FSX Negotiations: The Inside View

WHEN United States and Japanese defense officials met last fall in Tokyo to wrangle over plans to develop jointly the new FSX jet fighter plane, the Foreign Ministry expected to sit in on the meeting. But the Japan Defense Agency (JDA) refused, giving the excuse that there wasn't enough time to arrange a security clearance for the ministry officials to enter the building.

In Washington, officials of the Commerce Department were steaming over the Pentagon's decision to block their access to the deliberations on the same deal.

The FSX negotiations grew into one of the most bitter conflicts in US-Japan relations in decades, raising questions about the basis of the postwar alliance.

The Bush administration's $6 billion deal to co-develop the FSX fighter with Japan faces opponents in the US House of Representatives. They charge that the deal amounts to a giveaway of critical US defense technology.

A measure to restrict the deal passed the House last week, but by far less than the two-thirds margin of 290 needed to override an expected presidential veto. The Bush administration says the restrictive legislation would tie its hands in any future talks with the Japanese.

A close look at the FSX decisionmaking process reveals a story of bureaucratic conflict; of the difficulties of reaching bilateral agreements when governments are divided.

Such battles between government agencies and their allied interest groups in Japan have plagued US-Japan talks on a variety of trade and economic issues, most recently on telecommunications, and threaten the progress of any future negotiations.

Americans are not surprised to hear of such fights within Washington, not only between Congress and the White House but between different agencies of the government. But Japan is usually depicted as ``Japan, Inc.,'' a well-organized entity which tightly meshes the interests of business, the bureaucracy, and politicians.

Actually, Japan is riddled with internal battles. Dutch journalist Karel van Wolferen, in a recently published, controversial book, depicts the Japanese system as a uniquely headless monster, where the government is unable to control competing power groups. She suggests that lack of a strong center makes negotiations with Japan almost hopeless.

The FSX deal fits that description of a fractured power structure. The role of the prime minister's office in resolving the FSX negotiations suggests the emergence of a potential for political leaders to play more of a role as central decisionmakers.

The FSX negotiation which led to a formal Memorandum of Understanding (MoU) between the two governments last November was reached between the two defense establishments. The agreement to co-develop the plane, based on the American-designed F-16 fighter, was a compromise between Japanese advocates of home-grown development and pressure to buy a US plane. The JDA was itself deeply divided over the issue. Civilian bureaucrats favored cooperation, but the Air Force brass and JDA researchers linked up with the aircraft industry in favor of solo development.

Amid the confusion of a new US administration, the Commerce Department stepped in to challenge the agreement. As congressional and other critics joined a growing chorus, the administration decided in mid-February to review the agreement.

THE Japanese did not understand that the deal was coming apart until Feb. 25 when Secretary of State James Baker met with then Foreign Minister Sosuke Uno, during the funeral for the late Emperor. The Japanese were looking for a sign of commitment to the agreement. But Mr. Baker launched what one Japanese defense official calls a ``surprise attack.'' He said Japan could sweeten the pot by guaranteeing that US companies would get a 40 percent share of the production of the FSX, a demand the US had pushed and then dropped in earlier talks.

According to both Japanese and American participants in the meeting, Mr. Uno abruptly dismissed the idea, seeing it as an attempt to reopen talks on an official agreement. Mr. Baker quickly dropped the subject. Uno then tried to end the meeting on a polite note by vaguely indicating the possibility of continued discussions on the FSX issue.

At that point, reveals a Japanese participant, foreign ministry officials believed the Baker proposal was not a serious initiative. But Japanese defense officials accuse the ministry of opening the door to more talks by not firmly refusing any further discussion.

Behind his calm exterior, Baker was ``irritated personally at the sharp response,'' says a US official. Baker saw his proposal as a way to defuse congressional opposition to the FSX. But Japanese officials were unprepared and unaware of such concerns, partly because Baker had not briefed US State Department officials on his plans. In normal practice, this would have been discussed in preliminary talks to pave the way for the ministerial level meeting.

The Baker-Uno meeting brought Japan's Foreign Ministry into the issue to join the defense negotiators. It also brought Baker into an alliance with US Secretary of Commerce Robert Mosbacher.

On March 20, after a long review, the US informed Japan that it wanted to ``clarify'' the MoU, a polite way of demanding a renegotiation of its terms. The 40 percent production share was now a hard-and-fast demand, along with tightening controls on the technology to be shared with Japan.

AT this point the Japanese government was split. The Foreign Ministry leaned toward accepting the US position. But in Japan's Defense Agency, angry voices were raised. The Air Force, says the US official, was ``the strongest element in trying to see the whole thing come apart.'' The Foreign Ministry is widely viewed from elsewhere in the Japanese bureaucracy as an outsider, inclined to put the relationship with the US ahead of Japanese interests.

The civilian bureaucrats in the JDA had mixed feelings. They were committed to the deal with the US, but under pressure from the Air Force and those who say Japan's technology is superior.

``It is natural for those engineers to want to have more of the work share to make things by themselves,'' explains Jiro Hagi, head of the JDA's Defense Planning division. ``I was afraid our techno-nationalism would expand into the Japanese parliament and gather strong support.''

Then Prime Minister Noboru Takeshita, in the midst of his own political crisis, left the issue in the hands of Seiki Nishihiro, the JDA's most senior bureaucrat who had engineered the original FSX agreement. Mr. Nishihiro arrived in Washington on March 23, believing he could sit down with the Pentagon and bargain.

Nishihiro was shocked to find no familiar Pentagon officials on the other side of the table. The Pentagon was in disarray, weakened by the controversy surrounding John Tower's nomination as defense secretary.

``Suddenly there was nobody whom we could talk to,'' recalls Mr. Hagi. The Japanese found themselves facing tough-minded State, Commerce, and White House officials.

And when Nishihiro offered the US a 35 percent production share, he found Mr. Baker particularly intransigent.

The domestic political pressures on Baker were never clearly grasped by the Japanese. ``They were so focused on their own side of it, that they weren't sympathetic to the congressional problem,'' says the US official.

When Nishihiro returned empty-handed, the Japanese government was stuck with no coherent policy. Besides the Foreign Ministry and Defense Agency, the Ministry of International Trade and Industry (MITI) was also involved in what became a three-way bureaucratic deadlock.

The deadlock might never have been broken, most participants agree, without the intervention of Deputy Chief Cabinet Secretary Ichiro Ozawa, acting for the Prime Minister.

Mr. Ozawa held almost nightly meetings in his offices over several weeks with officials from all the ministries, forcing them to a consensus, essentially accepting the US demands.

Based on the Ozawa precedent, some see the Prime Minister's Office, or kantei as it is known, beginning to take on a central decision-making role.

Without Ozawa's involvement, says an informed US official, the FSX talks ``may well have failed.''

The kantei lacks the authority or even the personnel of a White House. But, a kantei official argues, there is a structural change going on, the result of dealing with international problems which cross ministerial boundaries. ``Now it is necessary to decide as quickly as possible,'' the official says, ``otherwise those issues become much more politicized,'' and more difficult to settle.

Due to an editing error, Dutch journalist Karel van Wolferen was mistakenly referred to in a June 14 article on the FSX as ``she.'' The Monitor apologizes to Mr. van Wolferen.