No Waving, Just Drowning

Comment on Economist article (31 May 2010) “No Waving, Just Drowning”

@AJ Johnstone

Yes a trade-off with between Taiwanese unification and Korean unification with the South in control maybe is something which could be put on the table. However, this would not get rid of China’s fear of having American troops at their borders. Maybe they could agree to leave the GIs in the South or even have then withdraw completely and replace by a UN international force. In any case, if South Korea controls the entire peninsula the need for US troops is not as great and South Korea itself has considerable military capability in its own right. With American military aid, surely this could be worked out.

There remains though the financial challenges of unification. There were many major mistakes in the German unification where it cost West Germany far more than it need have, principally moving to full unification immediately. Some sort of interim phase should be looked at where the market can adjust and investment can flow to the lower cost North Korea and with South Korean economic stability, management and institutions, as well as democratic base, there is no reason why North Korea could not morph into a low-cost economic tiger right on the doorstep of South Korea, Japan and China. Rather than costing the South, this could enhance the prosperity of the whole north asian region, including North China. In this though, unlike the two Germanies, it would be essential that for a time the North and South have two currencies, and their relative value can converge ¬†as the north approaches the South’s prosperity. This could take 50 years, but it would give the South (and China) a low-cost manufacturing tiger at their doorstep and provide a huge incentive for both the South and China to invest in a successful economic future for the North.

These same principles incidentally would come into play in a political solution to a Palestinian/Israeli settlement: Palestine (Gaza and the West Bank) becomes the low-cost economic tiger next door to high-cost, high-tech Israel and the emerging economy of newly democratic Egypt with its huge consumer base..

Leave a Reply

Your email address will not be published. Required fields are marked *