South Korea Thinking Ahead Re Unification w North

President Lee Myung-bak of South Korea has proposed a special tax to finance the enormous cost of reuniting with North Korea,

as concerns have deepened here over the North’s future after the eventual death of its ailing leader.

The proposal broached a delicate issue, and analysts said it could provoke an angry response from the North, which may see it as an aggressive move by the South.

Although all previous South Korean leaders have advocated rejoining the North,

President Lee Myung-bak of South Korea has proposed a special tax to finance the enormous cost of reuniting with North Korea,

as concerns have deepened here over the North’s future after the eventual death of its ailing leader.

The proposal broached a delicate issue, and analysts said it could provoke an angry response from the North, which may see it as an aggressive move by the South.

Although all previous South Korean leaders have advocated rejoining the North,

Mr. Lee was the first to propose that the South start saving for the event with a unification tax.

Merging the South’s economic powerhouse with the North’s impoverished socialist system could impose huge costs on South Korea, analysts say.

Those costs have been estimated at a few hundred billion dollars to $1 trillion,

according to various South Korean and American research institutes,

depending largely on how quickly the countries were integrated.

“Reunification will definitely come,” Mr. Lee said in a speech marking the 65th anniversary of the Koreans’ liberation from 35 years of Japanese colonial rule.

“I believe that the time has come to start discussing realistic policies to prepare for that day, such as a reunification tax.”

Mr. Lee did not elaborate on what prompted his proposal.

But it came as officials and analysts in Seoul contemplated the possibility that the North’s leader, Kim Jong-il, could die before a successor gained firm control.

South Korean intelligence analysts said Mr. Kim suffered a stroke in 2008, and he has reportedly been preparing his youngest son, Kim Jong-un, who is believed to be in his late 20s, to be his heir.

Unlike Mr. Kim, who had held important party and military posts for years before his own father, President Kim Il-sung, died in 1994, Kim Jong-un holds no known official title.

The North Korean government has recently begun indoctrinating its people with songs and lectures lionizing the son, according to South Korean intelligence officials.

Still, the younger man’s apparent lack of leadership experience has prompted analysts to speculate about potential instability if Mr. Kim dies suddenly, and the possibility that China might intervene militarily.

Analysts expected an angry North Korean response.

“North Korea will take a unification tax as the expression of a South Korean attempt to prepare for a sudden collapse of the North Korean government,”

said Kim Yong-hyun, an analyst at Dongguk University in Seoul.

Yang Moo-jin, a researcher at the University of North Korean Studies in Seoul, said,

“President Lee should have first reinstalled South-North exchanges and laid the groundwork for the mood for unification before proposing a unification tax.”

Inter-Korean relations have chilled to their lowest point in years under Mr. Lee, a conservative who opposed providing aid to the North while it was developing nuclear weapons.

Tensions rose after a South Korean warship was sunk in March and the South,

accusing the North of torpedoing the ship, cut off most cross-border trade.

Forty-six South Korean sailors were killed in the sinking, as noted in this article in the New York Times.

Like his predecessors, Mr. Lee envisioned a gradual unification, with the North’s abandonment of its nuclear arms capacity,

to be followed by extensive economic cooperation that would enable it to narrow the gap between its economy and the South’s, which is more than 30 times larger.

“Most South Koreans say they want unification, but they don’t necessarily want to pay for it,”

said Mr. Kim of Dongguk University.

Given the similarities between West and East Germany at the time of the Berlin Wall’s collapse – and the resultant resentment in the West over payments made to the East since 1990,

which, in a peculiar way, was sort of a “dry run” for the same kind of resentment Germans as a whole have shown towards the Greeks –

perhaps Prime Minister Lee’s suggestions isn’t such a bad idea –

especially since, as we have pointed out, the so-called “Greek bailout” is really a bailout of the German and French banks who had loaned the Greek government billions 😉 …