Kan: Okinawa costs topped official claim

$320 million, or over double that?

Kyodo News

Finance Minister Naoto Kan said Friday he believes the government paid more than $320 million in costs related to the 1972 reversion of Okinawa under “a secret pact in a broad sense” with the United States.

The official stance has been the government in power at the time paid $320 million in costs related to the reversion. But experts on bilateral relations have claimed the actual costs reached $685 million, citing declassified U.S. documents.

Kan made the remarks after releasing the results of the Finance Ministry’s lengthy investigation into Japan’s zero-interest account at a U.S. Federal Reserve bank in connection with the reversion of Okinawa to Japanese sovereignty from U.S. control.

The main subject of the probe was one declassified memorandum of understanding that Japan’s former top financial diplomat, Yusuke Kashiwagi, negotiated in 1969 with his U.S. counterpart, Anthony Jurich, which indicates Japan promised to pay more than $320 million for the reversion.

“Between Japan and the United States at that time, I believe there were secret promises regarding the burden going beyond $320 million, which has been stipulated in the agreement on the return of Okinawa, and how other money (for the reversion) should be spent,” Kan said at a news conference at the ministry.

He said the memorandum probably served as “the starting point” for bilateral negotiations toward reaching clandestine deals.

“I have summed up that the document functioned as a secret pact in a broad sense,” Kan said.

Japan deposited about $53 million into the bank account in 1972 and it was maintained through 1999, the Finance Ministry said.

Combined with the Bank of Japan’s deposit of around $50 million, Japan put about $103 million into the account, which is equivalent to the amount of new dollars the government obtained from converting Okinawa dollars into yen with the 1972 reversion.

But Kan said the Finance Ministry could not find sufficient evidence to establish that Japan’s zero-interest account was used to raise extra money for Washington.

The ministry’s probe into the purported clandestine deals related to the reversion was commissioned by Kan and his predecessor, Hirohisa Fujii, both lawmakers of the Democratic Party of Japan, which last summer ended more than 50 years of nearly unbroken rule by the Liberal Democratic Party.

The investigation was launched in parallel with the Foreign Ministry’s probe into whether there were secret pacts during the Cold War between Tokyo and Washington, including one that allows U.S. nuclear-armed vessels to visit Japanese ports.

Declassified U.S. documents and testimony by former government officials have confirmed the existence of some secret pacts in the 1960s and 1970s. But previous, LDP-led, administrations have successively denied their existence.

Kan’s announcement came after a Foreign Ministry panel of experts concluded Tuesday that some of the most important bilateral agreements of the period were reached in backroom deals.

Among others, the panel said a secret pact can be confirmed in which Tokyo consented to shoulder $4 million in costs on behalf of Washington to restore Okinawa land plots, which had been used by U.S. forces, to their original state.

But the issues related to the bank account were not subject to examinations by the Foreign Ministry panel.

The memorandum signed by Kashiwagi and Jurich touched on how to deal with Japan’s new dollar holdings.

The memo, dated Dec. 2, 1969, said, “The Bank of Japan will deposit $60 million or the amount of currency actually converted, whichever is greater, in a noninterest-bearing account with the Federal Reserve Bank of New York acting as principal and agent of the U.S. Treasury.”