[OUTLOOK]The cost of aiding the North

Economists in general have much to worry about. So, they are apt to put a damper on a party. They have a habit of making economic calculations before they share the joy and excitement with others.
When the peace treaty of Versailles was signed, ending World War I, the economist John Maynard Keynes worried a lot. The victorious nations were in a celebratory mood, touched by the fact that they had crippled Germany so that it could never wage war again.
As a result of his economic calculation of the peace treaty, Keynes, who had attended the treaty negotiations as a representative of the British Treasury, saw that the future of Germany and Europe would never be peaceful. He thought that under the conditions of the treaty, it was impossible for Germany to revive under its own strength, so that peace would hardly last for a long time and another war could break out.
Unfortunately, Keynes’ worries became reality.
The entire country is in a festive mood over reaching the agreement at the six-nation talks on the North Korean nuclear problem. Emotions overflow as people praise the agreement as “the heroic feat of self-reliant diplomacy” or as a “significant achievement in that we chose the future and peace of our nation with our own hands.” Of course, based on the fact alone that the nuclear crisis was stopped, it is a great accomplishment.
I am very hesitant to say this for fear of killing the joy, but we cannot skip the economic calculations. It should pay economically all the more if it is a good thing. It should also do so to make the present joy sure and long-lasting.
It can be said that the success of the six-party talks depends more on the economic support than the announcement of a joint statement. Different opinions already began to appear over the interpretation of the joint statement, and this gap in opinions will have to be filled mostly with money. Further consultations will reveal how much it will cost to carry out the agreement at the talks and how much South Korea will share the costs, but given the circumstances, we will have to bear a large share of the costs.
It is estimated that the cost of transmitting the 2 million kilowatts of electricity that we promised to supply North Korea will reach about 8 trillion won ($7.7 billion), and the maximum cost will be up to 11 trillion won, if costs for energy support, including the construction of light-water reactors, are considered.
For peace on the Korean Peninsula, we should basically help the North Korean economy find a way to recover from its present extreme poverty. To do so, an astronomical amount of money will be neeeded. But at present, our economy is not in a favorable situation. As the collection of taxes has fallen short of the goal while more spending is required, a budget deficit persists and the government is deep in debt.
The cost resulting from the six-nation talks is not one that we can prepare easily, even if it is indispensable for peace on the Korean Peninsula and national unity. The entire nation should painstakingly save money with extraordinary determination. But it would not be desirable if providing support to North Korea shrinks the Korean economy. The South Korean economy can offer help to North Korea when it grows solidly. We will lose everything if both the South and North Korean economies collapse together because of our burden to support North Korea.
Considering our economic power and budget, bearing the cost resulting from the six-party talks would not be completely impossible, even if it is difficult. But it would be possible on the premise that the various inefficiencies and waste of the present administration are eliminated. The government would not be able to bear the costs if it engages in wasteful spending and adopts all kinds of policies to attract popularity.
The government should drastically reduce less urgent projects and collect more taxes. It would be the right way for the government to clarify the goal of taxes like the defense taxes in the past and seek consent from the people.
When it took the lead in the past in constructing highways and the Pohang Steelworks and pursued a self-reliant national defense under the Yulgok Project, a modernization project for the South Korean armed forces, the government was able to meet the expenses in an extraordinary manner. Providing support to North Korea this time would be greater in size and economic importance than those efforts of the past. This is what requires heroic resolutions and thorough preparation.
But we cannot feel such a sense of firm resolve now. We do not know whether the government is making preparations to meet the costs without letting us know or if it does not realize the seriousness of the problem. The government should get out of the thrills and excitement as soon as possible and devise a roadmap and an action plan to meet these costs.
Above all, the government should persuade the people soon. It should inform the people that their burden will be increased, be it taxes or electricity rates.
Such information will provide them with a good opportunity to learn how much they will have to bear the burden for unification that would come some time in the future.
Also, when all the people share the costs to support the six-nation talks, it would be good to see those who behaved boldly and received big cheers through the talks and took the initiative set an example by paying much more than ordinary people.

* The writer is a columnist for the JoongAng Ibo. Translation by the JoongAng Daily staff.

by Choi Woo-suk