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Wednesday, Nov. 15, 2000

Settle for a least bad worst-case scenario in Korea

Staff writer
AVOIDING THE APOCALYPSE: The Future of the Two Koreas, by Marcus Noland. Washington, D.C.: Institute for International Economics, 2000, 431 pp., $22 (paper).

The thaw on the Korean Peninsula continues. Every week, history is made: a meeting between Korean officials, a diplomatic breakthrough for North Korea, a cross-border business deal. Yet the meaning of these changes and their impact on international relations in Northeast Asia is unclear.

Is North Korea sincere in attempting to reach out to the world? Is there the prospect of real change in the secretive state or is North Korea merely stalling for time and money? How can the rest of the world encourage evolution in North Korea? Can it? Is South Korea ready for relations with the North? Is the world ready for unification?

There are no sure answers to these questions. Not only are the uncertainties worryingly persistent, but the information we do have suggests that we won't like the answers we eventually get.

The best we can do, then, is be prepared for the worst. And the best way to do that is to read "Avoiding the Apocalypse," Marcus Noland's exhaustive study of the two Koreas and the impact of unification. Noland, a senior fellow at the Institute for International Economics, offers a "tour d'horizon," serving up the history and political economy of both sides of the DMZ, as well as extensive analysis of unification's likely effects.

His judgment is simple: "The North Korean economy no longer works. It does not generate enough output to sustain its population biologically, nor, absent fundamental economic reforms, will it do so in the future."

North Korea's survival depends on external support. But that poses a dilemma for the rest of the world, since international support will be forthcoming as long as the country poses a security threat to its neighbors. As Noland explains, "North Korea's ability to extract resources from the world community is intimately related to the threat it poses, and in this sense, the status quo more closely resembles extortion than charity. The threat North Korea poses is its sole asset. It is unlikely to negotiate away this asset very easily."

Reform in the North is not a real option. Pyongyang maintains a tight grip on the country because it knows too well that incremental change is dangerous to its survival. It has succeeded in extorting resources and would prefer to continue down that path. The parade of visitors to Pyongyang is proof that the strategy is paying off.

Unfortunately for North Korea's leadership, the status quo has to change. As Noland says, "North Korea is already the largest recipient of U.S. assistance in Asia. Maintaining this kind of largess to an unreconstructed, vituperative, Stalinist dynasty is politically unsustainable in the donor countries, especially in the U.S."

What are the options? Ideally, there would be a gradual recovery in the North that occurs in tandem with rapprochement with the South. Unification follows in a decade or so. That is unlikely, given North Korea's structural inability to feed itself and the knowledge that any loosening of the ideological straitjacket could be fatal to the Pyongyang regime.

The worst-case scenario is a crash. That is dangerous for several reasons. First, there is no telling how Pyongyang would react if it deemed its survival to be at stake. It could lash out in any number of ways. The prospect of regional war is a possibility; a purely Korean civil war is the least bad worst-case option.

A North Korean implosion is only marginally better. South Korea is in no position to absorb the North. The South has serious problems of its own. Even though the economy has recovered, most analysts think another crisis is in the offing. There hasn't been the real reform needed to put the South Korean economy on a steady footing.

Muddling through is perhaps the most realistic option. Noland argues that "It may well be that North Korea can survive (in a biological sense, at least) without any (or relatively modest) external assistance. . . . The experience of Romania suggests that muddling through may last for several years before there is a more permanent turn toward reform or chaos, especially if external powers find that this solution is in their interests."

In other words, the North could become a modern-day tributary state of China, dependent on Beijing for survival -- at least until that government faces its own crises.

Brad Glosserman can be contacted at brad@japantimes.co.jp.

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