Korean Preparation for National Unification

Background testimony for the Brexit and the Future of Ireland: Uniting Ireland and its People in Peace and Prosperity report produced by Senator Mark Daly for the Joint Committee on the Implementation of the Good Friday Agreement, Houses of the Oireachtas, Ireland.

February 1, 2017

Ireland and Korea are both divided nations. During the first decade of the 20th century, Korea was occupied and eventually formally annexed by Imperial Japan.  At the end of the Second World War, the country was partitioned into zones of Soviet and American military occupation. Unable to agree on a formula for unifying the country, in 1948, two rival states, the Republic of Korea and the Democratic People's Republic of Korea, were declared in the southern (US) zone and the northern (Soviet) zone, respectively.

In 1950, North Korea attacked South Korea in a bid to forcibly unify the peninsula, drawing the US and China into the conflict. Most of the capital stock was destroyed as armies from both sides twice traversed nearly the entire length of the peninsula. Millions of Koreans were uprooted and forced to flee their homes. The two Korean states subsequently not only pursued divergent development strategies but also pushed those strategies to extremes. South Korea not only adopted a capitalist system but also went on to pioneer an outward-oriented development strategy, emphasizing international trade as a catalyst. North Korea, in contrast, not only chose central planning but also intentionally time-phased its plans to frustrate linkages with those of other fraternally allied socialist states and in doing so created the world's most autarkic economy, notable in the degree to which markets were repressed. 

Over nearly five decades, economic performance in South Korea was nothing short of spectacular. Between 1963, when a wide-ranging economic reform program was initiated, and 1997, when the country experienced a financial crisis, real per capita income growth averaged more than six percent annually in purchasing power adjusted terms. At the start of that period the country's income level was lower than that of Bolivia and Mozambique; by the end it was higher than that of Greece and Portugal.

As astonishing as South Korea's economic performance has been, its political development has been as impressive, if not more so: In the space of a single decade, between 1987 and 1997, the leadership of the South Korean government went from an authoritarian strongman (General Chun Doo-hwan) to his elected but hand-picked successor (General Roh Tae-woo) to an elected centrist civilian politician (Kim Young-sam) to a former dissident (Kim Dae-jung). Even the current political turmoil involving the impeachment and removal from office of the sitting president, Park Geun-hye, on corruption charges can be interpreted as signaling the maturing and consolidation of the country's democratic institutions. South Korea is arguably the premier global success story of the past half century.

In stark contrast, North Korea experienced a famine during the 1990s, which killed perhaps 600,000 to 1 million people out of a pre-famine population of roughly 22 million, making it one of the 20th century's worst. This disaster was very much the product of the country's political system, an anachronistic Stalinist dynasty, now into its third generation, which has systematically denied its populace the most elemental human, civil, and political rights. Even by the standards of Ireland's history over the past century, the trauma experienced on the Korean peninsula has been profound.

Both the North and South Korean constitutions lay claims to sovereignty over the entire peninsula. Though the Irish and Korean cases are radically different, this essay will examine the policies undertaken by the South Korean government in pursuit of national reconciliation and eventual unification with the hope that there may be some modest applicability to the Irish case. (North Korea also engages in unification preparations, publicly through an offshoot of the Korean Workers Party, the Committee for the Peaceful Unification of the Fatherland, and surreptitiously through support for front groups and financial aid to ideologically aligned factions in South Korea. It is hard to imagine that this model of engagement has any useful application to the Irish case, and for our purposes can safely be ignored.) The remainder of this essay focuses exclusively on South Korean unification preparations.  

Preparations for Unification

In the period since a 1953 armistice put into force a ceasefire ending organized combat, the two Korean states have existed in a state of uneasy rivalry, punctuated at times by violent hostility. Despite the animosity, since the early 1970s both sides have officially promoted a policy of peaceful reunification. In 1972 North and South Korea signed the July 4th Joint Statement, which declared that both sides desired early peaceful unification and contained a renunciation of military force as a means to achieve unification. Both countries maintain nominal commitments to a consensual and protracted process of integration envisioned to last 50 years or more while preparing for possibly more abrupt unification scenarios.

In 2000, South Korean President Kim Dae-jung met with North Korean leader Kim Jong-il, the first time that two Korean heads of states had met. In 2007, another summit was held between South Korean President Roh Moo-hyun and Kim Jong-il. During both meetings, the two leaders released joint statements on the importance of unification. They proposed a variety of programs as first steps in the direction of unification. These programs included visits by families separated by the war decades earlier, humanitarian projects, cultural exchanges, and economic development projects. Nevertheless, none of these projects have been consistently implemented, and today inter-Korean cooperation is almost non-existent.

The two Koreas are de facto and in most regards de jure mutually independent states. Both states function as independent countries in the United Nations, and unlike the situation regarding China and Taiwan, 157 countries maintain diplomatic relations with both North and South Korea. The unique inter-Korean relationship has led to the creation of bureaucratic institutions that play roles similar to what a ministry of foreign affairs or an international development agency would play if the two had been normal countries with diplomatic relations.

The Ministry of Unification

To manage unification policy, the South Korean government operates the Ministry of Unification, which was established in 1969. The ministry plays a unique role as a quasi-foreign affairs and international development agency focused only on North Korea. The Minister of Unification sets policy on inter-Korean cooperation and engagement including humanitarian assistance, exchanges, North Korean refugee settlement in South Korea, and trade and economic cooperation. The ministry publishes an annual White Paper on Korean Unification policy as well as data and statistics on South Korea's engagement with North Korea. Officials from the Ministry of Unification are assigned to South Korean embassies around the world.

As democracy in South Korea has solidified, the human rights situation in North Korea has become more salient, as has the recognition that dealing with North Korean human rights abuses would be an essential element of any unification scenario. In March 2016, South Korea passed its first Human Rights Act, which created additional responsibilities for the Ministry of Unification to promote human rights, as well as mandating the creation of a government human rights foundation tasked with documenting North Korea human rights abuses to be used to prosecute perpetrators in a unified Korea.

In the economics sphere, after the Berlin Wall fell, inter-Korean cooperation in South Korea gained new momentum, and South Korea became gradually more open to cultural exchanges and economic engagement with North Korea. The National Assembly passed legislation promoting inter-Korean economic cooperation and cultural exchanges in 1990. The greatest expansion of inter-Korean cooperation didn't occur, however, until South Korean President Kim Dae-jung became president in 1998 and began to implement his "Sunshine Policy" towards North Korea—a policy based on the separation of politics and economics. The policy, named after Aesop's fable of the Sun and the Wind, expanded cooperation with North Korea without demanding specific quid pro quos from North Korea in the military or human rights spheres. As originally conceived by Kim Dae-jung, the Sunshine Policy was instrumental: the expectation was that engagement would induce changes in the North Korean political and economic system that would create a more plausible and durable basis for national reconciliation and eventual unification.

The North Koreans responded favorably to Kim Dae-jung's overtures but without making substantial changes to their economy or system of government. A paradox of Kim Dae-jung's strategy was that in South Korea he argued that opening up North Korea's society and economy would ultimately force the North Korean regime to change. But unsurprisingly, the North Korean regime regarded Kim's overture as a Trojan Horse and permitted only very limited and controlled inter-Korean economic and cultural exchanges with an eye on maximizing cash inflows. Throughout the Sunshine Policy era, North Korea secretly continued to develop its nuclear weapons program, as it eventually admitted openly.

Inter-Korean Cooperation Fund

The South Korean government finances its inter-Korean cooperation projects, including official development assistance, insurance for South Korean firms, humanitarian aid, economic cooperation, and some unification preparation projects, through the Korea Export-Import Bank's Inter-Korean Cooperation Fund. The fund currently receives regular allocations from the government and earns interest on its non-North Korea related investments. Since its establishment in the early 1990s, the fund has grown to approximately $11 billion today.

The fund's activities peaked during the heyday of the Sunshine Policy era in the mid-2000s. In 2006 South Korea provided over $800 million in funding. During the height of the fund's activities the categories with the largest spending were humanitarian assistance, economic cooperation, infrastructure support, and financing for a now-defunct light water reactor in North Korea. The fund finances projects through a variety of loans and grants, although in reality there is little hope that the loans will ever be repaid. Indeed, at one time South Korea provided food aid to North Korea in the form of "loans" precisely to avoid questions as to why it was not working through the UN's World Food Program (WFP) and subjecting its aid to the monitoring activities that the WFP was attempting to implement.

The cornerstone of the economic prong of Kim Dae-jung's Sunshine Policy was the Kaesong Industrial Complex (KIC), a business industrial complex located in the North Korean city of Kaesong just a few kilometers north of the demilitarized zone, known as the DMZ, which separates the two Koreas. At Kaesong, South Korean firms used South Korean capital supported by significant South Korean government infrastructure spending and political risk insurance. The firms used cheap North Korean labor to produce mostly light manufactured goods, which were then sold in South Korea and exported elsewhere. Kim Dae-jung's plan was for the KIC to serve as a template for inter-Korean economic cooperation that would spawn a virtuous cycle of trust between the two Koreas' economies and societies.

The high point of inter-Korean cooperation occurred in the mid-2000s as Kim Dae-jung's engagement-oriented successor President Roh Moo-hyun built upon Kim Dae-jung's vision to expand economic cooperation, humanitarian aid, and inter-Korean tourism. In 2002, the Koreas opened a joint tourism project for South Korean tourists run by South Korean firm Hyundai Asan at Mount Kumgang, just north of the DMZ in the eastern part of North Korea. However, in 2008 a North Korean soldier shot a South Korean tourist and, receiving a dissatisfactory response from the North Korean government, South Korean President Lee Myung-bak called off the entire tourism project. The South Korea-funded tourism zone remains mostly dormant, although North Korea is seeking Chinese investors to fully expropriate the property and take over management.

In terms of economic weight, the KIC had the most impact of any joint Korean project. During the mid-2000s the complex continued to expand and by 2013 employed 53,000 North Korean workers. Even when inter-Korean tensions were high amidst two North Korean nuclear tests in 2006 and 2009 and two North Korean attacks that killed South Koreans in 2010, the Kaesong complex continued to operate. Yet the KIC has always been a bit of political football. In 2013, North Korea unilaterally closed the complex for five months. In 2016, after the fourth North Korean nuclear test, the South Korean government of Park Geun-hye announced a "temporary closure," which remains in effect. As recently as 2015, trade with South Korea accounted for approximately 30 percent of North Korea's total trade but following the closing of the KIC declined to nil.

Now that inter-Korean cooperation is virtually non-existent, the Inter-Korean Cooperation Fund uses the majority of its funding allocations to pay firms that lost investments when South Korea shut down the KIC in 2016. Currently the Inter-Korean Cooperation Fund spends most of its funds on paying South Korean firms not to cooperate with North Korea.

However, North-South trade and investment have always contained a significant explicit or implicit subsidy element, and if a more pro-engagement government were to come to power in Seoul (which seems likely, if not probable, in the near future), the fund could be spent quite quickly on infrastructure associated with additional KIC-like projects in the North.

Other Activities of the Ministry of Unification

Besides these official government-run entities, the South Korean government funds think tanks that either support unification directly or fund projects that support them. The most prominent unification-focused think tank is the Korean Institute for National Unification, known as KINU, which was founded in 1991. KINU conducts research on a variety of unification-related issues, focusing on politics in Northeast Asia, analyzing North Korea as it is today, and researching unification strategy.

In terms of models of unification, South Korea has often looked at German unification to glean insights into how Korea might unify (Park Geun-hye once called Germany "an example and a model for a peaceful reunification of our own country"), though the differences in the two situations are vast. The difference in per capita income between the two Koreas today is perhaps ten times that of the two Germanys when they unified. The degree of political repression that existed in East Germany pales in comparison to contemporary North Korea, where citizens (really subjects) have virtually no political rights and institutions of civil society autonomous from the state are absent. Nevertheless, Germany provides the best-case example of a state divided by the Cold War, and many studies have been conducted to try to tie lessons learned in the German unification model to the Korean Peninsula. KINU, in fact, publishes a regular series of journal articles on German unification and its implications for the Korean Peninsula.

Another responsibility discharged by the Ministry of Unification is refugee resettlement. Most North Koreans who enter South Korea spend three months in a settlement center where they receive education to help them adapt to South Korean society. North Korean defections to South Korea were relatively rare during the Cold War but increased after the collapse of the Soviet Union. Defections and resettlements expanded at even faster rates during the North Korean famine in the late 1990s. There are now 30,000 North Korean refugees in South Korea.

The first of these North Korean refugee resettlement centers, known as "Hanawon" or "unity centers," was built in 1999. It was originally planned to handle 200 refugees but an increasing flow of refugees led the government to expand the center to accommodate 400 refugees in 2002. In 2004, a second center was built in the outskirts of Seoul. North Korean refugees generally live much better lives in South Korea than in North Korea but suffer from a variety of problems, including psychological issues due to abuse by the North Korean regime, exploitation while in transit (most refugees cross the border into China and then have to make an on-migration to a third country such as Mongolia or Vietnam to file an asylum claim, an ordeal that can take years), discrimination in South Korea, and various difficulties in adapting to their new lives. Their experiences provide a window into understanding North Korean society and the challenges North Koreans would face in a future unified Korea.

Other Unification Preparation Activities

As a peculiar vestige of the Cold War, South Korea maintains a shadow government for ceremonial purposes of five South Korean officials, who collect South Korean government salaries, as the shadow representatives of five North Korean provinces. These positions were first established in 1949 before the Korean War and have been maintained until this day. These politicians play a purely ceremonial role in meeting with North Koreans and their descendants living in South Korea—there are an estimated 8.5 million Koreans of North Korean descent in South Korea.

In 1980, the National Unification Advisory Council (NUAC) consisting of functional, local, and overseas members was established to gather public opinion in South Korea and foreign countries concerning unification, promote a national consensus regarding unification, act as a focal point for national unification preparations, and advise the President on unification policy. NUAC is really a mobilization body, not an advisory or policy-making group (despite its name), with almost 20,000 council members, including more than 3,000 in the diaspora.

Both the current president, Park Geun-hye, and her predecessor, Lee Myung-bak, have attempted to reinvigorate the public mobilization activities implicit in NUAC in pursuit of unification. During his presidency, Lee proposed a unification tax to begin more rapidly accumulating funds for the enormous expected costs of unification. The divergence between North and South Korea in virtually every area of development means that unification costs could be well over a trillion dollars, approximately equal to South Korea's annual national income. President Lee was unable to pass a unification tax, however.

In light of her predecessor's failure to introduce a unification tax, Park Geun-hye has taken a different tack. Instead of dwelling on the monumental costs of unification and the burden that it would impose upon South Korean taxpayers, she famously predicted that unification would be a "jackpot" or "bonanza"—focusing on the great economic and political windfalls that would spring from a unified Korean Peninsula. A 2014 Asan Institute poll showed that while more than 70 percent of those in their twenties claimed to be interested in reunification, less than 35 percent were willing to pay additional taxes to fund the enormous projected cost. (Such views in part reflect the anxiety, widespread among South Korean young adults, that due to the country's rapidly aging demographic profile and swiftly rising dependency ratio, they will bear the fiscal burden of supporting many elderly South Koreans—regardless of what happens in the North.) Park also emphasized unification education, including promoting the Center for Unified Future of Korea,  that focused on educating the younger generation of South Koreans on the importance of unification.

Another initiative to build public awareness under the current administration of Park Geun-hye has been the establishment of the Presidential Committee for Unification Preparation (PCUP). This group, run out of the Blue House with the President as the formal chair, comprises Korean and foreign experts from diverse fields to provide research and guidance on unification. The recruitment of participants has consciously been non-partisan to include a diversity of views, though inevitably some participants affiliated with the party out of power have been disappointed. (In the interests of full disclosure, I have participated as a foreign advisor to this group.) PCUP has essentially three main tasks: to set out a blueprint and roadmap for unification; to build a national consensus; and to establish a system of cooperation among government agencies and nongovernmental organizations (NGOs). Its taskforce on cooperation projects has attempted limited initiatives in the environmental and public health spheres, such as vaccinating North Korean youngsters and replanting North Korean hillsides, which were significantly denuded as more and more marginal land was brought under cultivation during the famine period. (The particular relevance of tree planting is that deforestation continues to contribute to problems of river, canal, and reservoir silting and exacerbated flooding associated with the seasonal monsoon-type pattern of rainfall.) Analysts associated with the PCUP have done ground-breaking work on integrating North Korean refugees into South Korean labor markets. 

Conclusions

The last ten years have seen an increase in inter-Korean military tensions and a marked decrease in cooperation. There are also no clear signs that the North Korean government is on the brink of collapse despite regular speculation along these lines. Formal unification activities in South Korea have clearly shifted from engagement to preparation for more abrupt unification scenarios.

More changes could be on the horizon. The South Korean president, Park Geun-hye, is in the process of being impeached and may not serve her full term in office. Regardless, the country will hold elections within a year, and the leading declared candidates all lean towards less conditional, less reciprocal engagement policies toward the North. The pendulum could well swing back toward the more pro-engagement policies of the Kim Dae-jung/Roh Moo-hyun era. But a simple turning back of the clock is unlikely: North Korea has pursued nuclear weapons and long-range missile programs at an accelerating rate, is subject to tighter and more pervasive international economic sanctions under the auspices of the United Nations; and the issue of human rights has risen in prominence—all in distinction to the Sunshine years.

From the standpoint of Ireland, the two cases appear radically different, and it is questionable how much from the Korean experience is applicable. Nevertheless, some Korean approaches may be worth examining. They mainly involve actions that a country's political leadership can undertake autonomously to promote national reconciliation having regard to the eventual possibility that a majority of the population in Northern Ireland might someday favor unification. 

First, with the creation of the Ministry of Unification, the South Koreans established a cabinet-level department tasked with a multiplicity of unification-related responsibilities. The ministry acts as a diplomatic interlocutor; administers a variety of programs relating to unification, including the Inter-Korean Cooperation Fund and refugee intake; and maintains a think tank that focuses on unification-related research. The latter function could be relevant to the Irish case insofar as the prospect of Brexit may significantly change economic conditions in Northern Ireland, as well as the Republic of Ireland's economic relations with the United Kingdom as a whole. In South Korea, the sorts of economic modeling that one would want to conduct in anticipation of these developments, as well as public discussion and dissemination, are supported by government-affiliated think tanks as well as bodies such as PCUP. The specifics obviously differ enormously—North Korea lacks the basic institutions of a market economy, and the cross-border flow of goods, capital, and people is highly restricted—all in contrast to the Irish case. Nevertheless, cross-border exchange across Northern Ireland and the Republic is subject to currency risk, and with Brexit, EU transfers to Northern Ireland will disappear, and additional distortions are likely to be introduced. It is not hard to see the desirability of doing analysis similar or parallel to what the South Koreans conduct today.

Second, under the governments of Lee Myung-bak and Park Geun-hye, there has been a renewed emphasis on educating the South Korean public, which is frankly unprepared for what could transpire in the medium to long run. These efforts have involved not only Lee and Park using the "bully pulpit" of the presidency to shine light on the unification issue but also a revitalization of the NUAC and the formation of the PCUP. Again, contemplating Brexit, one can grasp the desirability of public bodies in Ireland convening similar groups of experts and politically active citizens to enhance both the analytical quality and public awareness of contingency planning.

In sum, the Korean and Irish cases differ enormously. But that is not to say that there is nothing to be learned from South Korean preparations for eventual national unification. Some of the approaches, suitably altered and adapted, could make a positive contribution as Ireland contemplates its future.