Since 1953, North Korea and South Korea have been divided by the Korean Demilitarized Zone (DMZ), a buffer zone that runs along the 38th parallel line and serves as the site of many skirmishes between the countries. 

Despite thousands of years of common heritage, North and South Korea are not just divided geographically. Over nearly six decades of separation, their economies and social structures have diverged and relations between the two nations are heated, often seeming only a few diplomatic missteps away from war (read more: North Korean vs. South Korean Economies). 

Today, more than 20,000 American troops are stationed in South Korea to help deter such an outcome. U.S. military forces regularly take part in war games in the region. Despite all the public acrimony, North and South Korea have been meeting for decades to try to negotiate a peaceful reunification of their countries. But is such a thing even possible anymore?

Some politicians and investors have speculated that reunification between the two nations could happen in the next decade. In 2014, famed commodity investor, Jim Rogers, predicted in an interview with Futures Magazine that the two nations would be unified by the end of the decade and said that a unified Korea, “will be the most exciting country in the world for a decade or two.” 

Differences Between North and South Korea

North Korea and South Korea have been divided since the end of the Korean War . In 1948, North Korea founded a communist government. Today, it is headed by Supreme Leader Kim Jong-un, the grandson of Supreme Leader Kim Il-sung, who ran North Korea from 1948 until his death in 1994. In contrast, South Korea has a democratic political system that peacefully elects a new president every five years. (To learn more, see: Why North Korea & South Korea Are Separated.)

North Korea relies heavily on foreign aid and has a horrendous human rights record, according to Human Rights Watch. The secretive nation also does not provide accurate economic data and has not offered official macroeconomic figures since 1965. Meanwhile, South Korea’s gross domestic product (GDP) is valued north of $1.3 trillion annually.

Attempts to Reunify

In 1972, the two nations met secretly to outline an agreement for a possible reunification. However, the coalition disbanded the following year. The two countries again met in 1990, 2000 and 2007, but each time failed to reach a resolution. In 2000, 2004 and 2006, the international community gained hope about future reunification efforts after a reunified Korean team marched in the Olympics (though the nations competed separately). The countries again agreed to enter the 2018 Winter Olympics under a unified flag and discussed several joint ventures during the games, including a unified women's ice hockey team.

In recent years, South Korea's President Park Geun-hye has pushed for reunification, and has argued that a long-desired merger would be a boon to South Korea's financial and technology sectors due to North Korea's wealth of human and natural resources. In July 2014, South Korea's president appointed a special committee to prepare for possible unification between the two nations. Despite the potential economic benefits, a number of political, financial and social costs must be overcome to make reunification possible.

Reunification Will Be Expensive 

North Korea has the least free economy in the world, according to the Economic Freedom Index. Advancing North Korea from a state-run economy under a dictatorship to a globalized free economy will require immense time and resources. 

Just how many resources? According to South Korean Financial Services Commission Chairman Shin Je-yoon, modernizing North Korea’s economy could cost South Korea at least $500 billion. Shin has estimated it will require five years, or 20 consecutive quarters, of growth to raise per capita GDP in North Korea from roughly $1,250 (as it stands today) to just $10,000. In comparison, South Korea’s per capita GDP is already at $33,062, according to the World Bank.

Paying for this effort will require tax revenue from South Korean citizens and financing from the nation’s commercial banks. Although reunification is popular in South Korea, citizens do not want to pay for it. According to a 2014 survey by Seoul National University’s Center for International Studies to the Ministry of Unification and the Korean Political Science Association, 44.3% polled said they would not pay when asked, “Are you willing to pay additional costs associated with reunification?”

Tepid South Korean Support

In the same survey, South Koreans did not appear to have a sense of urgency about reunification. Just 25.8% of respondents said “We need to have reunification as soon as possible.” Meanwhile, 45.8% said that “While reunification is necessary, there’s no need to rush.” Approximately 30% surveyed had negative or indifferent feelings about reunification. According to the survey, 18% said, “Reunification is not absolutely necessary,” and 10.2% said, “I’m indifferent towards reunification.”

Meanwhile, reunification is buoyed by the hope that younger generations of South Koreans consider it an important step in their future. However, in the same survey, of South Koreans between the ages of 19 and 29, just 28.5% said that “Reunification is very important.” Another 24.5% said that “It’s not that important,” while 7.1% reported that “Reunification is not important at all.”

Finally, academics worry about the effect of reunification on South Korea’s democracy. Kathy Moon, the SK-Korea Foundation Chair in Korea Studies at the Brookings Institute, worries that adding 25 million North Koreans, who have only lived under communism, to a Western-style nation could test the limits of the unified nation's culture and politics.

“South Korea’s democracy is very young,” Moon said during one of the think tank's podcasts in March 2015. “It has only been one generation where people have been living in a democratic system. And South Korea’s democracy is still fragile and vulnerable in many, many ways. So when I think about adding 25 million people from the North and the 50 million people from the South together and mixing them up politically, I begin to wonder what kind of a political system can manage this kind of ‘integration.’”

What if North Korea Collapses?

If North Korea suffers a total political, social or economic collapse, unification may be forced on the nations regardless of public opinion polls or levels of preparedness. A collapse in North Korea could also trigger a humanitarian crisis affecting not only South Korea, but also the bordering nations of China and Russia.

North Korea’s continued pursuit of a nuclear program has the potential to alienate its largest trade partner: China. China accounts for roughly 90% of all North Korea’s energy imports and most of the food that feeds its military. China could reduce aid if it perceived North Korea’s continued nuclear development as a threat against its interests.

Jamie Metzl, a former member of the U.S. National Security Council staff, predicts North Korea could collapse in the next decade due to broader geopolitical forces in the region. As Metzl explains in a column in The National Interest, badly needed economic reforms are underway, but the full economic liberalization cannot occur without dramatic political reform. However, Pyongyang may ultimately be forced to choose between maintaining its totalitarian regime by shutting down economic progress or allowing its citizens to grow more used to economic freedoms that could ultimately spark potential political upheaval and regime change.

Under a political, social, or economic collapse, Metzl argues that North Korea would likely be unified under South Korean law, with the United Nations overseeing a referendum. In addition, China would seek to boost its trade and influence in the region.

The Bottom Line

The possibility of a reunification between North Korea and South Korea has been a source of interest for both nations and the world since their permanent separation more than 60 years ago. However, cultural, political and economic barriers exist and there are few opportunities for American investors at this time. A potential collapse of North Korea's political, economic or social fabric could suddenly expedite reunification. (For related reading, see: How the North Korean Economy Works.)

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