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

794.5 MSP/8–1954: Telegram

No. 803
The Acting Secretary of State to the Embassy in Japan¹

confidential

Washington, September 16, 1954—5:35 p.m.

588. Tokyo also pass CINCFE. Your despatch 241.² Japanese request orally transmitted through Japanese Embassy that $40 million section 550 yen be utilized procure naval vessels Japan for Japanese forces discussed Defense and FOA. This yen fund earmarked for payment existing MDAP/OSP contracts. Therefore Japan proposal procure additional items not presently programmed Japan not acceptable since diversion dollar funds from other MDAP projects would be required.

In view Japanese concern prospect reduced dollar receipts MDAP/OSP, Defense agrees instruct FEC make payments against contracts 50 percent dollars 50 percent yen until $40 million yen fund exhausted.

Estimate total outstanding MDAP/OSP contracts $88.5 million basis total contracts placed FY1952 through FY1954 less payments made through July 31.

Japanese Embassy informed this proposal at regular meeting economic section September 16.

Defense and FOA concur this message.

Smith

1. Drafted and approved for transmission in NA.
2. See telegram 363 from Tokyo, Document 789.