Why N.Korea hopes to be a member of ADB?

North Korea`s official submission of a request to become a member of Asia Development Bank (ADB) can be explained as a result of the judgement that the country desperately needs capital support from finance circles during the process of reconstructing the economy in the future.

Although North Korea has expressed its intention to become a member of ADB since the 1990`s, this time an official request letter was sent, and Pyongyang is working more aggressively than it has at any other time. Since our government, for whom the astronomical amount of capital needed for South-North economic cooperation is cumbersome, has already firmly established the policy of aggressively supporting North Korea`s membership in international finance organizations, and since America and Japan, who have very strong speaking rights, have recently adopted a favorable attitude toward North Korea`s membership, the probability of success is very high.

If North Korea becomes a member country, it attains the qualifications for receiving fund and technology support from ADB. Firstly, North Korea can borrow and use the Asia Development Fund, supplied for the economic development of low-income countries within the region, under extraordinary conditions - an interest rate of 1%~1.5% for a duration of between 24 to 32 years.

But the meaning of North Korea`s becoming a member country of ADB does not end at the level of funding support. Among all else, its membership would serve as a significant bridgehead for joining the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD), which have the personalities of senior organizations. If the IMF approves the membership by North Korea, this can reduce the psychological burden on the part of civilian investors in the U.S. and the European Union (EU) regarding investing in North Korea. IMF is actively studying the measure of inviting North Korea to its regular general meeting, which will be held in Prague, the Czech Republic, at the end of September.

In order to become a member of ADB, a country has to be a member country of either the United Nations (including lower organizations) or the Economic and Social Committee for Asia and the Pacific, and must obtain the agreement of 2/3 or more of the ADB member countries. The period from application until membership is ordinarily 3 years, but it can be shortened to 1 year in exceptional cases.

Of course, there are obstacles to North Korea`s membership. If it becomes a member of ADB, North Korea must regularize discussions related to macroeconomic policies, including the economic growth rate, with ADB, and it receives the obligation to follow international standards when writing statistics in each sectors, including economy, society, etc.

Publicly opening up the economic operation process for North Korea, which has been obstinately practicing closed economics until now, can only be a big burden for the country. Despite the positive progress between North Korea and U.S., and between North Korea and Japan relations, the local opinions in the U.S. and Japan, who possess 13.2% each of the total investment amount, are important variables.