Post by justjohn on Aug 11, 2010 4:02:39 GMT -7
FT.com
North Korea offers ginseng to pay Czech debt
By Christian Oliver in Seoul and Jan Cienski in Warsaw
Published: August 10 2010 09:32
Pyongyang’s cash-strapped totalitarian regime has offered to settle part of its debt to the Czech Republic with a large consignment of ginseng rather than eat into its limited funds.
With the domestic economy crumbling, North Korea is also feeling the pinch of tighter international sanctions imposed over its nuclear and missile programmes and the sinking of a South Korean warship. Its access to global markets is further hindered by outstanding international debts of about $12bn, two-thirds to former communist states.
Czech officials confirmed that Pyongyang had offered to settle 5 per cent of its Kc186m ($10m) in accumulated debt in ginseng, an invigorating root used in dietary supplements and teas that are supposed to improve memory, stamina and libido. Communist Czechoslovakia was a leading supplier of heavy machinery, trucks and trams to North Korea.
Non-cash trade and settlement of debt has been common among socialist countries. Cuba compensates Venezuela for discounted oil by sending doctors to work in deprived areas.
However, the now-capitalist Czechs are unconvinced they need an injection of vigour.
“We have been trying to convince them to send, for instance, a shipment of zinc, which is mined there. We would sell it ourselves,” Tomas Zidek, deputy finance minister, told the Czech Republic’s MF Dnes newspaper.
Radek Lezatka, finance ministry spokesman, said Prague was still discussing whether North Korea would ultimately pay in cash or a commodity.
MF Dnes calculated that 5 per cent of the North Korean debt would amount to 20 tonnes of the curly white root. Retail prices of North Korean ginseng in Taiwan suggest a figure closer to 12 tonnes. Both sums massively outstrip the Czech Republic’s annual consumption of about 1.4 tonnes year, though North Korean ginseng is popular in east Asia.
International security services last year seized large illegal consignments of smuggled arms, which are a key source of hard cash revenue for Pyongyang, probably worth hundreds of millions of dollars.
After the US and its allies blamed North Korea for sinking a South Korean warship in March, Washington again vowed to crack down on Pyongyang’s international financing, money laundering and narcotics operations, though the scale of these is unclear.
A US court last week ruled that the Foreign Trade Bank of Korea, a North Korean state bank, owed a Taiwanese counterpart $6.77m over an unpaid loan.
North Korea’s military runs the export companies that ship speciality foodstuffs, such as shellfish, ginseng and mushrooms, to gain hard currency. Intelligence agencies say the ginseng trade is controlled by Pyongyang’s shadowy “Bureau 39”, which runs the country’s foreign funds.
