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North Korea Defence and Security Report 2012
Business Monitor International, Jan 2012
Over the course of 2011, two significant trends have lent themselves to a renewed interest in the activities of North Korea, and more particularly the relationship between the regime and its nuclear ambitions. The first of these is the so-called ‘Arab Spring’, which has focussed interest on the long-term survival of autocratic regimes around the world. The second is growing concern with the nuclear capabilities of Iran, and with this the effects that nuclear pariah states may have on the regions of the world in which they can project power. Clearly, both developments lend themselves to a reading of North Korea as a test case for both trends. It is a state with massive potential for destabilisation of the South Asia region, both with the current regime in control, and also in the case of collapse. While BMI does not view this as likely, it is certainly a risk that the region faces.
In October 2011 the South Korean government began the process of establishing a fund for re-unification, which it expects to contain around US$50.0bn, Business Week reported. The fund will contain government inputs, such as government surpluses, but it will mainly be possible for individuals and private citizens to donate funds to this plan. There will not, at this time, be a special ‘unification tax’ to fund this; however, President Lee Myung Bak called on South Koreans to begin considering the possibility of such a levy. The expected cost, if unification happens peacefully and within the next twenty years, is around a quarter of South Korea’s 2010 GDP – a significant task, given that the South Korean economy has been in deficit since 2008. However, Bloomberg reports that there is not a widespread fear of a sovereign debt downgrade of the South in the event of reunification, as it is expected that the burden of re-integration will be spread over multiple generations. Pyongyang responded, in characteristic fashion, to renewed talks of this venture as a direct attempt to undermine the regime in Pyongyang.
North Korea may well also have reached the stage in nuclear development where they are able to miniaturise nuclear warheads, the South Korean minister of defence announced in June 2011. While he offered little evidence to back up this assertion, it certainly seems that enough time has passed for North Korea to overcome the boundary that would allow them to deliver full size payloads over much longer ranges than previously. Before now, it has been unclear as to whether Pyongyang had effectively weaponised its latent nuclear capacity – it now seems likely that, when pushed, North Korea would have the capacity to seriously destabilise the region at its will.
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