A conservative lawmaker on Wednesday called on the next unification minister to pursue more “forceful” ways to make Pyongyang cough up more than $1 billion in unfulfilled debt obligations to Seoul.
Speaking to the JoongAng Ilbo, Rep. Yoo Gyeong-joon of the People Power Party (PPP) said Kim Yung-ho, who has been nominated by President Yoon Suk Yeol to succeed current Unification Minister Kwon Young-se, “should pursue more forceful ways for South Korea to recoup its losses, including confiscating the North’s foreign assets.”
North Korea has failed to repay over $1 billion in unpaid loans and interest to South Korea since 2000, according to data submitted to Yoo’s office by the Export-Import Bank of Korea.
The bank’s data shows that total outstanding loans from Seoul to Pyongyang amounted to $932.9 million as of the end of June this year, while total interest on the loans has ballooned to 112.6 billion won ($87.38 million).
The South is not alone in having failed to obtain repayments from the North, which has an abysmal record of honoring its debts to foreign lenders.
One notable example is that of Sweden, which sold 1,000 Volvos to North Korea in 1974 as part of a $131 million trade package.
The Scandinavian country has yet to be paid anything for the deal, and Sweden’s foreign ministry estimated in 2017 that the North owes it $328 million once accrued interest is included.
Although the Volvos are no longer a common sight in Pyongyang, in 2016 the Swedish Embassy in Pyongyang uploaded a photograph to Twitter of one that is still being used as a taxi in the northeastern city of Chongjin, noting it was “still unpaid for.”
Seizing the North’s foreign assets is unlikely to be an effective method for the South to reclaim its money as the North is not part of the international monetary system.
South Korea first lent the North food assistance worth approximately $720 million over six shipments from 2000 to 2007, followed shortly after by $80 million in economic development aid from 2007 to 2008.
The first repayments for the 2000-2007 loans were scheduled to begin in June 2012, but the North has yet to pay back a single dollar out of the $291.33 million in loans and $80.98 million in accumulated interest that have since come due.
The North was also supposed to begin paying back the 2007-2008 loans in 2014, but it only repaid $2.4 million, or roughly 3 percent of that amount, leaving $86 million in unfulfilled loan repayments and interest.
The North also received $132.9 million in construction materials and equipment from 2002 to 2008 to complete the northern extensions of the South’s Gyeongui and Donghae rail lines to Kaesong and Anbyon, Kangwon Province, respectively.
The repayment schedule for the construction aid remains undetermined after both projects were suspended amid rising inter-Korean tensions.
Seoul’s Unification Ministry has requested the North repay its debts 84 times since it first fell in arrears in 2012.
In a response to the JoongAng Ilbo’s request for comment, the ministry said that it was “continuously requesting repayment from the North” and that it will “discuss how to deal with the issue in consultation with the [rest of the] government.”
In his comments to the JoongAng Ilbo, Rep. Yoo criticized the Unification Ministry for “passively handling the issue,” which he said was likely because “the ministry assumed we would never get the money back.”
BY MICHAEL LEE [email@example.com]