[Viewpoint] Are we preparing for unification?

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[Viewpoint] Are we preparing for unification?

Just as a stream eventually flows into a river, today is the progenitor of tomorrow. The future does not suddenly fall from the sky, but is built upon the days and events that precede it. That’s why we always need to be prepared. We will already be too late if we take action upon reaching tomorrow. We must get a start today in order to avoid disappointment or a debacle tomorrow.

Unification should be approached in this way. There is no magical formula for it. Today’s array of policies and strategies are, in fact, all part of the preparation. Our post-unification policies can work depending on how well we prepare today. For instance, our economy must grow further in order to finance the cost of unification and that depends on today’s economic policies. Privatization of North Korean land and consolidation of the two countries’ currencies will depend on how strong our economy is at the time of unification. And that, too, depends on today’s policies. Preparation for unification must start now, and the designers of today’s policies must never lose track of that vision of unification in the future.

President Lee Myung-bak in his Liberation Day address in August floated the idea of starting a tax to save up for unification. He didn’t meant to suggest raising the tax immediately, but merely to raise awareness that the time has come to prepare for unification. His exact words were: “It is time we start preparing for the day [unification].” He may have employed a sensational coinage - a “unification tax” - to underscore the urgency of the need.

The media and public may not have raised a ruckus if he simply had said, “Let’s prepare for our unification.” Money tends to seize the attention of the public and generate a lot of noise. The president added that he hoped his idea would spur a broad and heated discussion on the issue from various spheres of the society.

But afterward, as we watched the simmering debate on tax cuts, it appears that planning for unification is the last thing on anyone’s mind. Tax cuts can stimulate spending and spur the economy, but that comes at the cost of fiscal spending on welfare and other budget items.

The criticism over tax breaks for the wealthy and large companies is justifiable, and the call for consistency and fairness in policy is equally understandable considering that tax cuts - a campaign pledge - were deferred only for the rich. But we hear nothing about implications for unification. The president’s words have clearly been ignored.

The most fundamental preparation for unification is to keep the state’s fiscal position healthy enough to cover the immense post-unification costs. Only a solid fiscal account can help the country raise funds from home as well as abroad to help finance unification. If the country is saddled with heavy debts, unification could spell disaster for economies on both sides of the border.

The South would have to abandon the economy in the North, which is in a shattered state, if the South does not have the capacity to rebuild it. But such a move will boomerang into a catastrophic breakdown of the South’s economy. Foreign investors will become wary of the unified Korean economy, which would make external borrowing more expensive and difficult. In consequence, the plan to reconstruct the North will only drift further away. We might as well chuck away the plan altogether.

We cannot afford to gloat over our relatively lower fiscal debt levels compared with other member countries of the Organization for Economic Cooperation and Development. They do not have colossal unification costs in their futures like we do. Our fiscal policy must be thoroughly unification-oriented. The country’s fiscal deficit reached 43 trillion won ($38.2 billion) last year, equivalent to 4.1 percent of the gross domestic product. And the country’s liabilities total 360 trillion won, demanding 16.5 trillion won from the budget to pay interest this year. In other words, every Korean pays 330,000 won in interest costs. When the principal and interest rates are included, each person is indebted to the tune of 8.28 million won. The National Assembly’s budget policy office estimates the national debt will top 535 trillion won by 2014.

In his October address to the National Assembly on next year’s budget outline, the president stressed that the country needs to prepare for unification. But in reality, words and action are being played out separately. Politicians vehemently fight for their position on tax cuts to make an impression on the voters ahead of the election season. The ruling party, too, is busy fighting over the tax controversy with little regard to its association with unification.

The politicians are not only ignorant but also selfish. They may not care what happens after unification, but they must remember that their actions today can shape the future of the people in a unified Korea.

*Translation by the Korea JoongAng Daily staff.
The writer is a professor of North Korean studies at Ewha Womans University.


By Cho Dong-ho

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