JPRS ID: 10450 JAPAN REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500050026-3
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 83
• Document Creation Date: November 1, 2016
• Sequence Number: 26
• Content Type: REPORTS

APPROVED FOR RELEASE: 2007142/09: CIA-RDP82-40854R040500050026-3
FOR OFFICIAL USE ONL"Y
JPRS ! / 104~Q
13 Apri! 1982
,
- Ja a~ e ort
p p
cFOUO 22is~~
FBIS FOREIGN BROADCAST INFORMATION SERVICE
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00854R400504050026-3
~ xoTE
JPRS pu}-~lications contain information primarily from foreign
newspapers, periodicals and books, but also from news agency
transmissions and broadcasts. Materials from foreign-language
- sources are translated; those from English-language sources
are transcribed or reprinted, with the original phrasing and
other characteristics retained.
- Headlines, editorial reports, and material enclosed in brackets
are supplied by JPRS. Processing indicators such as [Text]
or [Excerpt] in the first line of each item, or following the
last line of a brief, indicate how the original information was
processed. Where no processing indicator is given, the infor-
mation was summarized or extracted.
Unfamiliar names rendered phonetically or transliterated are
enclosed in parentheses. Words or names preceded by a ques-
tion mark and enclosed in parentheses were not clear in the
original but have been supplied as appropriate in context.
Other unattributed parenthetical notes within the body of an
- item originate with the source. Times within items are as
given by source.
The contents of this publication in no way represent the poli-
cies, views or attitudes of the U.S. Government.
COPYRIGHT LAWS AND REGULATIONS GGVERNING OWNERSHIP OF
_ MATERIALS REPRODUCED HEREIN REQUIRE THAT DISSEMINATT_ON
OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE ONLY.
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
FOR OEFICIAL USE ONLY
_ JPRS L/10450
13 April 1982
JAPAN REi'ORT
(FOUO 22/82)
CONTENTS
ECONOMIC
Japanese Economic Aid to East, Southeast Asia Analyzed
(BOIIff TO KANZEI, Aug, Sep, Oct, Dec 81) 1
Vice President of NTT Discusses IN~ System
(SH[1KAN BIRION, 12 Mar 82) ~+4
Mitsubishi, Chrysler To Start Joint Production
(NIHON KEIZAI SHINIDUN, 24, 26 Feb 82) 52
MITI Minister's Request
Starting of Preliminary Surveys
SCIENCE AND TECHNOLOGY
Last 'Offensive-Defensive Battle' Over Converter Reactor
(Masakuni Umezawa; SHUKAN TOYO KEIZAI, l~+ Nov 81) 55
Space Treaties Kept on the Sheli'
(NIHON I{EZAI SHIMBLIN, 18 FFb 82) 63
. Telecommunication L~beralization Examined
- (NIHON KEIZAI SHIMBUN, 18, 19, 2~+, 25 Feb 82) 66
Toyota-GM Tie-U~ for Joint U.S. Product.'_on
(THE DAILY YOMIURI, 2 Ma,r 82) 79
- a - [III - ASIA - 111 FOUO]
FOR JFFICIAL US~ ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850ROQ0500050026-3
ECONOMIC
JAPANESE ECONOMIC AID TO EAST, SOUTHEAST ASIA ANALYZED
Tokyo BOEKI TO KANZEI in Japanese Aug, Sep, Oct, Dec 81
[Series of articles on Japanese economic aid]
[Aug 81 pp 32-37]
[Introduction by Shigc:kazu Matsumoto, director of Economic Cooperation R~~~-
search Office of the Institute of Asian Economic Affair,s]
[Text] Japanese Economic Aid at a Turning Point
Japanese Economic Aid Under Observation at Home and Abroad; Japan Selects Path
of Major Aid Giver
Recently, Japanese economic aid has been receiving attention at home and
abro ad. First, there is the expectation of a Japanese contribution to inter-
national society because of its status as a major economic power. Second,
there is the requirernent for effective economic aid which will help raise
the level of welfare of the local. people and give impetus to true indepen-
dence and progress in the developing countries. Third, ~here is growing
awareness that it is wise to choose the path of becoming "a major nonmilitary
power" (Prime Minister Suzuki) or a"major aid-giving power" as a middle- and
long-term international strategy for Japan.
Continuing from the 1970's, many changes are expected in the world, including
Japan and Asia, in the 1980's. When we compare the economic indexes of the
developing countries of Asia with those of the major powers--the Uni;ed
_ States, the Soviet Union, China, and Japan--there are clearly great differ-
ences (see Table 1). However, if ~re develop a long-term scenario for zhe
world economy, there are at least six possible developments that we can imagine.
(1) Harmony will continue among the advanced capitalist countries. In this
case, international control of trade and finance by the various countries is
likely to grow.
(2) Cooperation between the advanced industrial countries will increase
under the pressure of OPEC (limited protectionism). Tariff barriers, market
" divisions, and the creation of cartels will be employed to prevent semi-
developed industrial countries from joining the ranks of advanced capitalist
countries.
" FOR OFFICIAL USE ~NLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
~ ~ ~
~
d C Q~ n t'1 O a0 O N
+~1 O ~O Vl M 00 N c~1 ~-I N N 1-1 I~
O C ? cV J1 O
y 5 ~ N
C
O
M y~ ~p
l7 'C W
~ 0! 61 u'1 .i .-1 t+1 ~t .i N n .-1 ~D n O~ ~O O I
L w 'i N N .-1 .-1 N I
- L +1 1tl ~O N e�1 ~ N N
y C u
~ t/1 P'1 N O
O ~
N
y ri r1 .i
Y t0 ~T .-1 ~ u1 O ~ ~r1 .t N .~1 I~ N ~D O O
. .-1 .~1 O .d ~ .1 N O~ I~
~
d1 ~-1 O~
61
v 40 O~ N
~1 G
= y Z .i .-i N N O. ~ ~ Y1 .i ~ N 70 f"1 N i-1
~ .i 00 n ri
'C t0
u F
r1 n ~ v~
C q1 N r~ N ~ ~ 1 N l~) O Q~ V1 N v1 1 ~'1
a C Oi f~ J ~7 ~-1 N ~
~O Q~ N N
N ,C
u U
w ,e m ao ~n v
o ~ v
W M M r~ r~ N ~O O ~+'1 r-1 u1 N .~1 N O O O O
'O 2?4 .T .-I CO N 1 V1 .-I N 1-1 N r-1 ~i
C r7 in ~ r~
ttl . ,
~ u eo m ao c~ ~o ~f e~ o~ ~c+
+yi ~ Mo r'1 ~'1 ~D ~ .~1 N e"1 .~1 N .-1 ~/1 V1 P1
6 N ~L
W
0 ~ ~C ~O
~ ; Q O 1N fV P1 ~ O N v1
C v ~ i s i ~�.'~-i
_ u i ~
~ ,a v o ~a r~ c`
~
O RI C a0 .O t~1 n p~
V F~ ~ d N ~ a N N r-I J N M p~ ~ O
00
C ~
0. itl N ~ ~
F 1+ O N N CO O ~O N N OO ~O N N M O O~ pC
_ ; y rl rl 'S'
Ca ~
m a rn ~n o ~
u ~ e fV N a~o ~ rv ~ � ~ ~ a i a
o a .
. w U
I ~
Y1 ~tl 00 l+1 1~ N 1'1 O~
:1 t0 N.~I . N N ~ N1 O~ O~ I O 2
~ ~ N .~1 N N V1 v1 ~ N r-1 1~ ~ N U
~-1 W
~ i ro
~ 'fl a7 t+1 a0 ~1 O~ O O M '-1 N ~ N OD CD N O ~
0p N C ~^-1 N P'1 y
.T N V~
C ~ W
O . ~J�7
U ~q N t.
4 ~0 ~ W
~ O G! Ir .~-1 q M �
~ a~! C L u a~p
~ ~ ~-~i y "O Gl T. 0 +M+ ~ q r-I ~ 00 O u ~
v~ � ~ c~ ma rn a. a~ d ~ ,~a av
w a N N a rn u.-. y ~ n m r~ ~
o~ aw ornw oo ~avrn aa,k oo~i wa~0n, ~pY
C~ O M C O~ ~ Y .,Gy rl ~ ~-I .-I 4i O! +1 > O~-i B 0
O~O .a M w .~1 .-1 CI 0 L . u u ~tl O~0 ~ w 0~'0 ~ H
- ro 'a ~O ~ ~^m o u o~vz mi~ a~i oz m~� a~tli
~ ~ ~1 C9 G U N C7 +-I e 'O ~0 O~ C~ G S
~tl Qi N 8 Y C M 1~+ ~ L W L N N C 61 W
G. q rA C~0 O u i0 .C ~ 0. L w LL w C w ~ I~ ~ O~.C w. t0
Q+~ 7 ~-i ~tl .-1 u 00 v
O~ O ~ J I-1 C I-1 3 rl M ~ N ~ CS. ~ O > r. O L f0 M ~ O 0 a7
G U t L~, ~ r-i ' O O.~ N 01 W 41 6! k oNp O O~ C N Y C! d
u O G. n d u~ 0~0 n~ 7~ ~~0 O N~ 0 0~0 00 ~ ~NQ.~ '3 00 N N
~-1 M :J W�-I O ~r~l O~ 0! L 1~ Cl Y Gl u T u ~C rl .-1 ~O W L Cl L C C~
tC O ~ y U.~1 >.i O~ > C G Ir R u tE ~ u
dv md,.~.~,~a~v~a~~ ~~~'vbb ~
U D t0 u U u U u U Cl O T W C C u U q q W
~ ~ Ol ~O O~ F~ n ttl M ttl 1+ N l+ M Ir 01 N 7
~E i+ O. ~.J O~ fL n t~ R CI O~ r-i M p, .i GI ? C7 N f.ui u M f+ G~ 0..~~1 01 N4 LyL O
O .a Z o~ N,r ~~-1 a! 00 Z CI 6. o. W F l y k~0 a1 v O O rA
F 6 Hw ~~U.-~M~C~a ~oc~av~..y~vfs..r ucti d va
2
FOR OFFICIAL USE 'UNLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00854R000500050026-3
~ FOR OFFICIAL USE ONLY
(3) A new international economic order w~ll gradually be formed. The depen-
J' dence of the advanced countries on the developing countries will increase, aiid
conflicts betw~:en the advanced countries will grow.
(4) An international order will be formed which leaves out the peripheral
areas of the Third World. The elite class of the developing countries will
respond to the liberal movements of the advanced countries, and there will be a
widening gap between the "center and periphery" in the developing countries.
(5) A new international order. will be built through horizontal ties in the
Third World. This is advocated by Samir Amin [phonetic] a radical in the
Third World.
(6) A revolt will occur on the periphery of the Third World. In the assess-
ment of Yale Professor J. Scott, the revolutionary energy of agricultural
classes is apparent. A revolt of Moslem peoples centering on the Moro People's
Liberation Front in the Ptiilippines could be supported by A1-Qadhdhafi snd lead
to the formation of an Islamic alliance.
Of these forecasts of the future, rhere is a possibility that a combination
of (3) and (4) will actually come abeut during the 1980's.
Main Reasons for Reexamining Foreign Aid
When we consider this together with the trend toward multipolarization of
- world politics, what can be expected to happen? The following four develor- ~
ments are possibilities for the foreign relations strategies of the major '
~ powers--the United States, the Soviet Union, ancl China--in relation to the
international politics of East and Southeast Asia.
(1) The United States and China could come closer together and oppose the
Soviet Uni~n. (2) The United 3tates, the Soviet Union and China could carry
out relatively equidist3n~ foreign policies and maintain a balanced situation.
(3) The Soviet Union and China could come together in opposition to the
United States. (4) The United States and the Soviet Union could come together
and isolate China.
The present situation is that of ~1) . Between now anr; the er.d of th~ 20th
cen~ury, the situation may change to (2) as it passes from (1) to (3). :he
Soviet Union has military superiority over Western Europe, and is in the pro-
cess of shifting the emphasis of its world strategy to Asia. China will resist
this and Vietnam will oppose China. The conflicting relationship between North
and South Korea and the strained relationship between Indochina and the ASEAN
nations are placed in this context.
There are a number of reasons for taking fi second look at the aid problem.
One is the North-South problein, the increased mutual dependence of the ad-
vanced industrial countries and the developing countries s~!.nce the oil shock
of the fall of 1973. There is also the complication of the so-called South-
Soutti. ~:roblem in wh:tch a split has occurred between the semideveloped
3
FQR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407142/09: CIA-RDP82-00854R000540050026-3
countries and the very poor countries. Also, international stress has re-
appeared in what is called the "new cold war," the new conflicts in East-West
relations between the superpowers, the United StatPs and the Soviet Union,
because of the problems of Cambod~a and Afghanistan.
"Econami:c Aid" in the Technical Sense
Strong Political Coloring
Ordinarily, when "econom~c aid" is discussed in the United States, Europe, or
Japan, it ref ers to a"flow of funds" to the developing countries f rom both
public and pri~~ate sectors and includes aid, investment and trade. Here,
"economic aid" is essentially something that fulfills basic human needs and
contributes to the welfare of m~ankind and differs from ovprseas investment
and trade by corporations for the pursuit of private gain. Technically, it
means official development aid (ODA).
Official developm~nt aid may f low between two countries, between several coun-
tries or thiough an international organ (such as the World Bank or the Asian
Development Bank). Recently there has been a trend in favor of the latter.
However, under the policies of the new President of the U nited States,
R. Reagan, bilateral aid carried out chiefly for national interest will be
emphasized. Multilateral aid which passes through international organs will
be cut back.
By this means, so-called economic aid will take on a markedly political char-
acter and ref lect the international politics and economic conditions of an era
and the internal politics of each country. Let us look at the example of the
Uni~ed States. The Marshall Plan (aid for European recovery) and the Point
Four Plan (aid to poorly developed regions) which followed ~~orld War II were
_ forms of humanitarian economic aid, but at the same time they also had sig-
nificance as political economic aid to rebuild the U.S.-European capitalist
camp to resist the threat of Soviet communism and maintain a stable supply of
resources and raw materials from the developing countries for this purpose.
lluring the greater part of the 1960's, this aid concept of the United St3tes,
based on international politics, was used to lead the free economic bloc of
Europe and Japan in opposition to the East European and Soviet bloc. We can
still recall that until the early 1970's, in East Asia, American military and
economic aid was given to Korea, Taiwan, the Philippines, Thailand and other
- Southeast Asian countries in accordance with a policy of "sealing off Co~un-
- ist China."
~ven now, American economic aid is one-fourth of the world total. The
- foreign aid axtended by tr~e United States since 1946, at the yen exchange
rate of 1976, has reached the huge total of 123 trillion yen.l What led the
~ U.S. Government and people to adopt ttiis kind of foreign aid policy? As the
debate in Japan grows over whether the present amount of aid to the develop-
ing countries is sufficient, theze is a great deal for us to learn from the
30 years' experience of the United States as a ma~or aid-giving nation.
~
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPR~VED F~R RELEASE: 2007/02/09: CIA-RDP82-00850R004500050026-3
I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , .>k.-~...
I
~
I
i As is well known, the foreign aid policy of the United States was a major part
~ of its overall foreign policy, and it was carried out in accordance with a
~ variety of goals. The following six aid concepts were formed by debate in the
legislature and among the people and continue to be in effect today.2
(1) The moral concept of aid (advocates the giving of aid without reward
from the standpoint of humanitarianism)
(2) The concept if aid for reasons of diplomacy and: security (aimed at
directly affecting diplomatic negotiations and secuY~ity)
(3) The concept of aid for eco:~omic profit (in pursuit of direct economic
gains through the maintenance of export markets and sources of raw materials)
(4) The concept of aid for economic development (value is placed on the pro-
cess of economic development itself)
(5) The concept of aid for political progress (given to achieve political pro-
gress in the developing countries)
(6) The concept of aid for stabilizing relationships of mutual dependence
(given to help stabilize or strengthen internatio;ial relationships of mutual
dependence)
MITI Version: "Present Status and Problems of Economic Cooperation"
At the end of last year, various reports giving the views of the Japanese
- ~overnment on economic cooperation were publish~ci one after the other. T.hese
tentative arguments included "The Present S~atu~; and Problems of Economic
Cooperation (economic couperation white paper), prepared by MITI, and "Th~
Concept of Economic Cooperation: Why Should Official Development Aid Be
Given?," prepared by the Ministry of Foreign Aff airs, 1980 edition. MITI's
economic cooperation white paper points out the changes in the envirornnent
for aid caused by the oil shock. It clearly explains how the OPEC price hike
offensive spoi~ed the economies of nonoil-producing developing countries, as
well as those of the advanced cauntries, causing a split between the oil-
- producing countries and the nonoil-producing countries in the southern Third
World and causing the funds necessary for aid to be diverted to the oil-
producing countries in the form of oil m~_ney. However, the report lacks con-
crete policies for effectively returning the funds from the oil-producing
countries to the developing countries. It does not spell out what Japan's
role should be in energy development aid to nonoil-producing nations. It
lacks suggestions for the coordination of industry in order to deepen rela�-
tionships of mutual dependence. It expounds on the signif icance of large-
scale joint ventures with oil-producing countries such as the Iran-Japan
petrochemical pro~ect for "advance protection from outside threats and harm-
ful ef�ects on the Japanese economy." However, there are many problems in-
volved in Japanese-Chinese economic cooperation as seen in the Booshan steel
plant construction pro~ect in Shan~hai. The report appears to be lacking in
suggestions for avoiding the dangers of large projects and for dealing with
political and economic changes and social instability of the host country.
5
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-04850R000500050026-3
_ Foreign Ministry Version: "T:ie CoYlcept of Economic Cooperation"
In contrast, the Foreign Ministry's "c.ncept" report at~empts to give the
reasons why Japan must increase its official development aid, in both qual-
ity and quantity, even more than the other advanced industrial countries.
It includes official development aid as part of the foreign policy of a
major aid-giving countxy and points out the special features of various aid
philosophies.
1~'or example, Sweden's foreign aid aims at c:e3ting solidarity with the Third
World on the basis of a policy of active neutrality. France is enthusiastic
about spreading French culture and aims at crear,irg a Euro-African community
with precedence gi:ven to French-speaking regions. ~n the other hand, the
foreign aid policy af Great Britain has the objective of increasing the inter-
national influence of ~reat Britain and advancing its national interests
globally by strengthening the unity of the Commonwealth. West Germany, stand-
ing in the narrow defile between East an? West, is attempting to bring about
a lessening of international tension by giving development help to the devel-
- oping nations as well as by pursuing its policy of "Eastern diplomacy" aimed
at maintaining peaceful coexistence with the Soviet Union and Eastern Europe.
The greatest aid-giving country, the United States, as we have seen, has
consistently pursued a policy as leader of the free world of giving aid to
protect the democratic political systems in the developing countries and to
~ maintain the security of th~ West.
In brief, the aid policies of the Un~ted States and the countries of Europe
are backed by humanistic and moral concepts of charity, a legacy of both the
Greco-Roman cultural tradition and the Christian religion. And this is clearly
interwoven into the unique individual foreign policies of each country.
Ttie Foreign Ministry report states that ODA should be given as "part of an
~ overall security policy which contributes to the construction of an inter-
national order" based on "tre moral obligation of rich nations to aid poor
nations" and a"a consciousness of mutual dependence between North and
South." It emphasizes the "significance of aid as a means of diplomacy."
_ Ir. lists four factor~ unique to Japanese concepts of aid: (1) the cost of
being a peaceful country, (2) the cost of be~ng a major economic power,
(3) pi~tection against economic dependence on foreign countries, and
(4) experience in modernization as a non-Western country.3
The problem is that our country's "comprehensive security policy" is made up
of many varied elements, such as foreign policy, economics, military, and
cul.ture, and it is not at all clear where the main concern lies. Judging
from the government's basic policy for next year's budget formulation follow-
ing the sLUnmit meeting at which the U.S.-Japan "alliance" was proclaimed and
the move toward increased defense capability at the working level meeting of
the Security Affairs Committee attended by representatives of U.S. and Japan-
- ese diplomatic and defense off icials, ODA will undoubtedly be included as
garnishing in attempts to go along with the military expansion policy of the
Reagan administration. Even though we have developed a good economic aid
6
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
FOR OFFICLAL USE ONLY
concept of our ownheita~~lofcthe politigiansito~carrynitioutlin the~formaof
a strong will on t p
policy.
Hopeful View of a"Strong Japan"; Fearful of a"Military Power"
In Southeast Asia, the leadersof the ASEAN countries desire a"strong Japan,"
but the co~on people had bitter experiences duriag reat militaryapowerere
remains a strongly rooted fear of J2pan becoming $
Prime Minister Suzuki toured the ASEAN countries in January of this year
and promised that Japan "wi].1 not become a military power." Four months
later, the defense of the sea lanes within 1,000 nautical miles is being
undertaken and an attempt is being made to increase defense spending under
a special account. So suspicions about Japan are emerging once ag~in.
Japan has been criticized by Thailand: "It is a very serious matter to
developing countries if JaPan cuts its foreign aid because of increased de-
fense spending.i4 And there has also been criticism from Singapore: "The
statement that Japan will not become a military power was made only to avoid
the opposition of the Japanese people and the countries of :~isa.i5
This should prove ttiat .lapan could create an effective foreign policy for
increasing Japanese influence in international pol'tics if it could carry out
effective foreign economic cooperation. Because c-~~= this, we should watch
carefully the move among the main policy-determin~ng off icials toward a re-
appraisal of the economic aid policy of the past 20 years, the setting ears
new medium-range goals to.double the amount of aid given in the past 5 y
over the period from 19R1 to 1985 (from $10.7 bil~.ion to $21.4 billion), and
attempts to make the aid more efficient and eff ective.
Turning Point in the Status of Economic Aid
The Japanese System of Separate Aid Organizations
Japanese economic aid is determined and carried out on the basis of consulta-
tion under the four ministries and agencies" council system made up of the
Ministry of Foreign Aff airs, the Ministry of Finance, MITI, and the Economic
Planning Agency. This is a multicomponent aid organization with authority
residing in separate ministries like that of France and Holland. It could
be called a multidimensional aid diplomacy system. In the Western nations,
one can find "special ministry systems" as exemplified in the Economic Aid
Ministry in West Germany or systems in which the aid organs are under the
jurisdiction of the foreign policy organ and emphasize unification of foreign
relations, as seen in the Agency fox International Development(AID) whic:i
administers foreign aid as an appen~.age of the Department of State i:~ the
United States. It is often noted as a feature of Japanese aid diplomacy or
aid cooperation administration that it depends on a system of unanimous appro-
val for decisionmaking. Therefore, without firm policy direction Todessaofr
ship at the top level, it becomes necessary to go through a long p
getting compromises andeachcansa~reementeenlniotheriwordsa theregaretgreatd
justments in order to r S
7
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02109: CIA-RDP82-00850R000500050026-3
obstructi~ns due to the vertical structure of the bureaucracy and the terri-
torial consciousness o:c the various ministries. When this is f urther compli-
cated by factionalist politics and lobbying, there is a tendency to have
"foreign relations turn into domestic relations."6
Minister of Finance Watanabe proposed a reappraisal of official development
aid in the cabinet meeting of 8 May. Raising the example of Pakistan, he
asked: "Should we give economic aid to a country which has the atomic bomb?"
He pointed to further problems of foreign aid: "There are cases where inter-
nal wars arise because of aid." "Often, the administrators who receive the
aid build huge buildings as an expression of power and it does nothing to help
the people." He was indirectly criticizing the results of economic aid to
China. With respect to the problem of govermnent investment in the Saudi petro-
chemical project, he brought up issues that touch on the fundamentals of
policy making. "There is a trend toward collusion of bureaucrats and corpora-
~ tions iahich attempt to carry out foreign economic cooperation projects without
asking for the judgment of the relevant minister." "It is scandalous for
executives at the section manager level to willfully promise aid in the range
of 1 to 10 billion yen."~
What Is the Des3:re of Countries Receiving Aid?
When we consider the status of economic cooperaticr. in this time of change,
the most important thing is to determine what not only the government of the
target country needs but what the common people truly need and what reforms
are necessary in order to carry out the kind of economic cooperation that will
fulfill the desires of the people of the country receiving aid.
Looking at our record of official development aid to developing countries, we
see that it amounted to $3.304 billion, an increase of 25.3 percent over the
previous year, staying in fourth place behind the United States, France, and
West Germany. There was a great improvement in the percentage of the GNP,
" from 0.26 percent in 1979 to 0.32 percent. However, it was still well below
the average of 0.37 percent for countries participating in the OECD Develop-
ment Aid Committee (DAC).8 Japanese foreign aid cooperation became more sub-
stantial in the latr_er lialf of the 1960's. Japan provided large yen loans to
horea, Taiwan, and Indonesia, and overseas investment by corporations grew.
Japan tlius challenged the vested interests of the United States and Europe
and intensified its economic and trade relationships with the countries of
Southeast Asia (see Table 2). Of the economic aid received by the ASEAN
countries from countries in the Western camp between 1971 and 1979, 30 to SO
percent was received from Japan (see Table 3). This results from the tax�get-
ing of "70 percent to Asia" in Japanese aid policy. This offers an e~fectiye
contrast to Americai~., European, and Soviet aid which is aimed chiefly at Gen-
tral and South America, Africa, the Middle East, and 5outhern Asia.
In this way, the role of Japan in foreign economic aid to the coui:tries o~
Southeast Asia is becoming more and more important. The leaders of the ~Si~N
countries are attempting to create domestic political stability by expanding
the political and economic pipeline to Japan. In particular, they are seek-
ing to achieve economic security in all areas, including aid, investment and
trade.
8
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000500450026-3
Table 2. The Position of Japan in the Foreign Economic Relations of ASEAN
Nations
(Unit: percent)
ountry Thai- Malay- Singa- Indo- Philip-
land sia ore nesia ines
Year
Share of official development
aid from Japan in foreign aid 1973 55.7 39.0 15.2 27.6 66.3
1975 72.9 89.9 76.5 37.6 95.7
1977 39.1 41.4 66.7 28.8 16.7
1979 45.9 59.6 27.3 31.5 33.4
Japanese share of private
foreign investment 1973 37.6 10.0 6.0 20.2 l.l
1975 38.5 21.3 13.4 43.0 17.5
_ 1977 34.7 26.7 25.3 39.0 15.3
1979 34.2 24.8~ 16.5 35.6 22.7
Japanese share of foreign 1973 31.6 20.1 14.0 41.9 32.6
trad,~
_ 1975 30.5 17.0 13.6 38.8 31.2
1977 26.9 21.7 14.0 35.4 24.3
1979 23.9 23.8 14.0 40.7 24.8
* 1978
(Source) DAC, MITI, "Present Status and Problems of Economic Cooperation,"
' 1974-1978; JETRO "Overseas Market White Paper," sup~~.~-~?nt "Status
of Overseas Investment," 1974, 1976, 1979; and JETRO, "Qverseas
Market White Paper--Investment Section," 1981 (February 1981).
Prime Minister Suzuki gave a speech in Bangkok on 19 January this year in-
corporating the results of his tour of the ASEAN countries. In it he
stated: "Deepening the friendly relation~hip with the ASEAN countries is a
fundamental of Japanese foreign policy." He announced that the important
_ fields of future economic aid to the ASEAN region would be: (1) development
and promotion of agriculture, (2) energy development, (3) Promotion of job
training, and (4) promotion of small and mediimm enterprises. The evaluation
of Tapanese economic aid by the countries of Southeast Asia is fairly evenly
- split between pluses and minuses, but the ratings of the rulers and the
ordinary people do not always coincide. Some of the possib~e reasons for this
are as follows. The common people of the developing countries have relatively
little opportunity to see or hear about the economic aid proj~~ts where tre
money goes to the building of the social and economic infrastricture such as
_ irrigation, elECtrification, or the installation of water and ~Pwer systems
in rural villages. Even if a project is known to be Japanese, the government
elite are very proud and, while they may advertise their own accomplishments,
9
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R040500050026-3
`Pable 3. Development Aid to ASEAN Nations by the Major Advanced Nations
(19~1-19~9>
(Based on expenditures, in millions of U.S. dollars)
Donor Recepient Indo- Philip- Thai- Malay- Singa-
Countries Countr_ies neaia pines land sia pore Total
Japan ~ount 1,691.2 688.6 502.4 337.6 5$.4 3,278.2
Percent of total 33.4 /~8.9 53.6 56.8 39.7 40.3
United Amount l,�01.0 543.0 1%9.0 26.0 1.0 2,119.0
States percent of total z7.0 28.5 15.8 0.04 0.01 26.0
West Amount 439.0 60.3 102.2 35.4 1~.8 636.6
_ Germany percent of total 0.09 4.27 10.9 0.06 0.11 0.08
Netherlands `~IlOUnt 480.1 19.2 17.8 5.1 1.9 524.1
Percent of total 0.09 0.01 0.02 0.01 0.06
Australia ~OUnt 269.3 44.9 62.1 43.1 8.3 427.7
Percent of total 0.05 0.03 0.07 0.07 5.6 0.05
United Amount 128.2 3.5 25.1 86.0 57.3 300.1
Kingdom percent of total 0.03 0.03 14.5 .39.0 0.04
Subtotal 4,409.7 1,359.5 857.6 533.2 142.7 7,302.7
Total of all aid 5,055.5 1,409.5 936.7 594.3 147.1 8,143.1
t
_ (Source) Compiled fr~~m OECD, "Geographical Distribution of Financial Flows
to Developing Countr~?_es" 1976-1979,Paris 1980.
they will not take a posture of dependenc~e on a foreign country that would
invite anti-establishment criticism (examplES include Korea and the Philip-
- pines).
'Cl~e countries ofSoutheast Asia have expanded employment and raised the income
of their people through an industrializatiori strategy based on foreign capi-
tal and have pursued a development policy of bringing the ripple.effects of
modernization from the cities to rural society. However, the activities of
_ foreign private enterprise appear mainly in the major cities and are more
directly visible to the co~on people through the spread of consumption (food
products, clothing, electrical products, automobiles, etc). The fierce stu-
dent protest movements which occurred in Thailand and Indonesia during the
10
FOR OFFICIAL U~E ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2047/02/49: CIA-RDP82-00850R000500050026-3
visit of Prime Minis.ter Tanaka to Southeast Asia in 1974 were not unrelated
to this "excessive advance" of foreign industry. It was an explosion of dis-
satisfaction with the unequal economic development carried out by the author-
itarian gover:unents of these countries, tha suppression of human rights, and
the instability of life.
_ More Active Research by Local Scholars
In r~cent researchers 3nd scholars of Southeast Asian countries, as
~ well as those of Korea, have heen actively studying and analyzing Japan's
economic aid, private investment, trade, and industrial policies. The re-
sults will influence local politics 3nd the people's view uf Japan. However,
analysis of the economic effects of aid and resedreh on the social and poli-
tical situation by local scholars and even those of Japan are still insuffi-
cient.9
- The economic development desired by the peoples of Southeast Asia includes the
esrablishment of native industry by utilizing local resources and abilities of
local people, self-sufficiency in food production on an agricultural basis,
expansion of employment, stabilization of the international balance of trade
payments, eliminati.on of poverty, and improvement of the standard of living.
Japanese econamic aid to Thailand includes rather large yen loans, and a ~
mutually benef icial, friendly relationship is hop~d for. However, a survey
of Thai attitudes toward Japanl~ (made by Chulalongkorn University in 1978)
showed the following: (1) 45.7 percent of the general populace (45.1 per-
cent in a previous surve:y in 1974) and 68 percent of the elite (65 percent
in previous survey) beJieved that Japanese econemic aid was given for the
benefit of Japan; (2) 20.7 percent of the general populace and 25.8 percent
of the elite th~ught that it was given for the benefit of both countries;
(3) 8.4 percent of the general populace (7.3 percent in previous survey)
and 2.3 percent of the elite (2.0 percent in previous survey) thought that
it was given to help Thailand. So we see that the intensification of the
economic relationship between Thailand and Japan does not necessarily have
a good effect on the perception of Japan by the common people or the elite.
In Thailand, the bureaucrats, intellectuals, and students, those who have
received a higher education, are the most severe critics of the Japanese and,
- oddly, rather friendly toward China.
Strong Claims by the Southern Nations
Tt~e elite of Southeast Asia are mostly products of American or European edu-
cation. The exchange not only of political leaders but also of military
officers, scholars, and ~ournalists has increased the human connections
between the ASEAN. nations, reflecting a shared consciousness. The recent
trend is for Southeast Asians not to lean toward the Umited States, Europe,
Japan, or any particular country but to work together to control the influ-
ence of any major nation, including China, from outside the region and to
establish a relatively independent policy line. At U.S.-European-Southeast
Asian international conferences held in Jakarta and Singapore, strong Third
World claims were heard even from the moderates of the South.
11
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPR~VED F~R RELEASE: 2007/02/09: CIA-RDP82-00850R004500050026-3
"The present international order has failed to improve the standard of living
of the countries of the South. Indeed, the inF:quality in wealth between the
- advanced nations and the developing nations has reache~l a ratio of 35:1. A
situation is being created in which the ratio will reacl-i 45:1 in the mid-
1980's." "In order to promote a reform of the international order, it is
~ necessary for us to participate equally in international policy making."11
- "The failure of American aid to the Philippines is due to ignoring the local
_ society and culture. Eighty percent of the agricultural technology aid from
- the AID was usE~d for salaries and service fees paid to American personnel.
Japan consider�s war reparations to be aid. It offered a yen loan for part
of a trans-Philippine highway and called it the 'Japan-Philippines Friend-
shig Highway."'12
The nations of Southeast Asia are interested in the self-regeneration theories
of Mao Zedong and development policies emphasizing agriculture because of con-
cern about dependence on foreign capital as a strategy for economic develop-
- ment. At present, China has begun to use foreign loans and import advanced
technology and equipment as a metr,ud of modernization. However, amor~g the
elite class of Southeast Asia, there i~ a f irmly rooted idea that it is
necessary to introduce reform in agriculture and among the farming population
and build up small-scale industrial technology using local resources and
manpower.13 Therefore, aid f rom the advanced countries from now on will be
sele~ctively accepted when it is useful in these terms. For this reason, it
is certainly to be hoped that the four-point Asian economic aid policy
_ announced by Prime Minister Suzuki will be put into practice.
The economic and social development of the developing regions of the Middle
East, Africa, and Latin America, as well as A~ia, cannot succeed, no matter
how much foreign aid and private investment is poured in, without methods and
policies which take into account the country's own natural, social, and eco-
nomic conditions and utilize the special features of the region. When the
Soviet Union joined the aid competition in the 1960's, it is said to have
sent Russel snowplows to Guinea in tropical Af rica and to have left cement
out in the rain during the monsoon season ir. Burma.
"Ttie sincerity of tlie aid-giving country depends on whether it plans to f ul-
fill 'basic needs,' help to eliminate general poverty, in addition to aid
for general development programs" (United Nations University President
Sujatomoko [phonetic]). Future Japanese aid should maintain a postiire of
giving priority to basic items for improving the living standards of the
poor common people, such as residential electrification, medical services,
and education, even though the leaders and privileged classes want things
like color television and automobiles. At the same time, privatie funds,
knowledge, and manpower must be mobilized in order to make the giving of aid
more efficient and systematic. Two successful examples of aid in new fields
ttirough a third sector, or through public and private cooperation, are the
ASEAN industrial linkage chart project, carried out jointly by the Asia
Economic Research Institute and the economic planning bureaus and central
" statistics bureaus of the ASEAN countries, and the activities of the Japan
Energy Economics Research Institute in providing technical cooperation to the
Indonesian energy supply-and-demand data bank. Although there is a
12
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000500450026-3
difference ir. tize size and ob~ect of these programs, tney are both given high
marks by the people involved in the partner countries as unique methods of
cooperation irx activities that are f undamental to the formation of important
policies iii the developing countries.l4
In this series we will look at the deep re.'ationship between Japan and the
developing countries. Besides analyzing the character of past economic aid
we will examine how it is evaluated by the recipient countries. Making com-
parisons with the United States and Europe, the kind of aid that is desirable
in the f uture will be discussed in light of present circumstances and econo-
mic plans in the various countries.
FOOTNOTES
~ l. Yu Kawaguchi, "Amerika.no Taigai Enjo Seisa:_s--Sono Rinen to Seisaku
Keisei" [American Foreign Aid Policy--Its Concept and Policy Formula-
tion], with charts, (Institute of Asian Economic Affairs, January 1980).
2. Ibid., section 2.
3. Ministry of Foreign Affairs Economic Coopera~-ion Bureau and Economic Co-
operation Research Council, "Keizai Kyoryoku no Rinen--Seifu Kaihatsu
, Enjo wa Naze Okonau no Ka" ~The Cnncept of Economic Cooperation--Why
Should Official Development Aid Be Given?] (International Cooperation
_ Promoti~n Association, Dec~~nber 1980), pp 76-84.
4. NIHON KEIZAI SHIMBUN, 13 May 1981.
5. ASAHI SHIMBUN, 20 June 1981.
6. Shigekazu Matsumoto, "Nihon no Tonln Ajia Keizai ~njo to So.no Seiji
Rikigaku" [Japanese Economic Aid to Southeast Asia and Its Political
= Dynamics], (Japan International Political Science Association), "Kokusai
Keizai no Seijigauku" [The Political Science of International Economics],
May 1980, pages 65-66. Kazuo Shishido, "Enjo Taikoku Nippon no Sentaku
- [The Choice of Japan as a Major Aid-Giving Country] (TOYO KEIZAI SHINPOSHA,
March 1981), pp 157-158.
7. MAINICHI SHIMBUN, 9 May 1981; YOMIURI SHIMBUN, 9 May 1981; ASAHI SHIMBUN,
23 May 1981.
8. MAINICHI SHIMBUN, 16 May 1981. .
9. Matsumoto, ibid., pp 120-123.
10. "Japan in Thai Perspective," Asian Studies Monographs, No 026, Institute
of Asian Studies, Chulalongkorn University, Thailand, January 1980,
pp 59-61.
11. "Southeast Asia and the World of T~norrow," Center for Strategic and
International Studies, Jakarta, Indones3a, August 1977,, pp 218-220.
, 13
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
12. "Southeast Asian Perceptions of Foreigr.~ Assistance, edited by Lim Joo-
Jock and Christine Tan, Institute of Southeast Asian Studies, Singapore,
in ~ooperation with Institute of Asian Studies, Chulalongkorn Univer-
sity, Bangkok, 1977, pp 172-173.
13. Ibid., pp 172-173.
� 14. Takao Tomidate, et al., "Ajia Shokoku no Enerugi Mondai" [The Energy
Problems of the Countries of Asia] (paperback edition, Institute of
Asian Economic Affairs, March 1981), pp 175-189.
[Sep 81 pp 35-38]
[Article by Noguyoshi Nishizawa on aid to Burma]
[Excerpt] Let us look at the aid (based on net disbursements) given to Burma
by the advanced nations and international organizations. First, bilateral aid.
From 1971 to 1979 the cumulative total of such aid was $743.9 million. Of
this, $256.1 million was in grants ($60.5 million in technological cooperation)
and $477.5 million was in loans. Thus, loans made up two-thirds of the bi-
la~eral aid to Burma, but tr~ countries making th~ '_oans were limited in
- number. Besides Japan, they included West Germany and Canada. Looking at
, the amount of bilateral aid, we see that Japan is far in the lead with
$510 million. Next is West Germany with $108 million. These two countries
together account for by far the greatest part, 83 percent, of the cumulative
total. This may be due to the fact that Burma has a high regard for the eco-
nomic strength and the industrial technological strength of these two coun-
tries and sees them generally as not having p.articular political ambitions
with regard to Burma. To Burma, which strongly maintains a position of strict
nonaligned neutrality, the factor is very significant.
ACter these two countries comes Australia, Canada, and Great Britain with
about $200 million, and the United States and the Netherlands with about
$150 million (cumulative totals). However, some new trends should be noted.
Aid from the socialist countries of Eastern Europe such as Czechoslovakia
and Yugoslavia has greatly increased. There is a dramatic increase in aid
f.rom China, where similar improvements are being made. Although the United
States has been critical of the Ne Win government, it has become concerned
about recent changes in Indonesia and the stability of Burmese politics and
its economy, and it has declared its intention of again providing substantial
aid.
Som~: special features of the aid are that all aid from Australia, Great Bri-
tain and the United States ~s freely granted, and the terms of loans made by
West Germany and Canada are softer than those for loans made by Japan. For
example, West Germany gave very good terms, a repayment period of 50 years
and 0.75 percent interest on the loan made for the Nyanjat [phonetic] Dam
construction project which it co~nitted itself to in 1980. In numbers, the
Japanese share of the grant element (G/E) of total aid is about the same as
tliat of West Germany. However, when we consider the fact *hat there are vari-
ous kinds of reparations and quasi-reparations included in Japanese grants,
14
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
FOR OFFICIAL USE ONLY
~
~
~ we have to admit that the G/E for general aid is quite low. As mentioned
~ p:-F.viously, the total amount of aid given by Japan is much lar~er than that
' o~ any other country, and it is possible to see the poor loan teims as com-
pensaring for that.
Next, let us survey the sp~cial features of aid f rom each country, beginning
with West Germany. West German aid is aimed chiefly at mining and industry.
Some of the main items are a chemical fertilizer plant, the Bassein plate
glass plant, restoration of the Bawdsin mine, a soda ash plant, expansion of
the Heinder jphonetic] t~:l mine, a natural gas liquefaction plant, and the
Chun Choun [phonetic] urea fertilizer plan , Recently, it has reportedly
- placed emphasis.on development of energy resources as well. However, no
agreement has been reached for petroleum development, in spite of the urgent
demand from the Burmese side.
Special features of this aid are a general emphasis on continuity and the
provision of product loans and the care taken not to create obstacles to the
supply of raw materials and parts. gnphasis is also placed on technology
transfer. A technological tlaining center was ope:.a:~ under the No 2 Ministry
of Industry, and technicians and supervisors are ~eing stationed permanently
in Burma to give technological guidance. Also, Wnst Germany has the best
- record in aid related to technological assistance. The total of its tech-
nological assistance from 1971 to 1979 was $258 zn~llion. Canada was in
second place but far behind �110 million).
Australia's total aid of $21.8 million i~ not a vezy large figure, but the
fact that it is all a free grant is an important feature. Tie main object of
this aid is the infrastructure, and in this f ieis, Australia has a long
record of achievement in road construction and ~~pair. In addition, it is
carrying out a rural water supply pro~ect together with U*?ICEF, in agricul-
ture-related projects, it is building irrigation systems and rice store-
- houses.
The aid to Burma from international organizations in the period from 1971 to
1979 reached a~otal of $347.5 million. This was about one-third of the
total amount of aid (the sum of aid from single countries and from inter-
national organizations). The major international aid or~anizations are the
International Development Association (iDA) of the World Bank, the Asian
_ Development Bank (ADB), and the various United Nations organizations. The
total aid from the IDA was $115.2 million, the next largest amount of aid
after that of Japan. Burma went back to accepting aid from the World Bank
in 1973. This aid has continued to increase steadily since that time and
has played a major role in Burma's economic development. IDA aid is mainly
given for agriculture and transportation. These two fields account for about
two-thirds of the IDA aid. In the future, the uses of IDA aid will be ex-
panded to include fishing, mining, and electric power. The loan terms are
extremely lenient. For the Nyan,'�,at [phonetic] Dam pro~ect, which was com-
mitted to in 1980, the repayment period is 50 years, with a grace period of
10 years, and no interest is requ.tred. Also, the amount of the loan for
_ this pro3ect {$90 million) is the largest of any World Bank aid projects in -
Burma.
15
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407142/09: CIA-RDP82-00854R000540050026-3
The total amount of ADB aid is $y6.4 million, a~out the same as that of West
Germany. The special feature of the ADB aid is that it extends over a rela-
. tively wide variPty of fields. In compari.son with the IDA, which emphasizes
aid for agricultural development, the ADB emphasizes industrial fields.
3. Japanese Aid to Burma
As I have mentioned, Japan is the largsst :~ource of aid to Burma, Japanese
aid to Burma began with free financial assiatance based on the reparations
agreement which went into effect in April 1955. Since then, Japan has con-
tinued to provide large amounts of financial and technological assistance.
The total of official f inancial assistance to Burma between 1955 and the end
of December 1980 (based on official doc~nents exchanged) has reached a total
of 311.9 billion yen. Of this, 45.5 percent, or 141.96 billion yen, is un-
compensated assistance, and the remaining 169.98 billion yen is compensated
assistance.
(1) Uncompensated Financial Cooperation
Uncompensated financial assistance to Burma can be roughly broken down into
(1) reparations, (2) quasi-reparations, and (3) miscellaneous aid. Repara-
tions are based on the reparations pact signed in November 1954 and they were
paid over a 10-year period from April 1955 to April 1965. The main projects
for which reparations were used were: (1) the Baloochan [phonetic] hydro-
electric power plant (output of 84 MW), (2) the so-called "old four" indus-
trial projects (light rolling stock manufacturing, heavy rolling stock manu-
facturing, f arm tool and equipment manufacturing, and electrical equipment
- manufacturing), and (3) purchase of machinery and transportation equipment.
The reparations payments were used as follows: 10.4 billion yen went to the
Baloochan [phonetic] hydroelectric power plant, 10.5 billion yen to the "oid
four" projects, and Sl.l billion yen to other projects. The Baloochan [phone-
tic] hydroelectric power plant is still the largest source of electric power
in Burma and it plays a very large ro].e in the industrialization of Burma and
the supply of private electric power. Also, the "old four" projects can be
said to have built the foundations for. the ~urther industrialization of Burma.
lluwev~r, in 197~ Japai~ considered a request by the Burmese Goverrnnent for re-
evaluation of a comparative imbalance in the reparations to Burma as compared
with that to other countries, and a new economic and technological cooperation
agreement was concluded. On the basis of this agreement, a total of 47.34
billion yen in uncompensated assistance was provided over a 7-year period
from Apri1 1965 to 1972. This is what is referred to as "quasi-reparations."
Tt~e main project funded by tY~ese quasi-reparations was an expansion of the
"old four" projects. The amount invested in this was 432.9 billian yen.
Following the reparations and quasi-reparations, ordinary uncompensated
assistance was given continuously af ter 1975. The total of this ass istance
reached 226.3 billion yen by December 1980. This was made up mainly of
general grants and aid for increased food production a 7:3 ratio. Large
amounts came out of the general grants for a biomedical research center
(3.5 billion yen) and a metallurgy research center (2 billion yen). The aid
1.6
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPR~VED FOR RELEASE: 2047/02149: CIA-RDP82-00850R000500050026-3
for increased food production was spent for supply of fertilizer, farming
tools and equipment, and metho3s to increase r3ce harvests. Thia coincides
with the Burmese Goverrnnent's policy emphasis on agricultural development
and enjoys a good reputation.
(2) (;ompensated Financ~al Cooperation
Compensated financial assistance to Burma was start~d in February 1!~69. By
the end of December 1980 the total ~~alue ~f loans had reached 170 billion
yen. Of this, 108.4 billion yen (63.7 percent) went to pro~ect aid and 61.6
billion yen (36.3 percent) went for commodity aid. An interest rate of
3 percent was applied up to the eighth yen loan (excluding the first and
seventh yen loans). After that it was gradually reduced. From 1979 on, the
~ rate was 2.25 percent. The repayment period before 1977 wa~ 25 years and
after that it was changed to 30 years. So the terms of the loans have im-
, proved slightly. However, as observed previously, these lending terms are
poorer than those of other countries and international organizations.
The object of compensated financial assistance is mainly industrial and energy
resource development. In the industrial field, a large amount of aid is con-
tinuously received for the four industrialization projects. The total loan
amount, including both project and commodity loan~, is 45.34 billion yen,
about one-third of the total compensated financia~ cooperation. Aid has been
given continuously for a variety of purposes in the four projects throughout
the postwar period, beginning with the payment of reparations. A production
system was finally established, and certainly a great contribution was made
in such areas as the supply of produets within tlie country, industrial tech-
nology transfers, and expansion of employment. llowever, it is also true that
some problems exist. The first of these is that- because aid has been perpe-
tualized, there is a lack of effort for autonomous progress, and a system that
can pay for itself without aid has not been established. The second problem
- is that these industries have not yet been transformed into export industries,
as originally planned by the Burmese Goverrunent. And there are other problems
that can be pointed out. A great deal of rationalization ex~ending to all
aspects of business operations is required to solve these problems. And from
now on, aid will be necessary in "soft" areas such as management, informa-
tion, and marketing.
Other major industrial projects include construction of a ceramic products
manufactiiring works, the Bagasu [phonetic] pulp and paper mill, a cement
plant, and a rice mill. There are also some energy-related industrial pro-
jects, such as a natural gas turbine power plant (fourth yen loan), the Syrian
oil refinery expansion project (eighth yen loan), and the Man oil refinery.
Por energy resource development, a test drilling for oil was made off the
Gulf of Martaban with the sixth yen loan in 1973. And a yen loan was made in
1980 for offshore oil field development. Of course, this large amount of ~
energy-ralated financial cooperation has been provided because of the in-
crease in the price of crude oil in recent years brought about by the energy
crisis. It.is also due to the fact that Burma has very promising drilling
~ areas, and the Burmese Government is making a determined effort to develop
energy resources in order to export petrole~n and gain foreign currency.
17
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
. .
I ~O a ~ n n o a
~ .�~r a r~ ~ v~ o ao u~ d o0
~ �M
1~ P1 ~O ~O V1 ~O T 1~ C'1 N .~I rl .~1 ~T iJ 7!
f'1 r-1 ~ N .-1 1~ N N N Q~ Q N T O
A 4+
O~ e'~1 O. ~-V t^I 00 1~ N 'C 4)
I~ 1-1 .~i N N O~ ^ u'1 r-i ~t �-1 'O iJ
~ N a0 O .i d ~O . +-I
~ ~A n ~O O CO ~-1 e'~1 Q~ t~ u1 I~ O W ,'a N �
tr1 ~+1 'i .-i v1 ~O rl '-1 ~t N ~ b N
[~1 ~i ~ N
~
u O
a0 ~1 t~ v1 aD M1 ~O O C rl T
_ t~ n V1 ~D 1~ 00 N N Cl u .~1
~ rl O~ O 00 N V1 ul c~1 ~ O~ `o .
M O.
~O O~ ~D O n t'1 I~ N N 1+1 N N N P.
N .-I N ri I f+1 N i-1 rl ~`'1 N '~i U ~
C ~
~z ~
~ ~ ~ ~ ~ ~ s o , .
n ~ v~ t~ .t N1 O v1 ^ y ~
\ N ~D rl N .~1 ~I N O ~/1 ?i ~
~O
~ 1~ ~7' N ~O ~O .T N ~1 00 00 r-/ ~t '~O t/1 y D v
n N .~I 'i I N .1 ~ ~ N ~ ~ .
N rl N M 'O
~ ~3
" ~+1 n ~t ~C 1~ 1~ M
- O pG ~
1~ t~ ~'~1 .-1 O O~ y
~ 1~ ~O .7 O~ V1 t0 00 N N ~ G1 ~
^ s N ~ ~ N ~O C1 1~ r-~ I I I ~
N ~ ~ ~ I ~ .-1 I I I fA
N p O L
u1 U1 ~-1 a0 ~D N v1 O rl u
H
~ ~t O n .-1 O N u'~ C~ O ,G P. 0+
t+1 ~-1 N O O~ ~1 ~1 n O I I I H Cl _
O~ ~ I t~ r-1 1 1 I C7 ~
- ~ r"~ 0 Ol u
t
O N
n O~ rl ~1 N ~ VI .t u W �
- ~ O~ ~O 1~ v1 1~ ~T eV EO ~T V~ v C ~
~ ~O CO N v1 O~ e"1 ~ N I~ O ~ 1 I 61 'G O~
~ O ~ ~
M 'C Gal V ~
u > a v�
P'1 ~O t~ N V1 ?i u'1
f~ ~7 I~ d Q~ ~-1 N y'6 � 01
~ t~1 t+1 O O f~ N r-i T v1 00 S+ N U
~ ^ ~-1 O ' j ~ ~O I ~ ~ ~ I 1 I y~ ~~y F '
.-1 ri N O G +i
7 % W ~
N v1 1~ ~t e'~1 r-1 N ~O ~
1~ ~-1 O .1 .t I~ .Y .i ~ ~ u 'C! C
. ~ ^ .T .1 N ~D u1 00 rl O ~ W 71 C C~tl
n 1~ ~O N Q~ ~O N .-1 1~ rl ~t I I I 7 7 ~0
O O I rl O~ .-1 .-1 I I I N O. ~ M G
L tll ~ C
.~1 ~ .-1 rl rl v1 ~O O a0 ~ 4~i F~i ~ C A
~ r~i a~o u~i a~o ~ v`�i n .i a0 i i i o. a.~`~i a,
rn o o ao ~ri c
~i o ~ o ~ ~ ~ ~ o.~i a~ w
rl .i tn W 0 ~ .
~ ?L ~G ~G oL ~L ~L ~ C ~ o+ ~ u T
r. ~ O ~ .O ~I 1+ ~
~ O O L O O C U O ar ~ ~ ~ ~ T J N
Ki O O C O O O O O C q ~ C ttl p N++
N O G N O O O O O - Cl G1 ~ v N C
. . U ~ U U +~1 _ Ny O Ol Gl .~Ci S
O ~ ~ O O Y+ p O O O O I+ M 9 ' f]. w~cJ +~i ~ 9
w q ~ O O d O O O O O G! d
~ .a o. .i ~ ~ a a .r
N f+ > O
y v v v v v v v v v' v y v v
y v 1~+ u'q M w .
~ O ~ m o~0 u w d
c O w�C v~
' .a ~ w ~ ~ ~o
u u 0 ~D ~ o o~
u q~ u w v ~ppw o~
~ N N p ~ ~ C t C ~v
C P. W L ~ w w u ~ E..~ CI 1~
U U U ~d ~ w ~ v v
W y ~ q 0~1 ~ O 7 O ~1
~ � ~ g y ~ � ~ ~ G ~ dew y~
~O v o~o u u ~ o a~i d S~ w Qr n: ~~~-'~i
aNi m o o ~o aqi ~m a w~ a a �a a ~ c�~ b
pg. w a o� ~~e a L a~v r~ o ei
v U C9 0~4 ~ F ra U a m u
~ ~ C! 1+
r. ~r. ~ ~ r. O r~ N t+1 Lp ~p
~ rl v v ~t V1 ~O I~ CO T r-1 v .~1 �~1 Z N
E., v v ~ v v v v v v v
lU
FOR OFFICIAL USE ONLY
;
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000500450026-3
Table 2. Aid to Burma From Advar.ced Nationa and International Organizations
(1971-79) (based on net dis~buraements, in millions of dollars)
L. - IC A. ft I~ R M
3' 4 .5T6' 7 8 0~ 1112 13~1 I ~
- ie.e ~.o ~.r ~.o o.~ - - - - u.~ - - z~ a.r a.s
r ; ~ o., ~.o o., _ o.. - - - - _ _ _
1911 � 9.9 6.5 - - - IS./ - - - - - I5./
t6.7 .~.5 1.2 !.i 1.0 0.1 J!.! - - 7.7 - 2.1 /0.9
~p } IE.O 1.i 1.{ 0.6 1.0 0.1 = 0.2 = 0.1 21.7 = - I I.l = I.l , 1A.)
ri~.~t~Nfi/; 1.7. 1.7 0.~ 0.1 0.7 � 0.1 - 1 1.1 l.l 1.]
IL i t 1~
'
t-" II.B 7.I ^ - I_ - 1.1 - - - 16.0 = = I- _ - If.J
f ~r N e IS 0.6 t.o a.t ~.1 o.i - o.~ ~o.o I i~.?
N' ~r 11 / 1.5~ 1.1 l.9 � 0.1 - 0.1 � � IY.! - - I 7.9 ].9 2] "
197J 1 FiI~Nlx/l ~ 1 i 1 S 0.1 O.I � 0.! - ~ � � � _ ~.1 = 1 = ~7.9 - J.Y !.0
~ - '
IR F 11.9 7 5,~ . -
-'f Sfi.] S.f 1 I 1.9 � 0.1 I_7 P.l . de.i - 7.9 _ !.0 . 70.~
,i - -ia.~ ~ o ~.o i.~ I . � ~.s - � � ~ o.i ::.T-T-' S.6 - '+.6 n.e'
. ~ . . e.i - - s.i - s.e ~:.i
I:-~~e~nr4n i.s~~ n 1 0.~ n.x i~ ~~.s �
tvt~ r`ia rc ~i.a ~ ie - -o.t - - - ~t.e i.q - ~ i.9 io.v
~ I ir if ~R./~'-6.E . 1.0 I_] ~ � 1.5 -D.! . � � 0.1 59.9 1.9 - ~ 5 d - 7.5 67.{
- i~ ie.~ >.o os t.a . o.t . 7~.t - I-~ ~o.o I o.: !
io.: I 7~ i
L~ i:Krt;f] 2.] 1.1 0.9 O.l I.0 - ~ � 0.1 � 6.5 1.5 I 8.5 13.0
197 i ~ .t- 5.2 0.9 - ' ' I- -0.! - - ' S.Y IS.9 I] 0 - - 1!'9 71.8
_ ~y~ 1~ ?I.M1_I 7.0L
~.0 N0.5 1.0 -O.t 0.1 � I 79.U~15.9~1.0 i I0.0 0.7 7Y.1 5~.1
'':~-~j' IS~~ f
s.~ I i.e . i i.s o.~ ~
u
i T~s.st----I o.~ e.u o.s e,t a~.~
I 0:/ !�6.9 - 7.7 11.1
19i6 ~~~Itn~41i1~ 1.1 ,_7y 0.6 O.I � 0.7 - ? O.I i O.t 10.1 - - _
~I 7: ~0 -0.7 i 0.5 0.~ 11.7 IE.7 5.7 I I l1.6 7e.7
-i +7..1 5.7 ~ 7.! l.8 � 1.5 0./ � 0.1 ~ 0.2 7i.~ 1l.7 5.1 !.9 0.9 ]l.7 71.0
-"!t I...-Il.l S.l 1.~ 9.0 ?.I - 0.7 0.1 i 0.1 1+.0 - 1 0.~ T.7 0.6 9-l /LI
Lr,~~~+3~1 r I.1 7.5 0.] 0.1 - ~.6 - O.l 0.1 I O.I 6.3 - 0.1 7.T - !.5 I/.7
11777 ~k__-F --r' 9.: 6.0 /.1 - - 7.5 - - - 72.5 19.] i!.9 I- 9.7 77.9 e0.1
1h I 10.n 9.u 4.1 ~.S 9 o f.7 l.S. 0.7 0.1 O.t 5/.7 19.3 I 9.6 7.l 10.] /6.9 101.6
; 1L ~r ( In.6 1.tl 6.7 :.S t.0 S.! = O.l 17.7 09 q.5 = - - - IIJ 9.A
' 9.1 V.e
:~7e (.ir.~:Y.tin! s.~ ae o.a a.i _ 0.7 a_t o.~ 0.7 a.o _ - - -
~ n i�ii.i -i:.o a.s a.a . s.s ~�i
? ~as.v ito.-i
~ - ._~;,i+ a ~s.x a.t t.t z.o s.a o.i o.t e.i c; s xs.o si.e o.9 s~.s ui.t t~.o
7 � ~u.o i:s - e.o o.i o.e ~.o sl.s _ a~.: ~e.i
i:.ilN~itl 5.0 0.1 0.1 - l.] - - C.8 O.l 1_t - - ~ - - 19.2 70.9
~ t~ iv ' ~ - -o.~ - - to.o ~ ~ o - - - - ei.i zer:s
_ c ue.a n.~ - 0.9 - .
' ~N re'o st.a - ~.o -o.~ o.t o.e u.o ~ ai.t a~. e a x z s. 9 i a ~s r
f ~F iN.9 25_! 91.6 15.7 11.0 19.0 - 0.7 11.~ IO.S 266.1 - - 7f.] ~~1_/
r:I-7i r~
~ ~t,~'al~ 7.7 75.E ~.d 11.0 - 1.P - O.f 1.0 1.2 10.3 = - - - 69 6 110.1
R R 765_~ lt.1 - - - ~.7 - - 15.3 /7T.! S6V.] t 7lan for the fiber industry,
and expansion of exports through increased construction of export-processing
regions and expansion of preferential loans for exports.
Loans from the World Bank to the Philippines, perhaps partly because the head-
quarters are in Manil:a, have increased rapidly in the last few years. At the
end of 1980, there were 46 loans to the Philippines from the general fund. and
7 from the development fund. The loan amount included $1,067,050,000 from the
general fund and~ $6~+.3 ~~~illion from the development fund for a total of
$1,131,350,000. Ther.e were 34 instances of techn logical aid totaling
- $5.91 million. In terms of the total loans to a ~articular country, 1980
was the first year.that the Philippines moved int: first place, ahead of
Korea, which got $1,17~,030,000 [sic]. The average terms of the loans from
the general fund given in 1980 were a repayment period of 21 years (3.75 year
grace period) and an interest rate of 8.8 percen.t. For the loans from the
development fund, the average canditions were mu~:h more lenient, a repayment
period of 40 years (10-year grace period)and an interest rate of 1 percent.
Breaking down the loan proposals by category, we find that the largest amount,
19.1 percent, went for electric power. This was followed by 18.7 percent for
ind~stry, 15.0 pP'r'~Pnt f~r water supply, 7.?_.7 percent for roads, and 11.3 per-
cent for irrigation. Thus, these categories made up 76.8 Fercent of tl~~ ~otal.
3. Japanese Aid
(1) General Co*~ditions
_ Japanese economic assistance to the Philippines goes back to the reparations
agreement reached in 1956. Japan paid reparations over a period of 20 years
up to 1976--$25 million a year for the first 10 years and $35 million a year
for the second 10 years, for a total of $555 [sic] million. This was the
largest amount of reparations paid by Japan to any country. It was almost
twice the amount of reparations paid to Indonesia, Burma or Thailand. The
reparations breakdown by purpose was as follows: 65.4 billion yen for public
utilities, 49.57 billion yen for transportation and communications, 30.07
billion yen for manufacturing industries, 12.85 billion yen for agriculture
and forestry, 9.32 billion yen fur medical equipment, and 22.99 billion yen
for other fields. Thus, there was a broad range of items procured with the
reparations, and they played an important role in Philippine economic
29
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPR~VED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
development. For example, 29.2 percent of the foreign currency financial
sources ($498.98 million) f~,r goverr~ment infrastructure investment in the 4-
year period f rom 1972 to 1975 came from reparations.
The aid up to 1960 mainly consisted of reparations and technological co-
operation. However, in the 1970's there was ~reatdiversification of aid,
including compensated f inancial assistance, such as yen loans and deferred
payment exports of Japanese rice, and uncompensated aid, such as cultural
grants and food assistance (see Table 2). Technological cooperation was
still included. The first compensated form of aid was the joint loan from
the Export-Import Bank of Japan and 13 city banks agreed upon in 1969 for
the Japan-Philippines Friendship Highway. Following that, Japanese yen loans
began in 1971, and nine yen loans were made between then and 1981.
Japanese aid to the Philippines on a bilateral basis became the largest of
any country, exceeding that of the United States, in 1972. The record for
1979 (based on expenditures) was $89 million, or 52.3 percent of the aid re-
ceived from single countries (see Table l), The 1979 aid included $5~.25
million in government loans, $31.91 million in grants, and $17.65 million in
technological cooperation. The uses of the eighth yen loan are shown in
Table 3. A loan agreement for the ninth yen loan, 42 billion yen ($187.11
million), was concluded on 9 June 1981, The loan will be made under special
terms, a repayment period of 30 years (a grace period of 10 years) and an
interest rate of 3 percent. It will be used for the following seven pro-
jects: (1) the Negr.os southern geothermal power generation project
($48.1 million), (2j t?ie Northern Luzon power generation network project
($33.9 million), (3) the Isabela Bay special wharf project ($33.7 million~,
(4) the second Japan-Philippines Friendship Highway pro~ect ($28.1 million),
(5) the first Ilocos Norte Province irrigation project ($22.3 million),
(6) a power transmission line construction pro~ect ($20.5 million), and
(7) a consulting service far railroad rolling stock and facilities ($510,000).
(2) The Status and Evaluation of Assistance
_ As we have seen, Japanese aid to th~ Pliilippines has been the greatest of
_ any single country. Because of this, Philippine expectations of Japan are
great. However, wi~ether or not Japanese aid will be used ef~ectively is a
separate question. The amount of USAID aid is less than that of Japan, but
USAID has a regional office in Naga in addition to the Manila off ice and a
permanent staff there. It has 159 staff inembers, including Filipinos, in
its Philippine offices, and they are engaged in administering detailed as-
pects of aid activities. In comparison, there are only two people in the
Manila office of the Japanese Qverseas Economic Cooperation Fund (OECF), and
they are overwhelmed with the daily workload. If there is to be truly effec-
_ tive aid to a particular country, it will be necessary for a permanent staff
to be continuously committed to a project from beginning to end (even after -
completion of the actual work) of the pro~ect. From this standpoint, we can
say that the size of the Japanese staff is far too small, and a system for
effective aid administration has not yet been established.
30
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00854R000500050026-3
iE ONLY
The Philippine Goverrnnent has requested several things concerning aid. The
- completion of projects is constantly delayed because of a shortage of domes-
tic currency funds, so it is asking the aid-giving countries to take a share
of the domestic currency burden. It wants a reduction in the excessive time
required from feasibility studies to campletion of projects. It also wants
to eliminate the restrictions on orders for equipment and materials connected
- with aid. In response, Japanese aid at present has been made to cover 30 per-
cent of the local currency burden, and procurement is now generally untied,
_ unlike the situation before 1987. So improvements are being made which are
gradually meeting the desires of the local government.
- The period necessary f or project evaluation varies with the project, but
usually a period of 5 to 10 years is required. Japanese yen loans to the
Philit~pines have a,short history, having begun in 1971, and they have just
reached the stage where evaluation is possible. Unquestionably, this eval-
uation isessential r.o making Japanese aid effective in the future. Prepara-
tions are now being made at the Institute of Asian Economic Affairs f or
evaluation of Japanese aid. The evaluation o~ork is scheduled to begin next
- year, and good results are hoped for,
Table 1. Aid From F'oreign Countries to the Phili^pines ~ 1970-1979
(net disbursements) (in millions of do] ars)
- _ ~---_r---~_ ~ ---~..~_-r"~`_=---
Bilateral 19'0 1971 1972 I 1973 I 1974 I 197~ ~ 19iG_I 1977 I 1978 1979
- 1 1 ._..L_ L J
Japan 19. 2 29, fi 103, 5 lh]. F~ 73. 3 70, 3' 75, 5I 30. 6I 66. 5I 89. 2
United States 19, 0 30.0 97, 0 69. 46, 0 G3. U 60. Oi 86. OI 67. 0 5~1. U
West Germany 2.1 1. 8 7, 9 1, 0. 2 9,1 8. 2 'l, 5 10. 3I ll.
Australia 0,2 0.~ 1.7 1: ~ 5.5 8.1 5.5~ 7,9 7.2 7.G
Other countries O, g 2,1 2. 3 5, 2~ 7, 9~ 9, 6 11.8~ 11. 9 73. 7 8. 6
Subtotal 41, 3: 63, 7 156. 4 213. 7~ 132. 9~ iG0.1 161.0~ 193. 9 164. 7 170. 4
Multil teral
IBRD~IDA 10, 5 1G. 3~ 9, 9 27. A 38. 5 86. 9 90. 2 92. 7 143, 5 187, 9
p2. 0 2. d 2. 9 0. ti~ .'l6. 5 A2. 3 94. 7 28. 3~ Q6. 7 69. 7I
U~P 2. 6 3. 0 4, 5 ~1. 0~ 4. ] 4. 3~ 4. 1 3. 6 5. U 5. ?
IMF i - - - I ~ - - 19.4 59.7 60.6
Other organizations A.8 5.5 3. 9~ 22, 6~ 25. 7 6. ~ 4.8~ 6. U 10.3 14. 1
Subtotal _13.6 27. 2I 20. 7' 54, S~ 9^., 8 140. 2 143, 8~ 150.0 21'l.8 338. 0
To tal 90,'J 177, l~68, 1 2'L7. 7 300, 3~ 304 8~ 293, 9 377, fi 508. 4i
I I ~ � I
. . _ _ _ _ _.~.i.. _ _
- X Bilateral aid includes only ODA. Multilateral aid includes other forms of
aid in addition to ODA.
Source: Compiled from OECD, "Geographical Distribution of Financial Flows .
to Developing Countries," 1978 and 1980 editions.
31
FG~R OF'iFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850ROQ0500050026-3
~ ~ ~ ~ ~
o � i i '~o
~ c~ ~ ~ ~ a~i~ a~i 1~ ~ a~ ~
i ~ ~ H�~~aqv~v~~q~a~ u cd
~o u N~ v aa v~�~ aq ~ u~
~ w ~.~?i ct1 N�rl r1 c0 q m�r~l .-i f~+ q
V b01~ r-1 r-i r-I
R) �ri rl ~ V1 rl ~~d i.~ ~ Gl ~ F+ td ~N
v Q b0 U.L" ~ f~ N~ N 4-~I N~ ~cd
~d v a~i u a' ovo ~ v,.a a v.n u�~
q o.~C ~ m a1 v~ a~�~' r-~i ai E-+
0~^ cd CL 1.~ L'+ R1 .C ~-I o�rl r-I cd N F+ b0 N
O ~ t3 a.r ~-I rl ~ O�rl 41 �rl a~ p N R1
'd ~~O ,I.~ y.~ 1.~ CJ O TJ Q' U-~ .f,' ,'a~ �rl U ~-I
N ~ ~ ~ ~ ~d ~ ~ ~ a~ a v ~d ~ ~ ~d
a~ ~n o0 0 ~d ~n a~~+ ~ s~ t~
~ q ~ ~ ~ ~ v o cd cd �~I N ~
cd cd �ri
a~.~ m cd r-~'i �a N b ~ ~ r--i ~ q ~ v�1i ~ ~-~i
o ~ c ~ s~ cd ~ ~ ~ ~ G o ~~v ~do a~ ~ ~
~ ~ a o v~+ a~ a~ o v�~ v~�~ p a~ ~n q�,~ u
z ~ oR w W cA v~ D, z~, t~ p q cd a) ~ Rf a~ �rl
C7 ~ N ~ ~ ~
~ h W ~
a
~ v a
- u o ~
~
~ ~ �1 G�,~ a~ ~
~o u ~ .a' ~ � N
G W N~ U ~ 'U N ~ LL n ~-~1 ~q ~~rl ~ r~-I ai
~ a~vo .u ~ api a~iaa, '�OO a'v~ u
~ v a o ~n c~ c~ gv ~n ~ a~ ~ c�r
41 O ^ v r-I ~
In ^ td Cd r-I al Ul ~ U f~ O~
~ a`~i p' a~i ~ ;-~i ~v ~ ~-i a o v
~ ~ ~ o 4., ~
~ ~n o.. ~-1 ~ c~u c
i a~ ~ c~n � ~-~i o c~d
~ ~ ~ ~ m~.~i ~ ~ ab +~i bp ~ v~i
~ U
~~3 r-I N 4~ i-+ x ~ G~ N�r~-I q~1 u 'y
�r~l !n U w O N~t-I t~ ~ ~ O r-I ~Nj~ U V~' N a0 ~ r. r. ul
G4 +.1 al O.~ a) L+ �r-I ~ c0
F'+ L+ ~rl N U�}~ ~ ~ [0 N v ~
~rl ~ ' .C v G N O ~ 3~+ 00 H~ G O cd cd O
~ N O LL U~ R1 ~ i-~ R1 �rl �rl t11 1~ 'U R1 �rl u U U �rl
~ a ~n ~ a ~ ~ ~ ~ v ~ oo
~ a ~ 3 a cd o~ N ~n u�,~ o m s~ ~n u
(J~ U tA ~'Li ~ �rl ~-I 'Z U .o u) F+ cti r-I Ul ~ ~
N't7 F+ W ~.~i ~ v O ~ U y�~ ~ ~ R1 O�rl O 'b
f3~ C) G' O 'L1 R1 fn G' N c~A H.r~j ~r ~ U ~~-1
q~ +~v,m+~~ ~ G w~~ a~a~a~ Ga~ ..[u~ q a
o~ cd i.+ ~-1 q~ w ct1 0p ~ ~J i-+ D, v v �rl f-+ u a) �rl u1 cv
~ U ~ G~1 a~ ~ u~ q~~ F~ f~ ~ Rf H cVd L"+ ~ O
~w ~o~a~ a~ ~ oG~ v~+' vwu-~ cd o
'J r-I ~ ..C O O G' �rl O O ~ OJ tA O N 4-1
~ a v a a~ ~ ~d a~ ~n ~d
o o g ~r x ~ ~ ~ on ~ ~ ~ ~ ~ a v o 00 c`~d b
o w a~ ~ ~ ~ ~ ~ ~ a~
~ o ~ " ~ a a ~ .a ~ ~ w ~ ~ ~ ~ o ~
Q1 N td Ql 1.~ b~ ~ 1J r-1 ~ O O 1~ O O O ~ri ~ FI �rl b0 .'y O Ol
~ 0p a ~f q a a u ~ u o o p � ,n ,n a �J ~.r w
41 G N tt) O'7 O ~d N.C r-1 ~C R1 r-I N N F~+ N G~l q F+ ~ ~ p
~.~dC fx cJ .a 4a U a a a C~ pa v v v H~ C7 H~ri U H
�rl U~
u al q
a~ o o G o o o
01 ~"i �rl N N ~ ^ ~ O ~ O~ 00 I~ O ~O
~7 1~ O u"1 r-I O
c~'d Ul ~~rl 4~ ~ N N 00 i-I I~ 1~
~ ~ ~ O r-I v N
~-j v
~ O~ r~ p
. n
N N p~ f~ 1~ 00
(d r-I ~ O~ O~ � �
r"'~ ~O N ~O 1~ ' ~ ~I ~i r--I U
~ O~ O n
F ~ rn rn ~ ~ 1~ GO I~ ~ ~
ri ~-1 r-I r~-1 r~-I r~-I '-~i ~-~I r-~i H v~i
;
32 ~ .
FOR OFFICIAL USE ONLY
~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000500450026-3
~
ttl T rl � G
v � ~
~ ~ D ~ O O1 u O 01 r-1
~ ~ ~ u
.n C rn t~+ ro . aui u~' ,~i N
Cl . c, ,.i C 8 ~
C p~ ~
ttl ~ � y . v~ C.+D 3+ L N ~0 M O M
T~ v u U N U 6. 01 ~-1 O v
0~0 N ~.al GJ U N C~ p C! .C .~1 h C
!'Q tll lil Cl y Q v1 ~0 Y M M~
~ y O C Ol RI U
T +1 ~ ~ +i O v
3,: � M~v a?�~ ~ ~ a ro a e oo i m
a v o.k o a v owMw o
C.-1 .i t0 A O ' rl rl .C N'i O v v
~ T~ Uup pW AU M T DG'du F
G. O N W W TI V ~J ~ SJ Gl O N C
F+ TJ rl O ctl
M ~ ~~-1 N 7) V1 L 0. M L
00 r1 00 rf ~ N +1 t0 r-i U~ LL
v~) ~n rl v C 00 rl vd O C ~ L1. :Q J 01 ~
a 'D �.d u �G N 1+ .-1
- ~ A ~ 7 c0 a0 ,~~i a F~+ u G N M u m O. 3
Q pp ^ ttl C! �^7 'Sf .-1 G.' 7. O
~ y v 4+ G C tl O1 *i O C 7 O 11 W
�~-i c�~ aGi a�'' v~ T �u ~ w a `d M ~ co u
n ~y g ~p w ~
A 13. +~I OM! N O O 4S Oyl q ~0 C C u
G N C7 rA e0 ar u'O ~.i O+I C Gl 'C N~0 U
��i G O R 3 7 U7 tti .ti q .-1 t0 +~1 9 ~ ~-i T,`[', Gl C
0. O u O ~ y 1.~ ~~..~j O w Oy! G> O 7 N C C d O
"y N ^I ~1 L 'O d A .-1 H U +i O ~ A Q O i+ O 'i
~-ui A ~ ~y y q JJ N O la W N,-~ Ol Ir
etl q 7 T N T D N LY T r~ 00 ~-1 t't7 T
a'~, Li ,w-~ u� o~oo o v ~ a u a w b w ~e ."~n o'~ ~
a H aui ~ q a v~ ~ a ~p y c a~ ~p ~ p~np c.i w a 6
~ "~i U~Ol U Z~~'+'C a.O H U W N "'rol N U t/~J U~ W 6 U
,L .~L
u ~y G
~ y A A
71 r~l N T
61 L N
~ M ro ~ ,i
u
u
cl Y
b ~ o `a~ ~
.a g ~
~7 6 h~ W
I V ~
M ~ O ' ' ' ' C ' ' 7 ' ' ~
W
W
O ~
L L
C m C ~n
. O ~1 N y N v1 v1
~tl 1~ U ~-i U'f ~!1 N N N V1 N N N N N N
~ C G~ vf c~t t'1 t+1 P'1 e~1 n1 F1 c"1 c~1 .t M c~7
ro d ~
a
w o aWi
q a~i w ai
O. C v W L ul n n r~ n r~ ~ ~ ~ n r~ n v
~ ~ (y ~ v v v v v v v v v v v
^7 9'7 N N O~ O O ~t1 in in v1 u1 i!1 u1 ~n ~t1 v1
T M~~ .~1 N N N N N N N N N N N N
,c a w w
~v x" o. 00
v ~
~ C
+i y
> W
M ~ ~ N O~ V1 CD N CD
a~ g,�~i o~ n~i ~ n r`~. ao o..i o
N 7 ~-1 .-1 .i N .i d O F1 V1 ~ I~ V1
.~.1 ~ v ~ B ~Y./
v u
U C ~O r~ O r~ ^
~ W Ol .i N .~I N N n ~
~ g N I I I I N N S ~ N~ ~
~
A G! O! N .~~1 ~ ,-~i ~O N n a~ O~ r1
u tr ~ ~ ~ ~ ~
~0 Q~ i-1 N f~1 ^
~ t] d ~O n n n_ ~ ~ _ _ n ~ ^
61 4
~ ~ ^ ^ ~O ~
L t0 ~O 1~ n ^ ~ Q` - T _ ^
N N .~1 ~-1 .i rl ' ~ = O~
~--I .-1 rl r~l
33
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00854R000500050026-3
G ~ C
~ ~ ~ ~ ~ M
u u O C aD a~J ~ M ~.~i
q C U I ~ ~ .C~C C u+~i v~'a~0 6~ GA
,~~I A~n l~i ~ u 3+ O! u H O G.~
- o a.i tq ,a a r, r+ o,r m.i e o.. o v a,.~+
.-1 q N ~ R ~9 O O w O~ i.~ B M
- +i O Q. T O +i H u U C Cl u D A u~ ~ v v C�-I
A~-MI u L~i U u .~-1 ~ U Ou! 'r7 W C~ p v1 V.'~j Q .'~j v
~t .-1 C GI 01 T q+1 C W rf O'C uy fa . A�.�1 u u i-1 C
O 11 g~ w O 3 T A M O H CL O C G 8`~ ~ d N Cg! gGI +~1 M
O>~.Q'i O. o'CO q M 7 O. ~ 00 ~+~i U~ o~ C in a N dl ~ t0
- � O.L g ri O v1 A e0 O w u 'O C O~+'O d U
~J O.'O di ~ ~-"'~1 v t"~i O rCi aD ~ U~ O O u C~ F~i 1.~i v. b ~
- 77 6 G u G .i u~+i 00'O W rl O H.a u O G 0.~-I Cl
r1 u rl 61 N~.d +1 U N Y'LY W U C F+ g g
O U ~.d T.C .O 61 U N{+ C 7 Ol T ~ a~i O+i r-1 v'O
M C! Y M f0 a~ +'7'S7 4'O ~tl g w u Y .~1 l0 M C C
6~ +'1 Z fL pp 'O ~O 0 ~'S7 t'.. e�-. T+~I CL N u'C U O
O CL N G! ..~1 +~1 v a ttl G q G C u A~ 9~ 0! M~ I~+ W 0 O
~1 M q O 4~ C O W l0 +~1 .y C g Z y y~
vl ~0 C w d etl ~ U M O u W O! Q C O GI U d Q C L~i LL ut~
~ U+a '7 W'~ Of Ol N.-1 u,~ u O+1 u v k' q
00 G�+ W.. C u w O O 1+ c0 ~O H U o0 A~ G
LL+ N.~ 'C C C O~0 U O Mp, M O 00 .d C) C u ~g~ g y y y p
v'C C Ri .-1 O. T a G! O e0 +i e u~ 8~~ G! 4i u W~ U+/ C
W C! u p W,.'~.~ G Ol Ir G M U . O r..~ O L 7 40 N 10 ~1 ~
0 U(O p, +1 4 O N~ O C C N u~O ~ M.y ?1 W
~~tl ~ t0 C W.+-11 q u'C ~.~i ~.~1 ~ N T v i� T O, 00 ~ T Z A ttl G
~ aqi U' i~, C 9 u,.'~.~ a~i ~ G u C C u.y N~ w O
M u . etl C M ol . . . O N O O .C 1+ 6~ O
-o w+,+~ m u o au o ou
7 C'C i. 0 G O U r~ ,r ~n .a .~1 M O. 7 O ~tl 00 7
1+ .R~~ ~0 R O t0 O ~0 ~O q C C C.1 O.~1 C u k uf I-1 u{+ .p
9 1+ T.-1 "7 ~ ~ W�~ CJ CI N N.~1 M M+1 O Cl al N M ~tl
Q1 .~1 .-I .Q T�~j T T T~ O. 8 8 u C Y+ .~1 tJ M
.i I.r +i C+i u ttl u Q O ~ Cl . p u
p ~L i. u.. C. M tll
~ O-~ ~ v O 0! O O O O O O O O N G. C t0 C O O++
~tl.0 MM W 61 L+WL~.IM.I+i .~.IR1N Gl ....G! j 61 ML'[7 �
1+ .i O~+ +-i ~0 CO rl ~-1 .-1 .y N1 u v v C. T u M U
~tl �-1 O .-1 tA .~I .y .~1 .-1 ~ U Cl C C! t0 u
O t t~ +i c+~ O N t0 ,C .,y ep q r ~1 Cl
~tl O~~ O O. F.~I A.C G A ~tl M U U ~ C O C O C
~C .-~i O u~ O+~+ ^r u C7 ai w . .
>..a~t.t.t.r y~n+-~.. d p~p~~.�~~...:..~...
0~p0 G a+ U~-1 O o0 W C ~rtC~ q O O C $ f.
~ 0p .y C C uty k
. U~, O~+'1 .t7 u PG u T v v v v T. U CL C3. T W F A N G A>+ q A
N
~
.-1
u
~
C
u N W
al W -
C O O
+gi
'tl
d ~U
O
- u u
N C
.1 N 7! v1 in v1 O
~ y}n N N N O
C L y t~1 ~
d+-~i~
N 'O W
1+ O 61
~9 71
G7 1+ N ]
~ 0.~~ v v O O
j v _ v v
F ~ , ~ ~ ~ Q
O J 1+ N ~ ~ ~
d 1+ M ~
a a m
c
m w
u
.~~..C{{{ C O ~ ~
f'1 C' O..~j N N CO N
'L O C. ~ N ~ ~O Cl
a a~ o e ~
F ' c~ F
u
O W G! N ~ N O ~
G ~ L N ~ N N ~
+~~1 N lya ^j ~ .~1 .O tp
7 O Q r. ~ a^D ~ v~
C
y
w
r~ cc -r u
C y ~ 1~ ~ u I+
~ ~ ~ ~ ~ F v~i
34
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000500050426-3
During the visit of Prime Minister Suzuki to the ASEAN countries, local eco-
nomic journals carried special articles on Japanese economic aid, but there
' were no co~entaries that went as far as project evaluation. The past achieve-
ments of Japanese economic aid were presented, but this included only the
Cagayan Valley rural development, electrification projects,,and technological
cooperation. There is not yet much general interest in Japanese aid projects.
The true effectiveness of Japanese aid will likely come into question when
there is further growth in public interest.
[Dec 81 pp 41-45]
[Article by Takao TaniiiYa, researcher for the Institute for Asian Economic
Affairs, on aid to ROK]
[Text] Trade Wanted More than ODA
_ 1. The Korean Econ~my and Foreign Aid
(1) American Military Support
The Republic of Kor~a became independent in 1948, and the Korean war broke
out (in 1959) before it was able to absorb the ec nomic and social disruption
that accompanied the split between north and sout~~. The war resulted in thor-
ough destruction of the land, and many industrial facilities lost their
capacity to produce.
Following the signing of the truce agreement in 1953, under the Syngman Rhee
government, the ROK set out to rebuild its econc~ny while relying on economic
aid from America and the United Nations. The m~in financial source for the
United Nations was the United States, so the aid to the ROK was in reality
borne entirely by the United States. However, the American aid to the ROK
during thisperiod had the strong character of military support to the ROK as
the front line against communism, and it was not necessarily aimed at econo-
mic development. In other words, in addition to furnishing direct military
expenses for arms, etc., America also gave economic aid to the Korean Govern-
- ment to help assist in the burden of wages for the 500,000-600,000 members of
the Korean military forces. Because of this, the ma~ority of American econo-
mic aid took the form of donations of consumer commodities or raw materials
which could easily be turned into cash (surplus agricultural products as de-
fined by American Public Law No 480). The cash received for them was applied
- to military expenditures, which made up 30-40 percent of ROK Government expen-
ditures. This American economic aid to support the Korean military, as shown
in Table 1, amounted to an annual average of $250 million for the 10 years
from 1954 to 1963. This decreased to an annual average of $100 million in the
late 1960's, and fell to a]~nost nothing in the 1970's.
Although the American aid to the Pak Chong-hui goverrmient was not directly in-
tended for the economic development of Korea, it provided an opportunity to
develop industries which processed the co~nodities given as aid (fiber and
food industries such as the cotton industry, flour milling, and sugar refining).
35
FOR OFFICIAL USE ONLY
~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000500050026-3
'fable 1. American Aid to South Korea Under PL 480 and Through AID
Total amount in thousands Annual average in thousands
Period of dollars of dollars
_ 1954-1963 2,537,100 253,710
1961-1971 828,024 103,503
1972-1980 12,814 1,424
Source: National Economists Association, "ROK Economic Annual," 1981 edition
Thus it allowed for a certain acctmmulation of industrial capital and the
appearance of a class of business managers. And this undeniably formed the
foundations for the industrialization of Korea from the 1960's on.
(2) Industrialization and the Introduction of Foreign Capital Under the Pak
Government
The Pak Chong-hui government came into power through a military coup d'etat
in 1961. It instituted several 5-year plans beginning in 1962, and forcefully
promoted industrialization under goverinnent leadership. In order to gain the
funds for industrialization, it worked actively to bring in foreign capital.
- This coincided with the foreign economic aid policies of President Kennedy.,
who at the time was attempting to shift the economic aid to Korea from
direct aid for the purpose of military support to development assistance
credits.
In this way, the Pak government changed the ~oreign policy of the Rhee govern-
ment, which had been very closed to foreign countries with the exception of its
dependence on the United States. Particular importance was placed on Japan,
which was close geographically and growing economically at a rapid rate. In
1965, the Korean Government overcame the opposition of its people, who had
strong anti-Japanese feelings, and achieved normalization of Korean-Japanese
relations. From then on, there wa~ ~ targe inflow of public and private capi-
tal from Japan. Indii:~trializat.i.on was pushed ahead quickly. The United States
~~ud the countri~s ui Europe took notice of the growth potential of the Korean
economy, and the capital inflow from these sources steadily increased. As
shown in Table 2, the annual average of foreign capital (loans for more than
3 years and direct foreign investme-~t) during the �irst 5-year period (1962-
1966) was only on the average of $60 mil.lion per year. However, this grew
rapidly to $450 million during the Second Five-Year Plan (1967-1971),
$1.2 billion during the Third Five-Year Plan (1972-1976), and $2.7 billion in
the Fourth Five-Year Plan (1977-1980).
Looking at the content of capital inflow to Korea from 1962 to 1980, we can
say that public loans were initially the main component, but around the time
of normalization of Japanese-Korean relations in 1965 private loans became
the main item, and after 1970 direct investment by foreigners became impor-
tant. The sinn total of direct foreigner investment as of June 1981 was
36 =
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
; [t OFFICIAL USE ONLY
_ Table 2. Foreign Capital Inflow
Private Investment by
Public loans loans in foreigners in
- in thousands thousands thousands of
Period of dollars of dollars dollars
- 1959-61 4,386
(1,462)
Fi~st Five-Year Plan 115,595 175,600 16,675
- (1962-66) (23,119) (35,120) (3,335)
Second Five-Year Plan 810,808 1,354,728 96,354
(1967-71) ~162,162) (270,946) (19,271)
Third Five-Year Plan 2,388,867 3,042,916 557,040
(1972-76) (477,773) (608,583) (111,408)
Fourth Five-Year P1�n 4,067,100 6,189,900 426,600
(1977-80) (1,016,800) (1,547,5U0) (106,700)
Note: Loan figures are given for loans of 3 years or more, based on figures
at arrival. Total amount i~ shown. The a~nual average is given in
parentheses.
Source: Previously cited, "ROK Economic Annual"
$1.165 billion. Most of this was joint venture investment in local industry.
In many cases, private loans were introduced in parallel to make up for
shortages of operating funds.
Looking at this, we can conclude that the industrialization of Korea under
the Pak goverrnnent was achieved through economic cooperation on a private
basis. In any ~vent, today's Korea has emerged as a semideveloped industrial
country in Asia and belongs among the ranks of advanced countries more than
- among recipients of official development aid. It has even attempted to pro-
vide economic assistance to less developed countries. The ROK's overseas
investment balance (credits and direct investment), was only $12.6 million
at the end of the 1960's. By the end of the 1970's, it was over $500 million.
2. Economic Aid to Korea From Other Countries
(1) General Features
The provision of ODA to Korea by various foreign countries in the 1970's is
shown in Table 3. In 1979, the total ODA to Korea (net receipts) was only
$134 million, a 40-percent reduction from the $324 million of 1971. riulti-
lateral aid gradually increased during the 1970's, but in 1979 it only com-
~ manded 10 percent of the total. At the beginning of the 1970's, 90 percent
. of the bilateral aid c~~~e from ~ust two countries, Japan and the United
States. By the end of the decade, this percentage had dropped to 60 percent,
37
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/49: CIA-RDP82-00850R040500050026-3
but Lt sti11 cotrnnanded a strong share of the total. In 1979, West Germany
gave 15 percent of the total, but the aid from other Western European coun-
tries was close to nil.
Table 3. Aid to the ROK From Foreign Nations (in millions of dollars)
I 1971 I972 1973 1974 1975 1976 1977 1978 1979 ~
Loans 240. 3 282. 4 221. 7 192. ~ 184. 4 193. 9 197.1 1?1.8 94, 3 I
Totals Grants 84.3 82.8 60.6 59.5 65.2 24,1 41.6 42.5 39.5
Totals 324.5 365.2 282.3 252.5 249.5 218.0 238.6 164,3 133.8
Lo ans ~ 101. 2 66.1 127, 9 129. 2 50. 2 18, 5 75. 5 5~. 6 45. 0
Japan Grants 23,1 46.6 28.? 38.6 37.3 ' 5.7 8.8 11.5 9.1
To tals 124. 3 112. 7 156. 6 167. 8 87, 5 24. 2 84, 3 66.1 54. 1
- Loans 124,0 211.0 80.0 31.0 90.0 126.0 57.0 47.0 23.0 j
America Grants 51. 0� 19.0 11.0 2, 0-2. 0-2. 0 1.0 4.0 1.0 I
To tal s 175. 0 230. 0 91. 0 33. 0 88. 0 124. 0 58, 0 51. 0 24. 0
- Loans 1. 3 0. 5 6, 9 12. 4 29. 0 25. 0 15. 2 1. 4 3. 0 I
Wes t Germany Grants 2. 8 4. 6 4, 8 4, 6 5. 6 5. 0 9, 3 10. 4 15. 1
Totals 4,1 5.1 11.7 17.0 34.6 30.0 24, 5 11.8 18. 1
Loans 13:1 3.7 6.1 19.9 15.1 24.? 29.0 6.3 3.4
- Multilateral Grants 6,2 10.3 13.3 11.8 ~1.3 12.2 17.2 9.0 10,3I
. Totals ~ 19.3 14.0 19.4 3,._7 36.4 36.9 46.2 15.3 13_7I
Note: based on net receipts
- Source: OECD, "Geographical Distribution of Financial Flows to Developing
Countries," 1978 and 1980 editions.
Most of the aid was in the form of credits, but while both direct aid and
credits diminished, the ratio between credits and direct aid stayed at about
75:25 throughout the 1970's. In any case, the position of ODA is becomir~g
- less important each year in relation to the total amount of funds required
for Korean economic development, and today it has lost its significance.
(2) Characteristics of Variaus Countries' Economic Aid to Korea
1r ~~rican ODA tn Kor~~; ~�~as $175 niillion in 1971, about hal~ af the total.
l:n 1.979, it had dropped to only $24 million and its percentage of the total
had dropped to 25 percent. In terms of the types of aid, America commanded
- 29 percent of the ODA to Korea in 1971 with direct grants of $51 million,
- hut in 1979 it had fallen to a mere 4 percent with grants of $1 million.
Tlie majority of tlze American. Govermnent credits to Korea were long-term de-
ferred payment exports of surplus agricultural products under U.S. Public Law
No 480. This had the feature of increasing or decreasing.depending on Korean
food production. In recent years, this aid has also decreased greatly because
Korea has begun importing foodstuffs in ordinary form.
The Korean National Academy of Sciences was built as a kind of inemorial to
direct aid in 1970, but there were no other such visible results. However,
this became a means of encouraging a reversal of Korea's brain drain, so it
had very high exhibition value as a symbol o~ technolu~ical progress. .
38
~ FOR OFFICIAL USE ~NLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
' 'FICIAL USE ONLY
West German ODA to K~?-e8 was small in abeolute terms, but the percentage of
direct aid was very high, and this was a big difference compared with Japan
~ and the United States. Of the $157 million in total West German ODA to
Korea in the period from 197i--1979, $62.2 million or 40 per~ent was direct
! grants. This was much larger than Japan's 24 percent and America's 10 per-
cer.t. .
~ Looking at the content of West German ODA to Korea, the main feature was
; technology-related assistance such as educational facilities (technical high
; schools) and the acceptance of students for technical training.
Economic aid on a multilateral basis from the World Bank or the Asian Devel-
opment Bank has gradually increased. Also, an inflow of goverrunent credits
from the OPEC countries began to increase in the latter part of the 1970':s.
These funds were mainly used to form indirect capital for social development.
This included construction of dams, highways, and cammunication facilities.
, 3. Japanese Economic Aid to Korea
(1) General Features of ~conomic Aid
- Japanese economic aid to Korea began with the noz.~alization of relations
between Japan and Korea which took place in 1965. This consisted of $300
million in grants and $200 million in goverriment ,:redit:~ agreed upon in the
claims and economic cooperation pact. Because of the p~~culiarities of the
negotiation process, this was referred to as "quasi-reparations" by the
_ Japanese and "claim funds" by the Koreans and was handl~~d separately from ~
general QDA. Specifically, the ROK saw this as compensation for legitimate
claims and did not want to include it under the category of economic aid.
And in reality, it differed from general ODA which is applied to successive
separate pro~ects. It was arranged so that the FiOK Government would set up
_ projects autonomously within prescribed limits ($300 million in grants,
$200 million in credits), and would request the necessary materidls and per-
sonnel from Japan. These "quasi-reparations" were provided in installments
over a 10-year period from 1966 to 1975.
Beginning in 1971, general direct aid and credits went into effect that were
separate ~rom these "quasi reparations." For these, negotiations were car-
_ ried out for each project, and loan agreements were concluded. This became
_ the regular style of ODA to Korea from then on.
Provision of capital (credit) on a grivate basis also began with the :.~rmali-
zation of relations in 1965. Most of this was in the form of de~erred payment
exports using the Export~Import Bank of Japan. Also, serious direct invest-
ment by Japanese companies began in the early 1970's, and it came to be a
majority of the direct investment by foreigners in the ROK.
Table 4 shows overall~figures for these categories of Japanese economic
assistance to the ROK during each 5-year plan. These are statistics from ROK
_ sources for loans made for 3 or more years and direct foreigner investment.
39
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000500050026-3
Table 4. Capital Inflow From Japan
Period Public loans Private loans Direct investment
(in millions of dollars)
lst program 13.8 60.6 p,7
2d program 177.2 426.2 38.9
3d program 406.3 435.6 405.3
4th program 401.9 1,625.5 182.6
Source: Same as in Table 2.
.
The "quasi-reparations" mentioned above are excluded. Generally speaking,
the initial "quasi-reparations" built the foundations of economic exchange
between 3apan and the ROK. Afte~aard, the main assistance was the deferred
payment exports utilizing funds from the Export-Import Bank of Japan. In
the first half of the 1970's, direct investment (company operations in the
ROK) came to be on a par with other forms of assistance. Ir. the latt~r half
of the 1970's, the P,OK seriously undertook the establishment of heavy and
chemical industries, and deferred payment exports again became the main form
of aid. Private economic assistance became i.mportant along with the growth in
the Korean economy. This was confirmed on a political level by a joint state-
ment of "the central role of private economic assistance" at the Japan-ROK
_ periodic ministerial conference in 1978. As shown in Table 4, there was an
annual average of $100 million in yen credits during the 1970's. This
dropped relative to other forms of economic assistance, and when we consider
the decline in the dollar during that period, we see that it also shrank in
absolute terms.
(2) Japanese ODA to the ROK
On the basis of exchanged docimtents, the Japanese ODA to the ROK between 1965
and 1980, including "quasi-reparations," reached a total of 541.18 billion yen.
A breakdown of this aid is shown in '~'~a'~1e 5.
1'able 5. Gover~imeii~-13ased Financial Support From Japan to the ROK
Direct grants Loans, Total,
in millions in millions in millions
- Period of yen of yen of yen
lst program 102,093~ 67,728* 169,821*
2d program 526 159,184 159,710
3d program 2,957 116,490 119,447
4tli program 1,132 91,070 92,2p2
Total 106,708 443,472 541,180
* "quasi-reparations"
Source: MITI, "Present Status and Problems of Economic Cooperation," 1981
,
_ ~+0
FOR OFFICIAL USE ONLY ~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02109: CIA-RDP82-00850R000500050026-3
Some notable pro~ects from the compensated and uncompensated "quasi-
reparations" were the Soyang River Dam construction project (4.6 percent of
the total) and the steel and iron industrial complex at Pohang (22.4 percent).
The Soyang Dam construction project was the first major development project in
the great river basins of the ROK after liberation, and it became a model for
similar projects carried out af texward. It made the ROK Government aware of
the possibilities and importance of development of the four great rivers (the
Han, the Naktong, the Kum, and the Yongsan). And this project became a prac-
_ tical arena f.or the rapid improvement of the technical le~el of Korean civil
engineering and construction industries, which had been in a period of
infancy.
The other project, the Pohang industrial complex, was a plan to build a com-
plete steel-making plant on an international scale. It was a memorial to ROK
industrializaL-ion under the Pak goverrnnent. Negotiations for this project
were carried out between the ROK Government and the United States and other
Western countries which were to provi,de loans. However, these negotiations
ended in disagreement, and the ROK was forced to bring the project under the
framework of the "quasi-reparation" ~unds. There were some who were afraid
that it would prove to he too much of a burden to the Korean economy, which at
that time was in the early stages of industrializu~ion. However, because of
the character of the "quasi-reparations" explainec' above, this project was
carried out in accordance with the wishes of the h~K Goverrrment. The Pohang
steel complex, built with "quasi--reparations," had an annual production capac-
ity of 2.5 million tons. It was further expanded with privately based econo-
mic assistance and now has an annual project of 8.5 million tons. It has
attracted attention as an example of a"boomeran~; e�~ect," whereby its pro-
ducts now compete with those of Japanese steelmakers on the world market.
If we look at ODA given to the ROK after 1971, we ~zn~ that the uncompensated
part, or direct grants, included provision of fscilities, equipment, and
materials for technical educational institutions up to 1976, and materials
and equipment for medical institutions from 1977 on.
The compensated portion was half commodity assistance, including food, and
half project assistance. Most of the projects were conventional indirect
social capital pro~ects, but beginning in the late 1970's, aid was received
- for the educational and medical sector. Attention began to move a step ahead
o~ economic development to basic social development. Also, assistance con-
tinued to be provided to agriculture, which was a particularly slowly devel-
oping sector of the ROK economy; 19.2 percent oP the total yen loans were
applied to this area. Investment in agriculture is significant for social
development as well as economic development, so this did not contradict the
general shift in emphasis of. Japanese ODA to Korea. Major pro~ects carried
out with compensated assistance include the Seoul subway (7.2 percent of yen
credit), the Taech'ong and Ch'ungju multipurpose dams (7.1 percent):, and vari-
ous agri.cultural pro3ects (19.2 percent).
All of these pro~ects have achieved the results anticipated. But since they
were all the first such construction projects in the ROK, the experience
~l
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2407142/09: CIA-RDP82-00854R000540050026-3
gained by ROK civil engineering xnd constru~~tion industries which participated
in them brought about technological advanceE: in those industries similar to
the effects of *_he Soyang Dam. ~n particular, the large-scale introduction of
modern construction equipment through ODA leci directly to a strengthening of
the international competitiveness of the ROK construction industry. This made
possible an overseas expansion of the constru~:tion industry as well as the
autonomous growth of various types of construction businesses within the ROK.
Of course, this was not a direct result of the Japanese ODA. It was a totally
secondary effect. But it is noteworthy in view of the overseas operations of
the Korean construction industry, which has become an important provider of
foreign currency.
Conclusion: The Significance of "$6 Billion of Economic Assistance"
There was dramatic expansion of Korean industries in the 1970's. The present
Korean economy is assessed as having sufficient strength to handle the kinds of
projects, including the technical problems, which were objects of Japanese ODA,
Under the Japanese appru~ch to ODA, statements were made to the effect that
funds would be provided for separate projects agreed upon, but in reality,
Japan provided the personnel and materials which were needed to carry out the
project and could not be supplied by the recipient country. If the application
of the aid is limited to traditional fields, there is no longer a need for
this type of assistance in the ROK. Therefore, the ODA from all foreign coun-
tries to the ROK is actually decreasing rapidly year by year,, and statements
are being heard similar to the one mentioned which was made at the Japan-ROK
periodic ministerial conference. To put it another way, becai~se of the re-
sults achieved through ODA to the ROK, it has broken out of the economic devel-
opment stage in which it was a recipient of ODA. The role played by ODA in
the ROK has apparently come to an end.
- However, at a meeting of the Japanese and ROK foreign ministers held in
August 1981, a~ter a long period without such meetings, the ROK made a re-
quest to Japan for $6 billion in government loans, to the great surprise of
the Japanese. Besides the large size of the amount, Japan is concerned about
ttie purpose of the request, support for the KUK defense effort (security eco-
nomic assistance) . Tf,e Japanese nii~~ister of foreign affairs promptly refused
~i~e request. Later, at the Japan-ROK periodic ministerial conference, there
~oas no progress in bringing the views of the two parties closer, and negotia-
tions are still deadlocked.
- As stated earlier, the ROK economy has progressed to the point where it does
not require ODA from Japan as in the past. So why did the ROK suddenly ask
for a huge goverrnnent loan of $6 billion.
It is we11 knownthat after 1976 the Korean~economy had begun to lose its
balan.:.a because of the overly ambitious promotion of the heavy and chemical
industries. It was then hit hard by the second oil crisis and fell into a
deep recession in the latter part of 1979. Crop failures due to a cold sum-
mer in 1980 added to the difficulty. Effective steps could not be taken be-
cause of a loss of central government power after the assassination of
~+2
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
' President Pak, and the recession became worse and worse. As a result, the
growth rate fell to minus 5 or 6 per~ent, and it is not diff icult to imagine
how this hurt the self-confidence of the ROK Government. Looking at the
activity of the ROK economy this year, we find that although there may not be
further retrogression, there is still a high level of inflation and not much
growth in exports. Accumulation of foreign debt seemed to be a part of the
motiva power of the economy rather than a burden during the period of high
growth. However, by economic logic, it begins to exert heavy pressure once
the economy stagnates.
Private loans were the main factor in overcoming the ROK's trade deficit in
the past. Even now, it seems to be possible to obtain them without serious
_ difficulty. However, a flexible interest system for private loans has become
common, and previous advantages (partial elimination of debt by inflai:ion)
have relatively diminished. Therefore, the ROK's crisis in international pay-
~ ments can be temporar.ily postponed through an infusion of private loans, but
this cannot be a fuT,damental solution. At the same time, a large increase in
low-interest, long-term goverrnment loans cannot be hoped for under conven-
tional ways of thinlcing. It appears that the ROK has attempted to break out
of a hopeless situation with the new concept of "security economic assistance,"
~ or in other words, by creating a new "category of aid."
Whatever we may think of "security economi.c assis~ance," it is clear that the
~ present $6 bi,llion problem has its roots in the a::cumulation of foreign debt
which accompanied Korean economic development. The accumulation of foreign
debt is a worldwide problem today. And Korea did not escape it even though
it was regarded as one of the most outstanding performers among the develop-
ing countries.
The ~OK is also complaining about the problem o� a trade imbalance with Japan.
Even without raising the example of Taiwan, whi.ch has a trade imbalance with
Japan but does not have such a large accumulation of ~oreign debt, we must
say ~nat it is not appropriate to propose goveznment loans as a solution to
the problem. It is necessary ta point out that there is room for further
thought in the ROK's economic policies and development strategies.
Even so, if an extreme trade imbalance is maintained over the long term with
resource-poor countries like the ROK and Taiwan, the result is to place a
burden on the other party. The idea that real economic cooperation comes
through trade rather than aid is especially true for Japan and these semi-
developed countries. We can say that Japan has reached the position where it
= must make a conscious effort.
COPYRIGHT: Nihon Kanzai Kyokai 1981
9651
CSO: 8129/0597
~+3
FOR OFFICIAL USE ONLY
~
I
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
ECONOMTC
VICE PRESIDENT OF NTT DISCUSSES INS SYSTEM
Tokyo SHUKAN BIRION in Japanese 12 Mar 82 pp 20-23
~Text,~ ,~Question~ Lately, INS, Info rmation Network System, has become a topic
of conversation. Yasusada Kitahara is the leader of Nippon Telegraph and Tele-
phone Public Corporation's technology team and also an advocate of INS. In the
event of INS completion, it is said that a terrific society will come about,
_ l~ut I can't quite clearly visualize this image. Today, I would like to ask
what kind of impact INS will have on our society, and what is the technology
supporting INS.
~KitaharaJ First o.f all, I wan~ you to understand that Japa n is a telephone
society. The accumulated delay;; in 1978 of not getting a phone soon after
' applying has been completely ~esolved, and all of Japan can call f reely.
There are 40 million telephone subscribers in Japan and 50 million telephones.
Japan and the U.S, together account for m~~e than half of the world's tele-
phones.
On the one hand, Alvin Tofler, who wrote "The Third Wave," and Harvard Univer-
sity's Daniel Bell and others are saying: "In the 21st century, information
will support national life and information will cause ma~or changes." It is
the so-called post-industrial soci~ty. As for whether it was correct to in-
terpret this as a de-industria.lizeu society or not, at any rate I have asserted
~or some time ~.hae it is necessary to create an information network system
in such a society. That is, create the network most adapted to information. ~ -
Speaking a little more concretely, ~ust as Daniel Bell says, in a high level
information society, 10 percent of information exchanged is by telephone;
90 percent is Fiy means oth,er tfian the telepbone~ I am calling "means other
than the telephone" the non~telephone ~ystem~ 1'fie nan~telephone system will
steadily increase, It can Fie sa~d that INS ~s necessaxy ~or this new society.
lOQ, 000 Yen Automofi~.le Teleph,one
~~uest~.onJ' The npn�~telepIwne syatem re~ers to ~acsimile and data communication, i
doesn~'t it?
FOR OFF,~CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R004500050026-3
~Ki..tahax~ ,~e~~ Hprateyex~ ~t a~soiutelr neceasaxy to ob.ta~,n the unde.zstand-~
ing a~ the. px.iyate ~e.ctax t~i oxde~ to ~xc~ote ~I$~ ~.t t,~i.,~l ~fie fiopeless i,f
tfiE people_ s~~~, ~{I.et the te~,epb:pne cc~pany~ do as ~t pleas.es~ If tfie xates
go up, we wonrt use tfie telep~ic~netK
On this point, T myself fiave considexed fiDw tfie 1~tfe of tfie .7apanese would
- &e a#fected Ti}^ INS. T arT11 present tfi~e resnlts~ of tfiis research soon, but
~or example, let''s conside~ tfie i'mage of Mpeace o~ ~mind" in daily life. It
i.s no more tfian a tentati've assmnption, fint T tfiink `+peace of mind" is tied
to the categories of inedical care and safety.
In terms of inedical c~re, can~t INS fielp witfi a~medical information system
and a medical care data tiase? I think tTie Ministxy of Healtfi and Welfare
should take tfie lead -in furnishing this. Tnformation on '~'what to do when
a child has a fevez" could be obtained by~means of facsimile or cathode ray
tuhe.
Likewise, in terms of safety~ information can be obtained by means of an earth-
quake prediction system and operational sa~ety superv~sion system. It is my
INS concept ttiat such data bases can tie used freely and at moderate prices.
~Question~ NTT has designed a diversification ~~f services and has begun sell-
ing as new products facsimile, automobile telep:~nes, kanji (Chinese character)
printers and the l~ke. As for sucfi services, tle automobile telephone can be
considered typical, but the price is higfi (installation and subscription fee
is more than 80,000 yen; the basic monthly rate is 30,000 yen; and a cost of
10 yen per 6.5 seconds up to 160 kilometers). Wouldn't INS be expensive for
the user? '
[Kitahara~ Digital technology is the basis for lowering the cost. Ultra-
LSI's are representative of this. By increasing the level of integration,
as from 64 kilobits to 256 kilobits to 1 megabit, the cost per information
unit will quickly drop.
The automobile telephone is one example, In the beginning, NTT purchased
them at 800,000 yen each. One hundred and some IC's were used. Today, four
years later, connecting from Nagoya costs 480,000 yen; the number of IC's has
decreased to around 70, about half. The size is about one-f~urth and of course
power consumption has declined.
I think that a cost of 200,~00 to 250,000 yen is possible in about 4 or 5
_ years, or 1985. A me~�ory o~ 256 ki.loliits and IC~s w~tfi about 1,000 gates will
be used and only~about 2Q IC~s w~ll fie needed. Moreover~ a 100,000 yen auto-
mohile telephone ;Ls ~,n the ~~dst o� deyelog~ent.
,CQuestionl Thus. fax, ~Crs fia~e achieyed a~our~old c~ulative level in two
years. May cae see tfie real~ty of a 1QO~Q0o yen automofi~le telepfione e.arlier
than ex,pected?
~+5
FOR OFFICIAL USE ONLY ~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000504050026-3
r vn vl~ i~ .L~,Itsu v?~1~ varui
~Kitahax~J 25fi k~,],qh~,ts ~;s at the sta,~e, o~ he~,n$ xeal~tzed~ ~s ~px rahethex
the. 1~Q~QQQ ~en auto~ch~.e tel~hone can ato~k on~ ex~st~,ng extens~on li~nes~
a cons~'dera~le fi,~e~ktfixough -~y~ be necessaxy~~
Opt~cal Commun~cation, Dec~sive gactox in Lower Costs
[Questio~J' PI~11 d~gital~zat;Lon ~ower costs ~ox all teleco~unications?
- ~Kitafiara1 A~itfi.d~gitalization, switcfiboards and computers will be 30-50
percent cheaper. Tfie same wi:ll be true for transm~ssion systems. That alone
can reduce irroestment costs ~or-microwave, coaxial cable and repeaters.
Optical commun~cat~on wtll clincfi tTits even~more. At present, microwave needs
a repeater placed every 50 kilometers. Tfien less tfian 3,000 people in total
can communicate si:1oultaneously. Sfiift~ng to coagial cable, it becomes possi-
&le fo r just i~ndPr 6,Q00 people to communicate simultaneously. But an ampli-
~ier Fias to tie installed every 1.5 kilometer~ along the route. Recently, a
bridge in excess o~ 2 kilometexs is not unusual, and amplifiers are attached
along tfie bridge. Tfiere are problems wi.tfi reliability because of swinging.
Wi.th optic fibers, an amplifier may be spaced 20 kilometers. Moreover, what
is unusual about optics is that 24,040 people, a fourfold increase, can com-
municate simultaneously. That is because~many channels are possible if the
fibers are pure and uncontam~nated. You may think of tfii~ in the same way
that Mt. Fu~i can ~e seen well on a clear day.
~Questio~ This means the cost per. circuit will drop, doesn't it?
CKitahara~ Optical communication may be called the decisive factor resolving
the in~amous distance dif�erential. At 60 to 1, it can be called the great-
est differential in the world, and that bitter pill is accepted with resigna-
tion. I think that if optical communication becomes widespread, this differ-
ence will be reduced to almost zero. If it isn't reduced to zero, then INS
itself won't materialize. It is a contradiction for a person living in Tokyo
to pay a moderate rate while the person living in the provinces has to pay
an extra rate to NT~' in order to ~btain the same information.
~Question~ Here your concept of "information quantity-levied rate" has ap-
peared, hasn't it?
~KitaharaJ I presented the "in~ormation quantity--levied rate" concept in
Septemher last year and a~ fi,aying ~t xesearcfied By~many peopelt In a word,
the cost o~ sendi,ng ~n~o~t~on fiy ns~ng an ~n~prmation fiighutay will be de~
termined hy th.e tn~oxinat~,on sent. Gi,ven tfiat ~nfox~tion quantity equals
transm~s:sion speed t;t~es use t~ne, tfiE #astex tFis speed~ the inore the quantity
o.f in#ormat~on wtiicfi. can ~ie 9rent ~n one second. Hoar~~mucfi ~:nformation can be
sent in one secqnd~ tfie fiand, is s~in~lar to tfie concept of fiow much of the
= width. o~ tfie ~oad ~s~ used.
~+6
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
(Question,~ , E~ut at pxe~ent~ ~;t ;La s~,~,d t~at ~hen tkexe. ~;s d~,gitali,zat~pn, th,e
human ~q~ce. ~ia.l h~ rent ~t Ci4 k~;],oFi~;ts~ ~T,~; so~ ~~,t ~eeaQs ti~t the cost will
he. extxemel~ ex~.ens]L'v'e.
~KitafiaraJ' Sen~~ng tFie hrnoan vo~ce $t 64 kilob:~ts ~means, in d~.g~talization,
' deliiuit~ng one seconc~ into 8, OQQ and ~uxtFiexmo~ee axrangtng tfiat into 8 stepS
in order to discern tfie vo~'ce perfectly. 5"~nc~ 64 kilobits is too extravagant.
we are rea~earcfi~ng 'arfietfier 32 kilobit~ or 16~ k~loB~~ts won''t work.
Since verbal response does not require voice qnality, even 8 kilobits is extra-
vagant. Certainly, when tfie idea o~ ~informat~on quantity-levied rate" is pro-
mated on the assumption of 64 kiloFits, tfie rate will be extremely high. That
~.s why we are reexamining ~afietiier 64 kiloBits is rigfit or not . We intend to
~'un various trails from 6/+ kilobits to 16 kilobits in 3 tests beginning in
~'X1982.
Moderately Priced '.rermir:al Eqnipment grom Private Sector
(~uestion.j In eacfi fiome , tfie telephone, of course, microcomputer, facsimile
and cathode ray tube w'ill fie connected to one telepfione line, won't tTiey?
[~Kitahara~ It is not possiEle with copper wire. but with fiber optics it is
' possihle to tie them into one telepfione line.
~Question,~ In tiiat case, will acoustic couplexs wfiicfi convert analogs into
digital hecome unnecessary?
,CKitaharaJ Basically they won't be needed. SCnce the human voice is an ana-
log, ~t is necessary to convert it into digital. The CODEC converter is one
kind of IC. It now costs about 8,000 yen, but perhaps it will decrease to
- about 2,000 yen. There is no problem witfi a digital and analog junction if
it is built into the telephone.
[QuestionJ .Conversely, since the coupler is expensive, INS won't progress
as long as the coupler is necessary, will it?
~Kitahara,j Reducing the price of the terminal as much as possible may be
saici to be the fundamental condition for INS.
~Questio~ How far will NTT go?
[Kitahar~ It is a~undainental ~rinciple o~ ours to entrust all terminals
to the pr~vate sectcr.. NTT ~urni.sfiad tfie net~ro rk. ~ut my idea is that NTT
urill offer a common netwo~k and fnxn~sfi:a two~stag,e entxy so as to Tie able
to create an indeQendent ne.twoxlc for ~.ndus:tr~al u:~e wiiere the connection ~s
simple and the~ce are exper,ts~ �
Take the facs~ioile as an example. Perha~s thexe will he so.meone who says~
"txans~n~tti.ng l~y i~acsi.~n~le ~s~ great, but T~may use~~many ~ncorxect characters
and pfiDne.t~'~ eqvi'valents. S~nce T don~'t .�tivant to Fie Ceased, TR11 do it fiy
telepfione.
~+7
FOR OF'FICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02109: CIA-RDP82-00850R400540050026-3
i vi~ vi~. iv./.rs.u vvL vart/i
In th;Ls case~ a~oxd . pxoce.~s.ax ~ai HTT ~S � ne.t~o~k c~n he used ~ NTT ~,11 ~ux~
n~.s,ti tha 11d~,ct~on~xy~� Tb.ei~ a~ea dr,~,ll. .-He ~ece.~+ed .~o~: eve.xy ~roxd sent ~
(Question,~ Won~t e~ve~r}* Fis~usae. fie ~n11 0~ texs~~als*
~K~tafiar~ TfiQxe w~,`ll b~e camponnd tearm:Cnals. Tfie present Captain System
is only $n ~ge, fint ~oaitfi. d~g:Ctali,`zat~on atone, tfie voice will be made to
appear even witfiont copper ~arfire. Tt is noar pos~~ble to use some televisions
wi.tfi an adapte~ attacfied to tfie tube.
But tfie demand for personal use CRT''s w~ll e~pand in proportion to the diver-
siiication of serv~ces. Certainly tfie px~ce inust'drop witfi mass production.
The purpose ~n asking Sony Corporation and Tosfiiba Corgoration to participate
xs to try to lower the pr~ce of personal use ~RT~s. We have having Nippon
Electric Company, Ltd., Fu~itsu, Ltd., and Hitach~, Ltd, research an adapter
wh~ch can be attacfied to the present television tnbe.
Successive Advent of New Fiber Materials
~Questio~ By tfie way, is there no use for~man made satellites in INS?
- ~Kitahar~ 0~ course, it ~s necessary to build a co~nunications net with sat-
ellites. Weatfiex satellites are already large enougfi at present, but it will
be necessary for broadca~st~ng satellttes and comiuunication satellites to be
larger. The satell~te Japn will launcFi neat year will weigh 350 kilograms,
have a life span of 5 years and a capacity of 3,000 circuits.
America has already launcfied a one ton satellite. Its life span is 10 years
and it has a capacity of 25,000 circuits. This dif~erence is due to tP;-a dif-
~erence in rockets. This :ts unof,ficial, but ~t is being said that America
ma~ launch Japan''s commun~cation satellite witfi tfie space shuttle, Columbia.
It is said it can be done at roughly one-sixth the cost.
[Questio~ In terms of materials, will there be any new materials coming
out?
~Kitahar~ Gallium arsenide and Josephson's element are the new theoretical
ones, but they cannot be used easily except in very low temperatures. Con-
cerning semiconductor elements, I think for the ti.me being we will go with
today's silicon technology. However concerning optical fibers, I think that
fibers with an extremely h~:gh degree of transparency will appear by using
such new materials as flouxine. As I ment~oned previously, a 20 kilometer
- transYniss~.on w~tfiout a repeater ~s poss~Ble~ bnt tfiis w~ll become inco~nen-
surahle. gox e~ample, a 5,OQ0 k~loiaetex txansm~ss~on without a repeater
would fie possifile~ I'~ sq~ txan5tm~ss~,on ~xom~ Tokyo to H~ata~,i will be possible
w~thout a ~epeate~.
rQuest~or~ so, ar~:ll tfie laser output fia~re to fie ~ncreased?
jK~tahaxaa No~ S'~nce ~t wi11 go ~ar natnrally ~f tfie fiber''s transparency
~ncreases~ T tFiiiik ~t can fie done w~tfi a normal semiconductor laser. At
1+8
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-40854R000500050426-3
any xate~ ,~~~an ~;e at the ~tQx].d ~a . fifgiie~tt ].eayel ~.n ~i,fiex a~ti.cs ~
~Questio~ ~t seen~s tfiat tfiexe ~~ent`t .~ny.~ sensoxs in INS.
~Ki tafiara~ Not at present, bnt a.'1i tfie ~`utuxe t~iey siinuld be used ~n inany
instances, sncfi as ~.'1n co~nect~on an"`tfi a cxi~ae: ~eeventfon system, remote con-
trol and u~nned st~tti.bns,
,CQuestior~ A multi~faceted data fiase fias~fie Fe developed but wfio will make it?
jKitaharaJ That is a difficult question, Fsnt tfie government should consider
it. It must fie done witfiout fie~ng cangfit -np ih red~tapism. I think tfiat
when all is sa~d and_done, we-must spend more vioney on data.
(3) ~4) ~5)INS~i~~~~1~ (1) ~
j'E 7~ i~i 7~~ C
J~ ~ ~ -f ~ A
~ I9~ ~ J ~ ~ T ~ ~ i (10)
~~t \ 1~ )l,~ f~ 'J 8~ 6~ V ~
(11> ~ ~ ~r. o 0 0 ~ ~ ~ (9. ~o~. ;a;~~r~. T~9,~~~ f12)
~ ~~o~~~
(13) i~ G U O O O e~~~e~~. ~i1~~Yl.~.1~iZTL~ (14)
~a,1i3~8'�
C15) im O O O ~~4TTTlio7l?@~~~~~~~ ~16)
iAN0.1
(17) B ~ G O O O ~~~~~~'~7. ~}31~10-1296 (18)
~19~~ ~ o 0 0 ~~r~~.~~�~~~~a~ (20)
C21) o o t+~~~~~~-fN0.1,~z+~~~ ~(22)
- ~=t~. l~lI~S1~~$~bTJ ,
~23~~ ~7 ~ ~ o o ~_~,~~~~~r~~~~~~~ , ~24)
~25~e~~+~z~ o ~-r~~~a~~~n~~s~~~ ~26>
~27~~ ~ ~ r~ ~ o ?~~~~a~~~3~. x~~n~7 ~28)
(29)~ ~a ~ ~ o ~-r~~~~~~n~7~~, (30)
1L-7
~31~~ ~ ~ ~ o o ~~~~~~~~tn~~~.s~. (32>
~4~~f~=~ O O ~~i~~7~_7-f~~8~~~ (34)
(33~ '
(35)~ 9~t ~ 3tc O ~~~~$s~~~3~tm-~ , ~36~
~
~ ~1 ~ S!~ O O -fJ~)L*J~vl-C~~JS~2(~).
(37~ T-9�mtl~~t~~B~=~~~ (38)
- (39~e ~ ~ 1t~ O O -f~~11.+~~t~c~~i.x~30A5). ~ ~40~
~I~l~b?JIlE~ i
- (_41 ~t~ ~ 7~ 2 O ~~100~~ ~ V
A
D~i-~Z~~ 57 ' ~42 ~
~ ~q ~ = p ffi~i~711.-7~CVD~~ VAD ~
~4g~ ~r~~m~t~5~~5~3~t ; (44~
~45~ ~ ~.u~ o ~'r~~-r~ ~~ri~~ ( (46?
1+9
~ FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
B II~~ t~ O 7~-f/~-I#J#~~3. BTI7
(47~ _ ~~-~o~~t~izt~7~~~R ' :C48~
(4 g~~ -r x = ~ o ~u r~~~~~a~z~~c~~~~ : (50~
. ~~t~76066P9, 57~f~1~
~11.7~'~Slt p 5 ~-9~IEf~1171~.~~.
, ~~52~
~53~j ~ x J O ~t~l~CATV~yt~~~ (54)
(_557~ ~ - p ~B' ~t-
N C C U O U N y- A N V~ C~ A�2 ~ p V V C~'i
~ y O O 'CJ
V U t0 N d �.~i y~,~ O~ t~0 00 C O.u .,.`~i O m..Ci
- N u ~.-i v ~ a ~ .-~i o � v ~m ~y w v ~a~+ y o�~o ~
u N A ~o ai o v~o 'e 4'
w v~ v~ N u++ v a
G ~ v"' ~ A N O rC9 Gui 7 f.
v aUi O y~t~. y v~ rn a~i O~ F~+ c N c a~+ v c E~O
~ C 0. S t0 A�.i ~-1 V ~�2 O~. ..~i ~p, CL v~i V O~0 X
y U U W U U 7
N
U
V7 ~ ~ ~ N U U
p N V ~ V 0~1 ~
'i ,~p-i
N y E ~G' d O ~ L F. ~ 7
n w y 6 E 1.~ O. y
y Q 4 ~ 4' O G. W'O C
~o ~ o cu w~o oco
c 4i ~ p � ,1 ? a
a .1 v .c c ~o
~N O ~0 GO .,.N~ O 7 U U y
C ~ N .q ~ ~�~�C.M
~ ~ ~ t ro~' '-~i a~+ C U E v
~ W 6 C! N d ,p~ C T Cp d O�ti
[.S C 6�.1 N V tA U U
v C
N 0
~ �.i
~ ~ ~ ~-1 U
y ~E Ql
'C y ~ 7 C
y ~ O
E U
75
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-40854R000500050426-3
restrictions on use by others shall be eased on a large scale, in order
to enable the free use of circuits for data-processing purposes.
4. Mutual Connection of Specific Communications Circuits and
Public Communications Circuits: In reference to the connection of
specific communications circuits and public communications circuits,
the individual approval system shall be abolished, and efforts shall be
made to enable the connection thereof unde~ the certain standards to be ~
prescribed by a Postal Services Ministry ordinance. Moreover, the connec-
tion of public communications circuits, specific aommunications circuits, and
_ _ -
public communications circuits can be secured with approval, though
it has not been approved up until now.
5. Connection to Electronic Computers, Etc., to Be Installed by
Others: Connection to electronic computers to be installed by
contractors under the use-by-others system and to electronic computers,
etc., to be installed by others involved in the contracts can be secured
if it comes under the certain standards to be prescribed by a Postal
Services Ministry ordinance, or if it obtains individual approval.
_ 6. Installation of Input and Output Equipment, Etc.: The Public
Corporation or companies can offer input and output equipment, etc.,
to contractors for the use of specific communications circuits or
contractors for the use of public communicat ions circuits.
Supplementary Note: When the Public Tele-Communications Law is
eartially revised, in order to consolidate th e use of data communications
circuits, the strengthening of the Penal Regulations, which is ar.
urgent task, shall be carried out.
(1) In regard to persons who engage in public tele-communications
services, the provisions of the Penal Regulations concerning tneir
obligation to preserve secrets shall be s~:en gthened.
(2) The amcu:~:.~ of fines, mentioned in the Penal Regulations,
shall be revised.
' ~'o :e 4e 4e ai .'e d: ~'e
[25 Feb 82 p 3]
[Text]
MITI on the 24th formulated an opinion of criticism, to the effect
ttlat the general outline of a Public Tele-Communications Law revision
bill, drawn up by the Postal Services Ministry in connection with the
problem of liberalizing data communications, "is still far from liberal-
- ization." MITI says that if the Postal Services Ministry's draft plan
76
FOR OFFIC[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000500050426-3
is to be followed, then problems will remain as to the following points:
(1) The scope of liberalization is in3efinite; therefore, there is the
fear that depending on how it is operated, it may violate the Provisional
Administrative Affairs Research Council's recoimnendation calling for
the liberalization of data communications, as a general principle; and
(2) this will prove disadvantageous for the processing of information
by medium and small enterprises, which are unable to have thpir own
computers, when compared with big eriterprises. MITI will strongly
request the improvement of these points in the course of the Postal
Services Ministry's drawing up a draft revision bill, from now. But the
Ministry is nct changing its posture of revising the Law along the
line of its general outline. For this reason, further complications
are expected before early ;Jarch, when a final decision is expected to be
reached on the revision bill.
Data communications mean the processing of information through the
direct connection of computers and communications functions, as in
the case of the on-line systems of banks. Due to the vigorous
renewal of technology and the appearance of new forms of services
in rapid succession, voices calling for the liberalization of the use
[of data communications circuits] have become ~tronger, centering on the
enterprises and information-processing services business-persons
- who use computers. In response to this request, the Postal Services
Ministry drew up its revision-bill general outline on the 24th. In regard
to the general outline, MITI points out that there are concrete problems
as to the liberalization of "message exch ange" and "use by others."
Message exchange means the transmitting of information as is,
without changing the contents thereof, as in the case of the telephone,
even if it goes through a computer. Data communications for processing
large amounts of information will inevitably include nessage exchange.
However, the contents of the Postal Services Ministry's draft plan
are such that depending on how the Postal Services Ministry Ordinance
is operated, message exchange can be restricted,in actual substance.
The stand of MITI is that there is fear of its violating the Provisional
Administrative Affairs Research Council's recommendation which emphasizes
that "message exchange should be liberalized,in principle."
Use by others means that informa~ion-processing enterprisers will
lease circuits from the Nippon Telegraph and Telephone Public Corporation
(NTT) and sub-lease them to other enteprises. The main objects for the
joint use of communications circuits by two or more companies are
big enterprises, while [those for use by otr.ers] are mediiim and small
enterprises which are unable to have their own computers. However,
under the Postal Services Ministry's draft plan, use by others will be
restricted strictly, compared with joint use. MITI says, "For example,
when trying to establish business contacts by telegram through the
use of data communications circuits, it will not be permitted in the
case of use by others, though it will be possible, in the case of
joint use. There is the fear that this may cause gaps in information
77
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3
services, which can be used, between medium and small enterprises and
big enterprises.
s: :
Prime Minister Orders Co-ordination of Views between MITI and Postal
Services Ministry Data Communications
Postal Ser.vices Minister MINOWA called on Prime Minister SUZUKI
at thc Prime Min~ster's Official Residence on the 24th, and explained
the outline of the Ministry's draft of a Public Tele-Communications
Law concerning the liberalization of the use of data communications
circuits, which draft was submitted to the LDP Communications
Department on the same day. In rhis connection, the Prime Minister
ordered the continuation of studies between MITI and the Postal
Services Ministry as to high-level communications services and other
parts on which co-ordination has still not been carried out bet~een
the two sides. Moreover, concerning the part which is included in
the Provisional Administrative Affairs Research Council's second
recommendation, but which is excluded from the Postal Services
Ministry's draft plan this time, the Prime Minister presented a request,
saying, "I want you tp explain it fully to the Provisional Administrative
Affairs Research Council."
COPYRIGHT: Nihon Keizai Shimbunsha 1982
CSO: 4106/90
78
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007142/09: CIA-RDP82-40854R040500050026-3
SCIENCE AI~ID TECHNOLOGY
TOYOTA-GM TIE-UP FOR JOINT U.S. PRODUCTION
Tokyo THE DAILY YOMIURI in English 2 Mar 82 p 1
[Text] Toyota is the world's sec- env~ ged~le-up cwld e~en-,:~_
ond largest automaker next ~tual~y lestd :te~ do~ ot
to C3M. the world's car markets ~ bY
The spokesman said an the two giants, according to
agreement to begin neBotia- industrial sources.
tions on detalls of the pro- A common reaction among
posed tie-up was. reached Toyota's domestic rivals was
after Eiji Toyoda, president~ that what they had most
- of Toyota, met in New York feared vras about to become
with GM Chairman R.oger reality. '
B. Smith late in February. C3M p. aduced a total oi
During the Toyoda-3mith 4,800,000 trucks and pass-
talks, the Glvi chairman enger cars in 1980 in the US,
came up with the proposal securing 44.5 percer~t of mo-
for possible cooperation in tor vehicle sales on the U3
th~e production oi smaII '~arket.
- cars in }he US, the spokes- �With eight manufacturing ~
man said. ~ snbsidiaries and 14 assembl-
He decli~ed to comment ing su`~sidiaries abroad, GM
on details of the two ex- already has capital tie-ups
ecutives' . talks. with Japan's Isuzu Motors
According to reliable and 4~izuld Motor Company.
sources, the nnost likelq Toyota~ whose output in
- plan to be upproved un- 1980 reached about 3,100,000
der the accord calls ior units, was reluctant to
production of sma)1 ~ car locate its own plants in the
models �ieveloped by Toyo- U3, on the ground that
ta at an idle (3M iactory such plaas as beinB Pushed
in the US. at an annual by other Japanese carmak-
rate o! 400,000 to 500,000 ers would do little to help
units. - ~ ease the jobiess problem oE
IS' realized, the propoeed the slwmp-stricken US car
tie-up t~etween the two auto ~~tead o! branching out
glants would do much to
~ ease the ever-growin8 fric- itsel2 in the US, Toyota had
tion in the Japan-IIB trade been looking for a US car-
- relations, said of9clals o! maker slnce late last yeal'
the International Trade with which to form part-
und Industry Minlstryc. nership in the production
The Toyota-C3M joint of Toyota c:u's in the US,
production plan will also according to the sources.
pose a great threat to busi- Indications were that the
ness prospects at home and latest top-level Toyota-GM
abroad of Nissan Motor meeting was held when To-
Com~any, the nation's No 2, yoda, visited Smith alter
auto manufacLurer, and attending a sales promo-
other Japanese carmakers. tion meeting oi Toyota
It 3s possible that the dealers in Canada in early
- 79
_ FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3

APPROVED FOR RELEASE: 2007/02109: CIA-RDP82-00850R400540050026-3
tVK VCI'll.1HL UDG VIVLY
February. ~ ,
Haaed on the broad~
_ agreement reached in ~he
Toyoda-$mith talks, the
two companies will shortly
start negotiations on de-
taiLs of the projected joint
- production, including the
form of a joint enterprise,
the types of cars to be pro-
duced and when ~o s*.art
production, the sources
said.
Citing probable reasons
for Toyota's decision to
join hands with GM, the
sources said GM has
foi~midable technological
strength !or development of
new cars and Toyota could
beneEt mvch Irom ex-
changes o! technical know-
_ how witt: GM.
GM, on ,ts part, was con-
sidered to have okayed the
tie-up w~ith Toyota in view
of the unexpectedly noor
= sales of the GM-developed
"J" car series and resultant
- closure of some oP GM Pac-
tories.
The world's top carmaker
also might have taken into
account that cars being
produced under its existing
tie-ups with Isuzu and Su-
zuki are restricted to mini-
cars with englne displace-
ments Prom 1,000 to .1,300
- cc, the sources noted.
GM, therefore, might
have liuped that a tie-up
with Toyota would make it
possible to produce 2,000 cc-
class cars through joint
production. +~,~y said.
- The ci. . ~,,loned Toyottt-
- G?~f joL-~t production, how-
_ ever, is expected to encoun-
ter dif~lculi,ies because of
the US antitrust regula-
' tions whlch b~n a merger
or a joint venture iri an i~-
dustry where i;~e lour largESt
companies us a group hold
75 percent or more oi the
- domestic market, i! one
party to the merger or ioint
venture has a market share
of ].5 percent or more ((3M
has 44.5 percent) and the
- other party has a market
share of one percent or more
(Toyota has 8.8 percent).
COPYRIGHT: T'ne Daily Yomiuri 1982
. CSO: 4120/214 END
80
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500050026-3