Japan Clamps a Freeze on Kuwait Assets : Reaction: The goal is to protect accounts from seizure. Tokyo also plans sanctions against Iraq.

TOKYO — The government imposed an unofficial freeze Friday on Kuwait’s assets in Japan to protect them from falling into Iraqi hands and announced that it will impose sanctions on Iraq to punish it for invading its tiny neighbor.

Chief Cabinet Secretary Misoji Sakamoto said Prime Minister Toshiki Kaifu agreed to a request from President Bush to join other industrialized nations in taking coordinated action against Iraq.

But Kaifu, after cutting short a vacation to return to Tokyo on Friday night, decided to put off implementing sanctions until after an emergency meeting of the U.N. Security Council.

Finance Ministry officials, citing a lack of legal provisions to freeze Iraq’s assets in Japan, announced they will protect Kuwait’s assets by unofficially asking banks and stockbrokers to check the identity of anyone trying to redeem stocks, bonds or funds in accounts held by the royal Kuwaiti government or its institutions.

It was the first time Japan has ever taken such a measure in peacetime. Kuwait’s assets in Japan are estimated at more than $4 billion.

Speaking after Bush banned U.S. imports of Iraqi crude oil Thursday, Sakamoto, the government’s chief spokesman, said Japan “strongly condemns Iraq’s invasion of Kuwait.” He said Kaifu instructed his Cabinet ministers to draw up a list of specific sanctions against Iraq.

The sanctions are expected to include a ban on oil imports, a new freeze on $2.6 billion worth of promised loans and a moratorium on high-level official exchanges with Iraq. However, officials said a break in diplomatic relations is not being considered.

In a speech at a business leaders’ seminar in the resort city of Karuizawa, delivered before he returned to Tokyo, Kaifu said Iraq’s invasion “surprised” and “angered” him. Iraqi invading forces, he added, “should go home immediately.”

The prime minister said he does not expect Japan’s economy to suffer immediately, but he expressed concern that the conflict might drag on and expand to other Persian Gulf nations.

“Japan, too, must play a positive role to contain the fallout to the smallest possible limit,” Kaifu added.

Although prices on the Tokyo Stock Exchange fell below the 30,000-yen mark for the first time since May 1 and the dollar rose above 150 yen momentarily, business executives and officials reacted with relative calm compared to the panic that erupted after Arab nations imposed a boycott on shipments of oil to Japan in 1973.

Japan, which imports nearly all its oil, obtains about 6% of its shipments from Iraq and 4.9% from Kuwait. Petroleum provides 57.9% of the nation’s total energy. But unlike 1973, when Japan’s stockpile of oil amounted to only a 60-day supply, reserves that would last 142 days are now on hand.

The Nikkei index lost 729.42 points, falling to 29,515.76, while the dollar climbed to 149.35 yen, up 0.45 yen.

Only last February, Japan decided to resume extending credits worth about $2.6 billion that were originally promised to Iraq in agreements signed in 1974 and 1977. The loans were suspended during the 1980-88 Iran-Iraq War.