Sanctions noose makes it harder for Japan's Koreans to help their own

TOKYO Wed Mar 27, 2013 10:42pm GMT

A picture of North Korea's founder Kim Il-sung decorates a building in Pyongyang early October 5, 2011 in this file photo. REUTERS/Damir Sagolj/Files

A picture of North Korea's founder Kim Il-sung decorates a building in Pyongyang early October 5, 2011 in this file photo.

Credit: Reuters/Damir Sagolj/Files

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TOKYO (Reuters) - When the now elderly man left Japan on a Soviet ship in 1960 for North Korea, he thought he was headed to the promised land. In reality, he survived 47 years there thanks only to $1 million (661,025 pounds) in support from his half-brother in Japan.

The man's Korean-born parents decided to migrate to North Korea when he was a teenager, lured by the promise of free education and healthcare in a country that at the time was richer than South Korea in the wake of the 1950-53 Korean War.

Much of the Korean community in Japan is descended from people who were shipped across as forced labour during Tokyo's 35-year colonial rule of the Korean peninsula, which ended with Japan's defeat in World War Two.

In a twist of fate, the man fled back to Japan in 2008 and is now supporting his wife and children in the North. Like other Koreans sending money to the North from either Japan or South Korea, he may find transactions coming under greater scrutiny after new U.N. sanctions were imposed on Pyongyang for its third nuclear test in February.

Speaking to Reuters during an interview in Tokyo, the 66-year-old man declined to be identified for fear of reprisals against his family. He also declined to say exactly why he fled North Korea. He escaped to China in 2007, and arrived in Japan the following year.

He remembered calling his half-brother some years ago when he was in North Korea, thanking him for the money.

"I told my brother that I was sorry (for taking the money), but he said we were grown from the same mother's belly ... I really cried, I was so thankful for his words," said the man. His half-brother had died by the time he arrived in Tokyo.

Even before the February 12 nuclear test, Japan's Finance Ministry appeared to be paying more attention to transfers to North Korea, as the man found out when he tried to send 200,000 yen (1,388 pounds) to Pyongyang through the postal system after North Korea's latest long-range rocket launch in December.

Two days after he made the application, the ministry sent him a letter asking why he wanted to send the money.

"There was a blank space at the bottom to provide reasons for remittances in detail. So I wrote: 'This is not for Kim Jong-un's political fund but to help my poor starving family to live'."

The man said the ministry did not get in touch again, so he assumed the money was sent. Japan's post offices are able to carry out banking functions, such as sending money abroad.

WILL JAPAN TIGHTEN UP ON REMITTANCES?

The latest U.N. sanctions on the regime of North Korean leader Kim tighten financial restrictions, including the illicit transfer of bulk cash, and crack down on its attempts to ship and receive banned cargo. The aim of the March 7 measures is to curtail the North's nuclear and ballistic missile programmes.

Japan's Finance Ministry requires postal remittances above 3 million yen and cash transfers of more than 100,000 yen to be reported to the authorities. For all other countries, the amount is 10 times greater.

A day after the February nuclear test, the Nikkei newspaper said Japan would consider curbs on transfers to North Korea as well as lowering the amount that had to be reported.

A senior Finance Ministry official on Wednesday told Reuters no changes had been made to rules on remittances. It was unclear why the man had to give more details on his transfer, which was far less than 3 million yen.

More than 93,000 ethnic Koreans left Japan for North Korea between 1959 and 1984 under the slogan "Let's go back to the fatherland!", according to researchers in Japan.

That number plunged from the mid 1980s as stories of the grinding poverty in North Korea spread. Meanwhile, South Korea's industrialisation was in full swing.

The man's half-brother, a construction worker, sent him a total of 87 million yen ($923,400) while he lived in North Korea, a number he said he added up one day.

Remittances from Japan were as much as an estimated $2 billion a year until the early 1990s, according to a report in 2007 by the Washington-based Peterson Institute for International Economics, which studies the North's economy.

North Koreans called the cash flow the "Mount Fuji Stream".

Ethnic Koreans in Japan can still send money, but it is a trickle by comparison.

"MOUNT FUJI STREAM" ALREADY DRYING UP

Japan's bubble economy burst in the early 1990s, hurting the disposable income of ethnic Koreans. At the same time, Tokyo cracked down on what it said were illegal businesses run by a pro-Pyongyang organisation called the General Association of Korean Residents in Japan, or Chongryon, which had long sent money to North Korea. It has denied such accusations.

The Chongryon, which still exists, played a key role in Japan's socially isolated Korean community in the 1960s and 1970s.

Japan then banned most financial transactions with North Korea in 2006 after Pyongyang's first nuclear test. It also closed a ferry service that delivered goods and money across the 1,000 km (600 mile) sea that separates the two countries.

For the last three years, the Finance Ministry recorded close to $20 million in remittances. Annual flows from North Korean defectors living in South Korea are estimated at $10 million a year, according to researchers in Seoul.

These days, asking travellers to take cash from Japan to North Korea or sending money by post is the usual way. Flights go via China because Japan does not have diplomatic relations with Pyongyang.

The problem now is the same as it was when the man was sent money - it is not clear if relatives get it all.

Lee Young-hwa, an economics professor at Kansai University in the Japanese city of Osaka, sends around 200,000 yen a year to family in the North.

He believes half goes to North Korean officials as a "loyal donation" to the regime. Lee said he also believed most remittances to relatives sent as cash were unreported.

"We have been sending money for about five decades, hoping that the Koreans sent to the North will someday stand on their own feet," said Lee.

"But there's still no sign that they can."

FOOD IS IMPORTANT TOO

North Koreans were especially desperate during a famine in the 1990s, which killed around a million people, according to independent estimates.

"In the 1990s, we had to send goods. Even if you had money, there was no rice so we sent sesame oil, sugar, rice and noodles and rice cakes," said Yang Yong-hi, an ethnic Korean filmmaker living in Japan and whose three brothers went to the North in the 1970s. One is dead but the other two still live there.

The money the 66-year old man received helped him pay for food and medicine for his parents and other siblings as well as a wedding and a house in North Korea for himself. He declined to say where.

During the 1970s and 1980s, instead of yen, he got so called "exchange vouchers".

"Cash went straight into the state's coffers and we could buy goods at a foreign currency store with these exchange vouchers instead," the man said, adding he began to get cash after the 1980s.

Vouchers are still used for North Koreans working at the Kaesong industrial zone, a factory near its border with South Korea. There, South Korean firms pay wages in U.S. dollars and Pyongyang gives the workers both vouchers and its won currency, according to a South Korean lawmaker who has visited the zone.

Leaving his family behind saddens the man, who said he gets by on 140,000 yen from the Japanese government each month.

"I think I am happy now although I am not rich. I love so much being free. I can talk, hear and see whatever I want," he said.

(Additional reporting by Antoni Slodkowski. Editing by David Chance and Dean Yates)

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