Dealing with debtors, Asian style

TWO DIFFERENT STORIES highlight two different approaches taken by two countries–the United States and Japan–against the clandestine activities of other East Asian nations actively working against them. From all appearances, Japan actually has an approach, while the U.S. does not.

Writing in Contentions, the blog of Commentary magazine, Gordan Chang takes the Bush administration to task over continuing reports that the Chinese are supplying the Taliban in Afghanistan and Iraqi insurgents with weapons. To provide background, he provides links to other reports suggesting that the Chinese have been providing military assistance and training to the Taliban for several years.

There have also been reports that some people in intelligence circles suspect the Chinese are providing nuclear technology to countries in the Middle East, which I’ve linked to before. Indeed, when Libya’s Col. Khaddafi abandoned his nuclear program and turned over his resources to the IAEA, it was discovered that much of the documentation was written in Chinese.

Chang wonders why the United States lets China get away with it.

In contrast, Japan is dealing with years of belligerent North Korean behavior by cutting off the flow of currency and goods to the Pyongyang regime and refusing to allow North Korean ships to call on Japanese ports. The starving North Koreans make a habit of eating the carrots offered in carrot-and-stick diplomacy—and usually the bark from the stick, too—and then stiffing the joint for the bill. Now (for a change) they’re having to deal with a Japanese hard line, which has been the hallmark of the Abe administration’s Pyongyang policy.

They continue to tighten the screws. Yesterday, the Tokyo District Court ruled that unless Chongryon, the pro-Pyongyang General Association of Korean Residents in Japan, repays a debt of more than US$500 million to the government-run Resolution and Collection Corp., the company may seize their Tokyo headquarters (photo at right). In fact, the ruling allows RCC to act immediately to claim assets.

Chongryon is a pro-Pyongyang group that represents about 50,000 Korean citizens in Japan (most of whom were born and grew up in Japan), and serves as the country’s de facto embassy. They also are widely assumed to act as a conduit for funds to Pyongyang. Some observers think the association now may be forced to dissolve unless it ponies up the money it owes.

Japanese efforts to stop the flow of funds to North Korea are very likely to be causing real pain. The Japanese government officially claims that about US$24 billion flows from Japan to North Korea every year, but since 90% of the money is hand-delivered, no one knows exactly how much is remitted. Some estimates are as high as US$75 billion.

A good chunk of this money is believed to have come from the pachinko industry; many of the gaming halls are run by companies controlled by people born in Japan but with Korean passports. Japanese newspapers have run articles about people cutting back on their pachinko play because of worries it indirectly funds the North’s nuclear program. Another possible North Korean income source is smuggled methamphetamines. But it has become difficult to smuggle out the cash now that Japan is no longer a port of call for North Korean ships.

There’s an unusual twist in the case involving the Chongryun. Shigetake Ogata (photo 2), who attempted to buy the property but couldn’t come up with the money, warned, “This ruling will be conveyed to North Korea and there will be retaliation against Japan, which is not good for Japan’s national interest.”

I think it’s safe to say that Ogata is exaggerating about the retaliation. There is nothing Pyongyang can do economically to harm Japan, and its military options—if it wants to survive—are extremely limited.

It’s also safe to say that Ogata’s involvement in the purchase of the property created a media sensation, as you can see from the forest of microphones. Ogata is the former head of the Public Security Intelligence Agency. That’s Japan’s domestic intelligence outfit, which is responsible for monitoring North Korean activities in the country. In fact, as the Daily Yomiuri reports:

In March 1994, Ogata testified on behalf of the agency at the Diet about Chongryon’s activities. He told the House of Representatives Budget Committee that “about 5,000 members of Chongryon are engaged in secret activities.”
Many in the government and legal profession have spoken of their embarrassment that Ogata would act to help the same organization.

The deal fell through when Ogata failed to raise the funds, but not before investigators questioned him and searched his offices. Ogata held a press conference a day ago, during which he claimed that he became involved because the situation “struck a chord in his heart” and that he wanted to help ethnic Koreans in Japan.

Japanese media reports also note that Ogata told the press conference that Chongryon informed him it gave US$2.8 million yen to an unidentified former president of a Tokyo real estate company to facilitate the deal, as well US$80,000 for Ogata personally as the plectrum to strike his heartstrings.

He denied taking the money, but then again, he also said he was moved by the unidentified man’s stories of having to deal with racism in the U.S. and Japan. Ogata explained that their relationship deepened, and their thinking was alike on certain issues, but that he never got the man’s name card or knew his given name.

In short, Japan’s former top spycatcher claims the reason he was on the verge of being paid by the North Koreans to act as their bagman in a deal to save an organization he knew was trying to harm Japan was that he got taken in by a sob story from someone he didn’t bother to check out. (Would you care to speculate on whether he actually did turn the money down, or would have had the matter not come to light?) He could use the money now, because he’s under investigation for submitting fraudulent documents in connection with the deal.

Meanwhile, the Mainichi Shimbun is reporting that the owner of Chongryon’s Osaka headquarters declared bankruptcy to avoid a similar seizure by the RCC.

Why is it that Japan can put a full-court press on the North Koreans, while the Americans are so loathe to act against China? Among several reasons, this one might be the most important: China is recycling the profits from its huge trade surplus with the United States into U.S. Treasury bonds. That allows the United States to defer its diet and continue its supersized spending—some of which buys goods manufactured in China.

Meanwhile, all Japan has to do is keep finding ways to turn off the spigot while whacking Ogata and any other cockroaches that scuttle across the floor when the lights get turned on.

It’s good to be the creditor, as both Japan and China are finding out.

Addendum: While the Chongryun is affiliated with North Korea, some people in Japan whose loyalties or family ties are with South Korea also actively support the organization or work for it. That’s because the South Korean-affiliated organizations in Japan are emasculated by internal disagreements and are not as effective in promoting the interests of native-born Koreans. Indeed, my upstairs neighbors right after I got married were Korean nationals born in Japan, and the husband worked for the local Chongryun branch (about a 10-minute walk from my house). His wife gave the same explanation to my wife!