TOKYO, JAN. 14 -- The Japanese government continued today to prepare for a Middle East war. But despite Japan's vulnerability to an oil cutoff, no sense of crisis gripped the nation -- not even its usually jittery stock market, which barely budged.
Prime Minister Toshiki Kaifu met with top cabinet officials to discuss the possibility of increasing Japan's contribution to the U.S.-led effort against Iraq.
Japan's leaders "are watching Washington with high-powered binoculars," said Shigezo Hayasaka, a well-connected political consultant. "Everybody understands that we will have to provide more, and the question everybody is looking for is how much more that should be."
The government announced tonight that it will provide an additional $37 million in aid for refugees. Cabinet spokesman Misoji Sakamoto said the funds represent Japan's response to an expected plea from the United Nations Disaster Relief Organization. A new wave of refugees from Iraq and Kuwait is expected if war breaks out.
Kaifu canceled a long-planned trip to five Southeast Asian nations. "I did not want to be outside of Tokyo" in the event of war, he explained.
Yasushi Mieno, governor of the Bank of Japan, said in a recent interview in the Yomiuri Shimbun newspaper that the central bank "will make the appropriate responses should conditions change drastically in the Persian Gulf after Jan. 15," the U.N. Security Council deadline authorizing military force to expel Iraq from Kuwait.
But for all the activity in the ministries, Japan seemed remarkably calm as the deadline approached. The Nikkei stock index fell by just 0.12 percent in slow trading, finishing at 23,213.23, down 27.79 points. The dollar, traditionally a haven for investors at times of uncertainty, drifted up 0.75 yen to close at 135.35 yen.
The market's tepid reaction to the latest developments in the Middle East, traders said, reflected the fact that the prospect of war has already been incorporated into share prices, which are down about 40 percent from their 1990 highs.
"The worst cases have already been thought about over the last five months. Most has been discounted," said George Nimmo, manager of equity sales at SBCI Securities (Asia) Ltd. "That's not to say that the Nikkei doesn't have some downside potential, but by and large, most investors have got their portfolios onto a war footing."
Moreover, analysts said, while a sharp upward spike in oil prices would take some steam out of the Japanese economy, a war would not necessarily be an economic disaster. Oil stocks are plentiful and the Iraqi army is not considered likely to destroy Saudi Arabia's oilfields.
Japan's TV news and daily newspapers have been full of gulf-related reports and bulletins all weekend. But so far, the distant crisis has had almost no noticeable impact on daily life.
Jan. 15 is a national holiday, called Coming of Age Day, and workers were expected to take advantage of the day off by thronging to ski resorts and shopping districts.
Foreign currency traders are expected to show up at their desks because of the potential for major swings in the dollar and yen. Although the Tokyo markets will be closed, the traders will be able to operate in foreign markets.