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

8931. Subject: US-Japan Relations, Status and Prospects.

Summary: 1. Japan’s views of the US and its role in world, which have in past provided base-line around which ups and downs in state of our relations have occurred, may have been unsettled by recent [Page 278]developments. In economic field, Arab-Israeli war, balance of payments difficulties, “protectionism” scare, etc. are casting doubt on extent to which Japan can continue to count on us to carry its ball as well as our own in world economy, let alone expect special favors. In security field, though opinions have been divided on need for protection against threat, and though our military presence in Japan has increasingly become embarrassment rather than asset to Japanese politicians, Japan has at least seen our military containment posture as immutable part of landscape and have generally assumed it would be successful—at least over short run. Tet offensive and what was interpreted as abrupt shift into de-escalation and negotiations with Hanoi have thrown doubt on US firmness and invincibility. Racial violence and social unrest in America have roused concern over basic stability of American society, made American image a rather less positive political symbol. All this has combined with continuing long-run rise in nationalism and decline in conservative strength to make it possible that current worsening of perspective is not just because we are in political valley, but perhaps something more fundamental. I thus consider it quite possible that Japan is moving toward a serious reappraisal of our relationship, with much potential for harm to our interests as we have thus far defined them.

Summary: 2. As it looks to me now, damage to our economic interests from any reappraisal would be limited by realities of Japan’s economic position in world. Efforts to diversify markets and sources of supply, with lessening of degree of dependence on US, are certainly in cards, but not necessarily all to the bad. Despite all Japan might do to increase trade with Communist bloc, there are limits to how far Japan could go without sweeping restructuring of her economy or without clear risks to vital interests. Reappraisal might have implications for future of Japanese economic aid programs, as US leverage for exertion of influence wanes and, perhaps, as aid to S.E.A. comes into competition with China trade for available credit. I believe, however, that there are now authentic Japanese advocates of aid, and a developing consciousness of basic Japanese interests involved. Japan will probably be cautious about overextension of credit to China, and there will be more nationalistic gratification to be had from aiding S.E.A. than from trading with a Communist China, which would never be willing to play second fiddle to Japan. Our security interests seem to me more vulnerable, with further retrograde movement possible along lines of recent difficulties over NPW entry, decreasing certainty of smooth sailing in 1970, declining probability of Okinawa reversion with more favorable status for bases than in Japan proper, etc. Politically, while Japan will still be motivated by self-interest to side with us on many issues, it will probably become even harder to get Japan to take our side on any controversial issues. In short, recent developments and trends could do considerable damage to our interests. It is important [Page 279]to note that even with all the above kinds of damage figured in (and not all of it may materialize), we would still be left with much that is positive in our relationship; however, it is also important to note that things conceivably could get even worse, if world economy turns sour and if U.S. finds it necessary to administer still more shocks (e.g., ADB, “protectionism,” withdrawal from Expo 70). We are going to have to do some serious stock-taking ourselves as we move into the future. End summary.

3. Recent developments are affecting Japan’s views of and attitudes toward United States in ways harmful to our interests, as we have defined them. We must, of course, keep in mind historical fact that state of US-Japan relations has moved along rather cyclical course, with peaks and valleys occurring in response rather to balance of domestic political forces (e.g., the shifts in power position that seem inexorable part of life-cycle of Japanese Prime Ministers) than to external events (though these have also had impact). If views from peaks are misleading, so are those from valleys, such as that which we at present share with Sato. Nevertheless, with all due allowance made, and subject to later reexamination, we must consider possibility that current harmful trends may be fundamental.

4. Major factor that has in past kept floor under periodic ups and downs in US-Japan relations is fairly stable conception on part of Japanese leadership and most influential Japanese of U.S. world position and importance of that position to themselves. Trade relationship, access to U.S. capital markets and technology, and other concrete economic benefits have been and are vital to Japan, and over the years Japan also has become habituated to receiving special favors in economic field. In efforts to protect Japan’s interests in world economy and avoid repetition of nightmare of nineteen thirties, when Japan felt itself being squeezed out of world economy, Japan has been able to count on substantial identity of interest with us and on our therefore being willing to carry ball. Japanese determination at all costs to avoid jeopardizing these interests has imposed limits on fluctuations in state of US-Japan relations.

5. Attitudes regarding U.S. regional security position have been mixed. Substantial element of conservative leadership shares goals of containment policy, as it has understood these goals, and regards them as in Japan’s own national interest. Others, not really believing there is security threat to Japan serious enough to worry about, have gone along in security alliance with us mainly out of desire to preserve other benefits of relationship with U.S., e.g., economic benefits. Regardless of varying attitudes re necessity or desirability of security relationship, most Japanese have shared assumption that military containment policy was firmly fixed and likely to be successful at least over short run. However, the security relationship with the U.S. is primarily valued for the “nuclear umbrella” it gives Japan and the role of U.S. forces in [Page 280]the security of South Korea and Taiwan. While the sophisticated recognize that U.S. bases in Japan are important to this system, more generally these bases are regarded as a nuisance which must be tolerated and a price to be paid for other aspects of our relationship. Importantly the bases as such do not constitute any political asset on which GOJ leadership can capitalize but with the Enterprise and OJI hospital riots, the Sasebo incident, the F–4 crash in Fukuoka, etc. constitute situation in which the GOJ finds itself constantly on the defensive against opposition attacks and the political realities push the GOJ toward taking position akin to those of the opposition.

6. In political field, despite determined efforts of antique-Marxist opposition to build image of US as hateful capitalist-imperialist monster, popular respect for US political institutions, infatuation with many aspects of American mass culture, genuine respect for our intellectual attainments, and visible attractions of the American way of life, have kept America a strongly positive symbol. Renovationist parties, most intellectuals, and many labor leaders are hostile to main lines of U.S. foreign policy, but association with United States, manifestations of United States regard for Japan and its leaders, have been valued assets usable by Japanese conservative politicians, counterbalanced only in part by requirement that politicans periodically demonstrate the right degree of “independence,” and avoid image of slavishness or servility.

7. Recent major developments have called into question basic assumptions about US. Arab-Israeli war brought home in forceful terms to GOJ leaders that Japanese economy and security dispositions must be based on assessment of international political/strategic situation in which others than U.S. may play key role and in which U.S. desires and action may not be decisive. Full context of our B/P and dollar defense crisis, and our current and capital account measures, both proposed and instituted, is emerging in manner to cast doubt on extent to which Japan can rely on us to carry their ball as well as ours in world economy, let alone continue to count on U.S. for special favors in economic field. Tet offensive and what was interpreted as abrupt shift into de-escalation and negotiations with Hanoi, together with apparent resistance among American people to continuation of past military containment policies, have thrown doubt on U.S. firmness and invincibility (though negotiations were widely welcomed). Racial violence and other signs of social unrest in America are in some conflict with past conceptions of American way of life, and to some give rise to concern over basic stability of American society.

8. There are two other developments which though not creating the deterioration in Japan-US relations have measurably strengthened and accelerated it. One is rising sense of self-confidence, encouraged by twenty years of peace, economic growth, relative political stability, and improvement in social and cultural life, which makes most Japanese [Page 281]increasingly restless with realities or implications of reliance on others, particularly United States. Second development is continuing erosion of political strength of Liberal Democratic Party, so that its supporters at polls now (Jan 1967) barely exceed the combined totals of the supporters of the renovationists (counting Komeito as renovationist, in keeping with its present posture). Opposition parties, moreover, on foreign policy issues that matter, have tended during this past year to find more and more common ground in neutrality, opposition to the security pact, and an opening to China. We have already seen some signs that conservative leadership in order to maintain power will find it increasingly necessary to try to capture this rising nationalist sentiment and pull teeth of opposition by pulling back somewhat from close American ties and edging toward more accommodating relationship with Asian Communist powers. Excursions to left by conservatives are nothing new (witness Hatoyama, Kono, Fujiyama, et al.), but they acquire new significance in present context.

9. There is thus every reason to expect that Japan will over next year or so not only be reappraising its policy of individual issues involved in US-Japan relations, but also taking a fresh critical look at validity of past practice under which US-Japan relationship was cornerstone and major determinant of Japanese positions in every field of international activity. Following is attempt to explore tentatively kinds of damage to our interests that might result from such a reappraisal.

10. Relationship in economic field has been due to reappraisal for long time past, if only because of changing ratio of size of two economies. Some eminent Japanese have for some time been urging diversification of Japan’s trade relationships away from us, and there are increasing numbers of vigorous advocates of expanding trade with Mainland China. However, Japan’s room for maneuver in rearranging trade and economic relations is limited, and the feasible degree of diversification of markets, e.g. to Europe and S.E.A., would not necessarily be harmful to our interests, though we might lose some economic leverage. (Some diversification and less sense of dependence on the U.S. would in fact be psychologically healthy.) Even the most determined effort to reorient trade would still, after lapse of several years, leave U.S. as Japan’s most important trading partner by far, and would be unlikely to place Japan in relation of general trade dependence on Communist markets. For Japan to move into really close alignment with Communist bloc, even if it wished, would require sweeping reorganization of Japan’s economy, or else equally sweeping change in structure and philosophy of bloc, which as now constituted is most inhospitable to kind of economy Japan has developed.

11. How probable it is that Japan’s reappraisal of US relationship will militate against prospects for a more effective and generous [Page 282]Japanese economic aid program depends on extent to which Japan’s recent progress toward liberalization of aid Asia is attributable to US pressure and influence. Our influence has certainly been considerable but there are authentic Japanese advocates and basic Japanese interests involved in more liberal aid to S.E.A. efforts to diversify trade could of course lead to overextension of credit to China at expense of capacity to extend aid credits to S.E.A.; however, GOJ itself will be wary of overextension of credit. While emotional complex about China will strengthen pressures for more trade, China trade offers less potential gratification for Japan’s nationalistic desire to assert leadership than does economic assistance to S.E.A. nations. Chances of Communist China’s ever acknowledging any degree of Japanese leadership seem nil, and Japan will certainly not play second fiddle to China.

12. Over shorter run, certain of our economic and financial interests may also suffer. While Japan will still be impelled by convergence of interests to side with us in matters relating to international monetary reforms, in opposing “vertical” tariff preferences, etc., and might start basing more of its reserve accumulation on net earnings from Europe rather than U.S., Japan will probably become still more cautious about elimination of QR’s, [quote restrictions] freeing foreign exchange for tourist travel, or capital liberalization, at least until it has become clear that America is able to solve its economic problems in responsible manner with international cooperation.

13. Damage to our security interests vis-à-vis Japan is potentially larger than that to our economic interests. Outlook for free access to Japanese ports for US nuclear vessels is already gloomier, and even popular acceptance by 1970 of security treaty and extant base structure looks less certain than it did six months or a year ago. Possibility of GOJ accepting reversion of Okinawa with substantially greater freedom of use than enjoyed by bases in Japan proper has receded considerably since last winter. GOJ cooperation in applying strategic controls to trade with Asian Communist countries will almost certainly become harder to secure. While prospect remains that Japan will sign and ratify NPT if treaty picks up real momentum within coming year, Japanese advocates of keeping nuclear options open have doubtless been strengthened. There are only very few counterbalancing advantages that might conceivably emerge from reappraisal. Japan’s willingness to undertake limited ventures in regional collective security, such as selling military equipment to S.E.A. nations, Taiwan, or Korea, might increase, though domestic political hurdles for GOJ would remain formidable. Japan consensus might come to tolerate something more than very gradual acceleration of buildup in Japan’s own defense which has been case over last few years, but any value to U.S. of such a trend would be offset by probability that it would be accompanied by assertive nationalist overtones and aggressive demands for phase [Page 283]down of U.S. bases. All this worsening of outlook is due in part to current perspective from valley. Whatever relaxed attitude rest of nation may take about security threat to Japan, Sato and his likely successors will continue to entertain some genuine concern on this score, and security relation with U.S. will probably continue to look to them like most efficient and economical way of coping with threat; there are accordingly limits beyond which leadership over next five years or so will not wish to let alliance deteriorate. At same time, reappraisal such as we are hypothecating would almost certainly produce some retrograde movement along lines indicated.

14. Potential for damage to our political interests is also substantial. Japanese may well become more closely engaged in thinking about post-Vietnam reconstruction and may even move closer to readiness to participate modestly in international control set up, but GOJ is going to be quite leery of associating itself publicly and actively with any controversial U.S. positions re Vietnam. Concern for relations with GRC as well as U.S. and genuine uncertainty at policy levels as to full import of cultural revolution will continue to restrict room for maneuver in area of China policy. GOJ determination to beat us to the punch in any shift of posture now so much greater, however, that some gesture toward Peking seems certain to materialize. Urge to differentiate their China policy from ours will make common approach to Chirep more awkward, and increase potential pressures in UN for “compromise” solutions.

15. Damage that would be done to our interests if all or most of pessimistic possibilities noted above materialized is obviously considerable. Japan’s positive contribution to our security interests would have been cut back, and our ability to get Japan’s political support for any controversial political position would have been reduced. It is important to note again that this is the perspective from a political valley, and that even with all this damage we would still be left with a US-Japan relationship capable of making a substantial positive contribution to American interests. It is also important to note, however, that things could conceivably turn out worse than now seems probable. For example, if world economy deteriorated seriously, if U.S. really pulled back from Asia, and if US administered succession of shocks (“protectionism,” withholding support from ADB, refusal participate in Expo 70, etc), cumulative effect could conceivably be to set Japan again on introverted irrational course it followed in nineteen thirties. Changes in world economic and strategic interrelationships would keep Japan from exhibiting its irrationality in same forms it took a generation ago, but results could be very damaging. I trust that we will keep this more remote—but larger—danger in mind as we plan how to manage our relations with Japan in months and years ahead.

Osborn
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL JAPAN–US. Secret; Limdis.