MARK MANYIN: Okay, why don't we begin. I'd like to welcome everyone and thank everyone for coming today. Let me check some boxes here -- things that I'm supposed to say. I just want to remind everyone to please turn off your cell phones, BlackBerrys and other devices. And I'd like to remind everyone that today's session is on the record.
I'm Mark Manyin. I'm with the Congressional Research Service. And I think the turnout here is sort of an indication that the era of Japan passing is indeed over. And in fact -- a lot of cheers go up for that -- and in fact, at least from my perspective on Congress, the era actually was over a couple of years ago at least when we started noticing much more attention being paid to Japan issues in general. Of course, now we have history issues are front and center recently. But over the last few years, under Prime Minister Abe and his predecessor Koizumi, Japan has been taking on a much more assertive role on the world stage. We see Japan dispatching troops to Iraq, to the Indian Ocean, seeking a permanent U.N. Security Council seat, taking a very hard line on North Korea, deepening its military alliance with Japan, signing a security pact with Australia just last week. And maybe even most importantly, trying to change some of the things that inhibited it in the past from being a, quote-unquote, "normal nation" -- upgrading its defense agency to a ministry, talking about revising its constitution.
As part of this, of course, it's caused a lot of strained relations with its neighbors, particularly China and South Korea. We have historical issues that have come up that have raised questions about what Japan's intentions are, what its motives are. And we have some outstanding territorial disputes with China, South Korea and Russia.
In about a month or so, we'll have Prime Minister Abe coming into Washington -- of course, summit with President Bush. And he does so at a moment -- not only has he sort of stepped on this trip wire of historical issues, but the combination of that and some other missteps have led to a steep decline in his popularity to the point where his disapproval ratings in most public opinion polls are now higher than his approval ratings.
So, to discuss all of this we have an excellent panel. On my right, we have Kent Calder with SAIS just across the street, and Mike Green with Georgetown and CSIS. Both have a lot of government experience that they can bring to bear -- Kent as adviser to the U.S. ambassador to Japan during the Clinton years and Mike from the NSC where he was Asia director -- is that --
MICHAEL GREEN: Senior director, yeah.
MANYIN: Senior director for Asia.
So, why don't we start, Kent. Let's talk about what is the Abe agenda if we can define it that way.
KENT CALDER: I think the first thing I would say about it is, to a unique degree, I think it's a global agenda. We've got Prime Minister Abe's visit to NATO; we have his trip to the Middle East coming up; of course, the overtures to China and Korea within Asia but particularly beyond the region. And another thing, I guess, that's striking to me -- obviously, there's this strong -- relatively strong -- political military undercurrent in a lot of this of realists. I guess I would say it is political realism but also conflict resolution. Shimon Perez was in Tokyo the last week. The four-party talks with Jordan and Israel and the Palestinians have been going on. My guess would be probably in the Middle East visit that's coming up we'll see some initiatives there. And then on Russia and the nearer abroad, dealing with Central Asia, also some back-channel talks with the Russians.
So, I think there's certainly a lot more than, you know, the stereotypical -- important, but perhaps stereotypical -- issues within Asia. There's also this global agenda.
MANYIN: Mike, you want to add anything to that? I mean, and maybe talk a little bit about the whole debate about foreign policy that's going on within Japan.
GREEN: I think Kent is right. And for those of you who have time to do content analysis, if you'll look at prime minister's speeches, you'll see from Koizumi and Abe a sharp increase in the mention of global issues, of Europe and Middle East and a relative decline in how often Asia is emphasized. Koizumi was the first prime minister since about 1957 to articulate Japan's foreign policy in terms of U.S.-Japan alliance and global solidarity. His predecessors for decades had always said U.S.-Japan alliance, the U.N. and Asia. So, there's a clear shift that Abe is continuing.
The other way to think about Abe's agenda is in terms of the -- and I think this is the way he thinks about it -- in terms of the broad sweep of conservative politics in Japan. Koizumi and Abe come out of what, for decades, was the anti-mainstream faction in the LDP. The mainstream faction was more focused on pork and expanding the economic pie and a relatively low profile in foreign policy. Koizumi ran against, and in fact destroyed, the old guard LDP structures and especially the postal savings system which was the key to their patronage.
Abe is now continuing some of those economic reforms. We can come back to economics, because he has less enthusiasm about that than Koizumi. But Abe is now targeting the norms and institutions and policies of the left and of the center that kept Japan from playing a larger security and more active role in the world. So, he wants to change the constitution, he wants to create a national security council, moving the defense agency to a defense ministry and giving Japan the look that his grandfather, Kishi, wanted to give Japan in 1960, but it was a little too early.
MANYIN: So, you know, you're both talking about Japan as acting more robustly some on the global stage. But isn't this really about Asia? I mean, isn't this primarily a reaction to Russia --
CALDER: I think inevitably, given the geostrategic situation and the region is shifting, inevitably there are those concerns. There's a lot of tensions that go far beyond history. If we look, for example, across the Taiwan Straits, you've got over $100 billion of cross-investment. You've got Taiwan trading more with the mainland than it does with the United States. You've got 10 percent of the Taiwanese work force on the mainland. You've got the Korean Peninsula and, obviously, the missiles and, you know, mobile missiles, the Nodongs. You've also got a peninsula broadly in transition. So, there's a lot happening in Asia -- the sea lanes also, the geopolitical tensions that I think are in the background as well as the political changes, not just in Japan but in China, in Korea. Democratization, ironically enough, is making foreign policy management more difficult and intensifying nationalism I think.
MANYIN: Yeah, we'll come back to that, particularly when we talk about history issues. But it's my own sense in talking to, like, say, Japanese politicians and what not, is the extent to which foreign policy issues resonate for their constituents. And you know, one politician when I was in Japan last summer mentioned to me that, you know, all I have to do is mention China and it's sort of like dangling red meat. So again, is this really about China and North Korea to a lesser extent, Mike?
GREEN: It is. The increasing realism in Japanese foreign policy is a result of China's growing power, of uncertainty about North Korea and, of course, also generational change. And another factor is that although Koizumi has brought some growth back to Japan, they're looking at long-term growth rates of 2 percent at best. So, the old coordinates of Japanese foreign policy, using economic power, using economic tools don't work as well.
Ken Pyle has a great new book out about Japanese strategic thought -- the history of strategic thought -- and one of the arguments he makes that I find convincing is that Japan has consistently reordered its assets to deal with the international system it faces. And today, with rising Chinese power and with uncertainty about North Korea, economic tools alone aren't going to work, and Japan doesn't have as much economic power to utilize anyway.
So Abe -- and this is a trend that's been building since the mid-'90s, and Abe has a lot of support for this among both the DPJ and the ruling LDP -- but Abe is trying to strength Japan's hand by moving beyond economic tools, by creating security relationships with Australia, partnerships with Indonesia, using global norms like democracy and open market principles to shape the environment and fleshing out its playbook, because economic power alone just isn't going to do it. And that dovetails nicely with the ideological agenda that Abe and his generation have to move beyond the old way of doing business.
MANYIN: I should add for a non-Japan answer, DPJ stands for the Democratic Party of Japan which is the largest opposition party in Japan.
And Kent, you know, years ago you wrote a piece -- a review actually -- calling Japan the ultimate reactive state where it doesn't really seek to assert itself, at least not in traditional ways. So, is this a new --
CALDER: I think there are still many of the dimensions that made Japan reactive that are still there. At the margin, I do think there is change. First of all, the many ministries involved. You've got the foreign ministry, you've got MITI on the economic side, finance and so on. With a stronger kantei, the new national security council I think --
MANYIN: So the kantei being the prime minister's office.
CALDER: Right -- prime minister's office -- begins to create a little more coherence. But again, that's a small entity. You've also got the Diet with very complicated processes, lots of veto players in the political system, that make it easy to stop new overtures. You don't have the power of the presidency as in the U.S. or France or even Korea.
So, I think there's a lot of things that, in the nature of the situation, tend to make Japanese policymaking reactive. I think we can see some of the dynamics in what happened when Koizumi made his overtures to North Korea a few years ago. It was the interaction of the international and the domestic -- together made a foreign policy overture, you know, forced -- vetoed it fundamentally.
I think the reactive side of decision-making certainly is becoming less prominent. But when Koizumi and also when Abe now does take controversial steps -- we can see this domestically on, say, some of the education reforms; I think it could well occur also on constitution revision -- when really controversial steps are taken, the combination of domestic and international forces, given the fragmentation in Japanese politics, I still think creates some reactive element. Although, this is becoming less than it used to be.
MANYIN: Switching gears a little bit, you know, we're talking about a Japan that has problems with all its neighbors and seems to have a neuralgia, for lack of a better word, on history issues. It is, in some ways, a country in decline in relative terms economically, demographically, has a big time bomb lurking. And yet, the United States is pulling Japan closer and basically betting a lot of our Asia policy on this alliance.
You know, Mike, you participated in an influential report -- the Armitage Report -- too, you know, saying that the U.S.-Japan alliance is a key to getting Asia right for the year 2020. So, is this a good bet for us?
GREEN: Yes. (Laughter.) And it's not just because Kent and I spent years mastering Japanese and are too old now to learn Chinese. You mentioned demographics. Japan has a demographic challenge, but I think most demographic experts would say Japan is starting to do the policy and regulatory things it needs to do to start getting a hold of it. You set that against China which has an enormous demographic problem coming in 10 to 15 years and no public policy response in place yet. So, some of this is based on a straight line trajectory of China's economic growth that reminds me of the straight line trajectories about Japan in the late '80s. In fact, Goldman Sachs has put out a report projecting that China will surpass Japan's GDP I think in 10 years. I remember in 1990, Goldman Sachs put out a report saying Japan's GDP will surpass the U.S. by 2005. So, the straight line trajectory thinking behind some of this I think needs to be questioned.
Japan today, of course, has the second-largest economy in the world and is the second-largest supporter financially of all the institutions that make the international system work -- the U.N., the World Bank, the IMF, overseas development assistance. Japan is the platform from which the U.S. provides military presence and stability, not only in East Asia -- you can say this now; you used to not be able to say it, because the Japanese foreign ministry would panic -- but throughout the whole hemisphere. And increasingly, as we were discussing earlier, Japan is expanding its playbook. It's strengthening relations with other powers that, while they engage China and have very good economic relationships, are also hedging and balancing. So you have Indonesia, India, Australia, Vietnam, Singapore all tightening relations with Japan and each other not to contain China, but just to have that extra dimension to their foreign policy, which gives Japan a lot of outlets.
Japan has -- and this is, you know, surprising given this "comfort women" issue and history issues -- but Japan, for the second year in a row, was rated the most reliable country in the world, around the world, by BBC. They take a global poll. This year, Canada tied with Japan. But for the second year, Japan was number one when asked what country, you know, contributes to international prosperity, peace and so on and so forth. In Korea and in China, the numbers are bad for Japan, and that's a real liability for their foreign policy. And the history issue is part of the cost. But in Southeast Asia and in South Asia, Japan has numbers, in terms of support and trust, that we or China would be very happy to have. In India, Vietnam, Singapore, Indonesia -- in all these countries last year, Gallup did polling and found that Japan has 89, 90, 92 percent positive ratings in terms of Japan's role.
So the history issue is a liability, it's a problem. We'll talk about it more. But it is not, when people talk about Japan being isolated from its neighbors, it's not the case across Asia. And in many ways, you could argue Japan is taking a risk by being associated with us in some of these regions, because Japan has pretty good support throughout much of the region. Korea and China and, to some extent, Taiwan -- it's a problem, and it's going to be a big task for this prime minister and future prime ministers to deal with.
MANYIN: Kent, you want to add anything to that, particularly talking about the risks associated with us?
CALDER: Yes, I do think so. I think one should remember some of the structural characteristics of the Japanese system that we were just talking about. Decisive, sort of future-oriented policymaking is difficult. The electoral system, political traditions, various reasons -- often, there can be a rather parochial bias in a lot of Japanese policymaking. Or it can be oriented domestically. We're all, to some extent, oriented domestically, but particularly given the shift that we've seen in the opposition recently, there can be an orientation toward a policy line of debate domestically in Japan that may be out of phase with things elsewhere in the region or in the world. But I don't mean to exaggerate those. I think the large thrust is similar to what Mike said. It's the importance of Japan as a potential partner. The question to me is, what kind of a partner in what areas?
In that regard, it does seem to me probably the model that was once stressed of the United Kingdom, the Anglo-American alliance, may not be the most appropriate model, perhaps some of the other European models. Still strong allies, but admitting some cultural differences giving more weight to the economic side of the interaction -- I think those sorts of paradigms probably are the best, but that doesn't gainsay that Japan can be an extremely important ally, in fact, or certainly the pillar of American policy in the Pacific it seems to me.
GREEN: Can I just provide context? Because I wouldn't want people to think that this is a false choice between Japan and China. I think the correct way to answer it is to say we're not betting on Japan and betting against China. I think Kent would agree with this and what we argued in the Armitage Report is, you know, we need to invest in a stronger U.S.-China relationship. We need to expand the areas of cooperation. That's the most important variable in many ways in the international system today. We need to get it right. But to get it right, we have to make sure that we're continuing in lockstep with Japan which shares our values and which also wants China to play a positive role. And that we're building relationships around Asia so that this doesn't fall into a kind of bipolar U.S.-China dynamic where we split the difference. I think it's important that in Asia, the agenda and the norms are such that we can feel confident about China playing a larger role, because the whole region is setting rules that we agree with. And Japan's very important for that -- not just Japan, other allies, other friends in the region, but it's not an either/or. I think Japan is a critical variable to get our China policy right.
CALDER: I think that's absolutely right. We increasingly are moving into the era where we have to think regionally. And the idea of stability in the region as being absolutely crucial I think is very right. I do agree with what the Armitage Report had to say about that. So, the question really is, how to do that, how get that broader stability. And in that sense, the linchpin, it seems to me, does need to be a strong U.S.-Japan relationship.
MANYIN: Mike, you just mentioned norms, so this might be a good segue to talk about the history issue and maybe tie it to sort of the broader rise of nationalist sentiment in Japan. You know, we have the whole political system really shifting towards a conservative bent now. Why is it that Japanese leaders, particularly the conservative leaders in the LDP, feel compelled to, a, think the way they do, take these revisionist lines on history and to then say it publicly? I mean, don't they see what damage this does to their priorities?
CALDER: Well, I think there's three or four factors at work. One probably is a generational shift. We've got a lot of new leaders, many of them elected in the '93 elections. But certainly, there's a generational shift. You've also got the geopolitical situation in the region that I mentioned. I think it's becoming, in some respects, more challenging despite the economic interdependence. The uncertainties on the two flanks of Japan are something that, you know, make many Japanese wary. Also, the political shifts that you allude to in the political system itself -- in 1996, the socialists and the communists together had 14 percent of the lower house vote. In '05, they had 3 percent. There's been a collapse of the left in Japan, which has affected the broader dynamics of policymaking. The balance to a perhaps unrealistic but stridently, if you want to put it this way, peace-oriented diplomacy, you know, is no longer there.
Now, I do think as long as nationalism and conservatism are in the context of this strong U.S.-Japan relationship, the broader, global implications, of course, are less. But then, within Asia, in some parts of Asia -- and I think Mike is certainly right to distinguish broadly Southeast and Northeast Asia, particularly China and Japan because of their wartime experiences. Not only wartime but, of course, colonial rule beginning the whole heritage from 1895 on for half a century is something that Southeast Asia didn't experience with nearly that intensity, particularly the Malay, the non-Sinic parts of Southeast Asia. So, it's very hard to generalize it, but certainly there are those, you know, those tensions out of history.
The other thing I would stress is that I think the domestic politics, the political mobilization, the coming of democracy, the social impacts of economic growth in China itself are just making it tempting on all sides to use historical issues. And then the interaction of all of these things becomes politically combustible.
MANYIN: Mike, is there any role for the U.S. to play, either behind the scenes, subtle or more overt on these history issues, you know, both with regard to how it affects the U.S., because we have our own historical issues, and with Japan's neighbors?
GREEN: I think the U.S. has a very real interest in having Japan play a role in the world and be recognized for its positive contribution, for its democratic institutions and therefore, we have an interest in not having this history issue be the defining factor in Northeast Asia. We had a lot of debates about this in the administration, and I'm sure they still do debate how to handle this. And where we came out, which I think is the right place, is to say that it's not the U.S. business to intervene in these history issues, which are extremely complex. If we had, for example, intervened on the Yasukuni Shrine issue, I think the stories would all have been about the U.S. And in fact, what happened was Yomiuri and other newspapers carried a lot of stories reflecting on the history issue. Our intervention in this issue in an overt and political way makes this about us. It makes it about power relations.
And one of the reasons this issue is so hard to solve in the region is because it is intertwined with power relations. And if we got involved, it would just make it more complex. But we did when I was in the administration, and I think rightly, point out to friends in Tokyo that we want Japan to be playing a positive role. We want a stable relationship with China. And to challenge friends in Japan to think of ways, without telling them how to handle it, to emphasize the positive and to move in the right direction.
You know, you didn't do this, but you frequently hear people talk about Japanese nationalism. And then mentally, it's a quick jump to Japanese militarism and the images of the dark cloud society in the 1930s. Another way to say nationalism is patriotism. One man's nationalism is another man's patriotism. And pride, which is something Abe is pushing for, is I think something that the U.S. should want the Japanese people to have in their own nation. They should be proud. We want Japan to play a role, to continue underpinning the key institutions of prosperity and stability.
The other aspect of nationalism -- sometimes it's thrown at Japan -- but the reality is it's not just a phenomenon in Japan. In Taiwan, in Korea, in China and in Southeast Asia, the way I put it is I think there is, among all of these societies and political systems, a profound sense of incompleteness. So for Japan, it's moving beyond the post-war constraints, getting a constitution that's Japanese, you know, being quite firm on territorial issues. In Taiwan now, for the Taiwan identity, it's about separation from China. In China, it's about territorial and sovereignty and integrity. You have, in all these countries, debates about national anthems and flags and borders and territories and histories, the kinds of things you don't hear in the same way in North America or in Europe. So, it's a trend across the region. It's not necessarily all bad, though, because nationalism, if you think of it, has two dimensions. And one dimension is pride. And if the Japanese people channel pride into playing a larger role in the world and taking on more responsibilities, it's a very good thing for the system. And I'd say the same thing for China, Korea, Taiwan or any other state in Asia.
MANYIN: It puts a particular emphasis on recognizing how your comments reverberate outside of your own country.
GREEN: Yeah. Is this where we talk about the "comfort women"? (Laughter.) I was in -- Kent was there last week, I was there a week ago. The second thing about this "comfort women" issue was the degree to which within the Japanese political debate it was a left-right issue, full stop. There was -- I haven't seen polling, and I don't think there's been polling. But at least among the elite -- my wife and I were there, we talked to a lot of people, different sides of the spectrum -- this was not a woman's issue in Japan. Women on the right were with Abe. Women on the left thought he was terrible. It was a left-right issue, and the debate was largely left-right and whether or not this post-war generation was going to let the previous generation or let the left hold them down and force them to continue apologizing. And I think the prime minister and many of his supporters completely lost in the intensity of this debate what everyone else in the world say, which is that this is a tragic story with human dimension. And I think that the prime minister's office came to realize that. And on Sunday, he came out and offered, you know, his personal, deep remorse and apology. And I think that that basically is going to keep this issue on a low simmer. But there are a lot of people within the LDP or within media who feel that Japan should not constantly have to apologize, should explain its case, even though explaining the case does nothing but damage Japan's position. So, I think we'll continue to see low intensity on this one, which is unfortunate, because it undercuts a lot of the very positive things that I think the Abe government is doing in foreign and security policy.
CALDER: It seems to me, yes, it highlights what I think is going to be an increasing problem for the management of trans-Pacific relations, namely that a public discourse within Japan, and one could say probably about other countries in the region, much of it will be intensely domestic in its nature. And the American political process, of course, operates and the global processes deal in different sets of discourse in many cases. And we now have a world of electronic communication that automatically puts these highly parochial debates in somebody else's living room very, very easily. And in the United States, of course, the U.S. has major relations and important relations, as we've said, where the real stake is stability ultimately. The alliance with Japan, which is qualitatively different, but also with very important relations with China, with Republic of Korea, Taiwan, not diplomatic but economic, and so on -- so that all of these -- the crossfire -- it's very easy for a crossfire to develop or for issues that are of importance for Japan, perhaps, to be seen in different light in Washington or even potentially resolved in different ways. The converse might well happen in Tokyo sometime in the future.
But this issue, the "comfort women" issue, issues on the Korean Peninsula, other issues in Asia, in the Middle East, conceivably, global issues, they'll be seen in different lights. And so, sustaining a consciousness of U.S.-Japan relations in both capitals and also an understanding of the political situation I think is going to be both increasingly important and also increasingly difficult.
MANYIN: Okay, a lot to chew on here for questions and answers. And there's a lot we haven't talked about, of course -- economic issues -- we haven't touched on that much -- North Korea, the U.N. Security Council seat bid.
Before I go to Q&A, I want to just invite all council members to join us. Please, after I recognize you, wait for the microphone to come, if you would stand up and clearly state your name, affiliation, and please have a question as well.
Yes, in the back there.
QUESTIONER: My name is Yuri Sigov, chief of bureau, Business People magazine, from Russia. My question is for Mr. Manyin.
What do you think are any chance for change of the position of Japan towards the territorial issue with Russia? Many Russian officials now expect the new government will change this position. A couple of weeks ago, Russian prime minister was in Tokyo. And one of the tools that Russia wants to use in this situation is attracting Japanese investment and Japanese businesses to Russia. Russia is trying to play the game with China in order to motivate Japanese to be more active; giving Chinese some perks and possibilities for business. Is there any possibility that Abe government will change its position?
CALDER: I guess I would say not a change in position but a willingness to entertain on multiple tracks of discourse. The strategic dialogue, for example, with Russia that has been deepened, I think it's fair to say recently, as one element of that, even though there may not be progress on the northern territories question. That said, it also seems to me the Abe government is deepening its relationships with many of the nations on the periphery of Russia. Foreign Minister Aso was in the Baltics. Central Asia is of increasing concern diplomatically to Japan. So, there's a rather multifaceted and, to my mind, a more sophisticated diplomacy toward Russia and the nations around it than we've seen in a long time, which will perhaps lead to some deeper interchange, certainly culturally and economically. And then I think the Japanese would also see that in the long run that this will have some positive affects on the northern territories issue, too.
GREEN: Abe's polling -- his positive ratings are in the high 30s, low 40s which historically, for a Japanese prime minister, is pretty good. But he's running, as Koizumi did, his fuel, his popular support, because he doesn't have the traditional factional balance. So, he needs popularity. The negative ratings -- when the newspapers ask why are you negative about Abe, the number one reason is because he's not decisive. And although it's not in the answer, you could say like Koizumi was. And so there is, I think, some logic to Abe, who can't really now use the North Korea issue, because the U.S. has shifted so suddenly. He can't really use the U.S.-Japan alliance quite as effectively, because there's some issues now. So, there could be some political logic within the LDP before this upper-house election for a dramatic, unexpected breakthrough with Russia, which Abe, being from the right, could do. The old "Nixon goes to China."
However, I wouldn't bet on it. The reason I wouldn't bet on it is because I think President Putin's decision to renegotiate the Sakhalin II, this gas project, to claim that there were environmental problems and basically renegotiate the contract means that in Tokyo, there are very few people who think they can trust Moscow right now. So, I don't think they'd have the courage to do this. But there's a political logic to it.
MANYIN: Meaning that Russia shifted from Japan to China.
GREEN: Russia basically told Japan and this multinational investment in Sakhalin that they were going to have to renegotiate the price. They blocked permits using environmental excuses, but it was all about jacking up the price, renegotiating the contract.
MANYIN: Ambassador Demming.
QUESTIONER: Thank you. Rust Demming. Thanks for a very interesting overview.
I just wonder if you could talk a little bit more about what seems to be the operational problems with the Abe administration -- as you said, the criticism for lack of leadership, a lot of infighting among the various LDP and government leaders, statements by -- (inaudible) -- and others that have helped -- (inaudible) -- (Prime Minister Abe ?), and various people having various problems. Isn't this really going to affect the ability of the administration to carry out kind of long-range policies it's articulated? And are we in danger of going back to a period of rotating Japanese prime ministers every 18 or 20 months that we had for the last 10 years before Koizumi?
MANYIN: Who wants to jump at that? Mike do you want to -- (laughter).
CALDER: Well, perhaps to take the foreign policy side of this, first, I think the problem probably on foreign policy infighting is that that's the shining aspect of the administration so far, the whole "comfort women" issue apart -- you know, the overtures to Korea and China, also some degree of unity, the foreign ministry having particular preeminence there and being divorced from a lot of the crossfire on the domestic side. So, things are obviously more difficult on the domestic. I guess I would see a lot of this as settling in, people with relatively less experience than has been true in some key administrative positions than had been the case. I think it probably -- I'd be inclined to think rather than deepening that at least in the next two or three months, things will get easier. I think probably the Middle East initiatives, one should imagine that those would come across positively. The trip to Washington, I think hard to say. But foreign policy is going to be pulling up and supporting, I think, the domestic side where there's more problems.
GREEN: Koizumi had some problems at first structurally as well. And initially, Koizumi, although he was running on this very strong reform campaign, he was going after the patronage postal savings systems and other structures of the old guard, he, for the first two years, had to keep one hand with the old guard, had to adjust to them, they were part of his Cabinet. Then he ran against them in the campaign, crushed them and became the strongest prime minister since Yoshida, you know, in 50 years. I was told that after he won his series of elections a few years ago and became, you know, just absolutely dominant, he would walk into Cabinet meetings, and everyone would stand to attention, which had not happened in Japanese Cabinet meetings since 1945. So, Koizumi had real power. But at first, he struggled, too.
Abe's problem is not dissimilar. Abe has -- the biggest structural problem people talk about is that he has a very energetic prime minister's office with people like Koike and Shiozaki, who are strategic and thoughtful and want to be proactive. But within the prime minister's office, he doesn't have very many traditional, old style, backroom-politicking politicians. So, there's a bit of a decoupling of the prime minister's office from the party. And the other problem he has is that ideologically, some of the people Koizumi kicked out of the party are close to Abe, and he's bringing them back in. So, it's a bit bumpy.
But if Abe survives, he has an upper house election this summer. The other problem he has is people are hedging and betting that, you know, in case he doesn't make it, they're positioning themselves. If Abe gets through this upper house election this summer -- I think he will -- if he gets through, he's got two years without a major election. And at that point, I think he'll start really imposing discipline in a way he can't right now. But until July, I think it's going to be a little bit of the way it is now, which is left and right hand not always knowing what the other is doing.
MANYIN: In fact, some of the opposition party members last summer that I spoke to said to me that they were hoping that Abe would become the prime minister because they thought that he was the LDP's last best shot and that he would go down in flames -- (laughter) -- and they could ride it. Of course, they thought it was on economic issues, not foreign policy issues.
But in any case, another question -- yes, over here.
QUESTIONER: Julia Chang Bloch from the U.S.-China Education Trust.
It is, of course, in U.S. interest, as both speakers have stressed, for the United States to maintain a partnership with Japan and, at the same time, a good relationship with China. But how are going to manage this? Because if I recall correctly in history, Japan and China have never been, how shall we put it, up at the same time. And particularly, since all my encounters with the Chinese, I've not found one who thinks that our hedging policy in Asia, particularly incorporating the Taiwan Straits into the two-plus-two -- that's benign. So, I really would like to hear from both of you how we are going to do that -- maintaining a balance between Japan and China.
CALDER: First thing I think that I would want to say is I think the problem in the next several months is probably going to appear less, you know, less serious in the short run than it now looks. My guess is that Prime Minister Wen's visit to Tokyo is going to go well. Interestingly, even on the issue of the "comfort women" recently, the Chinese have taken quite a muted response. Which to my mind indicates that, you know, they see the prospect of some major cooperation looming in the future.
On the energy issue, of course, there's some underlying important differences. But also, the value, the possible gains from coordination, are substantial in East China Sea gas reserves, for example. The Chinese market certainly needs them. Demand around Shanghai, Sichuan and so on is growing rapidly. The basis, it seems to me, there for a cooperative arrangement on East China Sea oil actually is looming. Energy conservation is another area. Prime Minister Wen, in the National People's Congress, was emphasizing the importance of conservation. And Japan's record is outstanding in that area. At the East Asia summit, Prime Minister Abe noted that he felt cooperation within Asia was important and that Japan could help.
So, I think there's a lot of areas for potential cooperation. Obviously, the transitional questions regarding Taiwan, economic interdependence between Taiwan and the mainland and with the world, it seems to me, may well make the issues easier. In the longer term, you know, the points you allude to certainly loom.
As far as the American role is concerned, I guess I would just stress -- I'm sure Mike has a lot to say about this -- stability, the importance of stability, staying out, as a government, of the history issues but being concerned about them from a human point of view -- track two. I think there's a lot of room in terms of agenda setting for track two for universities, for think tanks, for various kinds of dialogues, because the issues that you're talking about are clearly dangerous in the long run.
MANYIN: He can give you the SAIS number in a minute. (Laughter.)
Anything you want to --
GREEN: The U.S. has a clear interest in, as Kent said, strengthening cooperation between Japan and China and among Asian powers. And we should not project that we see a zero sum relationship, that somehow if Japan's relationship with China is improving, we lose. We should be very careful never to give that impression. We should keep doing more of what we're doing with the six-party talks on North Korea. There's also a six-party forum that includes Japan and China on energy. We need to keep building the positive and cooperative agenda and do all the things that Kent said.
It is true that Beijing -- official and academic Beijing -- were very unhappy that the U.S. and Japan in 2005 in our joint security document said that the stability of the Taiwan Straits is a core objective for both countries. Both have said that many times, but that we put it out there upset people in Beijing. Underlying that was the reality that we have to face, I think, with open eyes, and that is that China's defense spending is increasing this year, by Beijing's numbers, over 17 percent. Japan's defense spending is increasing by 0.2 percent I think; Taiwan's by almost nothing. And behind that two-plus-two statement was deliberate Chinese submarine moves into Japanese territorial water; Chinese mapping of the floor around Japan; circumnavigation by submarines of Japan; anti-satellite tests we saw; increasing surface and air warfare capabilities.
And so part of this equation, while we emphasize the positive, has to be dissuasion and deterrence. We can't get away from it. And I think the two-plus-two statement was very, very important for stability in the region because we don't want it to be too easy for the PLA to go into President Hu and say, yes, we're confident that we could use force against Taiwan. And the more that the PLA is going into Japan's backyard and the more Japan is, without dramatically increasing its defense spending, working with the U.S. to defend itself, that complicates PLA military planning, and I think it pushes the whole process towards more diplomatic and political solutions. And though I can't prove it, I suspect that the combination of the two-plus-two statement, the Europeans not lifting the arms embargo and a few other things like that, after China passed the anti-secession law emphasizing military force, I think that was a factor in what you now see in China's Taiwan policy, which is a much softer approach and much less military.
So, dissuasion has to be and deterrence has to be part of this equation. The thing is, how do you do it without creating a defense dilemma and without creating the wrong dynamic? My feeling is the two-plus-two statement was at just the right level.
MANYIN: Another question -- stay on this side of the room for a minute -- over here.
QUESTIONER: Mac Destler, University of Maryland.
I was struck by Mike Green's comment that the sentiment in Japan on the "comfort women" was highly polarized between left and right. Now, Americans should not lecture other countries about political polarization. Nevertheless, I am tempted to ask two very brief, naive questions. Is there anyone serious in Japan who argues for a more aggressive and assertive foreign policy, including military policy, and at the same time would argue for deemphasizing the World War II issues or even coming to terms with them in a way lots of us would want to? And the second question is, is there any way that patriotism can be asserted in ways that seriously get beyond this? Like building a new shrine, ideas many people have brought forward that would somehow evoke the many, many things Japanese have to be enormously proud of, including, arguably, some aspects of World War II but without this sort of denial. And package it just right, recognizing that other countries exploit this for their own geopolitical reasons, we all know. It's not a great idea for the Japanese to give them the best opportunities possible for doing so.
GREEN: It's a very good question. And to answer the first part of your question, yes, there are people who argue for a more assertive Japanese security role and a more transparent acknowledgment of what happened in the Pacific war. The best example is Tsuneo Watanabe, the head of Yomiuri, who has published this enormous volume on war guilt, detailing down to the level of colonels, you know, who did what. And yet, Yomiuri's editorial policy is to change the constitution, play a more assertive role. That I think probably is where all of this debate will and should end up. But it's not there yet because, you know, Abe and his generation have been unfettered. They've been -- you know, these guys really don't like Kono Yohei. Mr. Kono was the one who put in place the '93 apology. It's generational. There's a real profound ideological and generational fight. And the trench warfare on this is so intense people are not thinking, in my view, clearly about what you're saying. But I think that's probably -- I think Watanabe Tsuneo is ahead of his time, and I think that's generally where this debate should and ultimately will go. But I think there's going to be a lot of open argument about whether Japan was guilty or not guilty in this case or that case. And as Kent was suggesting, that's going to be a feature of the trans-Pacific noise for some time to come.
The other thing I should say is I didn't do a survey, except for taxi drivers and basically elites I talked to. I didn't have a very scientific survey. What struck me was within the political establishment how this was a left-right issue.
I should say finally that I talked to people from sort of center left all the way to very far right. And I didn't meet anyone who thought it was a good move. I think people recognize politically it was a problem. How to recover was the debate.
MANYIN: I should add that Watanabe's Yomiuri has also been very hard line on the "comfort women" issue -- hard line defending what Abe said.
GREEN: Which is interesting and perplexing in some ways, but that's true.
MANYIN: Other questions -- yes.
QUESTIONER: Richard Bush from the Brookings Institution. My question is about North Korea.
It seems pretty clear that a wedge has emerged between Japan and the United States over the last five weeks since the February 13th agreement. Did that wedge emerge because the United States allowed North Korea to drive it between us -- between Washington and Tokyo? Did Japan help create it because of its focus on abductees? Whatever the case, what can Japan do to close it?
CALDER: Well, I think as a first cut, what one really has to recognize is the domestic politics of the issue in Japan. You know, the concern that Prime Minister Abe has shown for the issue of the kidnapped victims. Of course, the human side of that as well. We're not only talking about the few who were released but many, many more whose fate is unknown. And it's been given all sorts of media attention. And that creates a tremendously important and difficult political obstacle for the Abe government itself, of course. But I think the general sympathy is much broader than that.
GREEN: I think this is a real problem, frankly, right now. I think it's a problem for U.S. strategy, and it's a big problem for Japan. I supported the February agreement, because I thought it was useful to test North Korea, to use the leverage we had after the nuclear tests, to see if we could get some down payment. There was nervousness in Japan about it and worry that Japan would be isolated on the abduction issue. And I told people don't worry, this is just a test. I think the decision to return all of the money from Banco Delta Asia and the way it was rolled out was a real shock. I don't think people expected it in the region and certainly not in Japan. And I think for the U.S., we have a credibility problem right now. The mainstream Nihon Keizai Shinbun, the Japanese economic journal which has generally had editorials that are for stability for the U.S.-Japan -- pretty sensible, what you'd expect from a business journal -- had an editorial on March 8th slamming the U.S. for what they called alibi diplomacy, using these diplomatic processes and then calling in all our chips for diplomatic process was an alibi. It was allowing North Korea to continue developing nuclear weapons to threaten Japan. And you hear that from mainstream, you know, editorialists like Nikkei, but it's pretty broadly felt in Japan.
I think part of the problem, to answer your question, is on the Japanese side. I think this "comfort women" issue and some of these other things have complicated the debate on North Korea. But a lot of it is also on our side. And I think a lot of it is presentational. Ambassador Hill met with Kim Kye Gwan in New York. They came out; the press had pictures of them smiling and talking about a positive atmosphere and then immediately showed the Japanese ambassador for the talks, Haraguchi, you know, being essentially kicked out of the negotiations with North Korea by Song, his counterpart, who then came out and blasted Japan in the press. I think the administration is right to test North Korea to try some of this diplomacy, but we probably need to do a better job on the U.S. side in how we present this and in reassuring our commitment to denuclearization and to Japan on the comfort issue, which I think is there. It's clearly there, but it's not been spun or presented in ways that help us in Tokyo.
CALDER: Just to add one thing, it does seem to me this is another example of this kind of complex crossfire that we're getting. Diplomacy has to addressed, you know, in bilateral relationships. But the third party implications are very complex, and they're going to become more and more important.
MANYIN: Right here in the front.
QUESTIONER: Ted Kassinger with O'Melveny & Myers.
Is a U.S.-Japan free trade agreement a necessary or important element of the Japan-U.S. relationship of the future that you've laid out? And in that context, how do you assess the competing proposals for regional economic integration that China and Japan have separately advanced?
CALDER: Well, just as a first cut at that, I think initiating free trade negotiations, you know, on a range of economic issues -- an economic cooperation agreement, including services and there are a lot of investment issues and so on -- I think that makes a lot of sense to study the question. Obviously, there are all sorts of hard issues in the end game. But one of the main reasons that it seems to me that's important is to focus the attention of the two countries more on each other, not only for economic reasons but for broader reasons relating to what we've seen here. The biggest problem I see in the relationship right now is the third party problem. It's not the sort of bilateral trade war issues and conflicts over particular commodities that we used to have, say, 10 or 15 years ago. It's the indirect implications and the feedback effects with information flowing so rapidly.
So, in terms of focusing attention and also perhaps supplementing what I think is some very positive developments that have occurred in the relationship on the security side certainly that the administration has done -- but I guess my major critique was that perhaps things have been a bit narrow. Maybe it has to be to achieve the things that were needed after 9/11. But more attention to the economic and financial side definitely, and an FTA is a good way to start.
GREEN: Matt Goodmanshire (ph), who worked this stuff in this stuff in the NSC and still has the scars to show it -- but you know, in the early parts of the U.S.-Japan relationship under Bush and Koizumi, a major focus was the nonperforming loans, nonperforming assets. You know, pushing for Japan to write its economy. I think once that started to happen, we lost interest on the U.S. side.
And FTA -- I think studying an FTA makes a lot of sense. As a political reality, you know, moderate trade Democrats, like Charlie Rangel, right now are trying to get their own caucus under control, trying to get a U.S.-Korea FTA through. And if we were to throw Japan on top of that, it would kill them. So, it doesn't make political sense given how much time is left in TPA.
But I think putting it on the agenda, as Kent suggested, is critical, because as Asia talks about its various free trade agreement ideas, we have an interest in making sure that the standard for this trade liberalization is high. Because right now the intraregional free trade agreements have lots of exceptions. They're pretty low grade. We want to make sure that the quality of these agreements is high and that they're trans-Pacific. So, if we have an FTA with Korea, Australia, Singapore and then we put on the docket and start working on Japan, it really locks us into the Asian trade agenda in a way where it will remain high standard and trans-Pacific. But we have to put something on the table. We have to be part of the intellectual discussion. Korea is critical, and I think Japan would be sensible to start looking at next.
MANYIN: Emily, do we have time for one more? One more question.
QUESTIONER: Ayako Doi, Japan Digest publications.
Last November, after the election here, you could almost hear the gasp of horror among the Japanese business and government establishment when the Democrats took both houses of the Congress. Japanese, as far as we can remember in the last few decades, have always been more comfortable with a Republican administration, Republican policies, partly because the Democrats have focused on the conflicting economic interests. And then, you know, they still remember that. Assuming that -- well, possibly the Democrat administration will come in this Capitol in two years or even if it doesn't, Republicans probably won't have as free hand as it has had in terms of foreign policymaking. Do you see the rise of the Democrats -- the rise and vigor of the Democrats -- in the foreign policy arena affecting U.S.-Japan relationship in the medium term future?
GREEN: You know, I can't prove this, but you know, if you look back 100 years to Teddy Roosevelt, one gets a sense that Republican administrations tend to be a little more sympathetic to Japan. It's not consistently the case, but it goes even before the trade issues. The thing I would say, though, to reassure Japanese friends is if you look at the Armitage-Nye report -- people always forget Joe Nye, but it was co-chaired by Rich Armitage and Joe Nye, and the people who signed on were from both sides of the aisle -- I think there is bipartisan support for a strong alliance. And you know, McCain and Hillary Clinton are both surrounding themselves with people who are pushing that line I think. So, even within this early stage, you see people associating with candidates who are, you know, solid on Japan no matter who wins.
I think the affect on trade is pretty serious and significant, and it's going to be -- we'll know in the next month whether or not people like Charlie Rangel have gotten their caucus under control, and free trade will continue to be on the agenda. And so, it has an effect there. But you know, the reaffirmation and redefinition of the U.S.-Japan alliance -- the famous '96 Nye Initiative -- that was all under President Clinton. The Bush approach was, in many ways, the exact continuation of that. So I think the people are there on both sides to keep this going.
MANYIN: Do you want the last word?
CALDER: I think one has to remember that there have been many positive interactions between the Democrat Party and Japan. Having worked once upon a time with Edwin Reischauer academically and then, of course, thinking about his ambassadorship, I think the Reischauer years, the Kennedy years are one of the real high points. Cultural communication -- this has been something Democrats have always been concerned about. Environment, pluralism and an understanding and a respect for that, the role of Japan in the world, broadly speaking -- many Democratic presidents and supporters have strongly seconded that. And it was really at the Kennedy years that Japan joined the OECD, and Japan's role was broadened. Democrats have supported normalization in Japan's relations with Asia. The Korea-Japan normalization, for example. So, sometimes when -- I would echo what Mike said. Certainly, on both sides, U.S.-Japan relations has been appreciated by both parties. There have been difficulties, I think it's fair to say, on the trade side. Things often have been a little rockier in Democrat administrations. But we can't lose sight of the fact that U.S.-Japan relations is fundamentally a vital interest that's been appreciated by both parties.
MANYIN: And I would add that two of the Japan-specific hearings that have been held in the last couple of years -- on trade a couple of years ago and then the "comfort women" hearing just last month -- were dominated by Republican criticisms of Japan. So, when there are these overarching issues, it can get bipartisan -- bipartisanship alive and well and criticizing Japan as well.
Well, that brings our session to a close. Thank you very much for coming. Let's have a big hand for our panelists. (Applause.)
And also, a big hand for Emily McLeod over here in the corner who set this whole thing up. Thank you. (Applause.)
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