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

With the reversion 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). Under Article 6, Paragraph 1 of the Reversion Agreement, Japan was to purchase U.S. civil administration assets for the governance of Okinawa (such as electricity, water, and financial corporations, as well as roads and administrative buildings). Under Paragraph 2, since Japan is stipulated to provide bases to the U.S. military under the Japan-U.S. Security Treaty, Japan was to 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 reversion of administrative rights, it becomes clear that this payment was the result of the response derived by the United States from the "hontonami" (equal to the mainland) reversion sought by the Eisaku Sato administration at the time. "Hontonami" did not mean reducing U.S. military bases to the same level as the mainland. It meant "returning" 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 United States is permitted to maintain bases in Japan. Article 24 of the Status of Forces Agreement (SOFA), which gives concrete form to Article 6, stipulates that Japan bears the obligation to provide bases, while the United States bears the cost of maintaining them. When Okinawa became "equal to the mainland," the U.S. military bases in Okinawa, which the U.S. had constructed and maintained, changed to being provided by Japan. Consequently, along with the reversion of administrative rights, the issue of cost-sharing—especially regarding the investment of taxpayers' money—became a major concern in the United States that required explanation to the U.S. Congress.

Since the old Security Treaty took effect in 1952, many of the U.S. military bases after the 1960 security revision had taken over former Japanese military bases. Resistance to the provision of training grounds (North Fuji Maneuver Area) and base expansion (the 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 a defense share 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 the defense share disappeared with the 1960 security revision. Except for Okinawa, the sense of burden regarding bases in Japan decreased drastically.

In the reversion negotiations, the United States devised strategies on "how to return" based on the premise of reverting administrative rights. There was no option not to return it, and the U.S. aimed for maximum concessions from Japan. Japan, on the other hand, remained in a state of being unable to grasp whether the U.S. would agree to the reversion of administrative rights until just before the Sato-Nixon meeting in November 1969. That difference was likely the biggest factor that led to 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 from Japan through negotiations.

Why did the United States 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 the article stipulates that the United States bears no obligation for restoration to the original state or compensation upon the return of bases. Paragraph 2 stipulates that Japan bears no obligation to compensate for facilities or structures constructed at U.S. expense upon the return of bases. This seems to be less known than the previous paragraph, perhaps because there are few precedents. If the SOFA were applied to U.S. military bases in Okinawa, the U.S. would be unable to demand compensation from Japan for invested costs based on this Paragraph 2. Before the reversion of administrative rights, the U.S. needed to reach an agreement with Japan regarding compensation for base construction and maintenance costs.

While Japan sought to accumulate individual appraised values, the United States demanded a lump-sum payment (quid pro quo). Ultimately, it was handled through a political settlement. In a secret Japan-U.S. agreement, the amount was recorded as 175 million dollars for the purchase of civil administration assets and 200 million dollars for "relocation costs and others" for base returns accompanying 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, restoration compensation costs 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. Thereafter, financial support for the U.S. military continued under the name of the "Host Nation Support" (Omoiyari Yosan). The prototype of Japan's burden regarding U.S. troop stationing costs was born along with the reversion of administrative rights over Okinawa.

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