Window closing fast
The incumbent government’s five-year term is fundamentally different than the five years lost with North Korea under former President Lee Myung-bak. Five years in the early stage of a new leader are crucial to laying the foundation for radical change in socialist regimes. Deng Xiaoping was restored to a leadership position in 1977, and he cemented his power base the following year. By 1981, he was ready to implement sweeping changes through the Chinese style of opening markets and reforms. After ascending to the post of general secretary of the Soviet Communist Party in 1985, Mikhail Gorbachev experimented with his glasnost (opening) and perestroika (reform) policies.
Five years of reorientation brought down the Soviet Union. Janos Kadar ruled as the Hungarian Communist leader for 32 years from 1956. The opening policy he embarked on a decade into his office lacked momentum, producing a lackluster outcome.
The older the autocracy, the more regressive the regime. North Korea’s young leader Kim Jong-un is already halfway through the five-year golden period for change, having ascended to power after the death of his father, Kim Jong-il, in late 2011. Yet the Seoul government is wasting away this valuable period by dithering. In the meantime, the North Korean account gathers deficits. Sanctions and cease of economic cooperation following the sinking of Cheonan warship in March 2010 was a boon for Chinese companies at the expense of Korean competitors. Garments had been produced in North Korea for South Korean apparel companies through mediating businesses in China. But since the May 24 sanctions, Chinese companies still use North Korean factories produce or assemble goods, but they change the label to “made in China” to export to South Korea. Similar arrangements apply to fisheries. China brings in fisheries from North Korea and changes the place of origin to China to sell them in South Korea. Despite the sanctions, 50 percent of unauthorized shipments to China from North Korea end up on South Korean soil.
President Park once said unification would be a windfall for both Koreas. But that will only be possible through incremental economic integration. I strongly believe reforms in North Korea and maturing inter-Korean economic consolidation should be steps toward peaceful unification. To reach the great ultimate goal, South Korea must build various channels and routes backed by its overwhelming economic power over North Korea. North Korea’s per capita income is estimated at $600 and its economy tantamount to about half of the output of the city of Gwangju in South Korea. The draconian currency exchange in 2009 - knocking off two zeroes from the existing bills and demanding that North Koreans exchange all their old notes in less than a week - was what Pyongyang called reform. South Korea has wasted its enormous leverage against North Korea and has been trying in vain to wrangle with North Korea through defense and diplomacy. Japan cunningly squeezed into the gap between the two Koreas, making big strides toward normalizing ties with the North. China has succeeded in bringing South Korea closer to its side by using its influence over North Korea. Problems are getting more complicated for Seoul.
Economic exchanges with North Korea should be aimed at spurring activities in the state-controlled Communist market. All economic associations can help affect market activities. Even with heavy protections to prevent capitalist influence from slipping out of the heavily guarded perimeter of the joint industrial park in Kaesong, Korean chocolate pie cakes available in the complex soon became best-sellers among all North Koreans. The Russians who handed Boris Yeltsin the presidency because of his promise to deliver a market economy and who grew up in a Communist society, secretly listening to Western pop music and enjoying American jeans purchased on the black market. More must be done to grow the pro-market economy in North Korea through trade and contact with South Korean products.
Seoul’s policy on North Korea needs to be more sophisticated and drastic. The Park administration is freer from ideological and political chains that had previously constrained policy toward North Korea. If it cannot made good use of the opportunity, it might as well give up hope of any “unification windfall.” To wish for a jackpot from unification without civilian and incremental endeavors is nothing more than a gambler’s wishful thinking. The newly launched presidential committee on unification preparation should make the most of farsightedness and invisible resources in order to engineer policies toward unification.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, July 17, Page 31
*The author is a professor of economics at Seoul National University.
BY Kim Byung-yeon