Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 2

033.9411/10–2453: Telegram

No. 707
The Secretary of State to the Embassy in Japan¹

secret

Washington, October 24, 1953—3:53 p.m.

976. Our 958,² your 1041.³ Discussion United States package our 958 with Ikeda staff October 23.

1. Re military questions United States conferees explained basic concept reach understanding here on Japanese budgetary expenditure for defense and phasing ground force buildup to 180,000 with 325,000 goal to be generally agreed but not in terms timephasing. Japanese objected firmly proposal further buildup current Japanese fiscal year saying implied supplemental appropriation out of question. For JFY54 reiterated Ikeda proposal 24,000. United States expressed serious disappointment, invited better proposal. Re defense budget 200 billion yen Japanese indicated too high but reaction not strong as in case proposed increment current fiscal year.

2. Re Japanese contribution United States forces and United States withdrawal Japanese told reduction contribution not necessarily connected rate United States withdrawal but would be connected scale Japanese defense effort. This was answer Japanese wanted. Re withdrawal United States said commencement withdrawal would not necessarily await achievement full 325,000 and impossible state now point of commencement or rate, which would depend not only size but combat readiness Japanese forces as well general strategic situation. Japanese did not press for more precise statement.

3. Japanese pressed how far United States proposals stand or fall together, particularly whether 200 billion yen figure merely estimate Congressional attitude or position present negotiation. Told definite understanding this phase appears essential, as Congress will have to be satisfied actual Japanese effort and as it clear 200 billion yen buy more defense than 155 billion yen expenditures this Japanese fiscal year.

4. Japanese sought explanation $100 million target OSP and $50 million Section 550. Chief interest latter appeared to be not amount available for defense support but principle. Indications are Japanese will seek standard economic assistance agreement this connection. See separate message replying Tousfo 1.⁴

5. Re GARIOA Japanese questions involved precise legal status and amount obligation and possibility relating payments United States expenditures Japan. Amount claim to be pursued further next week with object on United States side clarifying discrepancy United States and Japanese figures but not reconciling accounts. Will insist that as German case write-down eliminates accounting questions.

6. Connection discussion Japanese budget Japanese sought United States views re balance-of-payments. Were given United States estimate reflecting prospective United States special expenditures $900 million current Japanese or United States fiscal year and $1 billion following year (in terms expenditures not contracts). Suzuki argued if estimates based $800 million estimate last year figures $100 million too high by reason confused accounting. Point to be explored further, request comments. Japanese indicated concern over ability support forces when built, lack United States commitments continued support and less optimistic estimates than United States re financial position several years hence.

7. In giving estimate special expenditures United States conferees emphasized based Japanese execution internal measures (paragraph 12 our 958) since essential Japanese be able sell competitively to United States Government as well commercial exports.

Re your 1041 proposals as made (our 958) vary from version on which you commented, but assume comments generally applicable and even more so re ground force phasing.⁵ Situation still unclear but Japanese have not questioned attempt reach definite understanding here on defense budget and ground force buildup and have not pressed for precise time-table on United States withdrawal. Principal question is whether Japanese counterproposals re budget and ground force buildup will afford basis understanding. If we have to accept Japanese buildup at rate heretofore discussed will be serious question our ability defends before Congress program for Japan for fiscal year 1955.

Appreciate potential importance United States commitment on early commencement withdrawal but any commitment that could now be made would fall short Japanese desires. Anticipate Ikeda may be willing settle for general statement in communiqué.

Re GARIOA strong preference here straight financial settlement makes impossible connect other matters although possibility not completely precluded as negotiation progresses.⁶

Re last sentence your 1041⁷ our statement paragraph 7 above appears strongest feasible in view lack flexibility these expenditures. Importance internal measures have been repeatedly emphasized and foundation laid any sanctions which may in future be feasible.

Discussions continue October 26 staff level.

Dulles

1. Drafted by Hemmendinger.
2. Supra.
3. Not printed. (033.9411/10–2353)
4. Not found in Department of State files.
5. In telegram 1041, the Embassy stated: “If Ikeda could be offered the prospect of a reduction in US forces pari passu with an increase in Japan’s, I think Ikeda and the government could be persuaded to go substantially further in the direction of our manpower and budget totals.”
6. On this subject, the Embassy commented in telegram 1041: “In regards GARIOA, straight financial settlement of 850 million will seriously injure prestige of present government, hurt Yoshida’s efforts to form a coalition, and thus weaken government’s ability to push through desired defense build-up. Therefore we continue believe strongly that part of approach recommended Embassy telegram 738 should be fitted into settlement.” See footnote 5, Document 694.
7. In the final sentence, Allison offered the personal comment that he believed the Department, in the Ikeda talks, had not made it clear “that we mean to take action to restrict special dollar expenditures in Japan unless positive steps are taken to correct their deficiencies in economic policies.”