Love,love me do

By Terry Lacey

(June 02, Jakarta, Sri Lanka Guardian)North Korea does everything it can to be feared, but wants to be loved. Paul McCartney, reportedly wrote the first Beatles single hit while he was dodging school in about 1958, - Love, love me do - was a song about a young man seeking to be accepted. Maybe that sums up the real problem for North Korea.

The celebration of the 20th anniversary of ASEAN-South Korea relations on South Korea’s Juju Island with the 10-nation ASEAN group (Brunei Darussalam, Cambodia, Indonesia, the Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) sums up South Korean economic success and regional integration alongside North Korean economic failure and isolation.

This anachronistic country has a population of 23 million and a standing army of 1.1 million while spending an estimated 25 percent of its GDP on defense. Its people can hardly bear this burden. By contrast Indonesia has a population of 235 million and a standing army of 310,000.

North Korea is trying desperately to punch above its weight. Houdini the great illusionist had more sense of realism. He sold an illusion and knew it was an illusion.

Shim Jae Hoon writing recently in the Jakarta Post (30.05.09) explained that the acts of brinkmanship of Kim Jong-il are attempts to obtain US recognition of North Korea as a nuclear power, to somehow facilitate the withdrawl of US troops from South Korea and even reunification with the South under Northern domination. And pigs might fly instead of catching the flu.

Ownership of nuclear weapons no longer guarantees the top table status which the UK and France obtained after 1945.

President Lee Myung-bak chooses not to be intimidated by North Korean belligerence and wants to link any future economic aid not only to denuclearization but to triggering economic and political reform in the North. On the latter he is right and on the former the only question is what tactics are best, and how the one relates to the other.

North Korea has a population of 23 million, GDP by purchasing power of only $40 billion and GDP per head of perhaps $1700 compared to South Korea with a population of 48.5 million and a GDP of $1.28 trillion or $26,000 per head.

South Korean trade with the ASEAN group of nations was $46.4 billions in 2004 rising to $90.2 billions by 2008. South Korean investment in ASEAN countries in the same period rose from $1.3 billion to $5.8 billion.

The Korean war was fought to a standstill on the 38th parallel, but the North lost the real battle for economic victory and sustainability many years ago.

The biggest threat to South Korea is that the economic and political collapse of the North, when it comes, could present much bigger problems than in Germany when the Berlin Wall fell. North Korean nuclear potential symbolizes a possible future threat rather than a present one. But there is more than a slight danger of maritime or land border clashes, which could escalate.

It is against this threat that President Lee should be backed by the international community to insist on economic development programs in the North.

Sanctions must not harm impoverished people and there should not be rewards for nuclear blackmail. But it would also be a mistake to drive North Korea more into a corner. This risks larger conventional clashes rather than nuclear war.

North Korea needs public administration reform, support for SMEs, agricultural reform and the beginnings of economic liberalization to save itself from collapse and lay the foundations for reunification.

Whatever combination of carrots and sticks is now dreamed up by the West, the waters still have to be navigated between reformers and conservatives in North Korea, assuming we can tell the one from the other.

This looks a bad time. But it might be the right time to try something new. The South Korean sunshine policy is ended, but a new dawn is inevitable and its time to start preparing for it.

Terry Lacey is a development economist who writes from Jakarta on modernization in the Muslim world, investment and trade relations with the EU and Islamic banking.

-Sri Lanka Guardian