AMBASSADOR URGES DEFENSE MINISTER TO FINALIZE HNS

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 005475 SIPDIS SIPDIS STATE FOR PM/SNA, EAP/J; DOD FOR OSD/APSA SHINN/SEDNEY/HILL/BASALLA; USFJ FOR J00/J01/J1/J3/J4/J5 E.O. 12958: DECL: 12/06/2017 TAGS: PREL MARR PGOV JA SUBJECT: AMBASSADOR URGES DEFENSE MINISTER TO FINALIZE HNS DEAL Classified By: Ambassador J. Thomas Schieffer; Reasons: (1.4 b/d) ¶1. (C) Summary: The Ambassador urged the rapid conclusion of a new Host Nation Support (HNS) agreement during a December 5 meeting with Defense Minister Shigeru Ishiba. The Ambassador noted that ambiguities in past understandings on HNS, and unilateral efforts by Japan to reduce its financial contributions after the May, 2006 Alliance Transformation agreement, have left both sides frustrated. To create a more forward-looking dialogue, he pressed for a three-year rollover of the Special Measures Agreement (SMA),sustained funding for the Facilities Improvement Program (FIP),and a comprehensive review of our bilateral HNS structure. Ishiba voiced strong support for a comprehensive review and stated his intention to seek a new HNS agreement that would not impact negatively on the U.S. budget. He also acknowledged the importance of FIP to the U.S.-Japan Alliance, but said that Japan could not commit to specific funding levels for legal and political reasons. Ishiba urged USFJ not to oppose talks between the Ministry of Defense (MOD) and the base workers union over labor benefits issues outside of the SMA. End Summary. ¶2. (C) Ambassador Schieffer met with Defense Minister Ishiba December 5 to urge rapid progress in ongoing HNS negotiations. Ishiba was accompanied by Vice Minister (Parliamentary) Minoru Terada, MOD Defense Policy Bureau Director-General Hironori Kanazawa, Local Cooperation Bureau Director-General Yoshiyuki Jibiki, and U.S.-Japan Defense Cooperation Division Director Kiyoshi Serizawa. The Ambassador was joined by Embassy Pol-Mil Chief and the USFJ Director of Plans and Policy (J5). Past Misunderstandings Source of Frustration -------------- ¶3. (C) The Ambassador noted that much of the frustration surrounding ongoing HNS negotiations stems from different interpretations of past agreements. The Ambassador stated that during Alliance Transformation negotiations, former Prime Minister Junichiro Koizumi and Defense Minister (now Finance Minister) Fukushiro Nukaga endorsed the broad principle that Japan's contributions to force transformation would not come at the expense of ongoing HNS contributions. The Ambassador commented that the format used to reach this understanding, however, left too much room for interpretation by both sides. Japan's subsequent decision to unilaterally reduce FIP, which lies outside of the formal SMA structure, by USD 300 million was viewed by the U.S. side as a clear breach of the spirit of our understandings. ¶4. (C) Looking ahead to the future, the Ambassador said that the two sides needed to find a way to quickly resolve the HNS issue before it causes any more hard feelings in the relationship. With this background, the Ambassador proposed a three-year rollover of the current SMA with measures to address other elements of HNS, including FIP. He noted that the U.S. understands that the JFY2008 budget proposal for FIP is USD 60 million lower than JFY2007. While the United States is not happy with this, we can accept it as long as Japan can assure us that it will not be further reduced over the period of the next SMA. ¶5. (C) The Ambassador further suggested that during the period of the SMA, the two sides conduct a comprehensive review of HNS that would create incentives for both sides to save money. Such a review would put all aspects of HNS on the table and reflect projected changes relating to Alliance Transformation. He noted, however, that such a review would be limited to HNS, and not seek to dictate Japan's defense spending. TOKYO 00005475 002 OF 002 Ishiba: FIP Assurance a Challenge -------------- ¶6. (C) Noting that any agreement must be approved by the Ministries of Foreign Affairs and Finance, Ishiba said he is not authorized to accept the Ambassador's offer on behalf of the Japanese government. In his capacity as Defense Minister, Ishiba said that he is less concerned about the length of our next agreement than its contents. ¶7. (C) Ishiba stated that he fully understands the importance of FIP to the Alliance and said he saw no reason to reduce funding levels. He asserted, however, that agreeing in advance to fixed funding levels is difficult for political and process reasons. Japan determines annual FIP spending on a project rather than funding level basis. Each year, MOD reviews USFJ requests for facilities and decides which can be explained to the Diet as critical for the stable basing of U.S. forces. This process is conducted in tandem with facilities decisions for the Self-Defense Force (SDF) to ensure that politicians will not criticize MOD for prioritizing U.S. over Japanese forces in areas such as family housing. Agreeing in advance to a fixed funding level for FIP, Ishiba concluded, would overturn this process. ¶8. (C) The Ambassador replied that the U.S. is not seeking a veto over FIP projects, but underscored that Japan's decision to reduce FIP spending so severely means that we will increasingly be required to ask Congress for new Military Construction funding for Japan. This will naturally lead Congress to ask why Japan has decided to unilaterally cut FIP spending in half over the past two years. He urged Japan to find a solution on the issue that would not hurt the Alliance's image with the Congress. Comprehensive Review and Labor -------------- ¶9. (C) Regarding the U.S. proposal for a comprehensive review of HNS, Ishiba expressed strong support for the concept and instructed his staff to press for inclusion of such a process in a final agreement. Ishiba noted that as Defense Minister in 2003, he had advocated for doing a comprehensive review of HNS as part of the Alliance Transformation negotiation. ¶10. (C) Before closing, Ishiba raised the ongoing negotiations on labor benefits between MOD and the base workers union (Zenchuro). Ishiba said that Japan is trying to conclude talks before there are any further disruptive strikes at U.S. bases. At the same time, he expressed hope that the U.S. would not oppose any agreement reached with the union in the Joint Labor Affairs Committee. The Ambassador replied that he was confident that working level negotiators would find a creative solution on HNS that would address the interests of all parties. SCHIEFFER