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Book Review: Altered States – The United States and Japan since the Occupation

Updated: Aug 22, 2023

Book Review: Altered States – The United States and Japan since the Occupation
Book Review of Altered States – The United States and Japan since the Occupation. Image © Oxford University Press


Author: Michael Schaller (1947-)

ISBN: 978-0195069167

Publisher: Oxford University Press

(US, September 25, 1997)

‘Obstructing the Japanese opposition’ was ‘the most important thing we could do.’

‘Continued U.S. military presence in Japan, Korea, and Southeast Asia was China’s best hope for Jap-restraint.’
Ultimately, it was in America’s interest to keep Japan and China concerned about the other.’
- Kissinger

We told them [China] that if you try to keep us from protecting the Japanese, we would let them go nuclear.’
‘Without the security treaty, America would ‘have no influence’ in Tokyo.’
- Nixon

Japanese Proxy Politics: Proxy Nationalism and Proxy Leftism of CAMP JAPAN

This Michael Schaller’s book ‘Altered States – The United States and Japan since the Occupation’ (1997) is the most important book on Japan’s proxy politics of today. Although no one mentioned in the past, Ukeru Magosaki’s 2012 book ‘The Truth of the Post-War Japan History’ (『戦後史の正体』) is ‘based on’ this book. Almost all focal points in Magosaki’s book can be found in Schaller’s work. Unfortunately, this is partially due to lack of publication of Japanese translation of ‘Altered States – The United States and Japan since the Occupation’.

After thoroughly read both books several times, readers should realize several critical points below:

1. The true cause of Kishi’s planned replacement with Ikeda was not Kishi’s ‘pro-independent’ tendency (Magosaki’s interpretation of Schaller’s text) but it is due to his unpopularity after Kishi’s undemocratic procedure on the revision of the security treaty caused the controversial Anpo Protests (mobocracy) during 1959 and 1960. Magosaki’s dichotomy of the past Japanese regimes is too simple that there were only either puppets or ‘pro-independence’ prime ministers. In fact, prime ministers of the 1950s to 1970s had sought genuinely independent diplomacy within the framework of proxy politics. From Shigeru Yoshida, Ichiro Hatoyama, Tanzan Ishibashi, Nobusuke Kishi, Hayato Ikeda, Eisaku Sato to Kakuei Tanaka, those respected prime ministers were more intelligent, diligent, truly independent political players than any official Japanese ‘leftists’ who claim to be ‘pro-independence’. Moreover, those prime ministers listed here were appointed and put in power by the U.S. establishment according to the disclosed documents cited in the book. Thus, it is very dangerous and inappropriate to politically label Yoshida, Kishi, Ikeda, Sato as U.S. puppets. Schaller sees them in a more holistic view and grand context without Japanese opposition bias (the author did not use any leftist term, such as ‘imperialism’) . Readers must put focus on how those prime ministers desperately tried to deal with the U.S. demands while protecting Japan’s own independent interests in the Cold War era. This is the core of this book.

2. Japan’s politics is still proxy state’s proxy politics which is essentially composed of both proxy nationalism and proxy opposition (proxy leftism). Although Magosaki and other ‘opposition’ opinion leaders treat CIA-funded ‘Marxist’ Socialists (日本社会党 / JSP, 1945-1996) as almost individual cases like ordinally corruption matters, the whole political mechanism of proxy opposition (proxy leftism) still is today’s dominant feature and phenomenon for oppositionists. Such as interchangeability (like Ichiro Ozawa is still floating around rights and lefts) and interdependency (the major economic base of ‘opposition’, RENGO is ‘inconsistently’ and ’notoriously’ supportive of LDP right-wing policies) of both camps and its aristocratic-elitist stars (marked with nepotism, opportunism, corporatism and gerontocracy). As the U.S. government mentioned in the text, the Japanese political establishment is designed to systematically neutralize extreme rights and radical lefts as militarist Japan and Communist Japan are equally undesirable for the U.S. geopolitical interests. As a result, homogeneity of the ruling parties and main opposition parties are inevitable. From this view point, it is not difficult to understand JCP’s contradicted nationalist attitude toward China and Russia because proxy opposition is dialectically just meant to be supplement of proxy nationalism.

3. Opposition failure of 2021 Japanese general election was undoubtedly aftermath of proxy politics. They were designated to lose the election at the most critical moment (popularity of Shinzo Abe’s henchman, Yoshihide Suga regime declined to 28% due to his disastrous COVID policy). Historically, the never-ending defeat of opposition originated in the grand context of CIA-fund for the Socialist (‘moderate’ sectarians within the party), DSP (the ‘anti-Communist’ social democrat sector of JSP formed 民社党, 1960-1994), LDP (LDP / 自由民主党 was originally designed to maintain the alliance, 1955-) and ‘moderate’ politicians in the establishment. Besides JCP (日本共産党, 1922-), present opposition parties like JSP (社会民主党, 1996-), The Japan Innovation Party (日本維新の会, 2015-), Reiwa Shinsengumi (れいわ新選組, 2019-), CDP (立憲民主党, 2020-), DPP (国民民主党, 2018-) and the predecessor of CDP and DPP ‘DPJ’ (民主党, 1998-2016) are all offspring of the Socialist, DSP and LDP. Thus, their direct economic base is simply seen as either Keidanren (The Japan Business Federation) or RENGO (The Japanese Trade Union Confederation; consists of 48 trade union ‘federations’) or in most cases both. In general, politicians and political parties are avatars of their economic base. In this case, LDP is Keidanren, both CDP and DPP mainly represent RENGO however the recent development more clearly revealed that simplification and the dualist approach to the proxy politics is fatally wrong. On January 21, 2022, RENGO political centre bureau sent their 48 trade secretariat members (6 out of 48 trade union federations of Keidanren companies are dominating political forces, such as The Federation of Electric Power Related Industry Worker's Unions of Japan / 電力総連; Japanese Electrical Electronic & Information Union / 電機連合; Confederation of Japan Automobile Workers' Unions / 自動車総連; Japan Federation of Basic Industry Worker's Union / 基幹労連; Japanese Association of Metal, Machinery, and Manufacturing workers / JAM; The Japanese Federation of Textile, Chemical, Food, Commercial, Service and General Workers' Unions / UAゼンセン, total 700 million members, only 1 % of the Japanese workers) a secret document ‘Basic Instruction for 2022 Japanese House of Councillors election (Appendix, revision, draft)’ 第26回参議院選挙の基本方針(補強・修正 素案)」. In the document, RENGO opposed united front between CDP and JCP Communists. Instead, RENGO promotes coalition of CDP and DPP in national elections. It indicates several things below:

a. Ex-Domei (Japanese Confederation of Labour; economic base of CIA’s DSP) confederations still control RENGO.

b. Civil alliance for peace and constitutional (市民連合) and its ideologue Jiro Yamaguchi (1958-)’s so called ‘policy treaty’ (seisaku-kyoutei / 政策協定) is totally empty and deceptive while it just only means RENGO’s electoral support and votes from JCP to let CDP win national elections. In short, Civil alliance for peace and constitutional (市民連合) as a political tactic, it means ‘共産党の票をもらいながら、選挙運動は連合の力を借りるという両面作戦’ (a two-tier operation that using RENGO’s power while getting JCP votes during elections). Therefore, opposition voters were totally deceived by ‘anti-Communist’ con-artists. The policy coalition between CDP and JCP did not exist.

c. There are already known CIA connections:

CIA-KEIDANREN-LDP-DSP(merged)-Domei(merged)-RENGO-CDP-DPP-Shiminrengou - JCP - C.R.A.C.

Jiro Yamaguchi- Shiminrengou- ND(新外交イニシアティブ) - HRW - SEALDs(defunct)-VOICE (Việt Tân)-NOYDA(defunct)-NED-USAID-The State Department

SASPL (defunct) - SEALDs (defunct) - ReDEMOS (defunct) - public4future (defunct) - Blue Japan (ブルージャパン(株)) - CDP - RENGO

Apparently, JCP is essential part of the entire proxy opposition to maintain the status quo. Unlike official narrative of today, the leading Marxist party of Japan was the Socialist JSP not JCP since 1950s to 1970s. In 1978, JSP became ‘moderate’ when the Socialist Association was politically castrated to fit corporatist policy of JCTU (merged) within the party. The Socialist was genuinely revolutionary in practice during the Mao era. It was interestingly synched with policy revision of CCP.

d. The secret document proved that Yukio Edano’s remark of November 12, 2021 on the ‘Opposition Coalition’ (Yatou-kyoutou / 野党共闘): 「限定的な閣外からの協力」(limited support outside of the cabinet) was reflection of RENGO’s policy behind the ‘policy treaty’ with other opposition parties. Before resignation of Edano, the newly elected RENGO president Tomoko Yoshino harshly criticized it with her anti-Communist stance on October 7, 2021: 「共産党との閣外協力はあり得ない」(even limited corporation with JCP outside of the cabinet is impossible).

e. Although it seems hopelessly irreversible or unimaginable under the present difficulties, total independence from RENGO and KEIDANREN is one of necessary conditions to change national elections and entire proxy politics for true oppositionists. Japanese opposition can never win as long as playing political games within the CIA-designated framework. When will they determine to end the vicious circle?

Electorate tactics ‘one candidate for one single-member district from the opposition coalition’ or ‘policy treaty’ itself is just purely a mechanical, mathematical and technical matter not the definitive condition for victories.

4. Leftists of the world still misunderstand China’s stance on the collapse of the Soviet Union. After Sino-Soviet split, the major national security threat had been the Soviet Union not the United States for China. Furthermore, the Nixon administration and CCP formed the anti-Soviet coalition in 1972. Thus, CCP was and still is happy with the elimination of nuclear threats from the Soviets in 1991. Schaller’s book perfectly explains this fact.

5. Historical events:

1945 The worst year of GNP

1956 GNP exceeded the 1940s

1965 Trade surplus with US

1989 Taxation ‘reform’ : introduction of rising consumption tax followed with reducing income and corporate tax

1991 The peak of Japan’s economic development

6. Magosaki’s another misinterpretation of this book is about the political nature of Zengakuren. Unlike NED-JCP-backed SEALDs or other imperialist-paid-opposition mascots (i.e. Joshua, Greta, Guaido), anti-JCP Zengakuren was genuinely an independent revolutionary student group of Japan. Only at the near end of the Anpo protests, Zengakuren got almost bankrupt, then CIA tried to infiltrate Zengakuren via right-wing Yakuza intermediaries. Hence, Zengakuren was not a CIA student group at all.

The United States and Japan: Q&A A Summary

1. The true reason of Japanese surrender to allied forces in 1945:

Atomic bombs? Chinese military victory?

In 1945, Yoshida joined those urging the emperor to negotiate an end to the war before a Soviet invasion or leftist revolution. Although this led to his arrest by the military police, it paid a handsome dividend when the Americans exempted him from the post war purge. (1)

2. The role of Zaibatsu, monopolistic capital, the economic base, driving forces of militarism of Japan:

George Kennan portrayed the attack on the zaibatsu as a ‘vicious’ scheme to destroy the major barrier to Soviet penetration in Asia.

The general MacArthur retorted that the de-concentration program (till 1949) targeted only fifty-six families and that his reforms would prevent a ‘bloodbath of revolutionary violence.’

To prevent left-wing influence or Soviet penetration, America should ‘crank-up’ the Japanese economy and bind Tokyo to the West through a defense pact. (2)

3. Japan’s designated role for America in the 1950s:

Through Japan, the United States could apply ‘tremendous influence over our relations with all of the Orient.’ In the future, Dodge told a congressional committee early in 1950, Japan could be ‘used as a springboard for America, and a country supplying the material goods required for American aid to the Far East.’

Prohibiting Japan’s trade with China before finding an alternative would do little to injure the Communists but would make Tokyo a ‘pensioner of the United States.’

Southeast Asian customers could pay with raw materials, offering Japan an alternative to Chinese supplies. This typified proposals from State, Defense, and Treasury for financing regional trade. (3)

4. Pentagon carved the entire post war Japan proxy system:

To prevent any changes in Japan that might inhibit ‘offensive operations against the Soviets in the event of war,’ military planners promoted a scheme to allow Tokyo greater home rule while leaving Occupational forces in place.

Unsolved questions about Soviet participation in a peace conference, rearmament, and whether to establish permanent American bases in Japan proved especially contentious. (4)

5. Neutralist argument and Shigeru Yoshida’s US colony theory of the post war Japan:

In April 1950, Yoshida attempted to break the deadlock. He told American diplomat Cloyce Huston that despite the public’s support for ‘naturalism,’ he recognized the value of American protection even if it meant providing bases in the home islands. Although rightists and leftists would accuse him of bowing to Washington, the prime minister ‘humorously’ recalled his patron’s humble origin. Just as a weak America eventually dominated Great Britain, he quipped, ‘If Japan becomes a colony of the United States, it will also eventually become the stronger.’ He offered to accept ‘whatever practical arrangement the United States might consider necessary’ to end the Occupation. (5)

6. The Nature of US embargo on the Communist China from 1949 to the 1950s:

In March 1949, President Truman approved a China trade policy reflecting Acheson’s view that a total embargo would hurt American allies and drive China closer to the Soviet Union, the opposite of what Washington desired. (6)

7. Japanese Conservatives’ Fear in the World Politics:

Communists? China? North Korea?

By April 1950, Yoshida recognized that the Truman administration, Congress, and the American military establishment saw matters differently. Although the prime minister and his fellow conservatives did not fear external Communist aggression, they worried a great deal about alienating their patron and losing the economic assistance only the United States could provide. (7)

8. US defends Taiwan even without any proxy regime on Formosa:

During May and June 1950, Dulles and Rusk floated a package deal by treaty opponents. They hinted that if Jiang Jieshi were deposed on Taiwan – perhaps an American-supported coup – the State Department might then agree to defend the island. This, along with increased military aid to Indochina, Rusk and Dulles speculated, might move Secretary of Defense Johnson and the Joint Chiefs to support a Japanese settlement. Boldly ‘drawing the line’ around China would reassure those engaged in an ‘active public discussion in Japan’ about ‘who will win in the Struggle of the Pacific.’ (8)

9. Neutralist Policy during the Cold War and beyond:

Neutrality would lead to a natural accommodation between Japan and China. In case of war, it would render impossible utilizing Japan as an ‘active ally’ in efforts to ‘end Russian domination of Manchuria and China’ and roll back Communist influence in Asia. The Defense position opposed any treaty until Japan fully rearmed’ or until the world situation radically changes, ‘two conditions unlikely to occur soon.’

In October 1950, presumably as a bargaining ploy, Yoshida revived the old idea of leasing military bases on the Bonin [Ogasawara] and Ryukyu Islands, rather than in Japan proper. Although the prime minister knew this was unacceptable, he may have raised the idea only to give in and then bargain for slower rearmament. (9)

10. The True Function of USFJ:

The two parties decided that Yoshida would ‘request’ the United States to maintain ‘land, air and sea forces in and about Japan’ for use anywhere in the Far East. These forces were not required to defend Japan, could be withdrawn at any time or used to suppress internal disturbances. Without setting specific targets, Japan pledged to assume ‘increasing responsibility for the defense of its homeland against direct and indirect aggression.’ (10)

11. ‘Separation of Politics and Economy’ Businessmen as a ‘fifth column for democracy’:

Dulles found the prime minister’s remarks about Japan’s ‘long-standing necessity’ for trade with China (‘war is war’ but ‘trade is trade’) along with his opinion that Japanese businessmen could serve as a ‘fifth column for democracy against the Communists’ especially vexing. (11)

12. Rearmament of Japan and Japanese forces in the Korean War:

During the Korean War, Japanese military personnel assisted American forces. Minesweepers of the Maritime Safety Force helped clear harbors along the Korean coast. The U.S. /UN command secretly employed Japanese shipping and railroad experts with past service on the Korean peninsula. Without them, Ambassador Murphy asserted, ‘allied forces would have had difficulty remaining in Korea.’

The Japanese public tolerated but had little enthusiasm for rearmament. (The Supreme Court refused to decide whether the NPR violated the constitution.) After visiting Japan at the end of 1951, Newsweek editor Harry Kern complained to Dulles that except for a ‘tiny minority,’ Japanese ‘feared the comeback of the military caste’ more than communism and regarded the NPR as ‘American mercenaries.’ (12)

13. US on Japan and the Communist China Trade Policy Relaxation after the Korean War:

In fact, with American consent, in July 1954 COCOM expanded the list of items approved for sale to the Soviet Union. Although this action did not eliminate the China differential, Eisenhower partially appeased Tokyo. In April 1954, he released Japan from the higher level of trade restrictions stipulated in the 1952 bilateral agreement. The State Department notified Tokyo that so long as it did so gradually and quietly, Japan could begin sales to China of most of the 400 items it alone was forbidden to export (1951). This left in place the China differential, but it at least applied the same standard to European and Japanese trade with China. (13)

14. Resurgence of Japan’s Military-Industrial-Complex and Formation of ‘Keidanren’ Crony Capitalism:

Following the San Francisco peace conference, business groups established councils to work with government agencies in planning for post Occupation economic cooperation with the United States. The councils advocated procurement contracts that encouraged broad economic growth, rather than production of military end items. The powerful Federation of Economic Organizations (Keidanren) urged SCAP to return confiscated munitions facilities to their former owners. During SCAP’s final days of authority, Ridgway responded by transferring to the Japanese government control of 1,000 confiscated munitions plants and permitting Japan to resume production of aircraft and weapons.

When the peace treaty came into effect, the Federation of Economic Organizations established an Economic Cooperation Council whose sub-committees dealt with general policy, Asian development, and defense production. A prominent industrialist led each group, with Kiyoshi Goko, head Mitsubishi Heavy Industries, in charge of the defense subcommittee. Big business worked closely with government organs, such as the Ministry of International Trade and Industry (MITI) and the Supreme Economic Cooperation Conference, to shape procurement policies.

The Diet assisted large enterprises engaged in military production by relaxing the de-concentration laws during the summer of 1952. (14)

15. Trade as Economic Warfare (the most successful regime change campaign) against the Communist China:

Many State Department planners concluded that Western governments should lower tariffs and accept more Japanese goods despite opposition from domestic producers. Even this would probably fall short of meeting Japan’s needs. Washington would have to take ‘extraordinary measures,’ such as special ‘system of Japanese trade controls…tailored to the economic relations between Japan and the Chinese mainland.’

A limited opening to China appeared the only way to ‘keep Japan completely on our side.’ Such trade might become ‘a lever to some utility in our efforts to bring changes within Communist China.’ (15)

16. British Government on the Post War US Policy toward Japan:

Although he sympathized with Washington’s desire to retain bases in Japan, MacDonald, like other British diplomats, criticized American actions in Japan as ‘classic examples of doing the wholly right thing in the completely wrong way.’ MacDonald hoped to tutor the Americans to act ‘more subtle’ with Asians. A colleague observed that there were only ‘two ways of dealing with the Japanese, either through friendship or hitting them with a big stick.’

Since the Americans possessed a big stick and were committed to Japanese recovery, Britain had no choice but to follow that lead if it hoped to ‘keep Japan out of the Communist camp.’ (16)

17. The Political Context of the Post War Japanese Politics - US on the political orientations of Japanese right-wings (LP) and leftists (the Socialists):

Yoshida and the Socialists formed a de facto bloc against constitutional revision and what it implied. The prime minister highly valued the ‘cover’ for limited rearmament provided by Article 9. The security treaty, whatever its dignities, offered protection at bargain rates. The Socialists, for their part, opposed even limited rearmament and feared that constitutional change would revive militarism and domestic oppression. Yoshida’s Liberal Party supporters and the Socialists tacitly agreed to blunt the revisionist agenda.

These divisions presented American policymakers with a dilemma. Yoshida’s stalling often frustrated Washington, but he was far preferable to the Socialists and their vision of neutrality. Some aspects of the revisionist agenda, including constitutional change and rearmament, appeared to Dulles and other senior members of the Eisenhower administration. At the same time, Americans reacted warily to the revisionists’ call for an independent military and normal relations with Moscow and Beijing. As a result, the Eisenhower administration hesitated to encourage Yoshida’s conservative critics. They urged instead, organization of a single conservative party committed to the alliance with America, favoring rearmament, and implacably opposed to the Socialists. (18)

18. The true Political Aspect of the Lucky Dragon #5 Incident (a.k.a. the Bikini incident):

The U.S. Atomic Energy Commission (AEC) was so concerned with maintaining secrecy about the hydrogen bomb’s technical characteristics that its behaviour transformed a human tragedy into a crisis in the Pacific alliance.

Although AEC chairman Louise Strauss assured Eisenhower that his agency could handle any problem, it made a bad situation worse. Strauss initially believed the Lucky Dragon ‘was a Red spy outfit,’ commanded by a Soviet agent who intentionally exposed his crew and catch of fish to radiation to embarrass the United States and ferret out nuclear secrets. Furious at this alleged setup by ‘Russian espionage,’ Strauss opposed revealing data to Japanese medical personnel on the chemical composition of the radioactive ash since it might disclose details of the bomb’s construction.

Secretary of State Dulles issued a bland statement of regret and instructed Ambassador Allison to press the Japanese government to place the Lucky Dragon under de facto control of the U.S. Navy. The AEC dispatched two medical scientists to Japan, with their primary intent to limit public disclosure and monitor the effects of radiation poisoning, not to treat the ailing crewmen. (18)

19. ‘Switching Channel’, the Regime Change Attempt on Yoshida and LDP as the US-designed Japanese Conservative Coalition:

Allison and Dulles objected less to the money Yoshida demanded than to his inability to control the bureaucracy or public opinion. By October 1954, they guessed he would soon be out of office and decided to delay a settlement until a successor was chosen. When Foreign Minister Okazaki came to Washington in October to discuss Yoshida’s impending visit, and warned that payment of less than $2 million might ‘end the Yoshida government, his threat carried no weight. Dulles put him off by saying that Congress must approve a large settlement and this risked ‘bad reactions’ among the public. On December 29, shortly after Yoshida’s resignation, Dulles approved a $2 million in compensation (paid form MSA funds) to settle claims arising from the Lucky Dragon affaire. The new prime minister, Hatoyama Ichiro, and foreign minister, Shigemitsu Mamoru, portrayed it as evidence of Washington’s support for their leadership. Eisenhower and Dulles welcomed resolution of the dispute as an inexpensive way to curtail anti-nuclear and anti-alliance sentiment within Japan.

Yoshida’s failure to win additional economic or political support in Washington sealed his political fate. By the end of November his support within the Liberal Party disappeared. The three top contenders to succeed him – Kishi Nobusuke, Hatoyama Ichiro, and Shigemitsu Mamoru – were all former purgees. Kishi, wartime head of the munitions ministry, had spent three years in Sugamo Prison under investigation for war crimes. Nevertheless, Ambassador Allison threw his support behind Kishi who, as we will see, became American favorite after his release from prison. Kishi advocated merging the main conservative groups into a unified party (achieved in 1955) and inspired confidence by telling embassy staff that ‘for the next twenty-five years it would be in Japan’s best interests to cooperate closely with the United States.’

Yoshida received a no-confidence vote in the Diet on December 6, 1954, and resigned the following day. The conservative coalition disappointed Washington by selecting Hatoyama, rather than Kishi, as prime minister. Although Hatoyama’s past support for rearmament had pleased Washington, his interest in forging closer ties with the Soviet Union and China spelled trouble. (19)

20. Trade Liberalization with Soviet bloc after 1953, the Methodological Concept of Manufacturing Revolt & US ‘Wedge Strategy’ to fracture the Sino-Soviet Alliance (IMPORTANT):

The Eisenhower administration considered trade a critical component of the ‘wedge strategy’ designed to fracture the Sino-Soviet alliance.

The wedge, however had both ‘hard’ and ‘soft’ components. Officials such as Secretary of State John Foster Dulles, Assistant Secretary of State Walter Robertson, Treasury Secretary George Humphrey, Joint Chiefs of Staff Chairman Admiral Arthur Radford, and Joseph Dodge (who now chaired the Council on Foreign Economic Policy) held that stringent export controls would make China completely reliant on a Soviet patron unable to meet its economic needs. Forced to its knees – and senses – China would break with the Soviet Union and return to the Western fold.

Proponents of a ‘soft’ wedge, most notably President Dwight D. Eisenhower, considered it ‘hopeless to imagine that we could break China away from the Soviets and from Communism short of some great cataclysm.’ Flexibility, not hostility, he believed, held out a better chance to induce Beijing to cast off the Soviet embrace.

‘History,’ the president remarked in 1954, indicated that ‘revolutions rarely arose in societies that were completely ground down by poverty and hunger.’ But when ‘they got a taste of better things of life [the issue at hand involved the sale of surplus butter!] their discontent with their lot flamed into revolt.’

Eisenhower also stressed the need to accommodate allies such as Great Britain and Japan. If ‘all trade between the free world and the Soviet bloc is completely cut off,’ he wondered ‘how much will the United States then do to help those free world countries which depend on trade, such as Japan?’ Was the United States prepared to subsidize Tokyo or to risk its economic collapse?

A total embargo on China ‘simply slammed the door in Japan’s face.’ (20)

21. Sino-Japanese Trade Relaxation (1952-1958) in the midst of the Cold War Rhetoric and ‘Free from China Differential’ Independent China Policy sought by Japan:

Between 1952 and 1958, Japan concluded four ‘private sector’ commercial agreements with China using intellectuals, business organizations, labour unions, and Diet members as negotiators. Private groups such as the China-Japan Trade Promotion Association, Dietman’s League for the Promotion of Japan-China Trade, Japan-China Friendship Association, Japan Association for the Promotion of International Trade, and the Japan-China Importers and Exporters Association arranged trade, tourism, and cultural exchange.

Ironically, the fruits of Japan’s trade victory slipped away at the very moment Washington removed its political impediments. In 1956, Sino-Japanese trade reached $151 million. Even the staunchly anti-Communist Kishi, who became prime minister early in 1957, hoped to expand commerce with Beijing. He informed American visitors that although they could ‘not fully understand,’ trade with China had an importance to Japan that beyond its dollar value. At the same time, he reassured Washington that Japan would not unilaterally establish diplomatic ties with the PRC.

Kishi’s continued effort to separate trade and politics played poorly in Beijing. After a brief period of domestic liberalization, Mao Zedong pushed the Chinese Communist Party in more radical directions. During 1957-58, so-called rightists were purged from party ranks and Mao initiated a shock program called the ‘Great Leap Forward’ to speed agricultural and industrial production. Kishi also provoked Chinese ire during a May 1957 tour of Southeast Asia and Taiwan. Standing beside Jiang Jieshi, Kishi endorsed the Nationalist’s plan for ‘recovery of freedom on the mainland.’


During trade talks in Beijing in the fall of 1957 and spring of 1958, Japanese negotiators followed government guidelines as de facto official representatives. They were willing to allow a small Chinese trade delegation to reside in Tokyo but not a large group enjoying quasi-diplomatic status. The Chinese also demanded the right to fly their national flag in Japan, exemption from the requirement that foreigners submit to fingerprinting, and official endorsement of the trade pact. Japanese negotiators exceeded their instructions by incorporating these terms into the agreement signed on March 5, 1958, an action strongly criticized by Washington and the Chinese Nationalist government.

Buffered by protests from the United States, Taiwan, and many fellow conservatives, Kishi declined to endorse the pact or permit the official display of the PRC flag by Chinese representatives. China responded by refusing to implement the trade agreement until Japan observed all its provisions. It denounced Kishi for trying to recreate the Co-Prosperity Sphere by relying on U.S. military power. Tension peaked on May 2 when a Japanese rightist tore down a Chinese flag displayed at a Nagasaki trade exhibition. Beijing used Kishi’s refusal to prosecute the culprit as a pretext to suspend virtually all trade and cultural exchanges with Japan.

China may have intended the suspension of trade, fishing privileges in its coastal waters, and cultural exchanges to either force Kishi to back down or damage conservative chances in the Diet election at the end of May. If so, the tactic failed, and the conservatives retained a large margin in the Diet. After this setback, Beijing demanded that Tokyo reject efforts to create ‘two Chinas.’ A few months later, China began shelling Nationalist-held islands off the southern coast, precipitating the second Taiwan Strait crisis.

Despite the enthusiasm among Japanese business and political leaders for trade with China, they had no intention of endangering their primary economic and political relationships with the United States.

Sino-Japanese contacts lay dormant until 1960. (21)

22. US planned to nuke Vietnamese Communists in 1954:

By April, as the Vietminh tightened their grip around Dien Bien Phu, Eisenhower and Dulles tried to rally Congress and the NATO allies behind intervention in Vietnam. Dulles spoke cryptically of ‘united action’ to protect Southeast Asia. The president also perceived significant stakes in the region but hesitated to commit ground forces to another Korea-style war. In contrast, Admiral Arthur Radford, chairman of the Joint Chiefs and the most bellicose of Eisenhower’s top advisers, proposed conventional or even atomic air strikes against the Vietminh.

Eisenhower and Dulles opposed intervention solely to save Dien Bien Phu or salvage ‘French prestige.’ (22)

23. Ikeda Hayato’s Independent Policy on US and China:

Conservative politicians in Japan, such as Liberal Party Secretary general Ikeda Hayato, called attention to events in Indochina. On August 10, 1954, he reportedly told party leaders that the American ‘roll-back policy’ in Indochina had failed and that China had seized the initiative in Asia. Consequently, Japan should reduce its dependence on the United States and adopt a more flexible ‘foreign and economic policy.’ Ikeda suggested ‘drastic revision’ of current trade practices – code for expanding sales to China. (23)

24. Neutralism - America’s ‘Great Pacific Nightmare’:

Unless the United States bolstered the fledging Diem regime in Vietnam and promoted Japan’s penetration of Southeast Asia, neutralism would sweep Japan and force the closure of American bases. This would usher in the ‘great Pacific nightmare’ : ‘Japan’s industrial potential…automatically…available to Communist China.’ Asia, Alsop concluded, was a ‘seamless web’ that, ‘if torn anywhere,’ would ‘unravel everywhere. And it is tearing now.’ (24)

25. Nobusuke Kishi, Douglas MacArthur II and Synthesis of the Greater East Asia Co-Prosperity Sphere (1957):

The new ambassador in Tokyo, Douglas MacArthur II, encouraged speculation that Washington would cooperate with Japan on regional development. Talking with Kishi’s ally, Kono Ichiro, MacArthur stressed that while Japan’s immediate prospects in Southeast Asia were limited, it was ‘necessary to get started without delay in developing the resources…so that in time, when they will be even more needed by Japan, Southeast Asia will be a valuable market and source of raw materials.’

Nothing, the ambassador stressed, was ‘wrong with the principle and the overall objective of the Greater East Asia Co-Prosperity Sphere, just as there was nothing wrong with the idea of European unification.’

Washington only opposed ‘the methods which Hitler and the Japanese militarists employed.’

Kishi followed up on these ideas in a meeting he held with MacArthur in April. The prime minister noted that European and American resistance to Japanese exports left Tokyo with only two alternative outlets, China and Southeast Asia. Although Japan preferred to steer its trade toward Southeast Asia, the region lacked the capital and technical expertise to develop its vast resources, while its consumers remained too poor to purchase many manufactured goods. In an early version of what he later called the ‘Kishi Plan,’ the prime minister proposed that Japan supply the ‘know-how’ and the United States the money ‘so that Japan’s technological and industrial capabilities may be fully utilized to accelerate the economic development of Southeast Asia.’ (25)

26. Background of Japanese Economic Miracle of the Post War Era (1950s to 1960s) : US Military Procurement, the Korean War, the Vietnam War and GATT:

…Half of the thirty-three GATT members, including the European and British Commonwealth states, invoked escape clauses and imposed high tariffs against Japanese textiles and manufactured goods until the early 1960s. This left the United States as the one industrial nation willing to absorb higher levels of Japanese exports.

While the Japanese feared a steep decline in military procurement after the Korean armistice, purchases continued at a high level. Between 1952 and 1962, it totalled some $6 billion, averaging over $500 million per year. Procurement earnings did not drop below $400 million until 1962, only to increase with the escalation of the war in Vietnam. In addition to procurement and aid funds, about $1 billion in private American capital flowed into Japan during the 1950s. These sources provided enough dollars to balance Tokyo’s trade deficit with America and permit Japan to purchase goods and make investments of about $1 billion in third world countries.

To the relief of many – and to the distress of others – trade between Japan and the United States surged after 1955. That year Japan exported goods with worth $449 million to the United States. By 1960, helped by tariff reductions from entry into GATT, exports more than doubled, to almost $1.1. billion. Japanese imports of American goods and raw materials increased from $772 million to $1.54 billion. This trade expansion contributed to Japan’s accelerating growth, with its GNP rising at least 12 percent in 1958, 1959, and 1960. (26)

27. ‘WAR ON TEXTILES’ US-Japanese Trade War of the 1950s, 1960s and 1970s:

Japanese exports of cotton textiles, women’s blouses, pottery, and consumer electronics, including transistor radios, made especially dramatic gains. During 1955 alone, for example, Japan’s share of the so-called dollar blouse market in the United States rose from 3 percent to 28 percent.

Although imports from Japan amounted to less than 2 percent of the total American textile market, domestic textile and apparel manufactures demanded protection, charging that Japan’s low wage rates (averaging 29 cents per hour, as compared to $2.29 for American textile workers), access to subsidized surplus American cotton (sold to foreign mills for up to 25 percent less than domestic prices), and predatory export promotion schemes represented a form of unfair trade.

Textile World, a trade journal, complained that the Eisenhower administration compensated for the loss of China to Communism by ‘giving part of the United States textile market to Japan to oil the hinge’ of the containment barrier around China. It charged that policymakers in Washington treated domestic manufactures like a ‘sacrificial goat.’

Senator Johnson of South Carolina predicted that textile workers would recall the day GATT’s reduced tariffs on Japanese goods came into effect as a disaster as great as the attack on Pearl Harbor. (27)

28. Conditions of a stable Alliance between US and Japan :

From the mid-1950s on, economic planners in Washington recognized that a stable alliance with Japan depended on sustained economic growth.

This, in turn, required access to Southeast Asian and American markets. Protectionism in the United States or Communist expansion in Southeast Asia might drive a wedge between the allies and push Japan toward China. At the same time, Japan’s search for wider trade options, along with rekindled Nationalist sentiment, encouraged movement away from the American orbit.

Efforts by Yoshida’s three immediate successors from 1955 to 1960 to expand trade with China, make peace with the Soviet Union, and revise the security pact increased these tensions. (28)

29. ‘Legal Ground’ for the Kuriles Dispute and a Wedge between Japan and Russia:

Washington insisted that the 1951 peace treaty with Japan suspended the Yalta accords of 1945. (At San Francisco, Yoshida argued that the four disputed islands were not part of the Kuriles and should be returned to Japan. However, during Diet discussion of the peace treaty in 1951, Japanese officials conceded that two of the disputed islands, Etorofu and Kunashiri, were part of the Kuriles.)

By refusing to sign the San Francisco peace treaty, American legal experts contended, the Soviets had forfeited their claim to all the Kurils.

By questioning Moscow’s claim to the Kuriles, as well as to the northern territories, Washington hoped to stir discord between Japan and the Soviet Union.

In fact, as early as 1947, George Kennan and members of his Policy Planning Staff had discussed the advantages of provoking a territorial dispute.

With luck, they remarked, conflict over the northern territories might embitter Soviet-Japanese relations for years. A half century later, the issue still divided Russia and Japan.

If Japanese-Soviet rapprochement further diminished Tokyo’s willingness to shoulder military burdens, it would constitute ‘a grave loss of advantage to the United States.’(29)

30. Formation of Japanese Domestic Politics and Proxy Leftists :

In fact, Japanese domestic politics proved less malleable than Dulles anticipated. In October 1955, the left and right Socialist factions merged (they split again in 1959). Adopting a more nationalistic stance than many conservatives, the Japan Socialist Party (JSP) demanded Soviet return of all disputed islands, including the Kuriles and southern Sakhalin.

In November, the main conservative groups merged to form the Liberal Democratic Party (LDP), a move celebrated by American diplomats. The party destined to govern Japan for nearly four decades was less a cohesive political organization than an amalgam of interest groups and personalities unified by opposition to the Socialists, financed by big business, and committed to the alliance with the United States. Party barons riven by personal feuds and loyalties divided along multiple fault lines on the questions of constitutional revision, the Soviet treaty, China policy, and revising the security treaty.

At any given time after 1955, the party leadership consisted of eight or more fractions, each linked to an individual and his followers in the Diet. Liberal Democratic rules specified that every two years LDP Diet members and a small number of party officials from the prefectures were to elect a party president. Given LDP control of parliament, he became prime minister.

Japanese voters had no direct input into the process; individual LDP Diet members had only slightly more influence. In theory, each Diet member cast a single, secret ballot. In practice, faction leaders bargained among themselves to select a party president and generally controlled the votes of their members.

As part of the process, the party leader / prime minister (Hatoyama was chosen as the first LDP president in 1956) appointed a cabinet of faction leaders or their designees. This limited a prime minister’s authority and led most to avoid contentious issues.

Both by default and by tradition, the permanent bureaucracy exercised a large measure of control over domestic and foreign policies, further insulating the government from voter input. The Japanese citizen, one scholar remarked, viewed political parties as ‘the bauble of the Dietman, not an integral party of the democratic system in which he must participate fully.’ (30)

31. Japan and Russia have not been in status of war since October 19, 1956:

The Soviets offered to return the Habomais and Shikotan – and nothing else – but only if Japan agreed to a comprehensive peace treaty. Since Hatoyama could not accept Moscow’s terms, the two sides settled for a minimal agreement. In a joint declaration issued on October 19, 1956 the Soviet Union and Japan announced an interim settlement terminating their status of war, exchanging ambassadors, returning POWs, restoring fishing rights, and endorsing Japan’s admission to the United Nations.

The United States scarcely commented on the agreement other than to note its disappointment at Moscow’s rejection of Japan’s ‘just claim to sovereignty over Etorofu and Kunashiri, the two southernmost Kurile islands.’

(This after Dulles had denied they were part of the Kuriles!)

In fact, the Eisenhower administration must have heaved a collective sigh of relief at having contained Japan’s reproachment with the Soviet Union. Dulles had blocked Hatoyama’s attempt to forge a more independent foreign policy and preserved the security treaty. (31)

32. ‘Government Officials Sabotaging the Cabinet’ US Agent Kishi and a Regime Change Op against Prime Minister Tanzan Ishibashi:

Ishibashi’s victory sent shivers through diplomatic circles. For example, Howard Parsons, the director of the State Department’s Office of Northeast Asian Affairs, told a British diplomat that the Americans ‘had put their money on Kishi’ and were shaken when the wrong horse won. They hoped that by serving as foreign minister Kishi would ‘put some brake on Ishibashi.’ ‘If we are lucky,’ Parsons added, ‘Ishibashi may not last too long.’


Concern over events in Tokyo prompted the NSC’s Operations Coordination Board to expand efforts to influence Japanese opinion by placing ‘favourable news and features in the Japanese press, periodicals, radio, and television’ that stressed the importance of close ties with the United States. However, Parsons’s hope that the new prime minister ‘may not last too long’ proved prescient. Less than two months after he took office, Ishibashi’s declining health forced his resignation.

In February 1957, LDP Diet members voted, to Washington’s relief, to select Kishi Nobusuke as prime minister. (32)

33. The most troublesome Thing for Japan:

As Kishi observed, the ‘most troublesome thing in Japan in connection to the Security Treaty was the fear that Japan could be gotten into a state of war involuntarily’ through action taken by U.S. forces in Japan. (33)

34. Establishment of CIA ‘Secret Fund’ for LDP and Leftists:

After his visit, Kishi and his brother, Finance Minister Sato Eisaku, opened a dialogue with American officials regarding LDP finances. In July 1958, for example, Sato met secretly with Stan Carpenter, first secretary of the embassy, to plead for campaign funds. Complaining that the Communists and Socialists had access to ‘substantial’ sums of money from China and Soviet Union, Sato tried, as MacArthur phrased it, ‘to put the bite on us.’

Sato told Carpenter that the LDP had established a ‘secret organization’ of ‘top business and financial leaders in Japan’ to fund election campaigns. Unfortunately, these sources were temporarily tapped out, even though the LDP faced elections for the Diet upper house.

Pleading poverty and warning of a leftist victory, Sato asked ‘if it would not be possible for the United States to supply financial funds to aid the Conservative forces in this constant struggle against Communism.’

As cover, a Japanese middleman could handle the payments.


While unstated, MacArthur lobbied for providing covert campaign funds as well.

Eisenhower authorized the CIA to initiate a covert program in Japan. As Alfred C. Ulmer, Jr., a CIA officer who controlled many operations in Japan from 1955 to 1958 put it, ‘we financed’ the LDP. The CIA ‘depended on the LDP for information’ and used secret payments to recruit allies within the party.

Campaign funds were channelled through a select group of LDP leaders to Diet candidates considered especially friendly to the United States. Additional money was spent acquiring political intelligence that could be used against the Socialists.

Some Socialist Diet candidates, judged relative moderates, received funds to improve their position within the party.

As one CIA participant recalled, acquiring ‘assets’ within the JSP as well as ‘obstructing the Japanese opposition’was ‘the most important thing we could do.’

Although the payments were modest in comparison to the larger scope of Japanese-American financial ties, they helped buttress Kishi’s fortunes in the Diet lower house election of 1958 and the upper house contest of 1959.

Payments to LDP and Socialist politicians continued for at least a decade. (34)

35. Pentagon on ‘US base’ Japan:

MacArthur’s concern about the military proved on target. John Steeves, the political adviser to the commander in chief of the Pacific area, alerted State Department officials that defense planners envisioned a new treaty with Japan that he considered ‘unrealistic beyond description.’

They spoke of expanding privileges ‘far beyond what we now enjoy under the Security treaty and the Administrative agreement.’ Even moderate elements hoped to retain a free hand to deploy troops from Japan and maintain nuclear weapons in the country.

They even suggested making a new treaty conditional on Japan’s amending its constitution’s no war clause. (35)

36. Socialists, Russia and China on ‘War risk’ USFJ (the revision of the 1951 pact):

Although the new treaty eliminated many of the ‘unequal’ provisions of the 1951 pact, it did little to placate Socialist opponents. They considered foreign forces in Japan a violation of the constitution and a threat to security.

The mere presence of American troops and equipment, critics charged, increased the chance of conflict with China and the Soviet Union and the danger Japan might be dragged into an unwanted and disastrous war.

Soviet and Chinese reactions to the treaty confirmed this fear. Three days after Kishi’s return from Washington, Soviet Foreign Minister Andrei Gromyko warned Japan’s ambassador to Moscow that ‘in conditions of a modern rocket-nuclear war all Japan with her small and thickly populated territory, dotted…with foreign war bases, risks sharing the tragic fate of Hiroshima and Nagasaki in the very first minutes of hostilities.’ Condemning the pact as a provocation against the Soviet and Chinese peoples, the Kremlin withdrew its standing offer to return the Habomai and Shikotan Islands once Japan and the Soviet Union signed a peace treaty. The Soviets then fired an ICBN test missile directly over Japan en route to its Pacific touchdown. China stepped up its verbal attack on the ‘Kishi clique of war criminals’ who risked involving Japan in an imperialist war on America’s behalf.


In fact, the treaty was not a partisan issue and the Senate practically ignored it. In January 1960, Assistant Secretary of State J. Graham Parsons briefed J. William Fulbright, Chair of the Senate Foreign Relations Committee, and described the pact as the ‘culmination of a historical process’ that began with Japan’s surrender. Parsons confided to Fulbright that a secret deal with Tokyo permitted U.S. forces in Japan to ‘react instantaneously without consultation’ in case of renewed Communist attack in Korea. He may have mentioned the secret agreement on the ‘transit’ of nuclear weapons. Fulbright ‘expressed no objections.’ His colleagues only cared about avoiding another ‘Girard case.’ (36)

37. ‘Bitter Divisions’ CIA’s DSP and the Origin of Today’s Proxy Opposition Camp:

Bitter divisions among the Socialists strengthened Kishi’s hand. The merger of right and left Socialist parties in 1955 produced a shaky marriage. The left-wing, linked to the Sohyo labor federation, cooperated uneasily with right-wing Socialists whose power base lay within the more moderate Zenro labor federation. For a time, the hope of winning a Diet majority obscured their doctrinal differences. But setbacks in the lower and upper house elections of 1958 and 1959 strained Socialist unity. The fissure widened during 1959 when Zenro refused to join the People’s Council opposed to treaty revision and Sohyo accused the more moderate labor federation of trying to steal union members. In December 1959, right-wing Socialist leader Nishio Suehiro bolted the Japan Socialist Party (JSP) and soon organized the Democratic Socialist Party (DSP) with 37 seats in the Diet lower house and 16 in the upper, compared to the JSP’s 128 and 69.

The JSP and Sohyo adhered to a Marxist ideology of class struggle while the DSP and Zenro advocated the type of bread-and-butter labor activism against the security treaty. The DSP favored gradual, negotiated loosening of the security relationship with Washington. Since 1958, the United States and the LDP had encouraged the Socialist split by providing secret financial support to Nishio and to the Zenro labor federation.

Kishi and Ikeda supplied funds to and maintained contacts with key DSP members in expectation that some might support treaty revision or at least not disrupt efforts at Diet ratification. (37)

38. The U-2 Incident and Japan’s Role on Intelligence Gathering against Russia and China:

The U-2 incident galvanized the treaty debate in Japan by arousing near panic about the consequences of retaining American air and naval bases on Japanese soil. As most Japanese quickly learned, the United States flew U-2 aircraft out of Atsugi airfield near Tokyo. (In September 1959, engine trouble forced one of the distinctive ‘black jets’ to make an emergency landing at a civilian airport. Although U.S. military personnel sealed off the site, a Japanese journalist reported the episode, and some questions were raised in the Diet and press.)

In the wake of the May 1 shootdown, China charged that U-2s from Japan routinely violated its airspace. Khrushchev threatened a ‘shattering blow’ with nuclear-tipped rockets against any country from which American aircraft intruded into Soviet airspace. (38)

39. A Regime Change Op on Prime Minister Kishi:

In Tokyo, anxious American diplomats and intelligence officers pressed conservative politicians to arrange an orderly succession to Kishi and not jeopardize Japan’s Western orientation.

Treaty opponents demanded Kishi’s resignation, recission of the Diet vote for the treaty, cancellation of Eisenhower’s visit, and new elections. Some Liberal Democrats opposed to Kishi tacitly encouraged radical treaty foes in a bid to force the prime minister’s resignation. But the massive protests in Tokyo mounted by treaty opponents began to worry them. (39)

40. CIA Fund handled by Keidanren:

Alarmed by the intensity of the opposition, and eager to secure tangible signs of American support, Kishi’s close ally, LDP Secretary General Kawashima, appeared to MacArthur for renewed infusions of cash. At a meeting, on May 23, Kawashima portrayed the treaty debate in Japan as a struggle for supremacy between ‘supporters of the U.S.S.R. and supporters of the United States.’ The Soviets and Chinese Communists, he alleged, were ‘working with all their might’ and ‘pouring in a great deal of money’ to defeat both Kishi and the treaty. The Kishi faction ‘needed money to wage the ideological and political struggle’ required to secure the treaty. American funds, secretly channeled through private business groups, would be used to ‘establish a student group to fight Zengakuren’ and to wage a publicity campaign in favor of the security pact that most major newspapers opposed.

MacArthur responded cautiously to this appeal, telling Kawashima ‘He did not see any possibility of providing such funds, although he would keep the problem in mind.’ Interpreting this as a coded call for more details, Kawashima suggested that Washington mask payment as ‘profits on commercial transactions’ channeled to the Federation of Economic Organization, or Keidanren. MacArthur then suggested that Kawashima call on Keidanren Vice President Uemura who coordinated business contributions to the LDP.

He did so that same day and a few weeks later the CIA began funding a political campaign along the lines proposed by Kawashima. (40)

41. CIA-US Ambassador mobilized Japanese Police, Yakuza, Students, Rightwing Organizations, LDP, Self-Defense Force and replaced Kishi with his Successor:

The tension among the president’s staff surfaced during an NSC meeting on June 8, shortly before Eisenhower was scheduled to depart for East Asia. CIA director Allen Dulles reported that out of pique over the president’s intended visit to Taiwan, the Chinese Communists had increased their shelling of Nationalist-held offshore islands and claimed numerous American violations of Chinese airspace and territorial waters. In Japan, Dulles predicted, the best to be hoped for was automatic ratification of the treaty on June 19, followed by Kishi’s resignation and replacement by an elder statesman, possibly Yoshida.

In a last attempt to persuade Eisenhower to come to Tokyo, MacArthur detailed the extraordinary security measures Kishi was prepared to implement. In addition to 25,000 policemen assigned to protect the president, the government would deploy ‘welcoming groups, consisting of numerous civic organizations, business groups, Boy and Girl Scouts, and friendly elements along the route.’ ‘Auxiliary forces’ composed of 30,000 young men of various athletic organizations’ strongly opposed to Zengakuren students ‘would assist the police.’ Two-thousand troops from the Self-Defense Force would also be placed on standby duty.

The athletic ‘auxiliary forces’ were, in fact, Kodama’s recruits from numerous right-wing groups, including the New Japan Council, the All-Japan Council of Patriotic Organizations, the Japan Veterans League, and religious sects. Kodama also tapped several thousand street vendors and members of crime syndicates to staff his private security force. Referring to the gangsters by their Japanese name, one wag claimed Kodama had organized ‘Yakuza for Ike.’

Even while touting these security measures, MacArthur began to prepare a postmortem on Kishi. Leftist agitation, Liberal Democratic factionalism, and the prime minister’s own failure of leadership, he reported to Washington, had made Kishi ‘the focal point of blame for everything that is wrong in Japan.’ Acknowledging that Kishi could not continue as prime minister, MacArthur had already suggested to members of Kishi’s cabinet that he announce his retirement ‘after treaty ratification’ both by Japan and the U.S. Senate, about a week hence.


The ambassador devoted increased attention toward selection of Kishi’s successor. Since Yoshida controlled enough LDP votes to play the role of kingmaker, Kishi and other faction leaders were courting him. The former prime minister had just returned to Tokyo from the United States and Europe and MacArthur joined LDP leaders lined up at his door. When they conferred on June 20, Yoshida brushed aside the ambassador’s suggestion that he replace Kishi on an interim basis but indicated that he favored selection of Ikeda or Sato. (41)

42. ‘Neutralizing Extremism of both Right and Left’ CIA’s Manipulation of Japanese Elections, Right-wing, Left-wing Parties and Media:

Although press accounts suggested that skillful diplomacy could salvage Japan, the CIA warned that after treaty ratification and Kishi’s resignation, the Japanese left would attempt to make the country ‘ungovernable’ and render the treaty worthless. To prevent this, Eisenhower authorized the intelligence agency to take actions to block anarchy and a drift toward neutralism before the next general election, expected in the fall.

By utilizing its financial leverage with the LDP, the CIA worked to assure Kishi’s quick replacement by a more moderate conservative leader. […]

The need to encourage stability led the CIA to fund ‘moderate’ elements within the LDP who were deemed more responsive to demands by the Japanese electorate for progressive domestic policies. The agency also increased its assistance to DSP leader Nishio Suehiro and other moderate Socialists, with the aim of creating an influential Japanese Social Democratic Party along European lines. In the medium term, the CIA hoped to move the center of Japanese politics closer to the middle and away from the extremes of right and left. To stabilize Japan immediately, friendly, or CIA-controlled media would be used to criticize treaty opponents and stress the importance of strong ties to the United States. Finally, to neutralize the Zengakuren student radicals, the agency funded right-wing action groups.

[Certain amount of CIA money flowed into Zengakuren via CIA-funded right wings for ‘neutralization’ = infiltration]

On June 21, Ikeda passed word to MacArthur that with Yoshida’s support he expected to succeed Kishi soon and doubted that the LDP would need to select an interim leader. To reassure Washington of where he stood, Ikeda boasted that ‘only the support of his faction had made it possible for the government to get the treaty through the Diet.’ He counseled the Americans not to worry about the possibility of JSP and LDP anti-mainstream collusion to force Kishi’s resignation before the exchange of treaty ratifications.

Ikeda predicted the Democratic Socialists would collaborate with the LDP mainstream to prevent this ‘because he was responsible for DSP leader Nishio receiving substantial financial support.’

MacArthur again described Ikeda as ‘far the best successor to Kishi for he believes staunchly in Japanese-American partnership and is militantly anti-Communist as his preceptor Yoshida.’

In accord with the CIA program, press treatment of the new government changed dramatically. Foreign Minister Kosaka Zantaro told American officials that ‘business elements in the newspaper world’ were reducing leftist influence. The ‘banks, paper mills, and the advertisers,’ he explained, demanded that newspaper owners ‘exert a more moderating influence on their papers.’

Personnel changes among the political reporting staffs of the three large national dailies muted criticism of Ikeda and the security pact. (42)

43. US-Soviet planned Sabotage of China’s Nuclear Facilities, ‘Two Chinas’ Policy and Japan-PRC Trade of the 1960s:

Concern over Tokyo’s interest in closer ties with China remained a sore point between the United States and Japan during the 1960s.

A few officials, including Chester Bowles, James Thomson, and ambassadors John Kenneth Galbraith and Edwin Reischauer, favored new approaches toward China, such as cultural exchanges, famine relief, and admitting Beijing to the United Nations under a ‘two Chinas’ formula. An aide to Reischauer recalled that up to 1963 the ambassador received only one serious rebuke from Washington. When he told a group of Japanese that decisions on diplomatic ties with China were up to them, Secretary of State Rusk sent the ambassador a cable that said ‘No, they aren’t.’

President Kennedy hinted at reassessing the nonrecognition policy, but never budged. China’s support for guerrillas in Laos and Vietnam, its October 1962 border war with India, and its nuclear weapons development program affirmed Kennedy’s belief that China threatened American interests and allies. Not even the vituperative Sino-Soviet split altered his view.

As Kennedy and Rusk saw it, the Communist fissure proved that the Soviets could neither abide nor control Mao Zedong. Beijing’s rhetoric so alarmed Kennedy that in 1962-63 he weighed broaching with the Soviets plans for a joint attack on China’s nuclear weapons development facilities.

Most Japanese feared and disliked the Soviet regime, but had a more benign view on China. They believed that nationalism, rather than Chinese meddling, accounted for most of the unrest in Southeast Asia. Kennedy and his aides could scarcely believe it when the Japanese government and public sided with China in its border dispute with India.

Even a large part of the Liberal Democratic leadership and business community viewed Chinese Communism as something of a transitory phenomenon with which Japan could profitably co-exist.


By 1962, the economic impact of China’s break with the Soviet Union led Beijing to seek greater trade with Japan. (43)

44. L-T Trade between PRC and Japan, Mao’s initiative of ‘Reform and Opening up’ before 1979:

In November 1962, steel executive and former MITI official Takahashi Tatsunosuke signed a memorandum with PRC representative Liao Chengji to create a new framework for Sino-Japanese trade. The so called L-T trade consisted of a five-year agreement to engage in at least $100 million trade per year. Japan would export steel, fertilizer, agricultural chemicals, farm machinery, and industrial equipment, while China sold food and raw materials. Chinese trade representatives could open offices in Tokyo while bureaucrats on leave from MITI would serve in Beijing.

The United States grudgingly accepted this development, but still tried to discourage Japan from assisting Chinese economic development. Assistant Secretary of State Hillsman urged Japan not to extend trade credits, deferred payment rights, or long-term financing to China, all considered forms of aid, not trade. (44)

45. ‘Infuriated Washington, Taipei and Beijing’ Ikeda replaced with Sato:

Ikeda deftly sidestepped American demands. His government delayed for several months approving the nuclear submarine visits by insisting on elaborate safety assurance. The prime minister characterized Kennedy’s call to contain China as a statement of principle in opposition to territorial expansion. It had no bearing on Japan’s policy of promoting economic and cultural ties with China. By August 1963, Ikeda felt confident enough to approve sale of a rayon factory to the People’s Republic with financing provided by Japan’s Export-Import Bank.

Anticipating Washington’s anger at the decision to provide credit to China, a Japanese foreign ministry official urged the United States to tolerate this and future deals, not on economic grounds, but as part of a strategy to encourage political moderation in China. Many Japanese, he added, saw a ‘racist element’ in Moscow’s break with Beijing. They also tended to attribute a racist motive to Washington’s ‘sympathy’ with Moscow and hostility toward China. By accepting Japan’s initiative, the United States could refute this belief and speed change within China.

Although what Rusk called the ‘aid not trade’ deal to finance sale of the rayon factory threatened to become a major problem between Tokyo and Washington, Taiwan’s vitriolic reaction forced the United States to mediate on Japan’s behalf. Jiang Jieshi’s Nationalist government denounced the deal as tacit recognition of the PRC. Jiang issued a litany of complaints, even accusing Japan of responsibility for the Communist revolution in China because of its 1937 invasion. Taiwan recalled its ambassador from Tokyo, canceled government contracts with Japanese businesses, organized violent demonstrations outside the Japanese embassy, and threatened to break diplomatic relations with Tokyo. During late 1963 and early 1964, the American government worried that these actions might backfire, provoking Japan and other Asian-African states to support China’s entry into the United Nations. In May 1964, tempers cooled after Ikeda sent Yoshida Shigeru to Taipei on a fence-mending mission. He delivered a letter – an update of his 1951 epistle – to the Nationalist government promising that Japan would neither recognize the PRC nor use government funds to finance trade.

This appeased Taiwan but infuriated China – which promptly cancelled several contracts with Japan and ceased negotiations on other deals.

In November 1964, Sato Eisaku replaced the ailing Ikeda as prime minister. Representing elements within the LDP that were less enthusiastic about trade with China, Sato pursued a more restrained policy. Shortly after Sato took office, Mao launched the Cultural Revolution. Maoist radicals stressed economic self-reliance and contempt for Sato’s pro-American policies.

Although Japan became China’s biggest trading partner after 1965, the forces unleashed by the Cultural Revolution halted progress toward normalizing of relations. (45)

46. Unfairness of the Trade War: The Textile Dispute between Japan and US was more devastating than China issues:

For many American policymakers and representatives of certain industries, Japan’s export challenge proved more vexing than disputes over China or Okinawa. Japanese textile exports to the United States had been a political hot potato since the 1950s. The Eisenhower and Kennedy administrations beat back several efforts to limit Japanese sales.


Following Kennedy’s May 1961 proposal for a textile conference in Geneva, the administration agreed to raise by about 5 percent the level of cotton goods in Japan could export to the United States in the coming year. Even though Tokyo had urged a 30 percent increase over the level permitted by the 1957 voluntary agreement, the Japanese press, government, and industry praised the spirit of Kennedy’s approach. In contrast, 33 senators and 122 representatives complained in a letter to the president that his program, which focused on cotton textiles, ignored the threat posed by foreign woollens and synthetics.

Even though Japan’s share of the American market had fallen relative to exporters such as Hong Kong, members of Congress and industry critics continued to blame Japan and complained that the administration proposal raised, rather than lowered, Japanese export levels. (46)

47. JCP on JSP and Reischauer Offensive:

Akahata declared:

One year and a half since the arrival of Ambassador Reischauer in Japan, the sinister hand of America’s strategy toward Japan – the Kennedy -Reischauer Line – has been steadily extending, with military bases as the axis, from the fields of culture, ideology, education, and science to the field of the labor movement. American imperialists ate not only undertaking intelligence activities through armed forces, police, and espionage networks, but also ‘inviting’ Japanese scholars, cultural men, and labor union representatives to America or sending many old Japan hands into Japan to work on the top and middle ranking leaders if cultural and educational institutions and strengthen ideological maneuvers toward the leaders of labor unions and democratic organizations.

Akahata criticized the JSP and its labor allies for allowing themselves ‘to be utilized as a convenient foothold for these maneuvers.’ Reischauer’s plot to ‘tame Japan’s leftist forces through his affable manners’ had proved both dangerous and effective. Non-Communist journalists marveled at the success of the ‘Reischauer offensive,’ reporting that it ‘created panic’ among the radical left and right. (47)

48. Japan’s Involvement in the War, Sato Eisaku and Johnson Administration on the Vietnam War:

The United States had already spent $4 to $5 billion in Vietnam, but ‘we seem to be alone.’ Where ‘were Britain, Japan, and Germany?’ Johnson thanked Sato for giving medical aid to Saigon, but the time had come for him to ‘show the flag.’ If Japan ‘got in trouble, we would send our planes and bombs to defend her.’ America was ‘in trouble in Vietnam’ and the question was ‘how can Japan help us?’

The president backed this appeal with some arm-twisting. Every day he ‘confronted several senators who jump down his throat because of problems arising from Japanese’ textile and electronic exports. The president wanted help solving this problem ‘for he had 50 senators after him on it.’ Sato doubted Japanese textiles had much of an impact and asked why American politicians always focused on what Japan sold to the United States, never what it purchased.

Johnson assigned his aides to thrash out policy details with Sato. Rusk spoke with passion about the Chinese threat to Southeast Asia and the need to isolate China. Sato agreed to follow Washington’s political lead on China, at least for the time being, and sign a peace treaty with South Korea. He promised to give more than ‘moral support’ for American efforts in Southeast Asia but suggested nothing beyond the $1.5 million in medical, technical, and financial assistance already provided South Vietnam and Laos.

In February 1965, the United States began sustained bombing of North Vietnam. That summer, as the Saigon regime teetered on the brink of collapse, Johnson dispatched the first contingent of combat troops to South Vietnam. Nearly a half million followed. Despite Johnson’s frustration with Sato, the prime minister personally supported American policy in Vietnam. He certainly believed that Japan’s access to the American market, its best chance to recover Okinawa, and ability to trade with China hinged on remaining in Washington’s good graces. As evidence of his loyalty, Sato permitted American forces nearly unfettered use of bases in Japan and Okinawa.

Although this cost him some domestic support, it paid strong political and economic dividends.

During most of Sato’s nearly eight years as prime minister (1965-72), he dominated the normally fractious LDP. The death of several rivals early in his tenure and bitter rifts within both the Socialists and Communist parties divided the opposition. Nevertheless, the Vietnam War, in Reischauer’s words, ‘cast a dark shadow over all Japanese American relations’ after 1965.

Even Japanese leaders who supported Johnson’s policies were troubled by America’s failure to consult with Tokyo in advance of the initial decision to bomb North Vietnam. The periodic use of airfields on Okinawa for B-52 raids proved especially upsetting. Sato informed Reischauer that although he did ‘not question in any way the right of the U.S. to use Okinawa’ as a staging site for B-52 attacks, he harbored ‘deep personal concern regarding the adverse impact this action’ would have in Japan. Reischauer, too, cautioned Washington that use of the Okinawa bases handed ‘the left a sizeable club with which to beat the Sato administration.’ Linking Sato, Vietnam, and Okinawa ‘in this current effort to convert Japanese public concern over Vietnam into massive indignation and action against our security relationships with Japan including the Okinawa bases.’ (48)

49. China alerting Japan to the Risks:

China lost no time in alerting Japan to the risks it courted by following the American lead in Vietnam. In February 1966, a ranking Chinese official asked a member of Japan’s trade office in Beijing to pass a warning ‘to the Japanese foreign office.’

If during the air war against North Vietnam, the official stated, ‘the U.S. bombs China, unfortunately the U.S. is out of our reach. We are not able to return the blow. However, it is not impossible for us to reach Japan.’

The threat, American analysist agreed, sought to ‘push Japan toward a neutralist position and use Japan to restrain the scope of U.S. action.’ (49)

50. Strange Political Ecology of Japan, CIA manipulates Japan’s Public Opinions:

Opinion surveys during the period 1965 to 1968 found a sizeable majority of Japanese opposed to bombing Vietnam and expanding the ground war. Respondents sympathized with the Viet Cong goal of toppling the Saigon regime. By 1968, at the height of American escalation, two-thirds of Japanese polled favored adopting a more neutral foreign policy. Only 20 percent wanted to continue the security treaty with the United States after 1970 when it could be ended. (Support for the alliance increased in 1969 when Nixon began removing troops from Vietnam.)

Despite these trends, neither grassroots nor elite opposition to the war ever threatened Sato’s domination of the LDP or the party’s monopoly of power.

The anti-war movement failed to arouse the depth of passion that the anti-security treaty movement had in 1960. Many Japanese opposed the war, but still voted for the LDP.

The structure of Japanese politics and the LDP further mitigated the impact of the anti-war movement. Prime ministers were chosen by Diet members, not voters. LDP faction leaders controlled blocs of Diet members in the bargaining process that resulted in selection of a party leader / prime minister. Party barons and their followers forged and broke alliances to gain control of cabinet posts, patronage, and rewards for constituents and campaign donors.

Whenever possible, they avoided embracing popular causes or grappling with divisive issues. The Vietnam war was not so overwhelming a concern among voters as to force the LDP to take heed of anti-war sentiment or risk losing its Diet majority. Moreover, continued CIA financing of friendly Japanese politicians and publications muted criticism of American policy.

As the war in Vietnam escalated, the United States spent about $1 million annually in subsidies to sympathetic newspapers and magazines and to individual members of the Democratic Socialist and Liberal Democratic parties.

Americans made special effort to influence politicians on Okinawa where popular opposition to the use of bases for Vietnam operations piggybacked on demands to return the island to Japanese control. A ‘secret action plan’ provided cash to sympathetic politicians in elections held in 1965 and 1968.

Even Ambassador Reischauer, a mild critic of the CIA subsidies, recognized the importance of keeping the lid on in Okinawa. In discussing the plan with military officials, his concern focused on assuring that leading national figures in ‘the Japanese LDP [rather than the party’s Okinawa branch]’ served as the primary conduit of American funds.

This was ‘the most effective way’ to assure both success and stealth. Deputy Undersecretary of the Army John M. Steadman agreed that secrecy was critical because if the ‘U.S. is caught with its hand in the cookie jar there will be a serious blow up in Japan.’ (50)

51. Omoiyari Yosan is necessary? Untold Advantages of US Bases in Japan:

As the Vietnam War escalated, American analysts noted that Japan served ‘as host for this country’s second largest foreign base establishment, after that in Germany.’ Air force and marine units in Japan and Okinawa filled ‘a key role opposite the growing power of Communist China and Soviet Far East.’ By ‘making it unnecessary for Seventh Fleet vessels to return to Hawaii or the West Coast for maintenance and repair,’ American naval bases in Japan ‘save us hundreds of millions of dollars a year in peacetime, and would have even greater logistics value in certain kinds of war situations, as the Korean War showed.’

Ammunition and equipment storage sites, repair facilities, and an industrial infrastructure all made Japan the linchpin for the U.S. defense posture in East and Southeast Asia. A Senate subcommittee on military preparedness concluded in April 1966 that

it would be very difficult to fight the war in Southeast Asia without bases at Yokosuka and Sasebo.’ (51)

52. The Pentagon can nuke Northeast Asian Countries via Japan, Secret Agreements and Loopholes on Nukes in Japan:

Although the security treaty barred the United States from introducing nuclear weapons to Japan without permission, the secret protocol of 1960 permitted nuclear-laden planes and ships to ‘transit’ through the country. American war plans and informal procedures followed by local commanders stretched this loophole even further.

Air force transport planes stationed on Pacific islands were assigned, in case of a war alert, to transport nuclear weapons to U.S. air bases in Japan without obtaining Tokyo’s approval. The weapons would then be deployed against targets in Northeast Asia.

While visiting Japan in the early 1960s as a Rand Corporation analyst working on a Pentagon study, Daniel Ellsberg uncovered a more serious violation of the security treaty. The small marine air base at Iwakuni, on the Inland Sea, had a handful of planes assigned to attack some two dozen targets in North Korea, China and the Soviet Union.

The marines arranged with local navy officials to store nuclear bombs on an LST barge (the ‘Sam Joaquin County’) semi-permanently moored a few hundred yards offshore. If needed, the motorized barge would approach the beach and send its bombs ashore on amphibious tractors directly to the marine airfield. Neither civilian nor military commanders in Washington seemed aware of this. Navy records, Ellsberg discovered, listed the LST as docked in Okinawa. The arrangement was ‘regarded as super-secret from the Japanese and from civilians in the Pentagon.’ (52)

53. Indirectly Selling Ammunition Parts and Technology, Tokujyu, Military Mrocurement Needs of both the Korean War and Vietnam War boosted Japanese Economy:

MITI officials minimized Vietnam’s impact by comparing war orders to total GNP. They noted that Korean-era procurement totalled about $1.8 billion in an economy only a sixth as large as that of Japan in the Vietnam era.

Procurement at the peak of the Korean War represented nearly 60 percent of the value of all Japanese exports, while during the Vietnam War they were about 12 percent of total exports. But however calculated, Vietnam had a huge impact on the pace and direction of economic growth.


Although Japanese industry refrained from selling weapons or munitions for use in Vietnam, petrochemical companies enjoyed a brisk trade in ‘precursor’ chemicals used to manufacture napalm, TNT, and other explosives. In the late 1960s, these sales totaled between $150 and $300 million per year. Electronic manufactures, such as Sony, built no weapons but sold the APA guidance systems used in military aircraft, missiles, and bombs. MITI deleted many of these sales from its procurement calculations, claiming that it lacked detailed knowledge about the total value or end use of material sold privately to the U.S. military. (53)

54. The US War Procurement Chain in Asia: Japan, Taiwan, South Korea, Thailand, Hong Kong, and the Philippines:

War-related procurement in Asia proved as beneficial to Japan as direct American purchases. Taiwan, South Korea, Thailand, Hong Kong, and the Philippines received large orders from the United States and, often, cash payments for sending troops to Vietnam.

To fulfil procurement contracts, those countries purchased machinery and semi-processed materials from Japan. The value of these orders exceeded that of direct procurement within Japan. Meanwhile, general exports from Japan to non-Communist Asia increased from $2 billion in 1965 to $6 billion in 1972. MITI estimated that 20 percent of this astounding growth was generated by the war.


The flood of dollars into Korea and Southeast Asia funded activities as a vast sex industry for GIs on R&R, light manufacturing, and a new consumer export market for Japan. It stimulated the kind of regional growth Americans and Japanese had talked about since the late 1940s.

With its advanced economy and geographic proximity, Japan harvested a great number of American dollars from throughout Southeast Asia and used them to modernize factories at home and invest in regional resources. (54)

55. The Nixon Doctrine and Kissinger in the 1970s:

In pursuing détente with the Soviet Union and China, the United States acknowledged its inability to shoulder the costs of containment in both Europe and Asia. The so-called Nixon Doctrine, the return of Okinawa to Japan, strategic arms control, the liquidation of the war in Vietnam, import restrictions, and the new economic policy were all attempts to assure an orderly transition as the United States entered a period of relative decline and reduced its military presence in Asia.

Largely because of Nixon’s and Kissinger’s indifference to economic problems, the administration ignored emerging monetary and trade problems. Roger Morris, a member of the NSC staff, recalled that of more than 140 National Security Study Memoranda (NSSMs presented options for presidential consideration) prepared during the first three years of the Nixon administration, only one dealt with international monetary policy and three or four with other economic questions. Economic policy, Morris surmised, ‘enjoyed equal rank with U.S. policy in Haiti’ but less than Peru. Kissinger’s profound lack of knowledge and interest in economics,’ Morris contends, led him to view trade matters as ‘low policy’ unworthy of attention.

Another NSC staff remember compared discussing economics with Kissinger to discussing military strategy with the pope. Kissinger recognized that several departments and agencies had authority over trade and monetary matters. With Nixon’s backing, he enjoyed near monopoly control over security issues. Jousting with the Treasury, Commerce, and Agricultural departments and the Federal Reserve would likely overextend his power.

Undersecretary of the Treasury Paul Volcker recognized this early on. Instructed to report regularly on international monetary policy to Kissinger (rather than to the secretary of the treasury), he ignored the order. No one complained since ‘papers on the intricacies of international monetary affairs ended up at the bottom of Kissinger’s in-tray, assuming they ever got that far.’

Nixon shared what Roger Morris called Kissinger’s ‘parochial’ out-look on foreign economic policy. Both men measured power by a military rather than an economic calculus – and by that assessment, Japan hardly merited the rank of great power. (55)

56. US wants Japan to develop its own Nukes:

According to NSC staffers Morton Halperin and Roger Morris, both the president and his national security adviser disliked the Nuclear Non-Proliferation Treaty signed by Lyndon Johnson and thought it inevitable that countries such as Israel and Japan should develop their own atomic arsenals. In the case of Japan, this would moot the issue of nuclear storage on Okinawa and force Tokyo to assume greater responsibility for its own and regional defense. (56)

57. Japanese Textiles were scapegoated by Nixon and his Patrons:

Kissinger’s economic adviser, C. Fred Bergsten, alerted him to the danger of rival bureaucrats seizing the protectionist banner and limiting NSC influence. To prevent this, Kissinger forwarded to Nixon a proposal by Bergsten to systematically press Japan to liberalize foreign investment rules, restrain textile exports, and allow more imports. The president returned Kissinger’s memorandum with the comment: ‘capital liberalization is not important to us politically. We have to get something on textiles.’

For Nixon, textiles were a domestic political issue, not an international economic one. As a candidate in August 1968, he promised a group of textile executives that, if elected, he would ‘take the steps necessary to extend the concept of international trade agreements [i.e., quotas]’ to synthetics had a small impact. Textiles and apparel imports from Japan constituted 1 percent of American textile production and only 4 percent of total Japanese textile output. Most inexpensive imports came from other Asian producers. (57)

58. The China Shock 1971 and the Turning Point of the Cold War:

Nixon’s and Kissinger’s interest in opening a dialogue with China reflected deeper changes in the cold war. On taking office, both men recognized that the Soviet Union had or would soon achieve a rough nuclear parity with the United States. Instead of a costly and probably futile effort to restore superiority, they sought to moderate Soviet behaviour through economic and political incentives broadly labelled ‘détente.’ These included negotiated limits on strategic weapons, increased trade and technology transfer, and recognition that the Soviet Union had legitimate global interests.

As Washington cultivated a more cooperative relationship with Moscow, it found that the political and economic policies of its allies often clashed with American interests. Tension within the NATO and Pacific alliances coincided with the demise of the Sino-Soviet bloc. In March 1969, the protracted war of words between Moscow and Beijing escalated into a series of border skirmishes.

This section created an opportunity for the United States to play off the Communist rivals against each other, assuming Washington had some leverage with the People’s Republic of China. Following the border clashes, Nixon and Kissinger concluded that improved ties with China might constrain Soviet behaviour and impel both rivals to cooperate with the United States or risk isolation. (58)

59. From Fear of Chinese Expansion to the Vietnam Twist, China wanted U.S. to counter the Soviet and Japanese Threats:

In an odd symmetry, China weakened by the cultural revolution sought American assistance in balancing Soviet and Japanese challenges. Following the August 1968 Soviet invasion to crush Communist reform efforts in Czechoslovakia, the 1969 Sino-Soviet border clashes, and the redeployment of substantial Soviet forces to the disputed frontier, Chinese leaders feared an assault by their former ally. Japan’s growing wealth and assertiveness – brought home by Sato’s affirmation in 1969 of an interest in the security of South Korea, Taiwan, and Vietnam – raised the added specter of a rearmed, expansive Japan.

Since the Korean War, American military deployment in Asia had a primary goal of containing China. Nixon’s gradual withdrawal of ground troops from Indochina, his decisions to return Okinawa and encourage Japan to play a regional security role, the Nixon Doctrine, and Washington’s pursuit of détente with the Soviet Union foretold a diminished American security role in the Asia / Pacific region. Because the retreat of American power coincided with a growing Soviet threat, Chinese strategists who previously feared a U.S. victory in Vietnam now agonized about the consequences of a defeat.

America’s retreat would leave China caught between the Soviet Union and Japan. As Nixon and Kissinger hoped, Mao’s determination to protect China outweighed his disdain for capitalism, solidarity with Hanoi, mistrust of the United States and drive to regain Taiwan. (59)

60. China wants the U.S. Military Presence in Asia:

On June 2, 1971, after almost two years of secret exchanges, Zhou Enlai invited Kissinger to come to China to arrange a presidential visit. Kissinger described the message as ‘the most important communication that has come to an American president since the end of World War II.’ Nixon told his aides that ‘fundamental shifts in the world balance of power made it in both nations’ interest to have relations.’ Faced by the Soviets on one border, a Soviet-backed India on another, and Japan to the Northeast, which could ‘develop military power fast because of its industrial base,’ China sought protection from the United States. Mao and Zhou still demanded that ‘the U.S. should get out of the Pacific’ but Nixon surmised, they really ‘don’t want that.’

As United States military power in Asia receded, the president explained, Japan would ‘either go with the Soviets or re-arm,’ two bad alternatives from China’s perspective. He believed that with a little tutoring Mao and Zhou would agree that continued U.S. military presence in Japan, Korea, and Southeast Asia was ‘China’s best hope for Jap-restraint.’ (60)

61. Nixon’s Revenge, A Regime Change Attempt on Sato:

When Kissinger and Nixon ‘embarked on a period of rapturous enchantment with China,’ U. Alexis Johnson complained, they shoved ‘our most important ally in Asia…to the back burner.’ Although they never officially linked their handling of the China issue to the textile dispute, Nixon and Kissinger approved journalist Henry Brandon’s attribution of motive. In a book based on interviews with both men, Brandon wrote: ‘Angry that the Japanese government, despite its promise to do so, did not place voluntary restraints on its exports, Mr. Nixon deliberately affronted Japanese Primer Sato by giving him no hint of his new policy toward China.’

Although most Japanese favoured broader contact with China, Nixon’s calculated insult stung deeply. Sato issued a statement welcoming the Sino-American dialogue ‘in the interests of world peace.’ Japan, he noted, had long favoured closer ties with China. In private, Ambassador Meyer reported, most LDP leaders were ‘upset as hell’ and doubted that ‘Sato could last’ after the humiliation inflicted by Nixon. Although Nixon sent the prime minister a note pledging to ‘work closely with you on China policy,’ his actions mocked the promise. ‘I have done everything’ the Americans ‘have asked,’ a tearful Sato told visiting Australian Labor leader Gough Whitlam, but ‘they have let me down.’ Among Nixon’s cabinet, only the long-ignored Secretary of State, William Rogers, expressed sympathy for Sato, suggesting that ‘lots of mood music’ be played to soothe him. (61)

62. Not the United States, A Nuclear-armed Japan is what China is mostly afraid of:

In a deposition given in June 1975 to the Watergate Special Prosecution Force, Nixon contradicted Kissinger. When asked about Radford’s theft of NSC documents, the former president, a prosecutor told Seymour Hersh, grew animated. “Radford knew everything’ ; he was ‘in on all the meetings.’ Nixon explained that during their initial contact with China, he and Kissinger warned that if the PRC did not agree to strategic cooperation against the Soviets on American terms, they would encourage Japan to develop nuclear weapons.

In Nixon’s words, ‘We had these tough negotiations with China over the Mutual Defense Treaty…with Japan. You have to be tough. And we told them that if they tried to jump Japan then we’ll jump them.’ Nixon reportedly said, ‘We told them that if you try to keep us from protecting the Japanese, we would let them go nuclear.’ He boasted of ‘putting it to the Chinese like someone out of Hell’s Kitchen.’

Laird’s remarks in Tokyo add credibility to Nixon’s later account. Possibly, Laird, Kissinger, and Nixon played ‘good cop / bad cop’ to encourage a more cooperative attitude in Beijing.

After all, the last thing China wanted was a nuclear-armed Japan as it tried to enlist American support against the Soviets. (62)

63. ‘Can’t be superior than the U.S. economy’ Nature of A Trade War, Not a Reform but an Attempt to devaluate Competitors’ Currency Values:

Secretary of State Rogers insisted that ‘any country in chronic surplus as Japan is’ was obliged to increase imports, eliminate export incentives, and revalue its currency ‘to bring its global balance of payments into equilibrium.’ Rogers called on Japan to go beyond its effort of June 1971 and eliminate all restrictions on imports and foreign investment, increase its foreign assistance, and assure orderly marketing of its exports. (63)

64. A Secret Conversation, Replacing Sato with Kakuei Tanaka:

Nixon and Kissinger received Foreign Minister Fukuda at the White House on September 10, 1971 and warned him that it would become ‘impossible to restrain the explosive forces building up’ over textiles beyond October 15. Unless a government-to-government agreement was approved by then, Nixon threatened unilateral action. When the foreign minister took the unpopular position of urging Japanese textile executives to approve such negotiations, Tanaka – engaged in secret talks of his own – criticized Fukuda for caving into Washington. When the MITI minister privately voiced concern that accepting American terms would end his career, David Kennedy retorted that their subterfuge, if successful, ‘will make you prime minister.’

To prevent Tanaka from trying to extract concessions, Kennedy avoided dealing with him directly. He went into virtual hiding on a military base in Guam and sent an assistant, Anthony Jurich, to arrange details of an agreement with Japan and with representatives of South Korea, Taiwan, and Hong Kong. Jurich arrived in Tokyo on September 20 and as arranged, delivered an ultimatum stating that unless Japan and the three other Asian exporters agreed by October 1 to import restraints, the United States would utilize the Trading with the Enemy Act to impose quotas effective October 15. (64)

65. ‘Not for Economics’ Selling and Buying a Policy:

American textile producers rewarded Nixon handsomely. On April 6, 1972, the day before a new law took effect requiring the detailed disclosure of campaign contributions, textile executive Roger Milliken handed Maurice Stans (by then chief fund-raiser for Nixon’s reelection) $363,000 in cash and checks gathered primarily from southern mills. Another $150,000 followed by November.

Editorials in the New York Times and the Washington Post denounced the textile deal. On October 16, the Times charged that the ‘agreement bludgeoned out of the Japanese…represented a victory on the part of President Nixon and the Southern textile industry, but at a cost of America’s long-range international political and economic interests that has yet to be fully calculated.’ It quoted a senior Japanese official as saying, ‘It’s going to be bad, very bad. People here just won’t forget how this was done.’ A Post editorial of October 18 called the settlement an example of ‘international economic policy at its worst.’ It caused a ‘maximum of rancor and distrust abroad with a minimum of benefit at home.’

It had ‘everything to do with the electoral votes of the Carolinas next year and nothing to do with economics.’

Ultimately, the textile deal had little market impact. Other Asian producers quickly stripped Japan of its comparative advantage in textiles. (65)

66. Currency Devaluation did not solve America’s Trade Deficits with Japan:

The belief among Treasury officials and academic economists that floating currency rates and a rising yen would spur American exports and solve the trade and payments deficits proved – in the long run – false.

During 1972, the trade deficit grew more slowly and during 1973 it declined because of such factors as the rising yen and a steep increase in oil prices after the October 1973 Arab-Israel war. After 1975, American consumers purchased Japanese automobiles and electronic goods in ever-increasing volume.

Gyohten Toyoo, a finance ministry official in 1971, believed that the shocks that summer convinced his colleagues that the ‘Nixon administration was thinking about the possibility of using Communist China as a counterweight to Japan in post-Vietnam Asia.’ (66)

67. ‘The Security Treaty’ The Origin and Foundation of the U.S. Influence on Japan and Asia:

Nixon countered criticism of Japanese militarism by asking if China really preferred ‘for Japan to be neutral and totally defenseless.’ Would China not benefit from Japan’s maintaining ‘defense relations with the United States?’ Without the security treaty, he cautioned, America would ‘have no influence’ in Tokyo.

Without a U.S. military presence in Asia and Japan, ‘our protests’ about Japanese or Soviet behavior ‘no matter how loud, would be like firing an empty cannon.

We would have no effect because thousands of miles away is just too far to be heard. (67)

68. ‘Taiwan was part of China’ U.S.-China on Taiwan:

Neither Nixon nor Kissinger have revealed what promises they made to win Chinese approval of the formula to deal simultaneously with Beijing and Taipei. Besides agreeing that Taiwan was part of China, Nixon secretly pledged that after reelection he would formally recognize the PRC, break diplomatic ties with Taiwan, and take unspecified steps to prevent Japan from dominating Taiwan. (68)

69. U.S. modified Attitude on The Tiaoyu Islands:

In March 1972, Nixon stunned Tokyo again. The Tiaoyu (Senkaku, in Japanese) Islands consist of uninhabited rock on the continental shelf between Okinawa and Taiwan, claimed by both Tokyo and Taipei. When oil was found in the area in 1970, China asserted ownership. Following Nixon’s trip to Beijing, the State Department modified its endorsement of Japan’s claim in favor of a more ambiguous stand. This, Sato guessed, foretold what Nixon and Mao were up to.

The Nixon shocks of 1969-1972 and their aftermath strained but never severed the tie between Japan and the United States.

Both nations remained so mutually dependent that not even the strategic and economic jolts of 1971-72 broke the bond. Over the next two decades, détente and renewed cold war, Japanese trade expansion and American economic decline, created new conflicts as well as surprising sources of strength that sustained the Pacific alliance. (69)

70. ‘Not just a bribe case’ Political ‘Donation’, Foreign Infiltration, and Corruption of Japanese Politics:

All Nippon Airlines would purchase twenty-one L-1011 passenger aircraft from the Lockheed Corporation in a deal valued at $400 million. This arrangement, whether Nixon knew, was part of a larger kickback scheme. In November 1974, Japanese journalists revealed that during the previous decade Lockheed had paid about $12 million in bribes to Japanese middlemen, often through Kodama Yoshiro – Kishi’s underworld patron and the organizer in 1960 of ‘Yakuza for Ike’ – to promote sales of fighter and passenger aircraft. The money flowed up and down the LDP food chain. Tanaka resigned in December 1974 and was convicted of bribery in 1983.

In February 1976, Senator Frank Church held hearings on this incident. This led to passage of the Foreign Corrupt Practices Act that made it a crime for American companies to bribe foreign officials. (70)

71. Mao on Japan-U.S. Alliance:

Angered by what he perceived as selfish desertion by the NATO allies in the face of Arab radicalism, Kissinger (now Secretary of State) flew to Asia to consult with China and Japan. Fearful that the Soviet Union might utilize the oil crisis to neutralize Europe and unleash its power against China, Mao Zedong told Kissinger on November 12, 1973, that Japan must play a key role in defending Asia. In an elaboration of the views he expressed the previous February, Mao described Japan as ‘insecure and sensitive’ because of world events. He would see to it that China did not force Tokyo to choose between the U.S. and China,’ as that would polarize Japan and promote reactionary nationalism. Both Washington and Beijing, Mao explained, must discourage a ‘free floating Japan playing off other countries against each other.’

The Japanese were ‘afraid of you,’ Mao told Kissinger, and must be reassured of their primacy in the Pacific alliance. (71)

72. The Oil Crisis of the 1970s and minimized Friction with the U.S.:

Japan’s internal dialogue was a bit less ‘silken’ than Kissinger imagined. The oil crisis spurred panic among consumers and industry. Tanaka and Ohira remained unsure of how far to go in distancing Japan from the United States. MITI minister Nakasone Yasuhiro, leader of a powerful LDP faction, demanded that Japan make a deal with the Arabs and show that ‘the era of blindly following the United States had come to an end.’ Nakasone carried the day. At the end of November, Japan followed the example of Western Europe by calling on Israel to withdraw from all territory seized since 1967 and recognize the ‘legitimate’ rights of the Palestinian people. Delegations from the Middle East where they donated $5 million to Palestinian relief efforts and offered generous loans, investments in joint ventures, and technology transfers to several Arab states. On December 25, 1973, Arab oil ministers moved Japan to their list of ‘friendly’ nations and restored oil sales.

Expressing greater sympathy toward Japan than the Europeans, Kissinger released a statement declaring that while he did not agree with Tokyo’s pro-Arab tilt, he ‘understood the circumstances that impelled it.’

Although Tanaka’s action restored the flow of oil to Japan, the huge rise in energy costs (from $4.5 billion in 1972 to $21.2 billion in 1974), combined with a steadily appreciating yen, threw Japan into recession. Not only were funds unavailable to finance the prime minister’s internal development scheme, but Japan needed a much larger supply of U.S. currency to pay for dollar-denominated oil imports. This played havoc with Tanaka’s desire to reduce exports to the United States and make up the difference with domestic expansion. As had been true since the Occupation, Japanese stability and growth remained dependent on the American market. (72)

73. Kissinger on Japan and China:

Despite the admiration for Chinese and Japanese leaders Kissinger professed in his memoirs, his contemporary views were less sympathetic and reflected his belief that realpolitik, not morality, dictated national behaviour.

According to Seymour Hersh (who obtained notes taken during a briefing the secretary of state gave to the Joint Chiefs of Staff in March 1974), Kissinger returned from recent trips to Beijing and Tokyo deeply suspicious of both powers. The ‘Japanese,’ he asserted, ‘are mean and treacherous but they are not organically anti-American; they pursue their own interest.’ The United States must maintain a balance in Asia or ‘Japan could be a big problem.’

In contrast, Kissinger said, the Chinese ‘would kill us if they got the chance and would pick up Japan if they thought they could get away with it.’ Fortunately, their fear of the Soviet Union forced them to cooperate with Washington. Kissinger predicted Japan, prodded by the oil crisis, would ‘go nuclear at some time.’ The Chinese ‘would worry if the Japanese began to increase their defense expenditures.’ That would be all right, he concluded, so long as Japan did so ‘without the United States being publicly linked to it.’

Ultimately, it was in America’s interest to keep Japan and China concerned about the other. (73)

74. The End of Détente during 1978-9, renewed Cold War of 1980s, and the Chinese Role:

During 1978 to 1979, both the Carter administration and its Republican critics saw the hand of the Soviet Union (or its Cuban proxy) in political upheavals in Central America, Poland, Sub-Saharan Africa, Iran, and Afghanistan. These regional conflicts, along with allegations that Moscow had cheated on arms control agreements, all but ended efforts at serious cooperation between the superpowers.

Beginning under Carter and accelerating in the Reagan administration, the United States pursued a military build-up designed to re-establish strategic superiority over the Soviet Union, reassert control over the Western alliance, reimpose authority in the Middle East, and consolidate strength in the Pacific through strategic cooperation with both China and Japan. In both Western Europe and Japan, Conservative governments eager to cooperate with the United States assumed power.

In the spring of 1978, the Carter administration moved closer to China. National Security Adviser Zbigniew Brzezinski described the PRC as a ‘central element’ in global security policy and Undersecretary of State Richard Holbrooke urged Tokyo to coordinate an anti-Soviet strategy with Washington and Beijing. In December, President Carter announced that the United States would recognize the Beijing regime as the sole legitimate government in China, severing its formal ties and defense treaty with Taiwan.

Congress, however passed the 1979 Taiwan Relation Act establishing a framework for future trade and diplomatic contact and promising American assistance if China tried to forcibly take the island.

Early in 1979, when China launched a brief border war to ‘punish’ Vietnam for its recent incursion into Cambodia where it ousted the brutal – but pro-PRC – Pol Pot regime there, Washington endorsed the attack.

The United States also applauded the conclusion of the Sino-Japanese Treaty of Peace, Friendship, and Mutual Co-Operation in 1978. Closer ties between the two Asian powers, along with Tokyo’s acceptance of a treaty clause opposing ‘hegemony’ (code for Soviet expansion) in Asia, suggested Japan would assist China’s anti-Soviet efforts and divert exports from the U.S. market to China.

75. ‘Scapegoats’ The Plaza Accord and the Louvre Agreement were not the Causes of Japan’s Decades of Stagnation:

In an effort to reduce the trade deficit, Secretary of the Treasury James Baker III pursued a strategy pioneered by Richard Nixon and John Connally in 1971 – forcing an upward valuation of the yen to raise the price of Japanese imports and lower that of American products. The Plaza Accord of September 1985 and the follow-up Louvre agreement of February 1987 substantially raised the value of the yen against the dollar. Before the Plaza Accord, $1 yielded 254 yen. During the next year, the dollar bought only 200 yen. By early 1987, the dollar declined to 154 yen and following the Louvre agreement fell to 127 yen.

This nearly 50 percent depreciation of the dollar’s value in yen had only a small effect on trade since Japanese manufactures cut profit margins to retain market share.

But Japanese investors holding dollar-denominated securities were badly battered. After 1985, they shifted away from securities and Treasury notes to purchase what now (given the strong yen) appeared as bargain-priced real estate and corporate assets in the United States. These included suburban shopping malls, Hawaiian resort hotels, entertainment companies such as MCA, CBS Records, Columbia Pictures, Universal Studios, and Rockefeller Center in New York City.

Although Dutch and British investors owned more American real estate than the Japanese, the sale of high-profile properties exacerbated popular resentment toward Japan. (75)

76. The Post-Cold War Era, 1990s:

Without such unifying elements such as an implacable Communist enemy and an assured American market, Japanese voters grew disgusted with the seemingly endless series of corruption scandals involving Liberal Democratic stalwarts and business interests seeking political favor. In 1993, the LDP fell apart, replaced in power for three years by a coalition of conservatives fronted, in 1994 – 95, by a Socialist prime minister. This seemingly incongruous grouping actually continued a pattern begun in the Yoshida era and played out during the subsequent half-century.

As former LDP prime minister Takeshita Noboru noted about the pre-1993 period, ‘Liberal Democrats had used the possibility of criticism by the Socialists to avoid unpleasant demands by the United States to take a more active role internationally.’

This ‘burden sharing’ and ‘cunning diplomacy,’ as Takeshita called it, continued in an amended form after the demise of the LDP. Each element of the coalition pointed to its partner as a reason for not yielding to American calls to liberalize trade or assume greater regional defense capability. (76)

Many untold facts here are not in any Japanese textbook. This book is a Bible on Japan-U.S. relations and proxy politics. Highly recommended!


1. Michael Schaller, Oxford University Press (US, September 25, 1997) ‘Altered States – The United States and Japan since the Occupation’, p.7.

2. Ibid., pp.14-16.

3. Ibid., p.18, p.23.

4. Ibid., pp.25-26.

5. Ibid., p.26.

6. Ibid., p.22.

7. Ibid., p.26.

8. Ibid., p.28, p.33

9. Ibid.

10. Ibid., p.36.

11. Ibid., p.34.

12. Ibid., p.46.

13. Ibid., p.83.

14. Ibid., p.55.

15. Ibid., p.58.

16. Ibid., p.59.

17. Ibid., p.64.

18. Ibid., p.72.

19. Ibid., p.74, p.76.

20. Ibid., pp.78-79.

21. Ibid., pp.79-80, pp.93-94.

22. Ibid., p.98.

23. Ibid., p.100.

24. Ibid., p.104.

25. Ibid., p.106.

26. Ibid., pp.108-109.

27. Ibid., p.109.

28. Ibid., p.112, p.116.

29. Ibid., pp.119-120.

30. Ibid., pp.121-122.

31. Ibid., p.123.

32. Ibid., p.124.

33. Ibid., p.134.

34. Ibid., p.136.

35. Ibid., p.137.

36. Ibid., p.145.

37. Ibid., p.146.

38. Ibid., p.149.

39. Ibid., p.152.

40. Ibid., p.153.

41. Ibid., p.155, p.157.

42. Ibid., p.159, p.160.

43. Ibid., p.173.

44. Ibid., p.174.

45. Ibid., p.176.

46. Ibid., p.177.

47. Ibid., p.178.

48. Ibid., p.189, pp.190-191.

49. Ibid., p.194.

50. Ibid., pp.194-195.

51. Ibid., p.196.

52. Ibid., pp.196-197.

53. Ibid., p.199.

54. Ibid., p.200, p.201.

55. Ibid., p.211, p.212.

56. Ibid., p.213.

57. Ibid., p.215.

58. Ibid., p.225.

59. Ibid., p.226.

60. Ibid., p.227.

61. Ibid., pp.228-229.

62. Ibid., p.236.

63. Ibid., p.238.

64. Ibid., p.239.

65. Ibid., pp.243-244.

66. Ibid., p.244.

67. Ibid., p.246.

68. Ibid., p.249.

69. Ibid., p.250.

70. Ibid., p.251.

71. Ibid., p.253.

72. Ibid., p.255.

73. Ibid., p.259.

74. Ibid., pp.252-253.

75. Ibid., p.255.

76. Ibid., p.259.


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