Japan and the United States agreed earlier this month to cut the Japanese share of the cost of maintaining U.S. forces here — special host-nation support, which is often called the “sympathy budget.” The cut, about 3.3 billion yen a year, is actually a drop in the bucket — 1.3 percent of the approximately 260 billion yen (contract value) that Japan is committed to paying in fiscal 2000.
The sympathy budget, which is based on a special bilateral agreement that expires next March, was implemented for the first time in 1978 to help ease budget pressure on the U.S. government, which was then plagued by large fiscal deficits. This special host-nation spending does not represent a Japanese obligation within the Status of Forces Agreement. With the U.S. now enjoying a huge budget surplus, there is no convincing reason why Japan should continue to spend such a large amount of taxpayer money for U.S. forces.
The cost-cutting agreement involves utilities expenses for U.S. military housing — light, fuel and water bills that normally should be paid by the U.S. Cutting a small fraction of these payments — which are not covered by the status agreement — comes across as a makeshift compromise that will likely come under strong criticism from the Japanese public, particularly in view of the nation’s worsening fiscal problems.
Japan’s direct financial support, including sympathy spending, totaled $2.88 billion in fiscal 1998, according to a report submitted to the U.S. Congress by the secretary of defense in March this year. The sum, when calculated at the exchange rate of 109 yen to the dollar, equals about 314 billion yen.
The report puts total direct support by 22 U.S. allies at $3.43 billion (about 374 billion yen), of which Japan accounts for about 80 percent. The next largest host, in financial terms, is South Korea ($349 million, or 38 billion yen), followed by Kuwait ($171 million, or 18.6 billion yen) and Germany ($23.3 million, or 2.5 billion yen). Italy, Luxembourg, the Netherlands, Portugal, Belgium, Oman and Qatar are providing no such support.
The first sympathy budget was worked out within the framework of the status agreement. It was meant to ease the financial burden on the U.S. forces here amid a wave of soaring inflation that had pushed up the wages of Japanese employees at U.S. bases. In a compromise move, Japan agreed to share about 6 billion yen in mandatory welfare payments for base workers, such as the U.S. share of social security contributions.
The status agreement says Japan will bear the cost of constructing facilities for U.S. forces, but that the U.S. will maintain them at its own expense. After fiscal 1978, however, U.S. requests for additional support escalated, including various other items such as wages for base workers, utilities costs, and training and relocation expenses. With Japanese payments reaching unwieldy proportions, the two countries signed a special host-nation agreement in January 1991. The accord, which was revised in 1995, expires on March 31, 2001.
The sympathy budget for fiscal 2000 consists of 80 billion yen in facility-maintenance costs, 150 billion yen in wages and fringe benefits, 30 billion yen in utilities bills, and 400 million yen in training and relocation expenses. The sum is roughly 40 times the figure for fiscal 1978 when the first special host-nation budget was put into effect.
The fiscal condition in the two countries has reversed in recent years. Japan is now piling up huge deficits and the U.S. is generating record surpluses amid the longest economic boom in its history. In these circumstances, Japanese taxpayers cannot see any rationale for continuing to provide such generous financial support for U.S. forces stationed here.
Of course this does not obviate the need for host-nation support itself. As U.S. Ambassador to Japan Thomas Foley said, allies hosting U.S. troops are all providing such support, and Japan’s support is an important strategic contribution in the Asia-Pacific region. Given the deepening fiscal crisis, however, Japan should limit such spending to a number of labor-related items, as it did under the initial sympathy budget.
The latest agreement, reached in the wake of a Liberal Democratic Party setback in recent Lower House elections, seems to reflect a desire on the part of the Japanese government to avoid “unsettling” developments in the Japan-U.S. alliance. Even so, a deal that makes only token cuts in the sympathy budget will only stir anti-U.S. feelings among Japanese taxpayers. In the eyes of those Japanese, the agreement came as the result of one-sided negotiations that swallowed even requests that should have been rejected. This does not help strengthen the long-term relationship between the two nations.
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