2. Telegram From the Embassy in Japan to the Department of State0

1885. CINCPAC for POLAD. Deptel 1479,1Embtel 1840.2 Cabinet approved JFY 1958 draft budget January 19 which included total Defense budget of 146.1 billion yen ($405.8 million) to provide 120 billion yen for Defense agency, 7.5 billion yen for US facilities support costs and 18.6 billion yen for GOJ yen contribution to USFJ. JFY 1958 overall defense budget reflects five billion yen net increase over JFY 1957 budget of 141.1 billion yen ($39.95 million) and 19 billion yen JDA budget increase.

Embassy and FonOff have reached informal preliminary agreement on draft FonOff note on yen contribution which substantially retains language of last year’s note of August 16, 1957 (TIAS 3886). Need for Washington clearance fully understood by FonOff. Only substantive change is language providing for three billion yen reduction in addition [Page 3] to progressive reduction calculated according to formula. This language carefully drafted to avoid any implication that similar action may be anticipated next year. Text of draft note follows in Embtel 18863 for which Embassy requests approval and authority to sign. While actual signing will not take place until budget is approved by Diet, FonOff wishes to have notes initialed soonest.

Minister Tsushima4 called on me January 21 to express his personal gratitude and that of Defense Agency for additional reduction in yen contribution granted by US. He considers US action timely and important since reduction made possible substantial increase in Defense Agency budget which otherwise would not have been forthcoming. Tsushima views budget as satisfactory step forward in carrying out planned strengthening of defense forces.

FinMin Ichimada had similarly called on me January 15 to express his “warm appreciation” for US agreement on supplemental reduction. He said our timely action would “strengthen relations and friendship between Japan and US” and would “substantially help PM Kishi and Conservative Party” in forthcoming national elections. I took occasion to emphasize our action this year was taken because of special circumstance and political considerations which Fujiyama and Kishi had described to me relating to forthcoming elections, and trusted we would not have to go through such exercise again since approved formula would take care of problem. Ichimada said he recognized that political situation this year had made this problem a special situation.

  1. Source: Department of State, Central Files, 794.5/1–2258. Confidential; Priority. Repeated to CINCPAC and COMUS/Japan.
  2. Document 1.
  3. Telegram 1840 to Washington, January 15, reported that Japanese press on January 14 gave front page converage to the Japanese Foreign Office announcement of U.S. agreement on additional reduction of 3 billion yen from Japanese contribution to defray USFJ costs. (Department of State, Central Files, 794.5/1–1558)
  4. Dated January 22. (Ibid., 794.5/1–2258)
  5. Juichi Tsushima, Director of the Japanese National Defense Agency.