korean unification studies

There are no official details of the proposed unification tax. Indeed, in my belief, the whole concept is as much about sparking debate on unification as it is about financially preparing for unification. Nevertheless, there are questions that are starting to gain greater attention in the local press.

Firstly, how is the government going to collect the unification tax? There is suggestion that it may be in the form of an increased value added tax (VAT). Now of course VAT is universal, but is it fair? Inevitably, a VAT will impact those that can least afford it. It is well known that VAT can disproportionately raises the tax imposed on middle and low-income households.

Korea already has a VAT rate of 10%, with exemptions for merit goods (education, medical services, etc) and equity goods (public transportation, necessities, etc) and also a myriad of exemptions for business contributing to the economy. The current rate of 10% is significantly lower than the OECD average of around 17%, but any increase will be difficult in both terms of popularity and economically, given the inherent risk as the country exits the current stimulus stage.
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A new tax has been proposed to prepare South Korea for the costs of unification. While I am never one to support a new tax, I reckon this is an excellent idea! Least of all because it will begin a conversation – a conversation that has been lacking in South Korea for around ten years. The conversation about how unification will occur…  Hooray for the unification tax!

Talking about new taxes is never easy. It takes a brave politician to do so. There are many South Koreans who remain in debt and continue to face the ever rising costs of education and healthcare. South Korea may be moving out of the financial crisis, but many families are not.

It takes an even braver politician to talk about a policy to address a situation that scares the average punter into fits of denial. Who really wants unification if it will impact living standards? But Lee Myung-Bak has addressed the issue, and with a certain degree of style. From his liberation day speech:

“The time has come to start discussing pragmatic policies…unification will definitely come…It is therefore our duty to start thinking about real and substantive ways to prepare for reunification, such as the adoption of a unification tax. I ask that these and other issues related to this be discussed widely and thoroughly by all members of our society“

While I know a lot of people criticize Lee Myung-Bak and may view this tax cynically, I reckon that it’s about time to talk about the future of unification.

The resumption of family reunions is welcome news for the many people who were separated from their loved ones during the Korean War and were not able to meet their families in earlier rounds of reunions. The scenes from earlier reunion events of elderly siblings, cousins and even parents and children reuniting after many years of separation were deeply moving.

However, against the background of this promising news there is a sense of growing detachment amongst young people from the issue of unification. A recent paper comparing attitudes of young people to unification across the last twenty years found that the reunification of families was of marginal interest as a motivator for unification. Whilst unifying a so-called ‘one-people’ remained the most important driving factor amongst young people for wanting unification, other motivations such as ‘economic gains’ and ‘increasing peace’ were growing in importance. In other words, the motivation for unification was increasingly focussed upon a desire to make South Korea stronger rather than reunite divided nation or assist those living in the North. These results suggest that unification for young people would only be acceptable if there were net benefits for South Korea.

As the generation that experienced the Korean War and division slowly passes away, the memories of a unified Korean go with them. Increasingly, young people in the South are defining themselves as South Koreans whose nationalist interests lie only with the country that they have known.

So as we watch the emotional reunions of divided families, we should also think about how we can unify the divided identities of young people in South and North Korea if indeed unification is to be successfully achieved.

The recent passing of Kim Dae Jung and the coverage surrounding the event has once again sparked an interest in discussion on unification policy. Kim Dae Jung’s Sunshine Policy, followed by Roh Moo Hyun’s policy of engagement with the North sparked frank discussion of how to move forward with North-South relations with strong opinions held by all sides. In particular, Kim’s patronage of a policy that actively engaged the North, finally showed that efforts could be made to build bridges between the two governments and peoples without necessarily having to share ideological or moral views.

However, with the arrival of the right-wing Lee Myoung-Bak government, it seemed that the space for discussing engagement with the North narrowed, and once again those who proposed ideas of engagement were labelled ‘leftists’ or North Korean ‘sympathisers’.

With Kim Dae Jung’s passing, and the recent efforts by the North to apparently reach out to the South, there may once again be a space to discuss views that oppose those of the current incumbent government. Whatever view one may hold in regards to Southern policy toward the North, all must agree that the return of frank and public discussions about future policy can only be a good thing.

…a lot of these exchanges are beginning to incorporate more and more North Koreans into the experience. For instance, these twenty-one thousand workers at Kaesong who are North Koreans, eventually are going to go home and tell their families and friends what they experienced. At this point what we’re seeing is very initial steps on the part of North Korea as they try to open up reform and yet maintain control. At the same time, they are being forced into a number of institutional changes and mind-set changes that are the first step forward in this process.

Read it all at the Council on Foreign Relations…

The International Crisis Group has a decent briefing on what they expect LMB will do for the Korean peninsula. Pretty much the same old stuff, including:

Lee is expected to continue South Korea’s efforts at rapprochement with North Korea but to press more firmly for reciprocity than his predecessor. He has outlined a plan to narrow the economic gap by providing the North investment and help in creating an export manufacturing economy. There is widespread consensus in South Korea on engagement with the North, so the only change anticipated under Lee is a greater emphasis on holding Pyongyang to its commitments.

But the value of the piece is in its level of research. Unlike most pieces which rehash research from other sources, ICG has a strong reputation for actually conducting the research itself! Make sure you give it a read!

A guest post by a reader and now once again blogger…

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Dear Fellow Bloggers and Blog Readers,

Greetings. I have enjoyed reading this and other blogs on Korea policy issues. Inspired by the second inter-Korea summit in October and other fast-paced changes that have brought renewed promises for peaceful settlement and further reconciliation in Korean peninsula, the Korea Report blog was re-activated in October after dormancy, with continuous coverage of pertinent news and commentaries. It recently passed fifty postings. [http://koreareport2.blogspot.com/]

Korea Report is dedicated to the reconciliation of peoples and nations affected by the Korean division, a lasting peace in Northeast Asia, and the reunification of Korea. It provides a Korean-American perspective, as a part of the Korean diaspora, on inter-Korean affairs, international relations and policy developments, with a strong desire to support and ensure peace and reconciliation process in Korea. It chronicles and comments on efforts and developments in this regard. I hope this effort will somehow contribute positively to the discussions on the future of Korean peninsula and Northeast Asia.

With Regards,
Editor of Korea Report
Washington, DC
 

Many suspected that differences in North Korea policy between a Lee Myung-Bak administration and the Roh Moo-Hyun administration were going to be largely cosmetic. Most thought it as an open secret that North Korea policy would largely remain the same… Stability is after all, much more valuable to most South Koreans than any chance of a North Korean collapse.

Well… Nam Sung-Wook, Professor at Korea University and advisor to the President-elect is quoted in the International Herald Tribune (Choe Sang-Hun, “Lee plans to harden Seoul’s line with North Korea, 20 December 2007) as stating:

“For now, you can forget about the October summit agreements. We will review them all from scratch to see if they are justified…the North must realize that we have a new government here and that things will be different”

Interesting times ahead. North Korea policy could well be in for a more significant change than many thought… Read some interesting views on Lee at Marmot’s Hole and DPRK Studies.