THE PRESS THURSDAY, DECEMBER 30, 1976. ’The world’s worst debtor'

Press, 30 December 1976, Page 10

THE PRESS THURSDAY, DECEMBER 30, 1976. ’The world’s worst debtor'

How far should exporters go in attempting to impose a sense of economic realism on their customers? A Swedish sauna manufacturer recently refused to supply five luxury saunas to the people’s paradise of North Korea, but agreed to provide 20 cheaper models, provided that he was paid in advance. This was all very egalitarian although the North Koreans, surely, would say that they need no reminders of the dangers of capitalist luxuries. Three months ago their diplomats were expelled from Finland, Sweden. Denmark, and Norway for their activities in smuggling whisky, cigarettes, and narcotics with a value of about SI million. The smuggling escapade appears to have been a particularly original, and distasteful, method by which North Korea hoped Io gather foreign exchange. The country s international finances are in a disastrous condition: even the large sums provided by the busy diplomatic smugglers would not go far to meet the country s debts of more than 82.000 million North Korea was described recently by the *’ Guardian ” in London as “ possibly the world’s worst debtor”. The newspaper said " Unlike Britain it does not even make arrangements not to pay its debts: the money simply fails to arrive ”, The “ Guardian ’’ went on to describe how North Koreans had been buying advertising space on a grand scale in European newspapers, including the “ Guardian ”, to put before an indifferent public the thoughts of their country’s leader. Kim II Sung. The

advertisements, it turns out. have been usually paid for in cash—in used notes of small denominations, at that—and the conclusion has been drawn that the fruits of drug smuggling were being used to pay for political propaganda.

The whole matter might have been dismissed as an unsavoury diplomatic incident were it not for two factors: North Korea appears to Have been actively promoting the abuse of drugs to further its political and financial aims, and the country has become the first member of the Communist bloc to default on the pay ment of debts to the

West For more than a year Western banks have been asking for payment on loans which were made to enable North Korea to import machinery from the West. Banks in Britain, Canada, France. West Germany, Switzerland, and the Netherlands are interested, and several meetings have been held under the chairmanship of the Australia and New Zealand Bank, which is substantially involved. But the North Koreans so far have either refused to discuss the matter or have sent representatives with no power to negotiate. Earlier this month exasperated Western banks threatened that North Korea would receive no more credit, even if it did eventually pay its debts. That has finally shocked the North Koreans into a promise that they will attend a meeting in London early in the New Year. The situation must be particularly galling to other Communist States. The North Koreans are giving communism a bad name among Western financiers. Until now it has always been assumed that, if any Communist State went deeply in debt, the others would help to bail it out. For North Korea this has not happened. Indeed. North Korea has defaulted on debts for imports from Communist countries, too. The North Koreans remain reluctant to admit the financial crisis exists. They still talk proudly of President Kim's philosophy of “ Juche ” or “ self-reliance ”, even while their creditors are knocking at the gates. They still find funds to assist Arab terrorists in the Middle East and Io invite a steady stream of “ good will ” missions to Pyongyang. Earlier this year a mission from New Zealand was there and a "friendship society” was said to have been formed between the two countries.

At the expense of its creditors, North Korea has attempted to cut an imposing figure on the international stage. Since the attempt went wrong, it appears to have turned to traffic in drugs, as a matter of Government policy, to help pay its debts. President Kim has had a bronze statue. 20 metres high, erected to do honour to himself. But his country remains, as the Guardian ” described it, “an extremely odious republic ”,