&#91OUTLOOK&#93Reunification is all about money

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[OUTLOOK]Reunification is all about money

Britain’s Fitch Ratings, one of the three biggest credit ratings organizations in the world, predicted that it will cost South Korea as much as $500 billion in reunification costs for the next 10 or 15 years should the North Korean regime collapse. Such an enormous burden, no doubt, would be disastrous for the South Korean economy. Logic tells us that we will be better off being divided until North Korea’s economy grows to a certain level. If not, the South Korean government will be laden with enormous debts, which in turn, will seriously affect the country’s credit ratings. In other words, we must soberly consider the fact that North Korea could indeed collapse any day before South Korea is ready to pay for reunification. Many South Koreans agree with Fitch Ratings on the dire prospect of an immediate reunification and think that it is inevitable that the present condition of division should be maintained. In the end, the reunification of the two Koreas boils down to money.
The ongoing inter-Korean talks are all about North Korea’s economic situation. The North Korean society still works under the principle of military first, and, deep in their hearts, North Korean leaders still haven’t given up their hopes for a reunification under the communist flag. But the North needs South Korea’s economic help to survive because its economy has failed. South Koreans feel it is their duty to feed their less fortunate cousins in the North with their newly acquired wealth.
Ludwig Erhard, credited with bringing Germany’s post-war economic miracle, visited Korea in 1957. When asked by a journalist what he thought was the way to reunify a divided nation, he answered that the shortcut to reunification was to steadily strengthen the economy. Another German, the former Chancellor Helmut Schmidt, answered a foreign journalist’s question in the 1970s: “Poland disappeared from the map of the world a few times in history, but Poland still exists as a country today.” Mr. Schmidt’s answer meant to point out that, in the course of history, any abnormalities were bound to return to normal.
When West Germany signed a basic agreement with East Germany in 1972 acknowledging a one-people-two-countries system, it had not thought that reunification was possible nor did it seek to realize it. Yet on Nov. 9, 1989, the Berlin Wall fell and West Germany celebrated a “moment of history” in which it was reunified with the East under principles of liberal democracy and a market economy. At the time, the West German government had not presented an immediate reunification plan in consideration of the uneasy reaction neighboring countries showed on Germany’s reunification and also in consideration of the wide economic gap between itself and the East. West Germany’s plans for reunification at the time were for gradual improvement, involving economic cooperation for a certain period of time until the East German economy caught up to a certain level of the West’s. East Germans, however, thought differently. They demanded to come over if West Germany did not give them West German marks. West Germany reacted by implementing a one-to-one exchange between the currencies of the two countries and persuading the East Germans to stay on their side of the wall while it speeded the reunification process. On Oct. 3, 1990, the reunification of Germany, once thought impossible, was made possible through the might of the German economy. Since then, Germany has had to pay more than $1 trillion to help in transforming East Germany’s system and reunifying the West and the East. This is a formidable precedent for South Korea to follow.
Except Cyprus, Korean is now the only remaining divided country in the world. The reunification of Korea will come one day, regardless of the economic burden, in a “moment of history” as in the case of Germany. Recent events in and around the Korean Peninsula could very well hasten this historical moment.
The normalization of the Korean Peninsula under the principles of liberal democracy and a market economy will bring permanent peace and stability to Northeast Asia. But this will require the South Korean economy to endure an enormous shock such as it has never experienced before. The pain, however, will bring the new beginning of Korea.
South Korea should not shun reunification because of an economic burden, but instead learn to prepare for that reunification by making its economy stronger.

* The writer is a former senior presidential secretary for economic affairs.


by Kim Chong-in

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