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The Revival of the Relations between Russia and North Korea: An Opportunistic Military Alliance based on a Fragile Economic Base |
| January 16, 2025
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Andrei LankovVisiting Research Fellow | anreilankov@gmail.com
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The recent events, particularly the two summits between Vladimir Putin and Kim Jong Un held in September 2023 and June 2024, as well as the dispatch of North Korean troops to Ukraine, have drawn significant attention to the current state and future prospects of relations between Russia and North Korea.
In the media, one can frequently encounter claims that Russia is now becoming the main sponsor of North Korea, probably replacing or, at least, challenging China in this role. However, such assertions appear to be greatly exaggerated. The recent rapprochement between Russia and North Korea is driven largely by military considerations. Beyond ammunition sales and the deployment of soldiers, the foundation for economic cooperation between the two countries is weak and unlikely to improve in the foreseeable future.
The major problem is simple: the economies of two countries are not complimentary. Moreover, the issues hindering the development of Russian–North Korean economic ties are structural in nature and, therefore, unlikely to be resolved through political decisions alone. -
Russia and Korea: Trade Structure Incompatibility
To understand the structure of North Korea's exports and the country’s export potential, it makes sense to examine the foreign trade statistics from 2016. The choice of 2016 as a reference point is due to the fact that, starting in 2017, the radical tightening of UN sanctions followed by the COVID-19 pandemic disrupted the and distorted structure of North Korea's foreign trade. It can be assumed that after normalization, North Korea's trade with the outside world, primarily with China, is likely to return to the situation observed in 2016.
As of 2016, North Korea's four major export items included:
1. HS Code 27 (Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes) – 45.1%
2. HS Code 61 (Articles of apparel and clothing accessories, knitted or crocheted) – 23.2%
3. HS Code 26 (Ores, slag and ash) – 8.6%
4. HS Code 03 (fish and crustaceans, mollusks and other aquatic invertebrates) – 7.2%
* Source: 2016 북한 대외무역 동향, p.15
The lack of demand for North Korea’s major exports in Russia
As will be shown below, all above-mentioned exports are of little interest for Russian buyers. ◇ HS Code 27. For North Korea, nearly all shipment classified as the HS code 27 category, consisted of anthracite coal, which accounted for 42.3% of the country's total exports. 1) As of 2016, North Korea exported a total of 7.5 million tons of coal. Almost the sole buyer of North Korean coal was China, particularly its northeastern provinces, conveniently located close to the North Korean border.
Russia, being a massive exporter itself, has no demand whatsoever for North Korean coal. Throughout 2005-2023 Russia was the world’s third largest exporter of coal, and this position is unlikely to change in the near future. 2) In 2023, Russia produced 384 million tons of coal, of which 203 million tons—47.2% of total production—was exported. 3) Most of Russia's coal mines are currently located in the eastern part of the country, and their output is predominantly exported, primarily to China. According to the Russian Ministry of Energy, China accounts for 48% of Russia's total coal exports: in 2023, 100 million tons of Russian coal were delivered to China. Most of this coal was shipped to China's northeastern provinces, the same region where North Korean coal is sent. 4) In other words, when it comes to the exports of anthracite coal, North Korea's primary export commodity, Russia is not a potential importer of a Korean product, but rather a competitor. Russian coal is exported in significant quantities and, recently, largely to the same Chinese market where North Korean exporters operate.
◇ HS Code 61. In 2016, the second most significant category of North Korea's exports was HS Code 61 products. This primarily referred to clothing and other light industry products manufactured in North Korea and supplied to China. In some cases, these goods were later resold to third countries, including South Korea. The Chinese investors were much interested in such projects, as by the late 2010s, the monthly salary of North Korean female workers in light industries was only $20–30. In comparison, similar work in factories located on the Chinese side of the border required wages of around $200.
Efficient production, however, relies on the existence of strong, well-established (albeit largely informal) cross-border contacts between North Korea and small-scale Chinese investors, who act as contractors, partners, and importers. These relationships are facilitated by two key communities: the ethnic Korean (Chaoxian-zu) community in China and the Chinese permanent resident (Huaqiao) community in North Korea. Since the mid-1980s, members of these two communities have been able to cross the border with relative ease, maintaining personal networks in both North Korea and China. This connectivity has brought the flexibility essential for clothing production, enabling rapid adaptation to fast-changing fashion trends and ensuring effective quality control.
In Russia's case, such flexibility is not feasible. Ethnic Koreans in Russia, known as Koryo-in, lost contact with relatives in North Korea nearly a century ago, and the vast majority no longer speak Korean. Unlike their counterparts in China, small and medium-sized Russian businesses lack individuals who understand North Korea and possess the necessary connections there. Without such intermediaries, and with little to no regular access to factories, it becomes nearly impossible to establish effective production for most light industry goods. Additionally, many Russian clients and wholesalers have long-standing relationships—often dating back to the 1990s—with enterprises in China, Vietnam, and other Asian countries. These partners offer a more familiar and convenient business environment, with clearer practices and established networks.
◇ HS Code 26. Mineral resources classified under HS Code 26 are more diverse than HS 27 group. As of 2016, more than half of the exports consisted of zinc(3.4%) and iron ore(2.9%). 5) However, the situation with these resources is the same as with coal. All the aforementioned minerals are also exported by Russia, which is one of the major suppliers of these commodities to the global market. As of 2023, Russia was the world’s seventh-largest exporter of iron ore 6), the world’s ninth-largest exporter of zinc ore. 7)
◇ HS Code 03. In 2016, the fourth-largest category of North Korean export goods was fish, crustaceans, mollusks, and other aquatic invertebrates (HS Code 62). The demand for these products in Russia is low and decreasing. Despite Russia having a powerful fishing industry, seafood consumption in the country is not only low by global standards but has been steadily declining. In 2023, annual fish consumption in Russia amounted to 10.3 kg per person, which is half of what it was in 2013.8)
This trend can be attributed to the traditional perception in Russian culture of fish as a second-rate food, a cheap substitute for pork or beef. As income levels rise, Russians tend to move away from fish and increasingly consume pork and beef, which are traditionally seen as more prestigious than seafood. At the time, Russia has a large fishing fleet. Given low domestic demand, a significant part of Russia’s catch is sold, so in 2020 Russia was the world’s 11th exporter of fish and fishery products.9) North Korean seafood is unlikely to find significant success in the Russian market. Once again, Russia emerges as a competitor, not a buyer. The Viable Non-Trade Cooperation: Labour Export
There are also non-trade forms of civilian economic cooperation between Russia and North Korea. So, far, only one form of such a cooperation appears to be promising: the employment of North Korean workers in Russia.
The first North Korean workers arrived in the USSR as early as 1946, and for nearly 80 years, they have been a constant and uninterrupted presence in the Soviet Union and then Russia. Starting in the early 2000s, the number of North Korea workers began to grow rapidly. At the highest point, in the mid-2010s the number of North Korean workers in Russia occasionally reached 37,000 mark, with roughly three-quarters of them being employed in the construction sector. Others were employed in logging, fishing and food processing10)
Currently, Russia's need for labor has significantly increased. A labor shortage has become one of the challenges facing the Russian economy. Heavy recruitment by the armed forces and defense industries has driven workers away from civilian enterprises, so unemployment hit a record low of 2.3%. 11) The complains about acute shortage of labor have become universal among Russian managers after 2020.
The demand for the migrant labor in Russian economy is large and growing. Traditionally, the primary source of migrant labor for Russia has been countries of Central Asian, the former Soviet Republics. However, citizens of these countries have recently become less willing to work in Russia, due to a number of reasons, including weakened Russian currency and Russian government’s efforts to control the migration from Muslim counties, increasingly seen as a hotbed of terrorism. 12)
Under these circumstances, there appear to be significant prospects for expanding the import of North Korean labor. All Russian observers agree that North Korean workers typically pose few problems for Russian authorities and employers. They are generally docile, law-abiding, and avoid conflicts with their employers. Furthermore, they are unlikely to overstay their visas and usually leave upon the expiration of their contracts. In accordance with official North Korean requirements, these workers tend to lead isolated lives, minimizing interaction with the local population. Given the size of the labor market and the level of demand, Russia could potentially accommodate a substantial number of North Korean workers (well in excess of 100,000).
The median annual wage of a construction worker in Vladivostok, where most North Korea workers are employed, in 2024 was $6-7,000. 13) In most cases, the wages of the North Korean workers do not differ from the local wages significantly. Presuming that 60% of this amount is taken from the worker as obligatory contributions or sent to North Korea as remittances, while the rest is used up as living expenses, we can say that 100,000 workers will generate some $400 million hard currency income annually.
The sale of North Korean labor is clearly a violation of the UNSC resolutions, but neither ROK nor other major players have leverage to stop it: Russia, being subjected to the numerous sanctions itself, will hardly make concessions on this issue.
The $400 million a year is a noticeable amount of money, but still modest compared to the total size of North Korean hard currency revenues. Even in the event of a maximum expansion of North Korean labor supply to Russia, North Korea will likely remain a peripheral zone within Russia's economic interests.
The prospects and policy recommendations
Thus, outside the military sector, there is little reason to expect significant growth of trade between Russia and North Korea. This trade can grow significantly only if the Russian government makes a political decision to subsidize such exchanges from the state budget. In the current situation, it appears unlikely that such decision will be made.
Occasionally, reports surface in the media about alleged Russian plans to participate in the reconstruction of North Korea's outdated industrial facilities, invest in mining operations or to modernize its railway network. However, these ambitious plans could only be realized if they were directly or indirectly financed by Russian state authorities using the national budget. North Korea simply lacks the financial resources to pay Russia for implementing such projects, and the prospects of profit are uncertain, so such projects are unlikely to attract much attention from Russia’s private capital.
The only two areas where profitable non-military economic cooperation is feasible are the supply of labor and, perhaps, the limited use of North Korean ports to support Russian exports.
After the end of hostilities in Ukraine, Russia might continue diplomatic cooperation with North Korea – like blocking resolution hostile towards Pyongyang in the UN and other international organizations. The continuation of the military cooperation is possible, albeit on a smaller scale. However, the base for the trade and investment will remain thin. China is likely to remain the major trade partner (and, perhaps, aid provider) for North Korea in the foreseeable future.
On the other hand, right after the end of hostilities in Ukraine, Russia is highly likely to seek the restoration of trade and economic relations with South Korea, which holds far greater interest for the Kremlin. It is noteworthy that the Russian side has expressed interest in engaging with the Republic of Korea (ROK), despite the current tensions (as evidenced, for example, by Vladimir Putin’s remarks on the matter).
If both sides exercise a certain degree of restraint during the crisis caused by the conflict in Ukraine, this restoration is likely to proceed smoothly. Therefore, it would be prudent for the ROK government to remain cautious yet firm. If neither side takes actions perceived as threatening to the other, trade between Russia and the ROK is likely to recover after the end of hostilities.
From an economic perspective, Russia is expected to gravitate towards the ROK, while its economic interactions with North Korea are bound to remain marginal.
| Russia and Korea: Trade Structure Incompatibility
1) https://www.e-ia.co.kr/sonosa/newsletter/201705/p10.pdf стр. 70
2) https://www.iea.org/reports/coal-information-overview/exports
3) https://minenergo.gov.ru/industries/coal/main-indicators/russian-coal-supplies
4) https://www.unian.net/economics/energetics/kitay-sokratil-import-iz-rf-12850233.html
5) https://www.e-ia.co.kr/sonosa/newsletter/201705/p10.pdf 70-71
6) https://www.reportlinker.com/clp/country/7437/726380
7) https://oec.world/en/profile/bilateral-product/zinc-ore/reporter/rus
8) https://www.euromeatnews.com/Article-Price%2C-quality%2C-convenience--the-new-trends-for-Russian-seafood-market/2061
9) https://www.statista.com/statistics/268269/top-10-exporting-countries-of-fish-and-fishery-products/
10) https://obsfr.ru/report/4889/11935/
11) https://www.reuters.com/markets/europe/russias-labour-shortage-spreads-defence-sector-poaches-staff-2024-11-28/
12) https://carnegieendowment.org/russia-eurasia/politika/2024/07/russia-central-asia-migrants?lang=en
13) https://vladivostok.gorodrabot.ru/salaries/stroitel
※ The opinions expressed in 'Sejong Focus' are those of the author and do not represent the official views of Sejong Institute
