B00BY4HXME EBOK (38 page)

The experience of post-Socialist Eastern Europe and the USSR has shown yet another potential vulnerability the ex-Communist populations have. They are ignorant and sometimes very naïve about the workings of markets. They therefore can easily fall prey to con artists who peddle all kinds of get-rich-quick plans. Ponzi pyramid schemes seem to be especially common. In 1994 in Russia, a Ponzi scheme run by the MMM Company wiped out the savings of five million ex-Soviet citizens. The MMM affair led to some political disturbances but it was nothing in comparison to post-Communist Albania. In Albania, a number of Ponzi schemes succeeded in attracting the investment of a quarter to half of all Albanians—some $1.2–1.5 billion, or
half of the annual GDP in this country with a population of three million. Their collapse in 1997 led to a short but intense civil war that cost an estimated 500 to 1,500 people dead.
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Romania—another country that resembled North Korea in many regards—also suffered from the collapse of the Caritas, as a local Ponzi scheme was known, even though this collapse did not lead to much violence.

Unfortunately, similar events are also likely to happen in North Korea. North Koreans might be street-smart in their own ways, but they tend to be remarkably credulous and naïve when it comes to the workings of modern capitalism. Actually, we already have a warning sign: according to recent research, in South Korea one in five Northern refugees has been a victim of fraud, a rate more than 40 times higher than the national average.
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They will make an easy prey for the predatory outsiders, especially those from the South—and such an outcome is not going to promote better mutual understanding in post-unification Korea.

It is clear that the social transformation of North Korea will be difficult for everybody. There is one group, however, that seems to stand out—the military.

The North Korean military is estimated to be 1.1–1.2 million strong. Most of these people can be seen as soldiers only if you stretch the definition of military service. They are essentially an unpaid labor force, whose members are also taught some basic military skills. But the North Korean armed forces also include a significant minority (perhaps as many as 300,000–400,000 people) of professional warriors, who have spent their entire adult lives mastering ways of low-tech killing. They are soldiers in the special forces, units of the Pyongyang Defense Command and other elite formations.

After unification, they are likely to find themselves in an unenviable situation, since these lifelong professional soldiers usually don’t have even those limited skills that can be found among the civilian population. They are also likely to be hit especially hard by the collapse of the official value system: the sudden realization of the emptiness and lies behind the Juche ideology and the Kim family cult. Some of them will find poorly paid jobs as security guards, but many others will opt for more lucrative opportunities in the criminal underworld.

Let us now consider some ways in which we can mitigate the negative consequences of unification whilst making the most of its numerous advantages.

One of the possible solutions might be the creation of a transitional confederative state where both North and South would maintain a significant measure of autonomy and keep different legal systems as well as, possibly, different currencies. A major task of such a confederation would be to lay the foundations for a truly unified state and to mitigate the more disastrous effects of North Korea’s future transformation.

The idea of confederation has been suggested many times before, but in nearly all cases it was assumed that the two existing Korean regimes would somehow agree to create a confederative state. Needless to say, one has to be very naïve to believe that the current North Korean rulers could somehow coexist with South Korea within such a confederative state. Even if they are somehow persuaded to accept such a risky scheme, very soon their own population will become dangerously restive.

In real life, a confederation will become possible only when and if the North Korean regime is overthrown or changes dramatically, so that a new leadership in Pyongyang will have no reason to fear the influence of the South. In other words, only a post-Kim government can be realistically expected to agree to such a provisional confederation. It does not really matter how this government will come to power, whether through a popular revolution, a coup, or something else. As long as this government is genuinely willing to unite with the South, it might become a participant of the confederation regime. If an acute security crisis leads to a South Korean or international peacekeeping operation in the North, the emergence of a provisional confederation still remains a possible—and highly desirable—solution on the way to Korea’s reunification.

The length of the provisional confederation regime should be limited, and 10 to 15 years seems like an ideal interval. A longer period might alienate common North Koreans, who will probably see the entire confederation
plan as a scheme to keep them from fully enjoying the South Korean lifestyle while using them as cheap labor. On the other hand, a shorter period might not be sufficient for a serious transformation—and a lot of things will have to be done.

One of the tasks of such a provisional system will be to control cross-border movement. The confederation will make it relatively easy to maintain a visa system of some kind, with a clearly stated (and reasonable) schedule of gradual relaxation. For example, it might be stated that for the first five years all individual trips between the two parts of the new Korea will require a visa-type permit and North Koreans will not be normally allowed to take jobs or longtime residency in the South. In following years these restrictions could be relaxed and then finally lifted.

One has to be realistic: this administrative border control is not going to be particularly efficient in stopping North Koreans’ exodus to the South. Post-unification border guards are not going to machine-gun illegal crossers, and with South Korea being so rich, so attractive, and so close, fines and mild punishments will have only marginal impacts. After all, the North Korean people have spent the last two decades boldly flouting countless regulations that were supported by an exceptionally severe system of sanctions and punishments. Thus, immigration between the two countries can be reduced only if life in North Korea itself will become sufficiently attractive within a suitably short period of time.

To achieve this goal, the North Koreans also should be protected from the less scrupulous of their newfound brethren. The provisional confederation regime, while encouraging other kinds of investment, should strictly control (or even ban) the purchase of arable land and housing in the North by South Korean individuals and companies, thus reducing the risks of a massive land rip-off being staged by greedy real estate dealers from the South.

It will be important to explicitly acknowledge the 1946 land reform, declaring the property claims null and void. To placate former owners, some partial compensation might be considered, even though the present author is not certain whether grandchildren of former landlords, usually rich and successful men and women, are in dire need of such compensation (especially
when one takes into account that many of these families got their land by being remarkably deferential to their Japanese overlords in the colonial era).

The property of the state-run agricultural cooperatives should be distributed among the villagers. As a first step, it might be preferable to give the land of the cooperatives to the farmers who currently farm on them—not as property, but rather on a free rent basis. In five to ten years, those families who continuously toil on their land plots, producing food and paying taxes, should be accorded full ownership rights. This will discourage some North Koreans from rushing South while also contributing to the revival of North Korean agriculture. By the end of the confederation period, land and real estate in North Korea should be safely privatized, with North Korean residents (and, perhaps, recent defectors) being major or, better still, sole participants in this process. Incidentally it is conceivable that North Korean farmers will do what many East German farmers did after unification—reestablish agricultural cooperatives. But, these will be genuine cooperatives, and not the state-run farms thinly disguised as voluntary communal farmer’s organizations.

The confederation regime will help to mitigate the problems of the North Korean middle class and professionals—essentially, by shielding them from competition for the most difficult initial years. During the confederation regime period, special efforts could be made to reeducate those people, preparing them for a new environment, helping them to master modern techniques and skills. Most of the North Korean doctors, teachers, and engineers will be unable to adjust, unfortunately, but at least the 10- or 15-year leniency period will give a chance to the lucky and determined, while also providing others with time to find alternative ways to make a living. During this leniency period they should be allowed to practice their professions, even though some minimal retraining might be strongly encouraged or even made mandatory.

The military of the two Koreas should be integrated, with large (perhaps, disproportionately large) quotas reserved for former North Korean servicemen in the united army. If former military officers are given commissions in the post-unification forces, their remarkable skills and their sincere nationalist zeal will find a useful and safe outlet.

The confederation also should execute some policies ensuring that North Koreans will not remain the source of “cheap labor,” to be used (and abused) by the rich South. Encouragement of trade unions might be one such activity.

Naturally, the rich South will have to provide North Korea with large and consistent aid. Fixed transfers plus direct investment (the more the better) and fixed-purpose aid grants will be necessary. However, it probably will make sense not to repeat the German mistake of merging currencies overnight—for a while at least, keeping two separate currency systems seems to be a better option.

It will make sense to give North Koreans a fixed admission quota in the most prestigious universities in Seoul. In South Korea the top positions in management, politics, and culture are nearly monopolized by the graduates of the top four to five schools, which are all located in Seoul. This situation might be regrettable, but it is not going to change anytime soon. Since North Korean students normally cannot be pushed through an extremely demanding system of pre-exam cramming, they are not going to be competitive in the entrance exams. The only way to get them into places like Seoul National University and Yonsei University is some kind of affirmative action system. Such an affirmative action system is going to be unpopular with South Korean parents who are very sensitive to any hint at region- or class-based preferences in admission policy. But, such sacrifices are necessary preconditions for reforging a unified Korean society.

Politics in the post-unification confederation will be tricky and highly contentious. Currently it seems that there are two possible solutions.

First, it is possible that for the entire length of the transitional period, or at least a few initial years, North Korea would be run by some outside government. Such a government might be appointed by Seoul, but some kind of UN-mandated international administration might also emerge from a future crisis. Unfortunately, such an administration is likely to be full of greedy and ignorant carpetbaggers who take every opportunity to enrich themselves before running away. Alternatively, some of the bureaucrats in a “Viceroyalty of North Korea” will be younger, idealistic officials from the South, who might be personally clean and devoted, but also remarkably naïve.

Alternatively, immediately after the crisis, a democracy might be introduced into the North. This seems to be an attractive option, but assuming that the alternative elite is either absent or very weak, such a democracy will most likely be dominated by minor officials of the Kim family era—or at least their children and close relatives. These natural-born opportunists may instantly change their colors and claim themselves to have been lifelong closet democrats (like their peers in Eastern Europe and the USSR once did).

Their children will fare even better—as a matter of fact, the second generation of the elite is bound to succeed even in the (unlikely and undesirable) case of their parents being ousted from the positions of power. One can easily imagine the choice that will be made by recruiters of a major international (or, for that matter, South Korean) corporation when, in the post-Kim North Korea, they deal with two candidates—a charming girl with a degree from the best Pyongyang college, passable English, and great social skills, and a young girl of the same age from the countryside with no working knowledge of the English language, a very basic picture of the outside world, and little understanding of how the modern economy works.

The choice seems obvious, but one should remember that the former in our thought experiment is almost certain to be the daughter of a party cadre (perhaps an efficient interrogator from the political police or a senior guard in a prison camp). This is principally because usually only well-connected people—in the case of North Korea, people who get their hands dirty (most of the time at least)—can give their children the opportunity to acquire the aforementioned education. Even her great looks might hint that she had the rare privilege of being exempt from annual labor mobilizations (such stints of hard work in the open air are really bad for the skin, and physically age participants). Meanwhile, nearly all the children and grandchildren of the people who once were unlucky to fall victim to Kim Il Sung’s wrath and spend their youth in camps or in exile in the countryside will look like the second girl in the above example—being exiled to the countryside, she would have not the slightest chance to acquire the education and skills that could make her successful in the post-Kim world.