Moon Jae-In on North-South Integration



On the seventieth anniversary of Korean independence from Japan, Moon Jae-In gave a speech outlining a bold new approach to North Korean policy. (Thanks to Matt McGrath for pointing us to the story. Text of the speech in Korean here). Moon, who lost to Park Geun Hye in the 2012 presidential election, is the current leader of the opposition New Politics Alliance for Democracy (새정치민주연합- NPAD) and a top contender for his party’s nomination next time around. As a result, the speech gives some insight into how the opposition is currently thinking about North-South relations.

Moon’s speech was clearly a foil to Park Geun Hye’s Independence Day speech where she addressed not only Japan but North-South relations as well; Japan was mentioned 10 times in the speech; North Korea, 25 times. For the most part, the speech reiterated Trustpolitik themes: cessation of provocations, resumption of family reunions, and the strengthening of inter-Korean academic and cultural ties. Her most avant-garde idea was a “World Eco-Peace Park in the DMZ that could ultimately “reconnect severed railways and roads between the South and the North” and exploit the Baekdudaegan mountain range “as a new backbone for facilitating peaceful unification and realizing cooperation across Eurasia.” But Park didn’t outline any major shifts to her Trustpolitik policy, perhaps because of timing: the speech came only 11 days after the landmine incident and before the high-level emergency talks and agreement.

Moon’s proposal emphasized an economic union between North and South Korea focused outwards to the rest of the Asian continent. He argued that if the North and South fully integrated their economies, Korea as a whole could join the “3080 club”: an elite group of countries—including the US, Japan and Germany—with 80 million consumers and a per capita income of $30,000. Moon sold his plan not simply on the merits of improving inter-Korean relations but on the grounds that the plan would be the new driver for economic growth in South Korea. He claimed that closer economic integration with the North alone could boost economic growth by 0.8 percent a year and further integration with greater Asia could eventually push it from 3 to 5 percent. He even linked the initiative to the persistent youth unemployment problem by arguing that it would create 50,000 new jobs per year.

It is completely unclear why South Korea, which already has trade volumes over a hundred times those of North Korea and dense production networks throughout Asia, needs the North to globalize. Even if new investment opportunities opened up, we must avoid one of the more common statistical fallacies: to see a 3 to 5 percent increase in the growth rate as “only” 2 percentage points rather than the 67 percent increase in growth that it would imply.

Moon and his advisers clearly see a dramatic expansion of North-South trade and investment. Moon doesn’t go into details about subsidies or ROK government-backed insurance schemes like those in the Kaesong Industrial Complex (KIC). But he does argue for the KIC to expand eight-fold according to its original plans and for the Mount Kumgang Resort to be reopened immediately. Beyond that, he envisions two economic "triangles": one in the Yellow Sea and the other in the Sea of Japan. One triangle would link Niigata, Busan, and Rajin and the other Mokpo, Namho, and Shanghai. And Busan would have a railway to connect to the rest of the continent.

These ideas to integrate the economies are not particularly new. Roh Moo Hyun advanced ambitious plans for the economic integration of Northeast Asia that went nowhere. Park Geun Hye has been promoting her Trans-Asia Silk Road Express railway initiative for years and it has also gone nowhere. The North Koreans even recently blocked the South Koreans from joining the Organization for Cooperation between Railways.

The post-Cheonan sanctions are clearly a crucial barrier. Park has sought to finesse these by allowing trial runs of coal shipments from a joint ROK-DPRK-Russian venture. Where Moon most differs from Park is that he wants to repeal the 5.24 measures immediately, expand the Kaesong Industrial Complex, and support South Korean firms entering North Korea. Moon wants to separate economic concessions from the kind of quid pro quo demanded by Lee Myung Bak and Park Geun Hye. Selling inter-Korean cooperation as a means for domestic growth makes political sense; only 22% of South Koreans currently support resuming economic aid. But the type of broad integration that Moon is proposing may be as threatening to the North as Park’s preoccupation with unification. We welcome long-term North-South economic integration but have a hard time imagining the current regime opening its doors to the type of integration that Moon is proposing outside of contained (and politicized) projects.

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