June 5, 2014 / 12:31 PM / 4 years ago

Russia, N.Korea to settle trade in roubles in bid to increase trade

MOSCOW, June 5 (Reuters) - Russia and North Korea will begin settling their trade bills in roubles this month rather than dollars to facilitate trade between the two countries with a goal of reaching $1 billion by 2020, Russian news agencies said on Thursday.

Russia is trying to boost ties with Asian markets after being shunned by the West for its involvement in the Ukrainian crisis and annexing the Black Sea peninsula of Crimea.

For its part, impoverished by sanctions for conducting a series of nuclear and missile tests, North Korea has reached out to Moscow and Beijing for help to fill the gap left by the drying up of South Korean and U.S. economic assistance.

Under the new agreement, North Korean companies will be allowed to open accounts in Russian banks this month, RIA Novosti cited Alexander Galushka, minister for the development of the Russian Far East, as saying.

“The ability to settle in roubles will significantly accelerate and facilitate trade and economic cooperation between Russia and DPRK,” RIA cited Galushka as saying.

Galushka was quoted as saying trade with North Korea rose by 64.2 percent last year to reach $112.7 million, which he termed “insignificant” and did not meet neither the capabilities nor the needs of both countries.

“Therefore, we set an ambitious goal to increase mutual trade by 2020 to $1 billion,” he said.

There were no details on what part of the overall trade will be initially settled in roubles.

After a visit in April by Russian Deputy Prime Minister Yuri Trutnev to Pyongyang, President Vladimir Putin signed in early May a law forgiving 90 percent of North Korea’s debt to Moscow from the Soviet era. The remainder, worth about $1 billion, is to be repaid interest-free within 20 to 40 years.

Galushka said the forgiveness of the debt has paved way for stronger ties between the two states. Russia re-opened a railway link with North Korea in September.

In May, Russia’s state-run Gazprom signed a landmark 30-year natural gas supply deal with China worth more than $400 billion, and since then a series of other agreements aimed at easing trade with China have been signed. (Reporting by Lidia Kelly; Editing by James Macharia)

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