Cable No. 5514, Ambassador Hatano to the Foreign Minister, 'Japan-United States Summit Meeting (Separate Telegram 1)'

Number: [TN: blacked out]

Primary: North American Affairs Bureau Director-General

Sent: United Nations, September 28, 1993, [TN: time blacked out]

Received: MOFA, September28, 1993, [TN: time blacked out]

To: The Foreign Minister      

From: Ambassador Hatano

Japan-United States Summit Meeting (Separate Telegram 1)

No. 5514 Secret Top Urgent

(Limited Distribution)

Outgoing Cable No. 5513 Separate Telegram 1: Change in Japan and the United States

(President) Are you enjoying governing? Are there not many difficulties in starting an administration?

(Prime Minister) It is half a joy, half a struggle. Mr. President, I think that is how it was for you, but there are various problems in the first two or three months.

(President) It was the same for me. On the other hand, the last three months have been good.

(Prime Minister) For a while now, I have noted and been impressed by the President’s enacting a budget adjustment law, taking the lead and showing leadership on the Middle East, NAFTA [North America Free Trade Agreement], and healthcare reform.

Concerning healthcare reform, you have decided to attempt what President Truman and President Nixon could not do.  Also, concerning NAFTA, you are taking on a great task, the influence of which will reach across the Rio Grande River. Its results will also have a great influence on Japan, so I have a particular interest and am watching it. I would like to encourage you in this.

(President) Thank you for your remarks. Healthcare reform is important for the following two reasons. First, it is directly connected to the future of the United States. The United States is spending 14 percent of its GDP on healthcare, but Japan and Germany are spending less than 8 percent of theirs. In the highly competitive global markets, the United States is spending six cents of every dollar on healthcare. This makes some sense in that it has a leading position in the healthcare field (technology, medicine), but in economic terms it is a waste.

Second, it is a problem for every country. It also effects the US-Japan relationship. That is to say, in the United States, the security of workers is not guaranteed and each year there is no rise in the standard of living. There is also the loss of work, in which case workers lose not only their income but their health insurance as well. When workers have a sense of insecurity, it becomes difficult to gain their support for NAFTA, GATT, the US-Japan Economic Framework Talks, and such. If I can have healthcare reform approved, I think that it will increase Americans’ sense of security and they will turn their attention to global issues.

I think that the political reform at which the Prime Minister is aiming is more difficult than this. I am working towards enacting three laws: on reform of political campaign fundraising, on the influence of lobbyists on the legislative process, and on reform of government agencies. I think that convincing Congress to pass these political reforms will be more difficult than healthcare reform. I would like the Prime Minister to come to the United States and tell us the details of how political reform succeeded in Japan.

(Prime Minister) You have come onto the political stage, calling for reform. I, too, appeared in calling for “responsible reform.” In Japan, which thinks that the political reform that is taking place in Russia and elsewhere is not an historical accident but an historical inevitability, it has the support of many Japanese. It seems that the expectation of Japanese towards me is less that towards a politician than that towards a revolutionary.

I would like to explain in a little detail concerning the changes that I am promoting. My cabinet’s historic mission is to promote structural reform. There are three reforms in structural reform: political reform, economic reform, and administrative reform. First, for political reform, I would like to pass within the year legislation to reform the electoral system and prevent political corruption. Second, concerning economic reform, it is a fundamental revision of the tax system, including a revision of the ratio between direct and indirect taxes, and a revision of rigid budget allocations. The Ministry of Finance, the top of the bureaucracy, approves of this. It also includes a revision of the pension plan, raising the eligible age from 60 to 65. Third,  for administrative reform, there is the promotion of deregulation and decentralization. Incidentally, my cabinet is the first to have raised deregulation as its banner.

These three reforms are not only for the Japanese people. In opening Japan to the world, in the sense of providing opportunities and markets, these reforms are for the world.

(President) I am very impressed. Since you took office, I have been reading your speeches and announcements. I pray for your success. Speaking from my own experience, once a country starts going down a certain course, it is difficult to change it. The reason is that people start to have interests and emotional thinking regarding that direction.

For example, in the United States we have printed money for quite some time now in order to cover up the giant fiscal deficits, and convincing the American people to stop this is difficult. However, the United States should not take up a significant share of the world’s capital.

In contrast, Japan had fiscal deficits before but is now in balance or has gone into surplus. In world trade, too, Japan has been successful. Also, Japan, European, and the United States are all now experiencing a global recession. In order to change this course, an even larger spending package seems necessary. Convincing the relevant ministries and agencies may be difficult, but just as I did difficult things, I believe that the Prime Minister, too, can respond this way to the problem.

It is necessary for Japan, the United States, and Europe to cooperate, even more closely than they have done to date, to create jobs, to increase exports, and, for example, to give assistance for such situations as that in the Middle East.

Passed to all [Japanese] diplomatic missions in the United States (except for Agana and Detroit), Permanent Mission of Japan to the International Organizations in Geneva, Mission of Japan to the European Communities, Delegation of Japan to the Organization of Economic Cooperation and Development, Canada, Mexico, Britain, Germany, France, and Italy. (End)