Foreign Relations of the United States, 1955–1957, Japan, Volume XXIII, Part 1

242. Memorandum of a Conversation, Department of State, Washington, October 23, 1957¹

Washington, October 23, 1957

SUBJECT

• The Formula for Sharing Defense Costs in Japan

PARTICIPANTS

• Mr. Ichiro Kono, State Minister in Charge of the Economic Planning Agency
• Mr. Takizo Matsumoto, Parliamentary Vice Minister for Foreign Affairs
• Mr. Takeso Shimoda, Minister Plenipotentiary, Embassy of Japan
• Mr. Shinichiro Miyakawa, Chief, Secretariat, Economic Planning Agency
• Mr. John N. Irwin II, Deputy Assistant Secretary, Department of Defense
• Mr. Arthur Way, Department of Defense, ISA
• Mr. Max Lehrer, Director, Economic and Fiscal Analysis Division, Department of Defense
• Mr. Howard P. Jones, Deputy Assistant Secretary for Far Eastern Affairs
• Mr. William C. Ockey, Acting Director, Offices of Northeast Asian Affairs
• Mr. James V. Martin, Jr., Officer in Charge, Japanese Affairs, NA

A meeting between State Minister Kono and American defense officials was held at the State Department in accordance with Mr. Kono’s request made to Mr. Robertson on October 21.² Mr. Way acted as spokesman for the Department of Defense in the absence of Mr. Irwin who was detained elsewhere until the meeting was almost over. Mr. Jones presided.

Following an exchange of cordialities, Mr. Kono said that when Finance Minister Ichimada was in the United States recently he had discussed next year’s budget, and, in this connection, Japan’s share of expenditures for United States forces in Japan. Mr. Ichimada had brought this matter up because a large portion of the United States forces was being withdrawn and expenses were dropping. Mr. Kono wanted it understood that he himself was not trying to disturb the formula. The formula had been agreed upon and it should be observed.

Mr. Way said that he had been at the meeting between Finance Minister Ichimada and Secretary Wilson, when the Military Assistance Program had been discussed.³ Defense had indicated that there would be no change in policy for the program but it would be necessary to consider the fact that Congress had cut $500 million from the budget for this program. Priorities would have to be considered and the greatest importance would be given to situations where there was war, where there was a suspended war or where there were threatening friction patterns. In this context Japan would have a lower priority.

Mr. Kono said that the following year’s defense budget was being organized now in Japan. There would be an increase of 20 billion yen over this year, one-half of which would be covered by the United States according to the expense sharing formula. Mr. Ichimada upon his return to Japan had said that he had indicated to United States officials that he would like to have more than this proportion covered by the United States. Mr. Kono asked whether Mr. Ichimada had in fact made this suggestion. Mr. Way did not recall the details; however, he said that the Finance Minister clearly had been anxious to put Japan in the best possible financial condition, and his sentiment had been appreciated by the Defense Department. There was throughout the United States Government and in its Defense Department an awareness of Japan’s economic difficulties. The Defense Department was glad to help in the defense area through programs such as the Military Assistance Program, and on such matters it worked closely with the Department of State. When any policy decisions had to be made, however, a government position had to be reached in the early stages.

Mr. Kono said that he and Mr. Ichimada were close friends. Mr. Ichimada had reported that he had reached agreement with United States Defense officials and that the United States would cover one-half of Japan’s defense budget increase because of the removal of combat forces from Japan. Mr. Kono said that upon returning to Japan he would have to defend Mr. Ichimada in the Cabinet. He wished to know whether there had in fact been such an understanding.

Mr. Way did not think that Mr. Ichimada could have gotten such an idea from his meeting with Secretary Wilson at the Defense Department. There must, he thought, be some confusion. Mr. Matsumoto remarked that this was a very important point. Misunderstanding could cause trouble in formulating the Japanese budget. Mr. Jones stated that this matter had not been discussed in any talks which Mr. Ichimada had here at the State Department.

Mr. Lehrer asked if Mr. Ichimada had indicated in his recent report to Cabinet officials in Japan who in the Defense Department had given him the impression that the United States was willing to change the formula. Mr. Kono said he had not named anyone. He had merely stated he had gained the impression that since United States forces were to be cut so drastically the United States would cover not only the 10 billion yen required of it by the formula but an additional 3 to 5 billion yen. Mr. Way said that so far as he knew the point had not been discussed. The Defense Department could not have consented to such a proposal without prior discussions with the Department of State. It would probably be several months before Defense officials would have available the facts essential for making any such decision.

Mr. Kono said that he understood, and that what Mr. Ichimada had told him then was not true. Nevertheless, since the Japanese Government was formalizing its budget and since it was following a tight money policy, no items except the defense item were being increased. The defense increase was contra to the general policy of economy. If Mr. Ichimada was wrong, and there was no new agreement about the formula, then perhaps he may have gotten some other agreement—possibly on mutual assistance. Mr. Kono added that it would be helpful it some such agreement could be had.

Mr. Way stated that Secretary Wilson had informed Mr. Ichimada that all Finance Ministers were searching for more money. Mr. Wilson had turned to Mr. Way and had asked him to explain the formula. Officials in the Defense Department had expected Mr. Ichimada to pay a courtesy call only and naturally they were not prepared to give an answer to a specific question of this kind.

Mr. Lehrer remarked that the basis of the formula was that as the Japanese self-defense forces grew they would take over increased responsibility for the defense of Japan, permitting the progressive withdrawal of United States forces from Japan. The United States share of increased Japanese defense costs constituted an incentive to Japan to assume more of the burden so that the United States could pull back its own forces. The policy had proved successful, and its success should constitute no cause for concern. Mr. Kono accepted this position but pointed out that the Finance Minister had a responsibility which he, Kono, shared because of his general responsibilities for Japanese economic planning. If the alleged understanding with Ichimada did not exist perhaps the United States might arrange some other assistance, for example on the P2V7’s. The offer of such assistance would be helpful to the Japanese Government in its defense of increased expenditures in the face of an austerity budget. Mr. Way said that the Defense Department was working on this matter. As to the formula it was too early to discuss it; another two months at least were required.⁴

Mr. Jones remarked that this was the first time he had had an opportunity to discuss this subject, and he thought that what Mr. Way had said was very much to the point. However, he was glad to have Minister Kono’s views which would be given consideration.

Mr. Lehrer said that United States costs had not dropped proportionately in Japan with the reduction of United States forces there. The reason for this was that the units which were least costly to maintain had been or were being withdrawn. Meanwhile expenses were rising on those units which remained in Japan. Mr. Kono appreciated the point that Mr. Lehrer had made. He said that whenever a Japanese representative initiates a request it might appear to be opportunistic, but he hoped that United States officials would realize that Japan had suffered last year from an overexpanded budget.

Mr. Way said that the Defense Department had appreciated its dealings with Japanese Government officials. Mr. Kaihara of the Defense Agency was well liked in Washington and American Defense officials were glad that he was coming here. His presence should be helpful in future discussions.

Mr. Kono asked for American understanding. He said that since the Japanese Government had promised to increase its defense budget it would do so, but he wanted the American Government to know that the Japanese Government was in a very painful position in light of its austerity program.

Mr. Way said that the Defense Department was very happy to see the $80 million increase in the JSDF budget. The American Government had been under criticism for its large contributions to Japanese defense because Japan itself was only putting 1.5% of its gross national product into its defense forces whereas the United States puts about 10% of its gross national product into defense purposes. Therefore, we were glad to see Japan’s defense budget increasing this year. The increase was an indication of the new understanding achieved when Mr. Kishi visited Washington. American officials would be happy to do what they could to make it easier for the Japanese Government to get its proposed budget approved in the Japanese Diet. Mr. Kono said the details would be covered in the Joint Committee in Tokyo. He would appreciate whatever the United States could do to help. Mr. Way remarked that we had a Congress, too, in the United States and he hoped that Mr. Kono would understand the problems which this entailed. Mr. Kono replied that 1.5% of the income of a poor nation meant more to it than 15% of the income of a large nation. Mr. Way said that he appreciated this fact and noted that the present contribution which Japan made to the maintenance of United States forces in Japan was down to one-half of what had been set in the original agreement of 1952.

Mr. Irwin closed the meeting with the statement that Defense officials were glad to have had an opportunity to meet with State Minister Kono and to hear his ideas.

1. Source: Department of State, Central Files, 794.5/10–2357. Confidential. Drafted by Martin on November 5.
2. According to Martin’s memorandum of the conversation between Kono and Robertson, Kono had requested that the meeting be held at the Department, rather than the Pentagon, to avoid press attention. (Ibid., 611.94/10–2157)
3. No record of this meeting has been found.
4. For text of the Agreement concerning a cost-sharing program for production and development in Japan of P2V aircraft, effected at Tokyo by an exchange of notes on January 25, 1958, see TIAS 3984; 9 UST 124. Documentation on the negotiation of this agreement is in Department of State, Central Files 611.94 and 794.5–MSP for 1957–1958. For the Department of State position on the proposal, see Document 244.