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Policy Priorities for the Unified Korea

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The Search for a Unified Korea
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Abstract

The economic and political integration of a unified Korea has always been the national hope of both Koreas, but in reality the two sides have been pursuing the integration in a way that would favor their respective but completely different systems that each has antagonistically maintained since the division in 1945. The origin of the nation’s division was in large part traced to the ideological split among independent movement leaders after the World War II, whose misguided political ambitions underlined the stumbling blocks that did not allow them to compromise and to unselfishly unite. After the first cornerstone was mistakenly placed and fixed, it was not possible for the leaders to acknowledge that a mistake had been made. In addition, the special interest groups as well as specific situations have not made it possible for the separated to be in accordance, since either side was not willing to completely give up its respective ideological philosophy. The two sides have thus been in endless conflict and have maliciously blamed each other for the nation’s division and the resulting pains. In a bitter rivalry for over a half century, the competition seems to have almost driven the North into a dead-end. Toward the end of the last century, a powerful force wiped away the landscape of communist bloc countries. A decade of subsequent turmoil revised and reformed the theretofore atlas of most communist countries. The last remnant of Stalinist-type communism resides in the “Democratic People’s Republic of Korea,” which is, in fact, neither “democratic” nor a “people’s republic.”

And if at another time I announce that a nation or kingdom is to be built up and planted and if it does evil in my sight and does not obey me, then I will reconsider the good I had intended to do for it.…

(Jeremiah 18:9-11.)

I will drive the northern army far from you, pushing it into a parched and barren land, with its front columns going into the eastern sea and those in the rear into the western sea. And its stench will go up; its smell will rise up.

(Joel 2:20.)

Therefore keep watch, because you do not know the day or the hour.

(Matthew 25:13.)

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Notes

  1. 1.

    It is known that there are more than 150,000 political prisoners in labor camps today; that is, one political prisoner for every 155 citizens. To know about the terrifying life in the North Korean gulag, read Kang and Rigoulot (2000).

  2. 2.

    In connection with this issue, refer to the following messages in the Bible: “Who of you by worrying can add a single hour to his life? Since you cannot do this very little thing, why do you worry about the rest? Consider how the little grows. They do not labor or spin. Yet I tell you, not even Solomon in all his splendors was dressed like one of these.” (The New Testament, Luke 12: 25–27.)

  3. 3.

    North Korea and South Korea both say that the national objective is to achieve reunification. But North Korea made it clear that inter-Korean relations and cooperation are one thing, and “our fatherland’s reunification is another.” It says that “two states can increase non-political exchange in economics, cultural, and social domains. But this method ‘cannot’ be a method for the improvement of relations between the North and the South for the settlement of the question of our country’s reunification.” See National Reunification and Conclusion of Agreements on Traffic, Correspondence and Trade, Information Bulletin: The Secretariat of the Committee for Peaceful Reunification of Fatherland (Pyongyang, DPRK), No.86, April 1990. pp. 6–11. Refer to the Appendix of this chapter at the end of this chapter.

  4. 4.

    To secure such support and cooperation, a unified Korea must proclaim its neutrality stance in the regional and international politics, keeping its policy of non-partisanship after national reunification.

  5. 5.

    If a new diplomatic relationship were established between the United States and DPRK, the entire picture would likely change. In general, current North Korean leadership has some reservations in fully trusting the Chinese despite Beijing’s tutelage. DPRK, if it still managed to survive till then, will shift its dependence from China to its new friend, the United States, when it establishes a more conciliatory relationship with the Uncle Sam. If so, it would be interesting to see if China wants to move closer to South Korea and vice versa.

  6. 6.

    As a matter of fact, a post-reunification economic measure is indifferent with regard to the mode (either gradual or sudden) and method of the reunification. What matters are both the timing of adjustment process taken in the post-integration and the degree of existing differences in all levels of economic conditions and sectors between the two states at the time of political unification.

  7. 7.

    However, it must be kept in mind that the transition from a socialist economy to a market economy is a time-consuming experiment. Because it needs a passage of time to complete transforming the old “implicit social contract” embedded in the workers’ mindsets to a new one. In other words, changing an “institutional factor” cannot be so successful using “shock therapy” as contrast to the prevailing arguments supported by most neo-classical economists (i.e., Jeffery Sachs).

  8. 8.

    Karl Marx had his conviction that the capitalist “market” is a machine where capitalist methods “mutilate the laborer into a fragment of a man, degrade him to the level of an appendage of a machine” (Das Kapital). Marx never understood that “market” is life with the capacity for individual creativity and self-expression, and unlike the communist system it gives the capitalist system both its extraordinary vitality and its social legitimacy.

  9. 9.

    There is some discussion on whether the exchange rate should be defined as P f /P d or P d /P f . Both approaches have their pros and cons. In the case of the former one (P f /P d ), a real appreciation of foreign currency is reflected by an increase in the real exchange rate index, while a decline represents a real depreciation of foreign currency vis-á-vis domestic currency. In the case of (P d /P f ), both nominal (E) and real (e) value of foreign currency (depreciation/appreciation) moves in the opposite direction with ratios of two price indexes (increase/decrease).

  10. 10.

    North Korea Army threatened South Korea by saying that Seoul is located within a 50 kilometer distance from their artillery located near DMZ, on April 20, 2009, and also implied that they would consider taking some critical measures on Gaesung industrial complex where about 101 South companies run manufacturing plants if the South were to join in the US-led PSI (Proliferation Security Initiative organized on May 31, 2003 to prevent WMD proliferation). If Gaesung were shut down, it would cost about 730 billion won of invested money plus an additional 630 billion won of opportunity cost to the southern investors.

  11. 11.

    This can be explained by the quantity equation of exchange, MV=py. By taking natural log of this quantity equation, we have ln M + ln V = ln p + ln y. Again taking the derivative to this log equation gives dM/M = dp/p + dy/ydV/V. This explains that rate of money supply equals the inflation rate plus overall productivity growth minus change in velocity rate. If dV/V = 0, then inflation rate (dp/p) would be zero if dM/M = dy/y.

  12. 12.

    Ghaussy and Schaefer, eds. (1993).

  13. 13.

    Some researches are made on gradual financial integration between South and North Korea on the assumption that the South and the North will coexist for a while. For example, see Park and Mueller (2001), pp. 1–27.

  14. 14.

    See the chapter on The Political Economy of Re-unification between Two Koreas, Section 5 in relation with the Germany’s misguided macro-economic policy paradox mixed with pro-cyclical fiscal policy and counter-cyclical monetary policy.

  15. 15.

    North Korea has a “unique fund supply system,” which solely controls the supply of funds as other socialist economy does. The Central Bank of North Korea implements the so-called control by Won, a form of state control in which the central bank guarantees the supply of funds for all institutes and companies by which the bank controls the economic activities of all state agents and their purchase of raw materials, utilization of manpower, productions and sales, and the acquisition and utilization of fixed assets. Control by Won is indeed meant by the national (state) control that applies to those economic enterprises and institutes within the monetary domain.

  16. 16.

    Treuhandandstalt was established on July 1, 1990 to promote the privatization of state-owned companies in the East Germany. But in Germany this state organization took sole power beyond its capability in privatizing companies in the transformation process.

  17. 17.

    The global recession, which ignited from the United States mortgage market collapse in 2007–2008, undermined international confidence in the free-market model, driving socialist countries like China, Russia, and other states to blame American-style capitalism for the slowdown. The US government’s huge investments to buyout the failing companies’ assets aroused a debate as to whether the US is still a free market economy.

    Aside from this argument on the nature of free market economy, there would be stages of different economic conditions in which government intervention is the “must.” In particular, in the early stage of two different economic systems’ integration into one, laissez-faire policy is not realistic.

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Correspondence to Eui-Gak Hwang .

Appendix

Appendix

7.1.1 (A) National Reunification and “Conclusion of Agreements on Traffic, Correspondence and Trade”

This is a North Korean propaganda text reflecting its official position on National Reunification. It appeared at Information Bulletin, Pyongyang, DPRK, No.86, April, 1990. This statement proposing to perpetuate division of the nation, which came in response to the then South Korean President Roh Tae-Woo’s July 7th (1988) declaration for national reconciliation, is well contrasted with the follow-up events in which the North Korean leadership reversed its tack and sought simultaneous entry into the United Nations with South Korea on September, 17, 1991.

Lately, the South Korean authorities are frequently talking about the question of “concluding agreements on traffic, correspondence, and trade” between the north and the south and clamoring that this year they would “conclude” an “Agreement on Traffic” even if they could not do other things.

Today, our nation is confronted with the supreme task of national reunification and, accordingly, the establishment of any relation between the north and the south should proceed from this fundamental aim of national reunification and should contribute to it. No one can dare deny this principled demand.

Then does it conform to this principled demand to “conclude” the aforesaid “three agreements” at the present juncture? In other words, does it break the present state of closure and open up the road to the peaceful reunification of the country?

If the north and the south “conclude” the “three agreements” at the present juncture, it will not open up the road to national reunification but, on the contrary, will bring about the grave consequence of freezing and perpetuating the present state of division.

To begin with, the South Korean authorities proceeded from the conception of “two Koreas” in talking about “conclusion of agreements” between the north and the south, clamoring about “agreement on traffic,” “agreements on correspondence and trade” and the like.

It goes without saying that the conception of “conclusion of an agreement” is a conception in international relations commonly used among different states.

If the north and the south “conclude any agreement,” it will mean that they recognize each other as a “state,” and externally it will give an impression that the north and the south are separate “states.” This clearly shows that “conclusion of agreements” between the north and the south is intended to make “two Koreas” a fait accompli.

From the beginning there cannot be such thing as the “conclusion” of “agreement” between the north and the south. And even if the “three agreements are concluded” between the north and the south at the present juncture, it cannot open up the road to national reunification.

Of course, the conclusion of the three agreements can be a method for improvement of relations for the normalization of diplomatic relations between two different states. But it cannot be a means of promoting the improvement of relations between the north and the south and bringing them close to each other in our country.

In international relations it is true that when two states restore their relations that have been severed and normalize diplomatic relations between them, they usually start from no-political exchange and partial exchange of economic, cultural and social domains and, on its basis, gradually deepen the relations of friendship and cooperation.

This method can be a method for the improvement of relations for the normalization of diplomatic relations between two states but cannot be a method for the improvement of relations between the north and the south for the settlement of the question of our country’s reunification.

For the peaceful reunification of our country it is necessary to solve various questions in north-south relations including the question of removing the political and military confrontation and the question of realizing many-sided cooperation and exchange in economic, cultural, social and various other domains.

In view of its significance the question of “concluding the three agreements” is not a pressing issue that must be settled before anything else. And even if this question is solved, it will not help solve other questions. In other words, in our country where the north and the south extremely mistrust each other and stand in sharp confrontation with each other, personal travel, correspondence and trade cannot be realized satisfactorily and even if they are partially realized, it will not contribute to the realization of national reconciliation and unity.

To begin with, the attempt to introduce the method for improvement of relations for the normalization of diplomatic relations between two different states is a dogmatic conception and is a wrong one.

To make a breakthrough for national reunification at the present stage, they should not peddle around the “conclusion of the three agreements” but take practical measures for removing the political and military confrontation and tension and ensuring peace between the north and the south and, first of all, pull down the concrete wall, the symbol of national split and north-south confrontation.

Then mistrust and confrontation between the north and the south will be removed, national reconciliation and unity be realized and a broad avenue to national reunification is opened.

In particular, as the South Korean authorities pursue the “two Koreas” policy, the “three agreements” will only result in maintaining and fixing the present state of division.

Although the South Korean authorities never miss a chance to talk about unification, their talk is nothing but a deceptive trick to cover up their splitter’s nature.

The South Korean authorities try to step up the “northern policy” and “separate admission to the U.N.” and keep in force the “national security law.” This clearly proves that they are following the “two Koreas” policy in actuality.

As publicly known, the “northern policy” and “separate admission to the U.N.” are aimed to win the recognition of south Korea as an “independent state” from the socialist countries and through the arena of the U.N. and have “two Koreas” legalized and the “national security law” is aimed to make the north and the south completely closed to each other and thus block the road to reunification and perpetuate the division.

As long as the South Korean authorities seek “two Koreas,” the “three agreements” will only realize partial traffic, correspondence and trade under the present conditions of split but will not serve to open the door of reunification.

The South Korean authorities keep in force the “national security law,” which defines the north as an “anti-state organization” and declares any contact with and travel to the north “violation of the law.” Their talk about the “conclusion of the three agreements” is itself self-contradictory and ridiculous one. In view of the contents, the three agreements are aimed to realize traffic, correspondence and trade among a few people under the control of the “government” and not to make a breakthrough for reunification.

According to South Korean publications, the agreement on traffic, agreement of correspondence and agreement on trade envisage prior “permission” of the authorities and the “special law on north-south exchange and cooperation” stipulates that “permission” shall not be given to those who are liable to endanger the “national security or public peace.” This means that even if the three agreements are concluded, the south Korean rulers will not open up the road of traffic, correspondence and trade to the patriotic people who oppose flunkeyism and treachery and “two Korea” plot and call for independence, democracy and reunification but only to those who follow their anti-reunification policy. Furthermore, the south Korean rulers threaten, saying that when south Koreans want contact with people in the north, they will allow only “non-political contact” not discussing the reunification question and even those who go to the north with their approval will be severely punished by law if they are suspected of having conducted activities for reunification during their visit to the north.

From this we can know that the South Korean authorities are completely separating artificially the question of “conclusion of the three agreements” from the question of national reunification. Therefore, it is clear that the argument about conclusion of the three agreements from the concept is not aimed to break the closure of the north and the south to each other and open the road to reunification but to maintain the present state of division as it is and open the road of pure traffic, correspondence and trade to a few restricted people. The above mentioned facts clearly show that the South Korean authorities’ argument about conclusion of the three agreements is not oriented for reunification but for division.

They are lately noisily talking about the question of conclusion of the three agreements whose splitters’ nature is transparent. This is nothing but a last resort to counter our new reunification proposal for demolishing the wall of division between the north and the south and realizing free travel and full opening of the door.

As everyone knows, the great leader President Kim Il-Sung in the New Year Address for this year advanced the epochal reunification proposal for demolishing the wall of division between the north and the south, first of all, the concrete wall in the southern portion of the Military Demarcation Line, and realizing free travel and full opening of the door as a decisive measure to overcome the obstacle and difficulty lying in the way of reunification and bring about a fundamental change in the solution of the reunification question.

If the wall of division between the north and the south is pulled down and free travel and full opening or the door are realized between them, the closure of the north and the south to each other will be removed, the national bond be restored, the north and the south discard misunderstanding of and mistrust in each other and national reconciliation and unity be achieved. And it will be possible to pool the nation’s desire for reunification, join its strength, repulse the foreign interference and realize the reunification of the country independently and peacefully.

For its feasibility and fairness our new reunification proposal enjoys the warm welcome and support of the entire Korean people and the world’s progressive people and the south Korean authorities are urged to accept it without delay. Of course, the south Korean authorities talked more than once about the question of “free travel” and “full opening of the door.” But it is no more than propaganda for improving their public image.

While clamoring about the home-visit of separated families, they opposed the performance in south Korea of the Opera “Flower Girl,” an art work reflecting the our country’s situation in the early 1930s at the time of the Japanese imperialist colonial rule and invited even by capitalist countries to be performed before full house, and with it as pretext they opposed the exchange of home-visiting group numbering several hundreds. This proves that the South Korean authorities are not interested in the home-visit of separated families and further have no intention to realize free travel and full opening of the door between the north and the south.

The South Korean authorities cannot accept nor openly oppose our epochal proposal for demolishing the concrete wall and realizing free travel and full opening of the door. Finding themselves in such a dilemma, they put up to the fore the question of “conclusion of the three agreements” as a last resort.

In his press conference, Roh Tae-Woo rejected to all intents and purposes the pulling down of the concrete wall and said he would step up conclusion of the “agreements on traffic and correspondence,” calling for “realizing first of all correspondence, telephone conversation and mutual travel of separated families” on the pretext that “agreement on free travel and full opening of the door would take time.”

As is clear to everyone, if the two sides have an intention to realize free travel and full opening of the door it will not “take time” to reach an agreement on it and if free travel and full opening of the door are realized, such questions as the home-visit of separated families, correspondence and telephone conversation would be settled without difficulty.

This notwithstanding, the traitor Roh Tae-Woo demands the realization of the home-visit of separated families, correspondence and telephone conversation before free travel and full opening of the door. This is nothing but a crafty trick to cover up anti-reunification nature opposing our epochal reunification proposal.

If the South Korean authorities have an iota of national conscience of being concerned about the future destiny of the country and the nation, they should not peddle around the question of “conclusion of the three agreements” but take the road to reunification though it is belated.

The South Korean authorities should clearly announce the reunification of the “two Koreas” policy, give up the scheme for “U.N. membership” and “northern policy” externally and withdraw the “national security law,” and evil law opposing reunification, and “unified channel of dialogue” internally. Thus, they should heighten the atmosphere of reunification and open the road for the people of all strata to participate in the north-south dialogue. At the same time, they should demolish the concrete wall and take practical measures to remove the political and military confrontation.

Then, the north and the south eliminate misunderstanding and mistrust, achieve national reconciliation and unity, remove the obstacle and difficulty lying in the way of reunification and open up the highway to the reunification of the country by the concerted efforts of the entire nation.

Note: This English transcript is reproduced here as it was originally released by The Secretariat of the Committee for Peaceful Reunification of Fatherland, Pyongyang, DPRK in April, 1990. This copy is intended to help all Koreans now and of the next generation to read history and judge who, the North or the South, was really telling a “truth” or “lie” under coveted name of fatherland reunification.

7.1.2 (B) The July 7th Declaration entitled “Special Declaration for Korean Self-Existence and Prosperous Unification”

The first reunification policy of South Korea’s President Roh Tae-Woo made on July 7, 1988 was embodied in the “Korean National Commonwealth Policy” presented on September 11, 1989, which proposed the three principles of independence, peace, and democracy to establish a piecemeal reunification strategy. In October, 1989, based on July, 7, 1988 declaration, the South proposed the North to make the South–North Exchange and Cooperation Agreements focusing on “traffic, correspondence, and trade” between the two Koreas.

My sixty million compatriots,

Today, I am going to enunciate the policy of the Sixth Republic to achieve the peaceful unification of our homeland, a longstanding goal dear to the hearts of the entire Korean people. We have been suffering the pain of territorial division for almost half a century. This national division has inflicted numerous ordeals and hardships upon the Korean people, thus hindering national development. Dismantling the barrier separating the South and the North and building a road to a unified and prosperous homeland is a duty that history has imposed on every Korean alive today.

The South and the North, divided by different ideologies and political systems, have gone through a fratricidal war. The divided halves of the single Korean nation have distrusted, denounced and antagonized each other since the day of territorial partition, and this painful state has yet to be remedied. Though the division was not brought about by our own volition, it is our responsibility to achieve national unification through our independent capabilities.

We must all work together to open a bright era of South–North reconciliation and co-operation. The time has come for all of us to endeavor in concert to promote the well-being and prosperity of the Korean people as a whole.

Today, the world is entering an age of reconciliation and co-operation transcending ideologies and political systems. A brave new tide of openness and exchange is engulfing peoples of different historical and cultural backgrounds. I believe we have now come to a historic moment when we should be able to find a breakthrough toward lasting peace and unification of the Korean peninsula, which is still threatened with the danger of war amidst persisting tension and confrontation.

My fellow compatriots,

The fundamental reason why the tragic division has still to be overcome is that both the South and the North have been regarding each other as an adversary, rather than realizing that both halves of Korea belong to the same national community, so that inter-Korean enmity has continued to intensify. Having lived in a single ethnic community, the Korean people have shaped an illustrious history and cultural traditions, triumphing over almost ceaseless trials and challenges with pooled national strength and wisdom.

Accordingly, developing relations between the South and the North as members of a single national community to achieve common prosperity is a shortcut to realizing a prosperous and unified homeland. This is also the path to national self-esteem and integration.

Now the South and the North must tear down the barrier that divides them and implement exchanges in all fields. Positive step after positive step must be taken to restore mutual trust and strengthen our bonds as members of one nation.

With the realization that we both belong to a single community, we must also put a stop to confrontation on the international scene. I hope that North Korea will contribute to the community of nations as a responsible member and that this will accelerate the opening and development of North Korean society. South and North Korea should recognize each other’s place in the international community and co-operate with each other in the best interests of the entire Korean people.

My sixty million fellow compatriots,

Today, I promise to make efforts to open a new era of national self-esteem, unification and prosperity by building a social, cultural, economic and political community in which all members of the Korean society can participate on the principles of independence, peace, democracy and welfare. To this end, I declare to the nation and to the world that the following policies will be pursued:

  • We will actively promote exchanges of visits between the people of South and North Korea, including politicians, businessmen, journalists, religious leaders, cultural leaders, artists, academics, sportsmen and students, and will make necessary arrangements to ensure that Koreans residing overseas can freely visit both parts of Korea.

  • Even before the successful conclusion of the North–South Red Cross talks, we will promote and actively support, from a humanitarian view-point, all measures that can assist separated families in their efforts to find out whether their family members in the other part of the Peninsula are still alive and to trace their whereabouts, and will also promote exchanges of correspondence and visits between them.

  • We will open doors for trade between South and North Korea, which will be regarded as internal trade within the national community.

  • We hope to achieve a balanced development of the national economy with a view to enhancing the quality of life for all Korean people – in both the South and the North – and will not oppose nations friendly with us trading with North Korea, provided this trade does not involve military goods.

  • We hope to bring an end to counter-productive diplomacy characterized by competition and confrontation between the South and the North, and to cooperate in ensuring that North Korea makes a positive contribution to the international community. We also hope that representatives of South and North Korea will contact each other freely in international forums and will co-operate to pursue the common interests of the whole Korean nation.

  • To create an atmosphere conductive to durable peace on the Korean Peninsula, we are willing to co-operate with North Korea in its efforts to improve relations with countries friendly to us, including the United States and Japan; and in parallel with this, we will continue to seek improved relations with the Soviet Union, China and other socialist countries.

I trust that North Korea will respond positively to the measures outline above. If the North shows a positive attitude, I should like to make it clear that even more progressive measures will be taken one after another.

I hope that this declaration today will serve to open a new chapter in the development of inter-Korean relations and will lead to unification. I believe that if the entire 60 million Korean people pool their wisdom and strength, the South and the North will be integrated into a single social, cultural and economic community before this century is out. On that basis, I am confident that we will accomplish the great task of uniting in a single national entity in the not so very distant future.

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Hwang, EG. (2010). Policy Priorities for the Unified Korea. In: The Search for a Unified Korea. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-1562-7_7

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