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South Koreans Weigh Burden of Massive Assistance for North
Electricity Project Seen as Payment Toward Unification

By Anthony Faiola
Washington Post Foreign Service
Monday, July 25, 2005

SEOUL -- Clusters of Korean War veterans were gathered at their favorite shady spot in downtown Seoul on a recent afternoon, arguing about a hot topic among South Koreans -- the massive cost of unification with North Korea.

The issue has moved to the national forefront after the South Korean government this month outlined a multibillion-dollar electricity assistance proposal to the North in an offer seen as a key reason North Korea agreed to return to international disarmament talks set to reconvene in Beijing on Tuesday.

Amounting to the most expansive direct aid ever proposed from the capitalist South to the communist North, the electricity package has been described as the first part of a North Korean Marshall Plan, the U.S. program to rebuild Europe after World War II. Aid could eventually bring new or improved South Korean-funded harbors, airports and expressways to North Korea if it abandons its nuclear weapons program.

While analysts and diplomats say the plan could help persuade North Korea to disarm, it is also an example of how expensive the bill will be if the South and the North are to achieve national reunification. The electricity package alone would cost at least $1.4 billion in new infrastructure and an additional $1 billion each year starting in 2008 as 2,000 megawatts of power are sent across the heavily fortified border.

Some of the veterans in the downtown park shouted that the aid package was "too expensive!" and "never for them!" But most agreed with Lee Jong In, 71, who once went toe to toe with his northern brothers on the battlefield. Rather than an expensive inducement, he said, the offer amounts to an essential investment in the future of Korean unification.

"Like them or not, North Koreans are our brothers, and one day we will unify the way East and West Germany did," said Lee, a robust retired high school teacher. "Just like the West Germans, we will bear a financial burden, but the economic differences between North and South are now too great. They are very poor, but if we help them to modernize, we can reduce our unification burden down the line. We need to try to balance out the differences between us before we become one."

Here on the Cold War's last frontier, many South Koreans see the decision as between paying now or paying more later.

One poll by the firm TNS Korea, sponsored by the governing Uri Party, showed that 59 percent of respondents supported the electricity plan and about 37 percent opposed it. Of those who opposed the aid offer, about one-quarter said it was because of the high cost.

South Koreans have been highly focused recently on closer ties with the North. A number of new factories and hotels have been built there. Kim Jong Il, the North Korean leader, met this month with Hyun Jeong Eun, the head of South Korea's Hyundai Group, and agreed to grant the company rights to bring South Korean tourists to the historic city of Kaesong and the North's sacred Mount Paektu as soon as late August. Talks are also underway to allow stopovers in the usually isolated North Korean capital, Pyongyang.

South and North Korean actors and singers are performing together in commercials and concerts; artists and scientists are holding joint summits. Service on an almost completed 15-mile rail link across the North-South border is expected to begin in September. And this month, the two Koreas established a fiber-optic cable link to allow videoconferencing for family members separated after the war.

Despite the blossoming of brotherly love, however, even those South Koreans who support unification say that if it happened now, the cost would cripple them. South Korea is the world's 11th-largest economy and home to major automakers and international electronics firms.

When East and West Germany reunited, South Korean scholars note, the East had one-fourth the population of the West and its economy was one-third the size. By comparison, North Korea has nearly half as many people as South Korea, but its failed socialist economy amounts to only 7 percent of that of the high-tech South.

South Korean experts, therefore, say the economic shock from reunification would be far greater. One recent study by the Rand Corp., a U.S.-based research firm, estimated that a sudden reunification of North and South could cost as much as $670 billion.

"So we need time -- we need time to help North Korea improve its infrastructure and narrow the gap with the South," said Kim Young Yoon, a director at the government-funded Korea Institute for National Unification. "The electricity proposal is a step in that direction -- it's a long-term investment to bring down the eventual costs of a unified Korea."

The South Korean government has said that its electricity offer is meant to address North Korea's power shortage, following the suspension of work on two light-water nuclear reactors that were part of a 1994 agreement between the North and the Clinton administration. The Bush administration abandoned the project after the Pyongyang government admitted to having violated the agreement by continuing its nuclear weapons research.

The amount to be spent on the electricity proposal, government officials said, would be offset, at least initially, by shifting $2.4 billion that South Korea had pledged for the reactors toward the non-nuclear power assistance. Construction could start this year -- if agreement is reached -- with power transmission to begin by 2008, assuming that the North has dismantled its nuclear programs by then.

Beyond power generation, far greater investments are foreseeable, officials said. "So much is possible in terms of South-North cooperation if they give up their nuclear programs," said Jun Byung Hun, a Uri Party legislator. "And it is to our advantage to offer it to them as we look toward the future of unification. It is a small price to pay for peace."

The South's current proposal calls for transmitting electricity across the border rather than building plants in the North. But the conservative opposition to the administration of President Roh Moo Hyun contends that the North will almost certainly insist on power plants built on North Korean soil. Critics fret that if Roh granted such a deal, the North's Kim could later renege on any pledge to give up his nuclear programs and end up with the new power plants.

Some analysts wonder whether South Koreans will still support the cost of reunification when the bills come due, perhaps in the form of new taxes. "Unification is a very romantic notion for South Koreans now, but as the real costs sink in, like the West Germans, people will have more and more concerns," said Lee Jung Hoon, a North Korea expert at Seoul's Yonsei University.

For now, many people such as Lee, the Korean War veteran in the downtown park, are hopeful. "It is a twist of fate," he said. "We fought them in one century, we help them in the next. They are our brothers. What can we do?"

© 2005 The Washington Post Company