August 06, 2019 13:43
President Moon Jae-in in a Cabinet meeting on Monday claimed that Japan's economic superiority is largely due to its "domestic market" and that South Korea will easily catch up with it if it forms a "peace economy" with North Korea. Moon for some reason feels that Japan's fresh export curbs "once again confirm the need for a peace economy" with North Korea. There have been rumblings in conservative circles that Japan was able to ambush South Korea by removing it from a list of preferential trade partners because the Moon administration was obsessed with North Korea and dropped the ball in the diplomatic spat with Japan. Now it is becoming shockingly clear how true that is. The financial markets are reeling, but Moon sings about pan-Korean peace and prosperity, even though there is no realistic prospect of international sanctions against the crackpot country being lifted for years to come.
Of course cross-border economic cooperation will one day benefit the economy, and peace on the Korean Peninsula will erase the "Korea discount" that has hampered the stock markets due to the security risks. But even when that day comes, the initial benefits will not be vast for South Korea, which is among the world's top 15 economies, because it will have to foot the bill for getting North Korea, one of the world's poorest countries, shipshape. It is safe to say that the North is about a century behind South Korea, and even its exaggerated GDP figures are about those of a mid-sized city in the South. What can North Korea offer other than cheap labor? And is the North Korean dictator willing to embrace South Korean capitalism? Seeking to overtake a world-leading technological powerhouse by cooperating with a basket case is pure fantasy.
At any rate, inter-Korean economic cooperation is a distant illusion. How can Moon even think up such far-fetched notions at a time when the economy and businesses face an immediate crisis? After that peculiar outburst, many wondered if Moon has completely lost touch with reality, and they are now having to worry about the president when he should be the one worrying about the public. Who will steady the rudder?
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