Why Korea Can Afford the Cost of Reunification

      April 25, 2009 08:04

      South Koreans are becoming less enthusiastic by the year about reunification with North Korea. Those in favor of reunification accounted for 91.6 percent in a 1994 poll by the Korea Institute for National Unification. But the figure declined to 63.8 percent in a 2007 survey by the Seoul National University Center for Unification and Peace. By contrast, the view that reunification is not necessary increased from 8.4 percent in 1994 to 15.1 percent in 2007.

      Under the engagement policy of the Kim Dae-jung and Roh Moo-hyun administrations, reunification became something of a taboo, and that taboo, coupled with a fear of the enormous cost, will have to be overcome if the two Koreas are to become one again.

      ◆ Reunification Costs

      German reunification two decades ago gave many Koreans hope that the same can happen here as well as a fear of the high costs. There is a widespread belief that the expense will crush the economy of both sides, a view gaining ground amid the world financial crisis.

      But experts say it will not be too difficult for the South Korean economy to support the North Koreans, whose income accounts for 1/36 of South Koreans'. Because 1 percent of South Korea's GNI corresponds to 36 percent of North Korea's, difficulties arising from reunification can be overcome at a rather less expense by learning from Germany's trial and error in the process of its reunification.

      The estimate of hundreds of trillions of won is based on the sum needed to raise the living standard of North Koreans to 70-80 percent of that of South Koreans all at once. But the belief that the economic gap between the two Koreas must be closed in 10 years is a fiction. Economic disparities now exist between Seoul and the provinces, and even between areas north and south of the Han River in the capital. Experts say with tight fiscal management, reunification is feasible even with the rice, clothes and medicines needed for the survival of North Koreans for a year.

      ◆ Reunification Benefits

      The benefits from reunification would outweigh the costs, experts say. To begin with, reunification spending would raise the income of North Koreans and help industrial development, which, in turn, would hike purchasing power for South Korean products. Millions of jobs would be created in the course of developing the North. Once the North Korean economy is invigorated, revenues are expected to rise and reduce the South's burden.

      Expenses of national division like propaganda costs could be saved. And significant non-economic benefits could also be expected to arise, such as enhancing Korea's status in the international community, reduced risk of war and resolution of problems relating to families divided between North and South.

      ◆ Exodus Unlikely

      There are fears that once the country is unified, a mass migration to the South would cause havoc. But North Korean refugees in the South say they would return to the North once the regime is gone. They say there is no reason for them to stay in the South if they can sustain themselves in the North. If their livelihood is secure and they are promised property rights only if they stay in the North, there would be no exodus of North Korean refugees, experts say.

      ◆ Reunification Taboo

      Pyongyang has recently proclaimed a state of confrontation with the South, but the public here seems unconcerned. While there is no need to go overboard, this complacency gives rise to security concerns.

      Some attribute the complacency to the engagement policy of the last two administrations which stressed inter-Korean exchanges and cooperation without mentioning reunification on grounds that it would provoke the North. The policy was based on the hope that North Korea could be gently persuaded to reform with economic aid. But the recent tension indicates that Pyongyang, if determined, could still attack the South at any time. In the past year, North Korea, by a policy of communicating with South Korean civic groups but blocking the government, has achieved the result of pressuring Seoul while securing economic benefits from civic organizations.

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