[Wikileaks] PART 2 OF 2 — U.S., JAPAN REACH AD REF GUAM

Viewing cable 08TOKYO3458, PART 2 OF 2 — U.S., JAPAN REACH AD REF GUAM

Reference ID
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Released
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08TOKYO3458 2008-12-19 05:49 2011-05-04 00:00 CONFIDENTIAL Embassy Tokyo

VZCZCXRO0359
OO RUEHFK RUEHKSO RUEHNH
DE RUEHKO #3458/01 3540549
ZNY CCCCC ZZH
O 190549Z DEC 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9602
RUEKJCS/SECDEF WASHDC IMMEDIATE
INFO RUEHUL/AMEMBASSY SEOUL 2934
RUEHGP/AMEMBASSY SINGAPORE 7305
RUEHNH/AMCONSUL NAHA 3901
RUEHOK/AMCONSUL OSAKA KOBE 5335
RUEHFK/AMCONSUL FUKUOKA 1544
RUEHKSO/AMCONSUL SAPPORO 2110
RUEHIN/AIT TAIPEI 7231
RUHBABA/CG III MEF CAMP COURTNEY JA
RUHBANB/CG MCB CAMP BUTLER JA
RUEKJCS/CJCS WASHINGTON DC
RHMFISS/CMC WASHINGTON DC
RUENAAA/CNO WASHINGTON DC
RHMFISS/COMMARCORBASESJAPAN CAMP BUTLER JA
RUHEHMS/COMMARCORBASESPAC CAMP H M SMITH HI
RUHPSAA/COMMARFORPAC
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHOVVKG/COMSEVENTHFLT
RUEAHQA/CSAF WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHHMUNA/HQ USPACOM HONOLULU HI
RUEKJCS/JOINT STAFF WASHINGTON DC
RHEHAAA/NSC WASHDC
RUHBANB/OKINAWA AREA FLD OFC US FORCES JAPAN CP BUTLER JA
RUENAAA/SECNAV WASHINGTON DC
RUEATRS/TREASURY DEPT WASHDC
RHMFISS/USFJ

C O N F I D E N T I A L SECTION 01 OF 07 TOKYO 003458

SIPDIS

DOD FOR OSD/APSA SHIVERS/SEDNEY/HILL; DEPT OF NAVY FOR
SECNAV WINTER, ASN PENN, DASN BIDDICK; DON PASS TO JGPO FOR
BICE/HICKS; NSC FOR WILDER; PACOM FOR J00/J01/J4/J5; USFJ
FOR J00/J01/J4/J5

E.O. 12958: DECL: 12/15/2018
TAGS: MARR PREL PGOV JA
SUBJECT: PART 2 OF 2 — U.S., JAPAN REACH AD REF GUAM
INTERNATIONAL AGREEMENT

REF: STATE 128612

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

Please see Tokyo 03457 for part 1 of this cable.

¶14. (C) Given this ambiguity and concern that the numbers
8,000/9,000 cited in public documents continues to be
misunderstood and misconstrued, the U.S. side pushed to use
the phrase “”and associated dependents”” in place of “”and their
approximately 9,000 dependents.”” The Japanese side objected
strongly to this approach. Japanese negotiators registered
frustration with over two years of U.S. inability to provide
more detailed data on the actual number of dependents
associated with the AIP units that will relocate to Guam, and
voiced suspicion that the U.S. intends to hold on to
excessive housing in Okinawa and force Tokyo to build more
housing in Guam than is required. The U.S. side explained
that the focus is on the units and capabilities that will
move to Guam, and that regardless of the actual manning of
those units, the U.S. remains committed to relocating those
units to Guam. All dependents associated with those units
will also relocate. The actual number may be 8,000 by the
time of relocation, but most likely will be less than the
full authorized manning. Likewise, the remaining forces on
Okinawa may be 10,000, but most likely will be less than the
full authorized manning. The Japanese side agreed to this
basic concept, but stressed it fully expects that the
facilities and areas associated with the capabilities that
move to Guam will be accounted for in the subsequent
consolidation efforts. The U.S. side did not commit to such
a direct linkage between specific units relocating to Guam
and consolidation and land returns. Both sides agreed that
the issue of actual versus notional numbers as well as
implications for consolidation and land return require
greater focus in the near-term. However, because the U.S. is
not able to provide any additional level of clarity on the
transfer personnel and their associated dependents,
highlighting changes in the number of personnel in the IA
would create significant risk for the Japanese government.
Japanese negotiators said that any effort by the U.S. side to
change the referenced numbers without providing more detailed
personnel data would be a “”deal breaker.””

¶15. (C) Scope of Funding: In earlier drafts, the IA’s scope
included not only Japan’s cash contributions, but also
Japanese funding commitments for housing and utilities via
equity participation and loans. However, bilateral
discussions on implementing the Special Purpose Entities
(SPE) that will execute Japan’s funding commitments for
housing and utilities remain preliminary and may ultimately
be resolved in the SPE Implementing Guidance and Operating
Agreements (vice an International Agreement) that will be
executed by the SPE participants. Although the negotiators
agreed to remove housing and utilities from the scope of the
agreement, there was sufficient discussion to identify key

TOKYO 00003458 002 OF 007

areas to be addressed bilaterally to ensure the smooth
implementation of housing and utility programs in the future:
(1) the two sides have different understandings of Japan’s
obligated ratio of equity to loans; and (2) the MOD insists
it can provide preferential treatment to Japanese companies
competing for housing and utility contracts under the SPE,
but the U.S. side seeks a level-playing field for U.S.
companies. (Note: the issue of the meaning of
“”recoverability”” was not discussed as part of the IA
negotiations, but is also a known area of disagreement.)

¶16. (C) Guam versus Commonwealth of Northern Marianas
Islands (CNMI): The U.S. proposed using language to reference
the CNMI (rather than the more limiting Guam) in Article 1.
The U.S. made the point that there may be projects that
Japan’s cash contributions may fund that support training
facilities in the CNMI. Japanese negotiators expressed
concern that at no time in the program management discussions
has the U.S. side identified any projects off Guam and
elsewhere in CNMI, so they would not be able to explain this
expanded scope to Diet members. As a compromise, the two
sides agreed to remove Japan’s proposed language in Article 1
that specified that Japan’s cash contributions would be for
facilities “”on Guam.”” The final language in Article 1 does
not state where facilities to support the Relocation will be
built. As such, that language does not preclude cooperation
in the CNMI, but does not explicitly identify cooperation
outside of Guam as part of the scope. In a pull aside,
Embassy of Japan Political First Secretary Masaaki Kanai
confirmed that Japan’s domestic law governing realignment
implementation could potentially be reinterpreted or revised
to allow cooperation in the CNMI.

¶17. (C) Japanese Obligation to Address Shortfalls:
Responding to proposed U.S. language, the Japanese side
agreed to language that obligates it to take action to
address funding shortfalls when appropriate. However, this
language was moved to the Implementing Guidelines (3.f.)
instead of the International Agreement.

———
Article 2
———

¶18. (C) The purpose of Article 2 is to highlight U.S.
obligations. Like the Government of Japan obligations in
Article 1, the U.S. obligations are subject to caveats,
highlighted later in Article 9. Additionally, the Ministry
of Finance (MOF) remained concerned that, despite Article 2
obligations, the U.S. would not move to Guam even if the FRF
had been completed and the Guam facilities were ready to
receive the U.S. Marines Corps personnel. The MOF requested,
and received, an oral statement from the U.S. negotiator that
“”Once the FRF and required facilities and infrastructure on
Guam are complete, the U.S. shall complete the Relocation.””
The MOF accepted this statement as a quid pro quo for

TOKYO 00003458 003 OF 007

dropping its insistence on special tax exemptions for Japan’s
cash contributions.

———
Article 3
———

¶19. (C) The purpose of Article 3 is to document the clear
linkage between the FRF and Guam program. The Japanese side
originally pressed to eliminate all references to the FRF.
When the U.S. insisted on FRF linkages, Japanese negotiators
tried to get the U.S. to introduce new language committing
the U.S. to cooperate for the FRF’s completion. The U.S.
side did not accept the Japanese language, stressing that an
overstatement of the role the U.S. plays in the FRF could
create confusion in the context of the lawsuit “”Center for
Biological Diversity v. Gates,”” where the clear Japanese
government lead in finalizing the FRF is a key tenet of the
U.S. defense. Moreover, a strong obligation by the U.S. to
cooperate toward the completion of the FRF could be construed
as an opening to renegotiate the location of the runway to
satisfy Okinawa Governor Nakaima’s political requests.
However, the U.S. side accepted the reference to “”close
cooperation with the Government of the United States of
America”” in the final language since this formulation
maintained the Japanese government as the lead actor for
completing the FRF. The inclusion of Article 3, as well as
the specific language of Article 3, required Prime Minister
Taro Aso’s personal approval.

———
Article 4
———

¶20. (C) The purpose of this Article is to assure the
Japanese government that the USG would not use Japanese cash
contributions for anything other than the original purpose.

———
Article 5
———

¶21. (C) The purpose of Article 5 is to capture U.S. efforts
to maintain a level playing field for Japanese companies
competing for contracts funded by Japan’s cash contributions.
In early discussions, the U.S. proposed including the caveat
“”in accordance with applicable laws and regulations”” to make
clear that the USG cannot guarantee equal treatment should
the U.S. Congress pass new laws that undermine the existing
arrangements. However, the U.S. side reminded Japanese
negotiators of the number of actions the U.S. side has taken
since May 2006 to create a framework for equal treatment and
to explain the political importance of equal treatment to key
Congressional members and staffers. The Japanese side
insisted that if the U.S. retained the caveat “”in accordance
with applicable laws and regulations,”” the Japanese

TOKYO 00003458 004 OF 007

government, at the highest levels, would not support the
agreement and would, at a minimum, insist on a statement in
Article 1 that Japanese funding is subject to equal treatment
by the United States. The U.S. negotiators reminded the
Japanese side that the U.S. never guaranteed Japan a level
playing field, but only committed to make “”best efforts.””

¶22. (C) Given the critical importance to Japan
domestically, the U.S. agreed to remove the caveat “”in
accordance with applicable laws and regulations”” from Article
5 after making a clear statement that even without an
explicit statement, all U.S. actions will be undertaken in
accordance with applicable laws and regulations. Removal of
this caveat does not change the fact that the U.S. will only
act in accordance with laws and regulations. Japanese
negotiators explicitly stated that they understood that it is
natural that all countries can only act in accordance with
their laws and regulations. However, they also said that
should the U.S. fail to maintain equal treatment of Japanese
companies, the Japanese government will cease funding under
this International Agreement. The U.S. side restated that it
has not agreed that equal treatment is a prerequisite for
Japan’s cash contribution, but took note of the high
importance the Japanese side placed on equal treatment and
agreed to, as has been the case since May 2006, make best
efforts to maintain equal treatment. The U.S. side added
that should the Japanese side choose to cease its
contributions, the U.S. would no longer be obligated to
complete the facilities in Guam or relocate from Okinawa to
Guam, per Articles 2 and 9.

———
Article 6
———

¶23. (C) The purpose of Article 6 is to give more authority
to the Implementing Guidance, which was drafted in parallel
with the IA, and which will be signed by MOD and DOD program
leads subsequent to the IA’s entry into force. The IG goes
into greater detail on implementation, especially ensuring
sufficiently flexible use of funds for program management.
The Japanese side pressed for indirect references to the IG
to avoid Diet attention. The U.S. side made clear that we
would share the draft IG with Congress and that the IA and IG
constitute a complete package.

———
Article 7
———

¶24. (C) The purpose of Article 7 is to lay out key
characteristics of the funding mechanism, although most
details are further outlined in the IG. Para 2 clarifies
that Japan’s contribution will be measured in constant US
Fiscal Year 2008 dollars by laying out a discount
methodology, and characterizes the index that will be used;

TOKYO 00003458 005 OF 007

separately the Japanese agreed to the U.S.-proposed
Engineering News Building Cost Index. U.S. negotiators
pressed the Japanese side to commit explicitly to transfer
funds annually within 60 days of Diet authorization.
Instead, they decided as an effectively equivalent solution,
the combination of a Foreign Minister statement at the time
the IA is signed committing to exchange notes as soon as
possible each year to facilitate timely transfer, along with
the MOD’s commitment to transfer funds within 30 days of the
annual exchange of notes, as referenced in paragraph 3 of the
IG.

———
Article 8
———

¶25. (C) The purpose of Article 8 is to address Japanese
concerns that the U.S. will make unilateral force structure
decisions (e.g., in the context of BRAC) that affect the
Japanese-funded facilities. During May 2006 Roadmap
discussions, the U.S. told the Japanese government that the
USG cannot make any commitments about the long-term presence
of U.S. forces in Guam. The language in this Article does
not commit the USG to anything more than the consultations
that would arise in due course among allies.

———
Article 9
———

¶26. (C) The purpose of Article 9 is to lay out the
disclaimers that both the Government of Japan and USG have
for their commitments in Articles 1 and 2 respectively.
Paragraph 1 is Japan’s disclaimer that it will not fund the
program unless the U.S. also takes necessary measures. The
real focus of this disclaimer is to hedge against the risk
Japan is taking of “”going first”” on funding. If the Japanese
government transfers funds to the USG in 2009 prior to
Congressional action to pass the U.S. FY 2010 MILCON budget
for Guam, and Congress subsequently does not pass the Guam
budget, the Japanese intends to ask for its unused funds to
be returned, consistent with Article 7. The caveats in
paragraph 2 capture the key conditions for U.S. funding and
actions to complete the Relocation. As is necessary in an
executive agreement, the U.S. includes the caveat “”subject to
the availability of funds for the Relocation.”” Moreover, the
U.S. clearly links the U.S. Guam actions to progress on the
FRF, as well as Japan’s financial contributions “”as
stipulated in the Roadmap”” (which refers not only to cash
contribution, but also funding for housing and utilities, for
a total USD 6.09 billion commitment).

———-
Article 10
———-

TOKYO 00003458 006 OF 007

¶27. (C) The purpose of Article 10 is to include generic
consultation language that Japan requires in all
International Agreements.

———-
Article 11
———-

¶28. (C) The purpose of Article 11 is to clarify the
mechanism and timeline for bringing this agreement into force.

———————————
Exchange of Notes (EON) and Annex
———————————

¶29. (C) The purpose of the EON is to initiate the JFY 2009
funds transfer. There will be annual EONs to reflect
projects and budget associated with the program. Language in
para 1 makes clear that the funds will be provided in JFY
¶2009. This reflects Japan’s retreat from earlier positions
that it needed to either use incremental funding or split
funding. The Annex of the EON updates the clarification of
each project. By grouping the design projects into a single
“”project”” for the purposes of the EON, the Japanese
government gives the U.S. program managers more flexibility
in implementation. By breaking up the Utilities and Site
Improvements (U&SI) project into three discrete projects, the
U.S. will need to exercise additional coordination with the
Japanese side to adjust funds between projects. However, MOD
implementation lead Marui made clear that he will be
authorized to assent to such funding adjustments and pledged
his full cooperation in accommodating flexible movement of
funds among projects as necessary. He cautioned, however,
that insistence by the USG that the US&I projects be grouped
together would be a “”deal breaker.””

—————–
Negotiating Teams
—————–

¶30. (SBU)

U.S.
—-

Suzanne Basalla, Senior Country Director for Japan, Office of
the Secretary of Defense (OSD) (lead)
Raymond Greene, Chief, Political-Military Affairs, U.S.
Embassy Tokyo
Lt. Col. Marc Czaja, Country Director for Japan, OSD
David Bice, Executive Director, Joint Guam Program Office
(JGPO)
Lynn Hicks, Senior Program Manager, JGPO
Matthew Gagelin, Legal Counsel, JGPO
CAPT Rame Hemstreet, Deputy Commander for Operations,
Headquarters, Naval Facilities Engineering Command

TOKYO 00003458 007 OF 007

CAPT Lou Cariello, Operations Officer, Naval Facilities
Engineering Command, Pacific
Wayne Wisniewski, Senior Counsel, Headquarters, Naval
Facilities Engineering Command
Craig Haas, Chief, Realignment Implementation (J57), U.S.
Forces Japan (USFJ)
Kent Morioka, J57, USFJ
Col. Clark Metz, Director, Marine Corps Pacific Posture
Program Office (observer)

Japan
—–

Kazuhiro Suzuki, Director, Japan-U.S. Security Treaty
Division Director, MOFA (IA lead)
Hiroshi Marui, Deputy Director General for Realignment, MOD
(IG lead)
Junji Shimada, Director, Treaties Division, MOFA
Tomoaki Ishigaki, Principal Deputy Director, Japan-U.S.
Security Treaty Division Director, MOFA
Masamitsu Nagano, Deputy Director, Japan-U.S. Security Treaty
Division Director, MOFA
Katsunori Sugahara, Deputy Director, Japan-U.S. Security
Treaty Division Director, MOFA
Satoru Yatsuka, Deputy Director, Treaties Division, MOFA
Masaaki Kanai, First Secretary, Embassy of Japan to the
United States
Makoto Igusa, Principal Deputy Director, Office of the DDG
for Realignment, MOD
Yukinori Nishimae, Deputy Director, Office of the DDG for
Realignment, MOD
Takahiro Araki, Deputy Director, U.S.-Japan Defense
Cooperation Division, MOD
ZUMWALT

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