Thinking the Unthinkable for Korea

For attention-grabbing political gestures, it is hard to beat South Korean president Lee Myung-bak's announcement of a "Unification Tax" supposedly to ease the path to eventual union with the impoverished North. It has won him headlines around the world as well as at home.

It is not an actual tax, only an idea to address a theoretical future. But it seems unlikely that it will do anything to further the cause of reunification, particularly given President Lee's hard line approach to Pyongyang and the South's recent naval exercises with the United States. Indeed it may have the opposite effect, making the North all the more determined to follow its own course, whoever is in power. Make China more than ever reluctant to see a united Korea dominated by a pro-US government in Seoul. And it may remind South Koreans of the economic and social cost of reunification, often desired more in theory than in practice.

Yet despite all this, unification issues do need airing again, scenarios for the future laid out and their policy implications debated.

It is not entirely fanciful that North Korea could be on the cusp of major changes which bring the prospect of reunification closer than at any time for the past 20 years. The issue of the process and cost of unification was at its peak around 1991 when the ending of the Cold War and the beginnings of China's rapprochement and economic relationship with the South made many assume that unification could be just around the corner. It might come, many thought, when Kim Il-sung died or even before that if the Great Leader decided to end his career by choosing to become the Great Unifier at the expense of his ideology and personality cult.

But all that proved wishful thinking. Kim Il-sung's death, shortly before a North-South summit, made matters worse, not better. His son, Kim Jong-il, spent several years bolstering his own power in part by using the North nuclear and missile program to enhance his own credentials. This made it ever more difficult to make progress in its relations with the US. Recognition by the US remains the key goal of the North but paradoxically the North's paranoia makes that impossible.

So is it entirely futile to follow President Lee's suggestion that change may be around the corner and with it the possibility of some form of reunification which would require sacrifices by the South's taxpayers?

Perhaps not. The death of Kim Jong-il, variously forecast as six months to three years hence, could make matters worse. Indeed there are suggestions that the Cheonan sinking and other recent aggressive gestures by the North may be linked to power struggles within the ruling elite, a small group in which the army leadership has hitherto been allied with the first family, and has become far more important than the party. Power plays to prove credentials of toughness and patriotism are to be expected.

On the other hand it is possible that the end of the Kim dynasty as effective power wielders could be at hand. The anointed successor, Kim Jong-un is only 28 and has scant experience – unlike Kim Jong-il who was groomed for power for many years prior to his father's sudden death in 1994. It is not entirely fanciful to believe that he will be removed or, more likely, be at best a figurehead while whoever comes out on top, especially of a military power struggle, and decides to take the country on a new course in the manner of Nikita Khrushchev in the Soviet Union after Stalin or Deng Xiaoping in China after Mao.

China would surely welcome having an ally who was less an international embarrassment and financial burden and might quietly support a faction seeking change. Of course China does not want to see reunification but given the strength of ethnic nationalism on both sides of the border, it is not entirely impossible for political change in the North to start a chain of events in that direction, starting with a revival of the Sunshine policy of President Kim Dae-jung and moving quickly to big investments by companies from the South, and tax-financed aid from the South to re-build the North's economy.

The gap between the two seems so large that the reunification cost seems huge. But given labor shortages in the South and the prospect of companies from the South shifting low-cost operations from China to the North, the outlook is not as daunting as it might seem, particularly given the high levels of both urbanization and literacy in the North. Korea is not Germany, where reunification was accompanied by a currency equalization that made no economic sense.

As for citizens of the North, they would doubtless be grateful for any significant improvement in their lot, not an expectation of early wage equality with the South. There is nothing sacrosanct about post-unification equality. (In Italy the gap between Milan and rural Sicily is almost as wide now as it was at the time of unification 150 years ago.) The bigger problem between North and South Korea will be cultural and social.

In short, there is no harm at all for the South to think seriously about unification issues. But whether it was helpful for President Lee to raise it in this way, as a gesture for domestic political purposes, is another matter entirely.