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The hypothetical reunification of Korea (Yes, it'll be expensive)
The Financial Times ^ | May 10, 2018 | Jamie Powell

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 ...


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS:
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1 posted on 05/11/2018 8:55:23 AM PDT by 2ndDivisionVet
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To: 2ndDivisionVet

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.


2 posted on 05/11/2018 8:59:40 AM PDT by MeganC (There is nothing feminine about feminism.)
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To: 2ndDivisionVet

Angela Merkel coming over in the German reunification should give S. Korea pause.


3 posted on 05/11/2018 9:00:03 AM PDT by MUDDOG
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To: 2ndDivisionVet
Let's have the 12 June meeting first - then we can speculate.

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.

4 posted on 05/11/2018 9:01:56 AM PDT by trebb (I stopped picking on the mentally ill hypocrites who pose as conservatives...mostly ;-})
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To: 2ndDivisionVet

That effin’ Trump costing those people all that money! Damn him!


5 posted on 05/11/2018 9:02:47 AM PDT by gr8eman (Since God has been banished from our classrooms, Satan has filled the void.)
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To: 2ndDivisionVet

Yet one less nuke power to contend with.


6 posted on 05/11/2018 9:02:52 AM PDT by Biggirl ("One Lord, one faith, one baptism" - Ephesians 4:5)
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To: MeganC
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.

Exactly. And China wouldn't be thrilled sharing a border with a Westernish democracy either.

7 posted on 05/11/2018 9:03:57 AM PDT by Snickering Hound
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To: MeganC

China will have to look for its own metals at home.


8 posted on 05/11/2018 9:04:12 AM PDT by Biggirl ("One Lord, one faith, one baptism" - Ephesians 4:5)
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To: 2ndDivisionVet

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?


9 posted on 05/11/2018 9:05:00 AM PDT by Dilbert San Diego
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To: Snickering Hound

Yet more trade for China.


10 posted on 05/11/2018 9:05:24 AM PDT by Biggirl ("One Lord, one faith, one baptism" - Ephesians 4:5)
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To: MeganC

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.


11 posted on 05/11/2018 9:05:32 AM PDT by TiGuy22
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To: Dilbert San Diego

The Communist East Germans did.


12 posted on 05/11/2018 9:05:57 AM PDT by 2ndDivisionVet (You cannot invade the mainland US. There'd be a rifle behind every blade of grass.)
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To: trebb

Second it.


13 posted on 05/11/2018 9:06:22 AM PDT by Biggirl ("One Lord, one faith, one baptism" - Ephesians 4:5)
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To: MUDDOG

Koreans don’t have Nazi guilt.


14 posted on 05/11/2018 9:07:00 AM PDT by 2ndDivisionVet (You cannot invade the mainland US. There'd be a rifle behind every blade of grass.)
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To: 2ndDivisionVet

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.


15 posted on 05/11/2018 9:08:00 AM PDT by RinaseaofDs
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To: MeganC

China won’t get in war with the United States. We have about 40X more nuclear weapons than they do.


16 posted on 05/11/2018 9:08:27 AM PDT by 2ndDivisionVet (You cannot invade the mainland US. There'd be a rifle behind every blade of grass.)
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To: 2ndDivisionVet
If North Korea were to re-unify the people would need extensive treatment - for physical starvation and other medical problems as well as mental troubles caused by horrific conditions and brainwashing. They don't understand how a real society works.

Imagine a woman who has falsely accused her grandmother of conspiring against the State just to get a few crumbs of food. A starving person will do almost anything, especially if they think they are going to die soon anyway. But then what if they live? Can such people live among the normal society, having never known normality?
17 posted on 05/11/2018 9:14:13 AM PDT by \/\/ayne (I regret that I have but one subscription cancellation notice to give to my local newspaper.)
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To: RinaseaofDs
Families will take care of each other. The East Germany reunification was expensive, to be sure, but the desire to reunite was the ROI.

East Germany at least had some development.

North Korea is essentially Haiti with radioactive fallout.

18 posted on 05/11/2018 9:16:41 AM PDT by Snickering Hound
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To: 2ndDivisionVet

Not our bill to pay.


19 posted on 05/11/2018 9:18:34 AM PDT by Lurkinanloomin (Natural Born Citizen Means Born Here of Citizen Parents__Know Islam, No Peace - No Islam, Know Peace)
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To: 2ndDivisionVet

Think how behind the Chinese would be if krinton Inc hadn’t gifted them with guidance technology.


20 posted on 05/11/2018 9:19:05 AM PDT by wally_bert (I didn't get where I am today by selling ice cream tasting of bookends, pumice stone & West Germany)
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