Korea after Kim Jong-Il

Rating:
Summary: A Hard Look At Korean Unification
Review: Marcus Noland, in June 2000, wrote one of the better books, published by the Institute for International Economics, on the situation on the Korean peninsula, Avoiding the Apocalypse: The Future of the Two Koreas. Now, as Volume 71 of that organization's "Policy Analyses in International Economics", is Noland's Korea After Kim Jong-il. It's a short, but dense read, and worth every graph and sentence in its 103 pages, of which 18 are the appendix, index, and references, and including four tables and four figures. It's an economic analysis, certainly, but Noland's unpretentious presentation is punctuated with glib remarks.

As in Avoiding the Apocalypse, Noland offers alternative scenarios with supporting data and policy recommendations. Korea After Kim Jong-il in fact contains much of the same recommendations Noland suggested in his 2000 book, only more sharply focused on developments which occurred after 2000. Noland's recommendations are based on economic factors, not political or diplomatic ones. Unfortunately, these recommendations required the political cooperation of regional players and the United States to succeed, but in many cases, none of the players have even carried out the suggestions each could make unilaterally.

The first issue Noland discusses is North Korea's probability to survive or collapse. Noland offers numerous sociological arguments for change from numerous sources. He also contrasts these theories with public polling data and anecdotal evidence from policy-makers. He concludes, that there is a consensus among important decision-makers and the public that North Korea will collapse even without external pressure, which is not supported by any cross-national economic data or sociological theory.

This strange consensus is even more jarring considering, that South Korea's official policy is predicated on the North Korean regime's survival, until it is gradually integrated into the South's economy. Noland identifies three three likely future scenarios: cooperative engagement (Seoul's position), neo-cons' dream, and international embargo. On a timeline, cooperative engagement would ensure Pyongyang's survival for decades, the ne0-con's dream secenario would cause Pyongyang's collapse around the end of President Bush's second term, and an international embargo would cause collapse within two years. Noland stresses the economic and political damage, that either of the last two scenarios would cause to the South Korea.

Finally, Noland recommends specific policies for South Korea. These suggestions are identical to the recommendations found in the 2000 book. This repetition highlights the stakes involved in the South's continuing reform, which Noland generally praises, even if he rightly acknowledges the failures. This last section is the most important focus of the book, because Noland believes the South Koreans should own their destiny. I accept this right until the point South Korea's messy politics leads to a serious cris in the region, because Seoul cannot accept it's responsibility for it's own unification policies.

Noland's recommendations (pp. 76-7) include :

1."Seoul should commit to the principle that engagement should be done on efficient, transparent terms....as long as the state maintains direct and indirect influence over specific capital allocations by financial intermediaries, it will be tempted to use its influence to promote its policy...The simplest way of accomplishing this would be to put provisions into the tax code that would create an incentive for South Koreans to invest in the North instead of....China and Southeast Asia...Such a tax-based approach woould also have the virtue of transparency."

2. "...South Korea should prepare for the possibility of collapse...a general need to improve the financial transparency in the South Korean economy...a second desirable innovation would be the creation of independent institutional investors capable of monitoring management and fostering a market for corporate control..."

Based on Noland's policy recommendations, I seriously doubt South Korea can reform itself quickly enough, especially considering that the Bush administration is not allowing for the gradual integrgation scenario Seoul favors. Indeed, its not even clear if there is a consensus in South Korea supporting liberal economics and reform. Beyond the shortcomings of a shorter schedule for collapse from a policy perspective and the unpredictable nature of the political relations between all countries involved in an election year, the fact South Korea could not handle unification economically, socially, or politically, puts a even greater premium on the domestic policy recommendations Noland offers. If South Korea can accelerate reform after the April elections, then there is a chance for success, but a very slim one. Factoring out politics in South Korea is almost the definition of idealism, but Noland's recommendations are as succinct as practicable. Unfortunately, no one can lose betting against the South Koreans.