Pinball Wizards Fuel North Korea

Japan's Passion Aids Communist State; Pachinko Players Underwrite North Korea

By Mary Jordan and Kevin Sullivan
Washington Post Foreign Service
Friday, June 7 1996; Page A25
The Washington Post
Yuichiro Aoyama sat on a stool in a garish game room and watched a blinking, bleeping, boinging pinball machine eat his $40 before he had finished one cigarette. Although he sometimes loses hundreds of dollars, Aoyama is still hooked on this game, pachink o, and he spends eight hours a day in his favorite gambling parlor.

"It's like opium; I can't stop," said Aoyama, whose addiction is not only good news to the pachinko industry, which has sales equal to Japan's colossal auto industry, but to the cash-strapped leaders of Stalinist North Korea.

It is an open secret in Japan that pachinko is one of the pillars upon which North Korea's economy rests. Police and economists estimate that up to 30 percent of the pachinko industry is controlled by North Koreans living in Japan, many of whom fun nel a portion of their profits across the Japan Sea to their homeland.

While pinball parlors might seem an unlikely underpinning for a national economy, even one as shaky as North Korea's, consider the numbers: Japan's 18,000 pachinko parlors ring up annual sales of $280 billion.

No one knows exactly how much profit there is in the shady, mob-connected world of pachinko, or how much of the game's proceeds wind up in North Korea. In 1994, Japanese police testified in parliament that $600 million or more was being sent to the world's last Stalinist state, much of it derived from pachinko. Japanese media and economists also have placed the number in that range, though some say it may have fallen by more than 80 percent.

Still, the Japanese money pipeline is irritating to the United States, which has accused North Korea of fostering terrorism and tried to use economic sanctions to isolate it while offering some humanitarian assistance. The recl usive nation has ties with many of the world's outlaw states and is believed to have sold missiles to Iraq and Iran. It also has threatened to produce nuclear weapons and keeps a million-man army along the world's most heavily armed border.

But even though Japanese customs and police authorities have never cracked down on the cash flow, the pipeline is drying up. New American and Japanese economic and intelligence estimates say the amount now winding up in North Korea is probably $100 million a year or less.

Japan's connection to Pyongyang has weakened since the 1994 death of national founder and "Great Leader" Kim Il Sung, who ruled for 46 years. The North Korean community here is facing its own economic difficulties, and loyalty to current leader Kim Jong I l is wavering.

In North Korea itself, the "workers' paradise" promised by Kim is now a grim place of hungry children and idle factories, according to many people who have visited since severe floods devastated the country last summer. As the economy continues to sink and hunger problems worsen, disillusioned expatriate North Koreans are less willing to turn over their earnings to keep the place afloat, analysts say, and are scaling back their cash contributions.

"The loss of funds here is devastating to North Korea," said Katsumi Sato, head of the Modern Korea Institute, a Tokyo think tank.

Nicholas Eberstadt, a researcher at the American Enterprise Institute who has written extensively on the North Korean economy, estimates that as of now North Korea probably receives $100 million or less from its patrons in Ja pan. If North Korea really were receiving $600 million a year from Japan, as many have believed, it probably would not have critical food and fuel shortages, he said.

Eberstadt said North Korea lost its benevolent "uncle" when the Soviet Union disintegrated in 1991, and its patronage from China, which is developing increasingly close ties to South Korea, has been severely cut.

United States defense and intelligence experts keep a close eye on North Korea's cash intake, and in particular the all-important Japanese connection. The information helps them determine how close the government is to collapse and how much money it has for things like fuel and military equipment.

Officials say that as the Japanese money becomes scarcer, North Korea is more likely to seek cash through other illegal means. The country already is suspected of producing counterfeit $100 bills and trafficking in heroin.

A down-on-its-luck North Korea also worries U.S. officials and many Asian countries because they fear Pyongyang could lash out with the only major resource it has left: its massive army. The 37,000 U.S. soldiers stationed in So uth Korea are in the sights of that huge military machine.

Many of the 700,000 Koreans in Japan came, or their parents or grandparents did, when Japan ruled the Korean peninsula as a colony from 1910 to 1945. After the war, the peninsula was divided into a pro-Soviet North and a pro-U.S. South.

In the 1960s, many of the Koreans here, still stung from harsh Japanese treatment, heard Kim Il Sung's promise of a socialist dream and returned to North Korea, which at the time was faring better economically than its southern rival. Many Koreans in Japan send money to poor relatives in North Korea, but it is unclear how much actually reaches them and how much is siphoned off by the government.

Lee Young Hwa, an economist and disillusioned member of the North Korean community here, said the membership of the Chosen Soren, the influential North Korean residents association in Japan, is dropping as people become disenchanted. He said enrollment in the extensive network of North Korean schools in Japan is down to 12,000, about a third of what it was in the 1980s.

"People don't want the dictatorial system anymore," said Lee, who has lived in North Korea.

So Chung On, a Chosen Soren spokesman, denied that membership is declining, but said that membership figures are not public. He also called the large estimates of cash traveling from Japan to North Korea "lies" designed to mali gn North Koreans.

However much money is going to North Korea, it is going with little objection from the Japanese government.

Although Japan is believed to devote enormous intelligence resources to tracking North Korean activities on its soil, it does little to control the money flow. Thousands of passengers come and go on ferries to North Korea from Niigata on Japan's west coast, but there are not rigorous customs checks there. Passengers are allowed to carry out the equivalent of about $50,000 in Japanese currency, but few suitcases are actually opened and money counted.

Large amounts of money are believed to be wired from North Korean-controlled banks in Japan to accounts in third countries, particularly Hong Kong and Austria. But Japanese government officials, famous for their rigorous regulation of most commerce in the ir country, say they know little about that trade.

Critics say the government deliberately ignores the money flow, hoping to avoid confrontation with North Korea, which has missiles pointed at Japan. They also say the government wants to avoid being seen as discriminating again st Koreans, with whom the Japanese have a troubled history.

Even though the money flow to North Korea may have slowed, it is not likely to dry up completely if the Japanese keep spending far more on pachinko than movies.

In the dull neon glow of his favorite parlor, called Paradise, Aoyama, 75, said his concern was pachinko, not politics. Once the machine takes his money, he said, it doesn't matter where it ends up.

"I have heard that a lot of pachinko money goes to North Korea," Aoyama said, his eyes following the ricocheting silver balls. "But I don't care."