A nonsensical tug-of-war

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A nonsensical tug-of-war

North Korea used to be in economic competition with the South. But in the 1970s, when President Park Chung Hee promoted economic growth, the South’s financial power surged. After two oil shocks and enduring the problems associated with a socialist economy, the North has lost steam.

Today, it is not even close to being a competitor: South Korea’s gross national income (GNI) per capita stands at 28.7 million won ($26,447), 21 times higher than that of North Korea. The competition has ended, but North Korea still refuses to admit defeat.

Recently, the two Koreas have primarily wrangled over two issues. The first is the unilaterally declared wage increase at the Kaesong Industrial Complex. Although both countries agreed on a 5-percent ceiling for monthly wage increases, North Korea independently decided to boost workers’ pay, informing the South that it was increasing wages by 5.18 percent.

The issue is the difference of 0.18 percent - or 135 won.

While it may seem petty, it is anything but. This is about more than the money, it’s about the North breaking its pledges. According to the law governing the industrial complex, only a designated inter-Korean committee can discuss the minimum wage and restrict the increase by up to 5 percent. So Pyongyang has broken two promises. If it wanted to abandon the game, it would likely have demanded a much higher increase, but it didn’t, which means it doesn’t want to lose its battle with the South.

The second issue is the South’s plan to join the Organization for Cooperation between Railways (OSJD), an organization with 27 members including China, Russia, North Korea as well as countries in Eastern Europe and Central Asia. South Korea is an affiliated member. In order to carry out President Park Geun-hye’s Silk Road Express initiative, South Korea must join the OSJD as a formal member. To do so, it requires the unanimous approval of its members - the problem being the North’s approval.

Since 2003, OSJD has proposed both Koreas first discuss the issue and reach an agreement so that the South may apply for membership. Now this plan has been hindered.

The North has confirmed that it will not attend the OSJD Railway Summit or the 10th International Freight Conference in Seoul, scheduled to take place from May 27 to 29. Korea’s formal membership will then be decided at the OSJD ministerial conference in Mongolia in June - too little time for Seoul to persuade Pyongyang, and it remains to be seen if Pyongyang will accept Seoul’s plea.

This time, the South must win again.

With its One Belt and One Road initiative as well as the creation of the Asian Infrastructure Investment Bank (AIIB), China is forging a new international order. Now is not the time for the Koreas to be playing such a petty game. Rather, it’s time to understand what China really is going after and attempt to find a pathway toward mutual prosperity.

*The author is a researcher at the Unification Research Institute, JoongAng Ilbo.

JoongAng Ilbo, April 6, Page 30

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