Chongryon Remittances and Investments

The Chongryon has been pursuing “patriotic projects” for a long time. These “projects” refer to those economic support and aid activities for North Korea.

Including activities such as fundraisers and collecting donations, as well as sending resources directly, these projects have been carried out nominally in the name of patriotism.

There are also associated activities aimed at enlarging the organization and preventing members from leaving so as to facilitate pursuit of these ongoing economic aims. But with most of the activities associated with the project happening under duress, the grievances of members have only gotten louder.

The Chongryon’s patriotic projects diversified during the 1980s, from simple financial donations to the provision of goods produced in factories and plants. Examples include enticing affiliated merchants to provide luxury vehicles and top-of-the-line electronic goods and precious metals to satisfy the needs of the North Korean leaders.

At its peak, the Chongryon’s patriotic projects enabled the remittance of six to eight hundred million dollars every year, and they served as the key channel through which North Korea acquired foreign currency right up until 1994. However, when the economic weakness of Chongryon-affiliated enterprises and financial organizations was revealed during Japan’s economic recession of the 1990s, the projects also shrank massively.

Simultaneously, citizens became increasingly aggravated by being almost forced to donate by the Chongryon, leading to large numbers of departures from the organization, and moreover, with light being shed on the reality of North Korean society, the earning power of the patriotic projects quickly vanished.

In the last five years, the Chongryon has also received clear warnings from the Japanese government, which enforces a trade embargo with North Korea, so the sending of donations and goods has almost entirely ceased. Now, as we enter the second decade of the 21st century, the patriotic projects have virtually halted.

Joint Investments also Failed

At the end of the 1980s, Kim Il Sung, in an effort to overcome North Korea’s economic stagnation, enacted a “Joint Enterprise Law” to try to entice foreign capital into the country. However, investments only trickled in, so North Korea attempted to lure Chongryon-affiliated enterprises instead.

These collaborative enterprises generally experienced huge losses for a number of reasons; the economic approach of the North Korean government; a recession in the country; a lack of infrastructure including unstable energy provision; and breaches of contract. As a result of the failures, Chongryon-affiliated businesspeople began to try and avoid doing business with the North altogether, undermining the power of the Chongryon.

Then, watching Chongryon-affiliated enterprises fail one by one despite their effort to ambitiously engage in business with the fatherland due to their lack of understanding of the North Korean market and its inadequate investment climate, other merchants and businesspeople also began to learn about North Korea’s economic environment, confirming their belief in the futility of investing in the country.

From 1984, when North Korea’s Joint Enterprise Law was enacted, until 1995, the number of incorporated enterprises involved in joint projects with North Korea totaled 131, but only ten have performed reasonably in recent years, including the Chosun Bank, Moranbong Company, and Kim Man Yoo Hospital.

One Korean-Japanese resident who wishes to remain anonymous experienced his own failure after getting involved in such a joint enterprise. Speaking by telephone with The Daily NK, he explained, “The issue lies in the fact that these joint enterprises do not prioritize economic principles; they are simply supposed to encourage nationalism and devotion to North Korea. Some progress could initially be seen, but with the passage of time, the North Korean government’s excessive interference and its deteriorating economy have made life difficult for the projects.”

“At the time, Chongryon-affiliated businessmen considered the elevation of the status of family members and relatives inside North Korea above economic gains, so some regarded the collaborative projects as a kind of a patriotic project or contribution rather than an investment.”

(to be continued)