Created: 1/11/1968

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ilf^lMain Trends in japan's External Relations




is acquiring an increasingly important position ineconomic community; its remarkable economicsoon make it the third most productive nation after the USUSSR. At the same iime. Japan Is bediming progressivelyin world and regional affairs. The constraints onto seek international political responsibilities are boundfurther over time, nevertheless its acceptance of suchand its exercise of influence and power in internationalwill probably not increase to the decree suggested byeconomic position within theoears.1

believe that Japan will continue to identify its basicwith those of the US and the Free World over theoIn particular, it will probably devote importantto cementing friendly relationships with its leadingUS, Canada, and Australia. These economic ties andsimilarity of political goals have aroused Japanesethe development of an informal grouping of advanced Pacific nations.

will continue to rely primarily on the US for itsIn relations with the US. Okinawa is likely to continue asproblem, but we foresee no effective opposition inthe continued application of the US-Japan Security Treaty pastthe next Eve years. Japan will probably not decide toweapons but iteep tha ptioa ptfl It abaconventional military capabilities, particularly its air and seaforces.

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will protably avoid direct military involvement in"contain" cnmimini&m; in certain circumstances, however, themight he willing toimited measure ofines of communication in the Northeast Asian area.

sees Communist Chinaong-range competitorin East Asia, but the Japanese will continue to avoidprovocation of Peking while working, mainlyo limit its influence. In the Japanese view,Asia can best be insured by the development in Pekingessand more realistic view of the outside world, Japan willfoster any such tendencies in China, taking care not to impairrelationship with the US.

will seek to expand its influence in South Koreaand in Southeast Asia, htil its interests in the luttor regioncompelling. Japan is reluctant to become deeply involved inpolitical turbulence, considers that security there isresponsibility of the US. and is aware that Southeast Asia tradecritically important to Japans economy. Japans mostfor the next few years will he to continue its present emphasisassistance, its role in the jioliticul field will probablyit will still move carefully, applying its influence in supportand regional cooperation.




The bade direction of Japan's foreign policy is unlikely to change Over theo ID years: Japan will continue to rely on the US for militaryand to identify its basic interests with those of the US and the Free World in general. This policy is rooted in Japan's self-interest as scon by its ruling conservative leaders and by most moderate political elements, and is Supportedubstantial majority of Ihe population. Within this established framework, however. Japan is likely to become progressively more assertive in world and regional affairs, tu take more initiatives in developing andIts national interests, and to be less restrained than formerly by pacifist and other emotions generated by World War II.

This outlook is already evident in the conduct uf Japans externalIt tsesult of the passage of time since the war and the rebirth of pride in being Japanese. Of equal importance, perhaps, is Japan'seminent position in the world economichis has ledleaders to assume growing international responsibilities in matters of trade liberalization, monetary affairs, and assistance to less developed countries. It has provided them with important leverage In the conduct of affairs with larger nations. And, Inevitably, it will lead themreater concern with political developments in areas of major interest to Japan.

The Japanese Government is opposed to the spread of Communist influence in Asia.atter of general policy, however, Japan Is likely to avoid heavy involvement in efforts having as their declared purpose the containment ofMany Japanese, including some conservative leaders, do notirect Communist military threat to Japan at this time. With regard to the USSR, there is suspicion ol its ultimate ambition in Northeast Asia but thesure of the US umbrella, are relatively confident that ihe Soviets will not resort to force to achieve their objectives. It is generally believed in Japan that Soviet leaders will maintain Iheir friendly pose in hopes of weaning Japan from the US alliance andloser Japanese relationship with Peking, as well as to keep open the nocbibility ot developing an expanded Soviet-Japanese economic relationship.

Concern about Communist China lias been growing recently, but fewleadershinese military attack on Japan. There Is some appre-

'In terms uf purchasing power ofnational productapan now ranks above France andK ant! i% on the verge of ovcrtalcing West Germany ro In-come Ihe world* Uiiid nioit productive nation (after the L'S andn volume of internationalt will lurp.u* Cm.iJjramv anil move into fourth place In thelter th" US. Wat Germany, aniltil. In the cirlv ISSO'n. the peoplepQ^Q'trjP REIEAS1 achieve living tumlanl^ ccn'paiabk to those of the more advancedlmt.wiW'Mij trie*. (Sec table and graph at Annex6 Japanese Made rtntfalics. S

hension over the potentialities of China's massive armies, but little respect for its air or sea arms. China's recent progress in the development of nuclearand delivery systems is causing concern among some informed Japanese, and the radicalism of the Cliiiiese cultural revolution hasisillusioning effect on Japanese generally. To the extent that there is concern in Japan over the Chinese military threat in the near lerni, it is now chiefly in lerms of the possl-hility of war hetween China and tin; US in which Japan, with its US bases, might somehow become involved. This accounts in large part for the sensitivity of the Japanese to US military actions in Southeast Asia or elsewhere which might conceivably provoke Peking lo fight. There is also growing concern that once the Chineseuclear arsenal, they will attempt nuclear blackmail.

here are other important reasons for continued reluctance In Japan to participate in military containment efforts in East Asia and elsewhere in the world, Japanese leaders are extremely sensitive over Ihe health of an economy so dependent ou foreign Irade, and they arc unlikely to pursue courses of action which might jeopardize profitable markets and critical sources of supply.the Japanese people in genera) do not yet share their leaders' interest in assuming responsibilities overseas. There ore still psychological restraints On political activity in .Southeast Asia resulting from the war, but mnie important today arc Japanese popular concerns wilh domestic needs. Despite Japan's brilliant economic performance, living standards in general are still below those of Western Europe and the populace is well aware of this, The discrepancy is particularly obvious in (he public sector of the economy; roads, housing, and sanitation facilities arc grossly inadequate, and there is considerable pressure on Ihe government to raise budgetary expenditures to meet these needs. Finally, the very success of Ja[>an'$ domestic and foreign policies in the past decade make for inertiaeluctance lo entertain very significant shifls of resources to defense or foreign aid,


A. General

the following estimate, we start from the judgment that Japanesewill evolve in the context of continued conservativeenerally favorable economic envhonment, with high rales ofgrowth likely through the. We believe, in short, thatfactions of the Liberal-Democratic Party will maintain theirdominance for at least the next several years. After that, even if theytheir commanding majority, power would probably passoderateralher thanarxian Socialist government bent on drasticdomestic and foreign policy.

arc, of course, many external variables which could significantly

affect our estimates: major changes in the US defense posture inj^qvjd for release Pacific; strong protectionist trends in US trade policy, worldwideID of markets brought on, for example,eneral economic depression; significant

changes in Communist China's altitude toward its neighbors, or increasedon the part of the Soviet Union in the Far Fast. The implications of such contingencies are considered in this estimate.

B. Notional Security and the US Alliance

S. Despite the absence of any feeling of an imminent direct threat to their security, the leaders ofthey contemplate the Communist giants on the Asiansensible of the needowerful military protector. They prefer to see the US take this role. They also see the military alliance as an essential component in Ihe complex of bilateralandhave proven advantageous for almost two decades.of these arrangements is strongly favored by the conservative leadership and by most middle-of-the-road political elements in Japan. We foresee no effective opposition, therefore, to the continued application uf the US-Japan Security Treaty1

must troublesome problem in the security field is the status offeeling against US occupalion of Ihe Byukyus continues to growin time cause the Japanese Government to press even more strongly forof complete administrative control. Prime Minister Sato hashimself before the electorate to obtaining, within the nextimetable torhe Japanese may accept reversionwhich would not bring US bases in Ihe Ryukyus under Ihe samethose imposed on US bases in the homeno nuclear weaponsconsultation on major military deployments. Japanese attitudes inwill be greatly affected by the overall military environmentelatively peaceful situation would probably acceleratefor reversion without special privileges. In any case, the Okinawaprobably be the most difficult problem in US-Japanese relations overlewho US bases in Japan proper are no longer anissue, though they are seen by some Japanese as anuf the Occupation and hence doesidual irritant in

During the next few years, it is probable that considerations of self-icspect and national prestige as well as defense needs will lead Ihe Japanese to improve their conventional military capabilities. The emphasis will be upon Iheof air and sea defenses for the home islands. Japan will strive to become increasingly .self-sufficient in the production of conventional armaments, not only for military and prestige reasons, but to save foreign exchange and establish new export lines.

We do not believe that Japan willirm decision during the next five years to develop nuclear weaponsapanese nuclear "allergies" oreFOR RELEASE

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weakening, but they arc still veiy strong. In addition. Japan could not utilize its existing nuclear facilities for weapons research and production withouta series of international agreements, including the protected nuclear non-proliferation treats-. Another obstacle would be the very limited supplies of

high-grade uranium in Japan and tbe difficulty of procuring sufficient

unsafeguarded supplies from abroad. In any case, so long at ibe US albance remains firm and the L'S discourage* Japanese acquisition of nuclear weapons, it would be difficult for proponent* of Japanese nuclear armament to rustify publicly tbe heavy eipcndKiires. although these would be well within JaiMitrw economic capabilities.

he Japanese will not. however, foreclose the option to develop nuclear weapons systems. Continuing technological advances in the field of space rocketry will make the production of delivery vehicles progressively easier. The Japanese already have experience in building nuclear reactors for powerand have an impressive supporting technological base. They have plans to build more power reactors unci clwmicul separation facilities to process the plntonium produced in sued reactors. Hecent Japanese studies have indicated torobable future need for an independent capability to produce enriched inAiisurn fuel. Such facilities, though designed for civilian needs could, ol course, produce material lor weapons.

anttngtnots. In certain contmgencies. Japan might give serious con-liberation to the development of nuclear weapons. For example, failure to achieve effective nuclear nonprollleratton agreements and the acquisition ol mi clear weapons by India would probably encourage some Japanese nationalist^ to demand nuclear weapons. Il is unlikely that the Japanese Government would accede to thesef it did, any nuclear weapons program undertaken in these circumstances would probablyelatively limited one. designed more for prestige than to meet overall defense requirements. It would not be intended to supplant Japanese reliance on the US for strategic security.

The Japane-se might consider tho acquisitionuclear capability If concern over Communist military strength in East Asia were to become much greater than at present. This sihiatlon could result from un unexpectedly rapid and extensive missile deployment by the Chinese, coupled with the adoptionolicy of nuclear blackmailelf -confident Peking regime It might also stemino-Sovietdmittedly most unlikely at thishich appeared to include renewed cooperation between their military forces.

In calculating their count of action under such circumstances. Japanese leaders would be acutely sensiuve to any evidenceeakening in USto defend the area. This applies both to the maintenance of US forces in the northern Paofic and to the credibility of US nuclear protection. If such evidence appeared, tbe Japanese would probably feel compelled to review their entire security position. Neutralist Alternatives might he considered. Anncutrabsm would almost certainlyected; the Japanese leadership HrrHtJWlO FOR HELEASf recognizes the perils, consequently the impracticably, of unarmed neutrality in MTU Will 10

Ihe volatile East Asian environment. Neutralism foundedtrong, nuclear-armed, and independent Japanese military establishment would have greater appeal, but we believe that this alternative would only be adoptedast resort. Japan's leaders would appreciate the severe domestic political and economic problems involved in providing entirely for their own defense: vastly increased military expenditures, crossing of the nuclear weapons threshold,and, possibly, amendment of the "no war" constitution, fn overseas relations too, it is recognizedilitary buildup of the required proportions would be detrimental to Japan's longer range interests, causing mistrust among the non-Communist nations of East Asia and sharpening the hostility of thestates. We Iselieve, therefore, that in the face uf an enlarged Soviet or Chinese Communist military threat. Japan would probably seek reaffirmation of US security commitments. Meanwhile, acting "ith prudence, Japan wouldthe buildup of its own conventional forces and perhapsimited or shared nuclear weapons program.

Alternatively, should Ihe Chinese ('ommunist threat appear to diminish. Japanese interest in nuclear weapons would probably lag and many might be attracted by the idea of reducing or cutting "unnecessary" defense ties with the US. They might see this as conducive to gaining an influential and profitable role for Japan in China's struggle toward political and economic maturity. In our view, however, such reasoning would probably not prevail in Japanese Government circles. Tokyo would certainly wish to exploit fully any commercial opportunities on the mainland and to improve political relations. Ifwere favorable, the Japanese would also try toS-Chinese rapprochement. In any event, however, the Japanese would not wish to damage the established and highly advantageous political and economic relationship with the US. This relationship, in which the US consistently aeimunls for someercent of Japan's trade, may he as compelling as its security requirements in guaranteeing Japan's continued desire to align itself with the US.

Certain economic contingencies may be of vital importance in the context of the US-Japanese securityajor return to protectionism in US irade policy would greatly upset the Japanese. While it might notritical impact on the Japanese economy, there would be strong resentment against the US which might leadoosening in political lies. Simultaneous protectionist trends in Western Europe would further strengthen the arguments of those callingeassessment of Japan's Free Worldevere depression in the US or Western Europe could lead to an economic crisis in Japan and. in turn, to increased political strength for extremists of both left and right.

C. Japan in Asia

IS. China is. of course, the central problem for Japan in .Asia. Japanontain China's influence within its present limits. But as indicated alx>ve, japan will rely mainly on US military power to give effect tospects of this policy of containment. We do notiun of land forcesonflict which might develop in Northeast Asia within

Iheive years or so. However, it is possible that Japanese air and sea units wouldeasure of responsibility for the defense of lines ofin and around japan, Okinawa, South Korea, and perhaps Taiwan.

n the prevailing Japanese view, prospects for peace in Asia can best be advanced by avoiding provocation of Communist China while promoting trade and other contacts. There are other, more direct Japanese approaches to the China problem. Japan has become, and almost certainly hopes to remain, China's leading trading partner (although China accounts fo* only about three percent of Japan's totalhile the profit motive is predominant in Japanesecircles, some Japanese leaders view economic interchange with Communist Chinaontribution In Ihe "pacification" of Peking. In lime, il is hoped. China will abandon its unmitigated hostility toward the outside world and adopt more realistic attitudes on the pattern of the USSB. And certainly, if Peking shouldess militant policy and if there appeared lo be prospectsignificant expansion of trade, pressure in Japan for the establishment of full relations with Peking would increase.

At the same time, Japan sees Chinarobable long-range competitor throughout East Asia and is taking advantage of China's current infirmities to entrench itself in the markets of this region, hoping thereby to diminish China's political as well as its economiceems clear thai some Japanese leaders view their nation as uniquely qualified to provide the sort of leadership which the underdeveloped nations of Easl and Southeast Asia require to attain economic and political stability.

Soiilli Korea and Taiwan are strategically and historically of overriding importance to Japan. In each ease, Japan has overtaken the US as leading trading partner, and will probably lake the leadrovider ofew years. In the HOK. Japan already exerts some covert influence on behalf of political elements favorable to its commercial interests. In official channels, there are bilateral working arrangements in mailers of defense,and internal security. These ties will grow, although traditional Korean distrust of the Japanese will compel both governments to move cautiously, ln Taiwan. Ihe situation Is roughly similar, with close personal relationships helping to smooth the way toward establishmentpecial position for the Japanese.

Japan's interests in the more distant lands of Southeast Asia are lessTrade is important; Japan ranks at or near the toprading partner in every country. But this trade amounts to only aboutercent of Japan's total, and there is widespread asvareness in Japan that Southeast Asia is not central to the nation's prosperity. Continued rapid expansion of Japanese trade requires developed markets, and Southeast Asia with its low purchasing power is unlikely lo become of great importance to the Japanese economy for many years. Moreover, the raw materials production of Southeast Asia is increasingly inadequate to Japan's industrial needs.


political interest in the area is likely lo grow, even if itsfremain relatively moderate. Developments in Southeast Asia wflT

probably offer broad opportunities to exert political influence, hoth in regional affairs and within specific lountrics. Nevertheless. Japan's most likely course for the next few years will be to continue its present emphasis on bilateral and multilateral economic aid. while moving slowly inpolitical Arid to apply its influence in support of stability and regional cooperation. Security in the region will still be viewed as primarily the responsibility of the US. There will also be an unwillingness to become deeply involved in the regions political turbulence lest such activity reawaken fears of Japanese domination, prejuditr commercial interests in the area, and mar Japan's political prestige on the world scene.

Among the countries of Southeast Asia. Indonesia may offer the greatest attraction to Japanbe largest, moat riraiegkalry situated, and richest in resource* of the countries in the region. It is also actively encouraging foreign investment. In addition, neither the US nor any Western European nation yet hokb the inside political and economic track in Djakarta. It remains politically unstable, however,ong-term pctttsnner for foreign assistance. Japan will be willing to continue, along with the US,ajor provider of economic assist-ance to Indonesia. The Japanese are still reluctant to commit themselves to an influential role in Indonesia's internal and external atlaiis. but this reluctance may dimmish in time.

Vietnam will remain an area of acute Japanese concern at least until the situation there is revolved. Although Japan has no intention of becominginvolved, the government should not have difficulty withstanding press and opposition crmcum of its support for USo long as (he situation there does not change radically for thend willttempt toole tn promoting negotiations. As an ultimate solution, Japan would probably .support neutralization of the Indochina area, coupled with provisions designed tocciincnce of the war. Japan might be willing to participate in tracea nonmllitary capacity and is prepared to assist in postwar reconstruclion both in the South and North.

Further afield, in thePaklttan, andinterests are likelyemain strictly economic. This might change in tbe eventreatly heightened Chinese mditary threat throughout Fait Asia, which would tend to draw Japan toward some sort of modest cooperation with India. Even in this instance, it is unlikely that Ihe Japanese would seek any close political or security alignment with theom they lend to view as relatively impotent miijtanly. disorganiTed poHtxalry. and economically unpromisingn addition, no important body of thought in Japan which deems the subcontinent relevant to Japan's security position.

D. Th* "Pacific Community"

most vital economic interests are focused in North America and

the western Pacific. Hie US is overwhelmingly Japan's most linporWril'liTONMIUMr. partner. Far behind, but in second place, is k^^l'

total, these three countries supplyercent ol Japan's imports, and purchaselightly smaller proportion of its exports. Trade svitb Australia and New Zealand could increase significantly if Britain enters the European Common Market and Commonwealth nations lose their preferential trade arrangements with the UK. Awareness is also griming in Japan of the untapped raw material potential in Australia. Canada, and. most recently, Alaska. These economic prospects, as well as an increased similarity of political Interests, have aroused Japanese interest in the developmentommunity of advanced PacificUS. Canada, Australia. New Zealand, and Japan.

hough still vague in concept, this grouping of politically stable areas connected by safe lines of communication Is viewed by some Japaneseounterweight to the EEC and other Atlantic Cornmunity economicwhich Japan fears may ultimately work to its economiche Japanese also regard this conceptseful device in countering any isolationist trends that mightbe US. Moreover, the Japanesesee tbe grouping as useful in assuring the part* ipalion of the several wealthy Pacific nations in the task ot furnishing economic aid to Southeast Asia

he Japanese will probahly devote important diplomatic eSorts over therears to the cementing of friendly relationships with these countries, though they will probably not press, in the short run.ormal politicalof the community. Wo also doubt that Japan willormal security pact within this community, as the US-Japan Security Treaty and the ANZUS pact are sufficient from the Japanese viewpoint.

E. Elsewhere in the World

Japan has little interest in exettiug influence in the political affairs of such relatively remote areas as Latin America, the Middle East, and Africa. We do not foresee any realhis attitude for some tunc to come. There is an unwillingness to risk antagonizing potential customers and suppliers by taking sides in any dispute not directly affecting Japans security. These regions together account for only aboutercent of Japanese trade and are not of critical economic importance, with the notable exception of the Persian Culi. which supplies someercent of Japan's crude petroleum imports.

Europe is of increasing economic importance to Japan because of its po rrntial as an export market and source of capitaL Relations with Europe arc strongly iiuluenced hy Japan's desire to he recognisedull member of the "club" of advanced industrial nations.


ba.ii af the Pacific commit nils alrondyto son* liqrrrr in prevailing, trartVpattern*. Japan's top ihnx inulinii punnets. as tn-ted nlwve. are ihe US. ,lr VrllOVID FORCanada Japan faults as second timoisr. US trailinghird .munif.iaaa

urtralia. and fourth (or New


he VSSH. With both sides agreed on the advantages of peacefulthe Japanese-Soviet detente seems likely to continue over the next five years. Over tbe longer run, however, the range of rapprochement Is limited on the Japanese side by the conservative Japanese leadership'* antipathy toward communism and its continuing mistrust of Sovietast Asia, and on Ihe Soviet side by opposition to any expansion of Japan's role in Asia which tended to further tbe Western orientation of nations in the area Otherwhich will continue to inhibit closer relations are Japanese territorial claims against the Soviet Union, Japanese support for US policy and operations in Southeast Asia, mid the continuing Soviet propensity to involve themselves in what the Japanese construe us Japan's internal affairs.


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