· _ SECRET • A ssislan t Secretary of Defense ISA Franklin Kramer US-Japan Bilateral Meeting 2 November 2000 DECLASSIFIED IN PART Authority EO 13526 Chief Records Dedaas Dtv WHS Date MAY 2 4 2011 Scope Paper ¢ In this 40th anniversary year of the 1960 U S -Japan Security treaty the alliance remains the centerpiece of U S regional security and Japanese national security strategy 05' b 1 '1 J • IJ Japanese officials are telling us they desire strategic dialogue with Washington that would help us formulate our joint defense postures U Japanese popular support for the security alli ance remains at all-time high levels recent polls show that 72% of the Japanese public expect the U S to remain Japan's closest security partner for th e next 5 - 10 years Nonetheless most Japanese favor reductions in the U S bases and operations suggesting a lack of depth in the aforementioned popular support for the alliance In this situation local politicians are increasingly able to score points by opposing aspects of our p resence -- e g training port visits and environmental issues -- but not the alliance itself Over the summer the Okinawa Prefectura1 Government OPG adopted a resolution caHing for revision of the Status of Forces Agreement SOFA to mandate environmental restoration measures and greater access to the bases • SECft f T As of Octo ber 30 HOO hours • Bilateral Meeting Objectives • • • • • • DECLASSIFIED IN FULL Authority EO 13526 Chief Records Dec lass Div WHS Date MA y 2 4 2011 Use 1TDP QDR and discussions on peacekeeping emergency laws ship inspection laws and roles and missions to begin a strategic dialogue Exchange perspectives on developments in relations with China Emphasize the relationship of trilateral activities to enhanced regional cooperation Applaud JOA on the success of the five-year old foru for Defense Authorities in the Asia Pacific Deal with bilateral issues that arise while keeping the GOJ side focused on the larger long-term picture U Politics Your meetings take place against a backdrop of deepening political fragmentation in Japan Recent polls show only 23% popular support for the current coalition Chief Cabinet Secretary Nakagawa resigned on October 27 for lying to the Diet about informing his mistress she was the focus of Police investigation into illegal drug use Prime Minister Mori has also been under increasing fire recently for telling British Prime Minister Blair that he had told Pyongyang that North Korea could slide past the abductions dispute by surfacing the Japanese citizens in a third country and saying they had simply been missing all these years Then he compounded the blunder by having his spokesman brief the press on the idea Should the Nakagawa affair and this latest gaffe force Mori to resign former Chief Cabinet Secretary Koichi Kato appears to be a likely successor Though the ruling coalition LDP Komeito and New Conservative Party holds a Lower House majority of271 to 209 seats and a comparable majority of 137 to 115 seats in the Upper House there is no single majority party Absent a change in leadership most observers expect the LDP to fare badly in elections next summer for that half of the Upper House in which the LDP has most of its seats Absent a dramatic swing of political fortunes or the emergence of a dynamic political figure we will have to deal with weak coalition governments for the foreseeable future U Economics Economic recovery remains the leading concern of the Japanese public and politicians Following two straight quarters of contraction Japan's economy returned to positive growth of 2 5% annualized in the January- 1arch period followed by growth of 4 2% annualized in the April-June quarter Notably consumer demand which accounts for 60 percent of Japan's GDP also grew for two straight quarters Counteracting these positive developments retail store sales dropped 1 5% in September from one year earlier -- the 42nd straight month of decline -- unemployment remains stuck at 4 6% consumer confidence is sluggish the banking sector remains saddled with bad debts and recent corporate surveys reveal widespread downward revisions in projected earnings growth Public sector debts of near 130% of GDP and Moody's second downgrading of GOJ debt notwithstanding the government remains firmly committed to expansionary fiscal policies to maintain the recovery and avoid yet another backslide into recession On August 1 the Cabinet approved use of ¥500 billion $4 6 billion or 0 1 % of GDP in public works reserve funds allocated under the FY2000 initial budget and on October 19 the Cabinet approved an ¥11 trillion $102 billion stimulus package roughly half of which is new money • U Though the Bank of Japan ended its zero-rate policy on August 11 by raising overnight interest rates to 0 25% monetary policy remains easy as the BOJ guards against a -Sf CRS' f 2 As ot October 30 1400 hours _ _ 2 _ DECLASSIFIED IN PART Autholity EO 13526 Chief Records Declass Div WHS 5i6CRFF- • Date MAY 2 4 201 l return of deflationary pressures thal produced seven strai ght years of declines in consumer prices Following the rise in overnight rates prime rates hav e hovered in the 1 75-2 0% range and the l 0-year Japan Government bond yield has ri sen to 1 85% f Mid-Term Defense Plan and Defense Budget The Japan Defense Agency JDA will issue its next five -year Mid-tenn Defense Plan this December The 1TDP is more analogous to our Future Years Defense Plan than to the Quadrennial Rev iew but it does provide some insight on JDA's strategic views Based on discussions with IDA officials we expect that chis 1TDP will continue to be based on the strategic assumptions outlined in the 1996 Defense Pohc Outline Nonh Korea will remain the primary concern The-MTDP will j usti fy t 1e ex1stmg collaboration will recommend acquisition of additional AEGIS destroyers and continued study ofTMD requirements but will not explicitly propose acquisition or deployment of TMD capabilities In a political environment that does not support increasses in the defense budget JDA will emphasize several popular themes including information technology Jisaster relief NBC and guerilla countermeasures and confidence building measures • In the first year of the new 1TDP JFY 2001 IDA is seeking a 1 4% budget increase to ¥4 99 trillion $47 5 billion This would stay just within the informal 1% of GDP ceiling on defense spending and avoid breaking the symbolic ¥5 trillion threshold The procurement account will include ¥1 76 trillion for new equipment including funds for initial design of new transport and maritime patrol aircraft MPA that will share extensive parts commonality and funds to begin acquisition of the first of 4 mid-air refueling tankers ¢ Though domestic pressures will force IDA to adopt an indigenous approach to its P3 C replacement the Maritime Staff Office and the U S Navy have been in preliminary discussions for the last two years concerning adoption of common mission avionics in respective P-3C successors to maintain close interoperability in this field lJ The tankers are appropriate to Japan's air defense needs and have long been approved for release should Japan decide to buy from the U S However they remain highly controversi al within Japan due to perceived power projection implications and they may once again drop out during the fi nal budget reviews in Decem ber • U Emergency Laws In addition to final legislative activities to implement Defense Guidelines expected during the fa ll Diet session see below many in Japan have long noted the lack of clear legal authority to clarify responsibil ities of ministries and agencies in times of national emergency Specifically they cite the need for legislation to amend emergency laws rel ated to SDF activi ties acti vities of U S forces and measures needed to pro tect Japanese lives As of October 30 1400 hours DECLASSIFIED IN PART Autho ity EO 13526 Chief Records OedaU Date • • Div WHS MA Y 2 4 2011 and property that are unre lated to the activi ties of the SDF or the U S fo rces For exam ple Japan lacks a legal basis to give the SDF priority for supply during a cri sis Likewise there is lack of clarity concerning the ro les of the SDF the Coast Guard and the National Police Agen cy fo r hand ling vario us border incu rs ion measures Though none of these items is expected to make the legi slative agenda any time soon the increasing ca lls for develo pment of Emergency Laws are emblematic of the ongoing debate w ithin Japan about the nature o f a more independent and normal security policy U Peacekeeping Laws Japan's participation in international peacekeeping remains li mited by 1992 legislation to situations that meet five key principles 1 the parties to the conflict have agreed to a cease-fire 2 the parties to the conflict consent to the peacekeeping force and to Japan's participation 3 the peacekeeping force maintains strict impartiality 4 Japan's unit may withdraw should any of the above requirements cease to be satisfied and 5 use o f weapons is limited to the minimum necessary to protect personnel's lives In addition under a moratorium on SDF participation in core assignments of peacekeeping forces PKF SDF activities are limited to logistical support activities such as medical care transportation communications and construction In 1999 the Diet debated a relaxation on this moratorium but has so far taken no action reflecting continued public ambivalence about participation in PKF As a result of the foregoing restrictions Japan was not able to participate in peacekeeping activities in East Timer but was instead only able to mount a mission to West Timor where the Air Self Defense Force delivered relief supplies to refugees who had fled East Tirnor Though no legislative action is expected during the fall Diet session we are encouraging Japan to take a more active role in peacekeeping U Okinawa Political The June 11 elections in the Okinawa prefectural assembly delivered a clear victory for Governor Keiichi Inamine whose backers picked up 2 seats giving them a 30 to 18 majority This was the first prefecture-wide election since Inamine's election in November 1998 and constituted a strong endorsement for his pragmatic approach to base issues and his associated success in winning greater subsidies from Tokyo that constitute a mainstay of the Okinawan economy In contrast the election was a clear repudiation of reform ist candidates' opposition to the bases and opposition to Futenma relocation U On August 28 the OPG presented a resolution to the Government of Japan and the U S Embassy calling for renegotiation of the Status of Forces Agreement SOFA The resolution proposes applying domestic Japanese law to U S facilities for environmental conservation and holding the U S military responsib le for environmental pollution caused at its faciJities It also proposes garnishing servicemen ' s pay if they do not support children born to them by Japanese women Lastly the proposal would ban low-altitude training flights to allevia te noise llu tion and su b ·ect vehic les own ed by U S military personnel to full taxation pposition to the SOFA remains a power u rallying point for anti -base forces in Okinawa that Governor Inamine cannot ignore The GOJ and we fi rmly maintain that the SOFA is an iss ue for the central governments • · SECRE'f'4 As of October 30 1400 hours DECLASSIFIED IN PART Authority EO 13526 Chief Recof'ds Dedass Div WHS • Da e MAY 2 4 2011 C Bilateral Issues U Host Nation Support HNS At the 2 2 Secretary A lbright and Foreign Minister Kono signed the new Special _v leasures Agreement S fA which accounts for about $ l 6 billion o f Japan's $4 5 bill ion annual Host Nation Support HNS _ The balance is composed of costs for facilities and construction land rent and various taxes and fees waived under the Security Treaty of 1960 The GOJ's unil ateral facilities improvement program FIP accounts for about S9Q0 mil lion of HNS every year C The new SMA maintains the ceiling of 23 055 employees for GOJ labor support which amounts to about $1 3 billion annually The GOJ commitment to pay for all costs associated with training relocation conducted at GOJ request also remains unchanged about S20 million annually The new SMA imposes econom1zation cuts in the utility ceilings that will amount to an estimated $31 8 million reduction to $270 million in the GOJ's annual utility cost sharing • U Defense Guidelines At the 2 2 we announced agreement on the establishment of a Bilateral Coordination Mechanism BCM This was a specific objective of the Guidelines The BCM encompasses the policy and working level military-to-military and miJitary-to-civilian coordination groups that will be called into action in the event of an attack on Japan or a situation in areas surrounding Japan With the BCM established we will have a clearer means for conducting realistic exercises that will prepare both sides for actual contingencies U AJso at the 2 2 we highlighted bilateral planning progress with the stand-up of the Coordination and Liaison Forum CLF Though not a specific requirement of the Guidellnes this body is an essential tool that our planners need to involve GOJ civilian agencies in the deJiberate planning process U Over the past summer the GOJ also took the initiative to issue a handbook to local authorities that explains the Gu idelines and the kinds of cooperation that migh t be expected Absent clear legal authority for the GOJ to compel the cooperati on of local authorities in a crisis this kind of outreach is essen tial to generating local understanding It also shows the GOJ's steady commitment to Guidel ines implementation jlJ Most recently the GOJ Cabinet has approved submission of legislatio n to implement • the shi p inspec tion portio n o f the Guidelines in Japanese law The GOJ is not certain th at there will be time in this Diet session ends December l to pass the measure and places greater priority on the Special Measures Agreement host nation s upport bill should there be a need to choose between the two The draft law con tains several restrictions th at may make S DF participation in ship inspections impractical but that wilJ on ly become d ear through exerci ses Key points in th e draft law include SECIU f 5 As of October 30 1400 hours • 8ECHET- DECLASSIFIED IN PART Authority EO 13526 Chief Records Declass Div WHS Date • • • • • MAY 2 4 2011 Ship inspections can be done onl y to help secure implcmentalion of economic sanc tions in a Si tuation in Areas Surrou ndin g Japan SIASJ The economic sanctions can be und er Ci SC reso lution or in support o f other mternational econom ic sanctions e g the CS and Japan together decide to impose sanctions but Ja pan by law cannot impose economic sanctions unilaterall y Diet prior appro val in each situation not each ship is required in principle in an emergency it can be obtained retroactively Prior concurrence of the ship's flag state is required In conducting operations JMSDF ships can make approaches toward other ships and track them and place themselves in the other ship's path but use of force is prohibited except in self-defense JMSDF ships can provide rear-area support to a U S ship inspection operation in SIASJ with Diet approval jt SpeciaJ Action Committee on Okinawa Futenma Relocation OoS 1 'i • e contmue to o d to t e pu 1c me at t e matter s ou e an e m t e context Joint Security Declaration In response to changes which may arise in the international security environment both governments will continue to consult on defense policies and military postures including the U S force structure in Japan which wilJ best meet their requirements Responses along this line to press questioning at the 2 2 meeting and during SecDefs recent Japan visit struck just the right note i Attention is finalJy turning to the details of the specific constrnction site construction method and operational use restrictions The GOJ and OPG held the third meeting of the Alternative Facility Coordination Council AFCC at which the GOJ OPG and local officials will work out the specifics of the new facility There is now consensus on hav · a civi -rnilita dual-use facility but no agreement on the construction method or precise site OSl r t U • As of October 30 1400 hours • - -c--_-__ - -_-- --- - - -----·· ····- ---- DECLASSIFIED IN PART Authooty EO 13526 Chief ReCOl'dS Oeclass Div WI-IS • Date MAY 2 4 2011 U Of the remaining SACO initiatives those not associated with land return have been comp leted Several of the land returns are also moving ahead through the zoning processes and design work but we don't expect to see any major deliverables on these until about 2004 Relocation of Naha Military Port to Urasoe has completely bogged down due to the opposition of the Urasoe city assembly and the recent shift of the Urasoe mayor to oppose the move U Ballistic Missile Defense The initial $72 million phase of TMD cooperation begun in August 1999 remains on schedule and will conclude in summer 2001 That phase covers requirements analysis and design RAD to support development of technologies necessary for the Standard Missile 3 SM-3 Block II upgrade under the Navy Theater Wide NTW program The cooperation is focusing on four critical components nose cone seeker second stage propulsion and kinetic kill vehicle to an enhanced SM-3 interceptor missile that will be required to provide a kill capability against ballistic missile threats expected after 2007-2012 The first round of discussions on the next stage was held in mid-October and a second round is set for mid-November • n this environment 1t remains important to reassure Japan o our pohttca an programmatic commitment to TMD cooperation even while we work through the overall NTW program definition issues OSt v l b cl i O 1 'f d • ¢ Shinkampo During SecDefs March visit we agreed with the GOJ on a fi ve-point plan in further implementation of Prime Mini ster Obuchi's fay 1999 commitment to POTUS that Envirotech commonly known by its former name Shinkampo would instaU dioxinremoving bag house filters by February 2000 and that the GOJ would fund construction of a LOOmeter smokestack to be completed by March 2001 ·6ECRm - 7 As of October 30 1400 hours SI CRET DECLASSIFIED IN PART Authority EO 13526 Chief Records DedaiS Dtv WHS Date MAY 2 4 2011 Inslaliation of baghouse filters in the three mcmerators has been compleh d and the filters are operating Joint monitoring data for June showed that on 23 of30 days Shinkampo's dioxin emissions exceeded the 0 6 pg m3 standard Vith the highest daily level at 4 0 pg m3 Additionally there is excellent correlation between elevated dioxin numbers at the monitoring stations and recorded wind patterns leaving no scientific doubt as lo the source of the dioxin Though a great improvement over August l 999's maximum level of 54 pg m3 the numbers continue to support our political and legal cases that further action is required x 'nether or not the filters are successful in removing dioxins it is clear that the filters alone will not remove all pollutants and that smoke will continue to fumigate base housing • • U The next hearing on our lawsuit is scheduled for December Though no one is projecting a quick end of the lawsuit the Navy is confident that its strong videotape evidence of Shinkampo's actual practices the joint and independent monitoring data expert testimony and Shinkampo's generally noncooperative attitude with court directives are leading us in a positive direction U Thus far no Atsugi residents have opted to take-up the GOJ's offer to finance offbase housing because pollution aside there is no comparable quality housing available and the Navy is requiring that any GOJ-funded housing be of the same standard We never expected that there would be a great demand for such housing when we included this item in the five-point plan but felt that the offer itself was an important part of the overall public relations posture Dst 'I b J As of October 30 1400 hours DECLASSIFIED IN PART Authority EO 13526 Chief Records Dedass Olv WHS GECHE1 Date MAY 2 4 2011 • Kobe Ship Visit In 1975 the city government of Kobe Japan passed an ordinance that requires visiting military vessels to declare in writing that they carry no nuclear weapons the Kobe Fonnula Given U S NCND olic no U S Nav USN' shi s have visited Kobe since the Kobe formula was promulgated • f Field Carrier Landing Practice FCLP remains one of the larger irritants in the relations between our bases and local commuruties Most recently cities adjacent to Misawa and Atsugi bases temporarily cut-off cordial relations with the U S Navy in response to shortnotice FCLP that the Navy conducted at those bases for two days during mid-September Though the Navy normally conducts about 90 percent of its FCLP at Iwo Jima inclement weather and operational urgency occasionally force use of mainland facilities In 2000 use of mainland bases was inordinately high Japan's Foreign Relations • ¢ Sino-Japanese relations Chinese Premier Zhu Rongji's October 12-17 visit to Tokyo managed to defuse some of the recent negative public sentiment towards China scoring points in the Japanese press for his PR efforts including a very favorable perfonnance in a TV ' Town Hall ' meeting GOJ officials unanjmously gave Zhu hi gh marks for improving the As cif October 30 1400 hours - - - - - - - - - - - - -- ----- ·-· -····· · - ··· -- ·-··-· --- DECLASSIFIED IN PART Authority EO 13526 Chief Records Declass '-SECRET- Date Div WHS MAY 2 4 2011 atmosp herics for Japan-Chin a relations al though they agree the visi t did no t produce any maj o r breakthroughs on substance Most important from Tokyo ·s perspective however Vas Zhu ·s deft handli ng of the history issue-a factor that doomed Jiang Zemin's 1998 vis ir Zhu emphas ized that he was not in Japan to seek an apology even though he had been criticized harshly in Chi na for not pursuing it ¢ Foreign v1inister Kano 's late August visit to Beijing also patched over a major biJateral irritant Tokyo and Beijing agreed that each country wouJd notify the other prior to conducting marine scientific research in disputed waters The GOJ had complained about numerous cases of PRC research vessels operating within Japan's Exclusive Economic Zone EEZ without prior approval over the past year A ou h most of the vio lations occurred in dis uted waters and man involved milit vessel h e increasmg equency o t e mcurs10ns Japanese Diet to suspen ¥17 btl 10n 158 million in special loans in retaliation The Diet also pressured MOF A to convene a panel to consider reducing other fonns of official development assistance ODA to China Though the loans were restored following Kano's visits the incursions continued and staff negotiations to implement the notifications process remain inconclusive • bOS l-'lM OSt '' • ' ¢ Military to military contacts are generaJiy improving but still quite limited Seventeen PLA National Defense University General Officers visited Japan from May 27 to June 5 Though the Japanese counterpart National Institute for Defense Studies has sent four such delegations to China thjs Vas the first such visit of Chinese officers to Japan Two weeks later General Yuji Fujinawa Chief of the Joint Staff Council visited Beijing for bilateral security talks completing a bilateral exchange Nevertheless the constraints on the military relationship are demonstrated by Beijing's continued refusal to consider IDA proposals for a JMSDF port call OS b t t b c l pf Japan-Russia During Russian President V lad im ir Pu tin 's 3-5 September state visi t co T okyo Putin and vlori's attempts to release a new roadmap for bilateral relations focusing on economic and strategic matte rs were overshadowed by Putin's clear rej ection ofthe December 2000 target fo r concluding a peace treaty and resolving the Northern territo ries dispute October 23 D eputy Foreign Minister talks also produced little of substance and expectations are already being lowered for Foreign Minister Kono's November 1-4 visit to Ru ssia • U Despite remaining technically a l war Japan has become R ussia's thi rd largest aid donor Tokyo has committed S6 5 bi llion in official grants loans and trade insurance although 8BCRf T• IO As of October 30 1400 hours DECLASSIFIED IN ART Authority EO 13526 Chief Records Declass Dtv WHS -8£CttE'f- • Date AY 2 4 2011 only $2 5 billion has been dispersed for Russian economic development Japanese financ ial institutions resumed lending last year with $475 million in balance of payments assis tance under the Worid Bank leaving Japan the only foreign donor to provide substantial cash loans to Russia • L • Japan-ROK relations Japan and the ROK are committed to im provi ng relations aod establishing tangible security ties despite historical cultural and territorial animosities The September 22-24 visit of South Korean President Kim Dae-Jung was smooth and congenial as the two sides addressed an agenda spanning economic cooperation cultural ties and the securi ty situation on the peninsula -SHCRi f11 As of October 30 1400 hours 4 - · · -·· • · ' DECLASSIFIED IN PART Authority EO 13526 Chief Records Deciass Div WHS -8eCRE'f • Date MAY 2 4 2011 t Military-to-mil itary ties are also gradually expanding The J 1SDF and the ROK Navy held their first joint exercise in August l 999 Several surface combatants and aircraft conduc ted a search-and-rescue exercise southeast of Korea's Cheju Island Another search-a ndrescue exercise is schedu led for 200 1 Japanese and Korean Defense Minis ters meet regularly vhi le working-leve l contacts exist among all service branches ROK Joint Chiefs of Staff Chairman Cho Yung-Kil and his Japanese counterpart Yuji Fujinawa met in March bOS Vt d • • -Sf Cft fft' 12 As of October JO 1400 hours ·- a