Following this week’s flurry of activity around the DPRK, with suggestions of a second nuclear test, the US and North Korea have now agreed to hold financial talks later this month.

The question of financial sanctions imposed in 2005 played a big role in the failure of the six party nuclear negotiations held in December. It was reported that the North Koreans were not ready to move negotiations along unless financial sanctions were lifted. The US position was that there was no linkage between the financial sanctions and North Korea’s nuclear program.

The forthcoming talks are good news to both parties. The Koreans have been after $24 million worth in assets, which have been frozen at a Macau bank. The US wants North Korea to halt its nuclear program and if the issue of financial sanctions is resolved, it will be closer to its goals.

However, the news does not mean that the financial dispute has been resolved. The US is not ready to lift sanctions without conditions. If the US was to lift the sanctions without negotiations, that would mean a second political victory for North Korea (after its successful nuclear test in October). But the announcement is a victory of sorts for someone as its no coincidence that the talks have been announced after an eventful week.


Russia is refusing to comment this weekend’s reports from Japan, which suggested that North Korea would offer Russia exclusive rights to its uranium in exchange for open support at the forthcoming nuclear negotiations. A representative of Rosatom, Russia’s Nuclear Agency, said that the agency does not comment on rumors, while Russia’s foreign ministry called the reports “provocative.”

It is important to note that while Russian officials have not commented on the reports, they did not deny them either. There is no reason to assume that such talks are impossible; after all, apart from China, Russia is North Korea’s closest ally. With pressure from the US to deal with North Korea accordingly, Russia needs incentives to work with the North Korean government. It is also in search of new areas of influence, as it is constantly being undermined in its traditional area (former Soviet Union), notably by Georgian President Sakaashvili.

North Korea also has a lot to gain from the deal. For one, it will provide them with a stable stream of income. This is significant for North Korea’s economy, which has been isolated for years and has also suffered serious economic sanctions since it walked our of the nuclear negotiations last year. It would also maintain part of the infrastructure required to build nuclear weapons. While North Korea would not be enriching uranium, it would be producing it, making it possible to secretly continue enrichment in the same plants that produce the uranium.

It is interesting to note that Russia today said that the nuclear negotiations would not begin before 2007, citing the forthcoming Christmas holidays. This may be the case, but it is also possible to speculate that Russia is still in talks with North Korea over the alleged deal. Furthermore, the deal does not seem completely lack credibility, as the Russians have already offered to enrich uranium for Iran’s nuclear power plants.

Reports from Japanese media indicate that progress may be made when negotiations with North Korea are resumed later this month.

Kyodo News reports that the US and others have urged North Korea to abandon is nuclear program by 2008 in return for economic aid as well as security guarantees. All the while, the US and its allies are warning of additional sanctions if North Korea refuses to cooperate with the plan. This reasoning is much more in line with what IAEA chief Mohamed ElBaradei called for two days ago and is a step in the right direction after a lack of progress in pre-negotiation talks this week. ElBaradei, the chief nuclear expert at the UN said that North Korea needed incentives to abandon its nuclear program, not just sanctions.

At the same time, a report in Tokyo Shimbun suggests that Pyongyang will offer uranium exports to Russia which can then be enriched and resold as nuclear energy fuel to China. According to the report, talks about giving Russia exclusive rights to North Korean uranium have been going on since 2002, and North Korea expects Russia’s open support at the nuclear negotiations in return for the deal.

Exclusive rights to North Korea’s uranium will be financially lucrative for Russia. It will also give some assurance that North Korea will not be enriching uranium for future nuclear blasts. However, there is no guarantee that Pyongyang will not continue to secretly enrich uranium not exported to Russia. It is a deal which will be difficult to turn down for the Russians and it will certainly make the negotiations interesting, as Russia has been looking for influence in Asia for quite some time.

One Step Closer to WTO

November 19, 2006

Russia has finally signed a two-way trade agreement with the US, which it needs to join the WTO. Earlier in the day, Russia inked a similar agreement with Sri Lanka, in exchange for lowering tariffs on tea from the country.

It now has to settle its disagreements with Georgia and Moldova, who have protested Russia’s trade-as-foreign-policy approach, as well as sign such deals with all members of the WTO. Its biggest obstacle, however, has been the US.

It remains to be seen, if Russia’s foreign policy will see a shift, because of the key deal. On the one hand, Russia likely made concessions to the US to receive the deal; what those were is unclear, Iran being a possibility. On the other hand, Russia will have to gain the trust of the other WTO members and thus must have an economic policy that is unquestionable and be ready to make concessions, like it did with Sri Lanka today. Europe, for example, may pressure Russia to alter its energy policy to let European countries into Russia, something European ministers failed to convince Putin in in October.

Will Russia Swerve on Iran?

November 10, 2006

Russia has reportedly come to an agreement with the US in regards to the county’s entrance into the WTO. The obvious question now is what has Russia given up in terms of its foreign policy to obtain the US go-ahead. Currently, the biggest disagreement between the two states are the Iranian sanctions to be discussed at the UN Security Council; the initially-proposed sanctions were edited and weakened by Russia to reflect Russia’s partnership with Iran.

Today, Iranian negotiator Ali Larijani was in talks in Moscow to persuade Russia not to steer away from its position. The Iranians, of course, need the support of Moscow as it is virtually its sole diplomatic ally for the nuclear program. However, the WTO may be a significant incentive for Russia to alter its stance — the country has been trying to enter the trade organization for years. On the other hand, the Russians are building Iran’s first nuclear power plant in Bushehr, an $800 million project. If the project is successful, the Russians stand to gain more contracts in the country.

In fact, it’s almost advantageous to be the sole supporter of the nuclear program and have a monopoly on similar contracts.

The Russian Blockade

Progressive Russian publication Kommersant reports that the attitude of Georgians towards their President is not unanimously favorable. Many believe the President has gone too far in his negative rhetoric in regards Russia, rhetoric which has prompted Russian sanctions.

With the harvest in full bloom, this is the best time for Georgian farmers to make money by selling to the Russian market. This season they cannot do this and must now struggle to survive, because their President did not handle a diplomatic situation with the care that it required. Until the Russian blockade was imposed, Saakashvili talked the language of defiance. Once the hard reality set in, he suddenly became open to dialogue and was suddenly perplexed by Russian response. This only goes to show his political immaturity — one of the main tenets of his presidency has been criticizing (rightly so, and not) Russia. This is healthy, but one’s presidency cannot lie on just one raison d’être: denying your neighbor.

War Plans?

This weekend, Georgia replied to Russian President Putin’s suggestion that the conflict may end in bloodshed, and denied having war plans.

This is rather curious as tensions have been rampant in the two separatist (and pro-Russian) regions of Georgia. In fact, on several occasions President Saakashvili has made statements about getting those areas under complete Georgian control — in domestic media, of course.

Curiously enough, the situation that played itself out this fall in Georgia had a very familiar ring to the Hezbollah-Israeli conflict of this summer.

Four supposed spies were arrested and held by Georgia, much like the Israeli soldiers that spurred the violence in Lebanon this summer. Except Russia did not respond with force. And force is what Saakashvili has wanted for so long — painting Russia as an aggressive villain, this is exactly what he needed, the confirmation of the corrupt nature of the Russian state. After all, Russia’s aggression has been Georgia’s (i.e. Saahashvili’s) raison d’être.

Not this time. But tensions are not falling and in all likelihood some sort of military confrontation will take place, unless proper diplomacy is finally exercised by both sides.

Russia’s Shame

The Russian government showed a political immaturity of its own by implementing an anti-Georgian policy within the country. Cracking down on illegal casinos and probing Georgian-owned businesses, the authorities have also began to target simple citizens with Georgian credentials. This is nationalism at its worse and it doesn’t help anyone: nationalistic discrimination is simply unacceptable. It has touched everyone, young and old, as has been reported throughout most major media. (For example, see this BBC story.) When I was on the phone with Moscow 10 days ago, I was told of a 19 year old girl who “looked Georgian” (and was not) being constantly harrassed by police officers to provide her credentials. What threat simple citizens pose to Russia, is simply unclear. And this is shameful state nationalism.

Thankfully, most Russians have realized the level of discrimination and have started to write in to papers to complain. Ashamed of the policy, Russia’s stars have started protests of their own. For example, Russian Actor Stanislav Sadalsky has applied for Georgian citizenship as a sign of solidarity for the Georgians living in Russia. Other members of the entertainment industry have made a statement about the ongoing discrimination.

Putin doesn’t commit

October 20, 2006

As expected, Russian President Vladimir Putin has not committed his country legally binding agreement.

While Russia has been a fairly open market, its energy sector has been centralized with Putin’s presidency. The country has reaped enormous economic rewards, has had its economy grow and has been able to pay off its debts at faster paces than anyone could have predicted. President Putin wants to stick to the winning formula. With a quarter of energy exports in Europe being Russian, it will be hard to persuade the president to change course. It simply is in the country’s interests to maintain the current order.

Or perhaps Putin is preparing for his post-Presidential career; there has been speculation that Putin may head Gazprom upon the completion of his term.