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.

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.

chongryon pic article.jpg
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.

In the '60s and '70s, when North Korea was a Soviet- and Chinese-backed export powerhouse -- neither country established diplomatic relations with South Korea until the early 1990s -- Chongryon played a central role in organizing Japan's socially isolated and largely pro-DPRK Korean community. According to some sources, 500,000 of Japan's 600,000 Korean residents were affiliated with Chongryon in the '60s and '70s.

At the same time, Chongryon has served Japanese interests at various points in the organization's history. Tessa Morris-Suzuki's 2007 book Exodus to North Korea details Chongryon's collusion with both the Japanese government and the International Committee of the Red Cross in repatriating up to 90,000 Korean-Japanese to North Korea in 1959. North Korea was hardly as bleak in the post-war years as it is now, and many of these Koreans had lived through legalized Japanese discrimination. "Everyone, from teachers in Chongryon schools to leading Japanese politicians and intellectuals, was assuring Koreans that a better life awaited them across the waters," Morris-Suzuki writes. Oh believes that, in the late '50s, ethnically nationalist Japanese officials likely saw Chongryon as a means of thinning the country's Korean population. "In a sense, by sending them to North Korean they thought they're reducing the number of troublemakers," she says.

Later, some Japanese leaders worked with Chongryon precisely because of its propensity for troublemaking. According to Michael J. Green, the dominant post-war political faction in Japan both protected and benefitted from the organization's activities. In the '70s and '80s, political allies of Kakuei Tanaka, a Liberal Democratic Party boss and former prime minister whom Green likened to Hughey Long, incorporated Chongryon's business empire into its kickback- and pork barrel-fueled political machine. Chongryon was allowed to keep making money, Green believes, so long as enough of that money found its way into the right Japanese hands. "The Tanaka faction protected the North Korean association, and in a sense helped protect North Korea," he says.

But Japanese attitudes about North Korea hardened after revelations, confirmed by an official North Korean apology in 2002, that the Hermit Kingdom had been kidnapping Japanese citizens. Anti-corruption efforts in the 90s and early 2000s banished pro-North Korean leaders from Japanese politics. By 2009, Chongryon had closed two-thirds of its schools and most of its credit unions. Green said that he would be surprised if the group's present-day revenues were even into the tens of millions of dollars.

Young Japanese-Koreans today have little enthusiasm for North Korea or what it represents. "The younger generation [in Japan] sees North Korea as a hopeless case, even though they are indoctrinated and raised in the North Korean system," says Oh of the ethnic Koreans who grew up hearing about North Korea's greatness in Chongryon-operated schools. "The younger generation is not listening to their parents." Even among older Japanese-Koreans, there seems to be little sense of buy-in or sympathy towards North Korea's foundering project. "They have some linkage with their ancestors buried in North Korea," she says. "They have nostalgia, and some moderate hope about a sustained relationship." With Chongryon's bankruptcy, that's about all they've got linking them to North Korea, as the long and strange saga of Japan's pro-Pyongyang lobby comes seemingly to its end.