Foreign Relations of the United States, 1969–1976, Volume E–12, Documents on East and Southeast Asia, 1973–1976

188. Key Judgments from Research Study OPR-4 Prepared in the Central Intelligence Agency, Washington, May 1974.¹ ²

Washington, May 1974

CENTRAL INTELLIGENCE AGENCY DIRECTORATE OF INTELLIGENCE OFFICE OF POLITICAL RESEARCH

May 1974

JAPAN IN THE SEVENTIES—AND ON INTO THE EIGHTIES

CONTENTS

KEY JUDGMENTS

THE DISCUSSION

I. JAPAN TODAY

II. DETERMINANTS AND PARAMETERS OF THE PROCESS OF CHANGE

A. Enduring Aspects of the National Character

B. Political Factors

C. An Economic versus a Military Strategy:

Principal Considerations

D. International Constraints and Opportunities

III. PROSPECTS FOR THE NEXT FEW YEARS

A. Domestic Problems

B. Security Policies

C. Foreign Relations

IV. ON INTO THE 1980s: CONTINGENCIES AND OPTIONS IN THE NEXT TEN YEARS

A. In a Peaceful and Stable World

B. In a Harsher World Economic Environment

C. In an Increasingly Disorderly and Contentious world

FIGURES

Japanese armaments and forces (table)

Index of economic growth (chart)

Foreign trade (chart)

NOTE: The Office of Political Research consulted other components of the CIA in the preparation of this Research Study, and they are in general agreement with its judgments. Comments on the Study are welcome and should be addressed to its authors, [text not declassified]

JAPAN IN THE SEVENTIES—AND ON INTO THE EIGHTIES

KEY JUDGMENTS

After two decades of growing prosperity and comfortable security, Japan stands at a turning point in its post-war history. Recent events have shaken Japan’s confidence and left it uneasily aware that:

• —international developments (e.g., market restrictions and increases in raw material costs) are threatening to slow its economic progress, delay sorely needed public works programs at home, and reduce Japan’s economic leverage abroad, calling into question whether Japan can continue to prosper in the 1970s without access to cheap energy and raw material supplies;
• —changing international political alignments are compelling it to explore potentially troublesome new external linkages, even while attempting to maintain the most essential of its ties with the US.

A number of basic factors in Japanese society will be conducive to a large measure of continuity rather than abrupt change in the years immediately ahead. Among them are:

• —political stability founded on the necessity to gain consensus before adopting new policies;
• —devotion to an achievement ethic that enables the society to focus its energies in sustained and dynamic pursuit of national goals;
• —a deeply ingrained belief that for Japan to rely on military power would be self-defeating in the nuclear age.

Over the longer run many of the decisions of the Japanese government will be conditioned—even determined—by international developments that are largely beyond its control.

During the next few years, however, world events are not likely to force major change in Japanese policy:

• —The search for export markets to pay for raw material imports and the assurance of arrangements for these supplies will dominate Japan’s external affairs.
• —Tokyo will continue to seek bilateral arrangements whereby Japanese capital and technology are used to develop natural resources which are then imported into Japan on long-term contracts.
• —The same combination of national characteristics which makes the Japanese so efficient in domestic industry makes them strong, and often insensitive, competitors in international trade, a circumstance that will produce recurring frictions, even with so close and important an associate as the US.
• —Neither China nor the USSR (the principal sources of worry to Japanese leaders) is soon likely to threaten Japan in ways that would destroy the faith that its salvation lies in being an economic giant and a military midget.

Japan’s capability to develop and produce nuclear weapons and modest delivery systems is not questioned. The industrial and technological backup is available. But going nuclear would be a political decision; it would not be made on the basis of technological capability but on an assessment of overriding national interests.

As Japan moves into the 1980s, the range of pressures it faces and the options it considers are likely to increase sharply. The policy choices Japanese leaders actually make will depend heavily on the character of changes in world economic and political conditions:

• —In an international setting no more turbulent than that now prevailing, Japan would come closest to playing its preferred role of a non-military nation of traders, supporting multilateral approaches to problems of trade, monetary reform, and resource development. Continuing prosperity and the growing demands for internal social spending would ease the sense of urgency that has dominated Japanese trade in the past and would encourage the further adjustment of Japan’s more aggressive trading practices.
• —In a harsher world economic environment, where “beggar-thy-neighbor” attitudes prevailed, Japan would fight tooth and nail for its share of the market, even though conscious of the need to keep the international trading system from collapsing. Domestically, traditional values of frugality and fatalism would be revived to ease acceptance of a leaner life style. Difficult economic conditions would be more likely to pull the Japanese closer together than to breed the kind of chaos that could be exploited by the political extremes on either the right or left.
• —An actual breakdown in major aspects of the international economic and political order—not presently foreseeable—could generate economic stress sufficient to cause dramatic shifts in Japan’s views on rearmament. With their country isolated in a hostile and strife-torn world, Japan’s leaders would probably see rearming as a prudent move, especially if a period of economic contention had so damaged US-Japanese relations as to make US guarantees of Japanese security appear less reliable. Internal disorder deriving from economic dislocations, combined with external threats to Japan, would make the public more prone to accept the discipline and restrictions of a more authoritarian government. Nevertheless, a rearmed Japan would be at best a second-class military power, unable to develop an assured deterrent, and aware that its ultimate security would still have to rest on alignment with one of the major powers.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 539, Country Files, Far East, Japan, Vol. 11, 1 January 1974–. Secret; No Foreign Dissem. A notation on the correspondence profile, August 14, reads, “No further action necessary—will be incorporated into Japan trip briefing papers for Pres.” (Ibid.) In a letter to the President, dated May 17, Colby wrote that the study was a response to Nixon’s desire for a “look ahead” into the future of Japanese policy. ( Central Intelligence Agency, OPI 10, Job 80M01048A, Box 4, Fold. 1 )
2. A CIA study predicted continuity in Japanese policy during the next few years, but anticipated that more dramatic changes would be possible during the 1980s.