... but the individual transactions on the losing chain could would still be valid and could be incorporated into the winning blockchain. It wouldn't be quite a simple as "the shortest chain loses"
Oh, and the country with the lowest amount of energy spent mining would win. Both countries hashing after unification would work on the chain with the lowest difficulty, which would be the one with the least hashing power. :)
Apparently you're the one who needs to read up. Any valid transaction from the shorter chain could (profitably) be incorporated into the long chain. Only double spends would be invalid, which are difficult to do in a network partition.
The difficulty is arbitrary and set socially (mechanistically it is currently set by a formula in the software; it could be set differently if people decided to use different software...).
So having a lower difficulty at time t is a terrible reason for a given miner to move to a given chain, they have to also believe that it will be the consensus chain that maximizes their value/opportunity in the future.
Also, if you don't care about distributed consensus (discarding chains outside the network to make it keep working), POW mining is an expensive and inconvenient way to keep a ledger.
