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4. Reversion Achieved: Expectations versus Realities

Arguably, no amount of preparation could be expected to take all the sting out of reversion. There was invariably to be at least a short traumatic period to be endured as new systems were put in place and the GOJ’s Okinawa fukki taisaku, or Reversion Countermeasures, kicked in. How smooth the process would be also depended heavily on factors beyond Okinawa’s influence, especially (in)stability of the global economy and the extent to which politico-military developments in East and Southeast Asia would shape US policy. Okinawa was unlucky in both respects. In the first part, just two months after signing the Reversion Agreement in June 1971,[1] President Nixon announced an emergency economic programme designed to defend the now embattled dollar, to curb unemployment and inflation. This so-called ‘Nixon Shock’ ended the dollar’s convertibility into gold and imposed tough, if short-term, import surcharges. One result, whether deliberate or not, was a swift upward reevaluation in the yen as the GOJ shifted to a managed currency float, breaking from the fixed 360-yen/$1 rate that had persisted since Joseph M. Dodge’s institution 22-years earlier.[2] On the day of reversion the exchange rate was 305-yen/$1, a 15% drop in value against the dollar in just seven months.[3] Nixon’s statement had an immediate impact in Okinawa where, in apparent panic, people began trying to shift their savings to foreign banks, quickly convert dollars to yen, or exchange dollars for luxury goods to resell at a profit after reversion. In an attempt to ease further hysteria the GOJ agreed on emergency legislation guaranteeing compensation for the balance between the conversion rate on the day of reversion and 360-yen.[4] Hard currency exchanges took place over 6 days between 15th to 20th May 1972 at 190 locations prefecture-wide.[5] Interestingly, if not surprisingly, of the hard cash $103.4-million received 50% was from Naha City alone and just $7-million (7%) from the entire Kunigami district of Okinawa Island.[6]

Although certainly welcomed, this one-off measure had little impact long-term. More useful was implementation of the Okinawa fukki taisaku to protect indigenous industry, provide consumers with a soft landing period, and to encourage tourism. As previously stated, while ittaika involved bringing Okinawa into line with Japan proper, allowances had to be made. On certain imported goods tariffs (kanzeiritsu) were kept very low. In the case of beef, for which Okinawa was 99.7% reliant on imports, the tariff was set at 5% in contrast to 25% in Japan.[7] Okinawa was 90% reliant on bean imports, from soya to adzuki, on which no tariffs were imposed.[8] Help for industry came in different forms. On the one hand, the GOJ imposed low or zero tariffs on the import of raw materials for industry “in special consideration” of small- and medium-sized enterprises, as in the case of hops imported to brew Orion beer.[9] In terms of certain crops, like sugarcane and pineapple, Okinawa was designated as an industrial promotion area (seisan shinko chiiki) and allowed favourable pricing concessions as well as assistance in modernisation efforts.[10] To push tourism, an acceptance system allowing US dollars to remain legal tender for the immediate future was approved,[11] and visitors to Okinawa received generous tax-free shopping limits on goods such as whisky, perfumes, handbags, watches, and local coral and ivory products.[12] The right-hand-side-of-the-road driving system inherited from the US persisted until 1978. Far more important to most people, of course, were the measures toward the cost of basic consumer items. Mainland Japanese paid on average 1,500-yen for a 10-kg bag of rice, whereas Okinawans would pay 800-yen under a measure keeping the cost at 50-60% of the mainland level for 5 years.[13] This was consistent with the fact that average Okinawan wages were 60% mainland levels. In the case of imported foods Okinawans would pay no more than 5% in tax on pork, chicken, oranges, bananas, and Oolong tea, while mainland Japanese consumers paid between 25-60%.[14] Clearly, the measures could not prevent Okinawa from being hit by a sharp rise in the price of basics. With 1970 as the base year (=100) Okinawa’s consumer price index (CPI) rose to 127.6 by June 1972,[15] rising far more rapidly than incomes for the first post-reversion decade. The CPI did not stabilise until 1985 when the strong yen served to reduce the price of imports. In 1987 the CPI fell for the first time since reversion.

The problem of spiralling commodity prices was only exacerbated by a swift and hitherto uncharacteristic rise in unemployment. Okinawa suffered from a number of economic problems, but unemployment was not one. As previously stated, from 1956-1971, total unemployment not only did not exceed 2%, but actually stayed at or below 1% for 12 of those years.[16] Not surprisingly, the continuing Vietnam War was a large factor in both on- and off-base employment. A shift in forward base strategy or reduction in Vietnam expenditures would have considerable reverberations. While the total area occupied by US bases in the four post-reversion decades has been reduced by a negligible 15%,[17] there has been great change in the amount of base employment, base revenue as a percentage of gross prefectural product (GPP), and the overall role of bases to the Okinawan economy. From 1970, Nixon began the gradual extraction of US forces from Vietnam and a trimming of defence expenditures. As a key US forward base Okinawa felt the heat early. In December 1969, USCAR announced 214 civilian base worker redundancies, hinting at bigger numbers in subsequent years. This proved to be well-founded as from 1969-1975 some 15,331 civilian workers lost their jobs.[18] Where there had been at least 30,000 base workers in 1969, there were just 8,447 in 1977.[19] In the case of unemployment in spin-off base-oriented activities, such as restaurants, bars, nightclubs, etc., as a result of troop withdrawals and the weakening of the dollar against the yen it is difficult to calculate. What is apparent, however, is that by 1977 unemployment had reached 6.8%, or 29,000-persons rather than the 4,000-persons it had been in 1971.[20] It proved difficult to retrain and employ around 20,000 ex-base workers, predominantly unskilled, and find avenues of employment to soak up yearly additions to the labour force with a sharp contraction in opportunities for base work.[21] Luckily, an expanding tourist industry proved capable of picking up the slack left by the base shock as the 1970’s progressed, though it must be pointed out that most jobs created were of non- or semi-skilled variety, and therefore, offered lower wages. The average Okinawan wage has reached no better than 80% the national average since reversion, with a woman’s average salary even lower again.[22]



[1] ‘Agreement between Japan and the United States of America concerning the Ryukyu Islands and the Daito Islands,’ Department of State Bulletin 1672 (1971), 33-41.

[2] On the diplomatic factors involved in the GOJ decision to float the yen on 28th August 1971, rather than preserve a fixed rate see Michael Schaller, Altered States: The United States and Japan since the Occupation (New York: Oxford University Press, 1997), 210-244.

[3] For a comprehensive description and analysis of the yen reevaluation and its impact in Okinawa see: Sengo Okinawa keizaishi, 1077-1131.

[4] Sengo Okinawa keizaishi, 1097. See also Gyosei Shuseki Yara Chobyo, ‘Tsuka kakunin ni kansuru seimei,’ 8th October 1971. Okinawa no fukki kiroku, 1016.

[5] Branch offices of banks, post offices, and at shi-cho-son yakuba.

[6] Sengo Okinawa keizaishi, 1107.

[7] GRI, Okinawa fukki taisaku yoko – daiichijibun: gutaiteki sochi (Naha: GRI, August 1971), 48. These countermeasures had been agreed upon in principle by the GOJ in late-1970. As the above title indicates, by the latter part of 1971 they had developed into “concrete measures.”

[8] Ibid., 48.

[9] Ibid., 40, and Makino Hirotaka, Okinawa keizai o kangaeru (Naha: Shimpo Shuppan, 1978), 259

[10] Okinawa fukki taisaku yoko – daiichijibun: gutaiteki sochi, 35-38.

[11] Okinawa fukki no kiroku, 678.

[12] Okinawa fukki taisaku yoko – daiichijibun: gutaiteki sochi, 66.

[13] Ibid., 32.

[14] Ibid., 51.

[15] Sengo Okinawa keizaishi, 1113.

[16] Ibid., 1306-1307.

[17] Okinawa-ken, Chiji Koshitsu, Kichi Taisakushitsu, Okinawa no Beigun oyobi jieitai kichi: tokei shiryoshu (Naha: Okinawa-ken, 2000), 8.

[18] Makino Hirotaka, Okinawa keizai o kangaeru (Naha: Shimpo Shuppan, 1978), 282.

[19] Okinawa no Beigun oyobi jieitai kichi: tokei shiryoshu, 8.

[20] Sengo Okinawa keizaishi, 1306-1307.

[21] As will be dealt with more comprehensively later in the chapter, US bases do not employ as many today but pound-for-pound bring more to the economy by direct and peripheral means than any other single source of revenue.

[22] Many women have horror stories to tell about wages, especially in more rural areas like Kin. On the place of women in the post-reversion Okinawan economy see Karen Lupardus and Higa Teruyuki, ‘A Statistical Approach to Women’s Labour in Okinawa, Japan,’ Sangyo Sogo Kenkyu 2 (1995), 49-86.

 



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