Tokyo’s latest foreign policy foray toward North Korea has the peculiar pinging sound of a pinball machine. Lacking formal diplomatic relations with Pyongyang and fearing North Korea is on the brink of deploying the new Taepodong long-range ballistic missile, which a year ago was test-lobbed over Japan into the Pacific Ocean, Tokyo is focusing on the North’s ever-vulnerable pocketbook. And pachinko seems to be ringing its bells.
PACHINKO is that uniquely Japanese obsession — a mix of arcade game and slot machine — that is played in some 18,000 parlors around the country. Participants, who purchase the small metal balls that zing around pinball-fashion, spend countless hours and perhaps as much as $250 billion a year on the pursuit. It has entered the fragile geopolitics of Asia because ownership of the parlors is dominated by ethnic Koreans — primarily those who have sympathies or, more correctly, family in the North.
InsertArt(588874)The expatriates, says Professor Hugh Patrick of Columbia University, are a “formidable source of North Korea’s income.” Just how much pachinko money finds its way to the North, either through third-country bank transfers or suitcases stuffed with cash, nobody really knows. Some economists believe it is the single biggest source of revenue for North Korea.
With some 600,000 Koreans living in Japan — many of whom are members of Korean social organizations such as Chosun Soren, which operates schools, hospitals and numerous businesses — it’s not hard to imagine hefty cash transfers.
Lawmakers in Japan, which is second only to China as Pyongyang’s biggest trading partner, say that much of the half-billion dollars that they estimate crosses the Sea of Japan annually is pachinko-related. But others say the sum is far greater, exceeding $1 billion a year, and contributes mightily to Pyongyang’s otherwise buckling economy. According to the Central Bank of South Korea, the North’s gross domestic product has been steadily contracting — by 6.8 percent to just $21.8 billion in 1997, the last year the bank estimated.
By almost anyone’s estimates, North Korea has been in dire straits. It spends about a quarter of its GDP on the military, has had a horrific time trying to feed its people and over the last year has participated in what has been characterized as diplomatic extortion in an attempt to raise cash — seeking hundreds of millions of dollars from the West in return for halting missile exports and allowing inspections of its nuclear facilities.
It is that apparent desperation for money that has led Japan — which has very little in the way of a military — to flex its financial muscles. Last week, Japan’s lawmakers submitted a bill to parliament that would prohibit Koreans living in Japan from sending hard currency to the North in the event of another missile test like the Taepodong 1 test of last Aug. 31. To some observers, the bill appeared to be an attempt to button up the pachinko parlors.
“This action is probably the most direct action Japan can take because it involves the flows of foreign exchange,” says Prof. Patrick.
But all anyone is betting on is that Japan’s 30 million pachinko players will continue packing the parlors come next week.