Masaaki Gabe: Why Japan Paid Money for the Reversion of Okinawa

2022/05/13

With the return of administrative rights over Okinawa, 320 million dollars was paid in cash from Japan to the United States over a period of five years. This amount was equivalent to 2% of Japan's foreign exchange reserves of 15.235 billion dollars at the time.

This payment was part of the Japan-U.S. agreement to apply the Japan-U.S. Security Treaty and the Status of Forces Agreement (SOFA) to Okinawa as they were, under the Okinawa Reversion Agreement (signed in June 1971) to realize the reversion (May 1972). Article 6, Paragraph 1 of the Reversion Agreement stipulated that Japan would purchase the civil administration assets of the U.S. administration of Okinawa (roads, administrative buildings, etc., in addition to electricity, water, and financial corporations). Paragraph 2 stipulated that since Japan is required to provide bases to the U.S. military under the Japan-U.S. Security Treaty, Japan would pay the costs when U.S. military bases, which are U.S. assets, were transferred to Japan. In response to this, Article 7 stated the payment amount shown at the beginning.

Reading the declassified Japanese and U.S. official documents regarding the return of administrative rights, it becomes clear that this payment was the result of a response derived by the U.S. from the "hondo-nami" (equal to the mainland) reversion sought by the Eisaku Sato administration at the time. "Hondo-nami" did not mean reducing U.S. military bases to the same level as the mainland. It meant "reverting" Okinawa to Japan—in other words, re-establishing "Okinawa Prefecture." Incidentally, Okinawa Prefecture was established as the completion of Japan's annexation of Ryukyu (1879, also known as the Ryukyu Disposition) and collapsed during the Battle of Okinawa (1945).

Under Article 6 of the Japan-U.S. Security Treaty, the U.S. is permitted to station bases in Japan. Article 24 of the Status of Forces Agreement, which gives concrete form to Article 6, stipulates that Japan bears the obligation to provide bases and the U.S. bears the costs of maintaining them. When Okinawa became "hondo-nami," the U.S. military bases in Okinawa that the U.S. had constructed and maintained would change to being provided by Japan. Consequently, along with the return of administrative rights, the issue of cost-sharing—especially since U.S. taxpayer money had been invested—became a major concern in the U.S. that required explanation to the U.S. Congress.

Since the old Security Treaty came into effect in 1952, many of the U.S. military bases after the 1960 treaty revision had taken over former Japanese military bases. Resistance to the provision of training grounds (North Fuji Maneuver Area) and base expansion (Sunagawa Incident) occurred just as it did in Okinawa. Furthermore, under the old Security Treaty, the fact that Japan had paid part of the U.S. troop stationing costs as defense contributions had also become a political issue. However, after the Korean War Armistice Agreement (July 1953), bases were reduced due to the withdrawal of U.S. ground forces from Japan (starting in 1957), and defense contributions were eliminated with the 1960 treaty revision. Except for Okinawa, the sense of burden regarding bases in Japan decreased dramatically.

In the reversion negotiations, the U.S. devised strategies on "how to return" based on the premise of returning administrative rights. There was no option not to return them, and the U.S. aimed for maximum concessions from Japan. Japan, on the other hand, remained in a state of uncertainty as to whether the U.S. would agree to the return of administrative rights until just before the Sato-Nixon meeting in November 1969. That difference was likely the biggest factor that produced Japan's concessions. To extract concessions in the financial and economic fields, the U.S. restricted itself from making trade-offs with the security field. This negotiation strategy resulted in extracting more from Japan in terms of security. The aforementioned 320 million dollars was one of the concessions the U.S. extracted through negotiations.

Why did the U.S. demand payment from Japan at the time of reversion? The basis for this lay in the Status of Forces Agreement (SOFA).

The provisions of Article 4 of the SOFA are well known in Japan, especially in Okinawa. Paragraph 1 of that article stipulates that the U.S. is not obligated to restore land to its original state or provide compensation upon the return of bases. Paragraph 2 stipulates that Japan is not obligated to compensate the U.S. for facilities or structures constructed at U.S. expense upon the return of bases. This latter point seems less known than the former, perhaps due to fewer precedents. If the SOFA were applied to U.S. bases in Okinawa, the U.S. would be unable to demand compensation from Japan for invested costs based on this Paragraph 2. Before the return of administrative rights, the U.S. needed to reach an agreement with Japan regarding compensation for base construction and maintenance costs.

In those negotiations, while Japan sought to add up individual appraised values, the U.S. demanded a lump-sum payment (quid pro quo). Ultimately, it was handled through a political settlement. A secret Japan-U.S. agreement recorded 175 million dollars for the purchase of civil administration assets and 200 million dollars for "relocation costs and others" for base returns associated with the reversion, totaling 375 million dollars. At Japan's request, the method was set as 300 million dollars in cash installments and 75 million dollars in goods and services. Just before the signing of the Reversion Agreement, compensation for restoration to original state and VOA (Voice of America) relocation costs were added to the cash payment portion, bringing the total to 320 million dollars. The (secret) 75 million dollars not explicitly stated in the agreement was budgeted over five years, increased, and used mainly for the consolidation and integration plan of U.S. military bases. Since then, financial support for the U.S. military has continued under the name "Host Nation Support" (Omoiyari Yosan). The prototype for Japan's burden regarding U.S. troop stationing costs was born along with the return of administrative rights over Okinawa.

Currently, airfield construction is underway in Henoko, Nago City, Okinawa. The "relocation costs" for Futenma Base are premised on being borne by Japan. The origins of this date back to the reversion of Okinawa.