The great North Korean bailout

By Shin Hyon-hee
  • Published : Nov 17, 2013 - 19:51
  • Updated : Nov 17, 2013 - 19:51
Shepherd Iverson
Policy experts are trapped in a conventional delusion that either fear or friendship will change North Korea’s behavior. Nothing could be further from the truth. This failing state behaves like a juvenile delinquent; no amount of mother’s love or papa’s iron fist is going to influence it. This troubled child needs a new life ― an opportunity like the Soviet elites took advantage of in 1991.

Interviews with former members of the Soviet elite suggest the Russian revolution was orchestrated by a pro-capitalist coalition of party-state leaders who realized the state was failing and saw an opportunity for personal gain. Elites abandoned ideology for the pragmatic pursuit of material privilege and continued power in a free-market system.

Years before privatization became official policy, political elites positioned themselves to take over state industries. And in the final months of 1991, they told their troops to stand down, and sat back and watched the relatively bloodless revolution unfold on CNN along with the rest of the world. Mikhail Gorbachev and his family have lived comfortably in Moscow ever since, and many of the Soviet political elites are members of the new Russian economic elite.

The post―Kim Jong-il power elite also needs a profitable bailout from the failing Stalinist system it inherited, but the current North Korean economy is 40 times smaller than the 1991 Russian economy. Thus, incentives must be offered from an external source.

This could be accomplished with the institution of an internationally financed Korean Peace Fund, commissioned to collect and disburse a large sum of money to North Korean elites, military officers and common people (over five years) if they reunify under South Korean political leadership.

Assurances of a personal bank account and new opportunities for the masses may incite a general revolt, and the promise of a significant payout to power elites and up and down the military chain of command may trigger a coup d’tat. Kim Jong-un will be compelled to acquiesce, as he will win the Nobel Peace Prize (like Gorbachev in 1990 and Kim Dae-jung in 2000), and be hailed as the young heroic leader who brought peace, prosperity and unification to his people.

It would be a shame if future conflict in Korea were to disrupt the global economy, since money to reunify the peninsula could easily be obtained from some combination of private and corporate donations, foreign reserve withdrawals and redirected military spending.

Although governments may be reluctant to provide support initially, power elites could institutionalize this fund and give it legitimacy by promising highly publicized donations. A few thousand corporate elites control $100 trillion; there are almost 1,500 billionaires, 400 residing in the Asia-Pacific. According to Bloomberg financial news, the net worth of the top 40 elites rose by $100 billion last year. Unconstrained by the parochialism of public opinion, international power elites could set in motion a partnership between private wealth, international media, banks, business and global institutions that could fundamentally change the political and economic incentive structure in the region.

In addition to $330 billion spent on defense in 2013, Northeast Asian nations hold more than $7 trillion in currency reserves and sovereign wealth fund assets (China owns 66 percent). A small fraction of this money could underwrite Korean reunification, and would not only be an investment in the sustained growth of capital funds, but would also amount to the greatest humanitarian gesture and security reversal in the history of humankind.

As preposterous as this idea may seem, it makes the most sense in this economic and security environment. The elimination of nuclear weapons from a failing totalitarian state in the epicenter of East Asian prosperity is worth billions, as is reducing the potential for conflict between great powers that would capsize the global economy and threaten the lives and livelihoods of millions.

Tension is increasing with the rise of China, the U.S. military pivot to the Pacific, and North Korea nearing its goal of miniaturizing a nuclear warhead. Checkbook diplomacy must replace gunboat diplomacy, and the proliferation of weapons of mass destruction must cease altogether.

Historic policy failures of engagement, containment and coercion, and the dismal results of the six-party talks (dormant since 2008) reveal that conventional diplomacy is failing. We need disruptive innovation in peacemaking, and leaders who, as the late Steve Jobs once proclaimed, have the imagination to “push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world are the ones who do.” If spearheaded by a single billionaire, or if a consensus emerged within the G20, a corporate consortium or among international power elites, this peace proposal could be funded.

Growing dissent within North Korea and the ascension of a new generation of leadership have opened a window of opportunity for political acquiescence. Given young Kim’s age, this opportunity might not come again for another half century.

By Shepherd Iverson

Shepherd Iverson is a professor of the Center for Korean Studies at Inha University in Incheon, and the author of the new book “One Korea: A Proposal for Peace.” ― Ed.