North Korea's $10 trillion problem

Reunification of North and South Korea could cost $10 trillion. Photo/AP

If Donald Trump delivers on his promise of "fire and fury" to wipe out the North Korean regime, the peninsula would face a $10 trillion economic catastrophe.

The war of words between the US President and the nuclear-armed rogue state dramatically escalated this week, with North Korea threatening to attack the US territory of Guam in response to Trump's comments on Tuesday.

Sebastian Gorka, a top aide to President Trump, subsequently ramped up the rhetoric in an interview with Fox News.

"Don't test America, and don't test Donald J. Trump," he said.

"We are not just a superpower. We were a superpower, we are now a hyperpower. The message is very clear: don't test this White House."

Assuming the best-case scenario and the US managed to wipe out the North Korean regime overnight, what would happen then?

The long, painful process of reunification between the North and the South would begin.

"I think it will probably cost at least $10 trillion, but probably more," said Dr Leonid Petrov, North Korea expert and visiting fellow at the Australian National University's College of Asia and the Pacific.

Petrov said recent estimates put the likely immediate cost of reunification at $3 trillion immediately and an additional $7-8 trillion in the first decade.

"The younger generation of South Koreans is not very keen at all to see reunification because they know they will have to pay for this," he said.

As one young South Korean woman told the ABC in 2015, she didn't think "we necessarily have to unify because there are such big gaps in the culture between North and South Korea and also in terms of the ideology."

She said she thought "unification might make things more difficult for both sides, so I believe it's going to be more effective to just remain as we are."

The push to convince the younger generation of the need for reunification has gained steam in recent months, with one political action group releasing a specially created song by Grammy-winning producers Jimmy Jam and Terry Lewis.

"I wanted to make sure unification is an issue that is accessible to young people and wanted them to begin to realise it is something they need to construct," Moon Hyun-jin, chairman of the US-based Global Peace Foundation, told The Korea Times.

"Music is the best way to transcend regardless of differences of country, culture, ethnicity, or race. It's universal. You can present a simple idea and message in a framework that anyone can understand."

If Donald Trump delivers on his promise to wipe out the North Korean regime, the peninsula would face a $10 trillion economic catastrophe. Photo/AP

Despite the massive upfront costs, civic unrest and refugee crisis that would follow an implosion of the North Korean regime, it wouldn't all be bad news.

"The good thing about reunification is North Korea is full of natural resources, high-quality coal, iron ore, rare earth metals, plus a 25 million population, a disciplined, cheap workforce which speaks the same language," Petrov said.

"That's why particularly China and Japan are very suspicious of Korean reunification, because [while] initially it's going to be very expensive, in the long term it will a bonanza for South Korea."

But Petrov said the effects on South Korea's social harmony would be huge, with 25 million "poorly educated, brainwashed brothers and sisters" who have "no idea how the modern world operates" likely to become second-class citizens.

"The older generation of South Koreans are much more enthusiastic about reunification because they have their loved ones left behind during the war, they want to see their native villages one last time before they die," he said.

"North Koreans are more realistic, both the elites and the common people. They know South Koreans live better, they know South Korea is stronger and if they unify the result will be they're treated as second-class citizens.

"They understand that. They're not rushing to reunification, at least not immediately. They know they need some time to improve economic output, to learn about capitalism and the contemporary world."

Petrov said the longer North Korea waited for reunification, the safer it would be - a Catch-22 given the steadily declining support among younger South Koreans, many of whom are already struggling to find work.

Tens of thousands of North Koreans gathered for a rally at Kim Il Sung Square carrying placards and propaganda slogans. Photo/AP

But it's a moot point anyway, he argues, because even the latest round of sabre-rattling is unlikely to amount to anything.

He said wiping out the dictatorship was "very easy to say, very hard to deliver".

"No one can do much about it because the North Korean dictatorship is so perfect," he said.

"Kim Jong-un is a perfect dictator. He was chosen by his father from his three sons because he was a dictator in the making - ruthless, ambitious. He executed his own uncle.

"Regimes like that don't disappear easily because there's no internal opposition, no dissidents, so it can only be done from the outside."

And because America's entire status in East Asia depends on North Korea, Petrov said it's unlikely anything will happen.

"If North Korea is not the enemy any more, Americans shouldn't be stationed in South Korea," he said.

"Japan would also start asking questions - why would they need military bases on Okinawa, and why should they abstain from signing a peace treaty with Russia, [which they haven't had] since WWII because Americans are against it.

"So basically American security posturing in East Asia is totally hinging on North Korea's presence and its aggressive and irrational behaviour. The more aggressive and irrational, the better the relations between the US and Asia."