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Cablegate: Pm/Sna Ambassador Mcdonald's Meetings On Sma

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FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8141
INFO RUEHUL/AMEMBASSY SEOUL 5329
RUEHNH/AMCONSUL NAHA 5888
RUEHFK/AMCONSUL FUKUOKA 3475
RUEHKSO/AMCONSUL SAPPORO 4195
RUEHOK/AMCONSUL OSAKA KOBE 7133
RUHBANB/CG MCB CAMP BUTLER JA
RUEKJCS/CJCS WASHINGTON DC
RHMFISS/CMC WASHINGTON DC
RUENAAA/CNO WASHINGTON DC
RUEADWD/CSA WASHINGTON DC
RUEAHQA/CSAF WASHINGTON DC
RHHMUNA/HQ USPACOM HONOLULU HI
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUENAAA/SECNAV WASHINGTON DC
RHMFISS/USFJ
RUHEHMS/COMMARCORBASESPAC CAMP H M SMITH HI
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 004596

SIPDIS

SIPDIS

DOD FOR OSD/APSA SEDNEY/HILL/BASALLA; USFJ FOR
J00/J01/J1/J3/J4/J5

E.O. 12958: DECL: 09/27/2017
TAGS: MARR PREL JA
SUBJECT: PM/SNA AMBASSADOR MCDONALD'S MEETINGS ON SMA

REF: TOKYO 4286

Classified By: Ambassador J. Thomas Schieffer; Reasons: 1.4(b/d)

1. (C) Summary: During a September 25 visit by PM/SNA
Senior Advisor Ambassador Jackson McDonald, Ministry of
Foreign Affairs (MOFA) and Ministry of Defense (MOD)
officials rejected the U.S. proposal for a three-year
roll-over of the current Special Measures Agreement (SMA)
governing USD 1.1 billion in Japan's Host Nation Support
(HNS) for U.S. forces. MOFA North American Affairs
Director General Shinichi Nishimiya asserted that the
April 2006 ""Gentleman's Agreement"" reached between
then-Defense Minister Fukushiro Nukaga and Secretary
Rumsfeld is ""not only defunct, but never existed.""
Nishimiya and counterparts from MOD warned that if no
agreement is reached for a new SMA before the end of
November, when Japan will finalize its JFY 2008 budget,
funding under the SMA will cease on April 1, 2008. MOD
officials commented that Japan is prepared to cut HNS in
areas that fall outside of the SMA framework, including
benefits for Japanese base employees. Ambassador McDonald
cautioned that the suggestion of a unilateral cessation of
Japan's HNS payments would be badly received in Washington.
He urged Japan to agree to an extension of the current
agreement. End Summary.

2. (C) On September 25 PM/SNA Senior Advisor Ambassador
Jackson McDonald met with the Japanese Ministry of Foreign
Affairs (MOFA) and Ministry of Defense (MOD) to discuss the
Special Measures Agreement (SMA). Ambassador McDonald
called separately on MOFA's Director General for North
American Affairs Shinichi Nishimiya, MOD Director General
for Defense Policy Hironori Kanazawa, MOD Defense Councilor
Daikichi Monma, and MOD Local Cooperation Bureau Director
General Yoshiyuki Jibiki.

3. (C) Ambassador McDonald made clear that neither he nor
the County Team has yet received authority to negotiate.
That said, McDonald reiterated the U.S. Government position
that Japan should agree to a three-year extension of the
current SMA per the April 2006 commitment by then-Defense
Minister Nukaga to Secretary of Defense Rumsfeld.

4. (C) McDonald stated that Japan's September 12 proposal
(reftel) goes against the sprit of the alliance, especially
in light of the increased costs the U.S. has borne to
support the war on terror and to counter new security
challenges in East Asia. McDonald rejected Japan's request
for data comparing HNS contributions from other allies,
noting that each ally contributes in its own way.

Gentleman's Agreement
---------------------

5. (C) MOFA and MOD interlocutors explicitly disavowed the
Nukaga-Rumsfeld ""Gentleman's Agreement"" to rollover the
current SMA for three years. DG Nishimiya stated that this
commitment ""is not only defunct, it never existed."" DG
Kanazawa asserted that the U.S. understanding of the
Nukaga-Rumsfeld agreement is ""confused."" Kanazawa,
emphasizing that he was personally present for the
discussion, said that Nukaga's offer was made in his
personal capacity, not as a representative of the Japanese
government. Defense Councilor Monma separately stated that
he had recently confirmed with (current Finance Minister)
Nukaga that his pledge was in his capacity as a politician,
not a Minister of State. ""At the time, Nukaga only had
negotiating authority from the Prime Minister for
(realignment issues on) Guam, not SMA."" Ambassador
McDonald replied that it is difficult to believe that a
government can so easily disavow a pledge from one of its
ministers.

Time Running Out
----------------

6. (C) MOD DG Kanazawa urged the two sides to quickly move
beyond the current impasse over the nature of the
""Gentleman's Agreement"" in order to start negotiations on a
new SMA. Both he and MOFA's Nishimiya insisted that if
negotiations did not conclude by the end of November, money
cannot be programmed into the FY2008 budget to be approved
by the cabinet in December. Nishimiya added that ""this is
not a negotiating tactic, it is a fact."" While
acknowledging that time is short, MOD's Kanazawa expressed
confidence that the two sides could reach an agreement
before the clock runs out if negotiations were to begin
soon.

7. (C) Ambassador McDonald rejected Japan's timetable,
noting that no serious review of our HNS relationship could
be conducted within two months. He added that the U.S.
postponed formal negotiations until after Japan's July 29
Upper House election based on a request from the Japanese
government. McDonald warned that the suggestion that Japan
would simply cease funding USD 1.1 billion on April 1 if
negotiations do not conclude before December would provoke
a negative reaction in Washington.

Beyond SMA
----------

8. (C) Both MOD Local Cooperation Bureau DG Jibiki and
Defense Councilor Monma urged the U.S. government to
consider Japan's (informal) proposal to reduce fringe
benefits for Japanese base workers, including the 10
percent ""USFJ differential."" Ambassador McDonald pointed
out that labor benefits fall outside of the SMA framework,
but registered the U.S. position that we oppose pay cuts
for Japanese employees. Monma replied that the Ministry of
Finance (MOF) does not distinguish between SMA and non-SMA
HNS spending. Accepting reductions in fringe benefits, he
added, would reduce pressure to cut in areas like utilities
and construction that would require the U.S. Congress to
appropriate additional funding.

9. (U) Ambassador McDonald has cleared this message.
DONOVAN

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