Japan Set to Help Russia Despite Island Dispute

Japan now seems prepared to commit as much as $2 billion in immediate aid to Russia, despite its continued insistence that Russia return four small islands seized after World War II as a precondition for substantial financial support, officials here and in Tokyo said Thursday.

Japanese officials have assured Western leaders that Japan will contribute to an aid package to be announced next week at a Tokyo meeting of officials of the seven large industrialized nations. At the same time, however, they are refusing to give ground on the islands issue.

While $2 billion is far less than Japan can afford to give--it ran a $107-billion trade surplus with the rest of the world last year--its agreement to make even that level of contribution represents significant movement. Previous aid discussions have faltered on the dispute over the islands at the southern end of the Kuril chain.

In the past, Japanese officials have floated proposals for as much as $26 billion in aid for Russian reconstruction on condition that the four islands off Japan’s northernmost main island of Hokkaido be returned to Japanese sovereignty. The Japanese refer to the islands, occupied by Soviet forces at the end of World War II, as the Northern Territories.

A senior State Department official said Thursday that Japan’s participation in the current Russian aid effort represents a significant and welcome concession from Tokyo.

“It was a major point for them to be willing to put to one side the dispute over the Kuril Islands--or I guess I should say the Northern Territories--and go forward with discussion of international aid,” said the official, who insisted on anonymity.

Involving Japan in the Western aid effort is seen as crucial because of its wealth and its geographic proximity to Russia. Japanese participation is also considered necessary to bringing other nations and international lending bodies into the multinational aid program.

President Clinton has asked for at least $1 billion from Tokyo as part of a $5-billion package to assist Russian democracy and economic reform to be unveiled at next week’s meeting of Group of Seven foreign and finance ministers in Tokyo. Clinton announced a $1.6-billion U.S. assistance package last weekend during his meeting with Russian President Boris N. Yeltsin in Vancouver.

Japanese Prime Minister Kiichi Miyazawa signaled Tokyo’s intentions in a telephone conversation with Clinton last Friday on the eve of the summit, U.S. officials said.

Clinton said Saturday before sitting down with Yeltsin: “The Japanese have been very forthcoming as the leaders of the G-7. This is their year to lead and they are leading. . . . And I believe that they will fulfill their leadership role. I’m encouraged.”

A Japanese Foreign Ministry official said Wednesday that Japan’s participation in the fund “would not be inferior” to that of Western nations, and Japan’s largest newspaper, Yomiuri Shimbun, reported Thursday that the Japanese contribution will be close to $2 billion. The money will be earmarked chiefly for support of budding private enterprises and Russia’s energy sector, the newspaper said.

The $5 billion would be part of a much larger package of Western aid to Russia that is being negotiated in advance of a July meeting of the leaders of the seven nations--the United States, Canada, Britain, France, Germany, Italy and Japan.

While Tokyo now appears willing to participate in Western aid efforts, it has not abandoned its claim to the four islands.

On his first full day in office, Kabun Muto, Japan’s new foreign minister, said Thursday: “I have no intention of shelving the territorial dispute” with Moscow or of separating it from the aid question.

Canada, acting with U.S. aid and support, has offered to broker a deal between Tokyo and Moscow to allow more substantial aid commitments later this year.

Yeltsin cannot simply cede the islands in exchange for payments from Tokyo because nationalist opponents at home would use it as further evidence that he had sold out to Western interests.

And Japan’s leaders will not pledge much larger sums in aid unless there is some movement from Moscow.

Muto said Thursday that he intends to raise the issue when Russian Foreign Minister Andrei V. Kozyrev arrives in Tokyo next week for the G-7 ministerial meeting.

Muto said that Japan will provide “positive leadership” on aid to Russia “so that President Yeltsin’s reforms will not falter.”

But he added pointedly, “Unlike other countries, Japan has an outstanding issue with Russia. We should not forget this and I do not think I will change the existing policy.”

The use of Canada as intermediary arises because the United States has consistently expressed support for the Japanese claim to the islands. Richard H. Solomon, who served as assistant secretary of state for Asia in the George Bush Administration, said that the U.S. stance “is very tricky. We can’t appear to be neutral, because our position is that it is Japanese turf.”