PROBABLE DEVELOPMENTS IN JAPAN'S INTERNATIONAL ORIENTATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A011900010001-0
• Release Decision: RIFPUB
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• Document Page Count: 21
• Document Creation Date: December 23, 2016
• Document Release Date: November 22, 2013
• Sequence Number: 1
• Publication Date: December 23, 1958
• Content Type: NIE

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15 JAN 1JU
NIE 4 1 ? 5 8
CONi1,4 NTIAL1 23 December 1958
4
N? 327
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 41-58
PROBABLE DEVELOPMENTS IN JAPAN'S
INTERNATIONAL ORIENTATION
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
UNITED STATES INTELLIGENCE BOARD
on 23 December 1958. Concurring were the Director of In-
telligence and Research, Department of State; the Assistant
Chief of Staff for Intelligence, Department of the Army; the
Assistant Chief of Naval Operations for Intelligence, Depart-
ment of the Navy; the Assistant Chief of Staff, Intelligence,
USAF; the Director for Intelligence, The Joint Staff; the
Assistant to the Secretary of Defense, Special Operations;
and the Director of the National Security Agency. The
Atomic Energy Commission Representative to the USIB and
the Assistant Director, Federal Bureau of Investigation, ab-
stained, the subject being outside of their jurisdiction.
eaCUMENT NO.
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UUIVFIDENTIATi
trIpErgiapaa,
PROBABLE DEVELOPMENTS IN JAPAN'S
INTERNATIONAL ORIENTATION
THE PROBLEM
To analyze recent trends and to estimate probable developments in Japan's
international position and orientation over the next five years.
CONCLUSIONS
1. Over the next five years, Japan will
probably remain basically aligned with
the US. Within this alignment, how-
ever, Japan will be more assertive in pur-
suing its independent national interests.
Supported by a strong and growing econ-
omy, Japan probably will increase its eco-
nomic, political, and diplomatic influ-
ence, especially in South and Southeast
Asia. Japan will increasingly identify
itself with the Afro-Asian states, particu-
larly in the UN, but on fundamental
issues will continue to cooperate with the
US and the West. (Paras. 8, 22, 36)
2. Japan will probably continue to de-
pend primarily on US deterrent strength
for its defense. Popular opposition to the
idea of rearmament as well as to its cost
will continue to restrict Japan's defense
effort, although we believe that this op-
position will gradually diminish. We be-
lieve that five years from now Japan's
defense establishment will be substan-
tially more modern than now planned.
Nevertheless, the armed forces will still
have only a limited ability to defend
Japan against major attack. (Paras.
21, 29)
3. If negotiations for revision of the US-
Japan Security Treaty end in a mutually
satisfactory agreement, the US bases in
Japan can be maintained for at least
the period of this estimate. If such a
mutually satisfactory agreement is not
achieved, US-Japanese relations would
gradually deteriorate. Even in this situa-
tion the US base position could probably
be maintained for at least a year or two,
but Japanese pressure for the elimination
of the bases would increase rapidly and
might result in making effective opera-
tion of the bases impossible. (Para. 31)
4. We do not believe that the Japanese
Government will consent to the deploy-
ment of US nuclear weapons in Japan in
the foreseeable future. We believe that
it would consent to the use of US bases
in Japan for the launching of air attacks,
EVITTEm*.%41' 1
CONFIDENTIAL
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el&E.44144143,00".
nuclear or otherwise, against targets on
the mainland of Asia only if Japanese
leaders were convinced that Japan itself
was directly threatened. In the event of
a Communist attack on South Korea it
is likely that the Japanese Government
would be convinced that Japan itself was
directly threatened and would agree to
nonnuclear attacks on targets in Korea.
It might even agree to the use of nuclear
weapons if this appeared necessary to
keep South Korea out of Communist
hands. In case of US involvement in
hostilities with the Communist Bloc in
defense of Korea, Taiwan, or Southeast
Asia, we believe that the Japanese Gov-
ernment would consent to the use of US
bases for staging, supply, and mainte-
nance support of operations. However,
it would probably place limitations on
such use of the bases, the extent of which
would depend upon its own estimate of
the importance of the threatened area to
Japan's security as balanced against the
degree of risk of Japanese entanglement
in the hostilities, and the possibility of
retaliatory attack on Japan itself. Re-
gardless of the Japanese Government's
decision, effective and sustained use of
US bases in Japan would probably be im-
possible if the Japanese public in general,
and organized labor in particular, actively
opposed their use. (Para. 32)
5. Japan's relations with the Bloc will
probably not become close during the next
five years. However, Japan will seek to
minimize frictions with Moscow and Pei-
ping. Trade with the USSR will probably
continue to increase, but it will amount
2
to only a very small fraction of Japan's
total trade. There will probably be some
improvement in the current strained re-
lations with Communist China, and trade
with China will probably be resumed
within the next year or so. If Commu-
nist China is admitted to the UN or if
other major nations such as Canada and
France recognize the Peiping Govern-
ment, domestic pressures will probably
force Japan to offer recognition regardless
of US action. However, we do not believe
that Japan would recognize Peiping if
this entailed acceptance of Communist
China's claim to Taiwan. (Paras. 33-34)
6. Japan's present close working relation-
ships with the US will probably continue
as long as Prime Minister Kishi remains
in power. Kishi's political future is un-
certain. If he should be replaced by an-
other conservative leader, US-Japanese
working relationships would probably be
more difficult, especially if the transfer
of power were accompanied by acute dis-
sension in conservatiVe ranks. However,
we believe that as long as the government
remains in conservative hands Japan's
international orientation will remain bas-
ically unchanged, and that satisfactory
US-Japanese relationships can be main-
tained. If the Socialists should come to
power, which we believe unlikely, Japan's
foreign policy would move toward a neu-
tralist position and the government would
seek closer relations with the Bloc. How-
ever, a Socialist government would prob-
ably not move as rapidly or as far toward
the Bloc as the Socialist Party program
suggests. (Paras. 23-24)
4,,soetahlit.Edp?
bONFIDENTIAri
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DISCUSSION
I. JAPAN'S PRESENT INTERNATIONAL
ORIENTATION
7. Japan is in a period of transition, moving
from a position of heavy dependence on the
US toward a position of greater independence,
in which it relies increasingly on its own re-
sources and efforts. However, aware that Ja-
pan is not strong enough to go it alone and
fearful of Communist Bloc intentions, the
Japanese continue to look to the US for pro-
tection, economic opportunity, and help in
achieving their national aspirations. Japan's
present leaders realize that the Communist
Bloc poses a grave threat to Japan, and that
Japan's security against external aggres-
sion depends almost entirely on US deterrent
strength. The Japanese economy is also crit-
ically dependent on trade with the US, Ja-
pan's principal trading partner. For these
reasons the maintenance of close ties with
the US continues to be the cornerstone of
Japanese foreign policy.
8. On the international scene, Japan's inhi-
bitions to independent action remaining from
the occupation have been largely overcome
by a growing spirit of self-confidence and
national assertiveness. Japan's approach to
foreign policy problems is becoming more di-
rect and positive, and its leaders are becom-
ing more independent-minded in defining
Japan's national interests. Prime Minister
Kishi and his associates have done much by
their own policies and conduct to give Japan
this fresh sense of national purpose. While
Japan's leaders see clearly the value of close
cooperation with the US, their values, atti-
tudes, and aspirations are Japanese, and they
are prepared to resist US wishes on those
occasions in which Japan's own interests ap-
pear to dictate a different course.
9. Although Japan's present pro-Western ori-
entation is supported in some degree by most
Japanese, there continues to be considerable
Also see annex for discussion of political, eco-
nomic, and military factors bearing on Japan's
international orientation.
neutralist sentiment within Japan and strong
political pressure on the government to nor-
malize relations and to revive and expand
trade with Communist China. The Socialists
and the Communists, who exercise consider-
able influence on organized labor and various
mass organizations, oppose Japan's close
identification with the US. Even among the
conservatives there are wide differences in
emphasis and in basic views as to the course
Japan should follow. The government's prob-
lems in maintaining Japan's present interna-
tional orientation are further intensified by
economic and political pressures from the
Bloc. However, the Japanese Government
under Kishi, thus far, has stoutly resisted
both internal and external pressures to loosen
ties with the US and to move toward closer
relations with Peiping and Moscow.
10. Since Kishi assumed office in 1957, the
main points of issue in US-Japanese relations
have not changed. There is continued con-
cern and resentment at resistance in the US
to imports of Japanese goods. The Japanese
leaders are disappointed that the US has not
actively backed their scheme for a Southeast
Asia regional development program or done
more to assist them in their efforts to expand
Japanese trade in Southeast Asia. The Jap-
anese continue to be sensitive to issues aris-
ing out of US control and administration of
the Ryukyu-Bonin Islands and to US nuclear
weapons tests in the Pacific. However, these
issues have become progressively easier to
deal with, partly due to the efforts of the
Kishi government to improve relations with
the US and partly to US policy, which has
recognized Japan's desire to assert its national
identity and independence.
11. The major issue in US-Japanese relations
is the dissatisfaction in Japan with the pres-
ent Security Treaty. The specific modifica-
tions which the Japanese desire include:
(a) prior consultation concerning the intro-
duction of nuclear weapons into Japan or the
use of US bases or forces in Japan to support
military actions elsewhere in the Far East;
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(b) a commitment by the US to defend Ja-
pan; (c) the right of either party to terminate
the treaty after adequate notice; and (d) the
elimination in the treaty of references to US
participation in dealing with internal disturb-
ances. The request for treaty revision is
based primarily upon a fear that Japan might
become embroiled in war as a result of the
operations of US forces based in Japan and
a conviction that the present treaty is incon-
sistent with Japanese sovereignty. Most con-
servatives favor maintenance of a US-Japan
treaty relationship with modifications, al-
though there are differences as to how the
present treaty should be revised. The So-
cialist and Communist Parties advocate abro-
gation of the treaty.
12. Most Japanese leaders recognize the threat
of the Communist Bloc, but they generally
regard Communist domination of the China
mainland as a fact they must learn to live
with. Under these circumstances the Japanese
feel that they cannot afford to antagonize the
Bloc unduly and that they must, in time,
arrive at some sort of modus vivendi with it.
13. At the same time, the Japanese have felt
sufficiently secure to stand firm against strong
political and psychological pressures from the
Bloc without conceding on issues and positions
considered vital. In 1956, for example, Japan
reached agreement with the USSR to estab-
lish diplomatic relations but has thus far
refused to sign a peace treaty without receiv-
ing some satisfaction with respect to the re-
turn of the southern Kurile Islands of Etorofu
and Kunashiri.
14. Similarly, Japan has resisted pressures
from Communist China designed to force Ja-
pan to break off relations with the Republic
of ,China and to recognize Peiping. In May
1958, Communist China suspended all trade
between the two countries and has sought by
every means to undermine the prestige and
popular support of the Kishi government.
15. The majority reaction in Japan to obvious
Bloc economic and political pressures has in-
creasingly become one of resentment of for-
eign interference and stronger support for the
government. There is also a growing realiza-
tion in Japan that Communist China, with its
expanding industrial power, poses an increas-
ing economic and military threat. However,
Japanese attitudes toward Communist China
are colored by a sense of cultural affinity with
China, and a feeling that Japan by its supe-
rior talents can, in any case, deal with the
Chinese and come out on top. These senti-
ments, combined with the still existing vision
of a vast China market, a desire not to be
outstripped in China trade by European com-
petitors, and the vocal clamor of the Social-
ists and Communists, place strong and con-
tinuing pressures on the government for a
normalization of relations with Communist
China.
16. Taiwan continues to be a dilemma for
Japan's policy makers. Although they have
little confidence in the durability of the Na-
tionalist Government, Japan's conservative
leaders consider it important to Japan's secu-
rity that the island of Taiwan be kept out
of Communist hands. The Japanese leaders
have not yet worked out a solution to this
dilemma. They are inclined to favor a "two
China" solution or an independent Taiwan
guaranteed by the UN but are aware that
neither of these is currently feasible. For the
present the Japanese seem content with the
status quo.
17. The Japanese leaders consider it highly
important to Japan's security that at least
the southern portion of the Korean peninsula
be kept in non-Communist hands. Primarily
for this reason Japan has persisted in its
efforts to normalize relations with the Repub-
lic of Korea. Although negotiations continue
sporadically, little progress has yet been made,
in large part because of President Rhee's
intransigence. Korean efforts to exclude Jap-
anese vessels from traditional fishing grounds
in international waters, and disputes concern-
ing the status of the Korean minority in Japan
are symptomatic of the basic lack of trust and
rapport between the two countries.
18. In its relations with the Afro-Asian na-
tions Japan is seeking to establish its identity
as an independent Asian nation, to dispel the
belief that it is a satellite of the US and to
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minimize fears and suspicions lingering from
Japan's military conquest of Southeast Asia.
Japan is stressing the commercial aspects of
its relations with the countries of South and
Southeast Asia and is making progress in ex-
panding and improving its economic and dip-
lomatic relations in that area. Its economic
activities are also expanding to Africa and to
the Middle East where it has recently nego-
tiated major oil concessions in Saudi Arabia
and Kuwait. However, Japan's economic and
diplomatic influence in non-Communist Asia
is still limited.
19. The Japanese have a special fear of nu-
clear war and regard "peace" as a positive
national goal. Japan's vigorous activity in
the UN since its admission in 1956 is designed
in part to enhance its prestige and status,
but it is also based on the belief that the
UN offers the best ultimate hope of main-
taining world peace, and that Japan must do
everything possible to strengthen and sup-
port it.
20. During the past two years, Japan's inter-
national goals and aspirations seem to have
crystallized and, especially under Kishi's lead-
ership, the country has begun rapidly to carve
out its own unique position in world affairs.
Japan appears to see its destiny as that of
a "minor great power," utilizing diplomacy
and its industrial and commercial resources
rather than military strength to further its
national interests. In the UN and on the
international scene generally Japan seeks to
play the role of a stalwart worker for peace,
contributing to the "easing of tensions" every-
where. In Asia it clearly hopes to compete
with India and Communist China for eco-
nomic and moral leadership. Japan is appar-
ently striving for recognition and prestige as
an independent Asian nation voluntarily co-
operating with the West and the US. The
role which Japan's leaders probably would
most like to fulfill is that of interpreter and
bridge between Asia and the West ? a part
of both, but dominated by neither.
21. In the military field, Japan is unwilling
to participate directly in the defense of any
territory other than Japan itself. At present
Japan's defense effort is a modest one, and
its forces are capable of little more than
maintaining internal security. The Japanese
people remain highly fearful of a revival of
militarism and they and their leaders are
very reluctant to divert financial and mate-
rial resources from economic development and
social welfare programs to rearmament. More-
over, most Japanese leaders believe that Japan
could play little part in either deterring a
war between the US and the Communist Bloc
or in affecting the outcome of such a war. Al-
though continuing the gradual build-up of its
own defense forces, Japan is not thinking in
terms of adding an important increment of
strength to the free world forces or of making
its forces available for the defense of other
free Asian nations in the near future. Never-
theless, over the past year or so, the idea
that Japan should do more to provide for its
own defense has gained increasing acceptance,
both for reasons of national pride and as a
reflection of the nation's desire for greater
independence in every field.
II. PROBABLE FUTURE TRENDS IN JAPAN'S
INTERNATIONAL ORIENTATION
22. Over the next five years, Japan will prob-
ably remain basically aligned with the West.-
However, the nature of the US-Japanese re-
lationship will continue to undergo consider-
able change. The Japanese will base their
policies increasingly on their own indepen-
dent analysis of Japanese national interests.
The major features of Japan's foreign policy
will probably be its growing urge to pursue
an independent course in world affairs and
its continuing efforts to expand its indus-
trial power and foreign trade. The Japanese
people,,impressed by the tremendous progress
in the postwar period, will probably continue
to have confidence in their economic future.
Further economic growth at a fairly high rate
over the period of the estimate is probable.
23. Japan's continued active cooperation with
the US will depend in large part upon the
degree to which US policy complements Ja-
pan's own search for security, international
status, and commercial opportunity. It will
also depend, in part, on the political future
of Prime Minister Kishi, who appears to be
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mOre firmly convinced than many of his con-
servative colleagues of the need for Japan
to maintain and strengthen its ties with the
US and the West. As long as he remains
in power, problems arising in US-Japanese
relations will probably be capable of amicable
and reasonable solution. If Kishi should be
replaced by a Liberal-Democratic leader less
enthusiastic about maintaining the present
close ties with the US and less scrupulous
about exploiting foreign policy issues for do-
mestic political advantage, working relation-
ships between the two countries would prob-
ably be more difficult. However, we believe
that Japan's general international orientation
would remain basically the same and that a
satisfactory US-Japanese relationship could
probably be maintained.
24. If the Socialists should come to power,
which we believe unlikely, the government
would probably move toward recognition of
Communist China and, over a period of time,
toward a neutralist foreign policy. However,
even a Socialist government would be con-
scious of the importance of Japan's economic
and security ties with the US, and, in any
event, would be restrained by the conservative
Japanese elements. Consequently, a Social-
ist government would probably be unable to
move as rapidly or as far toward the Bloc
as the Socialist Party program suggests.
25. In its relations with the US Japan will
continue to be highly sensitive to economic
and commercial considerations. If the Jap-
anese should come to believe that they were
being denied fair and reasonable access to the
US market, Japanese-US relations would be
seriously strained, and within Japan pressures
for neutralism and for closer relations with
the Bloc would greatly increase.
26. Japan will almost certainly continue to
have a large trade deficit with the US. In
the past this deficit has been offset by special
dollar receipts from yen sales to US troops,
US military expenditures, and third country
procurement programs under International
Cooperation Administration auspices. These
special dollar receipts decreased considerably
during 1957 and 1958 mainly because of the
reduction of US troops in Japan, and further
6
decreases are likely. However, so long as there
is no drastic drop in special dollar receipts,
Japan's dollar gap will probably not become
serious. Nevertheless, it is important for Ja-
pan to maintain a rising level of exports to
the US.
27. Japan is critically dependent upon for-
eign trade and must import most of its raw
materials and much of its food. Its over-all
balance of payments position is thus vulner-
able to factors beyond its control, such as
international market conditions, the pricing
of its competitors, trade and exchange restric-
tions, and fluctuations in the prices of its
imports. In general, however, Japan's eco-
nomic position will probably be sufficiently
strong to permit Japan to play an increas-
ingly important role in international economic
affairs. Southeast Asia will be the main, but
not the sole, area of increased Japanese eco-
nomic activity. Japan will continue to urge
the US to finance economic development pro-
grams in this area, and it will continue its
own modest programs.
28. Japan will press for greater voice and par-
ticipation in the affairs of the Ryukyus, and
within the period of this estimate will prob-
ably make serious representations for resum-
ing a large part of civil administration of the
islands. However, the US base position in
the Ryukyus is at present stable and it is
almost certain that the US can maintain
unimpeded use of the bases during the next
five years.
29. Japan will probably continue to depend
primarily on US deterrent strength for its
defense. However, the Japanese Government's
interest in improving Japan's over-all defense
posture has increased, particularly since the
US withdrew its combat ground forces in 1957.
There is a growing feeling in Japan that the
country should have a modern defense estab-
lishment in keeping with its status as an
independent nation of increasing economic
and political power. Although there is still
strong resistance to the economic sacrifices
necessary for rearmament, popular opposition
to a defense build-up appears to be grad-
ually decreasing. Consequently, we believe
that Japan, of its own accord, will increase
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gradually the pace of its military effort, and
that by the end of the period of this estimate
its defense establishment will probably be sub-
stantially more modern than envisaged under
present plans. It will probably place increas-
ing emphasis on its air and sea forces and on
acquiring and developing its own modern,
technically advanced weapons, including mis-
siles for defensive purposes. Nevertheless,
the armed forces will still have only a limited
ability to defend Japan against major attack.
30. Japan will probably make substantial
progress in research and development of nu-
clear energy for peaceful uses within the pe-
riod of this estimate. As Japan moves for-
ward in the peaceful use of nuclear energy,
present Japanese antagonism toward nuclear
weapons will probably diminish. Japan may
eventually develop its own nuclear weapons,
although not within the period of this esti-
mate.
31. There is still strong opposition in Japan,
particularly from the Socialists, Communists,
and the left wing elements in organized
labor, to the presence of US bases, and regard-
less of the terms of a revised US-Japan Secu-
rity Treaty such opposition will continue. If
the negotiations now under way eventually
end in an agreement satisfactory to the Jap-
anese Government and the conservatives, the
US base position in Japan can probably be
maintained for at least the next five years.
If such a mutually satisfactory agreement is
not achieved, US-Japanese relations will grad-
ually deteriorate. Even in this situation the
US base position could probably be main-
tained for at least a year or two, but Japanese
pressure for the elimination of the bases would
increase rapidly and might result in making
effective operation of the bases impossible.2
32. We do not believe that the Japanese Gov-
ernment will consent to the deployment of US
nuclear weapons in Japan in the foreseeable
future. We believe that it would consent to
the use of US bases in Japan for the launch-
'For further discussion of the US base position in
Japan see SNIE 100-10-58, "Threats to the Stabil-
ity of the US Military Base Position in Selected
Overseas Localities," 21 October 1958; paragraphs
34-38.
7
ing of air attacks, nuclear or otherwise,
against targets on the mainland of Asia only
if Japanese leaders were convinced that Japan
itself was directly threatened. In the event
of a Communist attack in South Korea it is
likely that the Japanese Government would
be convinced that Japan itself was directly
threatened and would agree to nonnuclear
attacks on targets in Korea. It might even
agree to the use of nuclear weapons if this
appeared necessary to keep South Korea out
of Communist hands. In case of US involve-
ment in hostilities with the Communist Bloc
in defense of Korea, Taiwan, or Southeast
Asia, we believe that the Japanese Government
would consent to the use of US bases for
staging, supply, and maintenance support of
operations. However, it would probably place
limitations on such use of the bases, the ex-
tent of which would depend upon its own
estimate of the importance of the threatened
area to Japan's security as balanced against
the degree of risk of Japanese entanglement
in the hostilities, and the possibility of retal-
iatory attack on Japan itself. Regardless of
the Japanese Government's decision, effective
and sustained use of US bases in Japan would
probably be impossible if the Japanese public
in general, and organized labor in particular,
actively opposed their use.
33. Although the Japanese will be wary of
Chinese motives, we believe they will continue
to seek an improvement in relations with Pei-
ping. Direct trade between the two countries
will probably be resumed within the next year
or so. However, as long as Communist China
continues to rely primarily on the Bloc for
support of its industrialization and modern-
ization programs, total Sino-Japanese trade
during the period of this estimate will prob-
ably not exceed an annual average of approx-
imately $300 million, about double the 1957
level. This would still be only about three
percent of Japan's total trade. Major sources
of friction between Japan and Communist
China will probably include Japan's inclina-
tion to accept a "two China" situation, the
continuation of US base rights in Japan, and
their growing economic competition in South
and Southeast Asia. Despite these difficul-
ties most Japanese appear to regard as inevi-
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table the eventual normalization of relations
between Tokyo and Peiping.
34. If Communist China is admitted to the
UN or if other major nations, such as Canada
and France, recognize the Peiping Govern-
ment, domestic pressures will probably force
Japan to follow suit regardless of US action,
although in this event Japan would in ad-
vance seek the understanding of the US.
However, we do not believe that Japan would
recognize Peiping if this entailed acceptance
of Communist China's claim to Taiwan.
Japan will probably continue to favor, and
may take an increasingly active role in seek-
ing, some formula which 4 believes will keep
Taiwan non-Communist.
35. Japan will probably continue actively to
seek a rapprochement with the Republic of
Korea, although it has a strong distaste for
President Rhee's regime. However, Japanese-
Korean relations will probably not improve
significantly until Rhee leaves the scene. In
8
general, Japan will go along with the US posi-
tion on the unification of Korea and of Viet-
nam, and it is not likely to recognize either
the North Korea or North Vietnam regime
during the period of this estimate. However,
Japan will continue and probably increase its
trade, mostly coal imports, with North Viet-
nam.
36. Japan will continue gradually to strength-
en its economic ties with the Afro-Asian na-
tions, Latin America and the Middle East.
In South and Southeast Asia particularly it
will make major efforts to expand trade and
to provide technical assistance, yen credits,
and capital investment. This increase in eco-
nomic activity will probably result in in-
creased diplomatic and political influence for
Japan in these areas. Although in its re-
lations with the Afro-Asian nations Japan
will stress its independence from the US, we
believe that on fundamental issues Japan will
continue to cooperate with the US and the
West.
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ANNEX
FACTORS BEARING UPON JAPAN'S INTERNATIONAL ORIENTATION
I. POLITICAL
Al. The Kishi Government and the Conserv-
atives. Prime Minister Kishi was in a strong
position immediately following the May 1958
elections, which returned a heavy conservative
majority (298 of 467 seats) to the lower house
of the Diet. As a result of this public con-
firmation of his leadership and policies he was
able to strengthen his control over the con-
servative Liberal-Democratic Party (LDP)
and to exercise considerable independence in
selecting his cabinet. The withdrawal of sev-
eral senior party members from the center of
the political scene, and growing public sup-
port for Kishi's foreign and domestic policies
gave the LDP the appearance of greater co-
hesion than at any time since it was formed
in 1955. Among these policies are measures
to reduce communist influence and political
activities in the labor movement and to ex-
pand greatly social welfare programs, includ-
ing health and unemployment insurance and,
eventually, old age pensions for virtually the
whole Japanese population.
A2. Despite this promising beginning, Kishi's
political position and prestige were weakened
in October?November 1958 by the clamor and
opposition generated by the press, the Social-
ists, organized labor, and the Communists to
his effort to pass legislation designed to in-
crease the power of the police. These devel-
opments have aroused the latent opposition
of Kishi's rivals in the Liberal-Democratic
Party, who hope to exploit his current diffi-
culties to weaken and eventually unseat him.
Kishi apparently has weathered the immedi-
ate political storm, but he has been forced to
withdraw the police bill and to move more
cautiously in other areas, e.g., in the Security
Treaty negotiations. His position is by no
means as secure as it appeared following the
May 1958 elections.
9
A3. The Socialists. The Japanese Socialist
Party (JSP) represents an alternative to the
Liberal-Democrats, ready to take power if they
should collapse. There are sharp differences
between the predominant left wing, with its
attachment to Marxist revolutionary tenets,
and the right wing. The party lacks agreed
purpose, other than opposition to the govern-
ment. It is rife with factionalism based on
wide ideological differences and personal ri-
valries, and its strength is limited by its close
identity with organized labor. The party
maintains close contact with Sohyo (General
Council of Labor Unions) , Japan's largest
labor federation, and most Socialist candi-
dates depend heavily upon Sohyo's financial
contributions and organizational talents. In
return, the JSP supports virtually all labor-
inspired policies and activities despite fre-
quent disapproval by the public of labor tac-
tics. The party also attracts many Japanese
intellectuals and some of the "floating vote"
in urban areas.
A4. Although the number of votes cast for
the Socialists has increased gradually in re-
cent elections, they have not yet been able to
obtain the support of more than one-third of
the electorate. In the May 1958 elections the
Socialists increased their representation in the
lower house of the Diet by only seven seats, to
a total of 167. An analysis of the vote showed
that although the Socialists continue to draw
the labor vote they do not dominate the urban
areas. Furthermore, they have not made sig-
nificant headway among the farmers and the
small businessmen who make up the largest
portion of the Japanese population and whose
support they must win if they are ever to
attain a Diet majority. The central dilemma
of the Socialists is that if they were to adjust
their policies and appeal to win greater sup-
port from the traditional conservative rural
areas they would risk the loss of labor sup-
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port. On the other hand, if they were to re-
sort to violence or turn to the left, they would
risk the loss of the conservative wing of the
party.
A5. The Communists. Japan Communist
Party (JCP) membership has declined in the
past two years and the party remains a weak
and isolated force in the Diet. In the lower
house elections of May 1958, Communist
candidates polled a little over. 1,000,000 votes
(2.6 percent of the total) and lost one of their
two seats. Party membership now stands at
an estimated 70,000. Internal morale and
discipline are bad, and internal factionalism
is a serious problem.
A6. The JCP's internal difficulties stem from
dissatisfaction with the party's present poli-
cies which have failed to revitalize the party
or to heal factional cleavages. Earlier violent
tactics having backfired, the JCP since 1954
has pursued a policy of peaceful political ac-
tivity and nonviolent agitation. Its strategy
has been based on an all-out effort to win the
cooperation of the Socialists in a joint poli-
tical front. The failure of the party either
to enhance its popular standing or to break
down its political isolation has led to open
criticism of party strategy and tactics. While
the dominant leadership group favors an anti-
US political emphasis in support of Bloc for-
eign policy, an important minority faction
advocates a more domestically oriented ap-
proach giving primary attention to an attack
on domestic capitalism. In addition, there
is also an extremist element which demands a
return to "direct action" violence. These dif-
ferences recently precluded any agreement on
basic policy at the JCP's 7th National Con-
gress, the first in 11 years.
`A7. Despite lack of unity and parliamentary
weakness, the JCP nevertheless remains an
important pressure group in Japanese poli-
tical life. Although the party has made little
progress toward its goal of a united front with
the Socialists, it exerts considerable leverage
on Socialist oriented trade unions and mass
organizations. Its heavy infiltration of many
such groups, including the teachers', govern-
ment employees', and railway workers' unions,
has enabled it to exert an influence dispro-
portionate to its size on Japanese public
opinion, especially when it exploits already
existing popular attitudes that parallel Com-
munist objectives. Such attitudes include
opposition to rearmament, fear of involvement
in war, and opposition to nuclear tests in the
Pacific. There is little cooperation between
the JSP and the JCP, especially at the na-
tional level, although at times Socialist candi-
dates have accepted local JCP support and
the conditions accompanying such support.
In general the two parties are competitive,
seeking support from the same social and eco-
nomic groups, and often stressing the same
political issues and similar political programs.
A8. The JCP has substantial capabilities for
mass violence and sabotage. An estimated
30,000-40,000 of its members may be termed
hardcore Communists who would remain loyal
to the party under trying and hazardous cir-
cumstances. Probably half of this number
are ready to engage in illegal and covert ac-
tivity.
A9. The Ultranationalists. Ultranationalists
or extreme right-wing movements appealing
for a restoration of the authority and power
of the Emperor, for a revival of Japan's mili-
tary power, and for an all-out assault against
Communism remain active on the fringe of
Japanese political life, but they continue to be
poorly organized, weakly supported, and gen-
erally ineffective. The ultranationalists are
unlikely to be a major force in Japanese poli-
tics in the foreseeable future.
A1.0. Political Prospects. Provided Japan
avoids an economic crisis and the internation-
al situation does not seriously deteriorate, the
Japanese Government for the next five years
will almost certainly remain in the hands of
the conservatives. The prospects for the
tenure of Kishi himself are uncertain. Fac-
tional rivalries and the internal struggle for
power will continue to threaten conservative
unity, and a new conservative split leading to
formation of a third party made up of dis-
sident conservatives and right-wing Socialists,
while unlikely, is a possibility. Nevertheless,
present trends toward political, conservatism
in Japanese politics will probably continue
over the next few years.
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All. If Kishi should be forced out of office,
political power could pass to any one or to a
combination of several other LDP factional
leaders, including Ikeda, Kono, Miki, and
Sato, who initially at least might exercise
their power through a figurehead Prime Min-
ister such as Ishii or Ishibashi. These men are
generaly oriented toward the US and favor
most of the foreign and domestic policies
which Kishi has initiated. However, US-Japa-
nese working relationships would probably be
more difficult. Kono in particular might be
more willing to explore alternatives to Japan's
present policy of close alignment with the
US, especially if he felt that his domestic po-
litical position would be strengthened thereby.
The difficulties would be accentuated if the
transfer of power were accompanied by a pro-
longed period of dissension in conservative
ranks. Even if Kishi remains in office for
the next two or three years his experience
with the police bill will probably cause him
to be more cautious in pushing necessary but
politically risky measures.
Al2. The Japanese Socialist Party will con-
tinue to exercise considerable influence on
public opinion and to harass the conservative
government and restrict its freedom of action.
However, the Socialists will probably remain
essentially a class party, aligned with and
largely dominated by organized labor. For
this reason the Socialists will probably not
be able to dispel the widespread distrust with
which they are regarded by the majority of
Japanese or attract much more than the one-
third of the electorate which now supports
them. We do not believe that the Socialists
will repudiate the parliamentary system and
seek power by revolutionary means, even
though some left-wing members, discouraged
by the dim prospects of attaining power by
parliamentary means, may advocate such a
course and from time to time engage in
strong-arm tactics. Despite their internal
differences we believe that the Socialists will
hold together and will concentrate their
efforts on strengthening party unity and
widening their popular support. Meanwhile,
as the major opposition party they will take
every opportunity to embarrass the govern-
?
11
ment, hoping that the Liberal-Democrats will
collapse or blunder so that they will be able
to take over. The chances are remote, how-
ever, that the Socialists will come to power
during the period of this estimate.
A13. Unless Japan encounters a major eco-
nomic crisis, the popular appeal of the Japan
Communist Party will probably continue
gradually to decline during the next few years.
However, considerable indirect Communist in-
fluence on public opinion, organized labor,
and on the Socialists will probably continue
as a consequence of infiltration and propa-
ganda activities. The JCP will probably in-
crease its efforts to build up its covert appara-
tus, especially if the Kishi government's efforts
to suppress Communist activities in labor and
education are successful. The Communists
may instigate strikes and demonstrations, and
they will undoubtedly participate in those
inspired by the Socialists. They will continue
to pose a serious potential threat to internal
security. However, they will probably not
adopt a policy of mass violence, at least for
the next two years or so, unless there is a
major shift in the international Communist
line.
II. ECONOMIC
A14. Economic Situation. Since the Korean
War boom which greatly stimulated Japanese
foreign trade and domestic investment, the
Japanese economy has continued to demon-
strate great vitality. With an average annual
rate of increase in GNP of eight percent dur-
ing the period from 1952 through 1957, 3 the
economy has far surpassed the production
levels attained during the Korean War. Dur-
ing that five-year period industrial produc-
tion doubled and production of machinery and
chemicals increased by more than two and a
half times. In 1957, shipbuilding, in gross
tonnage, was nearly equal to the combined
total of the UK and West Germany, which
just a few years ago ranked first and second
in shipbuilding. Japan's rapid expansion of
heavy industrial production has been facili-
tated by significant growth in supporting in-
dustries, such as electric power, and marked
See Chart A.
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CHART A
SELECTED INDEXES OF JAPANESE ECONOMIC GROWTH
(Calendar years, except for GNP)
1952
1953
1954
1955
1956
1957
1962
(Plan)
GNP 1 (FY 1956 prices)
100
108
112
124
135
145
189
Industrial Production
100
123
132
143
174
204
294
Real per capita
national income
100
106
107
115
124
135
n a
Exports (f.o.b.)
100
100
128
158
196
225
372
Imports (c.i.f.)
100
119
118
122
159
211
239
Base year (1952) values
GNP ($1M) $19,200
Per capita national income $163
Exports ($1M) $1,273
Imports ($1M) $2,028
1 Fiscal year (1 April to 31 March)
advances have also been made in the manu-
facture of technologically advanced products.
A15. In part these successes are the result of
favorable conditions outside of Japanese con-
trol, such as world-wide prosperity, unusually
favorable weather conditions which contrib-
uted to bumper rice crops, and a continued
high level of US spending in Japan. How-
ever, they are also the result of Japan's own
efforts to expand foreign trade, and to main-
tain domestic monetary stability. The Japa-
nese have sustained a very high rate of in-
vestment, mostly private; public and private
investment (gross capital formation) has
been averaging over 25 percent of GNP in
the past few years. The Japanese have clearly
demonstrated their ability to rebuild and
maintain a dynamic and modern industrial
economy, despite a meager resource base.
A16. The economy must continue to expand
to prevent a general decline in the standard
of living and to provide employment for
Japan's growing population, which now num-
bers about 92 million. Although the rate of
population increase has declined to about one
percent per year, 4 the high rates of increase
which prevailed in the immediate postwar
4Family planning was established as official na-
tional policy in 1951. Through birth control ed-
ucation and legalized abortion Japan's high rate
of population increase has been reduced to one
of the lowest in the Far East. Annual population
increase was 850,000 in 1957 as compared with
over 1.3 million in 1951.
12
period will result in unusually large annual
increments to the labor force beginning about
1960. Japan's New Long-Range Economic
Plan, devised at the end of 1957 by govern-
mental and industrial leaders, suggests the
rate of economic expansion which the Japa-
nese feel must be maintained. The plan calls
for an-increase in total production of 5.5 per-
cent per year, with industrial production in-
creasing at an average annual rate of 8.2 per-
cent and with chemical, metal, and machinery
production increasing at more than 10 per-
cent annually. Private and public invest-
ment must average 28.5 percent of GNP. The
plan envisages increases of 5 percent in im-
ports and 10.5 percent in exports annually,
and anticipates that personal consumption
will remain at about recent levels, i.e., some-
what less than 60 percent of GNP. Most of
these goals do not appear to be unrealistic in
the light of the rate of economic development
over the past five years: Realization of these
goals, however, will depend largely upon in-
ternational economic factors outside Japan's
control.
A17. Foreign trade is the life blood of the Jap-
anese economy. Japan must import about 20
percent of its food and most of its raw ma-
terials. To pay for a rising level of imports,
and to increase or even to sustain domestic
consumption, Japan must continue to increase
its exports, particularly of manufactured
goods. Consequently, Japan's international
orientation and its political and social stabil-
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ity, as well as its economic position, are un-
usually sensitive to external economic devel-
opments.
A18. Japan's over-all balance of payments
position continues to be vulnerable to inter-
national economic conditions beyond Japan's
contro1.5 To stop the rapid depletion of its
foreign exchange reserves the Japanese Gov-
ernment, in 1957, adopted a deflationary pol-
icy and tightened its system of import con-
trols. The reserves, which had dwindled to
$445 million, rose to $806 million by October
1958. However, the control measures reduced
the rate of capital investment, and caused
the accumulation of inventories of finished
goods which necessitated production cutbacks
in key industries, including textiles, steel,
coal, and certain chemicals. This, coupled
with a decline in world demand, created a mild
recession in Japan. The effect of the slump
will be cushioned somewhat by the bumper
1958 rice crop and probably by the recent
loosening of credit controls. Although a
number of signs of an upturn have recently
appeared, conclusive evidence of a general
recovery is still lacking.
A19. Japan's economic growth has continued
highly dependent on trade with the US. In
1957 the US accounted for 21 percent of Japa-
nese exports and 38 percent of its imports.6
Japan's imports from the US include coking
coal, iron and steel scrap, industrial machin-
ery and chemicals, POL, cotton, soybeans, and
grain. Its exports to the US are primarily
consumer goods, most of which compete with
American products. Japan will almost cer-
tainly continue to have a large trade deficit
with the US. Japan has had no serious dol-
lar gap over the past several years because of
special dollar receipts from yen sales to US
troops, US military expenditures, and third
country procurement programs under In-
ternational Cooperation Administration aus-
pices. The trend of these special dollar re-
ceipts, which averaged $624 million during
1953-1956 but declined to $549 million in 1957,
will continue downward. To offset this de-
cline the Japanese are attempting to develop
5 See Chart B.
'See Chart C.
CHART B
BALANCE OF PAYMENTS, 1955-1957
(In millions of US dollars)
Calendar Years
1955 1956 1957
Goods and services
205
?59
?585
Exports f.o.b.
2,006
2,482
2,857
Imports f.o.b.
?2,061
?2,613
?3,255
Transportation and
insurance (net)
?157
?316
?518
Government (net)
510
505
466
Others (net)
?94
?117
?135
Donations
20
28
?29
Private
31
33
36
Public
?11
?5
?65
Net total of all current
transactions
225
?31
?614
1 Mainly special dollar receipts.
Source: International Monetary Fund.
nondollar sources for various raw materials
and manufactured products and to increase
their exports to the US. However, in view of
continuing resistance by US producers to im-
ports from Japan and recurring threats of
US trade restrictions, the Japanese are gen-
erally pessimistic regarding the possibilities
of increased sales in the American market.
A20. Japan's trade with the Bloc increased
rapidly from 1953 until the Chinese Commu-
nist boycott in May 1958.7 However, this
trade was still of marginal economic impor-
tance, representing only two to four percent
of Japan's exports and imports. Restrictions
on Japanese trade with the Bloc resulting
from Japan's participation in the COCOM-
CHINCOM trade control system are no longer
a serious barrier. The "China differential"
was virtually eliminated in mid-1957 and
COCOM controls were recently reduced.
A21. However, Japan's trade with Communist
China, which accounted for about three-
fourths of its trade with the Bloc, was halted
suddenly in May 1958. At that time Com-
munist China abrogated the fourth in a series
of private trade agreements and an agreement
to barter iron ore and coal for Japanese steel
products. The pretext for Peiping's action
was a disagreement concerning the right of
Communist China to fly its flag over the offices
of its proposed trade mission in Japan. Since
See Chart D.
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CHART C
FOREIGN TRADE BY GEOGRAPHIC AREA, 1936 AND 1954-1957
(In Percent)
1936
1954
Calendar Years
1955
1956
1957
Exports 1 (total in billion dollars)
0.9
1.6
2.0
2.5
? 2.9
Asia
64
49
, 42
41
40
Europe
8
9
10
10
12
North and Central America
18
21
27
26
26
(United States)
(16)
(17)
(22)
(22)
(21)
South America
2
10
7
5
3
Africa
5
8
10
16
17
Australia and Oceania
3
3
4
2
2
Imports 2 (total in billion dollars)
1.0
2.4
2.5
3.2
4.3
Asia
53
31
37
33
29
Europe
9
8
7
9
North and Central America
26
46
41
44
46
(United States)
(25)
(35)
(31)
(33)
(38)
South America
3
7
4
4
4
Africa
3
2
3
3
2
Australia and Oceania
6
6
7
9
10
(Figures may not add to totals because of rounding.)
F. 0. B.
C. I. F.
CHART D
JAPAN'S TRADE WITH THE SINO-SOVIET BLOC
(In millions of US dollars)
14
Exports
Imports
1957
1958
1957
1958
Jan.-June
July-Dee.
Jan.-June
Jan.-June
July-Dec.
Jan.-June
Communist China
28.9
31.6
?
49.0
44.4
36.0
47.6
USSR
.1
9.5
9.7
3.4
8.9
4.0
Others
2.3
4.2
2.9
9.6
8.0
3.9
Total
31.3
45.3
61.6
57.4
52.9
55.5
Percent of Japan's
World Total
2.4%
2.9%
4.4%
2.4%
2.7%
3.6%
then Communist China has suspended all
trade with Japan, denounced the Kishi gov-
ernment, refused to renew a fishing agreement
and called on overseas Chinese to boycott Jap-
anese goods. At first, Peiping apparently
was attempting to influence Japan's national
elections. Continuation of the embargo ap-
pears to be an effort to use economic pres-
sures to embarrass the Kishi government and
to induce Japan to grant Communist China
political recognition and sever relations with
the Republic of China. The present recession
in Japan in some respects heightens the effects
of the embargo.
A22. Before the boycott, China provided a sig-
nificant share of Japan's imports of soybeans
and salt, in exchange for chemical fertilizer,
iron and steel products, and other manufac-
tures. A number of Japanese manufacturers
and trading companies have suffered losses
as a result of the Chinese embargo and some
of the smaller trading companies will prob-
ably face bankruptcy. However, despite the
boycott and the fact that trade with China
since the easing of the COCOM-CHINCOM
trade controls has been of only marginal im-
portance to the Japanese economy, a consid-
erable number of Japanese, including some
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businessmen, still cling to the belief that trade
with mainland China can approach the high
levels which prevailed in the 1930's. The Jap-
anese Socialists and Communists draw an
inflated picture of the China trade potential
in their political and propaganda efforts.
Domestic pressures on the Kishi government
to seek agreement with the Chinese Commu-
nists for reopening and expanding trade are
reviving and will probably increase.
A23. We continue to believe that there is
little basis for any great expansion in Japan's
trade with the Bloc. Communist China is
making strenuous efforts to become self-suf-
ficient in chemical fertilizer, which ranks
with iron and steel products as one of Japan's
major exports to China. Peiping depends pri-
marily upon the Bloc for its machinery and
equipment, and even in the event that China
should turn increasingly to the Free World
for such products, Japan would face stiff com-
petition from Western European countries.
Furthermore, China probably would not ship
large quantities of its iron ore and coal to
Japan. Even under favorable conditions Ja-
pan's total trade with Communist China will
probably not exceed approximately $300 mil-
lion annually (about double the 1957 level)
during the next five years.
A24. Japan's trade with the USSR increased
sharply from a small base during 1957 and
1958, following the resumption of diplomatic
relations and the conclusion of trade and pay-
ments agreements. However, the absolute
level of total trade remains extremely small
? $22 million in 1957 and approximately $35
million in 1958. The basis for Japan's trade
with the USSR is limited and this trade is
not likely to exceed $75 million annually over
the next five years. Trade with the Eastern
European Satellites will probably remain in-
significant.
A25. Japan has continued its efforts to expand
trade with the underdeveloped areas, partic-
ularly in Asia. Japan has concluded repara-
tion agreements with Burma, the Philippines,
and Indonesia, which will help to pave the
way for expanded economic relations with
these countries. These agreements call for
payments of nearly a billion dollars over a
period of 10 to 20 years, largely in the form
of capital goods, and they contain provisions
under which Japan agrees to facilitate loans,
mostly private, totaling $700 million for de-
velopment purposes. In addition, Japan has
granted yen credits of $60 million to India.
A26. Japan's efforts to expand its trade with
Southeast Asia are hampered by the limited
purchasing power and export capabilities of
the Southeast Asian countries. Consequently,
the Japanese leaders are especially interested
in hastening the process of economic develop-
ment in Southeast Asia. To this end, and to
strengthen and consolidate their own trade
position in the area, the Japanese have sought
to enlist US support for a Southeast Asia
regional development scheme. They have also
made cautious efforts to arouse the interest of
Southeast Asian governments in their regional
development plans.
A27. In seeking to expand their trade with
Southeast Asia, the Japanese are deeply dis-
turbed by the growing economic competition
from Communist China. During the past two
years there has been a large increase in Chi-
nese exports to Southeast Asia of light indus-
trial products and consumer goods, partic-
ularly textiles, at prices which the Japanese
find difficult to meet. It appears that this
trade offensive is motivated, at least in part,
by political considerations. Moreover, Com-
munist China has appealed to the overseas
Chinese to boycott Japanese goods. This
could be an effective way of weakening the
Japanese economy because of the important
role the overseas Chinese play in Southeast
Asia as importers, middle man and merchants.
However, reports indicate that the Overseas
Chinese are relatively unresponsive to this
appeal.
A28. Economic Prospects. Assuming a rea-
sonably high level of world prosperity, the
Japanese economy will almost certainly con-
tinue to grow. However, the rate of growth
will probably be considerably slower than that
of the past five years and will probably not
reach the average 5.5 percent annual increase
in GNP currently envisaged by the govern-
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ment. The high rate of investment which
has become a characteristic of Japanese econ-
omy will probably drop somewhat. Most in-
vestment will probably continue to be in such
industries as iron and steel, chemicals, ma-
chinery, electric power, railways, and shipping.
Underemployment will continue to be a seri-
ous problem and unemployment will probably
increase during the next five years, perhaps
to the point of becoming a major political
issue.
A29. If the present recession in Japan deepens
or is extended for another year or so, the
Japanese Government will almost certainly
be forced to adopt antirecession measures.
This would encourage inflation and risk over-
stimulating demand and intensifying balance
of payments problems. Prolongation or inten-
sification of the recession would probably in-
crease pressures on the government to reopen
and expand trade with Communist China.
Regardless of the depth of the recession, we
believe that Japan will probably agree to the
reopening of trade with the mainland, pro-
vided the Chinese Communists make suitable
concessions.
A30. Japan will probably have some success
in its efforts to expand exports. However,
Japan's dollar receipts from exports and in-
visibles may not expand sufficiently to over-
come its trade deficit with the US. Trade
expansion in Southeast Asia will be slow at
best, in view of the low purchasing power and
the increased competition from Communist
China and Western industrial natioris in that
area.
A31. Any one or a combination of various
contingencies, both external and internal,
could have a strong effect upon the Japanese
economy. A series of unfavorable harvests, a
major US recession, or the imposition of im-
port restrictions by Japan's major trading
partners, particularly the US, could individu-
ally or collectively have serious adverse reper-
cussions on the Japanese economy. However,
barring a major world economic upheaval,
there will probably not be fundamental
changes in Japan's economic pattern over the
next five years.
16
III. MILITARY
A32. Japan's military establishment is de-
signed to provide a modest defense capability.
Domestic economic and political factors have
played a more important part than military
considerations in the development of Japanese
military policies. As a result of their exper-
iences in World War II the Japanese have a
deep emotional revulsion against war, mil-
itarism, and, especially, nuclear weapons.
They are also extremely reluctant to divert
money and resources from their economic and
socal welfare programs to rearmament. Vir-
tually all top political leaders agree that eco-
nomic needs should have first priority and be-
lieve that Japan probably could neither defend
itself against a major armed attack nor build
sufficient military strength to deter aggres-
sion, even if Japan were to undertake an all-
out rearmament effort. Consequently, they
rely primarily upon their own diplomacy and
the deterrent power of the US for security
against external attack. Nevertheless, even
the limited qualitative improvement in Ja-
pan's defense capabilities which the conserv-
ative government appears now to favor will
require a corresponding increase in defense
expenditures, which now account for only 11
percent of the national budget and about 2
percent of the GNP.8
A33. Constitutional provisions renouncing
war and theoretically prohibiting the mainte-
nance of armed forces inhibit Japan's defense
effort, although they by no means constitute
an insurmountable barrier to rearmament.
The Japanese Government has encountered no
serious difficulty in circumventing the consti-
tution in order to create the present defense
forces, and would not be prevented by consti-
tutional provision from expanding them sub-
stantially. The real obstacle to rearmament
is the mood of the Japanese people, who are
not yet ready for a substantially increased
defense effort. As the mood changes, popular
objections to de facto contraventions of the
constitution in the rearmament program will
correspondingly decrease. If and when the
conservatives obtain the required two-thirds
See Chart E.
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CHART E
JAPAN'S FINANCIAL CONTRIBUTIONS TO ITS OWN FORCES AND TO THE
UNITED STATES FORCES JAPAN (USJF)
(In millions of US dollars)
Japanese Fiscal Years
1955
1956
1957
1958
Ground Forces
148
150
140
160
Naval Forces
53
64
61
71
Air Forces
33
55
71
91
Defense Agency
5
9
8
11
Subtotal
239
278
280
333
USJF (Yen contribution &
facilities)
128
112
111
73
TOTAL
367
390
391
406
US ASSISTANCE UNDER THE MILITARY ASSISTANCE PROGRAM
(In millions of US dollars)
Japanese Fiscal Year
1950-4958
1959
1960 (Proposed)
TOTAL
Army
$ 618.3
$ 39.4
$ 43.2
$ 700.9
Navy
411.5
28.0
13.6
453.1
Air Force
207.0
49.8
33.5
290.3
$1,236.8
$117.2
$ 90.3
$1,444.3
majority in both Houses ? not likely in the
next five years ? they may carry out an over-
all revision of the Constitution, but it is un-
likely that they will seek to amend the war-
renouncing provisions alone. For at least the
next several years we believe that the Japanese
Government will proceed with its defense
effort by developing new interpretations of
the Constitution rather than by seeking for-
mal amendment.
A34. The Japanese military leaders often dis-
agree with the political leaders concerning the
proper role, size, and equipment for the armed
forces. However, the Japanese military estab-
lishment is firmly under the control of civilian
authority and the ideas of the military leaders
appear to have little influence upon the gov-
ernment's military policy. Japan's current
defense plan was approved in 1957 by the
cabinet and the National Defense Council, an
advisory body of top civilian officials of the
government. This plan provides for a ground
force strength of 180,000 men by March 1960,
a naval surface and subsurface force of 25,000
men and 124,000 tons in commission by 1962,
a naval air arm of 8,000 men and 220 aircraft
by 1962, and an air force of 48,000 men (in-
17
eluding 900 pilots) and about 1,300 aircraft
(33 tactical squadrons) by March 1963. Any
increases in the defense budget will probably
place greater emphasis on air, naval, and de-
fense missile development.
A35. At present, the Ground Self-Defense
Force numbers about 165,000 men organized
into 2 corps headquarters, 6 infantry divisions,
4 combined brigades, and 1 airborne brigade
of battalion size. The units are equipped with
conventional World War II infantry division
arms, plus 8 inch howitzers and recoilless
rifles up to 106 mm. The capabilities of the
GSDF have shown steady improvement. Cur-
rently rated operationally effective at battal-
ion' level, it is expected that they will become
effective at the regimental level during the
current Japanese fiscal year. Although now
capable of fulfilling its secondary mission to
assist in the maintenance of the internal se-
curity of Japan, the GSDF probably will be
unable to fulfill its primary mission of provid-
ing for the ground defense of Japan over the
next five years. Operational effectiveness is
hindered by the lack of combined arms train-
ing, the lack of artillery and AAA firing
ranges, and lack of training in amphibious
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operations or those involving air support of
ground units. The ground forces are capable
of conducting limited defensive operations
within Japan.
A36. The Maritime Self-Defense Force has a
personnel strength of 18,300 men, with an
additional 5,500 in the naval air arm. The
combatant ship strength consists of 8 destroy-
ers and 6 escort vessels, most of which are
new Japanese construction, 1 submarine, 18
patrol escorts, 32 landing support ships
(LSSL), 8 submarine chasers, 9 torpedo boats,
44 minecraft, and 42 amphibious craft. The
naval air arm has 170 piston type aircraft.
The naval forces are currently capable of
limited ASW, mine warfare, and escort oper-
ations within coastal waters.
A37. The Air Self-Defense Force has as yet
no significant tactical or defense capability,
despite its personnel strength of about 20,000,
including 500 pilots, and its current aircraft
strength of more than 800, including about
450 jets. Only two operational fighter squad-
rons (F-86) have as yet been activated, and
even these are still not combat ready. This
lack of progress and development has to date
been caused by inadequate budgetary support,
a shortage of trained maintenance personnel,
internal logistic problems, and a lack of ex-
perience at all levels in the management of a
modern air force. JASDF leadership is be-
coming increasingly aware of these short-
comings and, with US support, is attempting
to overcome them. Nevertheless, the JASDF
will be unable to meet its present goals (33
tactical squadrons by 1963) or to become an
effective force so long as budgetary support
remains at present levels.
A38. In addition to the defense forces, Japan
has a National Police Agency of approximately
140,000 well trained and equipped men. The
police are capable of controlling mob action,
and in cooperation with the defense forces,
could probably put down any serious internal
uprising.
A39. Japan has a high scientific and indus-
trial potential for the development and pro-
18
duction of conventional and modern weapons.
Japan's current military research and devel-
opment program, although broad in scope, is
limited by lack of funds and falls far short
of the country's scientific and industrial capa-
bility. The program includes the prototype
production of Japanese designed tanks, ar-
mored vehicles, signal and engineering equip-
ment, and missiles. Thus far, Japan is de-
pending upon missiles procured from foreign
sources to advance its own research. The Jap-
anese have sought assistance from the US for
mutual weapons development, but progress
has been held up pending Japanese adoption
of appropriate security legislation. Japan's
industrial leaders apparently prefer to con-
centrate on nonmilitary production. At pres-
ent, Japan does not have the capability of pro-
ducing the most advanced types of complex,
specialized military end-items. However, the
Japanese are very proficient at aircraft as-
sembly and are manufacturing some compo-
nents. They have a high potential capability
for aircraft manufacture.
A40. Prospects. Japan will probably continue
to rely primarily on US deterrent strength
for its external security. We believe that Ja-
pan's own defense expenditures over the next
five years will probably remain well below its
economic capacity and that there will con-
tinue to be resistance to diverting financial
and material resources to rearmament. How-
ever, we believe that Japan's interest in in-
creasing and modernizing its military forces
will have increased greatly by the end of the
period of this estimate, and that its defense
effort will be considerably greater than en-
visaged in its present plans. There will prob-
ably be increased emphasis on the develop-
ment of efficient and technically advanced
weapons for defense against air and naval
attack and, within the period of this estimate,
it is probable that defensive, nonnuclear mis-
siles of its own manufacture, if not design,
will be included in its military establishment.
Nevertheless, the defense forces will still have
only a limited capability against major ag-
gression.
4.1?Npre.iiianiTimmb
601VIDENT T
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wENTIAty
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aOrrilDENTIAL
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