2003 November 07 Friday
Will North Korea Collapse Or Be Propped Up By Weapons Deal?

Lots of financial analysts think the collapse of the Norht Korean regime is inevitable.

John Chambers, managing director of sovereign ratings at Standard & Poor's, said the inevitable economic collapse could cost South Korea up to 300 percent of its annual gross domestic product.


Chambers told CNN Tuesday the North's collapse was "ineluctable". On timing, he said it could be soon or in the medium time. Either way, it would cost the South "dearly".

The question is whether enough aid and trade to prop up the regime is still getting thru.

"The North is still on the receiving end of donated food from China, Japan, the USA and South Korea," said Mr Morris.

"A sharp reduction in the assistance it is getting either from the West or from China... could push them over the edge," Mr Chambers predicted.

Standard & Poor's director for South Korea agrees with his boss.

"North Korea's economy cannot be sustained in its current state and we think it is highly likely to collapse," said Choi Jung-Tai, the agency's director for South Korea, adding: "When is uncertain."

In a sign of how the money men are looking at Korea they have even moved on from talking about the inevitability of the Pyongyang regime's collapse to bickering about the financially important question of how expensive the aftermath will turn out to be for South Korea. Barclays Capital says the Standard & Poor's cost estimate for reunification is too high.

``The 300 percent of South Korea�s GDP needed for reunification claimed by S&P would represent 75 times the North�s GDP. There is no example in the history of economic development of a country absorbing the equivalent of several hundred times of its GDP in external aid,� Barclays said in a report.

This depends on how one defines "cost". When South Korean corporations invest in factories in the post-collapse north will that be considered a cost or an investment? Also, the size of the cost depends on how the South Koreans handle it. They could rapidly build gold-plated infrastructure for North Korea or they could take a more parsimonious approach and let the growth of the post-collapse North Korean economy to provide a lot of the revenue for upgrading housing, medical faciltiies, roads, bridges, and so on.

So is the collapse of the North Korean regime inevitable? Kim Jong Il has two rays of hope. The first is that South Korea and China continue to send him aid and engage in trade. If Kevin of Incestuous Amplification is correct then the second ray of hope may turn out to be that the Bush Administration may wuss out and make a deal with North Korea for a pretty much unverifiable arms control agreement.

So here's the sequence. US presents evidence of a uranium-enrichment program to North Korea. North Korea admits having such a program. US stops oil shipments based on that program's existence breaking the terms of the 94 Agreed Framework. North Korea declares the Framework dead, kicks out inspectors, breaks the seals on their plutonium, and begins processing some or all of that plutonium. US government tries for a year to put economic pressure on North Korea, repeatedly citing the danger of their out-in-the-open plutonium program and their hidden uranium program as the basis for stopping this growing threat.

Now, via the State Department and intelligence official quoted in the USA today article, we're hearing that the CIA is not certain that a uranium enrichment plant even exists, and that North Korean ineptitude has slowed the overall program to a point of it not being as dangerous as the intel previously pointed to.

Click thru and read all the evidence that Kevin points to as signs of a climb-down on the part of the Bush Administration. He thinks the Bushies are preparing to sign a lame deal with Kim Jong Il. This would give the regime more years of life because such a deal would likely come with big piles of cash to help prop up Kim Jong Il's evil regime.

The uncertainty expressed by the CIA about the state of the North Korean nuclear weapons program has to be considered in light of previous inaccurate assessments. The advanced state of Saddam's nuclear program in the aftermath of Gulf War I was quite a surprise to US intelligence agencies. At the same time, Saddam acted like his weapons programs were further along in advance of Gulf War II than any evidence so far has shown to be the case. Also, the rate of advance of Pakistan's nuclear program surprised at least some analysts when Pakistan demonstrated the ability to explode a nuclear bomb in 1998. Since Gulf War II's aftermath is the less-than-expected amount of evidence for Iraqi weapons programs and the resulting criticism of US intelligence agencies performance causing the CIA to now act in a mode of being more afraid to overestimate than to underestimate the state of a secretive nuclear weapons development program? Also, just how much data do they have to base any estimate upon?

Keep in mind the nature of the North Korean regime.

Pregnant North Korean refugees repatriated after being rounded up in China have their babies forcibly aborted or killed after birth, according to a report that adds more horror to what is known of the Stalinist state's gulags.

An unverifiable US deal with North Korea would leave the regime firmly in control of its suffering people with the United States and other countries serving basically as enablers of that suffering. As it stands now both South Korea and China are firmly in the category of countries willing to serve as enablers of a horrible totalitarian regime. Will the United States join them?

Still, there are hopeful signs that a lame deal won't be signed any time soon. The organization tasked with building a $4.6 billion dollar nuclear reactor project for North Korea as part of the 1994 Frameworld Accord, the Korean Peninsula Energy Development Organization (KEDO), has decided to suspend work on the project.

- The United States won support from key allies Wednesday to halt construction of two nuclear power plants in North Korea for at least a year because of the communist state's atomic weapons program.

North Korea is threatening to seize the uncompleted project and not to allow construction equipment to be removed.

North Korea threatened yesterday to seize the property of an international consortium that has been developing two light-water nuclear reactors on the country's east coast in reaction to an announcement that the project would be suspended for one year.

North Korea is even threatening to retaliate by refusing to participate in 6 party talks on North Korea's nuclear weapons program and other issues in dispute. Well, we can surely hope they will show the determination to follow thru on all these threats.

To be fair to Mr. Bush, the biggest problem the United States faces is that, as Kevin points out, South Korea and China keep propping up North Korea. The rapidly rising trade between South Korea and North Korea is especially infuriating. The United States ought to pull its troops out of South Korea and stop pretending that South Korea is an ally. If we fail to stop North Korea it will be because of South Korea and China. But we at least should not join those countries in propping up a regime that is both a threat and that is so terrible to its own people.

Share |      By Randall Parker at 2003 November 07 03:02 PM  Korea

Ray Clutts said at November 7, 2003 7:41 PM:

That's a lot of information to parse for any relevant commentary but here's one thought. The South Koreans have watched attentively as West Germany absorbed East Germany and got a major case of indigestion in the process.

East Germany remains the poorest section of reunified Germany and its voters have proved to be very receptive to cradle to grave social support systems since they lack any entrepreneurial initiative after suffering almost fifty years of socialism. Don't forget too that prior to 1989, East Germany had the highest standard of living anywhere in the Communist block.

The South Koreans are much less sympathetic to the suffering of their brethern and better aware of the probable consequences of reunification.

The fallout of reunification for South Korea involves the assumption of at least twenty to thiry years spent rehabilitating a generation of North Koreans into the most elementry forms of human society. Like eating regularly. Just think about the burden of rehabilitating a population of 22 million malnourished and ideologically hostile survivors of a nation that is itself a prison camp. I don't mean to suggest that burden shouldn't be one that we assume because of the cost but let's be real about whose standard of living is going to suffer and the South Koreans know it.

colonel kurtz said at November 7, 2003 10:01 PM:

what would reverend moon do?

corsair the rational pirate said at November 10, 2003 7:22 AM:

A question I have always had (and have yet to hear a good answer to) is where are all the people going to go once reunification comes about (after a total collapse in NoKo, of course). Will all those people in the North just sit where they are now and wait for something to happen? Or will they pack up the family donkey (provided it hasn't been eaten yet) and head south where the good life it. And how will SoKo stop them and pretend to be "brothers forever" at the same time? "We want you to be part of us now, just don't come to visit."

Randall Parker said at November 10, 2003 9:19 AM:


The South Koreans could provide much more aid to the North Koreans in North Korea and tell their social agencies to not provide aid to them if they are in South Korea.

The South Koreans could also maintain the border with a fence barrier that makes it hard to come south. This might even turn out to be necessary if some former NK regime members decide that they are so dedicated to the old regime that they start committing terrorism in the south.

Ray, I agree that the Northerners are going to be pretty messed up in their heads for a long time to come. I don't think, however, that the South Koreans can really do all that much to rehabilitate them. The best the South Koreans can do is to give the North real rule of law, some food, enough infrastructure to deal with cold winters and disease, and education. Think about the problem with the schools. All the teachers know to teach insane propaganda. So send South Koreans up north to teach the kiddies?

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