THE DEPUTY SECRETARY'S STRATEGIC DIALOGUE WITH

C O N F I D E N T I A L SECTION 01 OF 04 TOKYO 001262

SIPDIS

E.O. 12958: DECL: 06/01/2019
TAGS: PREL ECON JA
SUBJECT: THE DEPUTY SECRETARY'S STRATEGIC DIALOGUE WITH
MOFA VFM YABUNAKA

Classified By: CDA JAMES P. ZUMWALT FOR REASONS 1.4 (B),(D)


1. (C) SUMMARY: The U.S.-Japan bilateral relationship remains
the core to an approach on several regional and global
issues, including security, engagement with China, and
redesigning the East Asian architecture, Deputy Secretary
Steinberg and Ministry of Foreign Affairs Vice-Foreign
Minister Mitoji Yabunaka agreed in a Strategic Dialogue June

1. Yabunaka said the GOJ favors moving the U.S.-Japan
economic dialogue toward a less formalized, two-tiered focus
on coordinating mutual global interests and resolving key
bilateral issues. Yabunaka also welcomed the recent close
dialogue on nuclear deterrence and the response to North
Korea, and the Deputy Secretary agreed on the need to move
quickly to resolve Host Nation Support issues. The parties
agreed on the need to engage China so that it will act
transparently in its military modernization. The Deputy
Secretary also urged Japan to avoid a business as usual
approach with Iran and to cease providing export finance.
END SUMMARY.

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THE BILATERAL RELATIONSHIP
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2. (C) Yabunaka said the GOJ is "very encouraged" by the
importance the Obama administration has placed on the
U.S.-Japan alliance, explaining U.S. defense assurance is
critical to securing Japan from several challenges such as
Chinese military posturing and North Korean nuclear armament.
While Japan's political opposition has signaled possible
changes to the bilateral relationship in the event it wins
this year's national elections, Yabunaka stressed the need to
reiterate its importance to the general public. The Deputy
Secretary agreed on the fundamental importance of the
relationship and emphasized when there is strong mutual
confidence between the US and Japan differences over specific
issues do not become a test of the strength of overall
relations.

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BEYOND THE EPG
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3. (C) Yabunaka also said the GOJ places great importance on
a quarterly Deputy-level U.S.-Japan Strategic Dialogue and he
looks forward to traveling to Washington in September or
October. He also praised the ongoing dialogues on climate
change and Iran and said the GOJ looks forward to
establishing a similar relationship between MOFA Director
General for Economic Affairs Suzuki and his counterpart.
Suzuki said the U.S. and Japan should revise the Economic
Partnership for Growth (EPG) to a smaller, less formal
framework consisting of three or four senior officials on
each side. Suzuki suggested the new framework would have two
tracks, one devoted to common interests, such as engagement
with China, energy security (including Russia),and APEC and
the Asian regional architecture. The other track would focus
on bilateral issues at the sub-cabinet level, reporting
regularly to leaders. Suzuki said MOFA's Sherpa, Deputy
Foreign Minister Yoichi Otabe, would head Japan's delegation,
with the expectation that NSC Director G8 Sherpa Froman would
be his counterpart. In addition, the group would include
representatives from the Ministry of Economy, Trade and
Industry, the Ministry of Finance, and possibly the Prime
Ministers' office. Yabunaka added the GOJ hopes Foreign
Minister Nakasone and Secretary Clinton might announce such a
framework at their meeting on the margins of the upcoming G8
Foreign Ministers' meeting, with the formal launch coming at
the G8 Leaders' Summit in July. The Deputy Secretary noted
the USG Sherpa's leadership, as a White House official, would
require interagency buy-in and that an announcement of

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whatever was decided at the G8 Leaders Summit in July may be
more realistic.

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BEEF
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4. (C) Yabunuka said the GOJ does not want to see the beef
issue continue to be elevated to the leaders' level, arguing
that Japan's current restrictions are not a protectionist
measure. He said Japan's Food Safety Commission is
undergoing a review of Japan's import ban, and the proposed
change to accepting beef from cattle under 30 months of age
would cover 80 to 90 percent of trade. The Deputy Secretary
countered that the USG cannot accept any agreement that would
undercut the argument with South Korea and that the U.S.
continues to advocate for a policy based on science.

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REGIONAL ARCHITECTURE
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5. (C) Yabunaka said making APEC an attractive forum to
advance issues between countries with many diverse interests
remains a challenge. The GOJ is exploring models for an East
Asian regional architecture, such as the East Asian Summit
(EAS) or the Asian Regional Forum (ARF) framework with the
addition of Australia, New Zealand and India that would have
a mandate to work on such issues as energy security and
climate change. Yabunaka added Russia has expressed interest
in joining the EAS as an Asian country, which Japan would
oppose unless the U.S. also joined. The Deputy Secretary
said the U.S. has a full stake in East Asian issues and is
deliberating the most effective framework. He said APEC has
some coherence for economic issues, but a different forum, be
it EAS or ARF, may have more value to addressing security and
transnational issues.

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U.S.-JAPAN SECURITY FRAMEWORK
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6. (C) Yabunaka praised the close bilateral dialogues between
defense and foreign affairs counterparts on nuclear
deterrence and the North Korean threat. Noting the different
U.S. and Japan budget cycles, he stressed the urgency of
concluding a basic agreement for funding Host Nation Support
by the end of 2009 before the current agreement expires in

2011. The Deputy Secretary agreed on the need for early
engagement, noting the USG has already begun its FY2011
budget formulation process.

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CHINA
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7. (C) The Deputy Secretary said China's military
modernization is an important mutual concern and he stressed
continued engagement with China so that it will show greater
transparency in its strategic intentions and military budget.
He added both the U.S. and Japan should avoid should avoid
establishing their positions vis-a-vis China on the basis of
worst case scenarios and the U.S-Japan-China trilateral
meeting would be helpful in demonstrating that U.S.
engagement with China would not be to the detriment of Japan.
Yabunaka agreed on the value of the trilateral approach and
expressed concern about the Chinese military's apparent
autonomy from China's leadership, as evinced by Peoples
Liberation Army Navy incursions in Japanese waters shortly
before Premier Wen Jiabao's last visit to Japan.


8. (C) Yabunaka added Japan has concerns over Chinese

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activity in the East China Sea and the Senkaku Islands and
has heard concern from Vietnam about Chinese assertiveness
over the Spratley Islands. In addition, while Japan and
China concluded an agreement over development of the East
China Sea in the summer of 2008 and both countries leaders'
consistently have reaffirmed the agreement, the issue remains
too sensitive to some elements in China to progress to a
treaty. Yabunaka also said China appears to have managed the
economic consequences of the economic downturn well. Both
sides agreed China continues to show little sign of changing
its unreasonable posture towards Tibet and that Japan and the
U.S. should closely monitor the situation.

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BURMA/ASEAN
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9. (C) Yabunaka said he spoke with Burma's Defense Vice
Foreign Minister May 31 and stressed that unless Burma holds
inclusive elections and stops arbitrary legal actions against
Aung San Suu Kyi it will not receive international support.
The Deputy Secretary appreciated this stance and said the
U.S. was also encouraged by China's signature on the U.N.'s
most recent statement calling for release of political
prisoners.


10. (C) The Deputy Secretary also raised the possibility of
U.S.-Japan cooperation through the Mekong Delta initiative,
including official development assistance (ODA) coordination.
Yabunaka said Vietnam is the largest recipient of Japanese
foreign assistance and there is room for project
coordination.

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INDIA
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11. (C) The Deputy Secretary said the U.S. and Japan should
engage India to take a meaningful role in global climate
change negotiations. In addition, he stressed the need to
impress upon India that it needs to be part of the solution
to the situation in Pakistan. Yabunaka said Japan is fully
committed to building infrastructure in and trade with India,
and that its economic relations with India will continue to
deepen.

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SRI LANKA
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12. (C) The Deputy Secretary said Sri Lanka needed to handle
properly refugee resettlement and political reconciliation.
Yabunaka said the GOJ is also pressing Sri Lanka's leadership
to use grant aid for displaced persons properly.

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AFGHANISTAN/PAKISTAN
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13. (C) Yabunaka noted Japan's dispatch of four civilian aid
experts to the Lithuanian PRT in Afghanistan and said Japan
remains fully committed to capacity-building. The Deputy
Secretary said Afghanistan is an urgent priority for the
Obama administration and the next year will be crucial to
gain traction. Yabunaka expressed concern over Pakistan's
nuclear development and urged more preventive action to
secure Pakistan's plan to halt further expansion of its
nuclear program. The Deputy Secretary said the challenge is
to secure long-term engagement with Pakistan and to avoid
imposing conditions that undermine its cooperation.

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IRAN
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14. (C) Yabunaka said Foreign Minister Nakasone pressed Iran
on the need to freeze its nuclear activities during his early
May visit to Tehran. The Deputy Secretary said the USG has
expressed a willingness to engage Iran. However President
Ahmadinejad has made unhelpful statements on the P5 1
discussions. The Deputy Secretary urged Japan to cease
export credits to Iran to demonstrate that this is not the
time for business as usual and that a freeze is a
precondition for international engagement. Yabunaka
questioned whether Japan was providing such credits and if
they were undermining international efforts, particularly in
light of similar funding from European countries, but said he
was willing to examine the issue further. (Note: they
continued this discussion over dinner; see septel. End note.)

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IAEA ELECTION/NUCLEAR DISARMAMENT
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15. (C) Yabunaka thanked the Deputy Secretary for his
personal efforts to gain support for Japan's candidiate,
Ambassador Yukio Amano, in the IAEA election. The Deputy
Secretary said the USG continues to support Amano and is
lobbying European Board Members and Mexico. Yabunaka also
said Japan was encouraged by President Obama's nuclear
disarmament speech and that Japan proposed to host a
disarmament conference in 2010.

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UNSC REFORM
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16. (C) Yabunaka said he understands the U.S. is still
reviewing its position on U.N. Security Council Reform and
Japan remains flexible in its approach, though he termed the
U.K.-French five-year term-limit a "non-starter." He also
said he was encouraged China's apparent shift toward not
opposing Japan's membership.



17. (U) PARTICIPANTS:

United States:

Deputy Secretary James Steinberg
CDA James Zumwalt
A/AS Glyn Davies
Ambassador Jeffrey Bader
Ambassador DeTrani
D Special Assisitant Pamela Park
Embassy Notetaker


Japan:

Vice Foreign Minister Mitoji Yabunaka
MOFA DG, North American Affairs Bureau Kazuyoshi Umemoto
MOFA DG, Economic Affairs Bureau Yoichi Suzuki
MOFA DDG, North American Affairs Bureau Koji Haneda
MOFA Director, Policy Coordination Division Takeo Mori
MOFA Director, First North America Division Kanji Yamanouchi
MOFA Notetaker


18. (U) The Deputy Secretary cleared this message.
ZUMWALT