As the German Unification moves through its 20's...

Sun 07 Oct

As the German Unification moves through its 20's, the analysis grows older too. Officials have mixed views on its success and rightly so. The facts remain that the East is better off and the West have paid for it. On another continent, another country is paying close attention.

South Korea, divided from North Korea since Civil War ended in 1953, has begun to accept that Unification is inevitable. How or when that happens is beyond their control but their preparedness is not.

Looking at the German situation, there are similarities that they would do well to learn from. North Korea is likely to be in the same situation as East Germany was, if not worse; impoverished, economically backwards, poor infrastructure, an under-skilled population, amongst other disadvantages. This means initial costs for infrastructure, maintenance, upgrades of State Assets and standard aid will be astronomical. South Korea had been heavily supported by America since the war, just as Germany was. This makes it likely that the gap between the north and the south is higher than between the west and the east because Korea has been divided for much longer. When Eastern Germany reunited with the West, its output per capita was 33% of that of the Wests. North Korea is estimated to be in a much worse state. They have higher unemployment and have received less aid due to their closed borders and lack of contact. This large workforce does not generall boast the skills of South Korea's highly-skilled citizens, which may prove problematic. Furthermore, a large portion of North Korea's employed are military or state employees, whose jobs would be reassessed after unification. How to integrate these people with a society lightyears ahead will be their biggest problem.

The costs of upgrading an entire country cannot be underestimated. In Germany it is estimated to have cos 1,400 billion euros so far and it is said that a further four decades remain until true parity is achieved. Unfortunately, Korea can expect similar costs. They have begun to look at the German funding model in order to cover these costs. The Germans implemented a tax in the early 90's, initially expected to last 5 years, in order to fund reunification. The tax is still in place and is expected to be in place until at least 2019. This year the Korean government also attempted to implement a tax. Financially it was smart. The earlier the funding the less it will hurt later on. Politically however, it was suicide and the backlash was so severe the government was forced to backtrack. Instead of backing off completely, it may be wise to begin to look at other methods, perhaps rally the support of their allies, especially the US. The need for stability in the region should be enough to convince America to help. They would like to reduce China's influence in the region and it will most definitely be lessened if they lose their one true ally in North Korea. It would be lessened further if change was implemented in a stable and effective manner. These are the same reasons Germany was able to gather international support for its own funding. Unfortunately it's other asian partners do not have the same clout as Germany's European partners did. China, the one true Superpower in the region, is unlikely to support a blow to its own power.

Despite the tax setback, South Korea have not lost sight of its own financial needs. In an effort to better educate the public and to prepare themselves for the financial costs, they have begun work on a voluntary fund. The purpose of the fund is to ask the public to contribute on a voluntary basis to help fund the costs. More than just the money, the fund focuses on other aspects that were perhaps ignored in Germany. It hopes to publicise other aspects of unification, such as a new sense of identity, the acquisition of land, mineral resources and a new labour force. It will also give the public a chance to be more hands on and feel as if they are part of the change.

Whilst this is a good first step, it is unlikely to provide the necessary funding. Until more practical and less symbolic steps are in place, South Korea remains ill-prepared for reunification. North Korea is an incredibly poor and unstable country and as such the regime could fall at anytime. The last year and a half has shown that when it comes to overthrowing regimes, it can happen very quickly. Korea would do well to look at Germany, learn from their mistakes and successes and be prepared for whatever might happen.

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