Kansai mulls ways to attract U.S. cash

Investment in apathetic region said connected to security relations

by Eric Johnston

OSAKA — Discussion on America’s relationship with the Kansai region generally centers on business investment or the lack thereof.

With no U.S. bases in the region amid a long tradition of apathy and occasional hostility toward military matters, Kansai tends to see the bilateral security treaty as something best handled by Tokyo.

But with the new U.S. administration expected to focus on security issues, some in the American and Japanese business communities are trying to change local attitudes by emphasizing that Kansai people also need to think about security issues and how they relate to American investment.

For these reasons, the U.S. Consulate General in Osaka recently sponsored a seminar titled “U.S.-Japan Relations Under the Bush Administration: Its Impact on Kansai,” at the Kansai American Center. Panelists ranged from the commander of U.S. naval forces in Japan to the chairman of Yoshimoto Kogyo Co., an Osaka-based major entertainment firm.

U.S. Consul General Robert Ludan began the session by noting that while exports from Kansai to the U.S. totaled 2.5 trillion yen in 1999, U.S. imports came to 1.1 trillion yen.

“Most of the U.S. imports to Kansai are sales to Kansai companies, not individual consumers. In particular, U.S. machinery and chemical products do well here,” he said.

But he noted the largest U.S. investor in the Kansai region was the consulate itself.

Ludan believes one way to increase U.S. investment and turn the economy around is to deal with an issue traditionally given short shrift in Kansai — security relations.

He specifically wants Kobe officials to scrap a resolution passed 25 years ago calling for military ships entering the port to first declare they have no nuclear weapons, saying, “This is a leftover from the Cold War. Its elimination would create a more favorable impression in the minds of American investors.”

Rear Adm. Robert Chaplin, commander of U.S. naval forces in Japan, said that while a U.S. policy to neither confirm nor deny the presence of such arms on board a ship still stands, another policy adapted about a decade ago is also in effect.

“Since the early 1990s, it has been general U.S. policy not to carry nuclear weapons on board surface ships, naval aircraft or submarines,” Chaplin said.

With the 50th anniversary of the San Francisco Peace Treaty coming up this year, followed by the 50th anniversary of the Japan-U.S. Security Treaty next year, more U.S. officials involved with Japan are pushing for a greater appreciation of the U.S. military presence among ordinary Japanese.

“Japanese people need to give serious thought to their defense. There is a danger Americans will get angry with Japan if a crisis occurs and Japan fails to respond,” said David Asher, associate director of Asian studies at the American Enterprise Institute, which has close ties to the Bush administration.

But Yoshimoto Kogyo Chairman Hideo Nakamura said the region’s historical hatred of bureaucracies and the military makes it difficult for many to think about the security treaty.

“Kansai people don’t like to be told what to do by those above them, and this region, unlike Tokyo, has never been a military center,” he said.

And Kansai has long considered itself the “Gateway to Asia,” with many local leaders seeing U.S. businesses as threatening rivals.

The idea that Asians are customers and Americans are competitors is the reason some in Kansai — especially in Osaka — give for the lack of interest in American investment in the region compared with Tokyo.

Takashi Hikino, economics professor at Kyoto University, noted that one negative result of Kansai’s efforts to draw closer to Asia has been the difficulty of reaching the U.S. from the region.

“At Kansai International Airport, there are only eight direct routes to the U.S., while at Narita airport, there are 18 routes,” he said.

Taking advantage of this fact, Osaka’s domestic Itami airport has even begun to advertise itself as the “Gateway to North America,” asserting that an Itami-Narita-U.S. route is more convenient than going via Kansai airport.

Hikino also touched on the high landing fees at Kansai International Airport. “A reduction in fees would mean more American and international carriers would use the airport,” he said.

One large U.S. investor in Kansai is Universal Studios, which will open Universal Studios Japan at the end of the month. While U.S. officials involved with the project have warned against expecting the park alone to provide regional revitalization, the Kansai Economic Federation and Osaka officials are touting USJ as the project that will save the local economy.

Hikino, however, remains pessimistic. “The park itself will do well,” he said. “But it’s a mistake to think it will turn the entire regional economy around.”