Fri, Nov 16, 2012 - Page 9 News List

How debts and double-dealing sparked Japan-China islets row

The purchase of three disputed islands by Japan that has sent tensions with China soaring, started as nothing but a deal made by a property magnate with heavy debts

By Antoni Slodkowski  /  Reuters, OMIYA, Japan

Illustration: Mountain People

The road to China’s breakdown in relations with Japan began in Omiya — a sleepy Tokyo suburb that is home to the reclusive real-estate investor at the center of the explosive property deal that enraged Beijing.

Surrounded by concrete walls, security cameras and warnings of guard dogs, Kunioki Kurihara has shunned the spotlight in his compound since closing a deal to sell three uninhabited islands in the East China Sea to the Japanese government in September.

The islands, known as the Senkakus in Japan, are also claimed by Taiwan, where they are known as the Diaoyutai Islands (釣魚台), and China, where they are known as the Diaoyu.

Their US$25.5 million sale sent tension soaring between Tokyo and Beijing. Seen in Beijing as a nationalization of private property, it sparked violent protests and a boycott of Japanese goods. Chinese ships were dispatched to patrol the disputed waters.

Participants close to the deal describe how a property magnate with heavy debts clinched a deal he had sought with the government for at least six years by playing it off against a fiery nationalist — then-Tokyo governor Shintaro Ishihara.

Ishihara has since resigned to return to national politics at age 80. It was his initial offer to buy the islands that led to a quick government purchase — at a markup of at least US$500,000.

Kurihara, 70, declined a request for an interview.

His younger brother, Hiroyuki, who describes himself as the family spokesman, has used his sudden fame to promote a book, Senkaku Islands for Sale — and a longshot plan to turn the islands into a center for medical tourism.

“It’s odd that they owned the islands for so long,” said Jeffrey Kingston, director of Asia Studies at Temple University in Japan. “It’s only now that the ante is up.”

Mostly rocky outcroppings which serve as a home to migratory birds and a herd of wild goats, the islands are closest to Taiwan, about 220km northeast of Taipei and 1,800km from Tokyo.

The largest, called Uotsurijima in Japanese and known as Diaoyu Island (釣魚島) in Taiwan, rises up like a forest-canopied mountain from the sea, with no port for landing. A little larger than New York’s Central Park, the island’s highest point tops the Eiffel Tower.

The Kuriharas obtained the islands for an undisclosed sum in the 1970s from Zenji Koga, a journalist from Okinawa, an island to the northeast. Before World War II, Koga’s father had run a fish-processing plant on Diaoyu.

Japan annexed the islands in 1895 and Koga rented them, then bought them in 1932, when they fell under the jurisdiction of colonial Taiwan, also annexed by Japan.

The Kuriharas obtained the islands after the US returned Okinawa to Japan in 1972, and interest grew in potential oil and gas deposits.

However, the family’s focus was on commercial and residential property in Omiya, a legacy of wealth built up in the rice trade. Records show Kunioki Kurihara pledged at least 75 real-estate parcels in Omiya and Tokyo against his bank borrowing.

One building next to his house served until recently as the headquarters of a Buddhist-affiliated group, Kenshokai, which preaches that Japan faces an apocalyptic reckoning and invasion by China. The group, a former Kurihara tenant, has described the isles as a potential flash point in that conflict.

In the summer of last year, Kurihara approached Akiko Santo, a lawmaker from the opposition Liberal Democratic Party, saying he wanted to try to sell the islands to Ishihara.

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