No. 9 — March 8, 1996

Weekly Review

--- by Barbara Wanner

Further demonstrating Japan's willingness to play a leading role in resolving political crises beyond its Asian neighborhood, government officials in Tokyo indicated February 28 tentative plans to extend to Bosnia-Herzegovina some $500 million in economic assistance over the next four years. Reports suggest that Tokyo expects to offer this aid package at the April 10-11 meeting in Brussels of the Peace Implementation Conference, the body of 52 nations and aid agencies devoted to dealing with the nonmilitary aspects of the December 14 Bosnian peace accord. Political observers suggest that at this stage the Japanese government's willingness to pledge $500 million for the full four years probably will hinge on as-yet unresolved interministerial discussions as well as on decisions by the United States and the 15-nation European Union to proceed accordingly. These analysts suggest, however, that by establishing formal diplomatic ties with Bosnia in early February and dispatching a government mission soon after to explore possible medium- and long-term aid projects Tokyo, for all intents and purposes, has given notice to the global community that Japan intends to be a major player in the multilateral effort to help the Balkan region emerge economically from war.

The $500 million aid package under deliberation would supplement the $20 million in emergency humanitarian supplies that Tokyo pledged last December at the inaugural meeting of the Peace Implementation Conference as part of Japan's promise to play an active role in the reconstruction of this war-torn area (see JEI Report No. 46B, December 15, 1995). The new, multimillion-dollar aid plan also is over and above the $50 million that Japan extended in January to help Bosnians through the difficult winter as well as the approximately $180 million in humanitarian aid that Tokyo has provided over the past three years for the building of refugee facilities and the provision of food and medical supplies in neighboring Croatia.

Perhaps most significantly, an aid package from Japan of $500 million, if approved by the government of Prime Minister Ryutaro Hashimoto, would constitute about 10 percent of the roughly $5 billion that the World Bank estimates Bosnia will need in economic assistance over the next four years. The matter of how these costs should be divvied up among the conference participants, however, has proved contentious, with the United States and the European Union at odds and two Japanese ministries locking horns. European countries have insisted that the European Union and the United States each should shoulder one-third of the estimated $5 billion needed for Bosnia reconstruction, or about $1.7 billion; in this view Japan and the other conference participants would pick up the tab for the remaining one-third of the aid costs. Given that the United States already is bearing substantial costs to keep American soldiers on the ground in Bosnia as one of the leading players in the peacekeeping operations under the auspices of NATO (North Atlantic Treaty Organization), Washington would prefer to hold its total four-year contributions for civil reconstruction at about $1 billion, or 20 percent of the total aid costs.

Perhaps feeling added pressure to offer a strong aid package to compensate for Japan's "peace constitution" and related laws not allowing Japanese military personnel to participate in U.N. peacekeeping operations that are as volatile as the one in Bosnia, the Ministry of Foreign Affairs apparently favors extending $500 million in economic assistance. The tight-fisted Ministry of Finance, however, has insisted that Japan's share of the Bosnia reconstruction costs be at the same level as its financial contribution to the European Bank for Reconstruction and Development, or 8 percent; this would amount to about $400 million. Unnamed Japanese government sources recently suggested to the media that the MOF/MOFA deadlock could be resolved at least tentatively with a one-year aid pledge "while keeping the $500 million figure in mind as a basis for discussions within the government on the total amount of aid for the next [three] years."

Other observers propose that alliance politics ultimately may bolster the Foreign Ministry's case for the larger Bosnia aid package. President Clinton, who has been one of the strongest proponents among world leaders of the Bosnian peace process, will visit Tokyo April 16-18 shortly after the Brussels aid conference to meet with Mr. Hashimoto. Government officials on both sides have indicated that the summit will feature a reaffirmation of the U.S.-Japan security relationship as well as pledges of greater bilateral cooperation on a wide range of global issues. Some policymakers in Tokyo apparently are anxious to have a positive issue to offset recent strains in U.S.-Japan defense relations, aggravated by last year's rape of a Japanese schoolgirl on Okinawa by three U.S. servicemen tried for this crime as well as by pending bilateral trade disputes (see JEI Report No. 8B, March 1, 1996). These officials have argued that Japan must "show its strong resolve to assist Bosnia at the Brussels meeting" to create a favorable atmosphere for the much-anticipated Clinton-Hashimoto summit.

In addition, after recent initiatives in Asia by the European Union it seems to political analysts to be incumbent on Japan to highlight its own position as a global economic power by appearing willing to assume a major portion of the burden for Bosnian reconstruction. The European Union announced February 26, for example, that it would contribute $6.3 million to help finance the modern nuclear reactors being built for North Korea through the Korean Peninsula Energy Development Organization. KEDO, a government-backed consortium comprised primarily of Japanese and South Korean firms, plans to build two light-water nuclear reactors for North Korea as part of an agreement concluded in October 1994 by Washington and Pyongyang aimed at halting and disassembling North Korea's suspected nuclear weapons development capability (see JEI Report No. 41B, October 28, 1994). These new reactors, which will cost approximately $4 billion to build, will provide less weapons-usable plutonium than North Korea's three existing or partially constructed reactors. Japan has pledged $800 million to KEDO.

Prior to and during the December meeting of the Peace Implementation Conference Japanese officials indicated to their European counterparts that Tokyo would prefer that its support for the Balkan peace plan be "balanced" with European assistance in helping to stabilize the Asian Pacific region. Arguing that North Korea — despite the nuclear accord with the United States — still poses one of the most serious threats to regional security, the Japanese government urged the countries of the European Union to help defang and denuclearize Pyongyang by contributing funds to KEDO to ensure that the new reactors get built. Now that the European Union has held up its end of the deal, some experts propose, Japan will be hard-pressed not to be as forthcoming as possible on Bosnian aid. An apparent failure on the part of Tokyo to rise to the occasion would make Japan vulnerable to criticisms that it is ambivalent to crises beyond its Asian backyard. In the aftermath of the harsh international criticism that Tokyo incurred for its perceived too-little, too-late response to the Persian Gulf War (which nevertheless included some $13 billion in assistance but no troops) Japanese foreign policy professionals have sought to guide policy development in a way that elevates Japan's profile on a wide range of global issues. The Bosnia aid initiative appears to fit that bill, but Japanese perseverance on this issue most likely will remain tightly linked to European and American actions in the region.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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