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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
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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