Saturday, January 18, 2014

Kim Jong Un’s $5 trillion price worth unification’s benefits

An anecdote:  Back in 1997 or 1998 when we were briefing the planning efforts for CONPLAN 5029 for north Korean Collapse and Instability we had a briefing with the DEPSECDEF, John Hamre.  After we describe the threats, possible scenarios, and contingency plans for each scenario he turn to me and said he had only one question.  "How much will this cost the US government?"  I was taken aback.  We had done a lot of detailed contingency planning but had never considered the cost to the USG. I gave him the only answer I could.  "Sir, I do not have any idea."  He replied, "Well I am the DEPSECDEF and my portfolio is budget and resources and I have to know how this is going to cost."  I told him we would get back to him.  And I am sure I still owe him an answer so perhaps I will send him this article as a partial response.
V/R
Dave

Kim Jong Un’s $5 trillion price worth unification’s benefits

BY WILLIAM PESEK
BLOOMBERG
As Park Geun-hye searches for ways to compete with China and Japan, the South Korean president is eyeing a rather surprising ally: Kim Jong Un.
“Unification will allow the Korean economy to take a fresh leap forward and inject great vitality and energy,” Park said on Jan. 10. “People would even sing, ‘We dream of unification even in our dreams.’ “
The idea isn’t as dippy as it sounds. Economists generally rate Park’s first year in office as a dud. She arrived at the presidential Blue House with big talk of building a more “creative” economy. Yet her plans to empower small and medium-size companies and to rein in the family-run conglomerates, or chaebol, that dominate the economy remain embryonic.
As her second year begins, Park must accelerate efforts to restructure Korea’s outdated and top-heavy growth model. Folding unification into the strategy is audacious. In theory, combining the South’s capital and technology with the North’s human and natural resources could create a powerful growth engine.
Of course, this entire discussion hinges on Kim’s willingness to remove the soldiers, artillery and barbed wire that continue to line the demilitarized zone. Kim’s recent purge of his No. 2, Jang Song Thaek, suggests the 30-something dictator has no interest in rapprochement. Convincing the Dear Leader to turn his back on Stalin and face capitalism will be no easy sell.
Park could face an equally tough sales challenge with her own people, who have less and less interest in dealing with the Kim Dynasty.
I was in Seoul in April 2013 when Kim precipitated what many characterized as Park’s Cuban missile crisis. His threats to carry out pre-emptive nuclear strikes against the U.S. and South Korea had governments around the globe on edge, markets gyrating and credit-rating companies ready to pounce. For young Koreans — those for whom war in the 1950s is the stuff of dry textbook passages and who feel little connection to those above the 38th parallel — it was the last straw.
The share of South Koreans who view unification as necessary fell to 54.8 percent in 2013 from 57 percent a year earlier, according to Seoul National University. The ratio is falling more precipitously among Koreans ages 19 to 29 — to a scant 40.4 percent.
The under-30 crowd worries primarily about bearing the cost of reunification. Absorbing 24 million impoverished people who’ve never had a bank account, touched a decent computer or visited a modern dentist would be a breathtaking challenge. In February, Park’s Finance Ministry vastly low-balled the price tag. Anyone who thinks this can be done for $591 billion or less if the process occurred around 2020 is as delusional as a North Korean peasant convinced that Kim is God.
Take the long-standing $2 trillion to $5 trillion estimate by North Korea experts, including Peter Beck of the Washington- based Atlantic Council. Even these guesstimates are likely to prove very conservative as reunification begins.
Pyongyang is a complete black box. Really, Dennis Rodman knows more about the state of play there than World Bank President Jim Yong Kim. There also are no precedents. Germany’s reunification, for example, was far less daunting, and even there costs vastly exceeded estimates, having reached at least $2 trillion so far. East Germans in 1990 were infinitely more plugged in to the global economy than North Koreans are now. Nor did they suffer from crushing poverty.
West German officials didn’t have to worry about a big store of nuclear weapons just on the other side of the Wall, or more than a million brainwashed and agitated soldiers. Given how disastrously dissolving Iraq’s military went, this must be handled wisely.
Reunification won’t pay for itself. Sure, North Korea has coal, copper, gold, manganese, tungsten, uranium, zinc and other underground riches. But big checks will have to be written by South Korea, the U.S., Japan, Europe and, of course, China, Kim’s main enabler. China will hate Park’s push to join forces with Kim’s people. It would put American boots right on China’s northeast border and rob the Communist Party of a key means of keeping Washington and Tokyo off balance.
(Continue to the article at the link below)

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