AMBASSADOR LAYS OUT SMA POSITION WITH FOREIGN

C O N F I D E N T I A L TOKYO 004993

SIPDIS

SIPDIS

PM FOR AMB MCDONALD; SECDEF FOR OSD/APSA
SHINN/HILL/BASALLA; USFJ FOR J00/J01/J1/J4/J5

E.O. 12958: DECL: 10/25/2017
TAGS: PREL MARR PGOV JA
SUBJECT: AMBASSADOR LAYS OUT SMA POSITION WITH FOREIGN
MINISTER


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


1. (C) Action request contained in Para 6


2. (C) Summary: During an October 24 meeting with Foreign
Minister Masahiko Komura, the Ambassador rejected Japan's
proposal to make sharp cuts in the Special Measures Agreement
(SMA) covering 1.15 billion in Japanese Host Nation Support
(HNS) for U.S. Forces. The Ambassador emphasized that the
U.S. made clear during Defense Posture Review Initiative
(DPRI) negotiations that we would not accept reductions in
HNS to fund base realignment. For this reason, the U.S.
would not entertain proposals for HNS reductions that would
result in increased U.S. expenditures. He noted, however,
that the U.S. would consider Japanese proposals that would
not negatively impact on the U.S. budget. Foreign Minister
Komura agreed to submit a new proposal that would potentially
include areas outside of the SMA in order to start
working-level negotiations. He and the Ambassador agreed to
initiate Director-level talks at an early date. End Summary.

U.S. Red Line: No HNS for DPRI Exchange
--------------


3. (C) The Ambassador told Foreign Minister Komura on October
24 that the U.S. government received a clear understanding
during Alliance Transformation negotiations from the Japanese
government, up to then-Prime Minister Junichiro Koizumi, that
realignment costs related to base realignment would not come
at the expense of HNS. Recent Japanese attempts to disavow
this understanding, he continued, threaten to provoke serious
irritation in Washington. The Ambassador added that the
previous evening, he had a frank and candid discussion on the
issue with Finance Minister Fukushiro Nukaga, who was a
direct party to these discussions in 2006 as Defense Minister.


4. (C) The Ambassador emphasized that the U.S. will not
contemplate any Japanese proposal that would result in
increased U.S. budgetary outlays. If Japan asks for such
cuts, the two sides will be in for a very difficult
negotiation. The Ambassador said that the U.S. would
consider Japanese proposals that would not impact on the U.S.
bottom line. In this context, he noted recent reports that
Japan is considering reducing benefits for local base
employees and/or an extended comprehensive review of HNS.

New Proposal
--------------


5. (C) Komura responded that Japan's proposed SMA cuts are
not aimed at freeing funds for realignment. Rather, Japan's
focus is on reducing parts of the SMA which are not
acceptable to the Japanese public. Komura acknowledged that
Japan has also sought adjustments on labor benefits for base
workers, an issue outside of the formal SMA framework.
Komura said that Japan would prepare a new proposal based on
the Ambassador's guidance and asked that Director-level
negotiations in Tokyo commence as soon as possible. The
Ambassador agreed that working-level officials should review
Japan's new proposal, as long as it is consistent with the
conditions the U.S. has outlined.


6. (C) Action Request: Country Team requests Department
approval to begin Director-level negotiations with Japan
based on its anticipated new proposal. This proposal may
include HNS items which fall outside of the formal SMA
framework, including labor benefits and the Facilities
Improvement Program.
SCHIEFFER