North Korea seeks rice deal

Aug 19, 2011
By Bruno de Paiva
Asia Times Online

Myanmar may be about to supply North Korea with rice, with a barter deal the most likely arrangement given the impoverished northeast Asian country's shortage of funds.

North Korean trade officials visited Myanmar last week to discuss a possible rice deal to ease major food shortages at home, Reuters reported, citing an unnamed government official in Yangon, the former capital of Myanmar.

Any deal involving the importation of Myanmar's rice to North Korea is a win-win for the two nations, both of whom are under sanctions that have helped increase their isolation over the past decade.

Although Myanmar remains a major food exporter - it has exported approximately 450,000 tonnes of grain in the first seven months of this year - its economy has long lagged behind those of its neighbors such as Thailand and India.

For North Korea, a rice importing deal with Myanmar would also be highly beneficial. While helping it to address food shortages related to a combination of poor government, severe drought and global sanctions, addition of Myanmar as a supplier will reduce North Korea's dependence on its major partner, China.

In 2002, when Hu Jintao became president of China, Chinese-North Korean trade totaled US$739 million. In 2010, trade between both nations totaled $3.5 billion, a near five-fold increase. China's trade with North Korea last year accounted for 83% of North Korea's $4.2 billion total international commerce, according to Bloomberg.

North Korea's increased reliability on China in recent years comes largely as a result of sanctions and increased global isolation in the wake of its nuclear tests. This has played very well into China’s hands as it desires a greater strategic foothold in North Korea. It has, however, drawn the ire of the North Korean government, whose juche (self-sufficiency) ideology has been shown to not work via the increasing reliance on China.

While a deal with any country apart from China would likely face scrutiny from the Chinese government, dealing with Myanmar is unlikely to lead to undue concern. Relations between China and Myanmar have themselves strengthened considerably over the past few years. China has built a deep-water port in Myanmar at Kyaukpyu on the Bay of Bengal coast and has aided in the construction of a naval base in Sittwe, also on the Bay of Bengal.

Two-way trade between China and Myanmar has surged over the past two years to $4.4 billion in 2010 from $2.6 billion in 2008, according to Chinese government data.

A likely concern over any conclusive North Korea-Myanmar rice deal is what Myanmar might receive in return for rice, with North Korea sharing its nuclear expertise one strong possibility.

North Korea and Myanmar resumed relations in 2007 after a 24-year freeze that came after a failed North Korean-led assassination attempt on Chun Doo-hwan, the then president of South Korea, during a visit to Myanmar.

A North Korean delegation visited Cambodia late last month to discuss a deal to import its rice, the Reuters report said. A Cambodian minister said North Korea had offered to provide agricultural machinery to Cambodia, suggesting a barter agreement may have been discussed, the report said.

Last month, the European Union said it will provide about $14.5 million in emergency aid to feed more than some 650,000 North Koreans.