Press Conference by the Press Secretary 26 May, 1998

1. The current situation in the Republic of Indonesia
2. Ongoing assistance to the Republic of Indonesia and other Southeast Asian countries by Japan
3. Dispatch of Maritime Safety Agency vessels in light of events in the Republic of Indonesia
4. Status of private loans extended by Japanese financial institutions to Indonesian financial institutions
5. The situation of the Korean Energy Development Organization
6. Comments by Director-General Toshiyuki Takano, North American Affairs Bureau to the Diet of Japan
7. Position of Government of Japan to nuclear tests conducted by the Republic of India

1. The current situation in the Republic of Indonesia

   First of all, I would like to give you an update of the situation in the Republic of Indonesia, focusing on the things that we have been doing in the past few days. As you are well aware, a new government was sworn-in for Indonesia on 23 May. The lineup of the new cabinet indicates that various social sectors are represented and that it will be a business-like government. The new Government of Indonesia also seems to be addressing the question of political reforms positively. Although there still remain elements of fluidity in the situation, overall we believe that calm is being restored in terms of public order. We are hopeful that this new government under President Baharuddin Jusuf Habibie of the Republic of Indonesia will implement the program agreed to with the International Monetary Fund (IMF) and move forward political reform so that the stability of the living conditions of the Indonesian people and economic recovery will be achieved as soon as possible. Against this background, Ambassador Takao Kawakami of Japan paid a courtesy call on President Habibie yesterday afternoon. In this meeting, which lasted approximately 45 minutes, Ambassador Kawakami referred to the messages from Prime Minister Ryutaro Hashimoto and Minister for Foreign Affairs Keizo Obuchi congratulating President Habibie on the assumption of his new position and expressed the hope of the Government of Japan that stability of the livelihood of the people and economic recovery will be realized under the new Government of Indonesia. He told the President that Japan will continue to support Indonesia's reform efforts. With regard to the Japanese Self-Defense Force aircraft and the Maritime Safety Agency patrol vessels standing by in the Republic of Singapore, Foreign Minister Obuchi announced this morning that in view of the fact that the situation in Indonesia is basically in the process of stabilizing, a decision on the withdrawal of the planes and ships from Singapore will be made in the course of the day after making one final review of the situation in Indonesia as of this morning and it is confirmed that there are no major changes.

2. Ongoing assistance to the Republic of Indonesia and other Southeast Asian countries by Japan

   Q: You are saying that Japan sees the situation calming in Indonesia.

   A: Yes.

   Q: Does that mean that Japan will proceed with its economic package for Indonesia in the coming weeks and months?

   A: I cannot speak in terms of a specific time frame because every project needs time for preparation, however I can explain to you the basic position of the Government of Japan on the question of Japanese assistance to Indonesia which is that we will continue to assist and support the reform efforts in Indonesia. In extending our support to Indonesia we will be giving priority to cooperation which will be conducive to improving the living conditions of the people of Indonesia and cooperation that will be conducive to achieving social stability there. In this context, we will be giving special attention to alleviating the plight of the poor and the most vulnerable segments of the population there. To sum this up, Japan will spare no effort in extending support to the efforts of the Indonesian people to move forward with reform.

   Q: From this could we say that up until now Japan is satisfied with the situation in Indonesia or are developments changing that?

   A: I have already described how we view the situation. For example, over the weekend the public security situation seemed to have settled down considerably. We did not observe anything out of the ordinary. There are no riots or demonstrations. Normalcy is returning to Indonesia. In the neighborhood of the parliament there are still policemen on guard but the military has already left and there are no armored cars in that part of the city. With regard to the cities other than Jakarta, normalcy is also returning. So we think that the situation is improving and that the overall situation is in the process of stabilizing. However, as I said there are still elements of fluidity, for example how the students will react to the announcements of the government. We believe that we need to continue to monitor the situation.

   Q: Could you give us an explanation of the plan for the disbursement of aid by Japan to Indonesia?

   A: Let me start with the rice. You may be interested in the supply of rice. As you are well aware, in the economic stimulus package announced in April, the Government of Japan announced that Japan would be extending 600,000 tons of rice to Indonesia. We are presently discussing with the Government of Indonesia the procedures and other details for implementing this support. It is said that the shortage of rice in Indonesia will become serious around September so we will be making efforts so that we will be able to deliver the rice by then. Regarding financial assistance, perhaps you may be referring to the US $2 billion in financial assistance that Minister of Finance Hikaru Mastusnaga said Japan would be going ahead with. There are two components. The first component is the US $1 billion in assistance for Indonesia's foreign reserves. That will come out of the US $5 billion committed by Japan in the form of second-line reserves. The second component is the US $1 billion Export-Import Bank loan. This assistance and support was committed by Japan in order to contribute to the facilitation of trade financing in Indonesia. Presently, with regard to the second-line reserves, we are working out the details for an arrangement to implement this assistance. With regard to the Export-Import Bank loan, preparations are being made at the working level with the Indonesian side so as to be able to conclude a contract on this loan. That is where we are right now.

   Q: Could you say when the disbursement will be made?

   A: At this moment all I can say is that in both cases, we are discussing the details of the arrangements for the implementation of this assistance.

   Q: Could you give us a maximum or minimum time frame?

   A: I do not think it would be appropriate at this moment to make any predictions off the top of my head.

   Q: I have heard news reports that Japan may be making some changes in its foreign policy towards Southeast Asia, especially concerning ODA. What is your comment on this?

   A: I do not know if this can be characterized as a change in the direction of our Overseas Development Assistance (ODA) policy but one of the things that the recent experiences in Asian countries have taught us is that the economic crises hit the vulnerable segments of the population hardest. So, we will be focusing in particular on extending assistance to these segments of the population that most need help. In the Kingdom of Thailand at the time of Foreign Minister Obuchi's visit there at the beginning of this month, Japan announced a sector yen loan which focuses on improving the situation of the vulnerable segments of the population, in particular the agricultural sector. In Indonesia we have been sending large amounts of humanitarian aid to address the problems facing the poor and the vulnerable segments of the population. I think you recall that in March and April we sent large amounts of medical equipment such as dialysis equipment and later on powdered milk to Indonesia. In the days and weeks to come, we will be giving particular attention to this aspect, that is the need to address the problems of the most vulnerable people of the society in the Southeast Asian countries.

3. Dispatch of Maritime Safety Agency vessels in light of events in the Republic of Indonesia

   Q: Can you tell us the background of the dispatch of vessels to Indonesia? We understand that you dispatched vessels from the Maritime Safety Agency to Indonesia. Last week we understand that the dispatch of the vessels happened after Habibie was sworn-in as president which is also regarded as the start of the stabilizing situation in Indonesia. Can you tell us why you sent the vessels after the swearing-in?

   A: I do not recall the exact date that the decision to send the vessels of the Maritime Safety Agency was made, but that was several days before President Habibie was sworn-in. The reason we sent the vessels was to be fully prepared for a contingency there and to evacuate Japanese nationals in Indonesia if such a situation occurred, but fortunately that did not happen. We are now considering the possibility of withdrawing the vessels as well as the aircraft from Singapore.

   Q: These vessels and aircraft can carry Japanese people from Indonesia to Japan?

   A: My understanding is that the vessels and aircraft are now in Singapore and that once the order to return to Japan is given, they will come back directly to Japan. As you know, in the last few days, more Japanese nationals are going back to Indonesia than leaving Indonesia for Japan.

4. Status of private loans extended by Japanese financial institutions to Indonesian financial institutions

   Q: Are there any signs or movements by the Japanese private financial sector to withdraw the huge amount of loans extended to Indonesian banks and the banking sector which I believe is in the amount of US $6 billion?

   A: It is my understanding that the question of corporate loans is being discussed in the forum created for that purpose, a forum in which the Government of Indonesia, as well as banks from Japan, the United States of America and other countries are participating. The talks are still ongoing.

5. The situation of the Korean Energy Development Organization

   Q: I have some questions about the Korean Energy Development Organization. Recently, North Korea hinted that it may rescind the framework agreement while the Government of the Republic of Korea says that it wants to downsize the KEDO project. Have there been any consultations, requests or contacts either by the United States or the Republic of Korea concerning these developments?

   A: With regard to the discussions on the cost-sharing arrangements for the light-water reactor project, the Korean Energy Development Association (KEDO) council members, that is Japan, the Republic of Korea, the United States and the European Union (EU), are now working on the cost-sharing aspect of the project, taking into account among other things, the major changes in the economic situation in the Republic of Korea since last year, including the devaluation of the won. These discussions do include the adjustment of the overall cost estimate, however since the discussions are still ongoing among the council members and since we have yet to reach a conclusion, I will have to refrain from going further into the details of these discussions. With regard to the reports emanating from North Korea, what I would say here is that the United States and other KEDO council members are complying with the terms of the KEDO Agreed Framework between the United States and North Korea and that steady progress is being made on the light-water reactor project.

   Q: It appears that Pyongyang does not think that steady progress has been made. It has complained that the promised heavy fuel oil has failed to arrive, at least in the full volume, and the construction work is being delayed.

   A: We believe that this is a one-sided view. As I already said, progress is being made on the light-water reactor project. Last year, construction was initiated and the construction work is proceeding as scheduled. I am referring to the initial phase of the construction. With regard to the full-scale construction aspect, the KEDO members are as I said, discussing among themselves the cost arrangements for the light-water reactor project. With regard to the supply of heavy fuel oil to North Korea, the supplies are being delivered. There are difficulties, but the supplies are being delivered to North Korea. An additional 22,000 tons is being delivered to North Korea in the course of this month, if it has not happened already.

   Q: You have said that the council members are working on the cost-sharing scheme. Could you tell us when the council members may reach a final agreement?

   A: Since we are talking about an agreement among all the KEDO council members, it is difficult for me to say when that agreement will be reached. All I can say is an agreement will be reached when it is reached. However, the next meeting of the KEDO council members at Ambassadorial rank is scheduled to be held in early June. The members are coordinating their schedules in order to hold this meeting, but we do not have the exact dates or venue of this meeting yet.

   Q: A final question. You mentioned the drastic change and difficulties that the Republic of Korea is facing in terms of its economy. Is there any chance that Japan may shoulder at least part of what Seoul was ready to shoulder last year?

   A: I think you are well aware of the Japanese position. Japan is prepared to make a significant contribution to the funding of the light-water reactor in the overall context in which the Republic of Korea will be playing a central role. That continues to be the Japanese position on that.

6. Comments by Director-General Toshiyuki Takano, North American Affairs Bureau to the Diet of Japan

   Q: Director-General Takano of the North American Affairs Bureau last Friday made some remarks in the Lower House about the Japan-U.S. Guidelines. Could you tell us what question was asked and what was Takano's response?

   A: I will be very glad to answer that question. The question was about the relationship between a situation in the "areas surrounding Japan" which I think you are aware is the term used in the new Japan-U.S. Guidelines for Defense Cooperation and the term "Far East" which is a term used in the Japan-U.S. Security Treaty. Our position on this question is as follows; the meaning of the term "Far East" as used in the Japan-U.S. Security Treaty was clarified in the government position first explained to the Diet back in 1960. The areas surrounding the Far East is not a concept explicitly mentioned in the Japan-U.S. Security Treaty. The Japan-U.S. Security Treaty does mention the Far East, but it does not mention the term "areas surrounding the Far East," but the meaning of this term is clarified in the government position which was explained to the Diet in 1960. It is stated here that "this is a concept concerning the scope of actions of the United States in response to an armed attack against the Far East or a case where the security of the region is threatened by a situation arising in the area surrounding the Far East. Now let me turn to the statement made by Director-General Toshiyuki Takano of the North American Affairs Bureau the other day in the Diet. The gist of the statement is as follows: Japan is a part of the Far East region referred to in the Japan-U.S. Security Treaty. Therefore, if there occurs a situation in the areas surrounding Japan, a situation which will have an important influence on Japan's peace and security, it goes without saying that the peace and security of the Far East will be threatened as well. Such being the case, the term "the areas surrounding Japan" cannot go beyond the Far East and the areas surrounding the Far East in conceptual terms. That is to say, it cannot go beyond the framework of the Japan-U.S. Security Treaty. I need not remind you here that as Director- General Takano told the Diet the other day, whether a given situation corresponds to a situation in the areas surrounding Japan has to be determined from an overall perspective, taking into account such factors as the magnitude and the nature of the situation. That means that a situation arising in a place deemed to be in the Far East or the areas surrounding the Far East does not necessarily constitute a situation in the areas surrounding Japan, referred to in the new Japan-U.S. Guidelines for Defense Cooperation. In that sense, the term "areas surrounding Japan" used in the Japan-U.S. Guidelines for Defense Cooperation is not a geographical concept, it is a situational concept. I would also like to remind you that we cannot identify or define in geographical terms beforehand where a situation in the areas surrounding Japan referred to in the Japan-U.S. Guidelines for Defense Cooperation may occur.

   Q: Could I just get a clarification? In your answer to the question about the statement by Director-General Takano, you referred to a government explanation in 1960. Did you say what that explanation was? Were you commenting or actually giving the explanation? I am not sure in your answer whether you were commenting?

   A: I was commenting on the meaning of the areas surrounding Japan. I was explaining the meaning of the areas surrounding Japan referred to in the new Japan-U.S. Guidelines for Defense Cooperation that was agreed upon last year.

7. Position of Government of Japan to nuclear tests conducted by the Republic of India

   Q: Concerning the nuclear tests by India, the World Bank is going to vote on sanctions to impose on India. The U.S. supports sanctions. What is the stance of the Government of Japan on this matter?

   A: As you may recall, we announced after the Republic of India conducted its second round of testing that yen loans for new projects will be frozen and secondly that Japan will examine cautiously loans extended to India by international financial institutions. What does this mean? This means that with regard to new projects for India in the World Bank and other international financial institutions, we will deal with the projects in accordance with our position on bilateral assistance to India. We will discuss the projects with other members of international financial institutions on the basis of this approach.