Catherine Field: Dear Leader's death raises hopes of reunification

Catherine Field, who lived in Berlin and covered German unification and twice visited North Korea, gives her view on the possibilities and pitfalls of reuniting North and South Korea

The death of Kim Jong Il has sparked faint hopes that after more than six decades of war and division, the Korean Peninsula will be reunified. But Germany's experience shows the task is long and hugely expensive - and good luck plays an important role.

Germany is the example of how a country split by the Cold War can be reunited in peace and anchored in prosperity. South Korea has paid close attention to the process, setting up a special office in Germany in the 1990s to see what lessons it could learn.

In 1989, Germany was in its 45th year of division. On the western side of the Iron Curtain set down by Stalin lay the rich, democratic and capitalist Federal Republic of 63 million people, flourishing under US protection.

To the east lay the German Democratic Republic (GDR), smaller, poorer and technologically backward, its 16.6 million people living under a viciously repressive state.

Yet on November 9 that year, the Berlin Wall fell without a shot being fired. Within a few months the East's Communist regime was replaced by an elected government. On October 3 1990, the GDR, at its own wishes, was incorporated into the Federal Republic.

But beneath this apparently simple tale of success is a complex recipe. Chief among the factors was a modernising leader in the Soviet Union, Mikhail Gorbachev, who accepted the peaceful loss of Moscow's buffer states. It also took the benign oversight of the four major World War II allies - Britain, France, the Soviet Union and United States - to provide an international framework to endorse the reunification process.

And then there was money, lots of it - between US$1 trillion ($1.3 trillion) and US$3 trillion, depending on which figures are included in the calculation. The Federal Republic swiftly offered a hugely generous currency union, in which it took on debts and pensions on the basis of one Deutschmark to one Ostmark.

Lured by prospects of a better life, more than a million East Germans, many of them young people, flooded into the West, triggering the task of finding them homes, jobs and schools. In the East, Leipzig, Erfurt, Rostock and Dresden become depressed cities inhabited by early retirees.

It has taken massive infrastructure projects - new roads, railway links, telecommunications and airports - to try to revive these Communist wastelands. The resuscitation continues today, funded by a special tax and subsidies. Yet more than 20 years after reunification, the East's jobless rate is around 12 per cent, roughly twice that in the West.

According to Victor Cha, director of Asian studies at Washington's Georgetown University, this picture of a long and hugely expensive trail is daunting for South Korea.

"After the initial euphoria of German unification, Koreans became acutely aware of the difficulties of uniting the two countries economically, politically and socially," notes Cha.

"They learned quickly that these difficulties would be exponentially more acute given the even wider socio-economic gaps between the two Koreas compared with that of the two Germanies."

The biggest uncertainty is political. North and South Korea have technically been at war since 1950, with only rare contacts allowed between their peoples. The unpredictable, paranoid regime in Pyongyang has repeatedly brought the two states close to conflict. A collapse of the Communist dynasty, civil war or widespread hunger in the North could send millions towards the South, overwhelming it.

South Korea has 48 million people compared to 24 million in the North. But the gap in prosperity is as wide as a canyon: per capita GDP in the South is around US$20,700 a year, compared to just US$1800 in the North, according to the US Central Intelligence Agency's online factbook.

Whereas the South is urbanised, based on the digital economy and high education, the North is dominated by collectivised agriculture and heavy industry, with decrepit infrastructure and crop failures that have caused repeated famines. Indoctrinated by the cult of leadership and the notion of "juche," or self-reliance, North Koreans would have almost nothing to offer the economy in the South: at least East Germans came with a dowry of education to help them adapt to the West.

Reunification strategies in South Korea thus lie not in Germany's fast-track approach but in an incremental one, say analysts. It is based on hopes that a regime will emerge in Pyongyang that is stable and able to forge a dialogue - and keep the borders in place while conditions in the North improve so that an anarchic exodus is avoided.

Estimates of the cost of peaceful Korean unification vary hugely, from less than US$100 billion to more than US$4 trillion, a range that reflects the many unknowns about the world's most isolated regime.

But in an analysis published last year, Charles Wolf of the RAND Corporation think-tank said the bill could be kept to a feasible US$62 billion if the goal was set to double North Korean GDP within five or six years, as opposed to dramatically hiking it to the level of the South.

"With careful planning, preparation and implementation, the costs of Korean reunification can be kept within manageable bounds," Wolf argued.

But a key component in this plan would be to internationalise the Korean issue, in a similar way to German reunification. China, Japan, Russia and the United States, which have been part of the "Six-Party" talks alongside the two Koreas, should all join in the burden-sharing, said Wolf.