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NORTH KOREA NEWSLETTER NO. 120 (August 19, 2010)
*** TOPIC OF THE WEEK (Part 1)

President Lee Proposes Three-stage Plan for National Reunification

SEOUL (Yonhap) -- South Korean President Lee Myung-bak has proposed a three-step strategy for reunification with North Korea and the introduction of a "unification tax" to cover the ensuing huge financial burden should the two Koreas be reunited.

   Lee's offer marked his first specific comments on the long-term goal of reunification, discussion of which had been sidelined under his administration, which has placed top priority on denuclearizing the North.

   Addressing the nation to mark the 65th anniversary of Korea's liberation from Japan's 1910-45 colonization on Aug. 15, Lee proposed his country adopt a "unification tax" and pursue a three-step reunification strategy that would create peace, an open economy and a national community.

   "We long for the common prosperity and peace of both the South and the North, which will lead to reunification, and this is the right way to achieve the genuine liberation of the nation," Lee said in the nationally televised speech.

   He pointed out that the two archrivals need a paradigm shift to liquidate the Cold War legacy and take a path toward eventual reunification. "Today inter-Korean relations demand a new paradigm," Lee said. "The two of us need to overcome the current state of division and proceed with the goal of peaceful reunification."

   The envisioned three-step formula calls first for the formation of a "peace community" for coexistence on the peninsula. The next step is to build an "economic community" for co-prosperity. The final stage is to create a "national community" for a unified Korea.

   Lee unveiled his blueprint for a unified Korea rather specifically, saying creating a "peace community" that assures security and harmony is the first step. He set the denuclearization of the North as a prerequisite.

   "The next step is to carry out comprehensive inter-Korean exchanges and cooperation with a view to develop the North's economy dramatically. The result will be an economic community in which the two will work toward market integration," he said.

   After this, the two Koreas can remove the barrier of different systems and establish a genuine community, in which freedom and basic rights of all Koreans are guaranteed, Lee pointed out.

   "Reunification will definitely happen," he said. "It is therefore our duty to start thinking about real and substantive ways to prepare for reunification such as the adoption of a unification tax."

   Lee's suggestion came amid heightened tensions with North Korea in the wake of the deadly sinking of a South Korean warship in March and uncertainties over Pyongyang's future after leader Kim Jong-il apparently suffered a stroke in 2008.

   Despite strong denials by Pyongyang, Seoul concluded, with a team of international experts, that Pyongyang was responsible for the sinking that killed 46 sailors.

   As Seoul has ratcheted up pressure on Pyongyang through the United Nations and joint naval drills with the U.S., the communist regime has responded with threats of war and the firing of shore artillery into the Yellow Sea.

   "It is imperative that the two sides choose coexistence instead of confrontation, progress instead of stagnation. The two of us need to overcome the current state of division and proceed with the goal of peaceful reunification," Lee said. He reiterated calls for the North's leadership to face reality and not fear change.

   The president then asked experts and politicians to start discussions on the scale of the unification tax and ways to levy it. Heated debates are expected in the process.

   South Korea is estimated to shoulder a cost of around US$1.3 trillion if it reunifies with the North, according to a study commissioned by a parliamentary committee. Germany has spent 2 trillion euros over the last two decades to cover its reunification costs.

   The emphasis on denuclearization, analysts say, is in line with Lee's existing stance toward North Korea. Lee's remarks in the 20-minute address set the tone for his policy in the second half of his single five-year term, which begins on Aug. 25, his aides said.

   Lee has been less engaging toward North Korea than his two progressive predecessors, presidents Kim Dae-jung and Roh Moo-hyun.

   Lee's approach to North Korea is considered to be similar to that of President Kim Young-sam in the early 1990s, who also touted a three-stage unification formula. Kim's predecessor, former President Roh Tae-woo, envisioned a similar unification plan in the late 1980s.

   But Cheong Wa Dae officials said Lee's formula is different because the president sees peace achieved only through denuclearization as a precondition to economic cooperation. Kim's formula pursued peace and economic cooperation simultaneously, they said.

   Analysts say, however, President Lee's offer of a long-term inter-Korean reunification strategy and a special tax to fund the ensuing astronomical costs is unlikely to help warm the two Koreas' frozen relations, and rather it may trigger a dispute with the North at a time when it is sensitive about its regime security.

   They claimed that Lee's vision for reunification with North Korea lacks a concrete plan on how South Korea will normalize relations with its communist neighbor, signaling that his administration will stick to a tough stance.

   Lee's reunification plan is based on the premise that North Korea will abandon its nuclear weapons program. That is why analysts view it as standing in line with Lee's "Denuclearization, Opening and 3,000" project, in which the South would assist the North in trebling its per capita income of US$3,000 over a decade in exchange for its denuclearization and market opening. Pyongyang has already rejected the idea.

   Lee's aides said he wanted to remind the Korean people of the need for reunification as it would mean genuine liberation from Japan's colonial rule that led to the division of a capitalist South and a communist North.

   "And (Lee's comments) also intended to urge North Korea to make a decision to improve relations with the South and accelerate our internal preparations (for reunification)," Yim Tae-hee, presidential chief of staff, told reporters.

   North Korea's response came rather quickly. On Aug. 17, the North lashed out at Lee's unification tax proposal, calling his comments "anti-reunification and confrontation outbursts."

   "It is needless to say that the unification tax spelled out by the traitor is very unsavory trumpeting as it meant 'contingency in the north,' a foolish pipedream," said the North's Committee for the Peaceful Reunification of Korea, a powerful party organization, according to Pyongyang's Korean Central News Agency.

   "Lee's vituperations are nothing but anti-reunification and confrontation outbursts," the committee said. "The traitor will be forced to pay a dear price for spelling out the unification tax."

   Earlier in the day, President Lee sought to minimize the political impact from the surprise proposal. The government "does not intend to levy the unification tax right now," Lee was quoted by his spokeswoman Kim Hee-jung as saying.

   Lee also said that Seoul's policy with North Korea has so far focused on managing the division with the North and "it is the very time to pursue a policy to prepare for reunification," according to the spokeswoman.

   Lee stressed that his office, Cheong Wa Dae, has just set the stage for discussions among politicians and experts on the issue of the unification tax.

   Yang Moo-jin, a professor at Seoul's University of North Korean Studies, said, "A prudent approach toward a unification tax is necessary in the current confrontational phase in inter-Korean relations. Discussions on the matter are needed, but controversy over the timing is expected."

   The main opposition Democratic Party (DP) dismissed the president's offer of the tax as pointless and called for him to implement the two inter-Korean summit agreements of his liberal predecessors, Kim Dae-jung and Roh Moo-hyun. "(President Lee) has yet to deviate from a Cold War-era mindset," DP spokesman Cho Young-taek said.

   The ruling Grand National Party (GNP), however, welcomed Lee's proposal as "very realistic." "We expect broad discussions in society overall, including the National Assembly," GNP spokesman Ahn Hyoung-hwan said.

  (END)