Working toward a turning point

Public opinion in South Korea is united; the South Korean people have learned enough lessons from Pyongyang’s military provocations. The South Korean government did its best by accepting the North’s offer for a dialogue, rather than insisting on a military confrontation.

The deal between the two Koreas is fortunate news that could create a breakthrough toward a more desirable inter-Korean relationship. It’s an outcome that demonstrates our society’s capabilities, and also a step forward.

The more serious issue starts now, because a higher-level policy should be created to form a new framework for improved inter-Korean ties. To this end, the government must overcome the limit of existing North Korean policies. Its problem is that the policies are all focused on North Korea’s highest leader.

The North Korean policies of the Kim Dae-jung, Lee Myung-bak and Park Geun-hye administrations are all intended to sway the North’s supreme leader; or at least the change is treated as the key condition to push forward these policies. Lee and Park’s policies also have the limit that only the South Korean government is designated as the actor in the early stages of implementation.

Such policies with limited actors and targets are highly likely to fail. Most of all, there is no example of a dictator of a socialist country actually changing his mind and opening up his country.

The Kim Jong-un regime - whose power is based on the lessons from his late father - is particularly well aware that the shift toward a market economy is critical for him to maintain his grip on control. The young ruler treated the South Korean government’s demand to show trust as an attempt to shake his power. Under the current framework of North Korea policy, the confrontation between the two Koreas is destined to continue.

A new North Korea policy must utilize various participants and contact channels between the two Koreas. So the sixth point of the latest agreement that the two countries revitalize civilian exchanges in various fields is very important. Civilian exchanges between the two Koreas can be an important opportunity for North Korean residents.

I participated in a joint academic symposium hosted by Yanbian University in China, in which Seoul National University, Kim Il Sung University and Yanbian University participated on Aug. 15.

Of the presentations made by North Korea, I learned that the accounting college had become independent from the college of economic studies, and the department of law was promoted to a college of law. The North probably needed specialists with pragmatic knowledge. If we can satisfy the needs of those colleges, it will be a great model of inter-Korean cooperation.

A Korean-Chinese businessman, who has long traded with North Korean companies, also said he can feel the changes in the management within North Korean companies. They respect the supply deadlines better, and their quality management skills have improved, he said. Those who have a better talent for trade were selected to manage the companies. So civilian exchanges are sure to have a positive influence on inter-Korean ties and development in the North.

A desirable North Korean policy must start from a project that is mostly needed by the North while simultaneously meeting our interests.

What the North Korean regime wants the most right now is foreign currency. Due to the plummeting prices of raw materials and the slowed Chinese economy, the trade between the North and China has been shaken. It will be difficult for the North to make up for the loss other than finding a resolution with the South.

The North’s change in attitude, by which it proposed a dialogue first and then sat down at the negotiation table, indicated their desperate need to economically cooperate with South Korea.

This is a crossroads. We can continue to pressure the North Korean regime with tighter sanctions, but that will only prolong the confrontation. The disparity between the residents of the two Koreas will further widen, and the possibility of the most appropriate unification process through an economic merger will become more distant. Therefore, oppression and sanctions are not a future-oriented unification policy.

Our choice, then, is clear. We must establish peace and create a structure of mutual prosperity for gradual unification. And it can start with the South helping the North to earn foreign currency via exports. The North has proposed establishing special economic zones, and officials can start pilot projects for exports in one or two of those complexes, which the two Koreas should jointly operate.

An independent body, with delegated authorities from both Korean governments, must have the right to oversee operations at these complexes. And private companies in the South should be permitted to trade with North Korean firms. The most effective way to change North Korea is through economic cooperation with companies with more autonomy from the central government.

Some argue that the payment for trade must be made with goods rather than hard currency because the money can be used to finance the development of the North’s nuclear arms programs.

But there’s not much difference between cash and goods in an economy like the North, where its dependence on trade is more than 40 percent. It can reduce imports it receives from the South to use that foreign currency for other means. It can even sell the goods to China and earn more foreign currency.

Now is the time for the South to elevate its North Korea policy to the next level. The latest deal must be used as an opportunity to create a smart and future-oriented policy toward Pyongyang.

Translation by the Korea JoongAng Daily staff

JoongAng Ilbo, Aug. 27, Page 35

*The author is an economics professor at Seoul National University.

by Kim Byung-yeon