Japanese PM wriggles on horns of a dilemma

The hostage crisis in Peru has been complicated immeasurably by the unique relationship between Lima and Tokyo, and the domestic agenda of the Prime Minister, Ryutaro Hashimoto. At the emergency summit in Toronto at the weekend he "reaffirmed his full confidence" in Peru's handling of the situation, a curiosity, since last week he was telling his own people the opposite. What was clearer than ever was the Tupac Amaru's cunning in choosing the residence of the Japanese ambassador for the drama.

To Peru, Japan is more than just a rich trading partner: it is its biggest foreign benefactor, and the ancestral home of tens of thousands of its people, up to and including its president.

More than 96bn yen (pounds 500m) of development loans are tied up in Peru.

More importantly, from the Tupac Amaru's point of view, Japan has a poor record of crisis management, a squeamishness about the sufferings of its citizens abroad and a history of caving in to terrorism. Of all Peru's friends, Japan was always going to be least tolerant of a hard line and with most leverage to apply, in terms of supplementing its aid packages or withdrawing them. "Fujimori certainly knows that if he decides to pull a Rambo against Tokyo's wishes, the money pipeline from Japan will be shut down instantly," said John Neuffer, senior research fellow at Mitsui Marine Research.

Apart from the ambassador, the 72 hostages include employees of some of Japan's biggest corporations.

During his 12 months in power Mr Hashimoto has created an image as a dynamic leader, in contrast with his predecessor, who was paralysed by a number of disasters in 1995, including the Kobe earthquake and Tokyo subway gas attack.

Last year Mr Hashimoto supervised talks with the US on reducing bases on Okinawa and since his re-election in October he has presented himself as the aggressive champion of administrative and financial reform. But in the hostage crisis he is almost helpless.

Japan has no special forces able to aid citizens overseas; in any case, its "peace" constitution makes dispatch of troops overseas a political minefield. Mr Hashimoto is in danger of appearing more and more like a bit-player. It was this impression that the summit in Toronto was intended to dispel.

Technically, Mr Hashimoto could have the final say: the ambassador's residence counts as Japanese territory and should a direct assault become the only option (if any harm befell the hostages, for instance), he would be asked for his consent.

If he said no, he would appear culpably weak-kneed; if he said yes, he would have to face the consequences of a shoot-out. However tough his public image, it is a choice which would bring nothing but risk.

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