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The President’s Jackpot
Shin-ho Ahn  |  ash906@uos.ac.kr
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[136호] 승인 2015.11.19  
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Korean Reunification Seems to be Her Slot Machine

“Reunification is a bonanza,” or “jackpot.” Considering the common usage of the words, President Geun-hye Park’s short metaphor seems to implicitly convey the government’s expectations that a united Korea will provide economic benefits. But is this promise just hollow ear-kissing? What benefits would reunification actually bring? Moreover, would economic benefits be the only reason to seek reunification of North and South, which have been divided for 70 years? Why should the two Koreas reunify, if ever?

Divided Nations

The most fundamental and frequently advocated reason for unification is that the people of each nation are in the same ethnic group, Hanminjok (the Korean race). It has been an assumption that one ethnic group should form one unified nation, or at least that it would be better if so. This assumption, in turn, is based on the concept of nationalism.

To understand this basis, it may help to understand the concept of a nation. Political scholars still debate whether the rise of nation-states is a modern phenomenon, and some scholars argue that it originates in ancient times. However, the modern concept of a nation arose during the 17th and 18th centuries. Later, French historian Ernest Renan (1823-1892), in his 1882 lecture Qu’est-ce qu’une nation? (What is a nation?), referred to it as a “spiritual principle” that consists of a joint memory and “the desire to live together.”

However, in German tradition, a nation is understood as a group of people bound by non-voluntary features. In his essay Us and Them (2008), Dr. Jerry Z. Muller, a professor of History at The Catholic University of America, says that “nations are defined by a shared heritage, which usually includes a common language, a common faith, and a common ethnic ancestry.” For example, when contemporary Americans identify themselves as a nation, they are referring to a shared heritage which may be called civic nationalism. During the early to mid 20th century, the concept of shared ethnic ancestry, or ethnonationalism, was used as a tool for both colonization and decolonization. For Japan and Germany, it developed into ultranationalism, a main component of Nazism.

In Korea, particularly during the Korean Empire, early scholars especially focused on ethnic heritage. With a belief in the uniqueness of Hanminjok, they fueled the Korean resistance against forced assimilation policies under Japanese rule. As a creed once wielded for freedom, this faith in Hanminjok has held fast in ever since, while Japan and Germany officially discarded theirs after World War II. North and South Korea have shared the central concept of Hanminjok - homogeneity - despite being divided, thus giving the Korean people hope for reunification.

Korean nationalistic pride, so-called ethnic nationalism, has been also inherited through education. Many textbooks used in schools emphasize the importance of purity, uniqueness, and greatness in Hanminjok. This emphasis leads to a claim that the two Koreas should therefore reunify in order to restore their nationality.

But not everyone agrees with this idea. Leila Cab, a French exchange student studying International Relations in Korea, said in an interview with The UOS Times, “It is more likely that they will remain two separated nations. To belong to one ethnic group is not enough of a reason for the two Koreas to reunify, taking all the risks. Younger South Koreans don’t sympathize with the idea as much anymore. Now, the world is so globalized that what matters is your culture, attitude and so on, rather than your race.”

As Cab said, younger South Koreans tend to show less enthusiasm for reunification. According to a survey conducted in 2015 by The Institute for Peace and Unification Studies at Seoul National University, as shown in the figure on page 20, the number of respondents who agreed that reunification is “needed” decreased by 12.4 percent among people in their twenties and 14.1 percent among those in their thirties. Regarding these results, Research Professor Eun-mee Jeong said that “Skepticism towards reunification have grown in spite of efforts to promote it,” and “positive awareness is shrinking especially among younger people.”

The UOS Times had an interview with Jihwan Hwang, professor of international relations at the University of Seoul, and he admitted that some people think of the idea as “old-fashioned.” He attributed this attitude to the Unification Formula for the Korean National Community, the official government policy, which has stood nearly unchanged for 20 years. Nevertheless, professor Hwang supported the concept of national homogeneity as a reunifying value. “Even though we are living in the global age, state centrality does still matter. When it comes to Korea, which is striving for a leading position in the world, having a unified nation and region has a whole different meaning.”

President Park emphasised the need for the reunification in World EconomicForum Annual Meeting 2014 in Davos, Switzerland
Guarding along the border also requires an incredibleamount of human resource
Golden Goose

The “bonanza” or “jackpot” that President Park refers to seems to suggest that the economic benefits will act as the follow-on to reunification. Some of these presumed benefits are commonly known, but have rarely been discussed or carefully considered. What if it proves to be only an empty pot at the end of the rainbow?

One of the immediate, most expected effects often mentioned is the decrease in military expenditure. During the seminar “Reunification, How to Prepare” held by The Future Strategy Research Institute, Chung-won Suh, a representative of the Saenuri Party, has claimed that “more than fifty trillion won of defense expenditure can be saved by 2040,” thus supporting President Park’s vision. Korean reunification, more benefits than costs (2010), one of the most frequently cited reports, published by Hyundai Research Institute (HRI), also states military expenditure will decrease by 122.6 million US dollars (129 trillion won) in the first 10 years following reunification.

However, some refute this expectation. In an interview with Pressian, Heon-ho Hong, former director of the People’s Institute of Economic and Social Studies, criticized the HRI report, saying it “does not have any good grounds for its estimates.” The report suggests the case of Germany as an example, in which military expenditure as a percentage of Gross Domestic Product (GDP) had gradually dropped in the ten years after the reunification. Hong considered it unconvincing. Based on data provided by the Stockholm International Peace Research Institute, Hong said, “ “Germany’s military expenditure ratio fell from 2.8 percent to 1.4 percent from 1990 to 2012. In the same period, however, the average ratio of the OECD’s 24 nations fell from 2.5 to 1.4, and ours [Korea’s] from 4.0 to 2.7, as well.” Thus, Hong insisted that such estimates include comparisons with surrounding nations.

Daily NK, a publication focusing on North Korean issues, also argued “It will be hard to lower defense expenditures considering the ongoing arms race in Northeast Asia” in its articles including Defense Expenditure to be rarely decrease even after Reunification. Koo-sub Kim, former president of the Korea Institute for Defense Analysis, also claimed that defense expenditures would necessarily increase after the reunification, because Korea needs to modernize its armed forces, taking into account the future’s hypothetical enemy states.

Hankyoung Sung, professor of economics at the University of Seoul, admitted the possibility of an increase in military expenditure if reinforcements to naval and air forces would be factored in, though he added that such an increase would not be so likely. He emphasized the need to compare the estimated expenditure between the cases of reunification and division. Interviewed by The UOS Times, he said, “Considering that it costs massive amount of money to maintain current human power, and that the overall size of the military [both South and North] is likely to decrease by one third after reunification, the burden will certainly be lightened, though it will not be as dramatic as is often claimed.”

Han-beom Cho, senior researcher at the Korea Institute for National Unification (KINU), also holds to the anticipation of a decrease in military expenditure. Publishing the result of research done by KINU, he expected the reunified Korea’s GDP to military expenditure ratio, which was 2.59 percent in 2012, to be somewhere between China’s (1.3 percent in 2012) and Japan’s (1.0 percent in 2012). He said the total number of South and North Korean military personnels is nearly about 1.7 million currently, and it would shrink to 1 or 1.5 million after reunification. According to Cho, 20 trillion won of military expenditures every year will be saved in the 20 years following reunification.

Many consider reunification to be a chance for another economic take-off. South Korea is already well known as a trade-dependent nation, with international trade making up a large portion of its economy. According to statistics provided by the Korea Customs Service in 2014, the trade dependency of South Korea was 75.8 percent, which is fairly high and is more than twice of Japan’s 33 percent. According to Dong-A Ilbo’s article Making Draft of Unified Economy (2013), Ho-jung Cho, senior researcher at Hyundai Research Institute, also pointed it out “The confined size of the domestic market is the reason why the South Korean economy tumbles whenever it faces an external draft.” Considering this, expansion in the domestic market following reunification is regarded as the key to stepping away from trade-dependency. The Korea Federation of Small and Medium-Sized Businesses, reported that 58.6 percent of small and medium-sized business managers believe reunification is needed. Of these, 60.3 percent of respondents cited “utilization of the labor force from North Korea” as the main reason. This was closely followed by “expansion in the domestic market,” with 59.7 percent . Professor Sung agreed with this idea, too. According to him, the expansion means “more than a mere change in the statistics,” since South Korean enterprises can take advantage of not only additional markets, but also additional labor force, which means there will be less need to seek them overseas.

Yet, whether the domestic market will really expand is doubtful. As stated in the World Factbook provided by the United States Central Intelligence Agency, the GDP of North Korea in 2013 is estimated (since North Korea does not publish any reliable national accounts) to be 40 billion US dollars, which is less than three percent of South Korea’s 1,381 trillion won. This means that the purchasing power of the North Korean economy is really insignificant, and that there is nothing much for South Korean enterprises to anticipate. What is needed in order to make these hopes a reality is to provide time for North Korea to develop. Hong mentioned that 600 billion dollars would be needed each year to raise 25 million North Koreans’ GDP per capita to 25 thousand dollars. “This would not be a problem if South Korea had a golden goose. But as it stands, it will bring a financial crisis like the one we see in Greece now,” said Hong.

The fleeting moment of reunion only brings separation with no end in sight
Cub Imperialism

Nevertheless, Professor Sung stressed that reunification is inevitable; “What if we refuse it, and the North Korean regime suddenly collapses? Are we just going to sit on our hands? What about all the refugees from North Korea? This would be nonsense.” If Koreans are destined to reunify, Sung focused our nation should prepare for it, and he asserted that every government branch must have its own post-reunification plan.

On the other hand, there is another voice with strong opinions on this issue.. Professor Vladimir Tikhonov, well known in the media by his Korean name Noh-ja Park, warns against the undertone of the “jackpot” theory. In his column Korea, Inside and Outside in the Hankyoreh, he says it was absurd to talk about reunification as a jackpot. Gradual and peaceful progress toward reunification will take many years. The probability that the North Korean regime will collapse in the near future is remote.

Even if it happens China will intervene as the sparks fly upward, and if the United States engages, “it will be a jackpot for death dealers.”
Professor Tikhonov points out that President Park’s remark seems quite indifferent to North Korea and may be perceived as a threat like saying “We will take you over.” He finds a neoliberal motive in seeking an economic neo-colony. He shows several examples such as Mexico's subordination to the United States, Czech to Germany, Estonia to Sweden. And he says the opening or reforming that South Korea is demanding in the North is like “asking them to be our Mexico, Czech, or Estonia.” This is the implicit meaning he thinks to be under the “bonanza,” and he calls it as “cub imperialism.” Professor Tikhonov argues in favor of reunifying people and assisting the weak. That means equality and humanity, which easily takes a back seat when we try to talk about money.

To carefully think about how we will distribute limited resources is important, of course, and this is the aim of economics. Nevertheless, sometimes we tend to find ourselves mired deep in it, and we miss what matters more, which is more vital: peace, equality, and humanity.

Shin-ho Ahn
ash906@uos.ac.kr

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