SCENESETTER FOR ADMIRAL KEATING'S VISIT TO JAPAN

C O N F I D E N T I A L TOKYO 001474

SIPDIS

SIPDIS

FOR U.S. PACOM, ADMIRAL KEATING

E.O. 12958: DECL: 04/05/2022
TAGS: PGOV PINR JN
SUBJECT: SCENESETTER FOR ADMIRAL KEATING'S VISIT TO JAPAN

Classified By: AMBASSADOR J. THOMAS SCHIEFFER. REASONS 1.4 (B),(D).

Overview
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1. (C) You take your command as Japan contemplates major changes in
its approach to our alliance and Japan's role in the region
and the world. Prime Minister Shinzo Abe's government is
focused on expanding Japan's ties, including security
relations, with new partners like Australia and India. It is
taking a more active role, on its own and in partnership with
us, to expand its role in South, Southeast, and Central Asia.
Japan has deployed forces overseas in support of U.S.-led
coalition efforts in Iraq, the Indian Ocean, and for
Southeast Asia tsunami relief. These experiences have not
only improved the ability of the Self-Defense Forces (SDF) to
operate with our military abroad, but also deepened their
experience working with other U.S. partners, including
Australia and NATO. Japanese public support for our alliance
is at an all-time high. Polling also shows that the
popularity of the SDF has increased following overseas
deployments.


2. (C) Bilaterally, we are rapidly moving towards a more balanced
partnership in which Japan plays a more direct role in its
own defense and in operations with U.S. forces in the region
and beyond. Japan's embrace of ballistic missile defense
(BMD) cooperation is driving policy makers and politicians to
review post-war restrictions on the exercise of collective
self-defense. Enhanced interoperability between U.S. and
Japanese forces has increased the sharing of intelligence on
a political as well as operational basis. China's growing
economic and military power and North Korea's missile and
nuclear weapons development have made the need for a close
alliance with the U.S. very concrete to the Japanese
man-in-the-street.


3. (C) Progress on the policy and operational fronts have
unfortunately not been matched by an increase in Japan's
financial outlays for security. Japan's defense budget has
stagnated for the past five years, even as the SDF has
assumed ambitious new roles and missions. Maintaining
Japan's Host Nation Support, traditionally a pillar of the
U.S.-Japan Alliance, will become increasingly difficult over
the coming years. The current Special Measures Agreement
(SMA),covering approximately $1.1 billion of Japan's HNS
contributions, is set to expire on March 31, 2008. We need
to constantly remind Japanese leaders of the growing gap in
defense spending between the U.S. and Japan and the political
risk for Japan if it were to reduce its share of alliance
responsibilities any further.

Domestic Politics
--------------


4. (C) You will be arriving in Japan just ahead of nation-wide local
elections and the campaign for the critical July 22 Upper
House vote. If the LDP seriously under-performs
expectations, Abe could face a challenge to his leadership
from within his party. Support for Abe's cabinet dropped
dramatically in the first few months of his administration.
Abe got off to a strong start with popular fence mending
visits to Beijing and Seoul. But his decision to allow the
return of party rebels kicked out of the LDP under former
Prime Minister Koizumi has tarnished his credentials as a
reformer and driven his approval ratings down to the low
40's. A series of scandals and gaffes by Cabinet ministers
has led to a media image of Abe as weak and indecisive. Abe
is blessed, however, with a feckless and disunited opposition
camp. The Democratic Party of Japan (DPJ) is almost certain
to pick up seats in the July Upper House election, but small
gains are not likely to topple Abe from his leadership
position.

5, (C) The deterioration of Abe's political fortunes has made him
more cautious. We assess that it will be more and more
difficult to get the Japanese to break any new ground with us
on security policy initiatives until the July elections are
out of the way. The same is true on the economic front.
Japan is back from the economic slump of the 1990's, thanks
in large measure to the reforms of former Prime Minister
Koizumi. Prime Minister Abe pledged to continue a robust
economic reform agenda, seeking an "open and innovative"
economy. Further reform is fundamental to raising Japan's
economic growth rate and removing obstacles to strengthening
the bilateral economic relationship. So far, however, Abe's
actions indicate a lack of commitment to economic reform,
partially due to a resurgence of anti-reform elements within
the LDP and to caution prior to the July 2007 Upper House
Elections

Foreign Policy
--------------


6. (C) Six-Party Talks with North Korea have increased Japanese
anxieties that they will be marginalized as our leading ally
in Asia. The Japanese are worried that we could disregard
their concerns over the abduction issue in an effort to reach
a deal with the North Koreans. Their initial reaction to the
Six-Party Talks Agreement has been generally positive, but
with an undercurrent of unease that Japan's abduction issue
was not adequately addressed. Many of our political
interlocutors concede that the agreement on the nuclear issue
is a good thing, but worry that the United States "again
passed Japan" and cut a deal with the DPRK. The failure of
Japan-DPRK Working Group talks in Hanoi on the abduction
issue earlier this month has increased public unease over
Japan's possible isolation within the Six-Party framework.

7, (C) Relations with both Koreas have been complicated by the
reaction of Abe's right-wing supporters to Congressman
Honda's resolution on Japan's treatment of "comfort women,"
girls and women forced to work in military brothels during
WWII. Abe has vacillated between reassuring the
international community that past official apologies still
stand and appeasing hard-line supporters who are seeking to
"revise" the official history of the issue. Abe called
President Bush to reaffirm that his government would stand by
the apology made in the 1993 Kono agreement. Abe hopes this
will quiet American critics at least long enough for him to
have a successful summit April 26-27.


8. (C) Abe has done a better job about stabilizing Japan's relations
with China. Beijing has been careful not to be drawn into
the public debate on comfort women, which could risk creating
another chronic irritant like former Prime Minister Koizumi's
visits to the Yasukuni Shrine. An upcoming series of
high-level visits, including Premier Wen Jiabao's visit the
same week as yours, should keep the bilateral atmospherics
positive for the immediate future.


9. (C) Despite the recent upbeat tone in Japan-China relations,
China is viewed among policymakers in Tokyo as Japan's most
significant long-term diplomatic and security challenge.
Beijing's recent anti-satellite test has exacerbated
long-standing concerns over China's long-term defense
build-up. Japanese military planners are increasingly
focused on PLA activities in the East China Sea. Concern
over the PRC's growing political and military clout is
driving Japan to diversify its strategic relationships.
Prime Minister Abe has advocated closer relations with NATO
and a "Quad" forum that would bring together the United
States, Japan, India, and Australia. Foreign Minister Aso
has also promoted the concept of an "Arc of Freedom and
Prosperity," which would expand Japan's activities in South
and Central Asia. The Japanese government also launched an
initiative last May at the "Island Summit" in Okinawa to
enhance Japanese engagement with the Pacific island nations
with an eye towards limiting PRC influence.

Security Policy
--------------


10. (C) Abe has set out to accelerate Japan's progress towards
"normalcy" in its security policy by strengthening the
bilateral alliance and reaching out to others with new
proposals. In a speech before the Atlantic Council in
January, he declared Japan's ambition to deepen ties with
NATO, and to not shy away from dispatching forces overseas to
support international efforts. Japanese officials have since
sought to downplay any expectations of "boots on the ground"
in Afghanistan, however, or of any sudden breakthroughs in
SDF interaction with NATO. Abe will be particularly cautious
on defense policy in the lead-up to the July election.
Nevertheless, he has secured Diet backing to extend Japan's
oiler support mission in the Indian Ocean, and requested that
the Diet extend the ASDF airlift mission Kuwait and Iraq for
another two years.


11. (C) Another initiative immune from Japan's recent pre-election
go-slow stance is trilateral defense cooperation with the
U.S. and Australia. The inaugural meeting of the Assistant
Secretary-level Australia-Japan-U.S. Security and Defense

SIPDIS
Forum (SDCF) will be held in Tokyo during your visit. Japan
and Australia issued a Joint Declaration on Security in early
March that makes Canberra Japan's closest defense partner
aside from the U.S. While not a treaty with security
obligations, the Joint Declaration calls for deepening
cooperation across a spectrum of areas - such as disaster
relief, information sharing, maritime security - and creates
a regular "2 2" meeting of foreign and defense ministers to
spur progress forward.


12. (C) After the July election, we expect the Prime Minister to
follow through on his pledge to reassess Japan's self-imposed
prohibition on collective self-defense, particularly as it
relates to the use of BMD assets to defend the U.S. against
incoming missiles. Abe has not revealed his position on
draft "blanket overseas dispatch" legislation -- which would
obviate the need for separate legislation to bless each
Self-Defense Force deployment abroad. Defense policy
realists within the LDP advocate using such legislation as a
vehicle to break the ban on using force abroad, but other
elements in the ruling coalition insist that the issue can
only be resolved through formal revision of the
constitution's pacifist Article 9.

Alliance Transformation
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13. (C) Efforts to implement the landmark "2 2" Security Consultative
Committee (SCC) May 1, 2006 Alliance Transformation Roadmap
are progressing well. The Japanese government took a major
step forward in fulfilling its side of the agreement in
February when the Cabinet approved legislation to facilitate
work on base realignment. The law, which may pass the Lower
House as early as this month, includes measures to induce
cooperation from base hosting communities and to facilitate
investment in infrastructure and housing on Guam. The
Japanese government will also start survey work at Camp
Schwab for the Futenma Replacement Facility (FRF). The
Okinawan government has given tacit approval for this
activity and appears prepared to assist in accelerating
realignment activities on the island.


14. (C) While we welcome Japan's initiative thus far on realignment,
we need to remind Tokyo to stay committed on funding. They
will cover an estimated $26 billion in costs for realignment
alone between now and 2014 (although this amount is not
discussed publicly). Japan will point to this price tag in
arguing for sharp cuts in Japan's Host Nation Support
contributions. Negotiations on a new 5-year Special Measures
Agreement (SMA) are expected to begin this summer. SMA is a
likely subject for discussion at the May 1 SCC meeting and
perhaps the April Washington summit.
SCHIEFFER