The Chosen Soren (Chongryun in Korean), a group of pro-Pyongyang ethnic Koreanspermanently residing in Japan, has come under heightened scrutiny as U.S. and Japanese policymakers seek new ways to stop North Korea's nuclear weapons program. With the six-party talkscurrently at a standstill, the United States and its allies are seeking ways to economically andpolitically pressure the Pyongyang regime to abandon its nuclear weapons program . The ChosenSoren has long supported North Korea by facilitating trade, remitting cash donations, establishingpersonal contacts, and possibly coordinating illicit transfers of narcotics and weapon parts. Japaneseofficials have recently indicated more willingness to crack down on Chosen Soren's illegal activities. U.S. officials may be prepared to cooperate with Japan in dealing with the organization as part ofa broader strategy of influencing North Korean actions. Congress has been actively engaged in its oversight of the Administration's North Korean policy, including a hearing held by the Financial Management, Budget, and International SecuritySubcommittee of the Senate Governmental Affairs Committee on May 20, 2003 in which a NorthKorean defector testified that Chosen Soren had coordinated shipments of missile parts to theregime. This report will explore assessments of Chosen Soren's relations with the North KoreanandJapanese governments, the recent changes in Japan's policy toward the group, and possible optionsfor the United States to exploit the link provided by the Chosen Soren between the reclusive NorthKorean regime and the outside world. This report was prepared using exclusively open sources. Members of Congress may benefit from classified briefings from the intelligence community on the extent of Chosen Soren's ties withthe North Korean government. The Chosen Soren (General Association of Korean Residents in Japan) is a political and social organization made up of ethnic Koreans who have chosen to affiliate themselves with North Korea. Chosen Soren represents a minority of the 640,000 ethnic Koreans in Japan; membership estimatesrange from 50,000 to 180,000. (1) Established in 1955,the group is made up primarily of descendantsof Koreans who moved to Japan as laborers in the 1930s when the Korean peninsula was annexedby Japan. Chosen Soren reportedly administers and finances 140 schools and a university thatemphasize Korean language and culture; publishes a newspaper; serves as a confederation for 12affiliated associations; holds close ties with financial institutions catering exclusively to ethnicKoreans; and acts as an unofficial representative of the North Korean government. Up to 30% ofthe pachinko industry (a popular form of pinball gambling with over 18,000 parlors nationwide) iscontrolled by ethnic Koreans, many of whom have close ties to Chosen Soren. (2) The Chosen Soren has a counterpart in the pro-Seoul Korean organization Mindan (Korean Residents Union in Japan). Both organizations work to promote ethnic Koreans' civil rights inJapan. Members of both are classified as "special permanent residents," but hold official citizenshipin North or South Korea. The groups differ in approach: Mindan supports the enfranchisement inJapan of special permanent residents (the designation of most ethnic Koreans) while Chosen Sorenadvocates a strong national identity with North Korea. Chosen Soren facilitated the repatriation ofover 100,000 Korean residents living in Japan to the North and sparred with Mindan in the 1960's,including outbreaks of violence. (3) Membership inMindan now outpaces Chosen Soren about 4 to1, and the trend over the past few years indicates that ethnic Koreans are increasingly eitherbecoming naturalized Japanese citizens or associating with Mindan. (4) Chosen Soren justifies its longstanding existence largely on the discrimination faced by ethnic Koreans in Japan. Although some Korean families have been in Japan for several generations, asspecial permanent residents they do not have the right to vote, cannot work for the centralgovernment, and were required to be fingerprinted as resident aliens until the early 1990's. (5) Together with the history of Japan's often brutal 35-year colonization of the Korean peninsula(1910-1945), relations between the Korean minority and the Japanese government have always beenstrained. Japanese political leaders have avoided confrontation with Chosen Soren both out of fearof provoking reaction from Pyongyang and out of a sensitivity to accusations of racialdiscrimination. (6) Government agencies also largelyignored the money flow from Japan to NorthKorea, permitted ferry links with little enforcement of safety measures and cargo inspections, (7) andallowed Chosen Soren to maintain its tax-free diplomatic status for years. (8) Traditionally Chosen Soren had close ties with the political left in Japan, particularly the Socialist Party. But until very recently, Chosen Soren leadership also enjoyed warm relations withseveral members of the Liberal Democratic Party. Accusations have arisen regarding ChosenSoren's ties with organized crime in counterfeiting and the drug trade. Some critics suggest thatJapanese politicians may intentionally allow cash remittances and contacts between Chosen Sorenand North Korea to continue because of the politicians' own involvement with gangster trade. Detractors allege that the interdiction of links with Pyongyang could expose LDP affiliation with the yakuza organized crime syndicate. (9) The secretive nature of North Korea makes the extent of political interaction between Chosen Soren and Kim Jong Il's regime difficult to assess. North Korea reportedly sends $3.6 million a yearto Chosen Soren to help administer the Korean schools in Japan. (10) Chosen Soren sendsrepresentatives to serve in North Korea's legislature, the Supreme People's Assembly, as well asdelegations to major public celebrations, but the extent of leverage and access to policymaking inPyongyang is not clear. Chosen Soren also reportedly runs a 2,000-member underground networkof "study groups," called gakushu-gumi , which are affiliated with the North Korea Worker's Partyand train members to spy on South Korea and the Japanese military. (11) In September 2002, shortlybefore a diplomatic summit with Japanese Prime Minister Junichiro Koizumi, Kim Jong Il publiclyissued a directive to visiting Chosen Soren leader Ho Jong-man, ordering the gakushu-gumi todisband in advance of the meeting. (12) Althoughthis indicates direct communication between KimJong Il and the Chosen Soren organization, reports on whether the directive was obeyed are notconclusive. The issue of hard currency flowing into North Korea from Japan has been the subject of extensive debate, both on the question of where the money goes (to individuals or to the regime) andthe amount. Before Japan's economic bubble collapsed in the early 1990's, U.S. officials estimatedthat up to $1 billion a year could have been transferred to North Korea from Japan, but, by allaccounts, that figure has decreased with the economic downturn in Japan and the death of PresidentKim Il Sung. Most observers now agree with Nicolas Eberstadt's estimation that, even at their peak,remittances generally were below $100 million annually. (13) Remittances are passed either in personwhen Korean residents travel to North Korea or by transfers through financial institutions. According to Japanese Finance Minister Masajuro Shiokawa, at least $33 million was reported tothe government as transferred to the North in fiscal year 2002. (14) Some Japanese firms associated with Chosen Soren have been implicated in illegal plans to transfer high-tech equipment to North Korea that could be used to develop the North's nuclearweapons program. Meishin, a Tokyo-based trading company run by members of Chosen Soren, hasadmitted that it exported three transformers that regulate electrical current, a device that can be usedfor uranium enrichment as well as missile development, to North Korea via Thailand. The shipment,exported without authorization by Japan's Ministry of Economy, Trade, and Industry, was orderedby the Korea Daesong General Trading Corporation, a company administered by the intelligence unitof the Korean Workers' Party. (15) US reports havesingled out Daesong as part of an extensiveorganization known as Division 39 of the Korean Workers' Party that provides hard currency to KimJong Il's regime; some reports value the cash assets of the unit at up to $5 billion, secreted in banksin Macau and Switzerland. (16) Reportedly, Japan-based firms often go through third countries in their dealings with North Korea. In Meishin's case, the transformers were destined for Pyongyang through Loxley Pacific, asubsidiary of Loxley PCL, one of Thailand's top communications companies. Loxley has significantbusiness interests in North Korea as well, holding exclusive 30 year rights to telecommunicationservices in Rajin-Sonbong, a Special Economic Zone in the North. According to press reports,Loxley Pacific often acts as a middleman between Meishin and Daesong for trade in rubber, sugar,and other products. (17) Chosen Soren has also been involved with at least one other non-ethnic Korean company that sold military technology to North Korea. The Japanese engineering firm Seishin Enterprises wasfound to have shipped a jet mill, a machine that can be used to grind solid fuel into fine powder foruse in missiles, to North Korea in 1994 on board the Mangyongbong ferry and attempted again inMay 2003 to export electronic scales that could be used in the production of biological and chemicalweapons. A senior member of a science and technology organization affiliated with Chosen Sorenreportedly coordinated price negotiations and product specifications for the order.