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C O N F I D E N T I A L TOKYO 001959 
 
SIPDIS 
 
SIPDIS 
 
DEPT PLEASE PASS USTR FOR BEEMAN, CUTLER 
 
E.O. 12958: DECL: 04/10/2026 
TAGS: PREL ETRD ECON XR CH LA XK JA
SUBJECT: WHA A/S SHANNON'S APRIL 10 CONSULTATIONS WITH MOFA 
LATIN AFFAIRS DG SAKABA:  MORNING SESSION 
 
REF: A. DEPT PLEASE PASS USTR FOR BEEMAN 
 
     ¶B. CUTLER 
 
Classified By: Deputy Chief of Mission Joe Donovan.  Reasons: 1.4 (b)(d 
). 
 
¶1. (C) SUMMARY.  Japan's top priority in Latin America is to 
revitalize its economic relationship, MOFA Latin American 
Affairs DG Sakaba told WHA A/S Shannon April 10.  Sakaba said 
policy mistakes by Latin American governments over the past 
10-15 years have lead to widening income gaps, a broad 
disappointment with democracy and the left's resurgence. 
Japan now recognizes that its programs must reach out to the 
people, not just governments.  A/S Shannon described U.S. 
efforts to overcome a perception of U.S. disengagement in the 
region despite greater attention and doubled ODA.  A/S 
Shannon separately reviewed the U.S.-Venezuela relationship 
and concerns about the role of Chavez in the region.  Sakaba 
underscored the role of the international community in 
ensuring a fair election.  End summary. 
 
¶2. (SBU) MOFA Lain American and Caribbean Affairs Director 
General Mitsuo Sakaba welcomed Assistant Secretary Thomas A. 
Shannon and Executive Assistant John Creamer to Tokyo, noting 
that although this was the 25th round of U.S.-Japan 
consultations on Latin America, it was his first as MOFA's 
Latin America DG.  A/S Shannon responded that at a time when 
Latin America was undergoing dramatic change, the U.S. 
believes it is important to consult with partners in Asia and 
Europe, to enable them to work together to ensure that change 
in the region contributes to stability.  While acknowledging 
that Japan attaches lower priority to Latin America than does 
the U.S., Sakaba stressed that Japanese foreign policy does 
not neglect the region.  Prime Minister Koizumi had visited 
the region in 2004, and eight Latin American presidents had 
visited Japan in 2005.  Furthermore, Japanese ODA and 
investment in the region gives it some leverage.  Sakaba 
noted that he had proposed this round of consultations to 
gain a better under 
standing of U.S. policies and perspectives on the region. 
 
¶3. (SBU) Sakaba briefly reviewed Japan's historical 
engagement with Latin America, citing Japanese emigration to 
Latin America from the late 19th century and the expansion of 
economic ties in the 1950s and '60s, when it was easier for 
Japanese firms to do business in Latin America than in 
neighboring Asian countries as a result of "issues" left over 
from WWII.  Trade and investment flows dropped off sharply 
following Latin America's debt crisis in the 1980s and 
Japan's economic slowdown in the 1990s. 
 
¶4. (SBU) Japan's top priority with Latin America is to 
revitalize the economic relationship, Sakaba continued.  This 
had been the focus of PM Koizumi's visits to Mexico, Chile 
and Brazil, and it motivated Japan's conclusion of an 
 
"economic partnership agreement" (EPA) with Mexico, which 
entered into force in April 2005.  It is also behind the EPA 
it is negotiating with Chile, which Sakaba said he expects 
will be concluded by the end of 2006.  Japan also holds 
general consultations with Mercosur on business climate 
topics, most recently during the early April visit to 
Argentina of MOFA Deputy Minister Yabunaka. 
 
¶5. (C) Describing Latin America as a major source of energy 
resources and an export market for Japan, Sakaba admitted to 
a sense of economic rivalry with China for access to the 
region's energy resources.  He expressed frustration with 
Japanese business's "excessive caution," which he 
characterized as left over from the region's debt crisis. 
China's trade with the region overtook Japan's in 2003. 
 
¶6. (C) Turning to negative issues on Japan's agenda with 
Latin America, Sakaba first cited former Peruvian President 
Fujimori, whose decision to stay in Japan had complicated 
Japan's dialogue with Peru.  Second, he cited the rising 
numbers of "Nikkei" - descendent of Japanese emigrants - 
entering Japan since the GOJ eased visa regulations to make 
it easier for them to remain in Japan.  Not only were the 
numbers large - around 300,000 in the case of Brazil - they 
also tended to concentrate in a few large cities, compounding 
pressures on those communities.  Sakaba identified this as an 
issue in Japan's dialogues with Brazil and Peru.  Third, 
Sakaba cited remaining public and private debt owed to Japan 
by Argentina and Cuba. 
 
¶7. (SBU) A/S Shannon provided an overview of U.S. relations 
with the region, describing efforts to overcome the 
perception of U.S. disengagement from the region following 
the September 11 terrorist attacks and U.S. military 
operations in Afghanistan and Iraq.  He noted this perception 
had arisen even as the Bush Administration had doubled ODA to 
the region.  The President had also participated in the 
Summit of the Americas process, traveled to the region, and 
received numerous Latin American heads of state.  Shannon 
identified a main policy challenge as the need to help 
governments in the region build the capacity to address the 
popular expectations created by Latin America's democratic 
revolution.  Shannon looked forward to identifying ways in 
which the U.S. and Japan could coordinate and cooperate. 
 
¶8. (C) Turning to the political landscape in Latin America, 
Sakaba said there are many analyses of why the political left 
is resurgent.  He found the most compelling in a recent UNDP 
report on democracy in the Peru, which attributed rising 
dissatisfaction with democratic governance to governments' 
failure to meet people's expectations that democracy would 
bring concrete benefits to their lives.  The general public 
in Latin America seems to evaluate democracy not for its 
merits as a political philosophy but on its ability to 
deliver, Sakaba commented.  They are ready to accept 
 
authoritarian governments that deliver what democratic 
governance has not.  This is a dangerous trend, he added, and 
underscores the need for Japan to reach out not only to Latin 
American governments but also directly to Latin American 
peoples, for example through Japanese ODA projects. 
 
¶9. (C) Citing the widening gap between rich and poor in Latin 
America, Sakaba described this as the result of policy 
mistakes committed over the last 10 to 15 years, which also 
contributed to the sense of disappointment with democracy. 
This helped to explain how Peruvian presidential candidate 
Humala could do so well in his campaign despite having no 
political background and no policy agenda.  Sakaba separately 
flagged Japan's interest in deepening political engagement 
with Haiti, Colombia, and Guatemala, which he described as 
focused on peace building. 
 
¶10. (C) A/S Shannon agreed with Sakaba's analysis.  Latin 
American publics understand democracy first in terms of 
individual freedoms, second in terms of living standards, and 
not at all as a political philosophy.  The challenge is to 
build capacity not only at the state level but also at the 
individual level.  The clear implication for ODA strategy, 
Shannon continued, is to try to connect directly with people, 
an approach the U.S. is adopting after years of trying to 
work through Latin American governments. 
 
¶11. (C) Asked for his analysis of the apparent contradiction 
between the size of the U.S.-Venezuela economic relationship 
and the anti-U.S. thrust of Chavez' rhetoric, A/S Shannon 
described in detail how Chavez had undermined 
government-to-government relations, to the point that the 
historically close relationship had broken down in all but 
the economic sphere.  The energy relationship persists 
because it is private on the U.S. side and Venezuela has its 
own refining and distribution capacity in the U.S.  The USG 
would like to rebuild bilateral relations, but Chavez needs 
the U.S. as an enemy.  While trying not to let itself be 
provoked, the USG has real concerns with what Chavez is 
trying to do in the region.  Sakaba agreed that other leaders 
are increasingly fed up with Chavez' anti-U.S. rhetoric but 
he noted that some Latin electorates still applaud it.  He 
voiced concern over Venezuelan economic controls, tax policy, 
and moves to increase government shares in joint ventures. 
 
¶13. (C) At Sakaba's request, A/S Shannon offered his 
assessment of Venezuelan opposition parties and expectations 
for the election in December.  The old political parties had 
lost credibility and collapsed when Chavez first came to 
power, while the emerging opposition groups lack experience 
and organizational ability.  Shannon voiced concern that 
voting rates have fallen because people don't think their 
votes matter.  They are unlikely to return to the political 
process until an effective opposition leader emerges.  Sakaba 
responded that the role for the international community is to 
 
demonstrate its interest and ensure that votes are counted. 
Japan has supported and contributed to OAS election 
monitoring efforts and is in talks to continue doing so. 
 
¶14. (U) A/S Shannon cleared this message. 
SCHIEFFER