28. National Security Council Report1

NSC 5516/1


Note by the Executive Secretary to the National Security Council


  • A. NSC 5429/52
  • B. Memo for NSC from Executive Secretary, subject: “Review of Policies in the Far East”, dated March 4, 19553
  • C. NSC 125/24and 125/65
  • D. NIE 41–546
  • E. NSC 5516
  • F. NSC Action No. 13747

The National Security Council, Mr. H. Chapman Rose for the Secretary of the Treasury, and the Director, Bureau of the Budget, at the 244th Council meeting on April 7, 1955, adopted the statement of policy on the subject contained in NSC 5516, subject to the amendments thereto which are set forth in NSC Action No. 1374–b.

[Page 53]

The President has this date approved the statement of policy in NSC 5516, as amended and adopted by the Council and enclosed herewith as NSC 5516/1; directs its implementation by all appropriate executive departments and agencies of the U.S. Government; and designates the Operations Coordinating Board as the coordinating agency.

The enclosed statement of policy, as adopted and approved, supersedes NSC 125/2 and NSC 125/6.

Also enclosed, for information and reference, are a Financial Appendix and an Appendix on “Certain Aspects of the Situation in Japan”,8 which were previously circulated in NSC 5516.

James S. Lay Jr. 9

[Here follows a table of contents.]



General Considerations

Japanese Trends 10

1. Japan’s relations with the United States will continue to be heavily influenced by its dependence upon the United States for economic, military, and diplomatic support; by its estimate as to whether the United States will continue to demonstrate its will and ability to resist Communist aggression without seriously endangering Japan; by the fact that the United States is Japan’s largest foreign customer and source of supply (20% of its export trade and 40% of its imports); and to a lesser extent by a still substantial residue of good will for the United States. Accordingly, Japan will almost certainly seek to maintain its present alignment with the United States.

2. Japan will endeavor to reduce its dependence on the United States and will seek greater freedom of international action, including expanded relations with the USSR and Communist China.

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3. Japan has the potential to assume a leading and stabilizing role in Asia. It is unlikely to acquire sufficient strength to do so in the next few years. The rapidity with which Japan attains such strength will depend not only on its own efforts but also on the nature and magnitude of United States support and assistance.

4. Japan will continue to move toward modification of the Occupation reforms, particularly toward increasing centralization of governmental power, but Japan will remain democratic with many differences from prewar authoritarian and imperialistic patterns.

5. Moderate conservative forces, which will be hampered by factional differences and will tend toward greater nationalism, will probably continue to dominate Japanese government and politics. Left-of-center forces will probably offer stronger opposition than in the past few years. The gradual revival of ultra-nationalist forces will continue. A strong and effective government is not likely to emerge during the next few years.

6. Although the Japanese Communist Party is not likely to gain substantial parliamentary strength, it will continue to exercise an important influence through its ability to aggravate popular grievances, to exploit and infiltrate mass organizations and the intellectual leadership of the non-Communist left, and to infiltrate the government.

7. Japan does not appear to have an immediate balance of payments problem, partly due to substantial though diminishing United States special expenditures, and its economic position improved during calendar year 1954. Over the long term, however, particularly in the face of further decreases in United States special expenditures, Japan faces a difficult economic situation of providing employment and adequate living standards for its growing population through an expansion of exports and development of its limited domestic resources.

8. Japan will continue to develop its over-all defense forces at a slow rate, and will seek to adjust the balance of these forces by emphasizing the development of the air and naval components. Japan will continue to rely upon substantial military aid from the United States.

Basic United States Interests

9. The strategic location and military and industrial potential of Japan are such that the security of the United States would require us to fight to prevent hostile forces from gaining control of any part of Japan by attack. Similarly, we would be obliged to assist the Japanese Government, if necessary, to counter subversion or insurrection.

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10. United States interests would best be served by a strong Japan, firmly allied with the United States, and better able to serve as a counterweight to Communist China and contribute to free world strength in the Far East.

11. For the present, Japan’s alignment with the United States is based partly on dependence on our support. As Japan’s strength grows, dependence will lessen and should be replaced by a new sense of common purpose, mutual interests and working partnership. A major effort must be made to persuade Japan’s dominant conservative forces that the satisfaction of the nation’s economic and defense requirements and desire for prestige, as well as the stability of the conservative position, depend on continuing cooperation with the United States.

12. If a sense of mutuality does not develop as Japan’s strength increases, basic United States interests with respect to Japan will have to be reassessed. At present, however, it appears that a strong Japan is a better risk than a weak Japan.

Basic Japanese Interests and Objectives

13. Japan’s immediate objective is to strengthen its economic position, with a probable long-term objective of recovering a position of international influence and prestige. Japan considers that increase of defense strength is of lower priority, partly because it believes that its defense will be assured by the United States. While political stability is desired by most Japanese, sharp and persisting conflicts between rival personalities and factions seriously retard its development.

14. Japan currently considers alignment with the United States and cooperation with the democratic nations to be in its national interest, because it believes that in this way it is more likely to attain a position of international importance and economic strength and because it expects that the United States will if necessary defend Japan against attack.

15. At the same time, Japan believes that, within the limits of its alignment with the United States and despite its historical fear of Russia and strong dislike of Communism, it should seek to ease friction, develop trade and broaden relations with Communist China and the Soviet Union.

16. Japan is beginning to display a desire for greater freedom of international action. This tendency reflects a nationalist trend, rooted in racial pride, a longing for national prestige and a desire for greater maneuverability in the event of conflict between Communist China or the USSR and the United States. Development of the healthier and more positive aspects of Japanese nationalism is essential to Japan’s [Page 56] recovery as a major power. Accommodation of this nationalism within the context of the U.S.-Japanese alignment is a basic problem of our policy.

Principal Conflicts Between United States and Japanese Interests and Objectives

17. U.S. Bases. Japan recognizes the need for continued military protection by the United States. However, Japan does not regard the threat of aggression against it as seriously as does the United States. Consequently, while the Japanese look upon U.S. bases in Japan as protection for Japan, they also regard them as serving U.S. strategic interests and as dangerously exposing Japan to nuclear attack in the event of war. Furthermore, Japanese policy is colored by serious doubt as to whether an acceptable defense of Japan is possible in the event of nuclear war.

18. Japanese Rearmament. Partly because it discounts the danger of direct aggression, Japan puts the development of political stability and economic strength ahead of the development of military power, and resists U.S. efforts to increase total Japanese defense expenditures.

19. Communist China. Japan’s development of closer relations with the Communist bloc will probably eventually cause serious friction with the United States. The Japanese believe their international interests will be served through early development of closer contacts and expanded trade with the Communist bloc. Pressures in this direction will continue. Currently Japan is restrained from going beyond certain limits by the possible effect on relations with the United States and on trade with Nationalist China and the Republic of Korea.

20. Other sources of conflict are:

Japanese resistance to United States private investment in Japan.
The Japanese need for trade and the present imbalance of United States-Japanese trade which drives them to want to sell more to the United States than we want to accept.
The Japanese sensitivity on nuclear development which leads them to oppose the testing of nuclear weapons in the Pacific and to be vulnerable to Communist-sponsored movements for the banning of nuclear weapons.
Irredentism over the Ryukyu and Bonin Islands.
Resentment over the continued imprisonment of Japanese war criminals.
The nature of a settlement of Japan’s GARIOA obligation.
Relationships with Japanese trade unions regarding the terms and conditions of their members’ employment through the Japanese Government for services to U.S. forces.

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Building Japanese Strength

21. Japan has limited economic, political and psychological resources with which to accomplish the demanding tasks of rebuilding internal political strength, economic viability and defense capacity. There is inevitable competition for these limited resources among social, economic and defense programs. A domestic political struggle over an increase in the defense forces is creating cleavages within the country and weakening the political position of the conservative elements. Both economic austerity and the defense program are essentially unpopular with many segments of the Japanese public, and require major political efforts if they are to be achieved.

22. The United States has limited capacity to influence Japanese action. Our bargaining tools and resources of good will and persuasion should be fully applied but carefully apportioned to accomplish our objectives most effectively.

23. While the requirement for an optimum level of defense readiness will continue to exist, it must be recognized that the Japanese Government will in fact determine the total size and composition of the military forces which Japan will support.

24. The security interests of both Japan and the United States require continuing progress by the Japanese toward greater political stability, economic viability and defense strength. Achievement of greater conservative political stability will mean that a Japanese Government can take austere and sometimes unpopular measures necessary to build economic strength and defense forces. Achievement of greater economic strength will mean increased resources available to devote to defense purposes. The amount and timing of the build-up of Japanese military forces should be related to the necessity for developing political and economic stability, as well as military strength, in Japan. The United States should avoid pressing the Japanese to increase their military forces to the prejudice of political and economic stability.


25. Preservation of the security and independence of Japan.

26. A Japan allied to the United States.

27. A prosperous, strong Japanese economy, having, within the free world, access to adequate sources of food and raw materials, adequate markets for its industrial and other products, and satisfactory economic relations.

28. A politically stable Japan maintaining the principles of representative government.

29. A Japan capable of defense against internal subversion and external aggression.

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30. A Japan willing and able to contribute to the security of the Pacific area.

31. The inclusion of Japan in arrangements in the Pacific area for purposes of mutual security and economic benefit.

Courses of Action

32. The following courses of action should be carried out in such a way as to contribute most effectively to the solution of Japan’s long-run economic problem and to its ability to assume an increasing role in strengthening and stabilizing Asia.


33. Promote the development of an effective, moderate conservative government in Japan as basic to the accomplishment of U.S. objectives.

34. Consult with the Japanese Government as an equal on matters of mutual interest, such as Communist strength and intentions in the Far East; countermeasures to be taken by Japan, the United States and the other free nations; political and economic policies in Southeast Asia; Japan’s defense planning and United States military assistance; and general international developments.

35. Endeavor to develop a community of interests between Japan and the Republic of Korea, the Republic of China, and the Philippines through offer of United States good offices to help resolve outstanding problems and by encouragement of joint cooperation; encourage the conditions necessary to form as soon as possible and them participate in a Western Pacific collective defense arrangement including these four nations, eventually linked with the Manila Pact and ANZUS.

36. Encourage the development of cooperative relations between Japan and other free nations and associate Japan, to the extent feasible, with multilateral activities carried on in connection with the Manila Pact; and encourage Japan to undertake broader amd more effective participation in the Colombo Plan and the United Nations specialized agencies.

37. Broaden by personal contact, exchange of views and feasible support, the understanding and cooperation of those elements already well-disposed to the United States, in particular business men, government officials, and officers of Japan’s defense forces; and also seek to develop and expand contacts with Socialist leaders and trade union officials of moderate views to win their confidence and understanding.

38. Encourage and as appropriate assist the Japanese Government to take effective internal security measures striking at the organizational basis of Communist power and undermining Communist financial and political strength.

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39. Encourage the development of a moderate trade union movement.

40. Make full use of U.S political means and, as practicable and appropriate, economic and military aid, including offshore procurement contracts, in order to induce private Japanese groups, particularly employers and unions, to combat Communism vigorously.

41. Expand U.S programs for offsetting Marxist attitudes among intellectual leaders of the non-Communist left and for enlightening the general public and in particular intellectual groups on the Communist danger.

42. Take the position with the Japanese Government that the United States does not object to the establishment of diplomatic relations with the USSR, but does oppose establishment of diplomatic relations with Communist China and would object strongly to political association by Japan with Communist nations in such actions as non-aggression pacts or efforts to facilitate entry of Communist China into the United Nations.

43. Support Japan’s claim against the Soviet Union for sovereignty over the Habbomai Islands and Shikotan; do not concede the Soviet Union’s claim to sovereignty over the Kurile Islands and Southern Sakhalin.

44. Support and encourage Japan’s claims against the Soviet Union and Communist China for repatriation of former military personnel and civilians and for cessation of seizures of Japanese fishing vessels.

45. Seek to associate Japan with United States and international planning for cooperative development of the peaceful uses of nuclear energy; make nuclear equipment and training facilities for peaceful uses available to Japan and exchange nuclear information under appropriate conditions.

46. Expedite the parole of those Japanese war criminals subject to United States control, in a manner not inconsistent with the German war prisoner program, with a view to elimination of this issue if possible no later than the beginning of 1956.

47. Continue to press efforts to gain Japan’s fuller association with and membership in the United Nations.


48. Encourage and assist Japan to develop military forces which will eventually be capable of assuming primary responsibility for the defense of Japan. The amount and timing of the build-up of Japanese military forces should be related to the necessity for developing political and economic stability, as well as military strength, in Japan. The United States should avoid pressing the Japanese to increase their military forces to the prejudice of political and economic stability.

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49. Consult with the Japanese Government about the rate of Japan’s defense build-up and the scope of United States military assistance, in order to make a realistic appraisal of what forces Japan is willing to support.

50. Based upon such an appraisal, reexamine United States goals for Japanese forces and the timing for their achievement, United States military assistance programs to Japan, and the deployment of United States forces in the area; in order to ensure that the minimum requirements for the security of Japan are met.

51. Develop with the Japanese Government a general understanding on a long-range plan for the build-up of Japanese defense forces, a phased withdrawal from Japan of United States forces as consistent with United States and Japanese security interests, and related reductions of the Japanese contribution to the support of United States forces in Japan; and make such understanding public at a suitable time. In such understanding, seek to obtain Japanese agreement that the amounts released by any reductions in Japanese contributions to the support of U.S. forces in Japan will be devoted to the development of Japanese defense forces.

52. Maintain ground, naval and air facilities in Japan which, with the cooperation of Japanese forces, will serve to deter or resist aggression.

53. Continue to develop arrangements with Japan for coordinated military planning and operations, and transfer responsibilities to Japan’s defense forces as rapidly as consistent with United States security interests.

54. During the present international tensions in the Far East, maintain the degree of control and authority over the Ryukyu and Bonin Islands now exercised pursuant to Article 3 of the Peace Treaty with Japan. In the interest of good relations with Japan, consider Japanese requests for fuller relations with the Ryukyu and Bonin Islands in such areas as trade, cultural relations, and interchange of nationals, and accede to such requests so far as consistent with United States security or other interests in the area.

55. Work with the Japanese Government in seeking to improve labor relations involving indigenous personnel furnished to United States facilities.

56. Develop with Japan a program for Japanese development of defense and defense-supporting industries and support such a program by offshore procurement with Defense and Mutual Security funds.

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57. Encourage Japan to expand and stabilize its economy so that it will be self-supporting and capable of maintaining gradually improving living standards and defense forces and of contributing to the strength of the free nations of Asia.

58. Encourage the Japanese Government to continue and strengthen appropriate measures of self-help to eliminate non-essential imports, maximize savings, and channel capital into essential areas of the economy.

59. Actively support Japan’s accession to GATT and promote the expansion of trade between Japan and other free nations, including the United States, in accordance with GATT principles through the general lowering of tariffs and the removal or relaxation of other government-imposed trade restrictions.

60. Assist the Japanese economy through the appropriate extension of public credit to Japan, the use of technical assistance, the use of local currency proceeds of agricultural surpluses and the widening of opportunities for the investment of Japanese capital.

61. Promote the expansion of Japan’s trade through United States participation in programs of economic development in free Asia; give particular emphasis to development projects which would tend to increase sound intra-regional trade; use Japan as a source of supply to the extent practicable in connection with United States-financed aid programs; encourage Japan to contribute to the development of South and Southeast Asia by providing technical assistance and financing.

62. Urge Japan to continue to cooperate with the multilaterally agreed level of export controls on trade with Communist nations; endeavor to handle questions of routine exceptions in such manner as to preserve and foster Japan’s willingness to retain the present level of controls; and seek to prevent Japan’s becoming dependent upon Communist areas for essential food and raw material supplies and export markets.

63. Encourage and assist the expansion, rehabilitation and modernization of Japan’s industries on a sound economic basis; encourage and assist competitive enterprise and improvement of the productive, managerial and marketing efficiency and labor relations of Japanese industry, especially through technical assistance.

64. Encourage Japan to follow internationally accepted trade practices; avoid cartel arrangements; prevent the pirating of designs, infringement of patents and other unfair practices by Japanese businessmen, and to publicize actions taken in this respect.

65. Encourage Japan to relax or remove legal and administrative barriers and to improve the climate for private investment, domestic and foreign.

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66. Keep the Japanese Government advised of impending major developments affecting United States expenditures in Japan so as to help the Japanese Government avoid any sudden adverse impact on the Japanese economy.

67. Take appropriate steps, with due regard for security considerations, to exchange technical and scientific information on a reciprocal basis.

68. Urge Japan to settle as soon as possible GARIOA claims and other property and claims matters arising from the war and Occupation; and assist through good offices the settlement of Japan’s reparations obligations.

69. Relate United States support and assistance to Japan to Japan’s actions with respect to the matters discussed in paragraphs 58, 62, 64, and 65 above.

  1. Source: Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5516 Series. Top Secret.
  2. Dated December 22, 1954; printed in Foreign Relations, 1952–1954, vol. II, Part 1, p. 1062.
  3. Not printed. In this memorandum, Lay described the status of plans to revise or supersede a number of NSC papers dealing with East and South Asia. (Department of State, S/PNSC Files: Lot 62 D 1, NSC 5429 Series)
  4. “United States Objectives and Courses of Action With Respect to Japan”, dated August 7, 1952. For text, see Foreign Relations, 1952–1954, vol. XIV, Part 2, p. 1300.
  5. “United States Objectives and Courses of Action With Respect to Japan”, dated June 29, 1953. For text, see ibid., p. 1448.
  6. “Probable Developments in Japan Through 1957”, August 10, 1954. An extract is printed ibid., p. 1697.
  7. See footnote 11, Document 26.
  8. Neither printed.
  9. Printed from a copy that bears this typed signature.
  10. The estimates in paras. 1–18 refer primarily to the period 1955–57. [Footnote in the source text.]