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

FE files, lot 55 D 480

No. 831
Memorandum by the Acting Director of the Office of Northeast Asian Affairs (McClurkin) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)¹

secret

[Washington,] November 18, 1954.

Subject:

• GARIOA

I attach a draft telegram (Tab A)² which would instruct our Embassy in Tokyo to try to bring the GARIOA negotiations to a conclusion, and which would inform the Embassy that the Department would recommend acceptance of any firm offer above $600 million without regard to the theory of computation. From our discussions with Takeuchi and Suzuki here, we believe that the chances of an agreement in the near future are appreciably greater if we can go down to $600 million because the Japanese are anxious to demonstrate to the Diet that the claim of $47 million based upon Japanese coal shipped to Korea during the occupation has been deducted from the amount payable to the United States.

The Treasury Department does not agree with the proposed instruction, and considers that the Embassy should be told that the lowest figure for which the United States is prepared to settle is approximately $630 million. This is the lowest figure which results from computations which are generally accepted as in accord with the NAC decision.

We think that the United States stands to gain little and to lose much by balking at the difference which is involved here and that our Embassy should now have sufficiently flexible instructions to conclude the negotiation. In view of the prospects for the Japanese economy, we think the Congress would not complain about a settlement which on a percentage basis fell slightly below the German.

If we accept an amount less than about $630 million, the matter may have to be referred again to the NAC. The draft telegram is couched in terms of the State Department position and would not commit other agencies, but it would be rash to give the Embassy any instruction which the Treasury Department was not willing to support in the NAC.

Recommendation

It is recommended that you or Mr. Baldwin speak to Mr. Overby and seek to persuade him that our Embassy should be instructed to conclude the negotiations for any figure above $600 million on German terms.³

1. Routed through Baldwin.
2. Not printed.
3. The attached draft was not sent. In telegram 1103 to Tokyo, Dec. 1, drafted in NA and cleared with NM and the Department of the Treasury, the Department stated: “During Washington visit Yoshida agreed try expedite GARIOA settlement upon return Tokyo. Every effort should now be made conclude negotiations, $630 million appears minimum acceptable within NAC decision.” (794.5 MSP/12–154)