Japan Puts 5.8% Cap on Defense Budget Rise : Military: The ceiling, imposed by Prime Minister Kaifu’s Cabinet for next year, is the lowest since 1961.

Prime Minister Toshiki Kaifu’s Cabinet on Friday decided to slow a boost in defense spending by imposing a ceiling of 5.8% on the increase in funds that the Japan Defense Agency can request for next year’s budget.

Although the move contrasted sharply with the absolute cuts in defense spending that Britain and West Germany are carrying out, it is the first time since 1961 that the limit on the increase in an initial Japanese defense budget request has been pegged at lower than 6%.

Based upon past practice, the final budget allocation is expected to fall several tenths of a percentage point lower than the limit for the request.

The decision will moderate a policy of giving special preference to defense spending that former Prime Minister Yasuhiro Nakasone launched eight years ago. It also is expected to tone down a defense program that the Defense Agency is putting together for fiscal 1991-95.

Although the agency insists that Soviet military power in Asia remains undiminished despite detente in Europe, Yozo Ishikawa, the agency’s chief, accepted without protest Finance Minister Ryutaro Hashimoto’s decision to cut the agency’s request for an increase of up to 6.3%.

“In the midst of the flow of hopes for world peace, is it all right for Japan’s defense spending to stand out (as an exception to the world trend)? How about 5.8%?” Hashimoto said.

“That would be fine,” Ishikawa replied.

It was the first time in years that the formal meeting between the two ministers to finalize the budget-request limit did not produce a heated and prolonged argument. Ishikawa and Hashimoto met Thursday.

Also conspicuously absent was any reference to a need for increased spending to meet demands by the United States, Japan’s partner in a military alliance. Recently, some Americans have expressed concern that Japan might expand its weaponry to become a military power despite repeated its pledges to restrict its armaments to those needed for its own defense.

The maximum of 4.4 trillion yen ($29.3 billion) that the Defense Agency will be able to request is small compared to the $303.3-billion defense budget that President Bush initially proposed to Congress for fiscal 1991--a 2.4% increase in absolute spending.

Kaifu had instructed Finance Ministry officials not to approve defense spending that would “protrude” above other items in the budget.

The Japanese Cabinet also followed through on a promise to the United States to raise spending on public works. An increase of up to 5.5% was approved. It was the first increase in the last nine years, since the Finance Ministry started either freezing or slashing spending on such projects as sewers, roads, airports and other infrastructure to cut budget deficits.

An unusually high increase of up to 9.7% was granted for official development assistance, or tax-funded foreign aid.