Soviets, Japan Both Fail to Get What They Want : Diplomacy: Gorbachev unable to win large-scale aid from Tokyo. Kaifu doesn’t regain four Kuril islands.

Badly needing a diplomatic triumph, Soviet President Mikhail S. Gorbachev emerged today from grueling talks with the Japanese with little better than a debacle, having failed by his own account to secure a dramatic improvement in relations or a pledge of large-scale aid for the flagging Soviet economy.

“We are yet to have that breakthrough,” Gorbachev acknowledged after 12 hours of often acrimonious negotiations over the past three days with the Japanese prime minister, Toshiki Kaifu. But in an attempt to put the best face on his first foreign trip in half a year, Gorbachev pronounced himself satisfied anyway.

“Now that we have this accomplishment under our belts, we can talk about making a breakthrough in our bilateral relationship, and we can feel more certain about it at this point in time,” the Soviet leader told a late-night news conference. “But everything is still ahead of us.”

For Gorbachev, whose leadership is now challenged at home by radicals, conservatives and centrists, it would have been immensely valuable to be able to fly back to Moscow with a clear-cut foreign policy victory, as he often has in the past, and that his allies cite as one reason that he must remain his country’s leader.

Tokyo, however, did not give him that triumph. To some who attended, it seemed the Kremlin’s biggest diplomatic disappointment since the October, 1986, superpower summit in Reykjavik, Iceland, when a tentative agreement to eliminate both countries’ offensive nuclear arms foundered because Gorbachev could not persuade then-President Ronald Reagan to place limits on “Star Wars.”

“A cool and detached observer might believe that an opportunity has been missed,” a Japanese government official reflected.

Members of Gorbachev’s entourage said he decided to become the first Soviet leader in history to visit Japan in hopes of ending a 45-year-old deadlock on a bitter territorial dispute and thereby stimulate badly needed Japanese investment, trade and government aid to help arrest the free fall of the Soviet economy.

Japanese press accounts, citing government sources, have said that Tokyo would be willing to ante up as much as $28 billion in exchange for regaining ownership of four rocky islands, collectively as large as Delaware, that the Red Army seized at the southern end of the Kurils chain at the close of World War II.

Despite adding three additional rounds to their talks, which had been scheduled to end Wednesday, Gorbachev and Kaifu failed to find enough common ground to coax the Japanese into loosening their purse strings.

“There will be no economic consequences (of Gorbachev’s visit),” said Konstantin O. Sarkisov, a Soviet expert on Japan who was part of his country’s delegation, and who opposes turning the question of the islands’ sovereignty into a pure real estate transaction.

At 11:45 p.m. Thursday, with the day’s extra rounds of negotiations finally behind them, the weary looking leaders sat down at a green baize-covered table in the Akasaka Palace, the state guest residence that has been Gorbachev’s Tokyo home since his arrival Tuesday, to sign a joint statement hammered out in the talks and 12 relatively minor agreements on matters such as trade fairs and fishing.

After the ceremony, the two men shook hands. Then, in a Japanese gesture called yubi kiri genmai, they locked little fingers--for Japanese youngsters, it is a pledge to keep a promise under penalty of losing one’s finger.

“These meetings will bring a new dimension contributing toward the signing of a peace treaty,” Kaifu declared. For the Japanese, the notion of a treaty formally ending World War II with the Soviet Union is inconceivable until the territorial feud is resolved.

Referring to the 15-page Soviet-Japanese joint declaration, Kaifu noted that for the first time, Moscow agreed to put down the names of the disputed islands in print--Habomai, Shikotan, Etorofu and Kunashiri. In another first, the Soviets also acknowledged in writing that the countries need to solve a “territorial question.”

Expectations had been running high in both Moscow and Tokyo that even if the issue of the islands could not be settled immediately, substantial improvement in relations could be made this week. Within a day of Gorbachev’s arrival, however, it became clear that neither side was willing to budge.

According to the joint declaration, the Soviet Union proposes a partial reduction of its military presence on the four islands, although the Japanese have traditionally demanded nothing less than a total pullout. The Japanese Defense Agency estimates that 10,000 Soviet troops, backed by 40 MIG-23s, are garrisoned on the islands.

The Soviet side also suggests allowing Japanese to visit the islands, located off the northern Japanese island of Hokkaido, without visas.

At the signing ceremony, Soviet Foreign Minister Alexander A. Bessmertnykh handed his Japanese counterpart, Taro Nakayama, 10 dark green folders that contained the names of the estimated 60,000 Japanese POWs who died in Siberian captivity--another legacy of World War II that has hampered a warming of relations.

For many Japanese, even the conciliatory steps taken on the POW issue during Gorbachev’s four-day visit have fallen short. One man detained for three years in Siberia asked Gorbachev at the news conference for a collective apology. In reply, Gorbachev reminded him that Japan and the Soviet Union had belonged to different military alliances during World War II.

The elusiveness of a jointly acceptable formula on the islands question snarled Gorbachev’s schedule badly. Ironically, the Soviet president, who had charmed Japan by saying he wanted to visit in time to see the cherry trees blossom, was forced to cancel a visit Friday morning to see the trees at the Shinjuku Gardens.

“Most of the time I’ve spent here was like being in political detention in the Imperial Palace,” the Soviet leader quipped at his postmidnight press conference. He said he had been so long in negotiations “that it may become an entry in the Guinness Book of World Records.”

Gorbachev on Wednesday warned the Japanese Parliament that foreign countries had a clear stake in helping the Soviet Union, but his words had little visible effect.

Sources said earlier that the Kaifu government was drawing up an aid package of $450 million in loans to help the Soviets repay their Japanese creditors, and investment insurance to spur an inflow of yen into the foreign exchange-starved Soviet economy.

That package, however, was not among the agreements signed Thursday night.

Cautious Japanese companies insist that trade with the Soviet Union will continue to shrink until the issues of loan repayment and investment protection are resolved.

Also Thursday, the Japanese Foreign Ministry announced that the government would begin sending $3.7 million in food aid to the Soviet Union by May. The aid plan, approved in principle last winter, includes 2,000 tons of flour and 50 tons of milk.

In terms of the scale of Soviet problems, however, the package--about a penny’s worth of food for each Soviet citizen--is minute.

Because of the unexpectedly long negotiations, members of the Soviet delegation said they were not sure whether Gorbachev would follow his schedule to the letter today, the last day of his stay in Japan.

Protocol calls for a farewell meeting with Emperor Akihito, but the event had to be postponed Thursday as the talks dragged on. Accompanied by his wife, Raisa, Gorbachev is also supposed to board the Shinkansen, Japan’s “bullet train,” for a side trip to Kyoto and Osaka.

Gorbachev is then scheduled to visit Nagasaki and lay flowers at the memorial honoring the almost 74,000 people killed by the second U.S. atomic bomb in 1945. He then flies to the South Korean resort island of Cheju for a four-hour session of talks with President Roh Tae Woo.