When South Korean President Park Geun-hye spoke at the Dresden University of Technology in Germany on March 18, she made several proposals on the steps to take toward the peaceful unification of the Korean Peninsula. On October 10, North Korea countered with the idea of establishing the "Democratic Confederate Republic of Koryo (Korea)."
People’s Daily interviewed some think tankers about North Korea’s proposal. Their analysis was that North Korea was afraid that Park’s "Dresden Proposal" would unify the country on an economic basis, which would mean the "peaceful revolution" of North Korea. Therefore North Korea countered with the proposal of a federation system. The think tankers felt that both sides realize that war will not resolve the problem of the peninsula. The two sides should reach an "independent and peaceful unification." However the issue of "independence" remains as the key.
Source: People’s Daily, October 14, 2014