CENTER TO KAIFU: ‘HOLD THAT LINE’ ON SOVIET AID

(Washington, D.C.): On the eve of
Japanese Prime Minister Toshiki Kaifu’s
meeting with President Bush in
Kennebunkport during the run-up to the
London Economic Summit next week, media
reports from Tokyo have signalled that
Japan does not believe that it will be
isolated at the G-7 sessions on the
question of large-scale aid to the USSR.

Typically, such a statement would mean
that any subsequent capitulation to the
coming, immense pressure from Germany,
Italy, France and U.S. — pressure aimed
at inducing Tokyo to reach into its deep
pockets to help prop up Mikhail
Gorbachev’s tottering regime — would
amount to a debilitating loss of
face for the Japanese. For
Western taxpayers, such statements offer the
only hope that such a
strategically and economically
ill-advised G-7 initiative can either be
thwarted in favor of direct assistance to
reformist republics or, at a minimum,
postponed pending the construction of
market-oriented institutions and a proven
track-record of structural reform in the
USSR.

Virtually alone among Western
governments, Japan has spurned Soviet
appeals to date for substantial
taxpayer-underwritten credit and
investment guarantees. In this
regard, the Soviet Union’s continued
refusal to meet legitimate Japanese
demands concerning the Northern
Territories, which were summarily ripped
off by Josef Stalin at the end of the
Second World War, have provided a
reasonable and convenient excuse for
Tokyo’s posture on aid to Moscow. Even if
this precondition were fully
satisfied, however, Japan
would be unlikely to accede to Moscow’s
demands for the same reasons that the
United States and other Western nations
should decline to do so:
Premature, unconditioned, large-scale aid
to Moscow center will postpone,
not catalyze, systemic reform and
unnecessarily expose taxpayers to massive
financial losses.

Unfortunately, there is some reason to
believe that Prime Minister Kaifu is less
seized with these problems than are his
experts in the Ministries of Foreign
Affairs and Finance. For example, last
fall, a representative of the Prime
Minister — then-Secretary General of the
ruling LDP party Ishiro Ozawa —
reportedly undertook in a private meeting
in the USSR with Gorbachev to arrange a
$28 billion islands-for-assistance deal.
Unbeknownst to the competent Japanese
authorities, the Ozawa initiative
evidently had the approval of Prime
Minister Kaifu. It is unclear whether the
Prime Minister has learned the proper,
bitter lesson from this experience or
whether he, like a number of his G-7
colleagues, will find it difficult to
resist the temptation to place short-term
political expediency — masquerading
as statesmanship — above long-term
national and Western strategic interests.

Accordingly, the Bush-Kaifu meeting
will be an important, early test of
Japan’s willingness to break with the
past and to begin to demonstrate global
political leadership commensurate with
its economic stature. This would involve
standing by its principles (particularly
those associated with the Northern
Territories policy) and sensible
commercial interests. Should it choose,
on the other hand, to fold under
the so-called “consensus” view
of the G-7 leaders, it will have lost
this historic opportunity to:

• protect the common
  interests of Japanese and other
  Western taxpayers in a
  non-creditworthy Soviet
  marketplace;
• catalyze the genuine
  structural transformation of the
  Soviet economic and political
  systems by withholding
  premature assistance flows;
• save billions in
  additional Western defense
  spending annually that
  would otherwise be required to
  counter the consequences of
  propping up the Gorbachev regime
  and its military-industrial
  complex — a potentially
  major new form of Japanese
  defense
  “burden-sharing”;
  and
• reduce Moscow’s
  capability to continue funding
  dangerous Soviet client-states
  such as North Korea, Syria,
  Vietnam and Cuba.

A number of other portentous
developments are also emerging in the
run-up to the London Economic Summit:

• It is now evident that the
  Center has been correct in
  predicting that large-scale
  Western assistance to the
  strategic Soviet energy sector
  will emerge as the
  “Stealth” agenda item
  for the G-7 Summit.
  Straws in the wind on this score
  include repeated official
  references and press leaks
  concerning the likelihood that
  Western nations will: help Moscow
  center build or refurbish oil and
  natural gas export pipelines and
  other related infrastructure;
  undertake to enhance secondary
  recovery at existing Soviet oil
  fields; expand further Western
  Europe’s already inordinately
  high dependency on Soviet gas
  supplies; and permit the
  Kremlin’s discretionary use
  of billions of dollars of newly
  generated income from the Soviet
  energy sector.
• Boris Yeltsin and other
  ostensibly reform-minded
  democratic leaders have
  associated themselves with
  Gorbachev’s fundraising campaign
  at the London summit and more
  generally have lent vital
  credibility to Moscow center’s
  program of economic
  half-measures. In so
  doing, they have done less to
  legitimize the central
  authorities’ efforts to stave off
  needed structural reforms than
  they have called into
  question their own commitment
  to the urgent implementation of
  wholesale, systemic political and
  economic change.
• Disturbing new evidence is
  accumulating that the
  cease-fire agreement concluded
  under EC supervision last weekend
  in Brioni — intended to
  create a framework for the
  peaceful resolution of the
  Yugoslav drama — is in
  fact being cynically exploited by
  the Serbian authorities and their
  allies in the military to lay the
  groundwork for a massive, bloody
  assault on the freedom-bound
  republics of Croatia and
  Slovenia after the television
  lights of the London Summit are
  turned off.
• Such evidence includes: the
  federal army freely equipping
  segments of the Serbian
  population, including those in
  the Croatian enclave of Krajina,
  with increasingly sophisticated
  weaponry; substantial
  infiltration of civilian-garbed
  Serbian soldiers into key areas
  of the break-away republics; the
  mobilization of over 200,000
  Serbian troops in addition to
  regular army forces to an
  advanced state of readiness; and
  the deployment of mines around
  Slovenian and Croatian barracks
  to which, pursuant the Brioni
  agreement, republic militias have
  withdrawn.