11/21/2014, 00.00
KOREA
Send to a friend

Korean unification could cost "$ 500 billion"

Without "reliable data on North Korea's financial and economic situations," unification could create a shock as big as the collapse of Lehman Brothers, South Korea's Financial Services Commission chief says. However, for South Korea, unification could be an economic "bonanza" as it combines its capital and technology with the North's labour and natural resources. The Catholic Church fears instead that North Korean workers might become "modern slaves, underpaid and marginalised".

Seoul (AsiaNews) - The reunification of the Korean peninsula could cost about "$ 500 billion". However, the lack of "reliable data on North Korea's financial and economic situations" makes it hard to estimate the real cost. Unification is thus a baseless hope.

South Korea's economy is 43-times bigger than North Korea's, this according to the South Korea's Financial Services Commission's calculations.

By comparison, the West German economy was 10-times larger than East Germany's when the Berlin Wall fell.

West Germany went on to spend some US trillion rebuilding the East, some estimates show.

President Park Geun Hye said early this year that unification could be an economic "bonanza" as South Korea could combine its capital and technology with the North's labor and natural resources.

Many analysts disagree. Even the Catholic Church has doubts about it because North Koreans could end up as "modern slaves" working in southern-controlled plants, "underpaid and marginalised by society.

With Kim Jong-Un consolidating power after a series of bloody purges and the two countries periodically exchanging fire over one of the world's most fortified borders, there is little sign that unification will happen anytime soon.

Shin Je Yoon, the Financial Services Commission's chief, said he is embarrassed about the unreliability of its calculations, using a photo of the open sea at a conference to illustrate how speculative they are.

"We've no reliable data on North Korea's financial and economic situations," Shin said. "We've long been singing about our wish for unification, yet we've no real master plan should unification actually happen."

As long as things remain unchanged, sudden unification could instead create a shock as big as the collapse of Lehman Brothers, he added.

The process could weaken South Korea's public finances, put pressure on the won and raise borrowing costs, this according to Hong Jung Hye, a Seoul-based fixed income analyst at Shinyoung Securities Co.

Send to a friend
Printable version
CLOSE X
See also
Tensions between Seoul and Pyongyang rise as Cold War fears cast a shadow over Korea
12/02/2016 15:14
Pyongyang asks for more humanitarian aid
24/04/2006
Seoul to give 20 million dollars to North Korean children
29/03/2006
Seoul: in 2005 1,400 N. Koreans Fled to South
24/01/2006
Damages claims from ex detainees of north and south cross over
10/01/2006


Newsletter

Subscribe to Asia News updates or change your preferences

Subscribe now
“L’Asia: ecco il nostro comune compito per il terzo millennio!” - Giovanni Paolo II, da “Alzatevi, andiamo”