Rogers says Korea to unify within 5 years

September 30, 2014 07:00 PM
OFF TOPIC with Jim Rogers

The Alpha Pages: We and our readers are interested to know what you learned on your trip to North Korea

Jim Rogers: People have mobile phones everywhere. I was allowed to take my mobile phone into the country and my computer. I could not do that before. They didn’t work, but I could take them into the country. I could have applied to the government to get access, don’t know if they would give it to me, but I was only there five days. 

Many Asian countries are having goods manufactured in North Korea. They are doing a lot of business. A lot of things are happening already, more than I realized. I certainly knew the Chinese were pouring in. When I crossed the border I was amazed that there were hundreds of Chinese crossing the border. I went and saw the new docks that the Chinese and Russians are building. I was in a town called Rason. Rason is the Northern-most ice-free port in Asia. The Russians have just built a new dock there. Everything I am telling you is happening now. It is not something that is going to happen. This is all new stuff that America is not talking about because it takes a while for American bureaucrats to catch on to what is going on in the world. It is exciting; unfortunately since I am a citizen of the land of the free there is nothing I can do.

TAP: You talk about investing. Are there any industries there to invest in?

JR: In the 1970s North Korea was richer than South Korea; communism can ruin anything, it certainly ruined North Korea. They have vast mineral resources that can be exploited, will be exploited. The communists didn’t do a very good job but there is plenty of stuff to be exploited. Fishing: They have coastlines on both sides of the border. Manufacturing: They are cheaper than China, probably cheaper than most places in the world. 

TAP: Is the new regime building a manufacturing base similar to what China did several decades ago? 

JR: I was only in this one region this time but I saw that manufacturing is exploding. One company I saw went from having three or four factories five years ago to having 16 factories. Small, but that is the sort of thing that is happening. 

TAP: Is this all happening under the radar? Do you have any expectation that there will be an official [reform]? A free market experiment [as] in China? 

JR: The [United States] will be the last to know and certainly the last to announce just as we were in China, just as we were in Russia, just as we were in Myanmar.  It’s happening. The Japanese went there and had a big wrestling festival. Wrestlers from all over the world were there. They had an international marathon in North Korea this year. You can take bicycle tours in North Korea now. This is not something that is going to happen, it is happening now. And these things were totally inconceivable three years ago before the old man died but it is all happening. You don’t read about it in the American press because the American press is controlled by the State Department and by American propaganda. Japanese Prime Minister Abe loosened some of the sanctions against North Korea. You don’t know about it because you live in [America]. 

It’s happening because of the kid. [Kim Jong-un] grew up in Switzerland. He knows it’s a different world. There is a black market now in just about everything. The Koreans know there is all sorts of stuff. 

TAP: Where do you see this going: A year from now, five years from now and 10 years from now?

JR: North and South Korea will merge within five years and then Korea will be the most exciting country in the world for a decade or two. No one else will agree with that but I will remind you that if someone said in 1985 that Germany would be unified in five years they would have the same reaction you did. 

TAP: Technically South Korea and the United States are still at war with North Korea; doesn’t America have to have a role in having that happen?

JR: America still has [28,500] troops stationed in South Korea. America is part of the situation; part of the problem if you ask me because they put on these war games every year. If country X is putting on war games with Canada every year what do you think America’s reaction would be? They have these war games every year, partly because they have always had these war games and bureaucracy grinds very slowly. I had dinner with the South Korean Defense minister earlier this year and I said to him — he knew about my predictions — why don’t you call off the war games next year. He was shocked, he never thought of such a thing. 

TAP: Hasn’t North Korea fired on South Korea recently? 

JR: You read the American press. What happened was South Korea and American were having war games  shooting live ammunition in rehearsal and a lot of it landed on a North Korean island and the guys shot back. What would you do?  Yeah that happened. Not the way it was presented in the American press. 

TAP: North Korea has been a force for destabilization in the world; the United States spends a lot of money helping to defend South Korea so you would think this would be good news and welcome. Why isn’t the United States part of this? 

JR: You would think everything that you just said. It would be fantastic for America, for Korea, for the world, for Northeast Asia if this stops. In America you have no clue as to what is going on. There are forces at work that prosper from, thrive on this state of affairs. 

TAP: Does not being a part of this damage the United States in terms of global competition?

JR: We don’t want this to happen. We have [28,500] troops in South Korea and with reunification those troops will have to leave. The pentagon likes having troops stationed in Northeast Asia. When reunification comes I assure you part of the deal is going to be American troops go home. There are lots of people who defend the status quo. It happens with Cuba. Many people are [investing] in Cuba, not us.

TAP: Were you able to talk to any government officials?

JR: Yeah, I went to see them, they want me to invest; they want us all to invest. There is a whole department designed to attract foreign investment. There were all sorts of incentives they were giving, etc. I had to say I am sorry, I’d like to do something but I am an American citizen and it is illegal. I am now in the process of trying to find out what is illegal and what isn’t. I have the impression that everything is illegal. 

TAP: Did you meet will Kim Jong-un or any of his trade ministers? 

JR: I was in Rason. I wanted to go to Rason because that is where the Russians just rebuilt the railroad across Siberia into Rason and that is where they are rebuilding the port. Rason is going to become the most important port in Asia in the next decade or two. If you put goods on the train in Rason, they get to Berlin two weeks earlier [than the current alternative]. Putin knows this, the Koreans know this, the Chinese just put in a railroad across China and Kazakhstan to get things to Europe much faster so geography is changing as we speak. You wouldn’t know it if you watch (American TV). 

I went to the market, you could get anything. Stuff that I don’t even have myself. It is all there. All the food you want. If you want ice cream you got it. Good ice cream. 

TAP: From what you said there appears to be an acceptance of this even in the South. Are there signs of a softening of the tensions, some cooperation?

JR: I was quoted on the front page of the largest South Korean newspaper in December talking about unification coming, and that it would make Korea the most exciting country in the world. You would then have a country of 75 million people on the Chinese border with vast natural resources in the North with cheap, educated, disciplined labor combined with vast amounts of capital and knowledge in the South. There is no country in the world that would be as exciting. To my shock and delight, the president of South Korea in her New Year’s address talked about how this American said it is going to be a jackpot when we unite. Most politicians would have ignored it. She didn’t, she picked up on it and said ‘this could be a jackpot for Korea.’ So some people are thinking about it. The polls now favor unification in the South. Even Japan is opening up to the changes. The biggest opponent at this point is Washington, D.C. The Chinese and Russians are all in there.

About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange.