AMBASSADOR AND CCS SHIOZAKI ON NORTH KOREA, CHINA,

S E C R E T SECTION 01 OF 03 TOKYO 006954

SIPDIS

SIPDIS

OSD/ISA FOR LAWLESS/HILL/BASALLA, COMUS JAPAN YOKOTA FOR
J0/J00/J5

E.O. 12958: DECL: 12/12/2016
TAGS: PREL PGOV MARR KN CH JA
SUBJECT: AMBASSADOR AND CCS SHIOZAKI ON NORTH KOREA, CHINA,
AND INVESTMENT ISSUES


Classified By: Ambassador J. Thomas Schieffer; Reasons: 1.4 (b/d)


1. (S) Summary: Chief Cabinet Secretary Yasuhisa Shiozaki
outlined Japanese expectations for the upcoming Six-Party
Talks during a wide-ranging meeting with the Ambassador on
December 11. Shiozaki welcomed the resumption of talks in
Beijing, but said Japan is not particularly optimistic about
its outcome. He also said some in the Government of Japan
were concerned about Japan being marginalized during the
course of discussions. Shiozaki said that if there was a
breakthrough in Beijing on the nuclear issue, Japanese
financial support for North Korea could not be counted on
until there was further movement on the abduction issue.
Shiozaki reacted favorably to the notion of a trilateral
strategic dialogue with China and agreed that such a forum
could calm potential PRC concerns over enhanced U.S.-Japan
engagement with India. Turning to the domestic arena,
Shiozaki expressed a desire to change legislation related to
triangular mergers to facilitate more foreign direct
investment. He also reiterated the Abe administration's
commitment to addressing problems associated with Collective
Self-Defense. Shiozaki acknowledged that he and Prime
Minister Abe had different views on the matter than Defense
Minister Fumio Kyuma. End Summary.

Six-Party Talks: Japanese Anxiety and Redlines
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2. (S) The Ambassador hosted Chief Cabinet Secretary Yasuhisa
Shiozaki for a wide-ranging and cordial one-on-one breakfast
meeting on December 11. The Ambassador opened the meeting by
assuring Shiozaki that the U.S. is returning to the Six-Party
Talks only because of Chinese assurances that there would be
meaningful progress. The U.S. has made it clear that if the
DPRK does not take visible steps to meet its past
commitments, the talks will go no where. Shiozaki replied
that Japan welcomes the resumption of multilateral talks, but
admitted there was anxiety among some in the government that
Japan could find itself marginalized during the course of
discussions.


3. (S) The Ambassador asked what would happen if there were a
breakthrough and an aid package needed to be put together for
the DPRK. Shiozaki said that the GOJ would not be able to
participate unless the DPRK showed movement on the abduction
issue. Shiozaki emphasized that the public would not support
any formal assistance to North Korea unless North Korea took
some steps toward resolving the emotionally-charged issue.
The Ambassador emphasized the full U.S. commitment on the
matter, noting that the President himself has taken a strong,
personal interest in the fate of the Japanese abductees.

U.S.-Japan-China Trilateral Strategic Dialogue
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4. (C) The Ambassador complimented Prime Minister Abe on his
outreach to China and the Republic of Korea noting that
Chinese Ambassador Wang Yi had described PM Abe's efforts as
opening a "new era" in bilateral relations. The Ambassador
also relayed Amb. Wang's suggestion that a trilateral
strategic dialogue be held between Washington, Tokyo, and
Beijing. Shiozaki appeared surprised by the suggestion, but
immediately warmed to the concept, adding with a laugh that
Japan should have been the one suggesting it. The Ambassador
noted that having China propose such a forum was in itself
significant, given Beijing's long-standing suspicions of both
U.S. and Japanese motives. Shiozaki agreed that launching a
trilateral dialogue with Beijing might also ease possible PRC
concerns over Japan's proposal for a Quad forum with
Australia and India.

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Bilateral Relations: Realignment and Intel Cooperation
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5. (S) The Ambassador emphasized the importance of moving
quickly with legislation to allow the Japan Bank for
International Cooperation (JBIC) to begin work on building
facilities on Guam to accommodate the realignment of U.S.
forces in Japan. Shiozaki said that some additional
adjustment in wording was required because JBIC traditionally
provided aid to developing countries and this involved "aid"
to a developed country. Nevertheless, Shiozaki stated that
there should be "no problem" with moving ahead with the JBIC
bill in the next Diet session (Comment: JDA officials
subsequently have told the embassy that Shiozaki will
publicly announce on December 15 that legislation will be
submitted in the January session of the Diet. End Comment.)
The Ambassador suggested that in addition to alliance
transformation, enhanced intelligence sharing should be
highlighted at the upcoming "2 2" State/Defense ministerial
meetings and the proposed May summit. Shiozaki agreed with
the proposal, adding that PM Abe fully supports enhanced
intel sharing.


6. (C) Shiozaki noted that the Prime Minister is also serious
about addressing the issue of Collective Self-Defense. While
acknowledging political sensitivities related to the July,
2007 Upper House election, Shiozaki said that recent public
comments by the Ambassador were a welcome addition to the
ongoing dialogue in Japan. Shiozaki acknowledged, however,
that he and Defense Minister Kyuma are following "different
paths" on the issue. Shiozaki expressed frustration with
Kyuma's tendency to speak out of turn. "You can't tell
(Kyuma) anything," Shiozaki continued, "since he believes he
is well-briefed on all of the issues." Shiozaki concluded
that the more fundamental problem is that Kyuma's knowledge
base is "ten years out of date."

Economic Issues: FDI Barriers, Highway Bill
--------------


7. (C) The Ambassador cautioned that a Liberal Democratic
Party (LDP) proposal to limit triangular mergers threatened
to damage Japan's ability to attract foreign direct
investment (FDI). Shiozaki admitted that he had only
realized the seriousness of the issue the previous week,
having been immersed in political debate over a controversial
highway bill. Shiozaki said he would meet with LDP Mori
Faction Leader Nobutaka Machimura and Minister of Trade,
Economy, and Industry Akira Amari later in the day to discuss
how to fix the problem (Note: later in the day, Shiozaki
publicly cautioned the LDP over the risk the M&A proposal
poses for Japan's FDI environment. End Note). Shiozaki
commented that many LDP members are reluctant to take on
Keidanren over the M&A issue given the business association's
long-standing financial support to LDP candidates. Returning
to the highway bill, Shiozaki disputed media reports that the
legislation was a step backwards in terms of reform. The
Ambassador suggested that both the U.S. and GOJ needed to
start formulating some economic topics that could be
addressed at the proposed May summit. Ideally, the summit
would have security, intelligence, and economic components
that could be seen as deliverables.

Comment
--------------


8. (C) Shiozaki was very relaxed and open during the whole
breakfast. He was both candid and thoughtful in the
discussion. Judging from the quick follow up on some of the

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issues we discussed, he demonstrated a willingness to act as
well as discuss matters. Shiozaki's quick embrace of a
trilateral strategic dialogue with China was noteworthy and
worth following up on in the coming weeks, particularly as
discussions over a Quad arrangement with India and Australia
evolve. The December 11 breakfast was the first in what
should become a monthly series of meetings to review progress
in our bilateral relationship.
SCHIEFFER