was estimated at $10-12 billion, by 2012 this had ballooned to an estimated $20 billion despite the Russians writing off $8 billion in debt in exchange for natural resources development[4].

My thoughts intertwine with the fact that for such an isolated country it really did not and doesn’t current function properly without the debt finance and billions of dollars of aid from the Russians and Chinese during the cold war. It seems to me that the North Korean government need the rest of the world to exist more than the rest of the world needs North Korea.

[1] https://www.rt.com/business/452648-trump-north-korea-tremendous-potential/

[2] https://www.rt.com/business/452915-north-korea-debt-sweden/

[3] https://piie.com/commentary/speeches-papers/north-koreas-external-economic-relations

[4] http://english.chosun.com/site/data/html_dir/2012/01/19/2012011900864.html

Adam Longfellow
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