China-Japan Dispute Puts U.S. in Tricky Spot

WASHINGTON—Washington has been scrambling to defuse the dispute over uninhabited islands in the East China Sea—worried that it could undermine the U.S. security strategy in Asia if mishandled.

U.S. officials have made clear that they do not consider the islands themselves worth fighting for. But they also have stressed that they do not want to do, or say, anything that would undermine Japan, a major ally and treaty partner.

Those disparate interests define the U.S. position in the standoff: one of limited options and tricky diplomacy.

Until Tuesday, defense officials believed that quiet diplomacy was working and that the situation around the islands, claimed by both countries, had begun to de-escalate.

But defense analysts said the latest revelations—charges by Japan that China had activated its targeting systems at sea—seemed likely to swing the pendulum back toward disagreement.

U.S. officials do not want a war in the East China Sea. Nor do they want to resort to a military show of support for Japan, such as a joint Naval exercise, an action China would see as particularly threatening. Any great escalation of the conflict could provoke an economic disruption with global impact, according to U.S. officials.

"This is the second and third biggest economies, these are two very mature nations," said a senior defense official. "It is in everyone's interest that these two great nations find a diplomatic solution. There is a lot at stake here."

But the U.S. has to be particularly careful about how it avoids conflict. If it leaves Japan on its own, or forces Tokyo to back down, it could weaken or undercut its ally, shredding the U.S. security strategy for Asia, according to analysts.

James Schoff, a senior associate at the Carnegie Endowment for International Peace, a non-partisan think tank, said the U.S. cannot allow China to undermine Japan's administrative control of the Islands.

"You cannot just use force or bully your way to wrest administrative control away from another party. It is a terrible precedent to set with anyone, much less an ally," Mr. Schoff.

Allowing China to undermine that control would not end in the East China Sea. It could embolden Beijing to then follow a similar pattern with other American allies and partners elsewhere—including in the strategically vital South China Sea, defense analysts said.

"It is a test case. The Southeast Asians are watching this very carefully," said Christopher Johnson, a senior advisor at the Center for Strategic and International Studies, a non-partisan think tank. "It is being watched carefully in regards to what the U.S. is signaling in its resolve for its allies in the region."

Indeed, U.S. officials insist privately that Washington is not pressuring Japan to back down.

U.S. officials have repeatedly praised the new Japanese government's handling of the dispute and Washington has been asserting—whenever asked by Tokyo—that the security agreement between the two countries covers the islands.

Still, those reassurances are nearly always followed by reminders that a war is in no one's interest.

"Our treaty obligations are serious," said the senior defense official. "But peace and prosperity is a huge goal."

Defense analysts in Washington said the U.S. strategy appears to be to try and pressure both sides to de-escalate by agreeing to send fewer aircraft and ships into the disputed territory. The U.S. has been quietly pressuring Beijing to reduce the number of surveillance craft, a diplomatic push that is likely to grow with the latest incident.

"There is not going to be a solution here—in terms of a resolution to the territorial dispute—anytime soon," said Ely Ratner, a fellow at the Center for a New American Security, a think tank generally supportive of the Obama administration. "The best the U.S. can hope for is to get both sides to lessen the potential for an accident here."