SCENESETTER FOR PACOM COMMANDER ADMIRAL KEATING'S

S E C R E T TOKYO 000845 SIPDIS PACOM FOR J00/J01/J05; DOD FOR OSD/APSA/SEDNEY/HELVEY/BASALLA; USFJ FOR J00/J01/J05 E.O. 12958: DECL: 04/14/2019 TAGS: PREL PARM MARR KN JA SUBJECT: SCENESETTER FOR PACOM COMMANDER ADMIRAL KEATING'S APR 19-20 VISIT TO JAPAN Classified By: James P. Zumwalt, Charge d'Affaires, a.i.; reasons 1.4 ( b/d) ¶1. (S) Summary: You will arrive in Japan amid continuing political turmoil and a worsening economic environment. Growing dissatisfaction with Prime Minister Aso's leadership, allegations of corruption at the highest levels of the main opposition party, dramatic contractions in the economy and its subsequent effect on Japanese workers all have an impact on Japan's foreign and security policy. In spite of this, the Aso administration has been successful in renewing Japan's commitment to Indian Ocean refueling operations, expanding its commitment to Afghan reconstruction, dispatching the JMSDF on an anti-piracy mission, and continuing to move forward on force realignment initiatives. More recently, scandal allegations involving opposition Democratic Party of Japan (DPJ) leader Ichiro Ozawa have helped to reverse the declining popularity of Aso and the ruling coalition, allowing him a brief respite to pursue his diplomatic and legislative priorities, including announcement of a record $569 billion economic stimulus package. A Congressional delegation led by Senator John McCain finished a positive visit to Japan on April 11. Prime Minister Aso, Chief Cabinet Secretary Kawamura, and Foreign Minister Nakasone expressed appreciation to the delegation for the close cooperation with the United States in the events running up to, and following the Taepodong-II launch by the DPRK. They reaffirmed Japan's commitment to the realignment of U.S. Forces and the Guam International Agreement. DPJ leader Ozawa gave strong assurances to the delegation that the bilateral relationship with the United States is Japan's most important, and that a government led by his party will be a more "reliable partner." End Summary. -------------- -------------- Global Economic Problems, Domestic Political Turmoil -------------- -------------- ¶2. (S) The current top priority for Japan is implementing policies to strengthen the domestic economy during the current global economic downturn, measures that have been slowed by a confused domestic political situation. Prime Minister Aso announced April 10 a new $568 billion headline figure Japanese government fiscal stimulus package entitled, "Countermeasures Against Economic Crisis." The package's stated objective is to put the economy back on a sustainable growth path by fiscal year 2010. Aso explicitly described the plan as Japan's response to the G-20 Leaders' call for "concerted fiscal expansion." Embassy contacts note that Aso's success in gaining passage of the supplementary budget could influence his decision to dissolve the Lower House for a snap election. However, Japan-based economists fear some new spending may be poorly targeted. Although Japanese banks and financial institutions had little sub-prime market exposure, the country's GDP fell 3.2 percent quarter-on-quarter due to a record drop in exports (down 50 percent year-on-year in February 2009). The economic outlook is gloomy with rising unemployment, continued drops in demand for Japanese exports, and falling domestic demand and business confidence. Companies such as Toyota and Sony are recording operating losses, paring employment rolls, and extending factory holidays. ¶3. (S) Fear about Japan's economic well-being, combined with its hamstrung political system, have exacerbated dissatisfaction with Prime Minister Taro Aso's leadership, resulting in a growing public sense that it may be time to turn over government to the opposition Democratic Party of Japan (DPJ). A recent financial scandal involving DPJ leader Ichiro Ozawa, however, has confused the political scene even more. ¶4. (S) Since taking office in September 2008, Aso's approval ratings have plummeted to less than 15 percent. Following the arrest of a key Ozawa aide on corruption charges on March 3, they have risen sharply, while public support for Ozawa and the DPJ have declined. In the short-term, the sudden reversal in political fortunes for the ruling and opposition parties means more operating room for Aso on his diplomatic and legislative agenda, including his April 10 fiscal stimulus announcement. Still, a general election must be held no later than this fall, and recent polls suggest that neither party will receive sufficient votes to avoid the necessity of creating a weak coalition government. A larger scale realignment of political forces is expected to occur at some point thereafter. -------------- CODEL McCain -------------- ¶5. (S) A Congressional delegation comprising Senators John McCain (R-AZ),Lindsey Graham (R-SC),and Amy Klobuchar (D-MN) and their staff members visited Japan from April 9-11. They met with Prime Minister Aso, Chief Cabinet Minister Takeo Kawamura, and Foreign Minister Hirofumi Nakasone. The Japanese officials highlighted, and expressed appreciation for the close cooperation between Japan and the United States in the events leading up to, and after the launch of the Taepodong-II ballistic missile by the DPRK. They reaffirmed their commitment to the realignment roadmap and stated there should be no problem for the Guam International Agreement to clear the Lower House. They also pointed out that China is the key to pressuring North Korea to stop its destabilizing acts, with Aso noting that China's economic relationship with the DPRK undermines international efforts to resolve the missile and nuclear issues. Opposition Democratic Party of Japan (DPJ) leader Ichiro Ozawa stressed to the delegation that the DPJ, once in power, will be a more reliable partner to the United States than the ruling Liberal Democratic Party (LDP) in terms of sharing the burden on dealing with worldwide problems. He asserted that the DPJ would not, unlike the LDP, focus so much on monetary contributions for addressing international issues in lieu of other types of contributions. -------------- Foreign Policy -------------- ¶6. (S) Japan's relations with its immediate neighbors are generally stable, but problems persist just under the surface. Japan and China have been successful in defusing, for the time being at least, the sharp conflicts over history that damaged relations in the Koizumi years. While Japanese acknowledge that good U.S.-China relations are in Japan's interest, they also fear that the United States might discount Japan's interests in pursuit of more robust relations with China. Japan has been sensitive to recent Chinese actions around the disputed Senkakus and has sought explicit U.S. reassurance on our commitment to aid Japan in the case of an attack on the islands. China has in turn been unhappy that the United States has reiterated our position that the Senkakus fall within the scope of the Security Treaty. On South Korea, although the Takeshima/Tokdo territorial dispute remains an irritant, both sides have expressed a desire to build a Japan-ROK relationship that is "different from the relationship up until now," including through high-level shuttle diplomacy. Prime Minister Aso and ROK President Lee Myung-bak have struck up a particularly good personal relationship. ¶7. (S) Japan remains exceedingly uneasy over the situation in North Korea. The DPRK's nuclear program, the expected launch of a TD-2 missile in early April, and resolution of the cases of Japanese abducted by the DPRK are all high among Japan's foreign policy priorities. Japan remains firm in its refusal to provide energy assistance to the DPRK absent progress on the abductions issue. The DPRK's August 2008 pledge to open a reinvestigation into the abductions remains unfulfilled, in spite of a Japanese promise to reciprocate by partially easing its unilateral sanctions. ¶8. (S) Further afield, Japan has recently dispatched two destroyers to the Horn of Africa to protect Japanese cargo vessels from pirate attacks and is currently planning on sending two P-3Cs to assist in these efforts. The Cabinet submitted to the Diet new legislation designed to authorize a more broad-based response to Somali piracy, enabling protection of non-Japanese vessels as well. In spite of this, Japan's ongoing deliberations contrast with China's relatively quick decision to dispatch ships to the region. ¶9. (S) Japan is seeking an expanded role in supporting Afghan/Pakistan stabilization. In December 2008, Japan passed legislation to extend by one year the refueling operation in support of Operation Enduring Freedom (OEF). Japan will host this month a high-level Pakistan donor's conference where it is expected to contribute up to $1 billion toward Pakistani stabilization. Japan is also working more closely with the PRTs and has assigned a full-time liaison officer to NATO's office in Kabul. Japan has also announced its intentions to second two officials from the Ministry of Foreign Affairs (MOFA) to the Lithuanian PRT in Chaghcharan. With $1.4 billion pledged since 2002, Japan is the third highest bilateral contributor (behind the U.S. and UK) to Afghanistan. Moreover, Japan has included an additional $300 million in its latest supplemental budget to support the 2009 Afghan elections and other security programs. -------------- Security Policy -------------- ¶10. (S) While pacifism remains deeply ingrained in Japan, there is a new consensus among the public and opinion makers -- due in part to the DPRK threat and the PRC's growing power projection capabilities -- that the U.S.-Japan Alliance and U.S. bases in Japan are vital to Japan's national security and essential for preserving peace and stability throughout the region. For example, the main opposition DPJ, while taking issue with some of the details of our basing arrangements, maintains as a basic policy platform the centrality of the Alliance to Japan's security policy. Force transformation spelled out in the Defense Policy Review Initiative (DPRI) will help sustain Japanese public support for the Alliance and will strengthen our capabilities. ¶11. (S) Our bilateral security ties remain robust and were reaffirmed during the recent visit of Secretary Clinton when she signed the Guam International Agreement (GIA) on the realignment of U.S. Forces. This agreement, scheduled for Diet deliberations in April, will legally commit Japan to completing the relocation of Futenma Marine Corps Air Station on Okinawa and providing funds for USMC-related facilities on Guam. Japanese officials believe the agreement, and the allotment of over $900 million in realignment funding during the next fiscal year, will buttress Japan's commitment to the May 1, 2006, Alliance Transformation Agreement even if there is a change in government here. ¶12. (S) Japan is also in the process of compiling its National Defense Program Guidelines (NDPG) and 5-year Mid-Term Defense Plan. These policy reviews offer the United States a chance to influence the future shape of Japan's defense posture. In addition to encouraging greater defense spending, enhanced information security, and broader legal authority to the SDF, we are encouraging Japan to focus on deepening operational capabilities in ways that will enhance our Alliance's deterrent value. Officials and outside experts reviewing the NDPG are looking at specific missions where the SDF should concentrate its resources. Among the areas that have been identified in recent discussions with the Japanese side are long-range lift, ballistic missile defense (BMD),sustainment, maritime operations (ASW, Mine Countermeasures, MIO),ISR, and C4. ZUMWALT