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

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

Tokyo, October 25, 1955—5 p.m.

1000. Pass Defense. Joint Embassy–FEC message. General Lemnitzer and I have discussed at length problem of Japanese defense budget with particular reference to Japanese contribution to USFJ. We agree that last August exchange of notes made clear that reduction in Japanese contribution to 38 billion yen was for one year only and that para 9 of confidential Japanese note of August 20 clearly stated that any reduction in next fiscal year would be from the full amount of 55.8 billion yen ($155 million), and that appropriation of more than 86.3 billion for JDA in JFY 56 would be the basis for considering any reduction of the yen contribution in JFY 56.

For this reason, we are convinced, as result of rereading August exchange of notes, that if we propose in first instance position previously advocated by Embassy,² we would thereby officially imply that we take lightly formal inter-governmental agreements less than six months old. We might thereby also cast doubt on all future agreements we may sign, in light clear understanding given Japanese in agreement and negotiations that concessions for JFY 55 “extraordinary measure”, not to be anticipated in future.

On the other hand we also agree that the present political situation in Japan makes it most unlikely that the present Japanese Government will or can agree to a total defense budget including contribution to USFJ of more than the minimum figure mentioned involved in the exchange of notes of August 1955, i.e., 148.1 billion yen including 6 billion for rentals of facilities used by US Forces Japan which the Japanese were told would be basis from which to consider any reduction in yen contribution.

In fact, Japanese press reports (undoubtedly inspired by the Japanese Government) indicate that the Japanese intend to propose a figure even lower than that called for by the August notes. Published estimates of 103 billion yen for JDA and 30 billion for USFJ would indicate a Japanese total figure of around 139 to 143 billion yen, depending on the size of the rentals appropriation.

The principal risk involved in prolonged pressure on our part to get a substantially greater defense appropriation is that the Japanese people tend increasingly to interpret such pressure as interference in Japanese internal affairs. The publicity engendered [by?] unduly protracted negotiations will inevitably be adverse publicity from US viewpoint. At worst, protracted unproductive negotiations might provoke a Cabinet crisis and delay merger of conservative forces. In essence, the problem is to weigh the military value of a defense increase against the political cost to the US. We agree that negotiations should not be prolonged beyond the point at which there is no reasonable hope of an increase in defense expenditures of sufficient magnitude to outweigh the political damage to our position and to that of the conservatives.

We, therefore, request approval of the following courses of action:

a. Ask Japanese to present their proposal to us. (We have been unofficially informed that they are ready to do so.)

b. If as we anticipate, Japanese proposal is for total defense budget of around 140–143 billion yen (103 billion to JDA, 8–10 billion for facilities, and 30 billion for USFJ),³ we would then call their attention to fact that August exchange of notes makes clear provision for conditions under which and manner in which yen contribution is to be reduced. We would request justification for not living up to this agreement.

c. If, as we anticipate, it based on economic necessity and political expediency, we would then, at such time as we consider propitious, offer the concession outlined in para 4b of C–74149;⁴ i.e., offer an additional reduction in yen contribution equivalent to any amount which Japan will appropriate and use as agreed to by US for JDA, over and above the figure required to support the JFY 56 portion of the six year plan.

d. If agreement cannot be reached in the above steps, then offer as an alternative to reduce the yen contribution from 55.8 to 38 billion yen for JFY 56 provided the Japanese will appropriate 148.1 billion yen including 6 billion yen to cover rentals of facilities in JFY 56. This reduction of 17.8 billion yen which is equivalent to the increased utilization of resources for defense purposes on the part of the Japanese Government over JFY 55, added to the Defense Agency minimum appropriation of 86.3 billion would provide 104.1 billion yen for the Japanese Defense Agency in JFY 56.

Should it develop that a defense appropriation for JFY 56 of 148.1 billion yen generally as outlined above would entail a degree of pressure on the Japanese which is likely to have unacceptable political consequences, further recommendations will be submitted for State–Defense consideration. In such case we hope Washington agencies concerned will be prepared to make speedy decision as any appreciable delay will increase dangers of adverse publicity mentioned above.

Request instructions soonest, as Shigemitsu already prepared to present Japanese position, and press reports indicate Japanese desire early settlement.⁵

Allison

1. Source: Department of State, Central Files, 794.10/10–2555. Secret; Priority.
2. In telegram 921 from Tokyo, October 14, the Embassy argued that both the public and the confidential notes exchanged between the United States and Japan on JFY 1955 yen contributions and Japanese defense spending were ambiguous enough so that it was not obligatory for the parties to compute the reduction of the yen contribution for JFY 1956 from the old ($155 million) base figure:

   “Basic objection to reversion to $155 million is that it appears make impossible increase in Defense Agency budget over JFY 55 figure of 86.3. Defense position would allow increase in DA budget only if total defense budget exceeds 149 billion yen whereas, regardless their economic capabilities, Japanese not willing accede to budget much over 140 billion yen. Even if US agreed to reduction from 155 million equivalent to full increase (without 50–50 sharing) in Defense Agency budget and additional defense costs, total budget would still be at minimum about 150 billion yen.” (Ibid., 794.5/10–1455)

3. On November 2, Shigemitsu informally proposed to Allison a formula which would have resulted in the following figures: Japanese Defense Agency, 103 billion yen; yen contribution to U.S. forces, 28.9 billion yen; rentals, 10 billion yen; total, 141.9 billion yen. (Telegram 1068 from Tokyo, November 4; ibid., 794.5/11–455)
4. Not printed.
5. In a November 8 memorandum to Robertson, apparently given to him on November 9, Hemmendinger argued that the Embassy–FEC position (as presented above) was unrealistic, and that while the Japanese proposal of November 2 (see footnote 3 above) was negotiable, the Embassy–FEC position was not. It posed the danger that the previous year’s “prolonged and acrimonious negotiations” might be repeated. Hemmendinger recommended that Robertson suggest to Hoover that he work out a negotiable U.S. position with Deputy Secretary of Defense Reuben Robertson. (Department of State, Central Files, 794.5/11–955) No information on Robertson’s action on this proposal has been found in Department of State files.