Shock Waves From Toshiba-Soviet Deal Still Rattle Japan

TOKYO — On a visit to Washington in 1979, the late Prime Minister Masayoshi Ohira was shown a satellite photograph of a Japanese-built ship repair dock at a Soviet naval base in Vladivostok.

The dock had been built by Ishikawajima Harima, one of Japan’s largest heavy industry firms, and Washington was not at all pleased that it had been sold to the Soviet Union. After all, the Soviet Union posed a potential threat to Japan, and the United States was providing for Japan’s security. Still, U.S. officials made no public protest.

Now it has been disclosed that Toshiba Machine, a subsidiary of the giant Toshiba electronics firm, has sold computerized milling machines to the Soviet Union. The United States charges that these machines have helped the Soviet Union quiet the propellers of its submarines, making their presence more difficult to detect.

This time, the United States has gone public with its complaint, setting off shock waves that have still not subsided.

Prime Minister Yasuhiro Nakasone called the $17-million Toshiba sale an “an act of betrayal.” Hajime Tamura, minister of international trade and industry, called it “an unforgivable criminal act” and he complained that some Japanese firms “lack morality.”

But the real shock in Japan--in government, in business and among the people--was not touched off by news of the sale to a potential enemy but by the reaction of an ally, the United States.

Since the Toshiba incident came to light, Japan has tightened its controls on the export of strategic goods, but government officials concede privately that this was done in response to a vote by the U.S. Senate to ban U.S. imports of Toshiba products for up to five years. (The House recently passed a milder bill that would prohibit the sale of Toshiba products at post exchange stores on U.S. military bases). Toshiba’s annual sales in the United States top $2 billion.

Nakasone’s Cabinet has now approved legislation that will tighten controls on the export of strategic goods and stiffen penalties for violations. Earlier, Defense Director Yuko Kurihara announced that U.S. and Japanese experts would join in a research project to improve methods of tracking Soviet submarines. And executives have suspended plans for a meeting of the Japan-Soviet Joint Economic Committee that was to have taken place by the end of the year.

But the main result of the incident so far has been to point up again just how casually the Japanese and their government regard the matter of national security and the alliance with the United States.

At the center of it all is the Ministry of International Trade and Industry. Its lax handling of export controls in general, and its initially nonchalant response to the American complaint about the Toshiba sale in particular, brought into the open the Foreign Ministry’s distrust of export-minded bureaucrats. The Foreign Ministry has insisted on having--and has been given--a voice in future decisions on sensitive exports.

Even Shoichi Saba, who resigned July 1 as Toshiba’s chairman, admitted that there is “a rather loose attitude” toward export restrictions, “not only within Toshiba Machine Co. but within Japanese corporations in general.”

The man who disclosed the sale, Hitori Kumagai, a former chief of the Moscow office of Wako Koeki, a trading firm specializing in transactions with Communist nations, puts it even more bluntly.

Kumagai, who speaks Russian and worked in Moscow for 10 years, said in an article in the August issue of the magazine Bungei Shunju that of the more than 50 Japanese firms that have offices in Moscow--including giants like Mitsui and Mitsubishi--”there is probably not a single one that has never violated Japanese government laws and regulations concerning export restrictions.”

Japanese diplomats admit privately that they are concerned about Japan’s image in the United States as a nation of executives who will do anything to sell their goods.

Government leaders, fearful of creating even more enmity toward Japan, have been careful to avoid appearing to condone the Toshiba sale, but most Japanese seem to feel that it was no big deal.

Kensuke Obata, a Japanese representative with Jane’s, the London-based international research organization that specializes in analyzing defense issues, said the Japanese “feel as if they are being scolded by a homeowner for destroying his house when all we did was break a window while playing baseball.”

Only when Toshiba’s chairman and president both resigned did the average Japanese begin to understand that the United States was taking the incident seriously. Even then, as Kazuo Aichi, a ruling party member of Parliament, noted in a newsletter to his constituents, the general reaction was one of astonishment.

Want Answers

“Americans would like to know,” Aichi said, “who it is that the Japanese people think they owe for their security.”

Tamura, the minister of trade, acknowledged at a July 17 news conference in Washington that the Japanese “have a weak sense of national security.” He blamed Japan’s “peace constitution”--written while Japan was under U.S. occupation after World War II--for dulling security sensitivities.

Japan, Tamura said, has become a nation “which believes that there should be no such thing as a secret, where even a law against spying cannot be enacted.” And he added that Japanese business firms, for all their diligence and management prowess, indulge in immoral acts in the blind pursuit of profit or a larger share of the market.

Kurihara, the Defense Agency director, said on the floor of Parliament that “people in Japan have a different perception of national security than do people in the United States and other Western nations.”

The general feeling that the Toshiba sale was not a major crime has been so strong that some Japanese, sympathetic to the United States, have felt compelled to remind their countrymen that rules and laws must be upheld.

“When a policeman catches a thief, Japanese should at least refrain from saying that it is the policeman who is bad,” said Sho Nasu, president of Tokyo Electric Power.

Ken Moroi, chairman of Chichibu Cement, said: “In Japan, there is a mood that rules are not all that important, but that kind of thinking doesn’t hold water in the societies of Western countries, which place importance on upholding contracts.”

Contributing to the absence of popular condemnation of Toshiba is widespread publicity given to statements by defense experts that the Toshiba sale in itself could not be credited with silencing Soviet submarines.

3-Year Difference

Defense authorities here noted that Soviet submarines started getting quieter around 1979, at least three years before the first of the sophisticated milling machines were shipped to the Soviet Union along with computer technology supplied by Kongsberg Vapenfabrikk, a state-owned Norwegian company.

Cmdr. Jim Auer, a Pentagon expert on Japan, acknowledged in an interview with the Japanese newspaper Yomiuri that the Toshiba deal was just one factor in helping the Soviets with their submarines. He insisted, however, that it has helped to make them “much harder” to detect.

Rules established by the Paris-based Coordinating Committee for Multilateral Strategic Export Controls (COCOM) have been accorded little respect by Japan. But in the eyes of most Japanese, these rules were imposed on Japan and countries of the North Atlantic Treaty Organization by the United States, which itself has not complied consistently with bans on the export of strategic materials.

Toshikuni Yahiro, chairman of Mitsui, told the newspaper Asahi here: “I never regarded the concept of violations of COCOM rules with such severity. . . . I feel that (Toshiba) was made a scapegoat for economic friction or for the failure of the Pentagon” to develop adequate submarine detection devices.

Takehiko Yamamoto, a researcher in the library of Parliament, said the history of enforcement of COCOM rules has been marked by a repetition of “tightening and loosening.” He advised Japanese executives to “wait coolly while the typhoon passes, with heads tucked in turtle-like.”

Kumagai, the trading firm executive who disclosed the Toshiba deal, said he suspects that Japanese firms have not been alone in selling strategic items to the Soviet Union, and that American and European firms have also broken the rules.

Various “conspiracy” theories have emerged to minimize the incident. Some have suggested that the Pentagon is plotting to whip up support in Congress for dramatic increases in spending on U.S. submarines. Others say that Americans are trying to beat back technological challenges from Japanese high-tech leaders like Toshiba. Some regard the Toshiba flap as just one more in a continuing series of “Japan-bashing” incidents.

There has been little call here for Japan to take a more serious attitude toward defense matters. A few newspapers have urged the people to abandon their apathy toward defense issues and to wake up to the existence of a potential threat. Hawks in the ruling Liberal Democratic Party have demanded enactment of a law to penalize spying. And some ultra-conservatives have argued that the constitution, which outlaws war as an instrument of national policy, must be revised to awaken the Japanese people to a need for defense.

But except for the promised tightening of export controls, there have been no changes of substance. For example, on July 31 Nakasone’s government put a limit of 6.2% on the increase the Defense Agency may request in the budget for fiscal 1988. But as a percentage and as an absolute sum, the increase represents no significant change. Even if the Finance Ministry approves the entire request, which is not likely, defense spending next year will continue at about $24.9 billion, about 1% of the gross national product.

The Toshiba sale was such a clear violation of COCOM rules, and of Japanese law as well, that Toshiba and its subsidiary have found no shelter from criticism. Yet without Kumagai, who blew the whistle, the incident would likely never have come to light.

Although Kumagai has not fully explained his motive, he reported the sale to the Paris headquarters of COCOM in December, 1985. At least two subsequent inquiries from the U.S. government, neither of which identified Kumagai, were brushed aside by the Ministry of International Trade and Industry. On both occasions, the ministry examined only the documents that had been submitted to it to obtain the export license.

Only after U.S. Defense Secretary Caspar W. Weinberger appealed to Kurihara at the Defense Agency did the ministry call in, last April, executives of the firms involved. It then learned that they had falsified the documents.

Moreover, it found that executives of both Toshiba Machine and Wako Koeki, Kumagai’s company, carried out the deal knowing from the start that they were shipping equipment banned under COCOM rules. It also learned that C. Itoh, the trading firm that normally handled Toshiba Machine’s exports to the Soviet Union, was brought in to help camouflage the the deal, and that technicians from the Toshiba subsidiary made repeated visits to the Soviet shipyard where the machinery was installed.

Not until the U.S. Senate moved to ban all imports of Toshiba did Trade Minister Tamura embark on a hastily arranged trip to the United States last month to try to make amends.

Among other things, Tamura promised to double, to 80, the number of inspectors monitoring the 200,000 or so shipments a year to Communist countries. He also promised stronger financial and moral support for COCOM.

Toshiba itself also took no action until the threat to its American market arose in Congress, but since then it has apologized and promised that there will be no repetition.

Not until after the issue exploded in Congress did Wako Koeki announce July 14 that its president, Naruo Fujisato, had resigned secretly in mid-June to “take responsibility . . . for causing turbulence in society.”

But the fundamental question was not “turbulence in society” but what the newspaper Yomiuri spelled out in an editorial:

“Even if the damage inflicted on Western security were not decisive,” the Yomiuri said, “Japan’s responsibility as one of the Western allies would not be lightened. What is at issue is the sense of national security among the Japanese people at large.”