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

794.5 MSP/7–3054: Telegram

No. 793
The Secretary of State to the Embassy in Japan¹

secret

Tokyo, August 20, 1954—7:25 p.m.

393. Your 235.²

1. Japanese defense plans: Greatly disturbed report Japanese considering 10 percent cutback defense budget current year. Japanese commitment maintain level defense spending indicated exchange confidential letters April 6 was not contingent upon US providing 17 vessels and no commitment this respect made by US formally or informally. In any event difference in amount yen required for personnel if in JFY54 US provides 5 rather than 17 vessels relatively small and should be utilized other defense purposes if legally possible. (Total number vessels presently programmed for Japan under US FY54–55 is 8.) Since availability additional US vessels doubtful any delay Japanese naval construction program would be most unfortunate. Curtailment troop maneuvers and reduction stock reserve would also appear violate spirit April 6 agreement. Although Japan’s economic difficulties appreciated view here economy can support program agreed reference letters and assuming no serious economic deterioration defense appropriation could be substantially increased next year.

2. OSP. Reduction MDAP funds to be available this year over last, necessity give special consideration MDAP contract placement US distressed labor areas and Japan’s own limited defense program are factors reducing possibilities OSP Japan. OSP naval vessel Japan extremely unlikely. Fact that Japan third largest OSP contractor last year might be used as indication US utilizing Japan’s capacities extent feasible. Japanese should be informed US will continue procure in Japan to extent possible but for reasons indicated above prospects maintaining FY 54 level OSP Japan not good. Appreciate broad policy implications this statement but in view circumstances above conclusion inescapable. Possible that portion special $700 million fund Indochina if appropriated and not required Indochina may be used other Asian countries but effect such action on OSP Japan highly speculative at this time.

3. Facilities assistance: In addition $10 million already available under Section 550 program limited amount yen for facilities assistance might be forthcoming result possible surplus commodities sales current year. Also possible small amount dollars can be made available under MDAP facilities assistance program but $49 million requested by Japanese clearly unrealistic in light limited new funds (about $20 million globally) tentatively programmed this purpose FY 55.

4. Military aid: Illustrative FY 55 program approximately $100 million plus past appropriations military aid Japan considered adequate meet current Japanese planning. See no justification therefore diversion to Japan any portion funds appropriated other areas (viz. Indochina if that becomes possibility).

With respect economic program Meyer recommendations under interagency study. Believe we should emphasize most strongly to Japanese any US military or economic assistance premised on Japanese cooperation and self help.

Re specific recommendations part 4 reference telegram:

(1) emphatically concur; (2) concur; no commitments made Kaihara during recent visit; (3) every effort will be made OSP Japan consistent other considerations; however as indicated above prospect is for decrease under FY54; and (4) long-range strategic role Japan under continuing review, including probable consideration overall policy NSC level. Unable furnish at this time further basis discussion with Japanese. However as was told Kaihara it can be stated U.S. looks to Japan for expeditious development forces which along with U.S. and other Allied forces FE will be capable maintaining internal security and defending Japan against Communist attack.

Defense and FOA concur this message.

Dulles

1. Drafted in NA and cleared in FE, S/MSA, the Foreign Operations Administration, and the Department of Defense.
2. Document 782.