It's Not Your Father's South (or North) Korea Anymore..

By Mallory FactorCo-Chairman/Co-Founder, The Monday Meeting/Member, Council on Foreign Relations

North Korean leader Kim Jong-Il has a flair for the dramatic. Last month's launch of a Taepo-Dong 2 missile as NATO's leaders gathered for their 60th anniversary summit brought North Korea to the attention of the world again. And the recent news that the United States and our Asian allies now consider North Korea a fully-fledged nuclear power with the ability to deliver its weapons into South Korea and Japan has raised suspicions that the test was more successful than comments by our government indicated at the time.



Still, though, one should not make too much of North Korean bluster or even actions. Last year, I visited the Demilitarized Zone that separates the Koreas at the village of Panmunjom. The DMZ appears to be one of the tensest borders in the world, with scowling soldiers, propaganda banners, and scores of landmines separating the two sides. But the South Korean perspective on the North Korean threat would surprise many Americans accustomed to thinking of South Korea as a country under constant fear of attack, dependent upon the American military presence as a "tripwire" for its life. Briefly put, the South Koreans aren't nearly as worried about a military attack from the North as Americans still think they are.

South Korea would not have survived the Korean War without United Nations intervention under U.S. leadership. It is also true that for much of the period since then, as South Korea developed rapidly and as Kim Il Sung and then his son Kim Jong Il ruled North Korea with an iron fist, South Korea has been under a severe threat, which the U.S. military presence has tempered. But things have changed dramatically in the past decade.

South Koreans no longer fear the North Korean conventional military, because they have discovered it is not worth fearing. Advanced technology, better equipment, and better training of the South Korean forces all mean that in a straight fight, South Korea (with the U.S. offering assistance) would win handily. Even as U.S. forces begin to withdraw from South Korea in 2011, the South is confident it will be able to hold its own militarily against the North.

As the economic and technological gap widens between the North and South, the political task of reunification becomes easier, however the economic realities make reunification far more difficult. Given the enormous economic cost to the South of reunification, this is actually a frightening prospect for the South Koreans. Due to the vast disparity in economic wealth between the two countries, the cost to South Korea of unifying with its Northern brethren could run as high as $1 trillion, by some estimates. -- That's a big bill even for one of the world's largest economies.

South Koreans would prefer that the North develop as much as possible on its own before unification. To that end, South Koreans have been investing in the North already, in areas such as the tourist zones of Mt. Kumgang and Mt. Paektu, and the Kaesong industrial park, all being developed by the South Korean conglomerate Hyundai. In 2005, 24% of North Korean exports went to South Korea, and 28% of the North's imports came from the South. This trade started from a low base but will increase rapidly. While many Americans disapprove of South Korean companies propping up a totalitarian regime, South Koreans see the matter differently--as easing the cost of eventual unification, providing jobs for their ethnic brethren and utilizing a low-cost alternative to China. Our military presence alone is no longer sufficient to dissuade the South Koreans from making such investments.

No one believes unification would be easy: after sixty years of living in a closed society, North Koreans are cut off from the realities and uncertainties of modern life. The task of unification would be as much psychological as it would be economic. Indeed, many South Koreans fully recognize the psychological aspects of the North-South standoff. Noting the military and economic backwardness of the North, they respectfully suggest that the United States inflates the importance of North Korea by giving Kim Jong Il more attention than he really deserves. Kim Jong Il pushes the U.S. in order to draw a response and attention he would not otherwise get. South Koreans wonder why we respond and appear to take him so seriously. This viewpoint, so different from what one hears from Washington, is widespread in South Korea.

With the rise in East Asian economic power, the United States can no longer assume that the countries in this region will blindly follow our lead in either economics or national security. If we want to preserve our influence both politically and economically, we must stay engaged in the region and better understand the actual concerns of East Asians themselves. Hundreds of thousands of American deaths in three wars in East Asia between 1941 and 1973 show that we ignore Korea -- and the entire Pacific Rim -- at our peril.

Mallory Factor is the co-chairman and co-founder of the Monday Meeting, an influential meeting of economic conservatives, journalists and corporate leaders in New York City. He is also a member of the Council on Foreign Relations and vice-chaired its Task Force on Terrorist Financing.