106. Memorandum of Conversation1

SUBJECT

  • U.S.-Japanese Relations and Security Problems

PARTICIPANTS

  • Eisaku Sato, Prime Minister of Japan
  • Naoshi Shimanouchi, Research Secretary, Bureau of Public Information, Ministry of Foreign Affairs (Interpreter)
  • The President
  • James J. Wickel, Special Assistant to Ambassador Johnson (Interpreter)

The Prime Minister thanked the President for the State dinner given him last evening and expressed his and Mrs. Sato’s appreciation for the gift presented by the President. The President said that the Prime Minister had made many new friends for Japan as a result of this visit, including the 200 guests at the State dinner, who represented almost all 50 states.

The Prime Minister thanked the President for creating the mood of sincerity that had marked his several meetings in Washington.

He had enjoyed full and frank exchanges of views with both Secretary McNamara and Secretary Rusk and said that the draft communiqué developed during these meetings was excellent. He said that he wished the President would agree to issue it as drafted.

The President said that Secretary Rusk believes that the draft communiqué would probably meet with the approval of Congress and probably would not be attacked.2 He said he wished to go as far in the Pacific as he could in assisting the peoples of Asia and the Pacific to improve their lives. Although formerly some Americans had shown prejudice against Japan, he said he felt that this has been largely overcome and that he can go as far as the draft communiqué without coming under Congressional attack. He did not wish to have Congressmen [Page 236]criticizing Japan. However, he had not had ample opportunity to review the latest draft because he had spent most of the day meeting with General Westmoreland and Ambassador Bunker.

The President said that one great problem we have is that the Constitution of Japan forbids her to send troops to Southeast Asia. Still, almost everything we Americans buy is imported from Japan, such as shirts, textiles, radios and television sets. On the economic side, however, such Southeast Asian nations as Singapore, Laos, Thailand, Burma, Indonesia and the Philippines all insist that an American withdrawal from Southeast Asia would spell their doom but when asked what they can do they are unable to help the United States effort there. Therefore, there are wonderful things for the Asian Development Bank to do, under its able President who is a Japanese. Japan is now equal to the strong nations and can do its part and provide the leadership, even though this may be limited to sound financial assistance. If the United States can make this great effort 10,000 miles from home why can’t Japan make an effort in her own area? Japan’s significant contribution to the ADB had the same effect on American opinion as a goodwill mission. The Koreans have impressed the American people with their growth and by the fact that they have sent troops to Vietnam even though Japan cannot. We understand why Japan cannot do so. Speaking quite frankly, said the President, is the only way to get things done.

The President said that he is more deeply interested in the Asian-Pacific region than any other President has ever been. He intends to lead the American people in the effort to help develop the strength and power of the region because this is the area where two out of every three human beings alive today live. This is where the people are. However, this fiscal year the United States is spending between $25 and $30 billion in the effort to defend Vietnam. This is a great expenditure, year after year, but in addition the United States has taken over 100,000 casualties, and has expanded a great deal of blood and lives. A way must be found to enable these people to do enough to help themselves.

Japan has helped considerably with the ADB. Now that he has requested Congress for additional funds for the ADB, however, Congress is asking why we must do it all and what is Japan doing?3 He said he understood that the Japanese people ask why doesn’t the United States provide more money, but the American people ask why doesn’t Japan? We wish to help Indonesia and can do so when Japan is also ready to help. This is a big country here. We hope that Japan can help on these [Page 237]financial matters, particularly since she cannot send men because of her Constitution.

There are two or three matters in which Japan can help, for example, balance of payments. If the United States is willing to run a deficit of $30 billion, Japan should be willing to spend some money too. Why can’t Japan buy $500 million in medium-term securities? Germany is willing to help. Japan can’t send men, but it would seem that she could provide dollars and could provide money for the ADB Special Fund. Secretary Rusk had probably already discussed these matters in full with the Prime Minister4 but this point is very important. Congress has just turned down the tax bill he had requested and the United States faces a deficit of $30 billion this year. The Australians have sent some 5,000–6,000 men to Vietnam and Thailand and the Philippines have each provided some men, but the United States is paying the extra cost of these contributions for them. He said that he understood the difficulties Japan faces but the best investment for both Japan and the United States is to strongly support the ADB and to provide greater economic help for South Vietnam. Japan is strong and growing stronger, but if we do not save Vietnam and Thailand, we will all face a grave crisis which will cost us dearly.

The President said that these are the things Japan should do. First, she should increase her contribution to the ADB Special Fund. If Japan can do this, he would try to get a bill through Congress for the same purpose. Second, she should increase her assistance to Vietnam. She should look everywhere and scrape up as much as she can, especially since she cannot send men. Now, the United States should provide an additional 50,000 men for General Westmoreland, in addition to paying the extra costs to the ROK and Thailand for their contributions. If Japan cannot send men, she should help as much as possible in whatever way she can before it is too late. We think that the best investment for the economy, the people and the region is the ADB Special Fund. If the United States can contribute $200 million, Japan should match this figure, as well as doing something extra for Vietnam. If Japan and the United States can work together, we can also do more to save Indonesia. These actions are all desirable and the President said he hoped Japan would do what he had outlined. However, he did not wish to do all the talking, he hoped to hear what the Prime Minister had to say.

The Prime Minister said that he was basically in full agreement with the President on the needs of these countries. He said he would make every effort to try to provide whatever help is needed, in fact, [Page 238]this is so stated in the communiqué, even though no specific amounts are cited.5

He said, with reference to the Joint Communiqué, that prior to leaving Japan for Washington he had been received by the Emperor, who emphasized the paramount importance of Japan’s security. At present Japan is secure under the U.S.-Japan Security Treaty, which provides that the United States will defend Japan against external attack. However, Communist China is developing nuclear weapons and Japan may soon be threatened by a nuclear attack. More than two years ago, the President assured the Prime Minister that the United States would live up to her commitment to defend Japan “against any form of attack.” He said he wished to ask the President to reconfirm this assurance at this time because of the concern expressed by the Emperor and in view of the discussions on the status of Okinawa.

The President said that the United States is committed and as long as he is President we would carry out this commitment. However, he said that the Prime Minister has probably seen the difficulties we face under the SEATO Treaty.

The Prime Minister thanked him and said he was gratified by this reassurance. He appreciated the deep concern of the United States not only in her own security but also in that of other parts of the world. He said that as Prime Minister he must always consider the security of his own country ahead of any other problem, for which reason he fully appreciated and sympathized with the President’s concern for security, even though there is a difference in the scale of the security problems faced by both countries. He said that Japan fully understands the difficult position of the United States and the problems she faces. Therefore, he said he would make every effort to do whatever he could to ease the President’s burden.

The President said that it would be very helpful if Japan would match the American contribution to the ADB Special Fund, which the President has now requested of Congress for this area 10,000 miles away. If Japan were to provide only $100 million for the Special Fund, the Congress would surely cite the great deficit we face. For that reason we wished to have Japanese help. We understand Japan’s problem but still hope that Japan could do more.

The Prime Minister said that Japan’s next fiscal year budget is now being drafted. It provides for $20 million of the $100 million previously promised by Japan for the Special Fund and the Government will consider fully the possibility of increasing Japan’s agreed contribution. Even though he could not promise to increase the contribution to $200 [Page 239]million, the Prime Minister assured the President that he would do his best to help. He said that he had already told Secretary Rusk of this intention.

The President said that the bill authorizing this contribution to the ADB Special Fund is now in the Senate Foreign Relations Committee but if critics like Senator Fulbright do not support it, he would be unable to do anything. He did not wish to exert unseemly pressure on the Prime Minister but the prospects for a favorable Committee report of the request for this $200 million would be improved considerably if someone could testify in the hearings in January that Japan plans to provide $200 million.

The Prime Minister said that he will do everything he can to help but in all frankness he said that the next fiscal year budget now being drafted calls for an across-the-board personnel reduction of 5% in the civil service. Every ministry is being asked to eliminate the equivalent of one bureau. Therefore, he said that he could not make any promises with 100% assurance and did not wish to create any false impressions about what he could do. (When his interpreter, Mr. Shimanouchi, suggested that the Prime Minister promise more strongly to do something to reassure the President, the Prime Minister told Mr. Shimanouchi that he could not do so in all sincerity because he wished, above all, to be honest with the President.)

The President said that contributions to the Special Fund would be spread out over a five-year period and the entire sum need not be appropriated in one year. The Prime Minister said that the $20 million appropriation this coming fiscal year would be Japan’s first installment toward the agreed amount of $100 million.

The President asked whether Japan could do anything further in Vietnam to develop agriculture, fisheries, communications or transportation. He said that it is essential that other nations begin to do more now that the latest polls show only 24% support for him.

The Prime Minister said that Japan presently is helping to establish the agricultural school at Cantho in the Vietnam delta as well as the agricultural guidance center to train agricultural specialists. He said that the President is probably already familiar with the Japanese medical program in Vietnam, including the hospital.

(At this point a secretary brought in copies of the Joint Communiqué, ready for release.)

The President asked if the Prime Minister was satisfied with the Joint Communiqué. The Prime Minister said that it was excellent and asked whether the President would approve it. The President asked whether he would agree to any specific programs to provide additional assistance in agriculture, fisheries, transports and communications, as the communiqué states Japan intends to do. It is not necessary to [Page 240]refer to such specific programs publicly, but the President said it would be helpful if he could cite such concrete programs to influential Congressional and other leaders confidentially. When he received the gift last night of a Sony TV video tape recorder the President thought that it might be possible to work out a joint educational television project for Vietnam to offset the shortage of teachers there. A few teachers broadcasting from one central location could reach many primary schools, if these were equipped with television receivers. Perhaps such a program could be designed to fight illiteracy in Vietnam. Japan might be able to assume additional responsibilities for education, and even agriculture, in this way. If the United States supplied the personnel, the know-how and the leadership, Japan need only provide the equipment, the television receivers, to build an educational TV system which would benefit 17 million South Vietnamese. What is needed particularly is a program to help the society move forward, not under totalitarianism but under democracy and a spirit of social conscience. Why not provide educational TV to do this? He had signed a bill the other day to provide for educational TV in the United States, which had met with a very favorable response. Therefore, he proposed that American experts work with the Japanese to set up an educational TV system in Vietnam. This country would supply the men and the know-how, and Japan would supply the TV receivers. He asked whether the Prime Minister could help in this way.

The Prime Minister said that this is an excellent idea, but Japan is presently providing bilateral assistance to both the Philippines and Thailand to improve their domestic communications systems and has learned that such a program is not very useful beyond a certain point without an adequate technological base. He asked whether Vietnam could effectively profit from such an educational TV system.

The President said that this may be true but the United States has already helped to install a general purpose television system in Vietnam. If this can be used for entertainment it can also be used for education. The only question is, who will supply the receivers? If we provide assistance in know-how, teachers and curriculum, and if Japan can provide the television receivers, all the Vietnamese would sooner or later wish to buy Japanese television sets just as many Americans buy Sony sets now. (To illustrate his point, he picked up a Sony transistor radio from his desk and played it for the Prime Minister.)

The Prime Minister said that was an excellent idea and he promised that Japan would consider it.

The President said that the United States could furnish technical know-how and would conduct a survey to determine the number of sites where TV receivers would be needed. Japan cannot send men, so the United States will do that but both countries could undertake this [Page 241]as a joint venture. Such cooperation is essential because the United States already is spending $30 billion a year in this area.

The Prime Minister said that this is indeed a good idea and agreed to cooperate.

The President said that he would speak to Ambassador Bunker about it tomorrow and report that the Prime Minister liked the idea. He would also consult with Ambassador Bunker to clarify the needs so that the United States and Japan could work out the details of this cooperative project. It would be most helpful if the President could tell Ambassador Bunker that both countries have agreed to this.

The Prime Minister said that the President should tell him that Japan does agree to cooperate in this project.

The President said this would be helpful, for now he could privately inform members of Congress of Japan’s additional efforts in education as well as the hospital in Vietnam, about her efforts for the ADB, and about assuming 1/3 of the obligation for economic assistance to Indonesia. This would be most helpful in meeting possible criticism of the next paragraph of the Joint Communiqué, Paragraph VII. (The President read Paragraph VII aloud in English, with special emphasis on the reversion of the Bonins and the steps to be taken on the Ryukyus.)6 He said that the Prime Minister would probably not be greeted by such demonstrations on his return as had marked his departure for the United States, because he would bring home this very good communiqué.

The Prime Minister said that he always exerted his best efforts to carry out his responsibilities regardless of demonstrations, because some people would demonstrate no matter what he did. The President said this was admirable. The Prime Minister should be congratulated for the great victory represented by this Joint Communiqué, and for making in it the forward-looking statement that Japan and the United States will work more closely together. The Prime Minister said that he did not think of these great issues in terms of a victory in the communiqué, but rather in terms of further increasing mutually satisfactory cooperation between Japan and the United States. The President said that this communiqué was indeed a step forward, and should help the Prime Minister to deal with public opinion at home. The Bonin Islands involved strong American sentiments and a deep emotional issue, and it is only Japan’s willingness to assume additional responsibilities that would enable him to defend the decision to return these [Page 242]islands. Japan’s help is essential in view of the possibility of a deficit of $30 billion this year.

He hoped that Japan would take $500 million in securities to ease the temporary balance of payments difficulties the United States faces. The Prime Minister said his Government would study this very seriously. The President said “don’t study it, do it.” The Prime Minister said that both Germany and Japan have each been asked to purchase $500 million in securities, even though Germany has reserves of $7 billion and Japan only $2 billion. The President urged him again to consider the purchase of $500 million because it is absolutely essential. The Prime Minister said that he would discuss this with the Ministry of Finance immediately after his return. Japan has already decided to buy $300 million worth of securities, but he could make no promise to buy an additional $200 million.

The President said that there are many demands placed on the Government. For example, there are riots in the cities and many people insist on Government help to rebuild them. The United States maintains six divisions in Germany, two divisions in Korea and a total of 600,000 troops in Vietnam, including foreign detachments for which we are paying. Without these defense expenditures the United States would have no balance of payments problems. Strong men are needed to step up and take these securities now in the same way the United States has agreed to support the British pound in spite of these difficulties.

The Prime Minister said that Japan has reserves of $2 billion, but only $500 million is liquid. If the GOJ buys $500 million, she will lose her entire liquidity. For this reason, the Ministry of Finance experts are deeply concerned about making a commitment to purchase $500 million worth of securities. He said it would be simpler at this point to agree to do so, but he would not wish to make a promise he was not certain he could honor.

The President said that the Prime Minister should impress the Minister of Finance that the United States faces a great deficit even though it must continue to honor its commitments. What is needed temporarily is some money to tide the United States over this period of crisis. He should be urged to consider the alternatives.

The Prime Minister said that Japan would give full consideration to this request, but would be limited by the extent of its liquid reserve. If all Japan’s liquid reserves of $500 million were committed, this would leave only non-liquid reserves of $1.7 billion. Japan would be totally without any liquidity. He asked if there was any means for Japan to buy the securities, but still “keep the money available within the country.”

The President said he was only urging the Prime Minister to do what was humanly possible, but was not asking him to undertake any [Page 243]action which was dangerous. The Prime Minister said that he was speaking in all sincerity and would not make an empty promise. Study of this matter before he had departed Japan for Washington had disclosed that $300 million was the best Japan could do at this time. In fact, Japan was actively considering a plan to secure $25 million in West German marks to increase her own liquidity. (The President telephoned Secretary Fowler at this point to ask whether there was any method by which Japan could meet the United States request without losing her liquidity. He also asked for a report on the latest developments in the British pound crisis.)

The Prime Minister said he would do his best to meet the American request, because he fully understood the President’s concern.

The President said that the Secretary of the Treasury would look into the question of protecting Japan’s liquidity as a means of helping her purchase the full amount of $500 million worth of medium-term securities. The United States had already announced her intention of providing half of the $1 billion needed to help Britain in this present crisis. The Federal Reserve Open Market Committee had approved this today, and both the Italian and German Governments had agreed today to do their share. The United States would not devalue her own currency, regardless of what Britain might do. If Japan and the United States would stand firm, other countries would not be so likely to devalue their currencies or to act irresponsibly in the present financial crisis.

The Prime Minister said that Japan had no thought whatsoever of devaluing the yen at this time, but if her foreign reserves declined in value as a consequence of devaluation by other nations the Government would have to consider what it should do in its own interest. The President said that Secretary Fowler had just told him that there were a number of methods by which Japan might buy $500 million without endangering her liquidity. These will be discussed with the Japanese experts as soon as possible. It is essential to help the United States in this matter because this country is so helpful to Japan in others. The Prime Minister agreed that this is evidenced by the Joint Communiqué.

The President said that he wished to adjourn to the Cabinet room to tell the American and Japanese officials waiting there that:

(1)
He and the Prime Minister had discussed increased Japanese assistance to Vietnam, such as the hospital and educational TV, and that the Prime Minister had agreed to appoint Japanese representatives to discuss this with their American counterparts;
(2)
Japan would consider seriously an increased contribution to the ADB Special Fund to be spread over the next five years. This development would be watched closely by the United States. Such a contribution would be an investment by Japan in an area in which she has [Page 244]a vital interest. If Japan does not increase her contribution, the President was concerned that he might get nothing from Congress and he needs $200 million to help Asia;
(3)
The Prime Minister and Secretary Rusk had agreed that Japan would undertake to supply 1/3 of the requirement to assist Indonesia; and
(4)
The Prime Minister would tell everyone he meets how strongly the Asian people themselves wish to defend their own freedom for the American public should know this. The statements by the Prime Minister during his East Asian visits were very helpful in this respect. In the final analysis, the United States can only “supplement” Asians in defense of their freedom but cannot “supplant” them.

The Prime Minister’s address to the Press Club today had also been extremely helpful. The President also said that he wished to continue to work firmly toward the development of a free and democratic “new Asia,” through such institutions as the ADB, even though there may be those in Congress who are critical. Such positive statements by the Prime Minister are even more essential now in view of the agreement contained in Paragraph VII of the Joint Communiqué.

The Prime Minister said that he pledged himself to make concrete efforts to help ease the President’s burdens and he wished to offer the President his full “moral support.”

The President said that the situation is difficult. There are demonstrations in Tokyo but on the other hand, the Senate is critical here of his efforts and his support is down to 24% in the polls. If the Prime Minister could take his place, he would fully understand why it is essential that Japan do more in this area. No doubt there would be protests against the agreement in Paragraph VII of the Joint Communiqué, but the President said that he would stand firmly behind this commitment.

He said that the Prime Minister would have been greatly encouraged if he had heard Secretary Rusk say in today’s Cabinet meeting that there is no leader in the world today more faithful and more courageous than the Prime Minister.

The Prime Minister said that all responsible leaders who do their duty must be prepared for such attacks and criticisms but he was convinced that he must do his best despite such attacks. The President said that he liked the Prime Minister’s courage.

  1. Source: Johnson Library, National Security File, Country File—Addendum, Japan. Secret; Nodis. Drafted by Wickel. The meeting was held in the Oval Office and at its conclusion the President and Prime Minister joined high-level Japanese and U.S. officials in the Cabinet Room and provided them with a summary of their private meeting. (Summary of Talks, November 15; Johnson Library, National Security File, Country File—Addendum, Japan) The time and place of the meeting are from the President’s Daily Diary. (Ibid.) At the conclusion of the presentation a joint communiqué was issued, the text of which is in Department of State Bulletin, December 4, 1967, pp. 744–747.
  2. William Bundy had contacted key Senators about the proposed text of the communiqué and had been informed of no objections to its contents. (Memorandum to Rostow, November 15; Johnson Library, National Security File, Country File, Japan, Vol. VII)
  3. In September the administration asked the Congress to authorize $200 million for the ADB Special Fund. (Ibid., Meeting Notes File, September 11, 1967, Meeting with Congress on ADB, and Meeting Notes File, September 12, 1967, Meeting with Congress on ADB)
  4. See footnote 1, Document 105.
  5. The topic is discussed in paragraph VI of the joint communiqué.
  6. Paragraph VII provided that a target date for reversion of the Ryukyus would be settled “within a few years,” whereas consultations would begin immediately to arrange for the timely return of the Bonins.