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

54. Telegram From the Department of State to the Embassy in Japan¹

Washington, October 1, 1955—2:46 p.m.

Unsec 1. Our 692.²

1. Main points Gray–Hoover letter September 29³ are:

(a) Though political difficulties are recognized should make every effort obtain Japanese defense expenditures required development forces indicated their Six Year Defense Plan particularly since US cannot guarantee $130–150 million annual military assistance planned.

(b) Gray reluctant assent either schedule proposed Hoover letter since they would violate principles August note exchange [with] Japan that current reduction Japanese yen contribution temporary and that any increase Japanese defense effort above current level should be shared equally between US and Japan. Agreement permanent reduction yen contribution would relinquish valuable bargaining position.

(c) Gray prepared make specific proposals on defense industry support and OSP providing Japan derives funds outside Defense Agency budget for this procurement and will continue it at least two years.

(d) Influenced by CINCFE views. If adjustment unavoidable, ready discuss alternatives based extent possible principle equal contributions and proposal paragraph (c) above.

2. Our comments are:

(a) Understand Japan willing spend in JFY 56 net more than about 140 billion yen for defense. Convinced efforts get substantial increase will prejudice US-Japanese relations and Japanese political stability as happened April 1955 negotiations, will sharpen Japanese opposition Administrative Agreement, and will make it harder for Japanese Govt develop necessary public support for increased defense effort since it will continue appear their defense measures are dominated by US desires and pressures.

(b) Important thing in this year’s discussion Japanese defense budget and reduced contribution to US forces is not whether base figure of $155 million and matching principle are retained. What is vital is solution consistent with NSC policy which impliedly rejects matching principle.⁴ However no objection seen to using it as proposed para c (1) your 793⁵ since goals of securing increased Japanese defense expenditures (including use for defense purposes of reduction in contribution) can probably be achieved thereby without prejudicing political or economic stability.

(c) Believe disadvantages of resentment and criticism existing security arrangements would greatly outweigh possible bargaining advantages should US adopt Defense–FEC position which designed to obtain total Japanese defense expenditure of over 154 billion yen. Also doubt advisability linking yen contribution negotiations directly with our other defense programs in Japan.

3. Believe important you and Allison discuss this subject with Lemnitzer if possible.⁶ Department will however continue endeavor reconcile its views with Defense in effort obtain satisfactory US position without delay.

Dulles

1. Source: Department of State, Central Files, 110.12–HO/10–155. Secret; Priority; No Distribution Outside Department. Drafted in NA and approved by Sebald who signed for Dulles.
2. Dated September 29, telegram 692 summarized the main points of the letter supra. (Department of State, Central Files, 794.5/9–2455)
3. This letter is the enclosure to an acknowledgement from Robertson to Gray, October 5. (Ibid., 794.5/10–555)
4. Reference is to the military sections of NSC 5516/1, Document 28.
5. In telegram 793, September 24, the Embassy proposed, as one possible method for calculating a reduction in the yen contribution, U.S. agreement to a reduction equivalent to a 50 percent increase in the Defense Agency budget over 86.8 billion yen. “Assuming DA budget of 103 billion yen and rentals of 6 billion yen, yen contribution would be 29.9 and total budget 138.9 billion yen. Reduction would be 8.1 billion yen.” (Department of State, Central Files, 794.5/9–2455)
6. See Document 56.