May 15, 2018 13:09
U.S. Secretary of State Mike Pompeo said in a TV interview on Sunday that if North Korea agrees to denuclearize, "of course there will be sanctions relief. We can create conditions for real economic prosperity for the North Korean people that will rival that of the South, and that is our expectation."
White House National Security Adviser John Bolton said the U.S. is ready to open trade and investments in North Korea as soon as possible. Pompeo referred specifically to investments in infrastructure, energy and agriculture, which are in urgent need of development in the North. The international community must pitch in to help rebuild North Korea if it scraps its nuclear weapons.
But the problem is the astronomical price tag. According to a 2014 government estimate it would cost US$77.3 billion just to rebuild North Korea's decrepit railway network, to say nothing of bullet trains. Road rebuilding projects also cost an arm and a leg. Back in 2005, the government estimated that it would cost W3.2 trillion to supply 2 million KW of electricity to the North over five years, and W3.5 trillion to build just one light-water reactor (US$1=W1,069). North Korea's power grid is so decrepit that the power shortage rate stands at 70 percent. The mind boggles at the cost of rebuilding it.
But Pompeo insisted those picking up the tab "won't be U.S. taxpayers." Bolton also said there will be no U.S. government assistance for North Korea. U.S. President Donald Trump is already asked Mexico to pay for his harebrained scheme of a wall along their border and views the U.S. troop presence in South Korea as essentially a cost problem. In other words, there will be no U.S. government support for North Korea along the lines of the publicly funded Marshall Plan that helped Europe back on its feet after World War II.
Instead Washington could turn to the International Monetary Fund, Asian Infrastructure Investment Bank or Asian Development Bank to share the cost of rebuilding North Korea and ask another country to guarantee the loans. South Korea ended up having to guarantee a considerable portion of loans after the 1994 Geneva Accords. South Korean taxpayers had to pay 70 percent of the cost of building an abortive light-water reactor in North Korea.
The projects President Moon Jae-in pledged following his summit with North Korean leader Kim Jong-un last month involves more than W16 trillion in costs. A new roadmap for North Korea's development by a special presidential committee includes development plans for the North's railway, ports, power grid and gas supply networks. There is even talk that North Korea now wants high-tech investments instead of aid for light industry.
Investment in North Korea could benefit everyone if executed wisely, and of course South Korea needs to help the North build up its decrepit infrastructure in order to prepare for reunification. But everything must be done within South Korea's budget and not turn into an emotional spending spree.
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