Island Issue Again Angers Japanese : Dispute: Local Russian officials reportedly have leased land in the contested territory to a Hong Kong company to build a leisure center.

TOKYO —  Japanese tempers flared anew Friday as a local Russian government unit reportedly agreed to lease land on one of four islands claimed by Japan to a Hong Kong company that would develop a big leisure center for Asians who want an affordable getaway.

Both Chief Cabinet Secretary Koichi Kato and the Foreign Ministry’s spokesman, Masamichi Hanabusa, called the reported contract “impermissible” and said Japan will officially protest to Moscow if the report is true.

“Japan cannot condone a contract between Russia and a third party that treats Moscow’s illegal occupation of the northern islands as an accomplished fact,” Kato said at a news conference.

Foreign Minister Michio Watanabe branded the report “outrageous” and promised “resolute action.”

The Russian newspaper Sovietski Sakhalin reported Friday that the Southern Kuril District had signed a $1-million lease with a Hong Kong development company called Carlson & Kaplan Co. The company reportedly plans to develop the 687-acre tract--three times the size of Tokyo Disneyland--on the east coast of Shikotan Island into a resort area with hotels and casinos, the Russian newspaper reported.

NHK, Japan’s semi-governmental radio and TV network, reported that the Hong Kong company was not located at the address it registered with the British colonial government. The TV network, however, televised a copy of the contract on its evening news show.

The Russian news agency Itar-Tass confirmed the lease in a dispatch from the city of Yuzhno Sakhalinsk. It said the 50-year agreement would allow the Hong Kong firm to build hotels, casinos, a cycling track, riding facilities, a dog track and a cockfighting arena. It was signed Sept. 4, Itar-Tass said.

Viktor Sirenko, the vice governor of Sakhalin, which has administrative responsibility over the disputed islands, told Itar-Tass that the complex will target East Asian nationals who either cannot afford such pleasures in their own countries because of high taxes or who come from places where some of the pursuits--cockfighting or gambling, for instance--are banned.

Itar-Tass called the leasing fee of 200 million rubles “unbelievably low” but said such an amount would be a big windfall for the local government. Sirenko said local officials had broken no Russian laws in signing the lease, so they did not feel obliged to involve Moscow in preliminary negotiations.

Word of the contract came only two days after Russian President Boris N. Yeltsin abruptly called off a four-day visit he was to have made to Japan beginning Sunday.

Japanese media also revealed Friday that Prime Minister Kiichi Miyazawa lashed out at Yeltsin on Thursday night when the Russian leader, in a 35-minute phone call that began at 11:03 p.m. Japan time, said that he would cite “conditions on the Japanese side” as partly responsible in announcing his decision to postpone his visit.

“What do you mean, ‘conditions on the Japanese side’? That is not acceptable,” Miyazawa was reported to have retorted.

As the conversation continued, Miyazawa twice asked Yeltsin to confirm that the public announcement of the postponement would in no way hold Japan responsible. The Russian leader finally replied by saying, “I understand Japan’s position,” Japanese media reported.

Asked about the reported exchange, Cabinet Secretary Kato refused to comment.

The official announcement in Tokyo cited domestic considerations in Russia as the sole reason for the postponement.

On Friday, however, Yeltsin, arriving in the city of Cheboksary, 500 miles east of Moscow, for a meeting with Russian regional officials, told both Russian and Japanese reporters that Japan was to blame for postponement of the trip.

“Japan was too uncompromising on the Kuril Islands question. That’s why there was nothing to go with,” Yeltsin said. “We can’t do things that way. The Russians can’t just give away the Kurils like that.”

Yelstin reportedly included a dig at his former rival, Mikhail S. Gorbachev, who was president of the Soviet Union until it was dissolved at the end of last year. “To go and come back empty-handed and, besides, to face pickets (by Japanese rightists) . . . and to run from demonstrating students, to hide from them in basements, like Gorbachev did last year? No. Neither the president nor Russia will allow such humiliation,” he added.

Clearly angered by the war of words, Watanabe threatened Friday to scrap plans to host an international conference on aid for the former Soviet republics, set for Oct. 28-29.

Jameson reported from Tokyo and Dahlburg from Moscow.