185. Memorandum From the Director of Defense Program Analysis and Evaluation (Sullivan) to Secretary of Defense Schlesinger, Washington, January 22, 1974.1 2


22 Jan 1974


SUBJECT: U.S. Defense Related Balance of Payments with Japan (U) — INFORMATION MEMORANDUM

Attached is a summary of an ODDPA&E/ISA analysis of U.S. defense related balance of payments with Japan. It looks at criteria which have been used in our negotiations with Germany, and judges their applicability from improving our defense balance of payments with Japan.

Our study shows that applying to Japan the same rationale used in Germany is likely to produce undesirable results as: (1) U.S. defense expenditures in Japan are generally independent of our force levels there, (2) the Japanese view of the threat and the need for U.S. forces to counter the threat is significantly less than in Germany and (3) unlike Germany, U.S. forces in Japan are responsible for theater-wide operations, and not dedicated to the defense of Japan.

The study also indicates that attempts to balance the U.S. military account in isolation involve high political costs and obscure more important DOD goals. As the Japanese associate direct offsets of U.S. defense expenditures with the post-World War II occupation, it might be difficult for the Government of Japan to approve significant offsets. Also, increased purchases of U.S. arms might produce serious concern in other Asian nations, because of latent Asian hostility to Japan. Thus, even if the Japanese were willing to further increase their defense budget, such action should be carefully planned to avoid being counter-productive to Asian security.

The study suggests two feasible proposals for increasing Japanese burden sharing: (1) encourage increases in Japanese economic assistance to less developed countries, and (2) encourage increased emphasis on anti-submarine warfare and air defense capabilities in way which are likely to be non-provocative to other Asian nations.

Leonard Sullivan


Copy to:

  1. Source: Washington National Records Center, OSD Files: FRC 330–78–0011, Japan, 123, 1974 January 22. Confidential. The memorandum is stamped, “Sec Def has seen. 13 Aug 1974.” The analysis is attached but not published.
  2. Sullivan summarized an analysis of defense related balance of payments with Japan.