Source:  The Financial Times                       Date: 12 August, 2010

Pyongyang’s cash-strapped totalitarian regime has offered to settle part of its debt to the Czech Republic with a large consignment of ginseng rather than eat into its limited funds. With the domestic economy crumbling, North Korea is also feeling the pinch of tighter international sanctions imposed over its nuclear and missile programs and the sinking of a South Korean warship. Its access to global markets is further hindered by outstanding international debts of about ISD12 billion, two-thirds to former communist states.

Czech officials confirmed that Pyongyang had offered to settle 5 percent of its USD 10 million in accumulated debt in ginseng, an invigorating root used in dietary supplements and teas that are supposed to improve memory, stamina and libido. Communist Czechoslovakia was a leading supplier of heavy machinery, trucks and trams to North Korea.

Non-cash trade and settlement of debt has been common among socialist countries. Cuba compensates Venezuela for discounted oil by sending doctors to work in deprived areas. However, the now-capitalist Czechs are unconvinced they need an injection of vigor. “We have been trying to convince them to send, for instance, a shipment of zinc, which is mined there. We would sell it ourselves,” Mr. Tomas Zidek, the Czech Republic’s deputy finance minister, has said.

A newspaper calculates that 5 percent of the North Korean debt would amount to 20 tons of the curly white root. Retail prices of North Korean ginseng in Taiwan suggest a figure closer to 12 tons. Both sums massively outstrip the Czech Republic’s annual consumption of about 1.4 tons year. International security services last year seized large illegal consignments of smuggled arms, which are a key source of hard cash revenue for Pyongyang, probably worth hundreds of millions of dollars.

North Korea’s military runs the export companies that ship specialty foodstuffs, such as shellfish, ginseng and mushrooms, to gain hard currency. Intelligence agencies say the ginseng trade is controlled by Pyongyang’s shadowy “Bureau 39”, which runs the country’s foreign funds.