Bracing for unification
We need to build goodwill with the World Bank and IMF, whose support will come in handy for unification.
“I do not expect to see German unification in my lifetime,” German Chancellor Helmut Kohl said in a private meeting exactly two weeks before the fall of the Berlin Wall in November 1989. A few month earlier, former Chancellor Willy Brandt predicted during a visit to Seoul that South and North Korea could unite faster than the two Germanys.
The Iron Curtain came down dramatically, paving the way for a unified Germany.
However, one could hardly be assured at the time that the collapse of the symbol of the cold war would lead to an immediate unification.
First of all, it was felt that France, the U.K. and the Soviet Union would never welcome a reunited - and mightier - Germany, which was responsible for starting two world wars. French President Francois Mitterrand said, half-jokingly, “We love Germany so much that we would prefer to have two of them.” His remarks summed up the attitudes of Germany’s neighbors to the prospects of a reunited Germany at the time. British Prime Minister Margaret Thatcher not only opposed German unification - strongly and openly - but also admitted later that she had been “clearly wrong” on the issue.
In such hostile and skeptical circumstances, Kohl first sought support from U.S. President Ronald Reagan, who maintained an amicable stance toward reunification. (Remember his words, “Tear down this wall”?) Then he succeeded in persuading Soviet leader Mikhail Gorbachev. He used all kinds of diplomatic skills to gain the blessing of Mitterrand. The famous talk afterward was that Kohl promised to surrender German pride over the deutsche mark for a single European currency to win over Mitterrand.
The question for us is whether we are ready to grasp the chance at unification when a tipping point arrives on the Korean Peninsula. The cost of the two Koreas uniting would obviously be much more than in Germany’s case if we take the demographic and income gap into account. While the West German population outnumbered East Germany’s by four to one and their per capita income was approximately triple that of the East Germans, North Korea’s population is about half South Korea’s, but the income gap is as wide as 20-fold.
Therefore, we have an immense task down the road to keep fiscal health, financial security and sufficient foreign currency reserves to cushion any shock from unification. Based on the German precedent, there should be thorough study and preparations for such things as a new currency system for the short and longer terms, the migration of North Koreans to the southern region, precise knowledge of land ownership in North Korea, guidelines on mergers or shutdowns of North Korean state enterprises, temporary administrative mechanisms and a new social security infrastructure.
Last week, an international forum on the theme of unification and the Korean economy was held in Seoul. The meeting was attended by Manfred Carsten, deputy finance minister of West Germany at the time of reunification, and other German policy makers as well as experts on North Korea from home and abroad. The German participants were of one voice in stressing the need for careful preparations for a massive influx of North Koreans. After all, East Germans were the most well-off among the Socialist bloc. Yet nearly 4 percent of the East German population, or around 600,000, moved to the West. So far 1.7 million, or more than 10 percent of the former East German population, have resettled in the West.
Considering the impoverished state of North Korea, the number of North Koreans flooding into the South would naturally be much greater. Therefore, we must be prepared for a sudden migration. We also need to reach a consensus on the guidelines on which North Korean state companies to keep or shut down, not to mention setting appropriate wage levels for North Korean workers. Both Germany’s successes and failures can offer us good guidance.
At the same time, we should come up with pivotal measures on another level: polishing our diplomatic skills and building a solid base for trust with our neighboring countries and the international society. A united Korea does not pose a threat to the global community as Germany has been in the past. But securing support and cooperation from abroad is crucial to preparing the ground for a Korean reunification.
That’s why we should make efforts to persuade our neighbors and the international community that a united Korea can better contribute to regional and global security and peace than a bifurcated peninsula. Also, we need to actively participate and build goodwill with international lenders like the World Bank, International Monetary Fund and Asian Development Bank. Their support and mediating role will likely come handy during times of need to cushion the immediate costs of reunification as well as in rebuilding the North Korean economy.
Given the rapid changes around the Korean Peninsula and inside North Korea, preparations for reunification are no doubt an imperative agenda for the country. Translation by the Korea JoongAng Daily staff.
* The writer, a former finance minister, is adviser to the JoongAng Ilbo.
by Sakong Il