The Strange Rise and Fall of North Korea's Business Empire in Japan

Since its 1950s founding, a Pyongyang-linked group called Chongyron has run everything from banks to newspapers, pushing propaganda out and pulling hard currency in. But now that's ending.

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Iranian President Mahmoud Ahmadinejad tours the Tehran nuclear research reactor. (AP)

It's been a big couple of weeks for North Korea's 29-year-old dictator. Kim Jong Un appointed himself titular head of the country's military last week and took his marriage public on Tuesday. But amid the celebrating, Kim's Stalinist regime suffered a little-reported setback on the other side of the Sea of Japan. At a time when North Korea is as desperate as ever for hard currency, one of its few reliable generators -- and one of its few links to the outside world -- has gone broke, likely ending the bizarre but significanthalf-century history of Japan's once-formidable North Korea lobby.

In late June, a Japanese court ordered Chongryon, a business, education, and banking organization formally representing pro-North Korean members of Japan's ethnic Korean minority, to auction off its ten-story office building in downtown Tokyo, effectively ending its mission of bringing money into North Korea and pushing propaganda out. The group's problems are essentially financial: Chongryon owes the Japanese government nearly $750 million for a late-90s emergency bailout that rescued the group's network of credit unions, which were rapidly de-capitalized because of remittances to North Korea during the country's devastating mid-90s famine, an economic and humanitarian catastrophe that killed up to 2 million people.

As with just about anything regarding North Korea, even the surface-level truth belies deeper and darker realities. If it weren't for the chronic economic crisis and resulting famine that gripped North Korea in the 1990s, as well as a rising anti-North Korean strain in Japanese politics, then the criminal enterprises, communal bonds, and official connections that made Chongryon such a formidable political and cultural organization may well have remained intact. It took economic collapse, regional crisis, and domestic political upheaval to bring Chongryon to its knees.

North Korea has no official embassy in Japan, so the Pyongyang-linked Chongryon acts as an unofficial representative of a government that has kidnapped Japanese citizens and fired long-range missiles in the island nation's direction. It runs banks, a newspaper, dozens of schools, and a university named after Kim Il Sung, North Korea's "eternal leader" and the current despot's grandfather. In the 1980s, Chongryon's business and criminal enterprises, which included off-book pachinko parlors, pubs, prostitution rings, and real estate, reportedly produced over a billion dollars a year in revenue -- much of which, according to Michael J. Green of the Center for Strategic and International Studies, was sent back to Pyongyang. As late as 1990, its banking system was capitalized to the tune of $25 billion.

Because North Korea has few exports and is under severe international sanctions, unofficial currency-gathering enterprises like this one can be crucial. And the group also serves as a propaganda outlet, pushing out the DPRK party line to ethnic Koreans. It would be unimaginable for North Korea to own a K-Street high-rise, and South Korea officially bans any expression of support for its northern neighbor. But Japan has allowed its enemy's outpost to remain, and even thrive.

Official Japanese tolerance of Chongryon is the result of "a very mixed, complex picture," Kongdon Oh of the Institute for Defense Analysis told me. She explained that much of Japan's Korean community (Japan's largest ethnic minority, but only about half a million strong currently) is descended from Koreans who arrived as forced labor during the Japanese occupation of the peninsula between 1910 and 1945. The country's 600,000 Koreans were officially discriminated against up through the post-war period, and even into the present day. "The Koreans living in Japan had a fundamental anger that they are deeply segregated and also registered as aliens, even though their grandfathers were born in Japan," says Oh.

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Armin Rosen is a former writer and producer for The Atlantic's Global channel.

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