Price of unification: Lessons from Germany for a divided Korea

Former BMW Group Korea Chairman Kim Hyo-joon, left, speaks with German Ambassador to South Korea Georg Schmidt during a roundtable hosted by The Korea Times at the German ambassador’s residence in Seoul, Thursday. Korea Times photo by Shim Hyun-chul

Germany’s experience with reunification offers sobering but valuable lessons for the Korean Peninsula, speakers said Thursday at a roundtable in Seoul hosted by The Korea Times, emphasizing the need for careful preparation, sustained engagement and a willingness to bear long-term costs.

Georg Schmidt, Germany’s ambassador to South Korea, and Kim Hyo-joon, former chairman of BMW Group Korea, said that although the political circumstances surrounding Germany’s reunification in 1990 differ markedly from those confronting the Korean Peninsula today, the costs of continued division — including the risk of armed conflict — must be weighed against the formidable economic and social burdens that reunification would entail.

Soldiers of the Republic of Korea Army’s 5th Infantry Division conduct guard duty with a walking robot along a barbed-wire fence, during a pilot operation near the border in Yeoncheon, Gyeonggi Province, Feb. 22. Courtesy of Republic of Korea Army

Kim said that reunification with North Korea remains a long-term objective for South Korea, but warned against abrupt political change or unrealistic expectations driven by emotion rather than feasibility.

“This is a matter of timing,” he said during the event at the German ambassador’s residence. “Eventually we want reunification, because there is clear synergy. North Korea has significant geographical advantages that could transform it into a logistics hub connecting China, Russia and even Europe.”

Kim, whose parents fled Pyongyang during the 1950-53 Korean War, said emotional and historical factors inevitably shape public attitudes toward reunification, particularly among older generations. But he stressed that policy decisions must ultimately be grounded in economic sustainability and institutional capacity.

“As a businessman, we always have to look at the substantive side,” he said. “You cannot ignore the costs — but you also have to consider the potential synergies.”

Schmidt cautioned that Germany itself was largely unprepared when reunification came suddenly in 1990, leading to long-lasting economic, social and psychological disparities between the former East and West.

“We were not well-prepared for unification, but things happened very fast,” Schmidt said. “Some people in West Germany said, ‘Look, let’s go slow, try to have a confederation.’ In hindsight, they were right.”

He noted that many East Germans expected immediate access to West Germany’s prosperity and social standards, while underestimating the scale of adjustment required to operate within a competitive market economy. Entire industries collapsed, unemployment surged, and communities struggled to adapt to unfamiliar economic pressures.

A Korean soldier gestures during a press tour at the peace village of Panmunjeom in the demilitarized zone, South Korea, June 12, 2019. AP-Yonhap

“Productivity levels were very different,” Schmidt said. “We are so different, our social systems are so different.
East Germans wanted it fast and wanted it all, but they were not happy with the price to pay for it."

Despite massive fiscal transfers from west to east over more than three decades, disparities persist in income levels, infrastructure quality and political attitudes, he said, demonstrating that reunification is not a one-time political event but a generational process.

Schmidt said Korea’s situation is even more complex, citing the deeper ideological divide, decades of near-total isolation and the unresolved legacy of the Korean War.

“We never had a civil war in Germany,” he said. “Despite all the challenges we faced, the divisions on the Korean Peninsula are far deeper.”

Unlike East Germany, which maintained some economic ties and human exchange with the West, North Korea has remained almost entirely closed, said Schmidt, creating gaps in skills, information and institutional capacity that would be far more difficult to bridge.

Still, Schmidt argued that reunification — or at minimum the elimination of military confrontation — carries value that cannot be measured purely in economic terms.

“How do you quantify the danger of war?” he said. “If the risk of nuclear conflict on the Korean Peninsula disappears, that alone would be worth a great deal.”

Both speakers stressed that any path toward reunification must begin long before political integration, through expanded cooperation in nonpolitical areas such as economic exchange, education, public health and cultural engagement.

Kim said incremental engagement would allow both sides to test cooperation, build trust and gradually reduce the shock that reunification would bring.

Schmidt said integration requires long-term preparation and cannot begin only after a political decision is taken. He added that cultural exchange plays a critical role in reducing fear and misperception, particularly when political dialogue is limited.

German Ambassador to South Korea Georg Schmidt listens closely during a roundtable hosted by The Korea Times at his residence in Seoul, Thursday. Korea Times photo by Shim Hyun-chul

Social trust, mobility as key challenges

Beyond reunification, the two speakers said Germany’s experience highlights that long-term economic resilience depends not only on growth but also on social trust, inclusive institutions and adaptability — areas where both countries face growing pressure.

Kim warned that South Korea’s rapid economic rise over the past three decades has masked structural problems that now threaten long-term sustainability.

“Korea achieved extraordinary success,” he said. “But the factors that drove that success can no longer be repeated.”

He pointed to widening disparities between large conglomerates and small businesses, between the capital city of Seoul and the provinces, and between regular and irregular workers, arguing that such divides are eroding social cohesion.

Kim identified restoring social mobility and rebuilding social trust as two urgent priorities, warning that growing anxiety among young people over education, employment and family life signals a deeper systemic strain.

“If the younger generation no longer has dreams or a clear picture of the future, that is a very strong warning sign for any society,” he said.

Drawing on his three decades working with German companies, Kim contrasted Korea’s tendency to focus on individuals when problems arise with Germany’s emphasis on fixing systems and processes.

“In Germany, when something goes wrong, the first question is not ‘Who failed?’ but ‘What in the system failed?’” he said. “That difference matters.”

Schmidt said Germany faces its own uncertainties, particularly as long-standing economic and security assumptions have eroded in recent years.

Germany can no longer rely on cheap Russian energy, unlimited access to the Chinese market or unquestioned U.S. security guarantees, he said, forcing a reassessment of economic and foreign policy priorities.

“We’re trading nations, we don’t sit on big numbers of oil or gas or anything. And now this is all changing a lot,” Schmidt said.

Internally, Schmidt pointed to demographic decline, the rise of artificial intelligence (AI) and energy transition as three forces reshaping German society — pressures he said Korea understands well.

Despite those challenges, Schmidt praised what he described as Korea’s “can-do spirit,” contrasting it with Germany’s more cautious, process-heavy approach.

Former BMW Group Korea Chairman Kim Hyo-joon speaks during a roundtable hosted by The Korea Times at the German ambassador’s residence in Seoul, Thursday. Korea Times photo by Shim Hyun-chul

Business culture, Mittelstand model

Kim highlighted Germany’s dual vocational education system and its network of highly specialized small and medium-sized companies — known as the Mittelstand — as areas where Korea could adapt from rather than copy wholesale.

Germany’s vocational system offers credible career paths outside university education, reducing social pressure and broadening opportunities for young people, according to Kim. The Mittelstand, meanwhile, shows how smaller firms can dominate global niche markets through specialization and long-term investment.

During his tenure at BMW, Kim said, he helped introduce hundreds of Korean suppliers to the German automaker, demonstrating that small Korean firms can compete globally when given exposure and support.

Kim said Korea already has the skills and capability it needs, but questioned whether existing systems allow that potential to grow.

Schmidt said that Germany’s labor relations model, which gives worker representatives a formal role in corporate oversight, also contributes to long-term stability by encouraging shared responsibility for a company’s future.

“Very often in life, it’s not about I win and you lose — 100 or zero — but about compromise,” Schmidt said. “Do you want a team where everyone is the same, or a team with different views? Do we only reward competition, or do we also reward teamwork?”

At the same time, both speakers cautioned against uncritical imitation.

“You cannot just import a system,” Schmidt said. “You have to internalize it.”

Kim agreed, saying the issue ultimately comes down to mindset rather than mechanics.

“This is not just a matter of systems,” Kim said.
“It is a matter of spirit and philosophy — and ultimately the maturity of society.”

As South Korea confronts demographic decline, technological disruption and an increasingly uncertain geopolitical environment, the German experience offers neither a blueprint nor a warning alone, both speakers said, but rather a reminder that long-term challenges require patience, compromise and a willingness to absorb costs before benefits become visible.

The discussion also touched on cooperation between so-called middle powers, including South Korea, Germany, Japan and Canada, particularly in shaping global norms on trade governance, supply chain resilience and emerging technologies such as AI.

Schmidt said middle powers share a strong interest in predictable, rules-based systems and should coordinate responses to economic coercion by larger states.

“We used to rely on the Americans to provide peace and security. Now there are question marks, and we are asked to do more,” he said. “There’s huge uncertainty in the international environment.”

Kim agreed, but cautioned that geopolitical realities complicate coordination, given competing ties with major powers such as the United States and China.