Since the beginning of the gulf crisis it has become a familiar and increasingly bitter question: if war comes, will American soldiers die defending oilfields that are even more vital to others? It is asked now most often and most pointedly of Japan, a nation with virtually no indigenous oil reserves which relies on the Middle East for 70 percent of its supply. Tokyo, critics say, should be especially grateful for Operation Desert Shield. Instead, its monetary assistance seems grudging, its gratitude almost nonexistent. As Rep. James Traficant of Ohio sputtered on the House floor last week: with 400,000 Americans preparing for war in the Saudi desert, “the Japanese are selling hot dogs at Yosemite Park. Think about it.”
In Tokyo they are thinking about it, and they can’t believe what they’re hearing. What’s apparently accepted as a fact among many in Washington-that, economically at least, this is Japan’s war as much or more than it’s America’s-is viewed on the other side of the Pacific as a simplistic and dangerous misreading of reality. The notion that the Japanese have the most at stake in the gulf “is not a rational argument but an argument based on emotion,” says Tomoharu Washio, senior research fellow at the International Institute for Global Peace, a Tokyo think tank associated with former prim minister Yasuhiro Nakasone.
As far as the Japanese are concerned, any rational analysis leads to the opposite conclusion: that it can cope economically with almost any oil-price scenario better than the United States can. The only situation that’s plainly a nightmare for Japan is a sustained supply disruption in the gulf, which few in Tokyo (or anywhere else) expect, even in the event of widescale war. “Any scenario short of that we can deal with,” says a Japanese official in Washington.
Japan’s confidence is rooted in three fundamental facts, all of which Tokyo believes Americans understand only poorly, if at all. They are:
Oil reserves, no matter how vast, are worthless unless brought to market. Simply put, many in the Japanese government believe privately that whoever presides over Kuwait’s oil, including Saddam, has to sell it. Few high-ranking Japanese leaders will say it publicly, but most would agree with the pungent assessment of Tokyo business consultant James C. Abegglen: “If [Saddam] doesn’t sell [oil] to Japan, what’s he going to do, drink it? He did not invade Kuwait to turn the oil off. He invaded Kuwait to increase oil income.”
Energy efficiency matters as much as dependency. If oil is available but at a higher price, everyone gets hurt a little bit, including Japan. But the relative damage for individual nations can vary greatly. What matters critically is how much energy a nation requires to fuel its economic output, and in this no one disputes that Japan has an edge over its industrial competitors. Since 1973 it has relentlessly implemented conservation policies that have paid off. During the first Arab embargo, oil provided nearly 80 percent of Japan’s energy. By 1986, that had fallen to just 56 percent. Today, Japan’s economy produces 81 percent more real output for the same amount of energy than it did in 1973. It uses about 30 percent less energy, relatively, to fuel its homes, cars, appliances and buildings than the United States. Its edge in manufacturing plants is even bigger, in part because it has invested so heavily in new factories and equipment over the last three years. Overall, the Japanese economy is twice as energy efficient as America’s. In short, the Japanese are probably right when they say they can cope better with higher prices.
Japan’s economy was stronger than its competitors’ going into the next oil shock. “Japan is rather confident of its financial resources to absorb an oil-price hike if it happens,” says Yoichi Funabashi, a respected economics columnist for the Asahi Shimbun. For good reason. On Aug. 2, when Saddam stormed into Kuwait, the United States was already slouching toward recession, and Bonn had just been handed the bill to overhaul 40 years of industrial ineptitude in East Germany. But in Japan, despite a stock-market slump, growth was and remains strong, with both inflation and unemployment low. While a war-induced oil-price hike-say, to $45 or $50 per barrel-will almost certainly deepen and prolong the slump in the United States, in Japan the worst that’s expected is slower growth. “If war breaks out and lasts more than a few months, we’ll have a growth recession,” says Yoshio Suzuki, an economist at Nomura Research Institute. A “growth recession” means the economy still grows, but slowly - 1 or 2 percent a year. This year in the United States, 1 or 2 percent growth would look good.
The Japanese government remains hesitant to voice these arguments aggressively. To do so, most believe, would only increase tension over Japan’s role in the gulf when things are already tense enough. “War in the gulf would be the worst-case scenario for U.S.-Japan relations,” says Washio. The contrast now in the atmosphere between the two countries could not be more striking. Across the United States, everyone braces for a war that seems inevitable. In Japan, many don’t believe war is necessary-and they certainly don’t believe it’s Japan’s war. “The gulf crisis,” said a 4-year-old Tokyo “office lady” last week, is like looking at a fire on the other side of the river."
