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

794.5 MSP/12–3053

No. 733
Memorandum by the Deputy Director of the Office of Northeast Asian Affairs (McClurkin) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)

confidential

[Washington,] January 13, 1954.

Subject:

• Japanese Defense Budget.

The Japanese Cabinet must submit to the Diet within the next few days the national budget for the fiscal year beginning April 1. Prime Minister Yoshida, with the support of Ikeda, Ichimada, Governor of the Bank of Japan, and other financial leaders, has made a strong plea for a balanced budget and a reduction of governmental expenditures. (See attached Embassy telegram 1624, Tab A.)¹ The preliminary budget submitted to the Cabinet by the Finance Ministry on December 29 called for total expenditures of 994 billion yen for the coming year, which is slightly less than the current year’s budget and roughly half of the total budget requests of the various ministries. If this budget is actually approved by the Diet, it would be the first postwar year in which governmental expenditures were reduced from the level of the previous year. The draft budget provides for reductions in all major categories of expenditures except defense which would be increased from 123 billion yen to 145 billion yen (plus a reappropriation of 10 billion yen of JFY1953–1954 funds).

In view of the opposition to rearmament and the great pressures for increasing appropriations for public works, farm relief (necessitated by last Year’s floods and typhoons), aid to small business, social security, etc., it has taken considerable political courage on the part of the Prime Minister to support a budget which actually calls for reduced appropriations for all purposes except defense. It is uncertain whether the austere budget proposed by the Finance Ministry will be adopted, but for the first time the Prime Minister and his financial advisers are willing to take a strong stand in favor of a sound financial policy in spite of the political dangers involved.

Included in the draft budget is a figure of 57 billion yen ($158 million) for support of United States forces stationed in Japan. This is 5 billion yen ($14 million) less than the Japanese are obligated to make available to United States forces under the terms of Article 25 of the Administrative Agreement. The Agreement itself contemplates a periodic reexamination of the Japanese contribution, however, and Mr. Okazaki has asked for our concurrence by January 14 in this proposed reduction.

Japanese defense plans for the coming fiscal year appear reasonably firm. They call for an increase of about 32,000 uniformed personnel and 10,000 civilians, 7,000 of which will release uniformed personnel from clerical and administrative positions. The actual increase, therefore, in the number of uniformed personnel available for military service will be about 39,000. This is an increase of about 33 percent over present strength. This program is not appreciably better, from our point of view, from that proposed to us by Ikeda. Ikeda talked in terms of an increase of 35,000 uniformed personnel. Thus the present program calls for 3,000 fewer new recruits than proposed by Ikeda, but, due to the transfer of 7,000 uniformed personnel out of clerical jobs, the effective strength of the National Safety Force will be increased by 4,000 more than Ikeda indicated. The Japanese goals, accordingly, are lower than we have hoped, but represent considerable progress toward acceptance of their responsibilities for self-defense, and are believed by our Embassy to be the most that the Government can do politically at this time.

The Embassy has proposed that we agree to a reduction of 2.5 billion yen ($7 million) in the contribution to United States forces. (See Embassy telegrams 1709 and 1718,² Tabs B and C.) This would be only a token reduction, but in view of the cuts being made in other elements of the budget (in part due to our exhortations), it would doubtless have a favorable political effect. It would not only indicate our general support for the austerity program which the Prime Minister is so courageously insisting upon but also would give the Japanese an indication of our willingness to reduce the costs to the Japanese of maintaining our forces in Japan as they demonstrate their intention of increasing their own forces.

Recommendation

It is recommended that you sign the attached telegram. (Tab D)³

FOA, Defense, and Treasury concur.

1. Dated Dec. 30, 1953, not printed. (794.5 MSP/12–3053)
2. Supra.

3. Robertson signed the telegram in draft; it was sent to Tokyo as 1639, Jan. 14, and reads:

   “Some agencies concerned particularly Defense do not consider proposed increase Japanese defense effort justifies reduction Japanese contribution. However in view other factors set forth your messages you are authorized agree reduction from equivalent $155 million to equivalent $148 million on condition force goals and budgetary support remain substantially as stated reference messages. Agreement should be contained exchange notes reciting condition and stating that adjusted contribution will be made until ‘effective date of any new arrangements’.” (794.5 MSP/1–1454)