The New Cold War
America, China, and the Echoes of History
Whatever their differences, the five governments that must contend most directly with Pyongyang-Seoul, Washington, Beijing, Tokyo, and Moscow-all assume that a rapid reunification of Korea would run contrary to their national interests. Implicitly or explicitly, their policies all posit that a gradual drawing together of the two Koreas would be optimal for financial or geopolitical reasons.
In South Korea, pronouncements about unification have been explicit and detailed. In 1991, according to that year's July 4 Washington Post, then-President Roh Tae Woo declared, "Our people do not want an accelerated reunification." Despite his subsequent fall from grace and the perennial disagreements on the point in Seoul, this cautious sentiment continues to guide the South's policy. Studies by the Korea Development Institute, the Republic of Korea's (ROK) leading quasi-governmental economic think tank, have argued that "the German experience demonstrates that national unification involves enormous costs, and, going forward, this is probably the most critical concern for South Korea," and that "the experience of German national unification convinced a large number of South Koreans that sudden economic integration in Korea . . . will result in disaster." Rather than risk derailing the South Korean economic "miracle," the prevailing consensus in Seoul goes, the South should try to plan for a reintegration with the North over a period of several decades, while the North reforms its polity and transforms its economy.
What are the alternatives? The notion of purposely working to prepare for, and thereby perhaps to hasten, Korea's reunification may seem fraught with risk-and it is. Such a strategy can offer no absolute guarantee that reunification would be peaceful. But in the perilous years ahead, no strategy can promise perpetual peace in the Korean peninsula-or northeast Asia, for that matter. Indeed, all of East Asia, as the political scientist Aaron Friedberg said in the Winter 1993-94 International Security, is "ripe for rivalry," and will be for many years to come. Under the circumstances, a policy that prepares for and attempts to expedite the coming of a free, peaceful, and united Korea looks decidedly superior to the alternatives.
Calculations that parallel the South Korean government's lead the four great powers of northeast Asia to a similar evaluation of the merits of a gradual reunification. Although President George Bush declared in Seoul in 1992 that "the day will inevitably come" when "Korea will be whole again," American policy does not anticipate that day any time soon. On the contrary, the "Agreed Framework" Washington reached with Pyongyang in 1994 outlines a prolonged and expanding American engagement with the Democratic People's Republic of Korea (DPRK). Brokered after the North's refusal to permit inspection of its nuclear sites, the document envisions Western construction of two modern reactors in North Korea at an estimated cost of over $4 billion in exchange for a freeze on the country's nuclear program, eventual inspections by the International Atomic Energy Agency, and the ultimate dismantling and removal of the suspect facilities and materials-obligations that are not to be fulfilled for years to come. Although positively disposed to Korean unification in the abstract, American policy includes no concrete designs for hastening it. In addition to Southern anxieties, the U.S. position is shaped by the possibility that Korean unification might mean the end of America's special security ties with and forward bases in the South-an arrangement that has, in Washington's estimate, helped stabilize the region and extend American influence in Asia.
China, Japan, and Russia have their own grounds for reluctance about a rapid Korean reunification. As the political scientist Chae-jin Lee has noted, the Chinese believe they "have no compelling reason to push for Korea's immediate political reintegration, even by peaceful means," insofar as they "view North Korea as a useful buffer zone that contributes to their national security" and at the same time enjoy a thriving commercial relationship with South Korea. Japanese foreign policy is more opaque than that of most other westernized countries, but one ingredient in Japan's approach to the two Korean states is an abiding apprehension that a united Korea would pose greater economic and diplomatic challenges. Russia, for its part, is all but overwhelmed at the moment with its own internal troubles, and in this time of extreme weakness would not welcome a new regional power rising along its border.
Yet rough agreement among many concerned governments about the preferable pace for Korean unification is no guarantee that their judgment is correct. The twentieth century provides repeated examples of shared misperceptions in foreign policy, as the prologues to World War I, World War II, and even the Korean War attest. Tragic miscalculations about one's own national interests, furthermore, are more likely in periods when a regional balance is undergoing fundamental change, as on the Korean peninsula.
The assumption behind all these prognoses is that the North will gradually become reintegrated with the South. But in fact, the North is more likely to implode. The cherished vision of a gradual and orderly drawing together of the two Koreas is today nothing more than a fantasy. As time goes on, North Korea will only grow economically poorer and militarily more dangerous. For all parties affected, from the peoples of northeast Asia to the powers of NATO, the faster reunification takes place, the better. Many details of reunification remain uncertain, but Western powers must begin to consider what a sudden reintegration might mean. The Pacific powers can no longer classify the Korean question as a problem that can be postponed and then muddled through.
A WIDENING GULF
Consider the economics. The reintegration of the two Koreas, however it ultimately occurs, will involve major economic dislocations and place immediate financial burdens on the working-age population of South Korea (the first cohort of Koreans in recorded history, incidentally, to be unfamiliar with privation and unexpected material sacrifice). Moreover, the equalization of incomes in northern and southern Korea will inevitably be a long process-like the enforced separation that brought about today's disparities. But can a go-slow policy realistically promise to reduce the dislocations and expenses attendant on unification?
The vision of a gradual reintegration of the two Korean economies that many South Koreans so fondly entertain hinges on a big assumption. It implicitly holds that North Korea's government will someday embrace a program of economic liberalization and somehow survive to complete the decades of transformation the program would entail. Yet Pyongyang to date has vigorously opposed any liberalization of economic policies worthy of the name. There is nothing to suggest that North Korea is contemplating any such reorientation. The weight of the evidence, furthermore, indicates that the leadership believes economic liberalization would be lethal for the regime. The possibility that North Korea might meet the conditions that the slow reintegration scenario would demand is remote-if not utterly fanciful.
If the North cleaves to its traditional policy, the most likely outlook is continued economic decline. For the South, on the other hand, the most reasonable prognosis for the decades ahead is steady and perhaps substantial economic growth. Under such circumstances, both the relative and the absolute gap between the North's and the South's per capita income will continue to widen. Although reliable data about North Korea remain amazingly scarce, Pyongyang's own leadership acknowledges that the Northern economy is in a "grave situation." By the late 1980s, the economy was already showing severe strains. In 1991, the end of Soviet-bloc aid and subsidized trade dealt a heavy blow to an already ailing project. Throughout this decade, North Korea's hypermilitarized economy has apparently been shrinking; virtually alone among Asian countries, its foreign trade has been progressively diminishing. In the face of crisis, the DPRK leadership has been unwilling or unable to embrace the sorts of liberalizations that might revitalize their domestic economy. Thus, North Korea is caught in a spiral of economic degeneration, the latest manifestation of which has been the reported emergence in 1996 of widespread food shortages. In a symbol of cracks in the edifice, last December a family of 17 accompanied by a North Korean border guard reached Seoul after a six-week escape through China and Hong Kong, the largest defection since the Korean War.
The ROK, by contrast, in 1996 qualified for and entered the Organization of Economic Cooperation and Development, encompassing the advanced industrial economies. In just over a generation, South Korea has risen from poverty comparable to India's to living standards akin to those of Greece or Portugal. Although South Korea's hyper-rapid growth rate is likely to slow, even pessimists envision continuing and substantial improvements in productivity and living standards.
On such a trajectory, the longer the North Korean state survives, the wider the economic chasm that will separate North and South. The cost of unification-the investment needs of North Korea in relation to South Korean output-will likely grow steadily and perhaps swiftly every year reunification is delayed. While it is technically possible that the South Korean economy could grow faster than the North's needs, the further apart the two economies get, the greater the cost of bringing the North to parity with the ROK.
If the specter of German-style unification expenses is terrifying to some South Korean policymakers, they tremble before a chimera. Any number of careful studies have pointed out that the bulk of western German transfers to the new federal states since 1990 have been for social welfare payments, not investment. In eastern Germany, most of the costs of unification so far have resulted from a collision between politically popular but overgenerous wage increases, which priced a large portion of the Ossi work force out of the job market, and an extravagant, newly installed social insurance apparatus, which paid qualifying beneficiaries on the established Wessi scale. There is no reason for these particular expenses to be replicated elsewhere-especially not in the ROK, which for better or worse still lacks most of the adornments of a full-fledged welfare state. Moreover, Korean reunification will yield benefits as well as costs.
In the short run, reunification with a poorer partner could help relieve South Korea's incipient labor shortage, reduce pressures on wages and other production costs, and enhance Korea's international competitiveness. While South Korean workers may not relish that short-term prospect, a fusion of the two Korean work forces could increase purchasing power and living standards for the great majority in both the North and the South. Over the long run, as northern Korea's infrastructure and industrial capacity are renovated, all of Korea could experience dynamic supply-side effects. The flip side of North Korea's current infrastructural obsolescence-of the likely need to scrap almost all the North's current production facilities-is the coming opportunity to replace decrepit plants with state-of-the-art equipment embodying the latest technology.
As in postwar Japan and West Germany, wholesale reconstruction of an industrial base can bring unexpected economic advantages: it can lower production costs, stimulate work force skills, dramatically raise productivity, and lay the foundations for sustained economic growth. Those advantages accrued not only to Japan and West Germany, but also to the economies with which they were integrated. While the analogy is inexact, the modernization of the North Korean economy could offer enormous spillover benefits for southern Korea. Nor would the benefits be limited to Korean nationals. Success in that venture would strengthen the framework for prosperity throughout northeast Asia and the Pacific; it would spur international economic development through favorable investment opportunities, an expanded domestic market, and improved quality of exportable goods and services.
Apprehensions expressed in some circles in Russia and China about being crowded out by the economic reconstruction of a united Korea are almost certainly misplaced. The global capital market is enormous and rapidly growing: in 1995 alone it financed over $1.2 trillion in international borrowing and facilitated an almost $300 billion flow of foreign direct investment. On the other hand, the boom in domestic demand that would follow reunification would likely offer wide-ranging and lucrative business opportunities to all the Pacific powers. One of the most intriguing economic implications of a successful reunification involves integration of the Chinese, Russian, and Korean markets. To date, juche economics, or North Korean central planning, has effectively precluded the development of infrastructural or commercial links between the North and nearby areas of China and Russia. With a southern-style business climate in northern Korea, a significant growth triangle could at last establish itself in the three countries.
Korea's reunification can be likened to a gigantic investment project. If the rate of return for that project is high, the costs will take care of themselves. While achieving and maintaining the necessary rates of return will not be easy, it is surely not the hopeless task that some in Seoul think. With prudent and coordinated preparations by the ROK and its allies, the chances that reunification will be an economic success-even if it takes place on very short notice-can be greatly increased.
THE WEAPONS LEDGER
If the economic prospects of a more immediate and deliberate Korean unification are decidedly less menacing than so often depicted, what of its possible political and strategic ramifications? There is sometimes merit in deferring difficult or contentious issues-and the Korean question assuredly qualifies as one of these. But because North Korea's economic circumstances are only likely to worsen even as the lethality of its weapons of mass destruction improves, the shocks to the region that the demise of the North Korean state might trigger are unlikely to be mitigated simply by postponement. In the meantime, the costs of maintaining the unstable balance in the Korean peninsula-already nonnegligible for the United States-stand only to rise. From a financial perspective, in addition to underwriting military deterrence in South Korea, Western governments now envision substantial outlays to Pyongyang for economic and humanitarian aid. The Agreed Framework is but one of several mechanisms for such transfers. To the extent that the great Pacific powers think about Korean security in a two-state framework, they will be ineluctably drawn to subsidizing the Northern system as its internal crises mount.
On a separate ledger, given the North's constantly improving arsenal, the extended survival of the North Korean regime will raise both the probability and the expected intensity of out-of-theater security threats facilitated by DPRK sales or transfers of arms to extremist governments or terrorist groups in other parts of the world. While none of the policy alternatives facing the North Korean leadership today can look terribly attractive, a strategy of continuing to augment the North's potential to inflict devastation on both neighboring and more distant countries may appear more promising-and indeed, more logical-than any other option. After all, what sort of consideration could Pyongyang expect from the world community if "the North Korean question" were merely a humanitarian problem? To extend the life of the state, by this reasoning, it is imperative to upgrade the threat posed by weapons of mass destruction. Indeed, as best can be told, this is exactly what North Korean policymakers are attempting to do. For while the effectiveness of a conventional army will eventually be compromised by the decay of the national economy, the killing force of these particular instruments is much better insulated against such adverse trends.
Although North Korea's program for developing nuclear weapons is widely thought to be suspended, the DPRK has reportedly established a nuclear warfare command and may have one or more atomic bombs in its possession. The nuclear option, in any case, is only one component of the darkís overall program. North Korea has extensive capabilities for manufacturing chemical weapons, including nerve gas; according to some reports, it may have the world's third-largest inventory of these compounds. And North Korea has been working feverishly for decades on long-range missiles. By the early 1990s, Pyongyang was experimenting with the No Dong class of missiles, with a range estimated at 600 to 800 miles. Today it is developing the Taepo Dong, which when perfected may have a range of up to 6,200 miles; according to some analysts, this intercontinental ballistic missile could be ready as early as the year 2000.
Although such threats would likely prove most burdensome to the United States, the only one of the four Pacific powers with truly global interests and obligations, all of the others would be affected by the destabilization that weapons of mass destruction can cause in distant venues, such as the Middle East.
AND WHAT OF THE ALTERNATIVES?
To appreciate the difference between a watch-and-wait strategy and deliberate preparation, one may begin by imagining how international relations in northeast Asia would be altered if a single democratic state governed in Korea. Two great imponderables tower over this thought experiment: the evolution of China and the evolution of Russia. Nonetheless, a free and united Korea would be a force for stability and prosperity.
For northeast Asia, perhaps the most dramatic implications of a successful Korean reunification would be military. At the moment, nearly two million Korean troops confront each other in that divided land. A free and united Korea could commence a far-reaching demobilization, releasing hundreds of thousands of military personnel for economically productive undertakings, retiring armaments that were once trained across the demilitarized zone, and decommissioning the peninsula's weapons of mass destruction. Such disarmament could still leave Korea as a power to reckon with, but it would also recast the conventional and nuclear logic of the region. It would stand in contradistinction to the arms buildup that has been under way in East Asia since the 1980s and has continued unabated since the end of the Cold War. While it would not alter the ambitions of other governments-a key factor in any true arms race-disarmament could substantially change the nature of risk perception and defense sufficiency in the region and attenuate pressures for further buildup.
While a continuing division of Korea invites a competitive proliferation in northeast Asia-with the South and Japan, in one reading, eventually opting for nuclear defense to counter ominous tendencies in the North-a united Korea could make good on Seoul's pledge to forswear nuclear weapons. In addition to ending the threat from Korea as a possible purveyor of weapons of mass destruction, unification would strike a second blow against international proliferation by complicating surreptitious merchandising by China.
Unification would also change the tenor of relations in northeast Asia. With a single democratic government on the Korean peninsula, many regional sources of tension would vanish. While a united Korea's chosen alliances and alignments might matter greatly to the powers of the Pacific, they would probably not constitute a casus belli. With open and accountable governance, civilian rule, and enthusiasm for commercial progress, a united Korea's foreign policy would likely be moderate and pragmatic-as the ROK’s foreign policy beyond the peninsula is today. A united Korea's domestic arrangements could also affect international politics; the example of a solid civil society in Korea would support neighboring Russia's quest for stable civil institutions and encourage their development in China.
The spillover economic benefits of reunification also have a political payoff, integrating the countries of the region in a set of cooperative commercial relationships. The striking point about a successful Korean reunification is that it would benefit all the populations of northeast Asia. Those dividends are by no means assured, but careful and concerted effort can bring them within reach.
NORTH KOREA IS THE NUCLEAR PROBLEM
Every government in northeast Asia can help improve the chances for rapid reunification. But two constraints loom large. The first is that neither China nor Russia can be counted on to cooperate in multilateral deliberations about what follows the end of North Korea. The second is that the allies most likely to cooperate in those preparations-the South, Japan, and the United States-have already restricted their freedom of maneuver through the Agreed Framework.
For obvious historical reasons, Washington's security relationships with Beijing and Moscow are vastly different from its relationships with Seoul and Tokyo. For similar reasons, China and Russia can be expected to regard an American design for a new Korea with considerable suspicion. China in particular has reason to appreciate the Korean status quo. Given its close economic and political ties with both Korean governments, the Chinese state now enjoys a more favorable position in Korea than at any point in the past century and a half.
Weighing against the impediments to cooperation, though, is the compelling fact that the current order in Korea cannot last. It is in both China's and Russia's interests to help shape the order that will follow. Moreover, Chinese and Russian interests coincide with the joint interests of South Korea, Japan, and the United States in fundamental respects.
If Middle Eastern oil exports were disrupted tomorrow by a crisis involving North Korean-made weapons of mass destruction, for example, China-which is becoming a major global oil importer-would suffer directly. Conversely, both Russia and China would reap commercial and security benefits from a successful Korean reunification. Therefore, they have strong incentives for approaching reunification together with the United States and its allies. The task for U.S., Japanese, and South Korean diplomacy, then, is not to convince Russian and Chinese leaders to submit to a Western strategy for Korea, but rather to encourage them to think clearly and realistically about where their own interests lie.
The Agreed Framework poses a rather different set of problems. This complex document outlines an extended schedule of financial, material, and diplomatic benefits that Pyongyang may obtain from a U.S.-led international consortium if and when the North passes a variety of milestones, mainly concerning compliance with the nuclear Nonproliferation Treaty but also involving such things as detente with South Korea and arms control. As negotiators on both sides have pointed out, the document is not a formal agreement, but a road map. Some, however, have observed that the agreement's ambiguities expose the United States and its allies to the worst of two diplomatic worlds, possibly obliging Washington to behave as if it were bound by treaty while permitting Pyongyang to decide when and whether it will honor its corresponding obligations. The range of envisioned Western-DPRK engagements restricts the range and scope of Western reunification strategies.
If Western governments are not to be ensnared, they must honestly recognize the Agreed Framework for what it is. The document does not solve the North Korean nuclear problem, but simply permits both sides to settle the matter later on. The North Korean nuclear "problem," for its part, does not derive from the technical specifications of the North's Soviet-style reactors, but rather from the inherent character and intentions of the North Korean state. The North Korean regime is the North Korean nuclear problem, and unless its intentions change, which is unlikely, that problem will continue as long as the regime is in place. If Western governments believe they can influence the nature of that state, they should assess their progress-or lack thereof-carefully and unflinchingly. But to allow this document to compromise preparations for Korean unification would be a grave mistake.
The Western countries with the greatest prospective influence on Korea's reunification are South Korea, the United States, and Japan. What sorts of things could each of them do, bilaterally or multilaterally, to improve the odds of a free, peaceful, and successful reunification? As a first but vital step, Seoul should make preparation an immediate national priority and begin to design long-range policies. Political leadership in the South must increase the South Korean public's awareness of the tests that lie ahead and make the case that these tests can only be successfully surmounted by sensible strategy and concerted collective effort.
As they contemplate the coming trials, South Koreans may recognize that the most important item on the agenda, paradoxically, is domestic reform. In the domestic realm, preparing for reunification mainly means doing what the South should be doing anyway. But such preparation also has a bearing on South Korean defense policy and the posture toward the North. If a free and peaceful reunification is indeed consummated, the subsequent success of the project will depend greatly on the dynamism of the South's economy, the resilience of its society, and the stability of its polity. Despite the South's great strides in these areas over the past generation, there is unfinished business in each of them.
South Korea's transition from a dirigiste system to a fully open market economy is not yet complete. Despite a decade and a half of liberalization, the country's economic performance continues to be limited by costly distortions. Agricultural protectionism in South Korea, for example, is even more extreme than in Japan or the European Union; the country's financial capital markets are still artificially segmented and sheltered against competition; and extensive nontariff barriers (most notoriously the "import diversification" strictures against Japanese products) interfere with trade. These distortions constrain the South Korean economy's productivity and flexibility. And, as is well known in international business circles, the South's climate for foreign direct investment is not especially hospitable. But in reconstructing the North, the alternative to foreign direct investment would be higher exactions from South Korean taxpayers.
These reforms would bring benefits in their own right, and the same may be said of civil and legal reforms. Despite the South's achievement of constitutional civilian rule, progress in civil and administrative law has lagged. Incontestable guarantees of the rights of the individual, including private property rights, and of accountable, transparent governance are intrinsically desirable and beneficial. The credibility of a united Korea's political system will depend on openness, impartiality, and equality before the law. What South Korean President Kim Young Sam once termed "the Korean disease"-the persistent weaknesses of the civil and legal system-could become a virulent illness if it is not cured before reunification.
Preventing war and forging a successful reunification will require close cooperation with all the South's allies, including Japan. Although Seoul's ties to Tokyo have been deepening and warming for decades, there is still ample room for improvement. The 1996 squabble over the disputed Tokdo-Takeshima islands, which culminated in a South Korean military landing on those barren rocks, is exactly the sort of distraction that a defense policy for South Korea cannot afford. If deterring North Korea is the objective, moreover, the merit of South Korea's costly current program to develop a submarine fleet is hardly self-evident. Adding insult to injury is the intended symbolism in the program. The most recent addition to the South Korean submarine fleet, for example, was named Chung Un-ho, after a Korean admiral who directed some successful sea battles against Japan four hundred years ago.
With regard to North Korea, the South must begin to think not only about deterrence but about reconciliation. Healing the wounds of divided Korea promises to be a monumental task-one that may take generations to complete. But the process can begin now. Committing the South to a "malice toward none" policy after Korean unification, and to guaranteeing ordinary northerners the same civil and political rights as southerners, would send an important and stabilizing message. Working to open lines of communication and expand people-to-people contacts could increase familiarity and reduce misunderstandings on both sides. South Korean society today is strong enough to withstand any attempts Pyongyang might make to manipulate such overtures; Seoul would be wise to capitalize on that strength.
The United States can shape the prospects for Korea's reunification through diverse instruments, but its unique and indispensable contribution is in the realm of security. Just as the U.S. military commitment to the South has been the sine qua non of deterrence on the peninsula, a vibrant U.S.-South Korean security relationship in a united Korea will be critical to the success of reunification. Rebuilding the economy of northern Korea will be an expensive undertaking that will proceed more rapidly, and place less of a burden on Korean taxpayers, if the international capital market can be harnessed. The attractiveness of post-unification Korea for overseas investors will depend on perceptions of risks and rewards; an American security commitment would lower risk premiums.
For Washington, however, preparing for Korean reunification will mean more than thinking about bases and places. As the world's predominant economy, and as the presumptive leader of any strategic Western initiative in northeast Asia or other regions of the globe, responsibilities for coordinating an international approach to Korean unification will almost naturally devolve on the United States. Managing such an effort wisely and effectively will be a tremendous task-no less taxing or delicate than the historic endeavor that united Germany in 1990.
To consider Japan's prospective influence on Korean unification is to beg the question of Japan's role in the world. In this century, Japan has never had a "normal" foreign policy: before World War II, it was an insatiable and revisionist power; after its terrible defeat, it has been a meek, one-legged giant. To this day, it is difficult for the Japanese to discuss their national interests-even in the Korean peninsula, where those interests are so directly and dramatically affected.
For better or worse, until Japan can play a role on the international stage in the same manner as other industrial democracies, its contributions to a successful Korean reunification are most likely to be made through the two diplomatic channels that Tokyo is most comfortable with: international finance and multilateral institutions. Fortunately, much can be done through both. If Korean reunification is to succeed, it will presage a significant expansion of trade and require substantial commitments of foreign capital. Japan's government and the Japanese business community can begin now to focus on the potential of mutually beneficial economic cooperation in a united Korea and on the problems that must be avoided or solved if such cooperation is to bear fruit. Japanese business is well placed to participate in the major infrastructural development projects that could draw together the economies of northern Korea, China, and Russia.
Much can also be done in multinational forums. Preventing North Korean sales of weapons of mass destruction or nuclear-capable missiles, for example, is an immediate problem that can be addressed through multilateral diplomacy; Japan could be a persuasive lobbyist for a resolution empowering U.N. members to interdict the transfer of such materials to violators of the nuclear Nonproliferation Treaty. In the years ahead, Japan could use its growing influence at the World Bank and other multilateral development banks to encourage those institutions to devote their technical expertise and financial resources to meeting the challenges that Korea's reunification would entail.
The list of possible initiatives and policies could be extended and elaborated. The point, however, is short and simple. Northeast Asia can live with a united Korea-in fact, it could be considerably more comfortable with a single free Korea than with the present arrangement. It is time for statesmen in the Pacific and beyond to think about how to make Korean reunification a success-because success or no, reunification is coming.