A tale of the two Koreas

Business Asia, May 19, 2000 by Cameron Cooper

Can Seoul and Pyongyang really settle their differences and reunite the two Koreas? CAMERON COOPER comments on the significance of upcoming talks between the leaders from the North and South

Kim Jong Il can supposedly write music to rival Mozart, play golf better than a hybrid version of Jack Nicklaus and Tiger Woods, and is a marksman with both hands.

What a pity he's such a crook leader.

In the past few years, millions of people have perished in North Korea under Kim's regime, which he inherited from his father, the late "Great Leader" Kim Il Sung.

Kim junior is now so desperate for economic aid that he appears to be taking reluctant steps to prise open cracks in the world's last Stalinist state. His decision to take part in a June summit meeting in Pyongyang with South Korean counterpart Kim Dae Jung has surprised all given that the two Koreas are still technically at war.

Apart from being a vindication of Kim Dae Jung's "Sunshine Policy" of engagement with the North, the proposed summit has also raised speculation about possible reunification of the mountainous Korean peninsula. If successful, the talks could reduce tensions on one of the last Cold War frontiers.

But the prospect of reunification is, for now, fanciful.

If history is any guide, the summit may not even proceed. Pyongyang diplomats have often reneged on planned talks -- and Kim Jong Il is renowned for using the promise of dialogue as a tool for other motives. More significantly, there's the cost of reunification.

According to a report by Daewoo Securities, if reunification with North Korea happened tomorrow it would cost Seoul up to 27 trillion won (US$24.3 billion) per year until 2010 to bring Pyongyang's dilapidated economy up to the South's level.

The report claims the total cost through 2010 would reach 300 trillion won. Given Seoul's own recent battle to rebound from Asia's economic crisis, funding such a reunification would be implausible.

The other big question is: How would leaders from the North and South coalesce?

After 50 years of iron-fisted family rule, Kim Jong Il could not simply step aside. And the South is not going to pour billions of dollars into the North without gaining leverage.

Such a loss of face, on either side, would be unconscionable.

A possible, but still unlikely, scenario is that Kim Jong Il could officially retain his post as leader of the North, with the South pulling the economic levers in the background. An agreed timeframe -- let's say 10 to 15 years -- could be set after which Kim, now 58, could stand aside gracefully.

But such a solution fails to take into account the vast North Korean military and the multiple layers of power that currently exist under Kim.

There's no doubt that the amalgamation of the two Koreas' economies has numerous long-term benefits for the South, including stronger industrial production, greater land resources and likely better trade with China and Russia as the cost of goods transportation is lowered.

Kim Dae Jung has raised the prospect of an economic bloc between the two Koreas, combining the North's cheap labour and plentiful natural resources with the South capital and management expertise.

Importantly, mended ties on the peninsula would lead to reduced defence spending -- a huge drain on both economies.

What of the mood in North Korea? Is Kim really embracing change? The truth is: nobody really knows.

In some ways, the North is little changed from the isolated country known as the Hermit Kingdom nearly a century ago.

What is apparent is that there have been growing arguments between reactionaries and reformers over whether to open the country to the outside world and seek help. Kim Jong Il appears to have been drawn towards a gradual opening-up of his state as his paranoia about a possible Western takeover of the North has subsided.

But the spectre of a June summit opens the way for a new chapter and seems to be an acknowledgment that the South is likely to become the main force in reviving the North's economy.

South Korean companies are leading the push -- for they have most to gain.

Hyundai, the South's largest conglomerate, already operates a tourism enclave near the North's scenic Diamond Mountains, and wants to establish industrial plants.

If the summit succeeds, other companies and other countries could also be drawn to the North. And families that have been separated by a stark Demilitarised Zone since 1953 could finally be reunited.

Let us hope the talks proceed.