SEOUL, June 19 (UPI) -- North Korea is expected to face a further financial squeeze as its biggest overseas network in Japan, which has served as a major financial lifeline for the communist regime, is on the verge of bankruptcy.
The embattled pro-Pyongyang ethnic Korean group in Japan, known as Chongryon, is likely to lose its headquarters in central Tokyo and other assets because of its failure to repay its debts.
The Tokyo District Court ordered the General Association of Korean Residents on Monday to repay 62.7 billion yen, or $508 million, to Japan's governmental debt-collection body. The court also allowed Resolution and Collection Corp. to seize the group's headquarters in Tokyo and other properties in lieu of payment. The headquarters has served as a de facto embassy for North Korea in Japan because the two countries have no diplomatic ties.
Tokyo's Yomiuri Shimbun newspaper described the court ruling as a "sweeping legal victory" for the government's debt-collecting body, which has already seized nine of 29 Chongryon facilities nationwide in recent years.
The government-run loan agency sued Chongryon in November 2005 for the repayment of loans after it took over non-performing loans from 16 failed credit unions affiliated with the pro-communist group. The Japanese government injected massive amounts of public funds into the now-collapsed credit unions.
Prime Minister Shinzo Abe defended the court ruling, saying it was "entirely reasonable" for the RCC to try to collect the money because public funds were pumped into the fallen credit unions. Abe has accused Chongryon of being involved in crimes, including the abduction of Japanese nationals to North Korea. Japan also suspects the group may have a role in the North's programs for ballistic missiles and nuclear weapons.
Under Abe's leadership, Japan has tightened its law enforcement measures against Chongryon with ongoing disputes over the communist country's nuclear weapons drive and its abductions of Japanese citizens in the 1970s and 1980s. Japan's police recently raided the offices of the group and summoned its leaders for the first time since Chongryon was formed in 1955.
The Tokyo metropolitan government has begun levying fixed asset taxes on the head office building and land of Chongryon since July 2003, reversing its previous stance of exempting the property from such taxes.
Chongryon have suffered from anti-North Korean sentiment in Japan after Pyongyang admitted in 2002 to kidnapping 13 Japanese citizens to help train spies headed for Japan. That sentiment was fueled by the North's missile and nuclear tests last year.
For instance, Chongryon parents have feared possible harassment by the Japanese, and some students remained at home because of concern of retaliation from an angry population. Indeed, North Korea has blamed Abe for crack downs on Chongryon, calling it an "unpardonable infringement" of North Korean sovereignty and a "crime against humanity."
The North "will never remain a passive onlooker to the Japanese authorities' outrageous suppression of Chongryon and Koreans in Japan," the North's Foreign Ministry said in a recent statement.
With mounting anti-Pyongyang sentiment, a pro-Seoul ethnic Korean group called Mindan has suspended reconciliation projects with Chongryon despite the fledgling cross-border reconciliation on the Korean peninsula.
About 600,000 ethnic Koreans live in Japan, many of them descended from the 2 million Koreans brought to Japan as forced labor during Tokyo's 1910-1945 colonization of the peninsula. Only 10 percent of the ethnic Koreans support North Korea as more and more have quit Chongryon.
The possible bankruptcy of Chongryon would be a significant blow to North Korea, which has depended on cash infusions from residents in Japan. The remittance by Chongryon businessmen is a major source of hard currency for the North. Many Chongryon members run slot machines or pachineseo, Japanese-style coin-operated gambling machines.
Pyongyang has often demanded the residents in Japan who have relatives in the North remit cash to the impoverished country, effectively holding their family members as potential hostages.
The money transferred from Japan to North Korea has been on the decrease in recent years since Japan has taken punitive measures over Pyongyang's nuclear weapons and missile programs.
The exact amount of the money transfer remains unknown, but Japan's ruling Liberal Democratic Party in 2005 estimated the remittance at $85 million a year.