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

32. Telegram From the Embassy in Japan to the Department of State¹

Tokyo, April 26, 1955—7 p.m.

2741. With agreement reached on defense budget, I believe this is good time to evaluate impact of negotiations on US interests in Japan. Evaluation may also be helpful in Congressional presentation of Japan MDA program. Negotiations brought General Taylor and myself into close, and often daily, contact with the top officials of the Japanese Government. They were conducted in tough, tense, and occasionally heated atmosphere and were quite revealing about capacities Japanese Government. It is useful initially review those aspects of agreement which furthered US interests here.

First, when the Japanese made a firm commitment to complete its part of the runaway extension program during the next fiscal year, we solved major defense problem with Japan and obtained opportunity for important increase in FEAF capability to operate against USSR-Chinese Air Forces. In past, Japanese have been willing to make commitment on furnishing land for runways “in principle” but not tied to specific schedule. Second, Japanese defense program has for first time been given real momentum, not only this fiscal year but in future. While Japanese commitment for JFY 56 and thereafter is, and could be no more than, a statement of intentions, it is widely viewed both by the press and responsible conservative circles as first substantial commitment Japan has made in post-war to strengthen its defense forces. Indicative of prospect for real Japanese defense effort this year is enthusiasm and optimism expressed by their top defense officials. They cite not only the defense budget of 86.8 billion yen but greatly increased contract authority and receipt of full carryover (about 22.7 billion yen) from last year’s defense funds (they had expected to lose 10 billion yen in unobligated JFY 54 funds). Third, with respect to future, Japanese have at last recognized publicly not only need for devoting increased resources to defense but also principle that this year’s yen contribution reduction will not be carried over to next year and is extraordinary measure of US cooperation based upon Japanese financial difficulties this year. Fourth, possibility of unilateral reductions during year in defense expenditures at behest of Finance Ministry is reduced considerably by positive commitment not to reduce Defense Agency budget except by mutual agreement. Fifth, Japanese have now recognized that development of defense industry, specifically F–86 and T–33 program, must be outside regular Defense Agency expenditures. Sixth, we obtained restitution of 4.5 billion yen as contract authorization and wiped off books unilateral violation of commitment to US in way which avoided local political consequences.²

In addition to these benefits directly related to the defense effort, it is also useful to cite other recent developments flowing at least in part from defense budget negotiations. Refusal to agree to Shigemitsu visit and generally tough bargaining sessions proved rude awakening to Hatoyama government which up to now had been inclined to pay only lip service to need for good Japanese-US relations. Hatoyama personally and those around him have belatedly begun to realize that US cannot be taken for granted, that Japan is perhaps not so important to US as Japanese had come to believe. There are small, but perhaps not entirely transitory, signs of greater Japanese cooperation: Japanese alignment with Free World at Bandung conference has been closer than we would have assumed probable month ago; Communist China Trade Mission has been given pretty much of cold shoulder by responsible government and business circles and Murata (head of the Association to Promote Trade with China) is complaining bitterly, according to informed sources, about the reversal of the Japanese Government position on China trade; and recently there has been far less wishful thinking about forthcoming USSR-Japan negotiations.

Defense budget talks have also served as partial catalyst for increased interest in conservative merger. After elections, Democrats riding on Hatoyama’s personal popularity tended to overlook their essentially weak Diet position. However, faced now with need for Diet approval of defense arrangement, there is greater necessity for both joint Diet action with liberals and preparations for subsequent merger.

There is always question of whether we could have gotten greater concessions from the Hatoyama government in the defense negotiations. When Japanese initially considered defense budget negotiations to be held after February 27 election they hoped for compromise which would keep defense budget within framework of last year’s budget of 132.7 billion yen. However, it is now evident that, as election campaign grew in intensity, Ichimada and others in thirst for victory made public and private commitments on housing, social welfare, etc. impossible to fulfill unless the defense budget were cut back from 132.7 to about 120 billion yen. In fact, Ichimada who saw personal political advantage to breaking free from US involvement in Defense Agency budget and to devoting savings to social welfare purposes would have preferred to let defense negotiations break down and to reduce Defense Agency budget to 60 billion yen with another 60 going to United States for contribution and rental of facilities. This is evident from what occurred in final week of negotiations. After top-level meeting on April 13 when Japanese side led by Ichimada raised major objections to our proposal of April 11,³ Ichimada without waiting for US reply and ascertaining if we had retreated position, reported impasse negotiations to Hatoyama and presented his resignation (according to Frank Matsumoto’s direct statement to US). Hatoyama was thus presented with alternatives of (1) accepting resignation and risking fall of government (2) rejecting it and letting negotiations fail or (3) rejecting it and seeking through Shigemitsu continue negotiations in hope of compromise within 132.7 billion yen limit. He chose third and at meeting April 15 Shigemitsu exercised authority and Ichimada sat silent through most of meeting. Foreign Office staff assistant who attended all meetings confided to us April 22 that he had fully expected government to fall and that it was only saved by Hatoyama’s decision make one more try before breaking with US and by subsequent US concession⁴ which made agreement possible within 132.7 billion limit. But to obtain it they had to make concessions which entail political liabilities both present and future.

Therefore, even with those aspects of arrangement favorable to government, most notably the 17.8 billion yen reduction in support costs (for US forces which may in any event be materially reduced in USFY 56), government faces extremely difficult task in getting Diet to approve budget. There has been considerable press criticism of overall budget for lack of substantially larger expenditures for social welfare. In addition liberals, whose support is required, are not particularly inclined to back new defense agreement. Embassy has been informed by reliable sources that some liberals are privately quite critical, particularly of commitments made on future defense expenditures and runway extension. Liberals plan let Socialists carry burden of attack on defense agreement, while concentrating their direction overall budget—although short of actually forcing Cabinet resignation or Diet dissolution. Democrats are, on other hand, not in strong position to defend arrangement. My negotiations with top Cabinet officials left me with impression of complete lack of coordination, and often lack of knowledge, on part of top Ministers. Ichimada’s dissatisfaction with agreement has already been mentioned (Alsop told me he had heard Ichimada still annoyed with me for discomfiting him on campaign pledges and hence his own ambition). Shigemitsu threatened with non-confidence motion. And finally Hatoyama lacks knowledge and physical strength to make dynamic fight in defense of budget.

In view above, arrangement negotiated seems best we could reasonably expect from weak government. Had we pushed Japanese government farther I was convinced, even before we began to get confirmation from Japanese sources, it would have led to Cabinet’s fall. Cabinet collapse would not have been consistent with policy set forth in NSC paper (paras 24 & 48).⁵ Furthermore, if Cabinet fell, it would have been perhaps months before we would have negotiated any defense budget arrangement.

Such arrangement likely to have provided for minimum defense effort on part of Japan, and in any event arrangement far less satisfactory than was agreed. Finally there was always possibility that fall of Hatoyama might lead shortly to socialist government which could be expected to deemphasize defense efforts.

While we achieved arrangement most feasible under present political circumstances this has not been done without certain cost to long-run US-Japanese relations. Negotiations have resulted immediate strain to our relations and strong undercurrent of criticism about US interference—specifically inability sovereign Japanese Government to reach decisions on budget or even to submit any budget to their legislature [without?] lengthy negotiations with US. Japanese believe that root of problem is provisions Article 25 Administrative Agreement which require such bilateral consultations prior to government decisions on budget. Japanese feel that provisions for contribution to US forces are special obligation imposed only on former occupied areas, i.e. Japan and Germany and are therefore carryover from the occupation period. Already half a dozen Japanese bureaucrats (including Foreign Vice Minister Kadowaki) have told Embassy officers that for sake of future US-Japanese relations we must never have repetition of this year’s negotiation. There is distinct possibility that this attitude will lead to demand for revision of Article 25.

If this can be done without real cost to US it may well be desirable since I feel that US-Japanese relations cannot stand too many more of these annual defense negotiations. We have annual budget review with NATO countries but there the background and history of voluntary partnership is altogether different to say nothing of multilateral framework of discussions and radically different circumstances in Europe and Far East. In view of my concern and in light paragraph 51 of NSC paper, I have therefore asked my staff to look into the question of alternative arrangements which protect US interests and are, at the same time, conducive to more mutually beneficial discussions on the defense question. I believe that this is subject which rates Washington consideration and help.⁶

Allison

1. Source: Department of State, Central Files, 794.5/4–2655. Secret.
2. “Contract authorization” lay outside the defense budget proper. In telegram 2678 from Tokyo, April 19, the Embassy reported it had been informed by the Japanese Government that it had approved, for submission to the Diet, additional contract authorization for the National Defense Agency in the amount of 4.5 billion yen. (Ibid., 794.5/4–1955) This 4.5 billion yen figure was not published, but formed part of the total of 15.4 billion yen for contract authorization (including the F–86 and T–33 programs) mentioned in numbered paragraph 2 of the Agreement effected by exchange of notes on August 19.
3. Forwarded to the Department in telegram 2605 from Tokyo, April 12. (Ibid., 794.5/4–1255)
4. On April 14 the Embassy–FEC negotiating team moved to the minimum position authorized in Document 29. The concession reduced the amount asked for yen support of U.S. forces in Japan by 4.4 billion yen to a total of 38 billion yen. (Telegram 2632 from Tokyo, April 14; Department of State, Central Files, 794.5/4–1455)
5. Reference is to NSC 5516/1, Document 28.
6. Sebald enclosed a copy of this telegram with a memorandum to the Secretary dated April 28. The memorandum indicated Sebald’s approval of the proposal in the last paragraph. (Department of State, Central Files, 794.5/4–2855)