North Korea’s Infrastructure Disappears Amid Loan Dispute

North Korea dismantles streetlights along the Gyeongui Line Railway and Donghae Line
Ministry of Unification asserts North Korea’s obligation to repay for projects under loan agreements
Last year, mines were installed along these railways and roads

On the 18th, the South Korean Ministry of Unification revealed North Korea dismantled dozens of streetlights on the Gyeongui Line and the Donghae Line. The Ministry stated, “Since the projects to connect the Gyeongui Line and Donghae Line railways and roads in North Korean territory were carried out with our government’s loan support, North Korea must repay.”

A South Korean Ministry of Unification representative said, “The Donghae Line project that North Korea has undertaken has already been contracted under a loan agreement.”

He emphasized, “The construction stopped before the completion, and the final loan amount has not yet been determined. Regardless of these facts, it is clear that North Korea should repay our government after the remaining construction process.”

The South Korean Ministry of Unification pointed out that according to the Agreement on the Provision of Materials and Equipment for the Inter-Korean Railway and Road Connection Construction signed on September 17, 2002, “South Korea will provide the materials and equipment needed for the Gyeongui Line and Donghae Line railway and road connection construction to North Korea in the form of loans.”

At that time, the scale of the in-kind loan for the materials and equipment for the railway and road was a whopping 132.9 million dollars. The loan repayment period is set to 30 years, including a grace period of 10 years after providing the loan, and the interest rate is low at 1.0% annually.

According to the U.S. Department of the Treasury, North Korea has a debt of $14 billion from about 30 countries. However, the OECD has stated that it is difficult to calculate North Korea’s debt situation, even as an estimate, since 1998, making it hard to verify the accuracy of this information.

However, North Korea has yet to make any repayments and remains silent. In response, an official explained, “It is difficult to finalize the loan amount and the time of occurrence due to the failure of the North’s section connection work, but we will resolve it.”

At a regular briefing that morning, Lee Sung Jun, the head of the Joint Chiefs of Staff (JCS) Public Affairs Office, stated, “Our military has confirmed that North Korea has recently dismantled facilities such as streetlights around the Gyeongui Line and Donghae Line, and we are closely monitoring the movements of the North Korean military.”

He added, “We are carefully analyzing the situation, and at present, we assess that their actions have no military impact.”

Furthermore, the JCS reported that the commander of the U.S. Pacific Fleet had visited South Korea and met with JCS Chairman Kim Myung Soo at the Naval Operations Command to discuss measures to strengthen the ROK-US Combined Defense Posture against North Korea.

The Gyeongui Line, the Road of Peace, is the only route between South Korea and North Korea to the Kaesong Industrial Complex. Both countries agreed upon the Donghae Line in August 2002, following the June 15th South-North Joint Declaration during the Kim Dae Jung administration in 2000. It has been used for travel to Mt. Kumgang tourism and separated family reunions.

However, in February 2016, the South Korean government decided to suspend the operation of the Kaesong Industrial Complex due to North Korea’s nuclear and ballistic missile launches. Subsequently, in 2020, North Korea shared a video of the demolition of the buildings in the Kaesong Industrial Complex, showing a complete severance of inter-Korean relations.

Also, since the shooting incident of a South Korean tourist by the North Korean military in July 2008, Mt. Kumgang tourism has been suspended for a long time, and the road has been unused.

According to the Ministry of Unification, since the end of last year (2023), North Korea has installed a large number of mines near the Gyeongui Line and Donghae Line, preventing anyone from moving. Despite this, the recent dismantlement of streetlights and other facilities is seen as a silent protest by North Korea, which has declared a complete break from South Korea while advocating the two-state theory.

There is also a view that it implies the impossible resumption of inter-Korean communication, such as separated family reunions.

However, some argue that it is premature to judge North Korea’s intent to sever inter-Korean relations through the dismantling of streetlights. Unlike the Gyeongui Line, which can be seen with the naked eye from the Dora Observatory or Panmunjom, the Donghae Line is difficult for the public to access due to its geographical features, making the claim of anti-South protest less convincing.

One expert even suggested the possibility that North Korea, considering its shortage of materials, dismantled the streetlights to recycle scrap metal.