311008Z

DAN 7683 TYHPAN 7523

CFIDENTIAL

DD 31 1OZ FCOLN

FM TO.. 0 TO FCOLN

31090OZ JAN GRS 775

CONFIDENTIAL

FM TOKYO

TO DESKBY 31100OZ FCO

TELNO 88

OF 31090OZ JANUARY 91

INFO DESKBY 3110OOZ HONG KONG

INFO IMMEDIATE WASHINGTON, RIYADH, MODUK,

INFO PRIORITY POLAD HIGH WYCOMBE

SIC 19M

MODUK FOR SEC (O) (C)

HONG KONG FOR GOVERNOR

GOVERNOR OF HONG KONG TO PASS TO LORD CAITHNESS'S PARTY GULF: JAPANESE CONTRIBUTION TO UK COSTS

SUMMARY

1. JAPANESE MFA STILL INTEND TO GIVE UK PART OF THE US DOLLARS 9 BILLION BUT BAKER'S BID FOR ALL THE MONEY IS A DELIBERATE POLITICAL DECISION, AND IN THE LAST RESORT THE JAPANESE MAY WILT IF HEAVY AMERICAN PRESSURE IS SUSTAINED : SO I WELCOME THE PROPOSED ACTION IN WASHINGTON. A VISIT NOW BY LORD CAITHNESS WOULD PUT THE ISSUE UNDER THE MEDIA SPOTLIGHT BEFORE THE JAPANESE COULD SAY ANYTHING HELPFUL. I RECOMMEND AGAINST.

DETAIL 2.

MY JUDGEMENT IS THAT THERE IS NO INTENTION ON THE JAPANESE PART TO SHRUG OFF THIS ISSUE. RETHER THEY ARE HOPING TO ENLIST

OUR EARLY SUPPORT ON A MATTER WHICH IS CLEARLY OF DIRECT INTEREST TO US IN A SITUATION WHERE OFFICIALS FEAR THAT IN A STRAIGHT POLITICAL ARGUMENT WITH THE AMERICANS, JAPANESE POLITICIANS MIGHT SUBORDINATE OUR INTERESTS TO THE OVERRIDING IMPORTANCE OF THE JAPAN/US RELATIONSHIP.

3. WE HAVE BEEN TOLD BY MFA OFFICIALS THAT FOLLOWING THE BAKER STATEMENT THE JAPANESE AMBASSADOR IN WASHINGTON WAS INSTRUCTED .IO TELL THE US GOVERNMENT THAT THE JAPANESE INTENDED THEIR CONTRIBUTION TO BE FOR THE MULTINATIONAL FORCES IN GENERAL, NOT THE US EXCLUSIVELY ALTHOUGH CLEARLY THE US WOULD GET THE LION'S SHARE. THEY CONFIRMED THAT KIMMITT SAID IN RESPONSE THAT BAKER'S CLAIM TO THE WHOLE US DOLLARS 9 BILLION WAS A DELIBERATE POLITICAL DECISION (CF AMBASSADOR ARMACOST'S COMMENTS TO ME TELNO 85). NEVERTHELESS AT THIS STAGE EVEN THE MFA'S NORTH AMERICAN BUREAU SAY THAT THEY ACCEPT THAT THE UK SHOULD RECEIVE A PART OF THE MONEY. HYODO, DIRECTOR GENERAL OF THE EUROPEAN BUREAU, REMAINS READY TO DO BATTLE ON OUR BEHALF.

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OUR

THE GREATEST RISK IN THIS SITUATION IS THAT THE JAPANESE IN THE END CAVE IN, HOWEVER UNWILLING, TO HEAVY AND SUSTAINED US PRESSURE. I HAVE STRESSED TO ALL THE SENIOR OFFICIALS INVOLVED THAT MINISTERS IN LONDON SEE THIS AS AN IMPORTANT TEST OF THE RECENT PROGRESS IN OUR BILATERAL RELATIONSHIP. MORE GENERAL CONSCIOUSNESS-RAISING- THE SECRETARY OF STATE'S INTERVIEWS, OUR OWN CONTACTS WITH ALL THE MAIN NEWSPAPERS AND TV STATIONS AND OVER 20 SENIOR POLITICIANS SO FAR IS ALSO BEING PURSUED ACTIVELY. BUT IN THE LAST RESORT THE OVERWHELMING CONCERN HERE WILL ALWAYS BE TO SATISFY THE UNITED STATES SINCE THE US/JAPAN RELATIONSHIP IS SEEN AS THE FUNDAMENTAL ONE FOR

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