Office of the Historian

367. Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Harriman) to Secretary of State Rusk0

Washington, December 28, 1962.

SUBJECT

  • Japanese Budget Provision for Assistance to Ryukyus1

The following information is for use in your discussions at 11:00 today with Secretary McNamara.2

The GOJ on December 6 proposed a list of projects totalling $5.1 million to be included in the budget (for the fiscal year to begin April 1), for presentation to the Diet, in assistance to the Ryukyus. (This was a reduction from $7.7 million contemplated earlier, which Ambassador Reischauer believed to be too much above the figure the High Commissioner would regard as acceptable.)

On December 27 the High Commissioner made counter-proposals which would have had the effect of reducing the total to about $4.7 million.3 This was to be achieved by eliminating a proposed mental hospital; reducing a public housing program; and cutting down projects for training and technical assistance. A Japanese offer of alternative projects was made and rejected, as HICOM was not prepared to accept the overall figure of $5.1 million. Since the Japanese budget must be ready for presentation December 29, the Embassy asked for instructions to be sent niact (Tab A—Tokyo’s 1529).4

We felt that the US Government should not get into disagreement with the GOJ by obstructing Japanese generosity to Okinawans, thereby [Page 766] negating a cooperative relationship envisaged in the President’s program for the Ryukyus established last March. At about 8 P.M. last night we consulted Mr. Kaysen, who promised White House support for this position. We accordingly instructed Ambassador Reischauer to inform the GOJ we accept the $5.1 million budget figure, adding that some modification might be necessary in respect of individual proposed projects within that total (Tab B—Deptel 1184).5

The Congress approved $6.9 million for US aid to Okinawa in FY 1963 and we are asking for $12 million in FY 1964 which overlaps nine months of the Japanese fiscal year in question.6 In addition we are in the final stages of negotiating a three year $18 million PL 480 Title IV (loan capital) agreement with the Government of the Ryukyus.

Recommendation:

We recommend you support the thesis that a Japanese contribution of $5.1 million is in the US interest, and that the High Commissioner should be instructed to accept projects totalling that amount from among those already agreed to plus others to be negotiated.7

  1. Source: Department of State, Central Files, 794C.0221/12-2862. Confidential. Drafted by Rice.↩
  2. Before U.S.-Japanese discussions on aid to the Ryukyus resumed on November 2, the Embassy recommended in telegram 1000, October 5, that the proposal for a 5-year aid plan be dropped and that the discussions resume on the basis of annual consultations. An October 15 memorandum from Yager to U. Alexis Johnson indicates that this suggestion was accepted. (Telegram 1000 is attached to the October 15 memorandum; ibid., 794C.0221/10-1562)↩
  3. No memorandum of this discussion has been found, but see footnote 7 below.↩
  4. According to a December 31 letter from First Secretary of Embassy, James S. Sutterlin to Fearey, General Caraway’s basic reason for wanting to limit the Japanese contribution “was his continuing fear that a Japanese program which was above the 2 to 1 ratio foreseen for US and Japanese aid would seriously jeopardize U.S. administrative authority in the Ryukyus.” (Department of State, Central Files, 794C.0221/12-362)↩
  5. Dated December 28; in it Reischauer strongly recommended the $5.1 million figure because to lower it would render the “U.S. again vulnerable to charges both in Okinawa and Japan of seeking restrict Japanese ‘generosity.’” $5.1 million was less than half of what the United States would request for FY 1964, and “we have had remarkable success in conveying impression in Japan that U.S. wishes cooperate with GOJ on Okinawa and welcomes GOJ aid.” This positive factor would be jeopardized if the United States insisted on a further reduction. (Ibid., 894.0094C/12-2862)↩
  6. Not printed. (Ibid.)↩
  7. At this time the U.S. Government’s fiscal year began on July 1, while Japan’s began on April 1.↩
  8. Telegram 1188 to Tokyo, December 28, reported that Rusk had raised the matter with McNamara that morning and that the latter had “agreed that we should not get into argument with GOJ over $400,000 but should accept $5.1 million aid offer.” (Ibid.)↩