Japanese Firms Try to Help Soviets Bolster Economy

Japanese businessmen are extending a tentative lifeline to the ailing Soviet economy even though their government has avoided wider ties pending resolution of a long-standing territorial dispute.

A number of companies have signed contracts or worked behind the scenes to help the Soviets in their herculean task of converting to a market-oriented economy.

“If Gorbachev is ousted and perestroika fails, it will be a very big setback, so some politicians and corporations have decided they must help it succeed,” said Hiroshi Kato, a Soviet specialist at Keio University.

Although there has been no breakthrough in a dispute over a group of islands north of Japan seized by Moscow at the end of World War II, Soviet President Mikhail S. Gorbachev is expected to make a concession on the islands when he visits Tokyo next spring.

“If perestroika fails,” Kato said, “Japan will have to help with refugees fleeing from Siberia. Inflation will become terrible and cause a complete economic failure. And then the Japanese will have to pay even more than now to bail the Soviets out.”

While Japan continues to rule out official financial aid to the Soviets until the islands are returned, it is providing some emergency medical relief.

Major Japanese trading houses and banks are among the companies concluding deals with the Soviets.

Mitsubishi Corp., Japan’s largest trading house, recently signed a $300-million contract to build 18 cargo ships for the Soviet shipping firm Sovcomflot.

Mitsui Busan, another major trading firm, has reached preliminary agreement with the Soviet Ministry of Oil and Gas Industry for two offshore oil and natural gas projects near the eastern Soviet island of Sakhalin. The project will provide the Soviets with offshore oil extraction technology and boost Soviet petrochemical exports.

In mid-November, five commercial banks agreed to lend the Soviet Union $400 million to buy steel pipes and pay for goods already imported from Japan.

Seiji Tsutsumi, head of the Saison Group of retail and travel companies, says he and other businessmen are writing a book to help the Soviets follow the Japanese example of rebuilding after the war.

The two-year-old Soviet policy of allowing 14,000 enterprises to make their own deals with foreign companies without going through the central government has bred great confusion.

“No one knows who’s in charge. In the past, you could depend on the government to back up Soviet firms, but now you can’t trust the system,” said Michitaka Hatori, economist at the Japan Assn. for Trade With the Soviet Union and Socialist Countries of Europe.

Soviet businesses have been told to become self-sufficient because they can no longer rely on the state to bail them out.

Foreign creditors have been unwilling to come to the rescue of ailing Soviet firms, and as a result some exporters have stopped shipments to the Soviet Union.

Estimates of unpaid Soviet trade debts to Japan range from several hundred million to $1 billion.

When Soviet companies sought delays of up to nine months to pay for steel from Japan, supplies were cut off until a partial payment was made, Japanese officials say. Matsushita Electric Co. started requiring advance payment for exports after Soviet buyers fell behind in payments.

Direct trade fell 6.4% in the first nine months of 1990 from the corresponding period a year earlier because of such embarrassments.