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TOKYO -- The Japanese government soon will be using taxpayer funds to
bail out failed pro-North Korean credit unions whose assets have been used to pay
for Pyongyang's missile and nuclear programs.
It is an old story that North Korea diverts whatever hard currency it
gets its hands on to pay for its high tech purchases; some of the hardware
which went into the missile fired by North Korea across Japan last August
was purchased in Japan, as confirmed by members of the Diet (parliament).
The new angle is that the pro-North Korea credit unions will be treated
like all other failed financial institutions which suffered from the ripple
effect of Japan's "burst bubble" economy.
They will be subsidized in government funds--taxpayer yen--which may
end up buying more missile and nuclear weapons parts for Pyongyang to put
in missiles to be sold to Iran and Iraq and brandished against Japan and
South Korea.
About one-third of Japan's 650,000 ethnic Koreans are loyal to
Pyongyang but the number is declining steadily. The credit unions were set
up to serve these Koreans, but last year 13 of them went belly-up leaving
more than $7 billion in outstanding loans. There is suspicion that North
Korea plundered the accounts through pressure on account-holders.
Heretofore, the spotlight of suspicion has fallen on pachinko parlor
proceeds and family remittances by Koreans in Japan to relatives in the
northern half of .the Korean Peninsula. By the mid-1990s, according to
then-Foreign Minister Tsutomu Hata, as much as $2 billion a year in
remittances, cash gifts and investment was flowing from Japan to North
Korea.
A government source told me this week "From April this year, all
credit unions in Japan, now administered by each prefectural government
depending on the area of their operation, will be administered by the
central government ( The Financial Supervisory Agency). The Financial
Supervisory Agency has recently established a project team to smoothly
start an inspection of over 290 credit unions from fiscal 2000."
Theoretically, the FSA will be in a position to choke off any improper
or suspicious remittances to North Korea. But there is a bevy of political
and historical ties clogging the administrative process.
The reality is that the Liberal Democratic Party, leader of the
tripartite ruling coalition, has some factions that are in bed with the
managements of the pro-North Korean credit unions.
The links go back to the days of the late LDP "godfather" Shin Kanemaru.
He felt so confident with his Pinging ties that he undertook a
single-handed diplomatic trip to North Korea which turned to mush. Among
others, U.S. Ambassador to Japan Michael Armacost was furious at
Kanemaru's naive intrusion into what were sensitive multilateral
negotiations.
Kanemaru was a virtual director of more than one of the pro-Pyongyang
credit unions and part of the funds he amassed was believed to have been
skimmed from the credit unions' accounts.
The situation is said to be of much concern and urgency to North
Korea. Some Japanese analysts on North Korean affairs see the current
"nice guys" peace offensive of the North toward Tokyo, Seoul and
Washington as an effort to pacify the parties until the credit union
issue heat subsides.
It has long been suspected that what is left of North Korea's
economy is supported by
funds from Japan.
Every time I see Hideshi Takesada, a North Korea expert at the
National Institute for Defense Studies in Tokyo, he tells me as he did
recently "Without funds and technology from Japan, North Korea would
collapse."
Edward Neilan (eneilan@crisscross.com) is a veteran journalist, based in Tokyo, who covers East Asia and writes weekly for World Tribune.com.