FINANCE MINISTER NUKAGA AGREES TO DISCUSS HOST

C O N F I D E N T I A L TOKYO 004884 SIPDIS SIPDIS TREASURY FOR IA/DOHNER, POGGI E.O. 12958: DECL: 10/19/2017 TAGS: EFIN JA SUBJECT: FINANCE MINISTER NUKAGA AGREES TO DISCUSS HOST NATION SUPPORT WITH AMBASSADOR Classified By: Ambassador J. Thomas Schieffer for reasons 1.4 (b) and ( d). (C) 1. In his inaugural courtesy call on Finance Minister Fukushiro Nukaga, Ambassador Schieffer welcomed the warm relations that he had developed with the Minister during Nukaga's tenure as head of the Japan Defense Agency. The Ambassador noted the importance of sharing the truth even when it is difficult in building U.S.-Japan relations, and expressed appreciation for Nukaga's willingness to do that in the past. Ambassador Schieffer suggested he and Minister Nukaga should meet to discuss host nation support in a candid and private way following the Minister's October 18-20 trip to Washington. The Ambassador added frank discussions were necessary to prevent both sides from getting in a position where hard feelings would arise from this issue. Nukaga observed that Ministry of Defense Counsellor Terada had recently traveled to Washington to discuss host nation support, and stated the current situation in Japan would not allow for a simple three-year extension due to a lack of public support. Nukaga agreed to meet with the Ambassador for further discussions upon his return from Washington. (C) 2. During the meeting, the Ambassador also expressed the hope that Minister Nukaga and Treasury Secretary Paulson would develop a close and trusting relationship, beginning with their meeting in Washington on October 19. He reported that Secretary Paulson, during his visit to Tokyo in March, had said that people look at China and see great economic opportunity, but they overlook Japan. Paulson had expressed that Japan's economy is so big and important right now, it should not be overlooked, given the importance of its health and strength to the world economy. Nukaga responded that he had spoken with Secretary Paulson the previous evening regarding the Clean Energy Fund, and that Japan wants to consult closely on this initiative. Nukaga went on to say the Japanese economy is now in a gradual recovery process, and acknowledged the continuation of Japan's recovery is important for the stability of Asia and the world. He noted that the economic and political situation in China is also very important for Asia, and that Japan's economy has been aided by the expansion of the U.S. and Chinese economies. SCHIEFFER