For many years during the 1970s and 1980s, as Japan’s trade surpluses grew and grew, a low profile, and a reactive diplomacy, that attracted little attention and criticism seemed both beneficial for Japan and in the interest of the U.S.-Japan alliance. Harnessing the strength of the Japanese economy, America’s political economy was nourished by capital inflows that allowed the Reagan Administration to progressively increase defense spending, in the face of rising fiscal deficits, and triumphantly end the Cold War. Japan’s cooperation in quietly revising its Foreign Exchange Law to facilitate capital outflows played a crucial role, but there was little need in those days for that role to be active.
Today, however, we are in a very different era, with radically different global imperatives. Energy, environment, and international financial stabilization-- areas of manifest Japanese expertise and technical strength—are matters of pressing concern, on which passive Japanese liberalization steps are no longer enough. To the contrary, capricious, unregulated manipulation of Japanese capital exports by hedge funds and others, in the form of the yen carry trade, has been a pernicious recent element of international affairs. A substantial international profile, and the political coherence to be proactive, are very much in the interest of both Tokyo and the world. Indeed, if Japan does not soon end its recent pattern of revolving-door leadership, regaining both the ability and the will to act decisively in international affairs by stabilizing its politics, both Japan and the broader world will suffer.
The need for a Coherent, Proactive Japan is starkly clear in the trans-Pacific context. The United States, Japan’s preeminent ally, has just entered what promises to be a historic political transition. For the first time in eight years, the Democratic Party is back in power. Even more importantly, America’s first true globalist President, with existential roots in both Africa and Europe, extended childhood experience in Southeast Asia, and an upbringing in the diverse Pacific state of Hawaii, is about to enter the White House.
On the crucial matter of U.S.-Japan security guarantees, the advent of Barack Obama will no doubt mean stability and continuity. Robert Gates, President George W. Bush’s current Defense Secretary, will be continuing in office. General James Jones, a four-star Marine General and recent commander of NATO, will become National Security Advisor. Other senior Obama defense-policy advisors with East Asia-related expertise understand well the importance of U.S.-Japan security ties. It is hard to imagine a lessening of core American security commitments to Japan.
Yet the first year and a half of a new American Presidential term is traditionally the most dynamic of our Presidential cycle. New officials come to office, normally in the first six to nine months of the new President’s term, striving forcefully to distinguish themselves from their predecessors. And for a few golden moments, they typically have the wind at their back.
These early moments of a Presidential term have always been important for trans-Pacific relations. It was in June, 1953, for example, that Dwight D. Eisenhower achieved the Korean War armistice. It was in June, 1961 that the major Kennedy-Reischauer initiatives in U.S.-Japan relations unfolded. It was in mid-1969 that Richard Nixon began to unwind the Vietnam War, and to quietly begin his initiatives toward mainland China. And it was in February, 1994—little more than a year after Bill Clinton took office—that the U.S.-Japan telecommunications and auto crises began.
The early months of a new President’s term can thus be both positive and negative. It is generally difficult to forecast which. Yet it is typically true that they are fateful. This has been true to some degree across the entire history of postwar trans-Pacific relations, as we have suggested. Yet there are reasons to believe that the coming twenty months or so will be even more critical for U.S.-Japan relations than has typically been true in the past.
One major reason, as I noted in my recent book, Pacific Alliance, is that the structure of the Pacific political economy is changing. In the world of the 1950s that John Foster Dulles effectively made in negotiating the US-Japan Security Treaty, Japan and the United States stood alone in the Pacific as major and stable members of the regional community. China was under a Cold War embargo, while both Korea and Indochina were war-torn.
Today the situation is radically different. China has an economy of well over $1 trillion dollars, with military spending rising in double digits for over fifteen consecutive years, with influence leveraged by the presence of nearly four million Chinese Americans in the U.S.—nearly five times the number of Japanese Americans. Korea, although not so large, has likewise been benefiting from favorable economic and demographic trends, as has Southeast Asia also. Under an Obama Administration Southeast Asia, in particular, may have substantially more entrée in Washington than has traditionally been true, although its geopolitical weight, of course, remains limited.
The world today is rapidly globalizing, transforming the playing field in which the United States and Japan interact, as indicated in the figure below. While they must retain a meaningful bilateral alliance, they must do so within a much more complex world of competing commitments than heretofore.
This new global equation is one to which an existentially global President Obama will likely be particularly sensitive. Competition in setting the detailed agenda of Washington’s relations with the world will be intense, and will emerge explosively in coming months. Indeed, it has already begun, as was clear at the recent G-20 Washington and London Summits. The roles of the BRICs and the Europeans proved to be particularly conspicuous.
As the largest creditor nation in the world, when both public and private flows are considered, as the only large creditor that is a strong American ally, and as the one major industrialized nation that is relatively detached from the pernicious sub-prime crisis, Japan is a vital, stabilizing player in international financial diplomacy, from an American perspective. It is a natural ally of the United States. Yet Tokyo is not playing, as the results of the recent G-20 conferences suggested, as dynamic a role as might be optimal, although its recent IMF contributions and stimilus packages have made more substantial contributions to stabilizing the global economy than generally understood.
Japan’s marginal role in global financial diplomacy—at a time when its active, stabilizing function is very much needed—is only one casualty of the fluid, ambiguous political situation in Tokyo. Japan and the world are also disadvantaged on the international diplomatic scene as well. Prime Minister Aso Taro delivered a thoughtful speech in September to the General Assembly of the United Nations, and has presented sophisticated geopolitical notions for the post-Cold War world, such as his concept of an “arc of freedom and prosperity”, which effectively pre-empts the revival of the Soviet Union by extending across much of the post-Soviet space. Yet the domestic political turbulence in Tokyo—the return of a pattern of nearly annual Prime Ministers that prevailed across the 1990s also—has allowed both Aso and thoughtful predecessors such as Fukuda Yasuo far less leverage in international affairs than Japan’s global scale merits—even on issues like finance, energy, and the environment, where Japan’s expertise and underlying ability to contribute in global affairs are so strong.
Some important institutional steps to leverage Japan’s international role, of course, have been taken. Prime Minister Abe Shinzo’s establishment of a National Security Council was one important step, as has been the steady expansion of the kantei more generally. The consolidation of macro-economic and industrial-policy functions in an enlarged METI, and an expansion of the Japanese diplomatic corps have been helpful to some degree. Certainly the private sector also has a role also, and needs to work to offset paralysis in Nagata-cho.
Yet reform in the political world is clearly critical, and the resolution is not an easy one. Japan’s Constitutional and National Diet structures themselves are complex, and provide leverage for numerous veto players who can slow or stop needed policy change. Party alignments also are critical. Fukuda Yasuo and Ozawa Ichiro tried last year to form a grand coalition, to restore greater domestic political stability, and failed. No doubt a general election will be one element in clarifying the overall picture. Given complications in Diet management, some configuration that allows both Houses to operate coherently is clearly imperative. Not only Japan, but the entire world, is waiting.
