Washington’s request that Japan maintain its “sympathy budget,” or special host-nation financial support for the U.S. forces stationed here, has drawn a cool reception from the Japanese government and the media. During his visit here last week, U.S. Defense Secretary William Cohen repeated that request to Foreign Minister Yohei Kono and his Japanese counterpart, Mr. Tsutomu Kawara. Japan’s dulled enthusiasm for the outlays is attributed to a reversal in economic fortunes. When the current formula was worked out unilaterally by Japan in 1978 to help ease the U.S. financial burden, the United States was plagued with huge fiscal deficits. Now that the U.S. government is producing a gigantic budget surplus — in sharp contrast to Tokyo’s ballooning deficit — the prevailing perception here is that it does not stand to reason that Japan alone should continue to shoulder this burden.

If nothing is done about this special host-nation budget, it will remain essentially unchanged for five years beginning in April 2001. The government is committed to disburse a total of 260.3 billion yen in fiscal 2000 — down 7.5 billion yen, or 2.8 percent, from the year before. A breakdown of the sum looks like this: 80.9 billion yen in base maintenance costs (down 5.4 percent); 149.3 billion yen in wages for Japanese base workers (down 0.7 percent); 29.8 billion yen in utility bills (down 5.9 percent); and 400 million yen in training and relocation expenses (unchanged).

The Finance Ministry plays up the spending cuts. The truth, however, is the figures represent not so much outright reductions due to economies, but natural — and in some cases, even artificial — decreases resulting from technical factors. Maintenance costs have dropped because part of the maintenance program has been carried over to the next fiscal year. Labor costs have shrunk because cuts in annual bonuses for government employees apply to base workers as well. The lower utility bills reflect lower electricity and water rates.

Those facts are behind the argument that the “sympathy budget” for fiscal 2000 has been hardly reduced in real terms. It should be noted, moreover, that the total amount of Japanese spending for U.S. forces in Japan, including this budget, for fiscal 2000 stands at 585.1 billion yen, a gain of 4.8 billion yen, or 0.8 percent, from the year before.

Article 24 of the Japan-U.S. Status of Forces Agreement states that Japan will pay construction costs for facilities to be used by U.S. forces, but that once the facilities are transferred, their maintenance costs will be paid by the U.S. In other words, Japan has no statutory obligation to pay U.S. maintenance bills. Making such payments is essentially an act of generosity on Japan’s part.

The government prepared its first “sympathy budget” after pay-hike negotiations for the Japanese base workers hit a snag due to a price-wage spiral triggered by the 1973 oil shock. In April 1978, Tokyo decided to pay, within the framework of the Status of Forces Agreement, (1) welfare benefits provided for by law, such as employers’ share of social security contributions, and (2) part of the overhead. Additionally, beginning in fiscal 1987, the government paid half of the base employees’ annual bonuses to help ease the impact of the yen’s rise against the dollar — which increased dollar-denominated U.S. spending at a time when Washington was plagued by mounting international payments and budget deficits.

In January 1991, Foreign Minister Taro Nakayama and U.S. Secretary of State James Baker signed a special agreement on the cost of stationing U.S. forces in Japan. It was revised in November 1995 to extend it through March 31, 2001. The document states in Article 1 that Japan will pay all or some of 44 wage items — including basic pay and allowances — for Japanese workers employed by U.S. forces. Article 2 stipulates that all or part of utility costs, such as electricity, gas and water bills, will be covered by Japan.

Japanese spending for U.S. forces will not decrease significantly unless the government decides not to extend the agreement or, in the event of an extension, reduces the number of wage items.

Reacting to growing public criticism of the “sympathy budget,” U.S. officials have said that special host-nation support should be seen not as a token of Japanese gratitude to the U.S., but as a key element of Japan’s strategic contributions to regional and international peace and stability. The Japanese public, however, will not be convinced unless the historical background of this budget is put in proper context and the budget is reviewed in terms of changed conditions.

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