Korean Unification

Korean Unification Ideas of the Korean Unification: Can They Learn From Germany’s Experience? Introduction The idea of this paper is to compare and contrast German Unification process with the outlook for possible scenarios in Korea. By looking at the similarities and differences between the situation in Germany and Korea. To do this I look at the state of the economies, recommendations toward policy, the need for international support as well as possibilities on how to organize the transition. If the Republic of Korea and the Democratic People’s Republic of Korea are to merge as one united country, several factors will need to be taken into question. I hope to bring light on what it might take in order for this to happen. With the end of the Cold War and the disappearance of the East-West confrontation, new challenges demand political management in order that the emergence of new aggravations and tensions be avoided.

Divided countries such as Germany and Korea were the epitome of the cold war era with its acute ideological divisions. German unification in 1989 was one of the central events of the process sealing the end of the cold war. Since then, Germany has undergone a process characterized by positive, but especially also an array of negative experiences. A series of mistakes was committed during and after the German unification process that caused avoidable pain and has lasting consequences which may not be overcome for decades. The German experience may hold some lessons for other countries.

The Korean peninsula, for one, is still mired in a conflict which reflects the harsh ideological divide, uneven economic development and the build-up of menacing military forces, including nuclear capabilities. Can Korean standoff and confrontation continue? Will the break-up of the Soviet Union, the disappearance of its Communist Party, the ensuing policies towards the market economy, the economic reforms in China and new diplomatic alignments in the region trigger Korean unification? What are the lessons from the German experience? I will attempt to shed light on the these and numerous other issues associated with the Korean unification process. Germany and Korea Similarities and Differences for Unification While the unification of Germany was treated as a national issue, it actually has and will continue to have considerable international implications. Germany grew overnight from a country of some sixty million people to a nation of eighty million. Germany today is one and half times the size of Britain, France or Italy.(Dept. Of State and Foreign Affairs) Although today Germany has enormous economic problems which will remain for at least the next 10 years, all of Germany’s neighbors believe that in the end Germany will come out on top economically. German unification has demonstrated that the re-establishment of the unity of a country even after a long period of division and difficulties is possible and that unification can be achieved in a democratic, peaceful way.

But despite similarities between the two cases, there may also be many differences regarding internal and external aspects. Germany and Korea were both divided in the wake of World War II against the background of rivalry between capitalist West and the communist East. In both countries, the hope for reunification was slim during the Cold War period. Unlike Germany, North and South Korea had fought a ferocious war. The two Germanys, unlike the two Koreas, concluded a system of treaties to regularize relations at the official level and to secure a modicum of civil contacts and communications among the people.

On the Korean peninsula, North Korea remains to this very day a hermetically closed society. No information flows uncontrolled into the country, access to foreign radio and television broadcasts is non-existent and no contact is permitted with the outside world, not even the exchange of letters. Travel both inside the country and abroad is subject to approval and regulation. Apart from the country’s leaders and nomenklatura, all other North Koreans are unaware of developments in the world in general and the social and economic conditions in South Korea in particular. This constellation is likely to make any unification process in Korea fraught with the risks of political and social instability.

There are also significant differences in the economic constellation between Germany and Korea. The population ratio between East and West Germany was 1:4, while for North and South Korea this ratio stands at 1:2. In 1997, North Korea is believed to have experienced an economic decline of 3.7% and in 1998 of 5.2%. South Korea has continued to achieve rapid economic growth in the past couple of decades. This has brought about an ever-widening income gap.

Today, the per capita income of the South is at least five times the size of the North. This alone will make economic integration between North and South an exceedingly tough and complex task. North Korean GDP per capita corresponds to some 16% of that of South Korean, while East German GDP per capita stood at 25% of West Germany’s at the time of unification. North Korea’s trade volume stood at $ 4.7 billion US dollars in 1990 and $ 2.7 billion in 1991. The decrease resulted from a slump in imports. South Korea’s trade volume reached $ 153 billion US dollars in 1991.

China and the former Soviet Union accounted for some 70% of North Korea’s trade. Instead of barter or compensation trade arrangements of the past, they now demand payment in hard currencies which North Korea lacks. North Korea used to import millions of barrels of oil yearly from the former Soviet Union against coal and other raw materials, but currently it receives only 40,000 barrels producing an energy crunch with serious repercussions for industrial production and living standards. The utilization of industrial capacities has actually fallen 40%. North Korean leaders seem to be beginning to open up their country to Western capital and technology. Most investments so far have come in the form of joint venture projects with pro-North Korean residents living in Japan. (Flassbeck, Horn, 1996 Chap.

4) Unlike East Germany, a unification of the two Koreas will not entail ready-made access to new foreign markets for either of the two given the absence of an Asian common market. Protectionism in the United States and Europe-Korea’s main export markets-threatens to erode Korea’s export base and places South Korea in a vulnerable economic position. To assist any unification process in the future, the international community ideally would have to be more accommodating to Korea in the future. But given the present climate in global trade negotiations, it is unlikely that a unified Korea would be granted assured access to the European Common Market or the United States. The differences between North and South Korea with respect to their industrial base are much different from those between East ands West Germany.

Unlike East Germany, North Korea relies essentially on large supplies of various raw materials most of which were traded on a barter basis with the Soviet Union before its demise. Korean unification may mean that additional markets could be tapped for their export. Given North Korea’s limited trade exposure, any reduction in demand for its products following unification would therefore not pose a problem comparable to that experienced in East Germany. Currently, North and South Korea engage only in some indirect trade through Hong Kong, Singapore and Japan. Between 1988 and 1992 there were only some $ 450 million worth of exports and imports between the two countries.(Sung Yeung Kwack, 1994). In Germany’s case, trade had steadily been growing between the two countries prior to unification, facilitated by a generous financial facility extended by the West German government. North Korea is suffering from severe shortages of goods. In 1991, it produced 4.4 million tons of grains but consumed 6.5 million tons.

Part of the short fall was made up by a donation from South Korea. Following a possible unification, South Korea as the stronger economy will have to take care of 22 million North Koreans, requiring substantial funds. (Sung Yeung Kwack, 1994). The North Korean economy is far more distorted than the East Germany economy was at the time of unification. It is also much more geared towards meeting military requirements than East Germany ever was.

This may also complicate the eventual demobilisation of military personnel following unification. Regarding labor costs, the gap between East and West Germany was probably higher than is the case for Korea. In Germany, gross labor costs increased following unification due both to the assimilation of wage levels towards levels prevailing in the West and to the introduction of the costlier social security system of the West. The Korean social security system is not very costly compared to German. In general, South Korea has not the capacity to bear the full cost of unification and might need to resort to higher domestic taxation and external borrowing on a large scale.

Furthermore, South Korea is not in a position to offer generous aid programs to other countries in support for reunification. Possible Re-Unification Scenarios for Korea Several possible developments should be considered in any discussion of Korean unification. In particular, there is a need to study the internal developments in North Korea. For one new leadership may change policies drastically or he may not do so. Either way, this could prolong the process, but could also yield benefits for the economic and social situation. Another scenario might be that of a revolt against the system and leadership by part of the North Korean party elites. The consequences of such an event are entirely unpredictable.

Another scenario would be the collapse of the North Korean economy leading to the absorption by the South. It is hoped that such an option can be averted in favor of a step-by-step approach to reunification. A further possibility would be the Chinese-style reform by opening up the country. The absence of any private ownership would complicate such an option, although the recent …