OSAKA -- What do you do with an island far from the center of town on which no one wants to live because methane gas leaks from landfill boasting high dioxin levels?

Maishima Island in Osaka bay

If you're Osaka, you turn it into a modern day theme-park version of Nagasaki's Dejima and allow foreigners to live and work there.

That's one proposal for using Maishima Island in Osaka Bay, now that the 2008 Olympics have gone to Beijing.

The city had hoped to build an 80,000 seat stadium on Maishima, as well as a swimming pool complex and sports facilities. But with the loss of the Olympics, the projects have been left dead in the water.

Maishima Island sits in the middle of Osaka Bay, about an hour by bus from JR Osaka Station. Surrounded by factories, the petrochemical smog levels that hang over the island for most of the year were recently cited by the International Olympic Committee as cause for concern during an inspection tour of the island.

As well as air pollution, local citizens' groups also have more down-to-earth concerns.

"Because of the buried garbage, the city had to alter a plan to build the Olympic stadium on the northern end of the island. They were afraid that digging in that area would disrupt large quantities of trapped methane and release dioxins into the air," said Yutaka Kadowaki, an Osaka environmental activist.

Another victim of the failed Olympic bid was a proposed subway system connecting the three man-made islands in Osaka Bay -- Maishima, Yumeshima, and Sakurajima.

While what to do with the first two islands is now being discussed by local political and business leaders, three basic ideas have received a good deal of attention.

The first involves turning the island into a gambling mecca. The business community favors this plan, but they admit that convincing the central government to allow licensed gambling casinos could be difficult.

The second idea is to transform Maishima into a model city for the future, constructing apartment blocks and office buildings with the latest environmental technologies.

But it is the third idea, proposed by Koki Chuma, a Liberal Democratic Party Lower House member, that is drawing the largest amount of interest from the local business community: Turn the island into a modern day version of Nagasaki's famed foreign enclave, Dejima.

"Both Maishima and neighboring Yumeshima Island would be turned into foreign access zones. There would be an American zone, a British zone, a French Zone and so on. Each zone would have its own consular representative, and its own businesses run by foreigners from that country. There would be international schools and housing for the foreign community as well," Chuma said.

"By setting up Maishima this way, Osaka would attract a lot of Japanese tourists. Once they crossed the bridge onto Maishima, it would be like they were in a foreign country, and they could enjoy it like they enjoy Nagasaki's Holland Village or Park Espana near Ise" (Mie Prefecture).

Chuma first came up with the scheme in the late 1980s, before the city decided to go after the 2008 Olympics.

Now, many in the Kansai Economic Federation and the city bureaucracy are taking another look at the plan, although Chuma admits that the city assembly in particular has mixed views with some members wanting to try for the Olympics again.

The idea also comes at a time when the Osaka Bay area is already littered with white elephant construction projects, many designed to promote international investment. The Asian Trade Center and World Trade Center buildings, which were opened on the Osaka waterfront in the mid-1990s, are now over 70 billion yen in debt.

Yoneko Matsuura of the watchdog group Mihariban said the plan is "another excuse to find some reason to get government money to build roads and buildings that nobody will use."

Foreign businesses and diplomatic missions have not been consulted on the idea. The few who have heard about the plan are reacting negatively.

"I guess Chuma has a lot of construction company donors that need a payoff, and this is the easiest way to take care of them," one American business executive joked.

"There is no way foreign consulates, especially those that already have a presence in central Osaka, would establish an office on Maishima or open up a consular office out there. It's a waste of money," a Kansai-based Western diplomat said.

Undaunted by the failures of the construction of the ATC and WTC buildings or foreign criticism, Chuma believes that with a little bit of effort and a few changes in the law to allow for the establishment of a free-trade zone on Maishima, the Dejima project could become a reality soon.

"If the city authorizes the plan, it could be up and running as early as 2007 or 2008," he said.

While not directly opposing Chuma, Osaka Mayor Takafumi Isomura expressed reservations about the plan.

"I don't really understand Chuma's plan, and it's a bit early to be talking about a Dejima when there are a lot of other, more basic infrastructure needs that must be taken care of first," the mayor said.