The government is set to provide unrestricted grants to Okinawa Prefecture to help its economy in an apparent bid to resolve the thorny issue of relocating the U.S. Futenma air station.
The program, the first of its kind, was drawn up in response to the prefectural government's call for 300 billion yen ($3.93 billion) in funds it can use entirely according to its own plans.
Although the government's new guidelines for steps to help the prefecture mentioned the establishment of grants allowing more freedom for Okinawa on how to use the money, it did not clarify the size of the funds nor provide details about the program.
If the government pushes to link the provision of grants with the relocation of the U.S. Marine Corps Air Station Futenma in Ginowan to the Henoko district of the city of Nago in the prefecture, it will likely draw ire from local officials.
The administration of Naoto Kan, Prime Minister Yoshihiko Noda's predecessor, earmarked 230 billion yen for projects related to Okinawa Prefecture in the fiscal 2011 budget.
Of the sum, 32.1 billion yen came in the form of grants, like the rest of the prefectures.
But these funds had to be used for specific projects as a requirement.
Okinawa was urging the government to raise the funds to 300 billion yen and to allow it to spend the money in accordance with its plans.
With the offer of the new program, Noda apparently intends to make progress in the stalled Futenma issue, a source of discord between Japan and the United States.
The new guidelines also stated that from fiscal 2012, the government will include a clause that takes into account the leadership of the prefectural government and the central government's responsibility in promoting Okinawa's economic development.
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