Will North Korea Attack South Korea?

Economist Ivan Tselichtchev By Sunny Lee Korea Times Correspondent BEIJING ― The common professional cognitive hazard for economists is that they are prone to look at the world from the monolithic angle of abstract principles, such as "supply vs.demand" or "opportunity cost." And even a good economist like Ivan Tselichtchev is not an exception. Sometimes, though, this "hazardous" approach offers a fresh insight into the matters that we didn't think of otherwise. Tselichtchev, the author of the new book, "Asia's Turning Point: An Introduction to Asia's Dynamic Economies at the Dawn of the New Century," argues that his calculation of the economic principle of "opportunity cost" points the following: North Korea will never engage in a war with South Korea. "North Korea will never attack South Korea. It's very clear," he said in a speaking engagement here. That could be a pretty "bold" statement as an economist, and particularly given the escalating tensions surrounding the Korean Peninsula these days. The explanation, he offers, is simple and intuitive. "North Korean leaders are not Al-Qaeda terrorists or Islamist extremists." This supports the view that although the North Korean leadership often misbehaves, it nonetheless acts in a very calculative and "rational" way to maximize its interest. Secondly, he says, "Kim Jong-il has a very big collection of Western movies. He loves them. He enjoys drinking very expensive French and Italian wines. He will never sacrifice this pleasure of life." He argues that if the North starts a war with the South, the damage will be on both sides and, importantly, as a consequence, the Kim clan will have to renounce their privileged lifestyle. Therefore, for North Korea to start a war goes against the economic principle that mandates one to make a better choice. He is not someone who harbors any illusion about North Korea. "North Korea has two faces. On the one hand, it is the sick man of East Asia, and politically, a reclusive dictatorial state with a criminal record. "On the other hand, in the late 1990s and early 2000s, it made a structural breakthrough, shifting from a centrally planned and tightly controlled economy with the public distribution system at its core to a new economy containing a significant market element." Tselichtchev, who has been teaching at the Niigata University in Japan, and received in 2005 the title of Seikatsu Tatsujin (A Master of life) from the Japanese government for his outstanding scholarship, essentially argues that the international community's approach to North Korea should reflect more insights learned from economic principles. "I always feel that there has been too much emphasis on the nuclear issue when we talk about North Korea. Actually, there is more. And there has to be more effort to induce North Korea to move towards pro-market oriented reforms," he said. To that end, he said, the international community, especially the big powers, can do much more to facilitate North Korea's market reforms through their support in articulating policies, training people, improving the legal system, and developing entrepreneurship. For this to be possible, "North Korea should be allowed to work with the Asian Development Bank and other world financial institutions," he said. In 2007, South Korea under the late president Roh Moo-hyun, expressed its willingness to back North Korea's move to join the International Monetary Fund (IMF) and the World Bank. The United States and several developed countries yet showed a lukewarm attitude over North Korea's entry into international organizations, playing a major role in rejecting Pyongyang's repeated applications for admission, demanding it dispose of its nuclear facilities. Tselichtchev has yet to offer an economic solution to this political problem, yet he believes that the ruling elite in North Korea is no longer an obstacle for economic reforms. "They are no longer impeding commercial activities. Some significant part of the ruling elite seems to be somewhat tired of imposing ideological dogma on society. It is more interested in benefiting from the de facto market transition, using its power and access to financial and material resources to get a big piece of the pie." According to him, North Korea has been gradually and spontaneously exploring ways to shift to a market economy, which needs to be encouraged, as ultimately that is the way for North Korea to open up to the outside world and join the international society. "My point is that much more can be done to direct North Korea to some kind of market-oriented economy." On South Korea, Tselichtchev's bold view continues. "South Korea is the first OECD country to grow on the quarter-to-quarter basis. As the worst days are over, South Korea tends to be the only tiger, which technically has avoided recession. And I am positive that South Korea's growth this year will be positive." With that statement, he remains the economist who has offered the most optimistic growth perspective on South Korea this year. The South Korean government Thursday revised its economic forecast upward for this year from minus 2 percent to minus 1.5 percent. As for President Lee Myung-bak's once touted "747" economic stimulus plan (that is achieving seven percent a year growth, becoming the seventh largest economy in the world, and raising the GDP to 40,000 dollars a year), Tselichtchev sees it as "a very challenging, at the same time, a very interesting" goal. "If it is achieved, the notion that a developed economy will slow down its growth when it is mature will be proved to be wrong," he said. sunny.lee@koreatimes.co.kr