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IPE-K <Lecture Note 8> 2013.6.7

IPE-K: Two Koreas and Unification*Some parts of this note are borrowed from references for

teaching purpose only.

Semester: Spring 2013 Time: Friday 2:00~15:00 pm Class Room: No. 331 Professor: Yoo Soo Hong Office Hour: By appointment Mobile: 010-4001-8060 E-mail: yshong123@gmail.com Home P.: //yoosoohong.weebly.com

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Geography

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4

Two Koreas Today

• South Korea• GDP Per Capita $20,400 • Military Expenses $21.06 bil-

lion• Military as share of GDP 2.6% • Population 48,846,823• Infant mortality

6.16 deaths/1,000 live births

• North Korea• GDP Per Capita

$1,800 • Military Expenses $5.21 Billion• Military as share of GDP 31%• Population 23,113,019 • Infant Mortality

23.29 deaths/1,000 live births

Cold War History: Korea

• USA/USSR tensions emerge almost at once

• USA envisions capitalist democracy

• USSR envisions communist government

• 1945: Divided occupation by the 38th Prallel Line

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6

Two Koreas

• Emerging Cold War conflict between USA and USSR

• Joint elections were impractical

• Two separate Korean Governments established

• 1948 “Elections” in both South (UN endorsed) and North Korea

Korean War

• January 12, 1950, United States Secretary of State, Dean Acheson referred at:

• US Press Club: About America's Pacific defense perimeter

• Implied that the U.S. might not fight over Korea

• This omission encouraged the North and the Soviets

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8

Korean War

• War began June 25, 1950: North Korea Invades

• Incheon landing, September 15 - September 28, 1950

• Chinese entry, October, 1950

• January 4, 1951, Communist Chinese and North Korean forces recaptured Seoul.

• MacArthur was removed from command by President Truman on April 11, 1951.

• Stalemate, July, 1951

Korean Division

• Originally 38th parallel

• Post Korean War: Red line called the DMZ

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Korean War Ends

• Cease Fire: July 27, 1953

• Neither Korea signed armistice

• State of war continues

• Both Koreas considered themeslves the only legitimate authority

• Both Koreas had aurhoritarian dictatorships at least through 1987

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Post Korean War History

• South Korea: 40,000 US troops remain to guard South Korea– US supports pro American authoritarian regimes

• North Korea: Chinese troops leave– North argues that South Korea is an occupied country, not independent– North sees US troops as a threat

North Korea

• North Korea sees 40,000 US troops on its southern border as a major threat– Asserts South Korea is simply a colony of the US.– No need to work with SK, it is the US that matters.

• Develops Juche ideology of independence– Economic independence– Military independence– Focus on People’s needs– In reality, Juche is a failure both in independence and in

People’s needs.– It became an ideological back-up for the Kim’s family dictatorship.

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North Korea

• Authoritarian

• Anti religious persecution

• Inefficient production, very little economic growth

• Becomes progressively less secure as South Korea outgrows the North

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North Korea

• Cold War ended

• Communist Block Collapsed 1991

• North Korea could not play China and Russia against each other

• South Korean President Roh Tae Woo (1988-1993) launched “Norde Politic” drive and normalized relations with China and Russia, Isolating North Korea.

• Isolated North Korea has difficulty feeding its population– Bad weather– Communist incentive structure– Poor distribution– No more cheap resources from China and Russia– 25-30% of GDP spent on military

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Nuclear Crisis

– North Korea launched Nuclear program, 1990

– 1994: NK withdrew from membership with International Atomic Energy Agency (IAEA)

• Jimmy Carter visited Korea representing Clinton Administra-tion

– 1994 Agreed Framework negotiated• N. Korea gives up nuclear weapons for energy support• Korean Economic Development Organization (KEDO)

formed to help N. Korean energy development.

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Nuclear Crisis

– 1994 Agreed Framework

• DPRK's nuclear power plants would be replaced with light water reactor (LWR) power plants by a target date of 2003.

• Oil for heating and electricity production would be provided while DPRK's reactors were shut down, until completion of the first LWR power unit.

• The two sides would move toward full normalization of polit-ical and economic relations.

• The U.S. would provide formal assurances to the DPRK, against the threat or use of nuclear weapons by the U.S.

• The DPRK would take steps to implement the Korean Peninsula Denuclearization Declaration.

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South Korean Response

• President Kim Dae Jung (1998-2003) Initiated “Sunshine Policy”– Attempts for the first time to engage NK with positive incentives– Negotiates some trade and family exchanges

• President Roh Moo Hyun (2003-2008) Continued Sunshine policy

• President Myung Bak Lee– Disagrees with the “Sunshine” approach

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Axis of Evil and Bush Doctrine

– At 2002 State of the Union, President Bush included North Ko-rea in “Axis of Evil” with Iraq and Iran

– Iraq Invasion

– President Bush declared the “Bush Doctrine” of preemptive war

– US invaded Iraq

North Korean Reaction

– 2003 Withdrew from Nuclear Non-proliferation Treaty

– Declared NK a nuclear power

– Insists on addressing only US, not 6-party talks

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– North Korea’s Nuclear threat was derived from North Korean perception of insecurity

– Korea’s division created that insecurity

– North Korea sees US as the core threat (40,000 US troops aimed at them)

– Bush Doctrine and US behavior since 2001 reinforces percep-tion of threat

– North Korean leadership is not crazy nor suicidal

– North Korea uses aggressive negotiating tactics to achieve its ends

– North Korea is unlikely to use nuclear weapons

– Panic or over-reaction to North Korean provocations are coun-terproductive

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The Political Economy of North Korea

Major changes in North Korean political economy over last two decades

- Transformation is better understood as an unintended response to state failure in the wake of the famine than as a top-down reform.

- Policy has at times ratified these changes, most notably with reforms of 2002

- However, since 2005 “reform in reverse” has been going on

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NK Economic Decline and Recovery

- Collapse: the great famine of the mid-1990s

- Recovery: unintended grass-roots marketization

- Since 2005, the return of slow growth (and food distress

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Production

0

1

2

3

4

5

6

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Metric tons (millions)

USDA

South Korean Ministry of Unification

Declining Food Production

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Daily PDS rations

500

400

300

427

353

250

196

271

319300 300

200

100 100

25

225250 250

300296

208

200

293

395 400

550575

600 600 600

0

100

200

300

400

500

600

700

Nov.1995 -Oct.1996

Nov.1996 -Oct.1997

Nov.1997 -Oct.1998

Nov.1998 -Oct.1999

Nov.1999 -Oct.2000

Nov.2000 -Oct.2001

Nov.2001 -Oct.2002

Nov.2002 -Oct.2003

Nov.2003 -Oct.2004

Nov.2004 -Oct.2005

0

100

200

300

400

500

600

700

Max Average Min Farmers

grams grams

Minimum human need (457g)

Declining Reliance on the PDS

PDS: public distribution system. When the PDS cannot provide enough food, there are few ways for vulnerable people to cope beyond the now very limited international assistance that is being provided.

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Changing Pathways to Advancement

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Origins of Shortage

On the back of increasing harvests, rising aid government seeks to re-assert control

Internally– Banning private trade in grain– Seizures in rural areas– Shut down relief agencies in the hinterland

Externally: 2006 missile and nuclear tests disrupt assistance from South

Bad weather: the floods of 2007

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Evidence I: Quantities

North Korean Grain Balance

-2000

-1500

-1000

-500

0

500

1000

1995/96 1998/99 2001/02 2004/05 2007/08

metric tons '000s

Haggard-Noland-Weeks Estimate

UN System Estimate

North Korea Food Balances 1995/96-2007/08

0

1000

2000

3000

4000

5000

1995/96 1999/00 2003/04 2007/08

metric tons '000s

Aid

Imports

Domestic production

Adjusted Total Demand

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Evidence II: Prices

1. 10/01/2005: Ban on private trade in grain & revival of PDS 2. 07/14/2006- 07/15/2006: Flood 3. 10/09/2006: Nuclear Test & UN Sanctions 4. 08/15/2007- 08/31/2007: Flood 5. 12/01/2007: Introduction of Chinese Export controls, partial ban on trading activities 6. 04/01/2008: Tightened control on trading activities 7. 05/14/2008: Military stocks reportedly ordered released & US aid announcement on the 16 th. 8. 06/30/2008: Arrival of first aid shipment

100

200

300

400

500

Pric

e In

dex

Oct

-14-

2004

Oct

-14-

2004

2005

Oct

-14-

2004

2005

2006

Oct

-14-

2004

2005

2006

2007

Oct

-14-

2004

2005

2006

2007

2008

Oct

-14-

2004

2005

2006

2007

2008(1

)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

(6)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

(6)

(7)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

FAO-Rice 50% Corn 50% NK-Rice 50% Corn 50%

North Korean Grain Prices

0.1

.2.3

.4.5

.6.7

.8C

orn

-Ric

e P

rice

Ra

tioO

ct-1

4-20

04

Oct

-14-

2004

2005

Oct

-14-

2004

2005

2006

Oct

-14-

2004

2005

2006

2007

Oct

-14-

2004

2005

2006

2007

2008

Oct

-14-

2004

2005

2006

2007

2008(1

)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

(6)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

(6)

(7)

Oct

-14-

2004

2005

2006

2007

2008(1

)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

North Korean Corn-Rice Price Ratio

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Evidence III: Qualitative

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Developments in the External Sector

North Korean Trade

0

500

1000

1500

2000

2500

3000

19901992

19941996

19982000

20022004

20062008

Exports

Imports

2006-2008: indexed trade values based on 2005 trade figures.

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China's Share of North Korea's Imports and Exports

0

5

10

15

20

25

30

35

40

45

50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

% o

f To

tal

Share of Imports

Share of Exports

Share ofImports+Exports

China’s Growing Share

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China-DPRK Trade

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China exports of grains to North Korea, monthly 2004-09

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Oct

-11

Jan-

12

Apr

-12

Jul-1

2

Oct

-12

Jan-

13

Apr

-13

KG

Total

Soybeans

Rice

Corn

Wheat flour

China Food Exports to DPRK

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North-South Trade

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Forms of Engagement

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The Kaesong Industrial Park

The model– An inducement in broader North-South relations– Engagement to socialize and transform

The outcome: leverage in reverse– North Korea not only holding hostage until release…– But holding entire Kaesong project hostage– Recent evidence of backing off by reducing land rent and wage de-

mands

Compromise– Resumed normal business

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The New Geography of North Korean Trade

Beyond China, the growth of ties with Middle East (ongoing project)

With new incentives to proliferate– Nuclear cooperation with Syria and Iran– Missiles: even during moratorium on test, working with Iran – Small arms to Burma, perhaps even Hezbollah and Hamas

Other illicit activities

US concerns: not simply sanctions in context of 6PT, but defensive concerns and link to Middle East

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Refugees’ Life Beyond North Korea

Preferences for permanent reset-tlement– US attracts younger, better

educated respondents– More might prefer China if

policies changed

Most want unification

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South Korean Money

Coins- 10, 50, 100, 500 Korean Won.Notes- 1,000, 5,000, 10,000 Korean Won.

1 US Dollar = 1,043 South Korean Won

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North Korean Currency

40http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in_article_id=410158

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Prospects of Reunification

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North Korea

Communist system - The world most isolated regime & economic backwardness - Dictatorship and human rights issues - Nuclear development & ‘military-first policy’

“Juche” (Self Reliance) Ideology: - Symbolizes autonomy or identity in ideology, independence in politics,

self-sufficiency in economy and reliance on Korea’s own forces in na-tional defense.

Characteristics of North Korean system: - Acceptance of hereditary succession of power - Most militarized country among communist countries - Anti-American education

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South Korea (ROK)

One of the most successful postwar economic development and democratization

- 12th largest economy (member of OECD)

- 12th largest trading country

- 11th in global competitiveness (WEF 2007)

- 1st in university enrollment

- 1st in broadband penetration (90% of households)

- Fully democratized political system

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Current (MB) Korean Government

Five Goals by Sector

- A government serving the people

- A lively market economy

- Active welfare

- A country rich in talent

- A global Korea

“21st Century Strategic Alliance” KORUS FTA - “Denuclearization, Openness, 3000“ - Six-party talks (multilateral approach) >Inter-Korean Summits (bilateral approach)

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Inter-Korea Agreements and Documents1953-Present

Total 92 agreements and documents:

- 1953: Armistice Agreement

- 1972: Inter-Korean Joint Communique

- 1991-1992 (11 on Inter-Korean Basic Agreement)

- 1994-1997 (9 on DPRK-US Agreed Framework-related)

- 2000-2004-2007 (69+1 since the Summit in 2000)

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South Korea’s Policy Towards North Korea

From confrontation to reconciliation

Engagement policy of North Korea during the last decade

- Dialogue and cooperation

- Confidence building

- Peaceful coexistence

- Prosperity on the Korean Peninsula and Northeast Asia

Peaceful and gradual process of unification

Sunshine Policy - Not allow any armed provocation hampering peace on the peninsula

- Don’t absorb North Korea

- Push reconciliation and cooperation with North beginning with those areas which can be most easily agreed upon

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Inter-Korean Relations

Humanitarian assistance - South Korea is the biggest donor county to the North

People’s exchanges - In 2005, 88,000 South Koreans visited the North (more than the total number of visitors during the previous five decades)

- 1.5m South Korean tourists to Mt. Geumgang since 1998

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SK Government Aid to North Korea1995-2004

Year Aid Amount (USD) Note 1995 232,000,000 Rice (150,000 MT) direct1996 3,050,000 Grain, P milk via UN 1997 26,670,000 Grain, P milk via UN1998 11,000,000 Grain, flour via UN1999 28,250,000 Fertilizer - direct2000 78,630,000 Fertilizer – direct2001 70,450,000 Fertilizer, grain, underwear, medicine

– D 2002 83,750,000 Fertilizer, grain, med – Direct2003 87,020,000 Med, cash (Unicef), fertilizer, grain -D2004 740,000 Yongchon ER supplies, medicines,

etc.-D

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SK NGO Aid to NK, 1995-2004

Year Aid amount Note9/95-5/97 4,960,000 Food, blanket-via IFRC6/97-7/97 8,500,000 Food, fertilizer-Korean RC8/97-10/97 8,900,000 Food, vitamins-KRC3/98 170,000 Fertilizer (800 mt)-KRC4/98-6/98 9,350,000 Food, potato,socks–KRC9/98-12/98 11,330,000 Corn, cows; NGO-food1999 18,630,000 Indep (10 NGOs)- diverse KRC (24 NGOs) -food,

clothing, med

2000 35,130,000 Independ (13 NGOs); KRC (16 NGOs)

2001 64,940,000 Indep (19 NGOs); KRC ($238,333) 2002 51,170,000 Indep (25 NGOs); KRC ($692,308)2003 70,610,000 Indep (29 NGOs); KRC ($583,333)2004 (Jan-Apr) 37,510,000 Indep (19 NGOs); KRC ($491,667)

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Gaeseong, the city next to the DMZGaeseong, the city next to the DMZ

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Inter-Korean Summit Meetings (2000, 2007)

Major results of the 2007 Summit: (Peace building) - Cooperation on denuclearization and establishment of a peace regime - Reduction of military tension and the holding of a defense ministers’ meeting - Holding Prime Minister’s meeting (Economic cooperation) - Creating a Special Peace and Cooperation Zone in the West Sea - Constructing ship-building complexes and repairing roads - Expanding Gaeseong Industrial Complex (Reconciliation) - Expanding the reunion of separated families - Promoting exchanges and cooperation in social and cultural areas

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Long-term Goals

- To establish a permanent peace regime on the Korean Peninsula

- To develop a multilateral security forum in Northeast Asia

Progress (North Korea’s action to be taken by the end of 2007) - Disable key nuclear facilities - Provide a complete and correct declaration of all its nuclear programs (Other Six Party’s action) - Economic and energy assistance up to the equivalent of 1 million tons of

heavy fuel oil - Discuss normalization of US-North Korea relations, Japan-North Korea rela-

tions

Stalemate (2008- ) - MB government demands proper apology by the North for killing a civilian - Three-generation succession of the ‘Kingdom” - Military Confrontation between NK and SK in the recent period - Reconciliation?

Six Party talks

Unification Strategy

• Containment

• Engagement

• Absorption

- Waiting collapse

- Absolute superiority

• EPA only

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Statistics on North Korea

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59

60

61

62

63

64

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67

68

69

70

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72

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