SUBJECT: UNITED STATES POLICY TOWARDS JAPAN

Over the past week interest in United States policy towards Japan
has been stimulated by an article in NEWSWEEK of October 25
purporting to give an 'inside' account of a 'new' United States
policy.

Reports from Tokyo correspondents of American newspapers indicate
that newspaper reports reaching Japan have set off a wave of eager
and optimistic discussion by the Japanese. In order to assess the
basis for such reports about a 'new United States policy for
Japan' it is essential to review the trends which have been in
evidence since the visit of George Kennan, director of the State
Department policy planning staff in February.

It might be expected that the emergence of a new United States
policy might first have been evident from United States actions in
the Far Eastern Commission since the latter is the body for
formulating policies, principles and standards for the occupation
of Japan. Formal United States actions in the Far Eastern
Commission, however, give only a limited view of the picture. The
details have to be filled in from other sources. It might serve
some useful purpose, however, to first review significant United
States actions in the Far Eastern Commission during this year
which could be regarded as pointing towards a new policy.

On the positive side there are only two points worthy of emphasis.

First was General McCoy's statement in the Far Eastern Commission
on 21st January, 1948. [1] This in effect put the Far Eastern
Commission on notice that henceforth the United States considered
that the economic rehabilitation of Japan was the most important
objective of the occupation and that the Japanese Government and
people and SCAP should take all necessary steps to bring this
about. Notice was also served that Congress would be asked to
provide appropriations not only for subsistence items as in the
past but also for the procurement of imports of industrial raw
materials and spare parts to assist Japan to expand the output of
its peaceful industries towards a status of self-support.

Cooperation was also asked from other Far Eastern countries in
certain future policies which the United States would place before
the Commission.

There has, however, so far been only one policy placed before the
Far Eastern Commission by the United States which could be said to
fall within the above category. This was a policy on 'Travel
Abroad of Japanese Commercial Representatives [2] which has now
been passed by the Far Eastern Commission.

The second positive action taken in the Far Eastern Commission was
the development by the United States of the thesis that in
addition to the authority which the Supreme Commander obtains on
the basis of (a) directives issued by the United States Government
prior to the existence of the Far Eastern Commission (b) interim
directives issued by the United States Government in cases of
emergency and (c) responsibility to carry out the terms of
surrender, he also derives authority from the fact that as the
'sole executive for the allied powers in Japan' he can do whatever
he thinks necessary for the administration of Japan in the absence
of a specific policy decision of the Far Eastern Commission.

The United States are apparently determined that their plans for
enabling Japan to achieve a status of self-support should be
frustrated as little as possible by anticipated objections from
other Far Eastern countries and the delays inherent in Far Eastern
Commission procedures. At the same time they are reluctant to use
their powers of interim directive. They appear to have been
setting the stage for permitting the Supreme Commander to develop
a wider area of responsibility than it had been assumed he had in
the past, so that he could do everything possible considered
necessary for the economic recovery of Japan, unfettered by the
shackles of the Far Eastern Commission.

Much can be learned from negative action of the United States
delegation in the Far Eastern Commission. On most economic
questions, particularly those relating to reparations and level of
economic life, members of the United States delegation have
virtually paralysed the work of the Far Eastern Commission by
their inability to state a position on a number of policies which
they themselves had originally introduced and which after a long
process of detailed technical consideration and ultimate
compromise many of the other delegations are now able to accept.

The conclusion can be drawn, purely on the basis of this inaction,
that for several months the United States Government has been
unable to formulate policies for presentation to the Far Eastern
Commission which would solve their dilemma of how to provide for a
status of industrial self-support in Japan and at the same time
make available as reparations, industrial facilities forming part
of Japan's industrial war potential, which the United States
itself had at one time considered necessary as a security measure
against future Japanese aggression.

As relations with the USSR generally have deteriorated the whole
emphasis concerning security from the United States point of view
has changed. The prime question of security is no longer
considered to be how safeguards can be erected against future
Japanese aggression, but rather what is to be Japan's role in
combatting the greater immediate menace to the future of world
security, the Soviet Union.

These questions of course cannot be discussed openly in the Far
Eastern Commission although the action of Ambassador Panyushkin at
to-day's meeting of the Far Eastern Commission in asking pointed
questions about a reported secret conference to defend Japan
against a surprise attack may be an attempt to open up this whole
question. The American attitude is nevertheless reflected to some
extent by great reluctance to approve any policies which would
give the Soviet any advantage in Japan. On the question of 'Access
to Technical and Scientific Information' introduced by the
Australian delegation [3], constant pressure was necessary before
the United States was prepared to state a position and then only
after SCAP had satisfied himself that he could set up
administrative arrangements which would protect him from the
Soviet Union using this policy to indulge in industrial espionage.

The same problem arises in connection with recent United States
amendments to their own original proposal on Civil Aviation in
Japan. An important question for the United States has been to
devise a formula which at face value appears innocuous but which
would provide SCAP with the excuse to prevent the establishment of
any extensive civil air service operated by the Soviet to Japan
(or perhaps of any Soviet air service at all).

While the conclusions concerning the trend of United States policy
towards Japan which can be drawn from formal actions in the Far
Eastern Commission are significant but limited, there is much
evidence outside the Commission of the general direction in which
United States policy is heading.

The State Department itself has made no public statements on
policy towards Japan worthy of mention. However that other
important agency of the United States government sharing
responsibility for formulation of occupation policies, the
Department of the Army, has been extremely vocal.

Nothing could be more misleading, however, in assessing United
States policy than to imagine that when the formulation of policy
is shared between interdepartmental groups and committees,
responsible officials of any one agency, in their public
utterances, speak with the full force and authority of the United
States Government. This has been particularly true of the Truman
administration where the various agencies have often had wide
differences of opinion and President Truman has not exercised that
central judgment and decision which in the American system of
government only the President can provide.

In the case of Japan, the Department of the Army has virtually
embarked on a public relations campaign to influence public
opinion and Congress towards their point of view. The views of the
Department of the Army have accordingly been generally well-known.

The Strike Report contains recommendations of a mission to Japan
sponsored by the Department of the Army. [4] The visit of the
Johnston (Draper) Committee to Japan was mainly for the purpose of
presenting a report to Congress during hearings on appropriations
which would support the Army's requests for an economic recovery
programme for Japan. [5]

There was much in these reports with which the State Department
agreed. They also contained, however, recommendations which in
effect meant that the United States should go back on certain
existing international commitments concerning reparations and the
reduction of Japan's industrial war potential. The Department of
the Army had no inhibitions about making these reports public.

State Department officials, however, have in their private
conversations clearly indicated that such tactics were a
considerable source of embarrassment to them. In fact while their
own original views on these questions had changed there was a very
wide difference of opinion between State Department views and
those of the Army Department which would have to be resolved
before any official United States position could be formulated.

Exactly how wide the area of the controversy has been they have
however never been prepared to say.

In fact State Department officials who have been traditionally
frank with our FEC delegation have for a long time displayed an
unusual reticence to discuss details of the issues involved in
their disagreement with the Army. This has been particularly true
as the controversy has moved up above the members of the State
Department at the working level.

On the wider issues in an overall policy towards Japan, Allison,
head of the North East Asian Affairs Division of the State
Department, as long ago as April, indicated just after the return
of Kennan from Japan that the United States Government was engaged
in reviewing their overall policy in the light of two years of
occupation and that when thinking had been concluded would wish to
have diplomatic talks with us and certain other Far Eastern
Commission countries. Saltzman, Under-Secretary of State for
Occupied Areas, again in May stressed the intention to hold
diplomatic talks when the United States had developed its
thinking. He stressed that the United States was concerned to see
that Japan should be allowed to develop and maintain free
democratic institutions free from the blandishment of any other
country with a different system of government.

During the months which have elapsed, all enquiries as to when
such talks might be expected have regularly produced the response
that the United States was on the verge of agreement internally
and would be ready to discuss these problems in 'a few weeks'.

[matter omitted]

In discussing the future role of the Far Eastern Commission
Allison said quite frankly and informally that the United States
government after having given considerable thought to this problem
had come to the conclusion that the Far Eastern Commission,
irritating and frustrating as it was to the United States on
occasions, was not an easy body for them to get rid of It had been
set up to formulate policies to implement the terms of surrender
which had mostly been carried out. As time went on it was to be
anticipated that there would be fewer policies. Such policies
should in any case be of a broader nature than in the past and the
Far Eastern Commission should not attempt to formulate policy in
detail. The Far Eastern Commission could continue as a useful
forum for discussion of Japanese problems in a general way.

Allison was prepared to speak frankly and in some detail on the
United States position regarding a Peace Treaty. The State
Department felt, he said, that while there were certain obvious
advantages to be derived from a Peace Treaty, there was good
reason for 'dragging the feet' on it until it became clearer how
the cold war against the Soviet would progress. The fact had to be
realised that there was a power vacuum in Japan and if the United
States didn't fill it, the Soviet would. If left to itself Japan
having no army, navy or air force would be defenceless.

While the United States would probably not object to holding a
peace conference if all other Far Eastern Commission countries
were advocating it, before starting to negotiate a peace
conference they would wish to have prior diplomatic discussions
with certain countries including Australia in order to first be
convinced that whatever suggestions they had to offer would solve
the problem of the power vacuum in Japan and would not in effect
mean abandoning Japan to the Soviet Union.

The United States now felt that the USSR was anxious for a peace
conference in order to get the United States occupation forces
out. He felt that the USSR would continue to express general
statements designed to give the impression that there were no real
differences to prevent the holding of a peace conference.

When the time should prove appropriate for a peace treaty the
United States felt that control should be as simple as possible,
e.g. by a council of Ambassadors, combined with close control at
the ports over importation and stock piling of strategic raw
materials.

[matter omitted]