Reconsidering Japan’s War Reparations and Economic Re-Entry into Southeast Asia

ABSTRACT Japan’s war reparations began to be paid to Burma and the Philippines in 1956 and ended in 1976. Approximately 65 years have passed since the reparation payment began. The nature of Japan’s Official Development Assistance, which has been based on economic infrastructure and prioritises Asia, began with war reparations. Although post-war reparations are relevant to Japan’s economic statecraft, previous studies have analysed only the negotiation process for individual countries. No comprehensive historical analysis of war reparations has been conducted so far. This paper fills this gap by analysing the declassified materials of the Ministry of Foreign Affairs and the state-of-the-art Japanese literature based on those materials. It also clarifies the characteristics of war reparations as part of Japan’s Official Development Assistance by looking at the projects and goods paid by the reparations in each country. Furthermore, this paper challenges the conventional understanding of previous research on Japan’s economic re-entry into Southeast Asia through reparations. The study concludes that reparations were unimportant in increasing Japan’s exports to Asian countries.


Introduction: Japan's southeast economic policies in the 1950s
After the Second World War, Japan lost its economic ties with mainland China and the Korean peninsula and had no option but to turn to Southeast Asia as a market for its products and as a source of raw materials.There were four ways for Japan to re-enter Southeast Asia economically.One was to develop Southeast Asia by combining American funds and Japanese technology.For example, Shigeru Yoshida made a speech in the United States, advocating the Asian Marshal Plan, and Ichiro Hatoyama's cabinet proposed a financial assistance institution at the Simla conference in India.Furthermore, during the Kishi Nobusuke administration, establishing an 'Asian Development Fund' was proposed to both the United States and Southeast Asia. 1 The second way was to CONTACT Hiroyuki Hoshiro hoshiro@iss.u-tokyo.ac.jpInstitute of Social Science, The University of Tokyo, 7-3-1, Hongo, Bunkyo-ku, Tokyo 113-0033, Japan Supplemental data for this article can be accessed online at https://doi.org/10.1080/09592296.2023.2270320.
join the Colombo Plan and provide technical cooperation, mainly to South Asian countries, starting in 1954.The third was the yen loans to India, which began in 1958, and the fourth way was to establish economic ties with Southeast Asian countries through war reparations and use the money as a foothold for Japan's economic expansion.For example, Yoshida stated that reparations are an investment and could strengthen economic ties between Japan and other countries and enhance mutual benefits.
Of the above four measures, the first options were ultimately rejected by both the United States and Asian countries and never materialised.Although Japan participated in the Colombo Plan, the number of engineers dispatched from Japan was small and did not affect the Japanese macroeconomy.While the yen loans to India contributed to economic ties with India, this was irrelevant to economic ties with other Southeast Asian countries.Therefore, Japan had no choice but to provide a large amount of money for Southeast Asia and repatriations were believed to be the most appropriate means for Japan to re-enter the region economically.This was the origin of Japan's Official Development Assistance (ODA), joining the Colombo Plan, and starting the yen loan to India in the 1950s.This demonstrates that the nature of Japan's ODA, which has been based on economic infrastructure and prioritises Asia, began with war reparations.
However, in the 1950s, Japan had just recovered its sovereignty and economic recovery, and the situation was such that there was not enough money to invest even in its own country.Moreover, the demands of reparations claiming countries were enormous.Therefore, the Japanese government has always been plagued with a dilemma between providing reparations to strengthen economic ties with Southeast Asia and trying to minimise the amount demanded by claimants.Subsequently, this paper clarifies the detailed process of such reparation negotiations between Japan and Southeast Asian countries.
Japan's war reparations began to be paid to Burma and the Philippines in 1956 and ended in 1976. 2 Approximately 65 years have passed since the reparation payment began.Although post-war reparations are relevant to Japan's economic statecraft, previous studies have analysed only the negotiation process for individual countries. 3No historical analysis of all war reparations and quasi-reparations has been conducted so far.This paper fills this gap by analysing the declassified materials of the Ministry of Foreign Affairs (MOFA) and the state-of-the-art Japanese literature based on these materials.This study explores what negotiations were done and the factors necessary to conclude the agreements.It also clarifies the characteristics of war reparations as part of Japan's ODA by looking at the projects and goods paid by the reparations and quasi-reparations in each country.Furthermore, this paper challenges the conventional understanding of previous research on Japan's economic re-entry into Southeast Asia through reparations and quasireparations.The study concludes that reparations were not important in increasing Japan's exports to Asian countries.

International political origin of Japan's war reparations
Concrete consideration of Japan's war reparations began shortly after Japan surrendered.Ambassador Edwin W. Pauley of the Allied Reparations Commission took the lead in formulating a reparation plan; the Pauley Report was published in November 1946. 4 Following the report, the factory facilities that were considered munitions industries in Japan were removed and transferred to the Republic of China, the Netherlands (later Indonesia), the Philippines, and the United Kingdom (later Burma, Malaya, and Singapore) (Table 1).By May 1950, 43919 types of machinery and equipment, including steel, shipbuilding, thermal power plants, machine tools, aircraft factories, and the chemical industry, valued at 165.16 million yen (constant 1939 price), had been removed from Japan. 5 However, this was called intermediate reparation because it was not the last.
However, as a leading historian and former President of Japan International Cooperation Agency (JICA), Kitaoka Shinichi, pointed out, 'reparations through the removal of facilities and equipment was a great pain for Japan, but there is little to be gained for the claimants'. 6When the Cold War began, the United States was forced to change the inefficient reparations policy because it wanted to keep Japan in the Western camp.This policy change was made clear in a statement by Frank Ross McCoy, the US representative to the Far East Commission, in May 1949, declaring that interim reparations should be cancelled.However, such a change led to a backlash from countries where Japan's war damage was enormous.After that, countries such as the Philippines, the Republic of China, the Netherlands, France, Burma, and Indonesia 7 expressed their opposition to the United States, which proposed a non-reparation principle in anticipation of a peace treaty with Japan.The Philippines, Australia, and the Republic of China, in particular, vehemently resisted and demanded reparations from Japan. 8inally, Article 14 of the San Francisco Peace Treaty, signed in September 1951 (issued in April of the following year), stipulated the following points regarding reparations.Japan should pay reparations When allied powers so desired, whose present territories were occupied by Japanese forces and damaged by Japan, to assist in compensating those countries for the cost of repairing the damage done by making available the services of the Japanese people in production, salvaging, and other work.
For that purpose, Japan will promptly negotiate with the country claiming reparations.
Therefore, the number of reparations and claimant countries was not fixed when the peace treaty was signed, and Japan had to negotiate with individual countries.These countries were roughly divided into four groups (Table 2).First, of the 52 countries participating in the San Francisco Peace Conference, only the Philippines and South Vietnam demanded reparations under the peace treaty.The second group consisted of countries with individually signed peace treaties and reparations agreements with Japan, such as Burma and Indonesia.Indonesia attended the San Francisco Conference and signed a peace treaty but was dissatisfied with the reparations provisions and did not ratify the treaty.Burma was invited to the meeting but did not attend because it was as dissatisfied with the reparations provisions as Indonesia.In the 1950s, these two countries signed a reparations agreement at the same time as signing a peace treaty with Japan.The third group were the countries that participated in the conference and signed a peace treaty but waived the right to claim reparations against Japan.These included Laos and Cambodia (both members of the French Union at the time of the conference), Malaysia and Singapore (under the mandate of the United Kingdom) and Micronesia (also under the mandate of the United States).However, post-war reparations were made to these countries through quasi-reparations.The last group consisted of countries not originally invited to the conference: Mongolia, the People's Republic of China (China), the Republic of China (Taiwan), South Korea, North Korea, and Thailand.These countries could not attend the conference because some were Japanese colonies or were not part of the Allied Powers during the Second World War.As a result, Mongolia and South Korea took the form of economic cooperation or Keizai Kyōryoku rather than reparations, and Taiwan abandoned the claim itself.China had also stated in the Joint Communiqué between Japan and China signed in 1972 that it would abandon its demand for war reparations against Japan (although economic cooperation later took place).Since North Korea and Japan have not yet restored diplomatic relations, the issue of reparations (claims) remains unresolved.Moreover, since Thailand was an ally of Japan during World War II, it was not covered by reparations.However, the debt that Japan owed during the war remained, and negotiations took place between the two countries over payment.This was also included in the war reparations issues.Moreover, India rejected the peace treaty that provided for the stationing of foreign troops in Japan as a violation of Japan's sovereignty.India also stated that it could not attend the conference because India was pushing for Taiwan to return to China, but the United States rejected this. 9Moreover, India rejected the reparations provisions because they were too harsh for Japan.Therefore, the peace treaty signed between Japan and India in June 1952 stipulated that the right to claim reparations should be waived.India thus did not claim reparations against Japan and did not even receive quasireparations or economic cooperation.However, India was the first country to receive a yen loan in 1958.
With regard to Taiwan, due to the physical damage on the continent, it became increasingly difficult for the Chiang Kai-shek government, which moved to Taiwan in December 1949 due to the defeat in the Chinese civil war, to forcefully enforce reparation demand. 10Moreover, the Japanese government, claiming that the Japanese assets remaining on the continent were sufficient to pay reparations to China, refused reparations from the National Government.In response to this attitude of the Japanese government, Taiwan, whose main goal was to conclude a peace treaty with Japan and to recognise that it was the only Chinese government, eventually compromised.After all, in the Japan-China Peace Treaty signed in April 1952, the issue of reparation was stated in the Protocol as 'a sign of magnanimity and goodwill towards the Japanese people, the Republic of China voluntarily waives the benefit of the services to be made available by Japan'. 11n the next section, I will clarify the process of war reparation negotiations between Japan and countries in Southeast Asia, 12 the amounts agreed upon, and the projects and products for which the reparations were used.With that in mind, the next section questions the conventional view that post-war reparations boosted Japanese exports to Southeast Asian countries.Then, through an econometric analysis, I will clarify that this conventional view was incorrect.

Burma
The reparation agreement with Burma was the earliest to be signed.The negotiations with Burma proceeded very quickly, in contrast to those with the Philippines and Indonesia, which started early but became deadlocked and did not proceed smoothly.As mentioned above, Burma refused to participate in the San Francisco Peace Conference.Therefore, on 30 April 1952, immediately after the end of the conference and the entry into force of the peace treaty, reparations negotiations were officially opened after the end of the war against Burma was announced.In late September 1953, Japanese Foreign Minister Katsuhiko Okazaki visited Burma as a goodwill ambassador and exchanged views on reparations and restoring diplomatic relations.This moment marked the beginning of the negotiations.The Burmese side demanded USD 10 billion, while Japan offered USD 50 million. 13f course, at this early stage, both sides merely presented excessive/ understated numbers to proceed with negotiations advantageously.Still, the gap between the two was enormous.
The formal negotiations began on 19 August 1954.At that time, Burma was formulating an eight-year welfare state plan.Therefore, U Kyaw Nyein, the head of the Burmese Mission, stated that the Burmese government wanted to incorporate reparations into the plan. 14The original duration of two weeks was considerably extended, and negotiating meetings were held to finalise the agreement. 15Japan intended to negotiate without specifying the total amount, taking into account relations with other reparations claimants. 16However, the Burmese side officially presented the total amount from the beginning, and negotiations continued over it.Finally, the peace treaty and the reparation agreement between Japan and Burma were concluded on 24 September and provisionally signed the next day.
'Since this treaty set a precedent for subsequent reparation agreements the Philippines and others, the significance of this treaty is enormous'. 17his statement was made by Kanki Okano, who conducted the most comprehensive and detailed analysis of war reparations in the 1950s.He also mentioned that Japan's reparation was the transfer of funds from a developed country to developing countries, as the statement 'The service and products . . .shall be supplied or made available for the economic rehabilitation and development and the advancement of social welfare in the Union of Burma' in the agreements clearly indicates. 18This was not just reparation for war damages like Germany in World War I.The reparation agreement stipulated to provide only produce goods and related services, but Burma had also requested consumer goods such as textiles and food products.Japan refused to include exports of consumer goods so as not to reduce exports from Japan.However, the Japanese side added canned film and fish, which were not originally exported from Japan to Burma. 19he reparation agreement with Burma was stipulated as follows (Table 3).(1) An average of USD 20 million US (7.2 billion yen) of Japanese services and products would be supplied to Burma as reparations for ten years (a total of USD 200 million).(2) Japanese services and products worth an average of USD 5 million (1.8 billion yen) would be lent to Burma as economic cooperation for ten years (a total of USD 50 million).Although the agreement was successfully concluded in this way, it was not easy to make detailed arrangements for its implementation.It took about a year and a half after signing the agreement that the first contract was signed (March 1956).In addition, there were two ways of procuring reparations; direct (private) and indirect (state-owned).The direct way was that the government of the claimants directly contracted with Japanese private companies.The indirect was that the Japanese government procured services and products from its domestic companies on behalf of the government of the applicants.As the Burmese had hoped, it was decided to use the direct one. 20This direct route was also taken in the case of reparations with the Philippines, Indonesia, and South Vietnam.In addition, the agreement contained a renegotiation clause for the total amount.The clause states that after all reparations agreements with other countries are concluded, the total amount of reparations and Japan's economic power would be calculated.Then it would be re-examined whether the amount of reparations is reasonable for Burma, and if it is unreasonable, Burma could demand additional reparations.The Japanese side, of course, demanded that this clause be removed, but Burma refused to remove it because otherwise, the opposition at home would grow stronger. 21he first reparation project was the second Baluchaung hydroelectric power station.Surveying and planning began in April 1954 by the Japanese consulting firm Nippon Koei, and the Japanese company Kajima provided the technology. 22Originally it was to be a 'breakthrough' construction on a commercial basis, but with the conclusion of the reparations agreement with Burma, this became the first reparations construction project. 23Apart from the hydroelectric power plant, the most important items are means of transport such as buses and trucks and electrical appliances (Table A1).
In April 1959, Burma applied a renegotiation clause to demand more reparations. 24Initially, the Japanese side insisted that Burma was 'not necessarily out of balance' compared to other countries, and negotiations did not progress. 25In January 1961, however, Japan changed its policy and offered economic cooperation (instead of the term 'reparations').However, Japan demanded USD 40 million, while the Burmese demanded USD 200 million, which was initially unsuccessful.After several negotiations, an agreement was reached in January 1963 for financial aid of USD 140 million and loans of USD 30 million.In other words, Japan agreed to reconsider the reparation payments.This is because if the agreement had been rejected, Burma could take the matter to the International Court of Justice.There was also a risk that the Burmese government would take harsh measures, such as suspending imports from Japan or expelling Japanese trading companies. 26It was also pointed out that the Hayato Ikeda government took this political decision not to weaken the pro-Japanese cabinet and strengthen the power of the communist camp in Burma. 27he total amount provided to Burma was thus USD 340 million in grants and USD 80 million in loans, including reparations and economic cooperation (Table 3).The economic cooperation grants began in 1965 and were used for projects such as trucks and household appliance assembly plants (Table A2).Disbursement ended in 1977.

The Philippines
The damage caused by Japan in the Philippines was the second largest after mainland China.Therefore, the Philippines had the strongest anti-Japanese sentiment among the Southeast Asian countries.Naturally, demands for reparations were strong in the Philippines, and negotiations were extremely difficult.However, the Philippines, which relied on the United States for international security issues, could not ignore US policies, including the McCoy Declaration.While neutral-minded countries like Indonesia and Burma refused to ratify the San Francisco Peace Treaty, the Philippines signed a peace treaty with South Vietnam.However, the Filipino government did not silently accept the reparation clause created by the United States and continued to persistently request amendments to the draft.Subsequently, they succeeded in reviving the demands for war reparations by clearly stipulating Japan's obligation to enter into reparations negotiations and by including capital goods in those produced by services. 28This was the result of Filipino diplomatic efforts. 29n 25 January 1952, five Japanese members visited the Philippines with Juichi Tsushima, an advisor to the MOFA, as a member of the Plenipotentiary Committee, and preliminary talks on reparations negotiations began.The Philippine side initially demanded a total payment of USD 8 billion, a period of 10 to 15 years and the payment of reparations before the peace treaty came into force (i.e. in April 1952). 30During this preliminary talk, the Philippine side reduced the amount to USD 800 million, 31 but since there was no authority in the negotiations given to the Japanese plenipotentiary committee, little progress was made at this time. 32Even the amount of USD 800 million was still enormous and unacceptable to Japan, including the threemonth grace period.The demand for the Philippines was reduced, and the possibility of a compromise was opened in December 1952 when Eiji Wajima, Director of the Asian Office, visited Manila, and Philippine Foreign Secretary Joaquin Elizalde hoped to settle the demand for USD 400 million. 33After that time, the demands of the Philippines were suppressed, and full-scale negotiations were resumed over the number of reparations that were almost the same as that of Burma and Indonesia.From January to mid-April 1954, negotiations began again between Minister Katsumi Ohno and Vice-President and Secretary of Foreign Affairs Carlos Garcia.There, a tentative agreement was reached in which the actual amount of reparation was USD 400 million.In addition, 'creating an economic value of 1 billion dollars' 34 was included.However, this agreement of 'creating economic value' later became problematic.
On 15 April 1954, a Japanese negotiating team led by Shozo Murata, who served as Minister of Communications during the war, arrived in Manila, and formal talks on reparations negotiations began.However, the meeting was 'completely unsuccessful' due to opposition from the Philippine senator. 35The reasons were as follows: (1) Vice-President Garcia, who was also in charge of the negotiations, accepted the Japanese demand of USD 400 million without consulting other ruling party members.(2) The draft reparations agreement was interpreted as being aimed at making the Philippines a supplier of raw materials to Japan.(3) The duality of the reparations amounts of USD 400 million and the 'economic value' of USD 1 billion was questioned.Finally, (4) the rumours of increasing bribery, that Japanese lobbyists were handing money to the Philippine senator for the negotiations, also became an issue at this time, and the senators who opposed the agreement expressed their innocence. 36The end of the reparation negotiations had to wait until the summer of 1956, two years later.With Felino Neri as the chief representative (ambassador), the Philippines had set a target of USD 800 million and began new negotiations with the Hatoyama government.Finally, the Japanese side accepted a total of USD 800 million as a secret agreement between Neri and Hatoyama.The MOF objected to the doubling because Japan had once offered USD 400 million, but it was finally settled at that amount.
As described above, the reparations negotiations between Japan and the Philippines, which took four and a half years before being concluded, were put into effect in July 1956 through the exchange of ratification documents.At the same time, the Philippines deposited the ratification of the San Francisco Peace Treaty with the US government. 37The agreement included a 20-year grant payment of Japanese services and products worth USD 550 million (capital goods, but also consumer goods if agreed by the two governments) and USD 250 million in loans (Table 3).Moreover, the exchange declaration stipulated that of the USD 550 million grant, USD 500 million would be allocated to capital goods and USD 50 million to services.In other words, the provisions of the San Francisco Peace Treaty, which essentially provided for reparations for services, were completely overruled here.Moreover, during the reparation negotiations, an agreement was signed to remove the Japanese warships and merchant ships that had sunk in Philippine territorial waters and to hand over the scrap to the Philippines.The cost of salvaging the sunken ship was also included in this reparation. 38ransport machinery and equipment accounted for most Japanese reparations to the Philippines (Table A3).As originally agreed, the payments were made for 20 years.During this period, when there were two changes of government on the Philippine side (the Macapagal administration in December 1961 and the Marcos administration in December 1965), a complete re-examination of reparation procurement was completed carried out.In some cases, procurement was temporarily stagnant. 39However, unlike Burma, there was no request for an increase, and unlike Indonesia, the funds were exhausted before being completed, and the payment was completed as originally planned.The last payment was made on 19 July 1976, when all reparations for Japan as a defeated nation in the World War ended.

Indonesia
Indonesia was reluctant to import capital from developed foreign countries in the early 1950s, as is often the case with nations that have just become independent.Therefore, reparations from Japan, which was the only foreign capital Indonesia could control, had to be preserved at all costs. 40Reparations negotiations with Indonesia began in December 1951, when a delegation represented by the Minister of Transport (later Prime Minister) Djuanda Kartawidjaja arrived in Japan.At that time, the two countries agreed in principle to conclude a reparations agreement under Article 14 of the San Francisco Peace Treaty.When Foreign Minister Okazaki visited Southeast Asia, including Indonesia, in 1953, Jakarta offered a concrete demand that amounted to the enormous sum of USD 17.2 billion. 41Negotiations were limited to the interim plan then, and the reparations negotiations did not go smoothly due to the subsequent rapid change of government in Indonesia.Moreover, the Japanese side did not feel it necessary to rush the conclusion of the reparation agreement, and Indonesia, frustrated by this attitude, refused to settle the trade balance with Japan in June 1954.The Indonesian government demanded that this be deducted as part of the reparation payments, which complicated the negotiations.As a result, Japan curbed exports to Indonesia starting the following month.
Only in 1955, after the reparations negotiations with Burma had been concluded, did the Indonesian side demand that Japan could bring itself to accept.Tatsunosuke Takasaki, Secretary of the Economic Council Board, attending the Asia-Africa Conference in Bandung, Indonesia, in April of that year, met Indonesian Foreign Minister Sunario.He asked for USD 1.2 billion, the same amount as the Philippines.However, the amount of USD 1.2 billion was still high, and no agreement was reached due to a lack of preparation on the Japanese side.Both sides agreed on the amount of reparations in February 1957, about two years after the Bandung Conference.The Japanese side offered net reparations (grants) of USD 200 million, an unpaid export deduction amount of USD 100 million, economic cooperation of USD 500 million, and loans of USD 70 million.The Indonesian side has proposed the next amount next month.Net reparations of USD 250 million, unpaid export deductions of USD 110 million, and economic cooperation of USD 450 million.In other words, the sheer amount exceeded only USD 50 million, almost matching the amount offered by Japan. 42he reasons why Indonesia made such a big compromise are, first, that Indonesia needed different development funds than the Netherlands because it had broken off its economic relations with the Netherlands in February last year.Second, in July of the same year, a new five-year plan for domestic economic development was started, and there was a great demand for funds.Third, a more realistic basis for negotiations was established since the reparation agreement between Burma and the Philippines was almost finalised. 43In the end, it was April 1958, during the administration of Nobusuke Kishi, that the final reparation agreement was signed, and diplomatic relations between the two countries were recovered.In November 1957, Kishi made his second visit to Southeast Asia of the year and met with President Sukarno.In this meeting, Kishi agreed on a trade debt bargaining proposal, which had been one of the concerns of MOF, and 'the reparation problem, which had been a concern for many years, came to be resolved at once'. 44As illustrated in Table 3, the final agreement was approved by Indonesia for a total of USD 400 million in grants (together with undisbursed exports) and loans of USD 400 million, for a total of USD 800 million.Over 12 years, the annual payment would be USD 20 million, which was the same amount for Burma.The total of USD 800 million was the same as the amount of reparations paid to the Philippines, and the balance between the two countries was emphasised.
Reparation payments to Indonesia began in 1959 and ended 12 years later, in April 1970.The main reparations items were the construction of dams, hotels, various factories, and the provision of transport machinery (Table A4).Also noteworthy about Indonesia's reparations performance is that loans secured by reparations as financial resources were provided four times, starting with the first loan in October 1959.These were used to build hotels and department stores.However, due to the political change on 30 September 1965, 45 it became impossible to repay the loans, and most of the reparation resources had to be used for this.Therefore, 'Indonesia has virtually exhausted its financial resources to the limit by 1965'. 46

South Vietnam
As mentioned earlier, South Vietnam was one of the few countries, along with the Philippines, to demand reparations under Article 14 of the San Francisco Peace Treaty.The Vietnamese Prime Minister Trần Văn Hữu, who attended the San Francisco Conference (then still as a member of the French Union), gave the amount of reparations as USD 2 billion and called on Japan to pay the reparations in ways other than services. 47However, as the First Indochina War continued, no concrete negotiation meetings were held.Negotiations finally began when an anti-Frenchist Ngo Dinh Diem came to power, and the Republic of Vietnam was formed in July 1954 after the Geneva Conference divided Vietnam into north and south.At the end of 1955, Japan submitted a proposal of USD 4 million, but the Vietnamese side demanded USD 250 million, after which negotiations began to reach the final amount of USD 39 million. 48Vietnam's initial USD 250 million demand included indirect damages to production and trade, which was 'ridiculous' to the Japanese government. 49fter that, the Saigon government, which had started negotiations with the Nobusuke Kishi administration into power in 1957, made concessions of up to USD 100 million, but Tokyo did not accept this.In the summer of that year, the Vietnamese side made a huge request of USD 244.4 million again. 50After that, Kōgorō Uemura, the vice-chairman of the Keidanren Federation of Economic Organisations, and a delegation from the Vietnamese side negotiated for three months from September 1957 to January 1958, but no agreement was reached.The opportunity for the Vietnamese side to compromise was a statement by Ho Chi Minh, President of the Democratic Republic of Vietnam (North Vietnam).Ho Chi Minh told the Japanese correspondent that he would 'waive the request for reparation' from Japan. 51This statement had a great impact on the Saigon administration. 52Fearing that Japan would be reluctant to reparations, Saigon accepted Japan's offer of USD 39 million in grants as reparations and USD 9.5 million in loans (Table 3). 53he reparations agreement with South Vietnam was unique in that the total amount was calculated only after a concrete development plan had been selected.This was done at the request of the Japanese side.Therefore, of the USD 39 million in reparations, about 90%, or USD 35.3 million, was spent on a single project, the Da Nhim Hydropower Project (Table A5). 54At the beginning of the reparation negotiations, the Vietnamese side recognised that the Da Nhim plan and reparation were unrelated.However, when Japanese company Nippon Koei's Yutaka Kubota proposed the Da Nhim project to the Saigon administration, they were linked. 55Kubota originally planned to implement the Da Nhim project with a loan from the Japan Export-Import Bank, but, in the end, most of the reparation money was spent on this project.Moreover, his plan resulted from the bidding competition between France and Nippon Koei.
The period for reparation was five years, from January 1960 to January 1965, with grants of USD 10 million for the first three years and USD 4.5 million for the next two years.Construction of the Da Nhim hydropower plant began in April 1961.The first construction phase was completed in January 1964, and the second phase in December of the same year.This power plant allowed it to transmit up to 160,000 kilowatts of electricity to Saigon. 56

Quasi-reparation
As mentioned above, only four countries, namely Burma, the Philippines, Indonesia, and South Vietnam, received formal war reparations from Japan.However, the countries of the Indochina Peninsula and Malaysia/Singapore, which were captured by the Japanese army, were also severely damaged during the war.Therefore, the Japanese government also had to consider financial reparations for these areas/ countries.Laos and Cambodia, which waived the right to claim reparations and received economic cooperation, are said to be quasireparations, not just economic cooperation (Table 4 and Tables A5-A8).The Japanese government argues that this is different from South Korea, which, according to its interpretation, has no right to claim reparations.

Laos and Cambodia
Laos, a member of the French Union, attended the San Francisco Peace Conference, but diplomatic and defence rights rested with the former colonial power, France.Although Laos waived the right to claim reparations at the conference at the will of France, the issue was raised again after Laos became an independent state in 1953.However, in December 1956, the Vientiane government officially notified Japan of the waiver of the right to claim reparation and, at the same time, announced that it expected Japan's economic assistance. 57According to the assets of the Lao government, the amount of damage suffered during the war in Laos was about 2 billion kip (20 billion yen). 58As a result, the Japanese government signed an 'Agreement on Economic and Technical Cooperation with Laos' in October 1958.It was decided to provide USD 2.78 million (1 billion yen) in grants over two years (Table 4).However, the implementation of the main reparation project, the Vientiane Water and Sanitation Plan, was delayed due to the lack of local currency.The period of reparation payments ended up being four years, from early 1961 to early 1965.Like Laos, Cambodia, a member of the French Union, was one of the countries that had abandoned the right to claim reparation while participating in a peace treaty and signed a quasi-reparation agreement called economic cooperation.At the peace conference, the Cambodian government expressed its desire to receive reparation. 59The Japanese government expected the request and estimated that the amount would be about USD 200,000. 60owever, Cambodia, which fully regained sovereignty on 9 November 1953, informed the Japanese government that it would formally abandon the claim in November of the following year.This was followed by King Norodom Sihanouk's decision. 61Then the Japanese government declared that it was ready for economic cooperation in response to this favour.A Foreign Ministry official expressed that 'it is rather a fair attitude to voluntarily provide adequate economic assistance to countries that have given up their right to claim' because 'it may be advantageous for Japan in reparations negotiations with other countries'. 62riginally, the Cambodian government sought economic cooperation in building a large plateau city in Kirirom, about 120 kilometres from Phnom Penh.However, the plan was abandoned because the Japanese government was reluctant. 63Eventually, USD 4.17 million (1.5 billion yen) of grant aid was given (Table 4).

Singapore and Malaysia: the blood debt issue
Japan also offered a quasi-rescue to Singapore and Malaysia, the British colonies at the time of the San Francisco Conference.Since the UK waived the right to claim reparations at the conference, the issue of reparations for both countries did not arise again in the 1950s.Malaysia became independent in 1963 and Singapore in 1965, but before that, in February 1962, many overseas Chinese were found in the suburbs of Singapore.Japanese troops had killed them during the war.From then on, body after body was found all over Singapore and Malaysia.These bodies were among those captured and executed as active anti-Japanese overseas Chinese by the Japanese troops occupying Singapore.In the early 1960s, a claim for reparation, the so-called 'blood debt' problem, arose in response to the massacre conducted by the Japanese army during the war.Furthermore, Japanese troops had forced a USD 50 million 'donation' to overseas Chinese living in British Malaya.In addition to requesting compensation for the blood debt, Singapore urged to return this USD 50 million.
The Japanese side was able to avoid addressing the issue of blood debt as a reparation payment in principle since the United Kingdom waived the demand for reparations under the San Francisco Peace Treaty (this policy was maintained until the end of the negotiations).The Japanese government agreed to make a 'gesture of atonement' and proposed replacing it with constructing a memorial monument and a park.Singapore's Prime Minister Lee Kuan Yew responded to such a proposal by saying that a poor reparation of less than 5 million Malaya dollars (590 million) 64 would be counterproductive. 65Japan then proposed to the Singaporean government to establish a cancer treatment centre, donate laboratory equipment to educational institutions and expand the intake of engineering students.However, this proposal did not lead to a conclusion.
On 25 August 1963, a major rally was held under the auspices of the Overseas Chinese Chamber of Commerce, which had a major impact on the overseas Chinese world in Singapore.It was an 'unprecedented rally in Singapore's history' with a demand of 50 million Malaysian dollars to Japan and the participation of about 120,000 people. 66The first reason for this movement was the formation of the Malaysian Federation (16 September 1963) and the accompanying opposition from Indonesia.Suharto had sharply criticised the formation of the Malaysian Federation as being British 'neo-colonialism' and pursued the 'Confrontation Policy of Malaysia (Konfrontasi)' after the Federation was formed.Therefore, Malaysia could not afford to be embroiled in the issue of the blood debt.Second, there was a big victory for the People's Action Party under Prime Minister Lee Kuan Yew in the Singapore general election.After the election, Lee revoked the citizenship of the left wing of the Overseas Chinese Chamber of Commerce.This weakened the influence of the hardliners in the organisation who had been against Japan. 67ith the establishment of the new Malaysian Federation in September 1963, the Singaporean government lost its diplomatic rights, and negotiations between the Malaysian government and Japan resumed in October of the same year. 68Malaysian Prime Minister Rahman was not always enthusiastic about the matter.He thought it unnecessary to take coercive measures against Japan and said, 'I do not want to make a large voice on this issue'. 69Rahman considered this issue exclusively to be an overseas Chinese problem.Moreover, the situation was not such that the Malaysian side would actively raise the issue to avoid damaging friendly relations with Japan in light of Indonesia's confrontational policy. 70Immediately after the start of the formal negotiations with Malaysia, the Japanese government indicated that it would like to deal with the same 'economic cooperation' as it did in Cambodia and Laos, not reparation.Tokyo also insisted that it would not be possible to provide more than 1.5 billion yen because the grant aid to Cambodia and Laos was less than this amount. 71Although Prime Minister Rahman was reluctant to address the issue, the initial demand from the Malaysian side was enormous at 50 million Malaya dollars (5.88 billion yen), disappointing Japan's expectations.The reason for the amount submitted by Malaysia is as follows.First, there was no objective measure of compensation for people.Secondly, the USD 50 million was set as a 'symbolic figure' so that claims would not increase immeasurably in the future. 72ingapore's subsequent independence from Malaysia in August 1965 forced Japan to negotiate with the two countries.After all, negotiations with Singapore were concluded when Foreign Minister Etsusaburō Shīna visited Singapore in October 1966 and offered 25 million Singapore dollars (2.94 billion yen) for Japanese services and products (Table 4).An agreement was signed with Malaysia in September of the following year, claiming that the same grant amount as Singapore was the 'minimum condition'. 73Over three years, Malaysia received two ocean-going cargo ships worth 25 million Malaysian dollars (2.94 billion yen).

Other: Thailand
During the war, Japan signed an agreement with Thailand to open a yendenominated clearing account, through which Japan could procure Thailand's local currency and use it to purchase war supplies and pay occupation costs.However, due to Japan's defeat, Japan's debts could not be paid and remained.The balance, known as the 'special yen problem', was levied between Japan and Thailand after Japan regained its sovereignty.According to the Bank of Japan's account books, immediately after the end of the war, the balance was about 1.5 billion yen, which was almost the same as the Thai side's estimate.However, the Thai government insisted that it should repay 90 times this amount, that is, 135 billion yen. 74The Thai side claimed that the amount is equivalent to the market value, considering the foreign currency exchange ratio and the inflation of both countries. 75In the Thai National Assembly of 1952, there was a widespread belief that the goods purchased with military expenditure and the high wages procured in the special yen during the war exacerbated inflation and worsened the Thai economy. 76Given this anti-Japanese sentiment, the Thai side seemed to set the demand higher.How to make up this large difference in amount was the focus of the negotiations that followed, but of course, it took a long time to conclude.After informal talks from September to October 1954 and formal talks between Foreign Minister Wang Wai and Minister Hisato Ichimada from March to April 1955, the following compromise was finally reached on 9 April.These were: (1) the Japanese government would pay 5.4 billion yen in pounds over five years, and (2) Japan would provide 9.6 billion yen in investment and loans through Japanese capital goods and services (Table 5).
This seemed to solve the particular yen problem, but while the Japanese government thought the 9.6 billion yen was a loan that had to be repaid, the Thai government thought it was a de facto reparations grant.There was a gap in perception, which again proved to be a problem between the two countries.In Thailand, a coup d'état installed the Sarit Thanarat government in September 1957, but the idea that the 9.6 billion yen was a grant remained unchanged.The payment of 5.4 billion yen was completed in 1959, but the 9.6 billion yen remained unresolved after 1960.Moreover, Japan, especially the MOF, did not abandon the loan route because the MOF felt that it could not refuse when other reparation countries requested that the loan be converted into a grant. 77However, such an attitude of Japan led to criticism against Japan in Thailand. 78hen Prime Minister Hayato Ikeda visited Bangkok in late November 1961, the Japanese government finally accepted a request for a grant of 9.6 billion yen instead of a loan, and the problem of the special yen was solved.In January 1962, a new special yen agreement was signed, and the Japanese government planned to pay the Thai government 9.6 billion yen over eight years.Naturally, Japan's opposition Socialist Party fiercely attacked this government's decision, saying that it was 'unthinkable in common sense' to change what was originally loans to a grant. 79Ikeda said he had made a political decision 'thought from a high place'.The agreement passed parliament with most of the ruling Liberal Democratic Party.In the first seven years, an average of 1 billion yen was paid each May and 2.6 billion yen in the 8th year.The main items to be purchased were textile factories, freighters, fishery research vessels, railway vehicles, and electrical materials related to Nam Chan Hydroelectric Power Station. 80

Reparation negotiations and amount: summary
Thus far, I have divided the countries that received money, mainly reparations from Japan, into three groups and discussed the individual negotiations.
A systematic examination of the whole reveals the following features.The first thing that became clear was that the Japanese side conducted the reparations negotiations advantageously.In some cases, such as in Indonesia and the Philippines, the initial amount was too high to be paid by Japan at the time of the first claim.Therefore, Tokyo did not need to find an immediate solution, and negotiations dragged on.This contrasted with Germany, which was liable for disciplinary damages after World War I.As a result, the compromise between the claimants was the most important factor in concluding the reparation negotiations.The claimants, who had gained independence as a sovereign nation after World War II, wanted an early compromise because they needed capital from Japan to build their nation.Second, the amount claimed by the applicants was not significantly reduced if negotiations took long and were accepted by Japan.This could be because Japan's fiscal capacity had increased due to economic recovery and growth.Indonesia, for example, which was the earliest to offer Japan the amount, initially demanded compensation of USD 17.2 billion and eventually settled on USD 800 million.The Indonesian government received only 4.7% of the original demand, although the original bill was enormous.A similar calculation demonstrates that Burma received 2.5% during the first round of negotiations and the Philippines 10%.Nevertheless, in the 1960s, Burma received 85% during the second round of negotiations and Malaysia and Singapore 50%, demonstrating that the original demands had been somewhat met.Of course, making the funds available as quickly as possible had the advantage that they could be used to build up a country that had just become independent.Inflation rates also differed between the 1950s and the 1960s.However, it is clear from the data that the longer the negotiations lasted, the more satisfied the requesting government was.Third, the requesting country was always aware of the number of reparations from other countries.For example, the Burmese negotiator confessed: 'As Burma, I will not ask for a huge amount, but I also do not want to ask for less than other countries.So, if the Philippines pays USD 400 million for 20 years, Burma will ask for the same amount.Moreover, if the Philippines only needs 100 million dollars, Burma 100 million dollars is fine'. 81In other words, the Burmese government emphasised relative gain rather than absolute gain.This also explains that the total payment to Indonesia was the same amount as the payment to the Philippines.It has been pointed out that Japan had always considered the balance of reparation payments in negotiations, 82 but the claiming countries had also tried to maintain a balance with other countries and maintained their face.It was, therefore, only natural that the number of reparations, especially for the countries with major war damage, was similarly high.
Fourth, the Japanese government always avoided saying 'reparations' as much as possible and continued to use 'economic cooperation', which did not have a negative meaning for Japan.It is a well-known fact that South Korea was forced to abandon its 'claims' and replace them with 'economic cooperation', but even against Burma, using the term 'reparation' was prohibited in the second round of negotiations.For the recipient country at that time, it was more fruitful than nominal.
Fifth, most of the reparations were for construction projects such as power stations and assembly plants.This fact should force us to reconsider existing studies claiming a causal link between reparations and exports.

Rethinking the effect of the vanguard of reparation
Japan's reparations and quasi-reparations laid the foundation for the acceptance of Japanese goods in Southeast Asia and were a vanguard for Japan's economic re-entry into the region since the 1960s.Such ideas are well known and have become a conventional understanding.For example, economic historian Hideo Kobayashi's work, 83 which was a representative study in the early days, argued that the export promotion policy was promoted through reparations mainly in shipbuilding, machinery, vehicles, and electric appliances.In other words, the reparations to Southeast Asia had 'decisive importance for Japan's high economic growth and expansion of exports to Southeast Asia'. 84Many of the other research groups followed suit.Export promotion has always been highlighted by Japan's ODA researchers as one of the characteristics of Japan's ODA, and it is only natural that reparations are positioned as its origin. 85he above-mentioned earlier studies, however, lack a systematic examination based on actual data.For example, even if the number of imports from Japan to countries receiving reparations or quasi-reparations increased in the 1960s, this could only be a natural increase.If the number of imports from countries other than Japan has increased, or if the volume of exports from Japan to other countries is larger than that to these countries, the export effects of reparations cannot be claimed.In other words, to prove the export effects of reparations, it is necessary to conduct a comparative analysis not only with the countries receiving reparations but with all countries in the world.Moreover, differences in export effects within countries receiving reparations should be observed.In other words, if the arguments of previous research are correct, Burma, the Philippines, and Indonesia, which have received a large number of reparations or economic cooperation grants, would have the strongest export effects.Thailand, Malaysia, and Singapore, however, were not expected to benefit much.In reality, Thailand and Malaysia, for example, received relatively small amounts of economic cooperation, but the number of exports from Japan was considerably larger than that of Burma.These differences between East Asian countries have rarely been tested.
Furthermore, there is the view that Japanese private companies could expand into the Asian territories without risk and accumulate know-how through reparations. 86However, such a notion is an argument that does not consider the diversity of Southeast Asia at all.Southeast Asia has some Buddhist countries, some Islamic countries and a Christian country.Politically, while the Philippines has been an ally of the United States, there are also countries like Burma, which advocate neutrality.Naturally, the cultures and languages of these countries are not the same.Economic policies were also diverse.It would be a kind of Orientalism (or Asianism) to regard them as one entity, 'Southeast Asia', and to think that the experience in one country is valid in another.
There are three grounds for the above idea that reparations affect exporting to Asia.One is that policymakers at the time said that reparations would contribute to Japan's economic development.For example, Shigeru Yoshida, the Prime Minister when Japan started negotiations for reparations, considered reparations as one of the investments and stated that unless reparations strengthen the economic relations between Japan and the partner country and strive for mutual benefit, they are 'meaningless'.Furthermore, Yoshida mentioned that reparations were rather an opportunity because 'they don't have to worry about evil even if it is called an economic aggression'. 87Hayato Ikeda, Minister of Finance and International Trade in the 1950s and Prime Minister in the early 1960s, also emphasised mutual benefit, stating that the reparations were not only out of a sense of duty but also for the benefit of Japan. 88During the Eisenhower administration, John Foster Dulles, the US Secretary of State, also spoke of the benefits of reparations for Japan so that the demanding country could supply raw materials and use Japan's idle plant and labour to create jobs. 89urthermore, politicians, bureaucrats, and business people had similar views and were, therefore, deeply involved in reparation negotiations.For example, regarding the conclusion of a reparation agreement with the Philippines, Taizo Ishizaka, the chairperson of Keidanren, said optimistically, 'although reparation could cause Japan to lose some money, the loss can be recovered in a few years'. 90However, it is necessary to distinguish between the interpretation of the intentions of the political decision-makers at the time and the analysis of the actual political consequences.In other words, even if politicians such as Yoshida pointed out the causal relations between reparations and Japan's economic development (exports), scholars need to test whether their envisioned mechanism was correct by rigorous methods with real data. 91he second reason for the previous research that reparations pioneered Japan's economic advancement into Southeast Asia is that Japan's reparations were centred on providing services and capital goods.Until the Japanese government announced a new policy of providing capital goods in September 1953, 92 just before Foreign Minister Katsuo Okazaki visited Southeast Asia, Japan insisted on providing only services stipulated by the San Francisco Peace Treaty.For this reason, as already mentioned, the negotiations for reparation were rather protracted and sometimes extremely harsh.In the end, however, the provision of capital goods and services was assumed to work in Japan's favour after the fact.This is because services are a way of sending engineers from one's own country to the other to help build infrastructure.However, by supplying capital goods, Japan could provide the goods needed to build the economic infrastructure of the reparation countries in the long term.It was assumed that this would lead to an increase in Japanese exports.Because of the export effects of such reparations, many researchers have believed in the causal relationship between the two.
The third reason was the fact that reparations were completely tied to aid.In other words, in the countries that received reparations, Japanese trading and construction companies were involved in building the economic infrastructure associated with the reparations, such as dams and roads.'Perhaps, in the process of paying reparations, a close relationship beyond the scope of business was created between Japanese companies/politicians and the government of the partner countries'. 93This statement is the representative view.
However, there are some questions about these reasons as well.The first question is about the export effects of reparation items and projects.Two principles were considered when discussing and agreeing on the reparation implementation plan 94 : (1) reparations are not to interfere with normal trade between Japan and reparation-receiving countries, and (2) to prevent Japan from being burdened with additional foreign exchange payments.The latter means that when reparations are provided, purchasing new parts or goods from overseas is avoided.That is, the reparations are fully tied.Moreover, the former means that normal Japanese exports should not be included.With a few exceptions, such as ships to the Philippines, 95 the reparations differed from Japan's major exports at the time.The reparations regarded, first, transport vehicles such as buses and trucks, and second, construction-related matters, such as dams and power plants.Transport vehicles were not Japan's major export at the time except ships.Until the 1970s, Japan's major export items were textiles, optical machinery such as cameras and binoculars, and mass-market machinery such as sewing machines, transistors, radios, and televisions. 96In other words, it was a product unrelated to transport vehicles.The second building transaction is also questionable because it did not promote exports.There were annexe documents listing business plans for reparations in all reparation agreements.The countries that received reparations had to use the grants or economic cooperation as stipulated in the annexe; Burma for a power plant in Baluchaung, the Philippines for the development of the Marikina River, Indonesia for the development of the Kali Brantas River and South Vietnam for the Da Nhim power plant. 97The largest part of the reparations thus related to construction, but doubts about the export effects were also expressed by the entrepreneurs involved in construction at the time.That is, 'in the construction industry, most of the labour and materials are procured locally, so the local currency portion of the construction cost is large, and the foreign currency take-back rate is low.Therefore, the export contribution is small'. 98owever, because Japanese products were supplied as reparations, some believe that those products deepened knowledge, understanding, and familiarity and stimulated demand for other Japanese products in Southeast Asian countries. 99Therefore, to systematically demonstrate the relationship between reparations/quasi-reparations and trade, I have conducted a statistical analysis using panel data, where the unit of analysis is country-year.The dependent variable is log-transformed trade volume (exports from Japan), and the main independent variable is log-transformed granting of reparations, quasireparations, and economic cooperation.The latter does not include loans but special yen payments to Thailand and economic cooperation with South Korea.The values of each variable are calculated as constant prices for 2019.In addition, the period is limited from 1960, when data on development assistance were available, to 1977, one year after the end of payments to the Philippines.Developed countries are not included in the data.Table 6 illustrates the analysis results estimated using different models, for example controlling for recipient GDP per capita, lags in the year and country-fixed effects. 100This result demonstrates the fact that reparations have nothing to do with exports.
It was the construction industry that benefited most from post-war Japan's reparations.Before the war, the construction industry rarely went abroad, but after the war, it laid a foothold for expanding into East Asia through service reparations. 101The Overseas Construction Cooperation Association (OCAJI), established in February 1955, served to carry out overseas construction projects.There was no competition with foreign companies, which were supposed Table 6.Results of quantitative analysis of the relations between reparations and exports.to have superior technology, and there was no risk, as the Japanese government covered payment.Thus, Japanese construction companies initially expanded in East Asia under the protection of the state.They were able to experience in those countries and to prepare for the subsequent commercialbased construction'. 102However, care must be taken to conclude that the construction industry could expand into Asia because of the reparations only.As demonstrated in this paper, in Burma and South Vietnam, the construction plans for hydroelectric power plants were already being finalised before the conclusion of the reparation agreement.Furthermore, the heyday of construction work for reparation was limited to the first half of the 1960s.After 1965, it 'shifted to a commercial-based era'.Even in its heyday, for example, orders for reparation works in 1964 were 7,286 million yen for 7 cases, while 17 cases for commercial basis were 5,922 million yen, which was almost the same. 103Therefore, reparations could support Japanese construction companies but not serve as a vanguard of exports, as is usually argued.
This study examined Japanese reparations in the 1950s and 1960s from a unified perspective, using MOFA materials released in recent years and the latest research.While there are many previous studies on individual negotiations, there has been no historical analysis of all countries.This is the first empirical study to attempt to do so.Not only does it clarify the process of individual reparation negotiations, but this study also demonstrates in detail the projects and items to be paid.It also urged a reconsideration of reparations, as there were no export effects of reparations, as assumed by previous research.Post-war reparations helped the Japanese construction industry expand into East Asia but did not lead it.Since the 1960s, Japanese companies have expanded into Asia by themselves, not by the power of reparations.

Table 1 .
Percentage of intermediate reparations.

Table 2 .
Relations between the San Francisco peace treaty and claimants for reparations in Asia.Source: created by the author.

Table 3 .
Results of reparation negotiations.Source: created by the author.

Table 4 .
List of countries that provide quasi-reparations.Source: created by the author.

Table 5 .
Results of special yen negotiations with Thailand.Source: created by the author.