North Korea-Mongolia Sign Deals Before Leaders Meet in Pyongyang

North Korea and Mongolia signed a series of agreements to step up cooperation in a move that could help ease the two former Soviet allies’ economic reliance on China.

The agreements were signed yesterday hours after Mongolian President Tsakhia Elbegdorj arrived in Pyongyang to become the first head of state to visit since Kim Jong Un became supreme leader in December 2011. The accords covered cooperation in industry, agriculture, sports, culture and tourism, the official Korean Central News Agency said. It didn’t provide details.

“North Korea and Mongolia are particularly reliant on China,” Charles Krusekopf, head of the American Center for Mongolian Studies, said by phone from Victoria, British Columbia. “Mongolia is looking for outlets to the sea to export minerals, coal and energy resources. There are a lot of people talking about potential for Mongolian resources to be shipped through North Korean ports to world markets.”

Mongolia, a nation of 2.9-million people squeezed between Russia and China, adopted democracy and free elections in 1990, and moved to welcome foreign trade by offering access to its mineral riches. North Korea has been reaching out to friendly nations such as Mongolia and Indonesa as international sanctions over its nuclear weapons program have limited trade and hobbled the economy.

Oil Investment

In June, HBOil JSC, an oil trading and refining company in Ulaanbaatar, Mongolia said it acquired a 20 percent stake in the Sungri refinery in the North’s northeastern free trade zone of Rason.

Sungri has a refining capacity of 2 million tons a year and is connected to the Russian railway systems, HBOil said in a release. In September, Russia completed a 54-kilometer (33.6 miles) rail link between Khasan in its southeastern corner and a rebuilt North Korean port in Rason.

“I am sure that the Korean people will successfully achieve prosperity and progress of the country, their happiness and regional peace and stability in close cooperation with the international community,” KCNA reported Elbegdorj saying at an official banquet in Pyongyang.

Fighting Japan

In September last year, after meeting with the visiting chief of North Korea’s parliament, Elbegdorj pledged to help the new North Korean leader pursue economic reform, offering his nation’s experience of moving toward capitalism.

North Korea and Mongolia first set up diplomatic relations in 1948, the year the North was founded. The relationship between the two countries dates back to 1939 when North Korean founder Kim Il Sung joined Mongolian-Soviet forces in fighting the Japanese, Song Byeong Gu, a professor of Mongolian studies at Dankook University outside Seoul, wrote in a paper in April.

North Korea cut its ties with Mongolia in protest when then-South Korean President Kim Dae Jung visited Mongolia in 1999. The sides re-established ties when North Korea’s foreign minister visited Mongolia in 2002.

Mongolia sees its national security guaranteed better if it maintains neutral relations with both Koreas and major powers such as China, Russia, Japan and the U.S., Song wrote.

To contact the reporter on this story: Andrew Davis in Hong Kong at abdavis@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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