Posted on 05/11/2018 8:55:23 AM PDT by 2ndDivisionVet
With a certain Donnie from Queens having just announced a historic meeting between himself and North Korean hipster dictator Kim Jong Un in a month's time, we thought we would look at the potential cost if, God willing, North and South Korea were to eventually unify.
Fortunately for us, Stephen Jen and Joana Freire of Eurizon SLJ Asset Management have beaten us to the punch. Yesterday they published a hypothetical research piece looking at the cost of unifying a peninsula, using as a guide Germany's reconstitution in 1989.
So what are their conclusions?
First, Eurizon starts by looking at the transfers from West Germany to East Germany in 1989, calculating a cost at around €1.7trn in today's euros, around 62 per cent of West Germany's current GDP, or roughly 8 per cent of the European Union's nominal GDP, according to the IMF.
The Korean populations are closer in size, with around 26m North Korean citizens compared to South Korea's 51m, a near 2-to-1 ratio versus West and East Germany's split of around 4-to-1. So all else being equal, the lack of a need for serious population flows from south to north should at least partly aid unification.
That is, until you remember East Germany still carried the legacy of the Nazis' bellicose wartime industrial efforts. From Eurizon's note:
Much of the industrial base in Germany that supported the war efforts during the 1940s were located in the former East Germany. Mercedes, BMW, VW, ThyssenKrupp, and Bosch, which are household names today, but all of them had major factories before May 1945 in support of Germany’s military operations. The industrial ‘culture’ has never disappeared in EG, even if it had faded somewhat under communist rule.
Together, these items suggest that population flows might be less of an issue....
(Excerpt) Read more at ftalphaville.ft.com ...
North Korea is sitting on an estimated treasure trove of rare earth metals worth more than $20 TRILLION dollars.
Meaning that the expensive part of reunification will be the war that China is going to wage to try to keep control of those resources.
Aside from China the Korean reunification will pay for itself.
Angela Merkel coming over in the German reunification should give S. Korea pause.
Besides, it woildn't take such a big cost to vastly improve the Norks' situation in life and if things stabilize, there's probably plenty of speculators/investors who might want an early niche in an expanding market.
That effin’ Trump costing those people all that money! Damn him!
Yet one less nuke power to contend with.
Exactly. And China wouldn't be thrilled sharing a border with a Westernish democracy either.
China will have to look for its own metals at home.
But what about Kim Jong un? Would he really allow capitalist reforms and give e greater freedoms to N.Korea? Would he really voluntarily give up power, agree to the eventual reunification of Korea where he’s no longer in control?
Yet more trade for China.
I think the real issue is that little rocket man is going to want to keep power. Might have to carve out NK being a territory of SK with rocket un as governor for life.
The Communist East Germans did.
Second it.
Koreans don’t have Nazi guilt.
It’s all opportunity.
Families will take care of each other. The East Germany reunification was expensive, to be sure, but the desire to reunite was the ROI.
I also think Germany is far stronger today for having done it, despite the costs.
What a mess that was, fortifying West Berlin. Can’t believe we all survived that.
China won’t get in war with the United States. We have about 40X more nuclear weapons than they do.
East Germany at least had some development.
North Korea is essentially Haiti with radioactive fallout.
Not our bill to pay.
Think how behind the Chinese would be if krinton Inc hadn’t gifted them with guidance technology.
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