Scared Monkeys Discussion Forum

An investigation by the Ministry of Finance has confirmed that the Japanese government deposited $103 million into a zero-interest account at the U.S. Federal Reserve Bank of New York between 1972, when Okinawa was formally returned to Japan, and 1999. Deputy Prime Minister and Finance Minister Naoto Kan has also admitted that there was a secret pact between Japan and the U.S. over the reversion of Okinawa.

At the same time, it has been learned that no documents relating to the deposit were retained on Japan's side, and officials at the Ministry of Finance did not hand down information to their successors. We are shocked at the slipshod management of documents and the lack of responsibility in handling the public's money.

The fact that there was a secret pact made between Japan and the U.S. during negotiations over the Japanese government's financial obligations in the reversion of Okinawa has already been exposed through documents declassified in the United States.

In December 1969, memos were exchanged between Japan's vice minister of finance for international affairs and the special advisor to the U.S. treasury secretary. They stipulated that Japan would deposit U.S. dollars which it obtained through a currency swap into a U.S. Federal Reserve zero-interest account for at least 25 years, with the amount standing at $60 million or the actual exchanged amount, whichever of the two was greater.

Some have pointed out that operation of zero-interest funds would benefit the U.S. The Ministry of Finance, however, has shrugged off this suggestion, saying that while the move could be viewed as providing financial benefits to the U.S., it was in fact meant to offset windfall profits that Japan would receive through currency exchanges, and differed in nature to the regular provision of financial benefits. Nevertheless, when considering that the agreement was made outside the framework of Japan's official financial burden of $320 million under the Japan-U.S. agreement on the reversion of Okinawa, claims that Japan was providing financial benefits to the U.S. cannot simply be brushed aside.

Okinawa return costs probably topped $320 million under secret pact

Saturday 13th March, 04:56 AM JST

TOKYO —

Finance Minister Naoto Kan said Friday he believes the Japanese government paid more than a total of $320 million for costs related to the 1972 reversion of Okinawa under ‘‘a secret pact in a broad sense’’ with the United States.
   
Kan made the remarks after releasing the results of the Finance Ministry’s months of investigation into Japan’s zero-interest account at a U.S. Federal Reserve Bank in connection with the reversion of Okinawa to Japanese sovereignty from U.S. control.
   
The main subject of the investigation was one declassified memorandum of understanding that Japan’s former top financial diplomat Yusuke Kashiwagi negotiated in 1969 with his U.S. counterpart, Anthony Jurich, which indicates that Japan had promised to pay more than $320 million for the reversion.
   
‘‘Between Japan and the United States at that time, I believe there were secret promises regarding the burden going beyond $320 million, which has been stipulated in the agreement on the return of Okinawa, and how other money (for the reversion) should be spent,’’ Kan said at a news conference at the ministry.

The Finance Ministry could not find a copy of the memorandum, signed by Kashiwagi and Jurich, in Japan.
   
The memo, which has been kept in the U.S. National Archives, said, ‘‘The Bank of Japan will deposit $60 million or the amount of currency actually converted, whichever is greater, in a non-interest bearing account with the Federal Reserve Bank of New York acting as principal and agent of the U.S. Treasury.’‘

Declassified documents in the United States have led some experts to put the total amount paid by Japan at the time as high as 685 million dollars.

The Foreign Ministry report released Tuesday has cast doubt on the way previous Japanese governments conducted affairs overseas. The report said it believed past governments had been "dishonest".