Japan breaks symbolic limit on defense spending

The Japanese government passed a small but significant milestone yesterday when it concluded the proposed budget for 1987. The ruling Liberal Democratic Party approved a defense budget that breaches a decade-long military-spending ceiling of 1 percent of the gross national product. The self-imposed limit, adopted by Cabinet decision in 1976, had acquired a highly charged, if symbolic, status as an obstacle to Japan's once again becoming a military power. The ceiling created the comfortable impression that there is a limit to how much Japan can build up militarily.

The decision to junk the barrier has drawn immediate reaction from both supporters and critics of Japan's steady defense buildup in recent years.

``We greet this with great pleasure from every point of view,'' United States Defense Secretary Caspar Weinberger told a news conference almost immediately after the news was relayed.

All of Japan's major opposition parties denounced the decision and vowed to fight it in the Diet (parliament). Socialist Party chairwoman Takako Doi warned that the move could open the door to Japan's remilitarization.

The change is a victory for Prime Minister Yasuhiro Nakasone, who two years ago made a public pledge to carry it out. Opponents, especially from within his own party, had held him back. Mr. Nakasone, though, has entered what is expected to be his last year in office. For him it is a time to finish his conservative agenda. For his potential successors, it is preferable that the departing Nakasone bear the burden of this controversial decision.

``The key thing,'' a US official said, ``is that consensus had been building here that they had to do this. This year was the moment to move to a better policy.'' Among the reasons for the timing, he said, is ``an overriding concern with preserving the harmony of'' US-Japan defense ties.

The agreeable defense relationship, however, contrasts sharply with difficulties over Japan's huge trade surplus with the US. ``They see a tough road ahead this year with Congress on trade,'' the US official said.

Thus, Tokyo's decision to maintain the pace of its defense buildup - despite the domestic controversy it would generate - was seen as an effort to ameliorate anti-Japanese protectionist feelings in the US. The budget contains a key gesture to the US: an additional $100 million to share the costs of US bases in Japan.

A Japanese defense official agrees that ``the consideration of our defense ally is one factor which occupied everybody.''

However, the official insists, the spending level had to go over the limit because of factors unrelated to ties with America. He cited the need to fulfill spending levels called for in the second year of the current five-year defense buildup plan. The slowdown in the Japanese economy, which has lowered projections for GNP growth, also made it difficult to increase spending without going over the 1 percent ceiling.

The proposed overall budget, which must be approved by the Diet, calls for the smallest increase in spending in more than 30 years. Total spending is to be 54.1 trillion yen ($333.9 billion), up only 0.02 percent over the fiscal year that ends in March. Defense spending will be 3.517 trillion yen ($21.984 billion), up 5.2 percent over last year (compared to a 6.58 increase last year). This constitutes 1.004 percent of GNP - last year's spending was 0.993 percent.

The austere budget results from the government's commitment to bringing Japan's huge deficit under control. For the last five years, the Finance Ministry has strongly limited spending, though this has done little to reduce the accumulated debt of $838.5 billion, one of the highest in the world.

The budget is likely to draw fire as well for this tight fiscal approach. Economic growth is slowing down, bringing slumping corporate profits and rising unemployment. Some people within the business community and the government bureaucracy are urging more government spending to stimulate the economy.

The stringent policy will attract more attention because of the government's proposed tax reform, which will be put before the Diet along with the budget. The opposition parties and other critics have strongly attacked the reform for favoring the rich and for functioning as a disguised tax increase.

The combination of the defense increase and the tax reform is expected to provoke a stormy session of the Diet when it reconvenes at the end of January. The government postponed a Cabinet decision until then on a new formula to supplant the 1 percent of GNP ceiling. They may offer to replace it with new wording, such as ``about'' 1 percent, to placate the opposition.