Britain cancels plan to forgive N. Korean debt
SEOUL, Jan. 9 (Yonhap) — The British government has withdrawn its plan to cancel a North Korean debt that has been unpaid for more than four decades, in consideration of the possibility that North Korea could pay it back after the two Koreas are unified, U.S. broadcaster Voice of America reported Tuesday.
The liabilities were incurred in 1972, when GKN, a British multinational automotive and aerospace components company, put up 7.86 million British pounds in financing for the construction of a petrochemical complex in the North. Later, the North defaulted on the loan after paying back just 20 percent.
UK Export Finance (UKEF) decided in May 2013 to stop efforts to recover the debt, Voice of America said, citing data from the export credit agency.
But a senior UKEF economist advised in an email sent to Nigel Smith, then head of the Office of Government Commerce, the following month that there was still a chance that the entire debt could be collected if the Koreas are peacefully unified, the broadcaster said.
The economist cited East and West Germany and North and South Yemen as examples for debt recovery, and Smith replied that it was not the time to give up on collection of the North Korean debt, according to the broadcaster.
As of 1975, the North’s liabilities amounted to 5.86 million pounds (US$7.93 million) by the current exchange rate, the broadcaster said.
Other European countries, including Sweden, Austria, Switzerland, Czech Republic, Finland and Romania, have also failed to recover debts from the economically devastated country for more than 30 years, and the unpaid debts are estimated to be at least $500 million, the broadcaster added.