Study: Rebuilding North Korea Will Cost at Least $2 Trillion

North Koreans struggle for basic access to facilities and more than a quarter of children are stunted due to inadequate nutritious food, the UN says
AFP/Ed JONES

A study by two British economists this week estimated that the reconstruction of North Korea to bring it into alignment with South Korea in the case of reunification would cost at least $2 trillion, money that South Korea would largely be responsible for.

As foreign investors and international corporations begin to prepare for the possibility of investing in a Kim-ruled, non-nuclear North Korea, allies of the rogue state like China are beginning to suggest that the United States invest heavily in “rewarding” dictator Kim Jong-un for not flagrantly violating international law.

Researchers Stephen Jen and Joana Freire of the UK’s Eurizon SLJ Capital Ltd. compared the cost of unifying Germany to the population and economic size differences of the two Koreas, according to Bloomberg. Unifying Germany, they found, cost West Germany $1.4 trillion at the time, equal to about $2 trillion today.

A similar amount of funds would have to pour into North Korea if the countries reunified to create a stable state, they conclude. The two researchers posit that the amount of money Kim Jong-un could demand may be even greater, as the potential for a nuclear disaster to occur without coming to an agreement is such a large risk that there is a greater incentive for the parties seeking to bring North Korea to the table – the United States, South Korea, Japan – to offer more.

“Given the threat presented by the nuclear arsenals, Mr. Kim Jong-un is in a position to demand a very large financial commitment from the rest of the world to secure complete denuclearisation,” the researchers wrote about their study. “We stress that we are not arguing that North Korea should or will demand such a large financial assistance. We are merely thinking out loud about what the order of magnitude of that figure might be.”

The amount of money necessary for successful reunification appears to have doubled since the Economist attempted a similar study in 2016. At the time, South Korean newspaper Chosun Ilbo reported, reunification would cost at least $1 trillion. The newspaper noted that the Economist‘s estimate was nearly 75 percent of South Korea’s entire gross domestic product when the piece was published.

The Christian Science Monitor put out an even bigger number this week on the potential cost of reunifying Korea: a $5 trillion weight on the South Korean economy.

South Korea The Economist study noted that North Korea is rich in rare earth metals, which technology companies have a heavy demand for to use in digital products. Estimates suggest the value of North Korea’s basic minerals – coal, copper, etc. – ranges from $6 to $10 trillion total, not counting the rare earth metals. Coal is a critical export of the North Korean economy; recent sanctions on the purchase of North Korean coal have reportedly significantly crippled that economy.

South Korea would also benefit from a boost in the number of eligible workers in their economy, though significantly less than they would be hurt by taking on the burden of modernizing North Korea. Corporations in South Korea – including some of its biggest, like Hyundai – have begun preparations to profit from this new workforce. A poll cited in Chosun Ilbo on Friday found that nine of ten South Korean companies are interested in doing business in South Korea.

South Koreans, recent polls have found, are rightfully skeptical of reunification, and growing numbers of Korean citizens oppose the move, feeling ethnically and nationally separate from the people born and raised under the repressive Kim cult. A 2017 national poll found that 57 percent of South Koreans support reunification, but 71 percent of South Koreans in their 20s oppose it, having grown up with the constant threat of nuclear annihilation from the other side of the DMZ. Seoul National University found in a poll in January that only four of ten South Koreans would brand reunification “necessary.”

Concerns about the exorbitant cost of reunification also increased in the aftermath of the 2018 PyeongChang Winter Olympics, in which South Korean taxpayers were forced to foot the bill on food, lodging, and all other expenses for a hundreds-strong team of North Korean athletes, performers, diplomats, and assorted affiliates.

With South Korean unwilling and unable to bear the burden of modernizing the impoverished prison state north of them on their own, President Moon Jae-in, with the eager help of the Chinese government, appear to be attempting to convince the United States to spend taxpayers’ dollars on North Korea, while also not addressing the core problem with North Korea, the parasitic Kim family and its imposition of unfeasible communist economics on the country.

In a meeting this week attended also by Japanese Prime Minister Shinzo Abe in Tokyo, Moon and Chinese envoy Li Keqiang issued a statement demanding that “the international community, including the United States, must actively take part in ensuring a bright future for North Korea through a security guarantee and support for its economic development.”

Chinese state media have asserted that the United States must offer North Korea “attractive rewards” if it wishes to see the nation abide by international law.

On Friday, U.S. Secretary of State Mike Pompeo said the United States was willing to contribute to rebuilding North Korea. His statement did not mention any desire to see the eradication of the Kim regime or respect for human rights in the country.

Follow Frances Martel on Facebook and Twitter.

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