55. Telegram From the Embassy in Japan to the Department of State1
Secun 11. From Hoover. I called on Prime Minister this morning accompanied by Ambassador, Hollister, and Prochnow. Meeting lasted well over hour, during which Hatoyama exceptionally cordial but rather vague, seeming miss point altogether on some occasions, dodged direct answer on others. Following is summary his comments on principal points raised:
US relations: Hatoyama several times stressed that he considered close and friendly US: Japanese cooperation keystone his policy, was most pleased with results recent Washington talks. Also said he considered fact that he had emphasized and expanded basis for such cooperation was principal reason for his continued popularity with Japanese people.
Japan-Soviet negotiations: He had impression negotiations would be settled soon. Although liberals and some of public were pressing for return Kuriles and South Sakhalin he believed that Japan had relinquished her rights to these at signing San Francisco treaty. However Japan would insist on return Habomai and Shikotan “without conditions”, would not accede to Russian insistence on limited navigation rights Japan Sea and other waters. He did not believe Japanese detainees would be returned prior to making treaty settlement. I counseled patience pointing out that Soviet negotiators would undoubtedly follow customary tactic of refusing make agreement until last possible concession extracted from Japanese, but Hatoyama only nodded agreement and did not comment.
Conservative unity: I mentioned deep US interest in seeing some solution to problem political stability in Japan and asked about progress conservative merger. Hatoyama replied that success current Democratic-Liberal negotiations still very much in doubt. He admitted fact that Liberals anxious avoid dissolution was factor favoring merger and said he hoped it could be achieved. However, he continued believe that merger based on shaky foundation (with possibility future split) would be useless. He said he would much prefer have election and increase strength Democratic Party. If merger became impossible he considered it best hold election “as soon as possible.” Prime Minister believed Democrats would be better prepared for elections this time, might not win decisive majority but could gain at least 40 seats. He pointed to results recent public opinion polls which indicated both he and Democratic Party still extremely popular.
[Page 129]Trade with Communist China: I stressed fact US public opinion very sensitive on question Communist China and that any indication Japan intended enter into relations with mainland government would create unfavorable reaction. While I explained we understood Japan’s desire expand trade, I pointed out that Japanese Government should take pains to put any such arrangements into proper context in order avoid misunderstanding. Hatoyama replied that trade with Chinese Nationalists now greatly exceeded that with mainland but that Japan urgently felt need recapture lost markets in Commie China. He said he understood feeling US people because of Communist Chinese participation Korean war and said Japan did not intend “go any further” than expansion trade relations. He added he believed Japanese public opinion valued good Japanese-American relations more than anything else and said government would exercise caution in dealing with Communist Chinese.
Economic matters: Hollister pointed out US aid program in Far East expanding and that considerable buying would naturally be done Japan. He pointed out that now would be time for Japanese industry to develop to meet this demand as substitute for offshore procurement. Hatoyama made vague reply, suggesting he would like fit in such program with Philippine and Indonesian reparations problems. Hollister continued that of course capital essential for such development and that investment foreign capital (particulary US capital) should be encouraged in order allow Japan get fair share trade. We both pointed out little basis for fear foreign economic domination through these means.
Hatoyama agreed that encouragement foreign capital investment “vitally important,” said he had been impressed by Sakuma Dam project where US technical assistance had produced amazing results. He said he also keenly aware necessity for Japan recapture South East Asian market from Communist China and other countries who have moved in.
Pouching memo conversation.2