The Political Economy of the Asia Pacific Series Editor Vinod K Aggarwal For further volumes: http://www.springer.com/series/7840 Bernhard Seliger · Werner Pascha Editors Towards a Northeast Asian Security Community Implications for Korea’s Growth and Economic Development 123 Editors Bernhard Seliger Hanns Seidel Foundation Seoul Office 140-886 Seoul, Republic of Korea seliger@hss.or.kr Werner Pascha Department of Business Studies The Institute of East Asian Studies of Duisburg-Essen University 47048 Duisburg, Germany werner.pascha@uni-duisburg-essen.de ISSN 1866-6507 e-ISSN 1866-6515 ISBN 978-1-4419-9656-5 e-ISBN 978-1-4419-9657-2 DOI 10.1007/978-1-4419-9657-2 Springer New York Dordrecht Heidelberg London Library of Congress Control Number: 2011930810 © Springer Science+Business Media, LLC 2011 All rights reserved This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com) Acknowledgements This work was supported by the Academy of Korean Studies Grant, which is funded by the Korean Government (MOEHRD, Basic Research Promotion Fund) AKS-2007-CB-2002 v Contents Introduction: Towards a Northeast Asian Security Community and the Role of North Korean Negotiation Tactics Bernhard Seliger and Werner Pascha Part I Prospects for a Northeast Asia Security Framework From a Fault Line to a Catalyst: An Emerging Korean Confederation and the Contour of a Northeast Asian Security Community? Key-young Son Envisioning a Northeast Security Framework: The Korean Peninsula Scott Snyder Korea as a Focal Point of the Security Concerns of Northeast Asia: A Geopolitical and Historical Perspective of the Present Scenario Brahm Swaroop Agrawal Part II 13 27 39 Features of a “Peace Dividend” The Unification Mythology and Reality of the North–South Divide Andrei Lankov Features of a Peace Dividend for the Two Koreas Paul Chamberlin Peace Dividend and Regional Stability on the Korean Peninsula: Focusing on the South–North Korea Cooperation Fund Allocation B Jeong 63 73 99 vii viii Contents Part III Implications for North Korea’s Economy A Peace Dividend for North Korea? The Political Economy of Military Spending, Conflict Resolution, and Reform Bernhard Seliger 129 Implications for the North Korean Economy of Moving Toward New Modalities for Northeast Asian Security Bradley O Babson 149 10 Financial Cooperation with North Korea: Modalities and Risks Stephan Haggard and Marcus Noland 11 Inter-Korean Cooperation in Special Economic Zones: Developments and Perspectives Ralph Michael Wrobel Part IV 12 13 14 15 161 175 Implications for South Korea’s Economy Toward a Northeast Asian Security Community: Implications for South Korea’s Economic Growth Deok Ryong Yoon 189 The Development of a Northeast Asian Security and Economic Community Soon Paik 207 Fractured Strategic Alliance, Restructured Economic Cooperation: Korea at the Helm of the Emerging Northeast Asian Order Jitendra Uttam 217 An Institutional Approach to Peace and Prosperity: Toward a Korean Fisheries Community Martyn de Bruyn and Sangmin Bae 239 Index 259 Contributors Brahm Swaroop Agrawal M.L.B Government College, Jiwaji University, Gwalior, India, brahmagrawal@yahoo.com Bradley O Babson John’s Hopkins School of Advanced International Studies, US-Korea Institute, Washington, DC, USA, bradbabson@aol.com Sangmin Bae Northeastern Illinois University, Chicago, IL, USA, sbae@neiu.edu Martyn de Bruyn Northeastern Illinois University, Chicago, IL, USA, mdebruyn@neiu.edu Paul Chamberlin Independent Scholar, paulfchamberlin@gmail.com Stephan Haggard Graduate School of International Relations and Pacific Studies, University of California, San Diego, CA, USA, shaggard@ucsd.edu B Jeong Graduate School of Public and International Affairs, University of Pittsburgh, Pittsburgh, PA, USA, jon.jeong@gmail.com Andrei Lankov Kookmin University, Seoul, South Korea, anlankov@yahoo.com Marcus Noland Peterson Institute for International Economics, Senior Fellow at the East-West Center, Washington, DC, USA, mnoland@piie.com Soon Paik U.S Department of Labor-Bureau of Labor Statistics, Washington, DC, USA; Washington Baptist University, Annandale, VA, USA, paik.soon@bls.gov Werner Pascha Department of Business Studies, The Institute of East Asian Studies of Duisburg-Essen University, 47048 Duisburg, Germany, werner.pascha@uni-duisburg-essen.de Bernhard Seliger Hanns Seidel Foundation, Seoul Office, 140-886 Seoul, Republic of South Korea, seliger@hss.or.kr Scott Snyder Center for U.S.-Korea Policy, The Asia Foundation, Washington, DC, USA, snydersas@gmail.com ix x Contributors Key-young Son Tohoku University, Sendai, Japan, skyquick@hotmail.com Jitendra Uttam Korean studies at the Centre for East Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi, India, jnucampus@gmail.com Ralph Michael Wrobel Faculty of Economics, West Saxon University of Applied Sciences, 08066 Zwickau, Germany, ralph.wrobel@fh-zwickau.de Deok Ryong Yoon Korean Institute for International Economic Policy, Seoul, Korea, dryoon@kiep.go.kr List of Figures 6.1 6.2 7.1 7.2 7.3 7.4 7.5 7.6 7.7 8.1 11.1 12.1 12.2 12.3 12.4 12.5 12.6 North Korea at night Rates of economic growth for North and South Korea Regional comparison of military spending (Unit: million USD) Military expenditure of United States and countries in East Asia (Unit: million USD) Research framework: The transition process in triangle domain and the role of the peace dividend on the Korean Peninsula Stages of peace stabilization and research focus South–North Korea Cooperation Fund appropriated and allocated Trend of the South–North Korea Cooperation Fund allocation Trend of humanitarian assistance by the South Korean government, nongovernmental, and international organizations The triangle facing North Korea North Korean Special Economic Zones ROK: Country credit rating by Moody’s Survey on North Korea’s influence in decision making to invest in Korea CDS Korea (five year) (2001/9 ∼ 2007/12) CDS (Credit Default Swap) Premium for governmental bond for foreign currency with five year maturity Premium for governmental bond in US dollar due 2013 (2003/5 ∼ 2007/12) Railway connection between TKR, TSR, and TCR Eurasian railway network 78 79 103 104 107 108 112 114 115 145 176 191 192 193 193 195 197 xi List of Tables 6.1 6.2 6.3 6.4 6.5 6.6 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 8.1 8.2 8.3 8.4 11.1 11.2 12.1 12.2 12.3 12.4 12.5 15.1 ROK & DPRK fertility rates Note: Replacement is 2.1 ROK & DPRK lifespans Median ages – ROK, DPRK, USA Total ROK population Estimated military Spending as a percentage of GDP Selected ROK and DPRK military resources (As of December 2006) Comparison of military expenditures by country Trends of military expenditure by country (Unit: U.S Million Dollars) South–North Korea Cooperation Fund implemented for projects of nongovernmental or private organizations Military expenditure by region (Unit: U.S Million Dollars) South–North Korean Cooperation Fund added by year (Unit: 0.1 Billion S Korean Won) South–North Korea Cooperation Fund allocation trend (Unit: 0.1 Billion South Korean Won) Trend of humanitarian assistance by South Korean government/nongovernmental/international organizations (Unit: 0.1 Billion S Korean Won) Expenditure of South–North Korea Cooperation Fund (Unit: 0.1 Billion S Korean Won) Reduction of military forces in Germany, 1989–2010 Military spending, selected countries Active-duty military personnel, selected countries, 200 Military spending, selected countries and world Total Mount Kumgang tourists per year Kaesong Industrial Complex master plan (as of 2006) Reconnected sections of inter-Korean roads and railways Possible routes of gas pipelines Gaeseong Industrial Complex State of main mineral resource possession Estimates of unification costs Inter-Korean dialogue on maritime affairs and fisheries 76 76 76 77 88 89 103 118 119 120 121 122 123 124 134 135 136 136 177 178 196 196 198 199 201 252 xiii ... Werner Pascha Part I Prospects for a Northeast Asia Security Framework From a Fault Line to a Catalyst: An Emerging Korean Confederation and the Contour of a Northeast Asian Security Community? ... creating a Northeast Asian security community Why a Northeast Asian Security Community? Northeast Asia is arguably one of the most rapidly transforming regions in the world because of China’s... the search for equally lofty goals for the Korean peninsula, the authors hope The conference Towards a Northeast Asian Security Community? Implications for Korea’s Growth and Economic Development