No doubt the potential costs of North Korea’s economic transition occasionally keep South Korea’s finance minister awake at night…particularly when the international credit rating agencies review South Korea’s sovereign debt rating. So it is only rational that South Korea would seek to spread these potential costs as widely as they can.
Last week South Korea made a small pitch to the European Bank for Reconstruction and Development to facilitate the DPRK’s transition :
“I strongly recommend North Korea as a next candidate to become a recipient country, once it decides to transform itself into a market economy,” Young Geol Lee, vice minister of strategy and finance, said in a speech. “Please bear in mind that North Korea has great potentials as a future client of the EBRD.”
I seem to recall that North Korea defaulted on some very hefty loans it took out in Europe in the 70s, making it ineligible – or at least a very high credit risk – for obtaining any further loans. Didn’t they buy a whole lot of agricultural equipment in Western Europe and default on the payments? They probably didn’t want to get themselves in the same boat as Romania did.
Perhaps it is because I am relatively new to the whole Korean Peninsula economy, but I don’t understand why is the South obliged to pay for the redevelopment of the North, let alone pitch to the EBRD on their behalf?