Project Syndicate
Planning for Korean Reunification
By Lee Jong-Wha, Professor of Economics and Director of the Asiatic Research Institute at Korea University
SEOUL
– The long-simmering North Korean nuclear crisis has reached a near
boiling point. Last month, the Hermit Kingdom launched two
intercontinental ballistic missiles capable of hitting major US
cities. The United Nations Security Council responded with a unanimous
vote to impose new economic sanctions on the country – the most
stringent yet – which would cut at least one third of its annual export
revenue. Since then, North Korean leader Kim Jong-un and US President
Donald Trump have been hurling escalating threats at each other.
At
this point, it is impossible to say what will happen on the Korean
Peninsula. For now, all the international community can really do is
continue to leverage a combination of economic sanctions, military
pressures, and diplomacy to try to get the Kim regime to the negotiating
table. But, at the same time, we should consider and prepare for all
eventualities, from a military conflict to the peaceful reunification of
North and South Korea.
The
most catastrophic scenario would undoubtedly be a military conflict.
And yet the likelihood of that outcome has now actually increased, owing
to the Trump administration’s recent announcement that it is reviewing
its military options, including “preventive war.”
The
truth is that a preemptive strike is far from a practical solution. It
is not at all clear that such an approach would lead to North Korean
denuclearization or topple the Kim regime. What it could do is escalate
into an armed confrontation between the US and China, with nuclear war being the worst possible outcome.
South
Koreans, well within the range of the North’s weapons, would suffer
dearly from the Kim regime’s retaliation against a US strike. To put it
into perspective, the Korean War of 1950-1953 killed more than two million Koreans, as well as 36,000 Americans and 600,000 Chinese soldiers – and it didn’t even involve nuclear weapons.
A
safer and more practical approach would focus on tightening the
economic and political screws on North Korea. To be sure, some argue
that economic sanctions, however harsh, would be inadequate to
compel North Korea’s leaders to give up their nuclear weapons. After
all, both Iraq’s Saddam Hussein and Libya’s Colonel Muammar Qaddafi
halted their programs to acquire weapons of mass destruction, only to be
driven out of power and then executed.
Given
the risk implied by a military solution, more robust economic and
political pressure remains the international community’s best bet for
defusing the North Korean nuclear threat, whether by compelling the Kim
regime to abandon its program or by triggering that regime’s collapse.
The UN Security Council sanctions are a step in the right direction, but
they are not enough, as they do not ban supplies of oil to the North,
apparently due to Chinese and Russian opposition.
In
fact, though China agreed to the sanctions, it remains reluctant to
aggravate its already tense relationship with its North Korean client.
This must change. Stronger and more focused US-China cooperation is
essential if sanctions are to have a chance of working. Avoiding such
cooperation will only make a devastating outcome – be it a military
conflict or an unruly collapse of the Kim regime – more likely.
China
could still be persuaded to take a more active role in constraining the
Kim regime. Indeed, its uncooperativeness could damage its
relationships with the US, Europe, Japan, and South Korea – all of which
are ultimately more valuable partners than the unruly, impoverished
North Korea.
But
for China to do more, it needs assurances that it will not immediately
lose its strategic buffer on the Korean Peninsula. Hence the need for an
agreement now on how to handle the potential collapse of the Kim regime
and the reunification of the Korean Peninsula. Like the fall of the
Berlin Wall, the Kim regime’s collapse could come about quite suddenly.
So China needs to know now that a reunified Korea would not be its
enemy, and that the US would withdraw its troops that are currently stationed in South Korea.
Of
course, the implications of a collapsed regime in North Korea extend
far beyond China’s strategic interests. Indeed, it would have a major
economic and political impact throughout the region. That is all the
more reason to put a comprehensive plan in place to ensure a peaceful
transition.
I recently conducted a quantitative assessment of
the economic impacts of unification on North and South Korea under
several hypothetical scenarios, assuming North Korea’s sudden collapse.
As it turns out, a peacefully managed unification process, characterized
by comprehensive economic reform and opening-up,
could enable North Korea to achieve sustained double-digit GDP growth,
despite a sharp slowdown immediately following the collapse.
The
key to success would be to allow North Korea to take advantage of its
relatively abundant human and natural resources, including rich mineral
reserves, to achieve export-led industrialization. As for South Korea,
with sufficient preparation, effective policies, and more financial
resources, it can manage a peaceful reunification and mitigate the
adverse effects of the shock.
By
contrast, in a scenario where South Korea is unprepared for
reunification and the North quickly dissolves in a state of disorder,
the risk premium on the Korean Peninsula would jump sharply, and reforms
would be delayed. This would lead to persistently weakened investment
and GDP growth across the Korean Peninsula, causing South Korea’s GDP to
decline by more than 3% in the initial years of the crisis. Inflows of
migrants from the North would compound the risks, potentially disrupting
South Korean labor markets and causing social unrest.
For
now, the international community, including China, should continue to
push for North Korea to abandon its nuclear weapons and pursue economic
reforms, using ever-stronger economic sanctions. Meanwhile, South Korea
must continue its efforts to resume a dialogue with the North on
humanitarian, health, and environmental issues. Civilian exchanges and
information flows could nurture forces that would bring about
fundamental change from the inside.
Even after 70 years of division, South Koreans must not give up hope for peaceful reunification with our northern brethren. On the contrary, we must plan for it.