Help the world vaccinate North Korea

By Troy Stangarone

After initially lagging behind much of the developed world, South Korea's vaccination program has begun picking up steam. Health officials announced recently that around 30 of the population has received at least one dose of COVID-19 vaccine and they expect this figure to increase to three quarters over the next three months.

South Korea's success in turning around its vaccination program, however, is at a critical stage and has implications for reopening the economy and how best to re-engage North Korea.

If the vaccination program continues at its current pace, the government should be able to lift more restrictions and ease the need for social distancing. While life would begin returning to normal, the economy will also receive a boost by closing the gap in the two-speed recovery that has persisted since the second half of last year.

The current recovery has been built off of successful social distancing, five supplementary budgets and a recovery in exports. Since the beginning of the pandemic, social distancing has played a key role in preventing the spread of COVID-19 and minimizing the pandemic's impact on the economy.

In combination with social distancing, the government has injected 81.8 trillion won into the economy to give businesses and the public access to needed cash during the crisis. Both were critical early in the pandemic, but exports, which account for about 40 percent of GDP, began aiding the recovery in the second half of last year and are expected to increase by 10 percent this year.

While the prospects have been bright for exporters, the need for social distancing means South Korea has experienced a two-speed recovery. In contrast to the export sector, the services sector has been hit hard by the pandemic and only returned to positive growth in the first quarter.

Restrictions on restaurants, travel and social activities such as sports mean that the majority of job losses during the pandemic have been concentrated in the services sector. In May, the retail and wholesale sectors shed 136,000 jobs, while hotels and restaurants added only 4,000 jobs.

As vaccinations pick up pace and social distancing restrictions are eased further, policymakers shouldn't assume that there will be a smooth return to normal. New variants have slowed openings in some European countries, and the United States has seen workers reluctant to return to low-paying jobs. Targeted assistance may be needed going forward for these sectors, especially with the uneven resumption of international travel as countries vaccinate their populations at varying speeds.

The growth in vaccinations also opens space for South Korea to consider how to re-engage North Korea. Having sealed its borders tightly since the beginning of the pandemic, any real efforts at inter-Korean cooperation will necessitate vaccinating North Korea's population.

The natural instinct of policymakers may be to offer direct vaccine aid to North Korea, but Pyongyang has to date refused aid from South Korea to handle the pandemic. Instead, speeding up global vaccinations may be the best path forward.

Similar to the United States, South Korea has been slow to contribute to global vaccination efforts, but with it now on a path to vaccinating its own citizens, President Moon Jae-in has begun looking to how South Korea can contribute. Moon reached an agreement with U.S. President Joe Biden at their recent summit to form a vaccine partnership with the United States and announced at the G7 that South Korea would provide $100 million this year to support COVAX, the global vaccination effort, and an additional $100 million next year.

These initial steps should be a down payment rather than the sum of Korea's contributions to battling the pandemic globally. The G7's commitment to providing 1 billion vaccines over the next year is 10 billion short of what is minimally estimated to be needed over the next year.

Providing additional support to COVAX as the situation improves domestically also aids in vaccinating North Korea. Pyongyang has shown a reluctance to engage in the rounds of vaccine diplomacy that China and Russia, two of its closest partners, have engaged in. It speaks volumes that despite China exporting 240 million vaccine doses abroad, Pyongyang has shown a willingness to accept vaccines provided through COVAX rather than turning to Beijing to meet its vaccination needs.

South Korea still has work to do in shoring up its economy. Ensuring that its vaccination program maintains its pace is critical to preventing the service sector from being a drag on the broader economic recovery. However, as one of the world's fastest recovering economies, South Korea is well-placed to contribute further to helping COVAX to close the funding gap needed to vaccinate much of the world's population.

The pandemic will not be over until a sufficient portion of the world's population has been vaccinated, including in North Korea. In this case supporting global efforts to end the pandemic aligns with Seoul's North Korea policy objectives. Doing so is also likely the best way to ensure that North Korea is vaccinated.

Troy Stangarone (ts@keia.org) is the senior director of congressional affairs and trade at the Korea Economic Institute.