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Symposium on the U.S.-Japan Partnership: Session One: Global Transformations and the U.S.-Japan Partnership

Introductory Speaker: Richard N. Haass, President, Council on Foreign Relations
Panelists: Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and the Environment, and Director, Program on Energy Security and Climate Change, Council on Foreign Relations, Tanaka Akihiko, Professor of International Politics, Interfaculty Initiative Information Studies and Institute of Oriental Culture, University of Tokyo, and Sheila A. Smith, Senior Fellow for Japan Studies, Council on Foreign Relations
Presider: Funabashi Yoichi, Editor-in-Chief, Asahi Shimbun
December 1, 2008
Council on Foreign Relations

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This session was part of the CFR Symposium on the U.S.-Japan Partnership: An Agenda for Change, cosponsored with the Asahi Shimbun.

RICHARD N. HAASS: Ohayo and good morning. Now you've heard 50 percent of my Japanese. But welcome to the Council on Foreign Relations. I'm Richard Haass, president of this organization. I want to welcome everyone here, particularly those who have traveled such a long distance to be with us.

Today's topic is the United States-Japan relationship and agenda for change. Our timing is good. In approximately two hours, President-elect Obama will be announcing his national security team at the Cabinet level. And one of the issues they are obviously going to deal with is Asia and, in that context, Japan.

And the reason this is so important, I believe, is while this may not be urgent in the same way that Iraq or Iran or Afghanistan or now terrorism in India are urgent or the international economy, it is important. And the dilemma for policymakers is always to get that balance right and not to allow the urgent to overwhelm the important. And dealing with the major actors in Asia, trying to create a security architecture for Asia, I would classify as terribly important challenges facing the new administration.

In the case of Japan, I'd add one other thing. Yoichi and I were talking about it before walking in here, which is there's an understandable fascination with all things Chinese. There's an understandable fascination with many things Indian. Sometimes Japan tends to get lost amidst all these fascinations. And it's essential that it does not.

People should not lose sight of Japan's scale, the power and significance of its economy, the capability of its military, the reach of its foreign policy. And U.S.-Japanese relations are one of the cornerstones of what happens in Asia and one of the cornerstones, I believe, of what will happen in the international system.

There's lots of things for the United States and Japan to focus on, obviously -- trade, investment, how to make sure the international economy does not stay in recession any longer than it must, how to build regional and global institutions to help manage the challenges of globalization, not just economic but climate change, proliferation, what have you. It's a rich agenda.

And this conference today, this meeting today is one of the reflections of that here at the Council on Foreign Relations. We are committed to keeping a focus on Japan, on U.S.-Japanese relations. We've brought Sheila Smith onboard, one of the leading scholars in this country about Japan. And this is simply, today, part of a much larger set of meetings and written work here as well as in Japan on this subject.

I'm thrilled that our friends at Asahi Shimbun are cosponsoring today's program. We're also extremely pleased and grateful to the Japan program's many corporate sponsors for making today's symposium and other Council events on Japan possible. I particularly want to single out Canon USA, Mitsui & Company, Mitsubishi Heavy Industries America, Mitsubishi International Corporation, Sony Corporation of America and Toyota Motor North America. They're truly great friends of the Council, and we're happy to welcome them here along with our dear friend the counsel general of Japan, who always honors us with his presence.

Today we're going to have three sessions. One on the global task, problems, agenda confronting both our societies. Secondly, we're going to zero in on the international economic situation. And thirdly, we're going to look at stability questions in Northeast Asia.

Before I turn to Yoichi to handle things, let me say Gary's running late. Gary had the misfortune to be in Mumbai this week, so did I. I was lucky enough to get out 24 hours before things happened in the hotel I was staying in, the Taj. Gary was not so lucky. He was there with his wife and daughter. Fortunately, they are well, and he is literally driving in from Kennedy Airport as we speak and will join us as soon as he can.

We in the United States celebrated Thanksgiving this week, and there are, for many of us, many things to be thankful for.

So let me begin by introducing Yoichi Funabashi. I hope he doesn't take this wrong. He is really one of Japan's wise men, and he's been one of its wise men for some time, which I think is not a statement that he's getting on in years but rather that he was wise at an early age. He's editor-in-chief of the Asahi Shimbun. He served as its bureau chief in both Beijing as well as in Washington, D.C. He's a contributing editor to another magazine that publishes in the realm of foreign policy and international affairs, known as Foreign Policy. And he's won awards as an author and as a journalist.

Let me also say he's someone who I've known, I guess, now, I don't know, for what, three decades, give or take. And he has taught me more about Japan than anyone else, to the extent I know anything, and I don't want to say I know a lot. But to the extent I know it, it's really because of him. He is one of the people, I think, who has made Japan understandable to those of us who don't read Japanese, who are not Japanese experts but need to know about it. And he's one of the people who has really opened it up for generalists, such as myself. So I'm indebted to him for that, and I'm indebted to him for making today possible and for being here and leading off the first panel.

So thank you, Yoichi.

YOICHI FUNABASHI: Thank you. Richard, thank you for nice words. And I really appreciate that.

First, on behalf of the Asahi Shimbun, I really would like to express my gratitude for Council on Foreign Relations, particularly Ambassador Richard Haass' staff for making this happen. We are truly honored to be a part of this exercise.

We are also very much fortunate to have three prominent Japanese public intellectuals joining with us, Dr. Heizo Takenaka, Professor Akihiko Tanaka and Professor Hitoshi Tanaka. And we also are very much delighted to have them with us.

And I'm very much thrilled to see familiar faces, many of you are joining this morning's sessions, many familiar faces or formidable faces, formidable public intellectuals.

The first session, we will focus on global issues and how the U.S. and Japan is now confronted with those challenges and tested by those challenges. And I'd like to first ask Professor Tanaka to share some of his thoughts with us on this issue.

Professor Tanaka.

AKIHIKO TANAKA: Well, thank you very much for inviting me to this great opportunity.

Thank you, President Haass, and thank you, all.

As Yoichi mentioned, there are many challenges facing the United States and Japan -- terrorism, the zone of instability -- Afghanistan, Pakistan, India -- or traditional interstate threats, including North Korea or global issues including climate change or possible pandemic or natural disasters and, of course, financial and economic crisis.

But probably for my presentation, I would like to talk a bit on China because China is going to play a very important actor in the world, which creates a basic difference of distribution of power in the international society where, I think, we need to create new systems for global governance. How we regard China is quite important.

And then for Japan and the United States as a close ally, it is important to share some of the sense of how we would think about China.

And then having said this, I don't think China is a threat to our alliance. And I don't think it is wise to consider China as a source of problem. But I think it should now be necessary and desirable to regard China as an important global partner of both the United States and Japan.

A few years back, there was a debate in China whether the peaceful rise is possible or desirable for China. I think, nowadays, China is already a peacefully risen power. Its GDP measured in purchasing power parity is already much larger than Japan's GDP. And I think in the history of China, the last decade was the most prosperous and stable decade since the Opium Wars.

I think the recent G20 meeting indicated that China is already an important global partner for the world. Of course, there are uncertainties -- military development, political development, societal development. And in its international behavior, there are uncertainties.

In the area of military development, China is steadily increasing its military forces which might change the balance of power in East Asia, which then would necessitate for Japan and the United States to readjust its force structure and other military management.

And then politically, also, there are uncertainties whether authoritarian tendency increases or more pluralistic tendencies increase. We are not so sure.

And societally, there are uncertainties, too, whether the Chinese nationalism is going to be tamed or is it becoming more xenophobic. We are not so sure.

And international behavior, too, there may be some uncertainties about Chinese activities, for example, in some parts of Africa.

But I think it is in the interest of Japan and the United States to somehow influence our Chinese friends so that these uncertainties would be reduced and to realize a China with a more transparent military, a China with a national authoritarian that respects rules of law, a China that is confident enough to act internationally in a very responsible manner.

To realize this, what should Japan and the United States do? I believe hedging is necessary, given these uncertainties. Our U.S.-Japan alliance should be kept being strong and reliable. But we need, I think, not just simple engagement but a very, very deep engagement with China. Policy level, I think, we should explore the possibilities of having what I might call trilateral schemes involving American, Japanese and Chinese policymakers on various issues, including international affairs, energy, environment, as well as security affairs.

I would like to finally add, in my initial remarks, to add one more important thing of one element of deep engagement over China that is, I think, societal engagement. In other words, we need to engage our Chinese friends on a people-to-people basis. I think it's good that the Japanese government and Chinese government in this year agreed to create a scheme of exchanging 4,000 youth annually. And I think by increasing more contact, I think the Japanese should encourage more Chinese to come to Japan as tourists, as students and other areas to create visiting purposes and stay so that we could enlarge the basis of our mutual understanding between Japan, U.S. and China.

As I think Japan starts preparing a new national defense program guidelines in this year, we are going to, again, strengthen the alliance -- the scheme. But in addition to strengthening our alliance, we also make our efforts to deepen our engagement with our common partner, China, to encourage China to act as a responsible member of a new global government. (Inaudible.)

FUNABASHI: Thank you very much. Let us do some reality checks here. You said that China is not a threat. Do you think that this view, perception is well shared between Washington and Tokyo or within, you know, respective countries?

TANAKA: I think differences exist within each capital. There are those who regard China as a threat in Washington, D.C. and in Tokyo, and there are those who, like me, do not regard China as a threat.

FUNABASHI: Do you think that -- you proposed some kind of U.S.-China-Japan trilateral consultation process. Do you think that China is interested in getting onboard this process?

TANAKA: Well, it depends on the scheme. I think I cannot make any judgment on a -- sort of in general terms because if there are known pressing issues for China, simply having a trilateral scheme doesn't, I think, (proceed ?) very much. But I think this is the subject that Dr. Levi is going to talk about.

But for example, you know, if we are to deal with climate change, the participation of the United States, China and Japan is, I think, quite important. And so I think these sort of functional areas, we can find a fair number of functional areas where we could have trilateral speech.

And then in addition to six-party talks and other schemes, it may be of use to have trilateral meetings to deal with the Korean Peninsula issue.

FUNABASHI: Thank you very much.

Mike, Professor Tanaka just touched on this global warming. You are an authority on the energy and environmental issues. You have been writing a lot of pieces on this subject. I'm very much interested in your view.

First, what do you see as the biggest challenge for U.S. and Japan in face of this energy and environmental serious problem?

MICHAEL A. LEVI: Well, it's interesting because, unlike my colleague, I don't focus on Japan issues. But Japan inevitably comes up and the U.S.-Japan relationship inevitably comes up in a very important way in looking at climate change and energy security issues.

And climate change is a case, in particular, where that's very clear. Richard spoke earlier about the urgent versus the long-term efforts. Here was have an urgent problem where we need to be working together to face it. On a global level, this is really an urgent problem. Today we have the first day of global climate change negotiations under the auspices of the U.N. beginning in Poland the last and next two weeks.

And the United States and Japan will each play key roles, and they'll also play a very important role together, in particular, in addressing China. And I think that specific dimension, the role of the United States in addressing China, Japan in addressing China and the two together in working with China, is absolutely critical.

And it's important because the United States and Japan, whatever their differences on climate -- and I think those will be narrowing under a new administration, but there will still be significant differences -- whatever their differences, they are closer together than the United States and Europe are, for example, in dealing with China and, in some ways, closer than Japan and Europe are. So there is room really for common strategies in a few basic ways.

First, the two countries, the United States and Japan, are very much focused on what I would call bottom-up approach to doing things on climate change -- really looking at what our capabilities are to transform our energy systems, to transform our behaviors, to transform the patterns that we use energy in and then moving from that to engaging other countries.

There's a real contrast with Europe where there is a much more top-down view of things where the question is: What is our ultimate goal? Let's agree on it and then we can sort out all the little details. The United States and Japan -- the little details are fundamentally what matter in getting things started and I think that's an important point of agreement to work on.

Another thing we'll see in the next couple weeks is that the United States and Japan will have a big push -- and I think something that the new administration will continue to really put a spotlight on -- two separate classes of developing countries: the poor developing countries, and the wealthier ones -- including China. And there's a Japanese proposal out there that has the tacit support of the United States to really create a third category of countries, with China really that key one, and focusing on getting them to take concrete commitments to action that would reduce their greenhouse emissions from what those would otherwise be. And that is a very important step and one where I think the two countries can really team up effectively to move forward.

And I think we'll see a wide variety of these things and it is an area where if we have these sorts of trilateral consultations, we would find new opportunities to work together.

FUNABASHI: Concretely, how do you perceive this policy to China onboard -- to get China deeply committed to this?

LEVI: That's a very difficult challenge and it's an evolutionary challenge where we're going to have to try a wide variety of different steps, see what works, abandon what doesn't amplify those things that do succeed.

But some of the things will include various or nitty-gritty not high-level diplomacy, but intensive cooperation on capacity building, on technology, on these sorts of things that don't really necessarily excite diplomats, but that are absolutely essential in moving forward. That's the sort of area where we need to work with China.

Another area is in providing funds for the incremental costs of some of the new transformations. And Japan and the United States are being big backers of an alternative approach to what's being done. And we've talked a lot about something called the Clean Development Mechanism where we use these so-called market-based mechanisms to fund clean development.

Japan and the United States have been pushing clean technology funds either as a substitute or as a complement, where we gather large amounts of money together and use them for strategic goals in helping transform the energy systems of countries like China. That's another place where we can work on a concrete initiative, where the two countries are already inclined to do something positive. They still aren't quite clear on exactly how they should be going about it.

FUNABASHI: How do you see the prospects of nuclear energy to be designed to solve these global warming issues? And in what way do you think that Japan and the United States cooperate on this field -- and also possibly with China?

LEVI: Nuclear energy is -- has been a critical piece of the relationship here. And for the last several years it's been one of the few places where Japan and the United States could strongly agree on their approach to climate change. They were both very pro-nuclear. We may see a slightly different dynamic under a new administration, but still looking at how nuclear power can contribute to reducing emissions is one area where the United States and Japan will play key roles individually, but also together.

And one of the main places where they'll be able to work together in a peculiar way is in demonstrating different paths toward developing nuclear power programs. The United States and Japan have taken fundamentally different approaches to developing nuclear power. The United States does what we call a once-through approach where it burns its nuclear fuel and then stores it. Japan has pursued a different approach where it burns its nuclear fuel, reprocesses it to extract uranium and plutonium and then reuses that, potentially, in reactors.

Those are two very different routes. They have different economic implications; they have different security implications. And frankly, each country is going to have a different vision for how the world nuclear industry develops -- whether it's along the U.S. lines or along the Japanese lines. And that's an area for cooperation where we can talk about how to most effectively promote nuclear technology in a safe and economically sound way.

FUNABASHI: How do you characterize the anti-nuclear sentiments in both countries? I'm particular interested in how Obama -- a new administration -- would, you know, think of this and the potential of a nuclear energy path.

LEVI: I think the -- I can't speak for the incoming administration, but my sense is that they see nuclear as an essential component of the energy mix in the future, especially as we deal with carbon dioxide emissions. But they do have concerns about waste disposal, about safety and about security and the proliferation aspect of things. I think we'll talk a little bit more about proliferation and its other dimensions in a moment.

So I see a slightly more skeptical view of things both on the domestic front and on the international front. You can see that, for example, in the different attitudes that members of the current administration and advisers to the incoming administration had to the U.S.-India nuclear deal. I mean, that revealed different views as to the value of spreading nuclear energy technology worldwide.

I think Japan has a much more -- in some ways a more straightforward view in favor of the spread of nuclear technology, though it also had hang ups, in particular on that one example in the U.S.-India nuclear agreement.

FUNABASHI: Thank you very much!

Sheila, welcome. I'm very glad you are here.

SHEILA SMITH: Thank you very much.

FUNABASHI: Thank you.

What do you think of that current status of the U.S.-Japan alliance? You know, there have been a lot of talk about a drifting relationship -- you know, a drift or -- well, when Koizumi was the Japanese prime minister, he certainly elevated the U.S.-Japan alliance to a global level and we have been hearing a lot about that. You know, a higher elevation of the U.S.-Japan alliance entrenchment.

What do you -- you know, how do you see that trend, status?

SMITH: Well, I think it's important that we think back to the moment when Koizumi was leading Japan and that particular moment when the United States had been attacked in 9/11. And the U.S.-Japan alliance at that particular time was very energized and very focused. And I think the Japanese partnership was deeply appreciated in Washington, but also among the American public.

That was a very particular moment in my mind in the relationship. And while that era I think is to be admired in terms of Japan's own response, I'm not sure we're going to -- we should expect that the U.S.-Japan alliance will continue to be in crisis-management mode.

We have a complex array of global issues and the United States and Japan, I think as both of our speakers have indicated, have congruent interests in trying to contend with some of these challenges. We have new emerging powers -- China, India; we have complex problems -- climate change and very deep and intense energy competition; and we also have an agenda on nonproliferation, on anti-terrorism, security issues that I think we'll be talking about together for some time.

So I think the U.S.-Japan alliance has been tested today in new ways. Funabashi noted that there is some sense of the alliance being adrift and I think that's true. I think I'm particularly worried about the Japanese public sensitivities today to the effectiveness of our partnership.

And Japan today, and the Japanese people in general, see themselves in a rather different strategic environment in Northeast Asia, but I think there's a larger question here about how the U.S. and Japan can energize their conversation, get focused on some of these global issues and develop the political capacity to work together so that this alliance does not go further adrift.

FUNABASHI: Among all the world challenges you have enumerated, which one do you think is the most crucial one in the coming years -- particularly over the next four years?

SMITH: Well, I think that depends on where you sit. I think clearly, if you're sitting in Washington looking ahead, the large issue is going to be how the United States moves forward or moves out militarily of the Middle East. I think the climate change issue, energy are going to be very high on the agenda of the next administration.

But I think if you're sitting in Tokyo, the priority is very much on North Korea, on the management of the Korean Peninsula. And behind that, in a quieter way -- as Tanaka-san, I think, has very effectively suggested -- the attention in Tokyo is focused very much on China.

And I think it's true that just like in this country, the conversation in Tokyo is not one -- uni-dimensional. There are a variety of views in Japan about Japan's own relationship with China, about how China will emerge in the decades ahead. But I think China is very much on the minds of the Japanese policy community -- intellectuals, as well as the Japanese public.

FUNABASHI: (Inaudible) -- a bit uneasiness and anxiety in Japanese political circles about the long-term trend in the United States in which the United States will perhaps likely deal with China as a primary interlocutor in Asia-Pacific, whether it's on the financial economic crisis, North Korean nuclear issues as well as Iranian nuclear issues and in that process, Japan perhaps may be more marginalized or you know.

Is that a fear that -- how do you address those fears in terms of managing the U.S.-Japan alliance?

SMITH: Well, I think the United States and Japan -- again, the China question has been an issue in that relationship before. Many of you remember the Nixon shocks -- as the Japanese called them -- which were the deepest, I think, blow to the U.S.-Japan alliance in the post-war period.

But I think managing China is going to be a challenge for all of us. And I think the important thing on the agenda for us -- the U.S. and Japan -- is to think of ways of proactively engaging China in some of the problem-solving exercises that we've laid out for you here.

Clearly, climate change is one opportunity. I think there are other opportunities as well. I think we need a much more sophisticated and perhaps in-depth conversation between Tokyo and Washington on North Korea and how to move forward with the six-party process.

So I think our answer is not to do one thing. Our answer is to make sure that the United States and Japan have avenues for addressing their common concerns and strategic interests -- and their differences, frankly -- in a way that doesn't have China looming large outside the partnership, but has China very much a focal point of conversation within the partnership.

FUNABASHI: Thank you, Sheila.

Tanaka-san has an interjection.

TANAKA: Yeah. I think there is a fear in Tokyo that this time around, again, that the U.S. under Mr. Obama's administration may emphasize very much on relations with China without taking Japan's views into much consideration. But I think this is a fear sort of based on lack of confidence and lack of sort of -- well, lost confidence in Japan's capability.

I think the fact of the matter is that the Japanese too are engaging the Chinese very much in a very large scale now. You know, Japanese trade with China is very big now and investment is very big. Japanese businessmen engaging Chinese in a very big number. And so I think somehow the political -- particularly in political circles in Tokyo -- having not much confidence in their own ability to deal with our Chinese friends seem to have unnecessarily (raised ?) the fear of Americans supporting China without, you know, taking Japan into consideration.

The fact of the matter is that if their fear is so much, then the best thing they should do is that the Japanese politicians start engaging Chinese as earnestly, as energetically as, you know, the Americans do, which they fear.

FUNABASHI: Thank you very much.

I'd like to make the floor open and I welcome any questions. And the floor is open. Yes, Hugh.

QUESTIONER: Hugh Patrick, Columbia University.

We speak of U.S. and Japanese cooperation in dealing with China on issues of climate change and so forth. One of the problems, it seems to me, is that the United States and Japan both have lots of very good technology for energy saving and environmental, but those are private sector. And it would be quite natural for Japan to support its companies through foreign aid and so forth and a natural for America to support its companies.

So rather than cooperation, is it a likelihood that we'll have an increasingly competitive public policy in dealing with how this technology is transferred to China?

LEVI: I think there's a tricky tension to play in that. On the one hand, yes. Each country will want to promote the exports of its own industries. That said, a lot of energy technologies aren't specific to one country. There are a lot of places where you can't simply push a U.S. power plant or a Japanese power plant; where you do have to have groups of countries moving these things forward.

The piece is that to make that really worthwhile in the long term, you have to create demand. There has to be a real appetite for this there. And this is a case not just for China, but much more broadly. And in a lot of cases, there are domestic policies in these countries -- and China is a case in point -- that are creating demand. But we're going to need international approaches that build even greater demand for these sorts of advanced technologies -- for ones that exist now and for ones that we hope will exist in the future. And that's a place where we're going to need to cooperate to provide those incentives to these countries to move in a direction where there'll be that appetite for technology from the United States, from Japan that will be transferred on fairly commercial terms -- not just based on terms where we have export support on these sorts of things.

So I think it's a mix of things. Yes, there will be competition -- there always is -- to provide materials for export, but there is going to need to be cooperation creating the environment where the market for those is substantial.

FUNABASHI: Yes, please.

QUESTIONER: John Mbiti from UBS.

In recent years, China has become a scapegoat for a lot of U.S. problems. For example, China is constantly hectored for manipulating its RMB, whereas in fact, it's the largest purchaser of U.S. government securities. Similarly, in the energy sector, one of the main reasons that the U.S. refused to sign the Kyoto Protocol was because China wasn't going to be subject to the targets in the Kyoto Protocol.

I'm not suggesting that some of these criticisms are not warranted, but isn't it more effective to focus on domestic reforms rather than expend tremendous amounts of energy criticizing China?

FUNABASHI: Domestic reform here?

QUESTIONER: Yes.

FUNABASHI: Anybody willing to?

SMITH: We're all passing it off to each other. (Laughs.)

FUNABASHI: Tanaka-san, why don't you.

TANAKA: Yeah. Well, it is a fact that China has a lot of problems. And then there may be some behavior that might appear -- attract some criticism.

But I agree with you that in many cases, it's more productive to think about what sort of reforms we can do in our domestic societies. And what true reforms we want the Chinese to go through? For example, this year in Japan -- when you are in Japan, you had terrible problems with food safety, particularly food safety coming from goods imported from China. And then this created, again, a very big surge of some sort of anti-Chinese sentiment amongst the Japanese.

But then, under the currently, you know, interdependent world, I think I agree with you it is more productive to focus on how together -- Japanese, Chinese -- to create a mechanism of securing safe food, rather than simply, you know, giving names for the Chinese -- Chinese are incompetent or Chinese are always doing things bad. That's, I think, not really true.

Many -- I think one senses Chinese are trying their best to make their products exportable. But then there are problems in the systems and others. So I think it is more constructive to work together.

And then I appreciate, I think, recent change in at least some of the Chinese officials view. We in the early months of this year, we thought that the Chinese authorities would cover up all the, you know, process of investigation of contamination of pesticide in a dumpling. And then the Chinese later notified, through the Japanese authorities, that there had been some problems. So I think that could be an opportunity for both the Japanese and the Chinese to work to realize a better situation for food.

So I think criticism is sometimes necessary, but we need to find a better way to cope with the real problems.

LEVI: Let me make a couple quick comments. First on the specific point about energy and climate. Yes, the United States needs to move forward domestically and I think opinion is shifting toward one that says the United States needs to move first. At the same time, if we ignore the challenges in places like China, we're not going to come up with ways of working together to deal with that.

The second is that this is a panel about global challenges and we wouldn't want to get the impression that the entire role of the U.S.-Japan relationship in dealing with global challenges is to deal with China, and it's not. There are a lot of other places where the United States and Japan need to work together. North Korea is a clear example where we need to deal with the proliferation challenges, and it's not a primarily something about China. Iran is another example. Energy supplies are another critical area. We talk in the United States about dependence on Middle Eastern oil. Compared to Japan, we hardly import any Middle Eastern oil. The fraction of Japanese oil consumption that comes from the Middle East is enormous, so there is a huge stake there and there is a great opportunity to cooperate in sorting of common rules of the road for how we deal with things like energy supplies when it comes to markets versus locking things up in long-term agreements, versus promoting national -- versus promoting domestic oil companies.

So there are a wide variety of different places that we can see potential cooperation dealing with global issues that have nothing to do with China.

FUNABASHI: Thank you.

Yes, please.

QUESTIONER: Bob Lifton, Medis Technologies. If we had a representative of China sitting up there, what would that person frame the issues as between China and the United States and Japan? What claims and faults would it lay at our doorstep?

FUNABASHI: Sheila?

SMITH: Well, I think we should wait until the third panel and let Liz Economy tell us -- (laughter) -- what China might see as problematic in the U.S.-Japan partnership. So, just a small point here, I think one of the dangers that we have in this relationship of course is creating a China that we don't want down the road, and I think what all of us are trying to emphasize here is that we want a U.S.-Japan partnership that engages China on an array of issues that are deeply intimate to our own domestic societies. Takenaka-san brought up the gyoza issue and the deep antagonism that created in Japan about the food safety.

But the other thing it brought up in Japan, which even for us Japan experts was not so obvious, was that Japan's own food security regulatory system was weak and it did not cover some of the issues that were raised in this particular instance. So now you have a conversation in Japan that's not now about China and gyoza; it's about rice; it's about other kinds of food products in Japan and the regulatory insufficiencies of the government in trying to make sure that Japanese consumers are protected.

And I think this is rather emblematic of the way we should be looking at how we work on issues related to China. There will be some like this that will cause us to step back and reflect, think about our own capacities and how perhaps they need to be better addressed. Some are going to be inherent to the relationship, strategic or broader relationship with China. But again, I think Mike Levi is very right to caution us. This is a panel about global concerns and China factors largely in those but is not going to define the agenda, I think, for the alliance in the future, nor should the alliance be defined in terms of how we deal with China. We have a broader array of issues that we can work with and opportunities I think that we should pursue.

FUNABASHI: Thank you.

QUESTIONER: Thank you. Merit Janow, Columbia University. I wonder if the panel and somebody, Yoichi, could comment on what you think this administration -- the new administration's position on North Korea should be and how that should be articulated early on. Does it need to shift? If so, how? What should the message be?

FUNABASHI: Merit, I'm glad that you raised that very much important question, but perhaps I think we should defer this question and discuss among this to -- in the third session, which Professor Tanaka will be a panelist -- Hitoshi -- who would be delighted to focus on this. Is that acceptable? Thank you.

Any other questions? Yes, Gerry.

QUESTIONER: Gerry Curtis, Columbia University.

You know, it seems to me one of the threats or the dangers to the alliance is that in this country we're seeing a new dynamic administration, out to deal with a lot of -- determined to deal with a lot of global issues coming to power. In Japan we see a government that's weak, getting weaker -- third prime minister in three years, probably another prime minister next year. The question is, how do you deal -- how do you maintain or deepen an alliance with a country that doesn't have a leadership that's able to move forward. And there may be no answer to this question, but it seems to me you can't talk about cooperation on global issues if you don't have a government that's able to take a position on any issues.

And I think the danger in what we face in the U.S.-Japan relationship is that there will simply be an impatience on the part of the Obama administration to try to read the tea leaves of what might be possible in Japan if the Japanese government doesn't come out with strong positions of its own. It's very hard -- you know, it takes two to tango. It's very hard to dance if the partner isn't prepared to take some steps. So the question is whether you see this as as much of a problem as I'm suggesting, and whether you see the possibility of this changing anytime in the near future?

FUNABASHI: Gerry, I'm interested in your view on this question. (Laughter.) You are the authority on this, but nonetheless, Sheila? (Laughter.)

SMITH: I have to foreclose that I was one of Gerry's students -- (laughter) -- so I'm not sure my views are going to be that much different. I think the domestic capacity -- political capacity in Japan at the moment, to engage in our alliance dialogue, is somewhat smaller, is somewhat diminished. And I don't mean that as a criticism of either Jiminto or the Minshuto or any particular party, but you are clearly at a moment in Japan where we are anticipating perhaps a structural shift where you have -- we're moving more towards a two-party system. I don't know, but what we do know, whatever happens in the next lower-house election, you're going to have a fairly strong stalemate in the legislative branch of government.

It's a parliamentary system. If the legislature can't move, policy can't move, I think even the things that we tend to take for granted in Washington -- you know, alliance support, host nation support -- a whole bunch of things will be on the floor of the Diet perhaps, but things will not move smoothly, and therefore both Washington and Tokyo are going to need to adapt and develop new ways of interacting. But I think there are many of us in Washington who are quite concerned that Japan is going to be absent because it is not able to bring the political leadership that we need to bear on some of these conversations. And by that I don't mean say or so what America says it needs to do, but come to the table energized, with ideas and conversations about an agenda as we move forward.

So, yes, I personally am somewhat worried about the situation in Tokyo at the moment.

FUNABASHI: Thank you --

TANAKA: Can I --

FUNABASHI: Yes, please.

TANAKA: I think it is a challenge for the United States that Japan, having only a very weak government, which is becoming weaker and weaker. And then, it's quite understandable for our friends in America will become rather impatient: Where is Japan? What is Japan's position on various global issues?

I understand that, but then -- and then also maybe, you know, it's not particularly useful to engage in conversation, but I think still, you know, despite this current weakened government, on some global issues Japan's positions are fairly stable and worthwhile and constructive. Maybe implementations are rather slow, but then I think as -- I think Michael said that Japan's position on global climate change has been fairly consistent from the government of -- like the Koizumi administration to the Abe administration, despite the, you know, annual change of prime ministers. It's like a sort of relief or relay, you know, pitchers. No one can complete the game, but somehow it has to change each inning.

SMITH: Keep it going.

TANAKA: And then, in terms of confidence of some of the Japanese proposals -- are they transparent and concrete -- maybe you can become, you know, irritated but then probably that's the reality that we have to cope with. And then, maybe like, you know, with me, you can wish for a big change in the next coming general election. (Laughter.)

FUNABASHI: Thank you very much. On this it-takes-two-to-tango question, Ishii-san?

QUESTIONER: Thank you, Funabashi-san. My name is Ishii from the Embassy of Japan in Washington. The direct response to Gerry is that I think we need to face the fact that politics in Japan has been weak, and, as Sheila said, Koizumi is the exception. We have to live with that. But having said that, we have done at lot under weak government, but I think we can do a lot.

And having said that, I just want to share with you what we've been discussing since early spring of this year with the Obama camp, just to share that. We've been talking about the year 2010. Twenty-ten is the 50th anniversary of the signing of the present Japan-U.S. Security Treaty, so we are bound to do something about it. And 2010 is the year when Japan is going to host APEC. That means the visit by President Obama to Japan. So what we are discussing is to come up with some sort of joint statement to reset the alliance agenda. And what will be in it is -- I think we've been talking about global issues because we need to do more where we can make a difference, and I think global issues is the issue.

So be it climate change, be it pandemic, be it assistance to Africa, I think these issues will be focused more under the context of Japan's-U.S. alliance agenda. And I think how to do it -- this is somehow in response to Gerry's point. We are talking about creating some sort of wise men's group, involving people out of government. You know, government is weak, so you need to reach out to strong business people, strong intellectuals like -- (inaudible) -- so that whatever sort of conclusion that the wise men's group comes up with can survive the change of prime ministers -- in annual changes of prime ministers. So I think if we can come up with those things, we can survive and we can do more.

Just a last point -- you know, quick response to Funabashi-san's point about trilateral, Japan-U.S.-China, my impression is China is ready to do it. China is very much interested in doing this. So is Japan. Japan is okay.

FUNABASHI: Did they indicate that to the Japanese government?

QUESTIONER: This is on the record?

FUNABASHI: This is on-the-record. (Laughter.)

QUESTIONER: Okay. I think yes. I think yes.

FUNABASHI: Thank you.

QUESTIONER: And I think we are interested in that. We have indicated that too. So if the Obama administration is ready to do it, we can do it. But the subject to be taken up is not North Korea, I think. If we start talking about North Korea, we need to have ROK on board. There are many other things, like pandemic, you know, global climate change. And I would very much like to talk about things like Taiwan with China and the U.S. in the same room. Thanks.

FUNABASHI: Thank you. Well, I have to be satisfied with the presenter role, but I just would like to respond to Gerry's question myself. I really share your deep frustration at the scene of Japanese politics right now, but we need some perspective here, in my view. We have had to live with that lame duck, or lamest duck U.S. administration for several months, or perhaps a couple of years in the past, you know, and in some instances, in managing that partnership and alliance, you have to live with that, whether it's, you know, your partner is inflicted with a political intoxication or particular constipation. (Laughter.)

SMITH: And which one is Japan, I wonder? (Laughter.)

FUNABASHI: Yeah, right. Okay, any other questions? Yes, please.

QUESTIONER: Brian Klein, the International Affairs fellow in Tokyo with the Council. I'm wondering about the economic global downturn and the affect it can have on the U.S.-Japan alliance, and in particular, the response to the crisis in Asia. So far, despite all the criticism, the United States has loaned quite a bit of money to South Korea and Singapore. China has been far more domestically focused, initially not wanting to lend to Pakistan and then lending a relatively small amount. And there's been, to some degree, a lack of regional coordination, either regarding currency swaps or regarding a broader even political message in the region. I'm wondering to what degree Japan wants to take the lead in regional economic integration, especially in terms of an economic crisis, or to what degree there is area for cooperation, possibly U.S.-Japan-China, although I'm a bit skeptical that China wants to take on anymore leadership role than they've taken already. I need comments on that, please.

FUNABASHI: Certainly we would also discuss on this issue in the second session, but, Tanaka-san, would you share --

TANAKA: Well, I'm no expert on international affairs and probably Heizo Takenaka may give comments in the second session, but in my understanding the Japanese government itself is quite positive in using regional mechanisms to cope with the impacts of the current financial crisis.

As you know, the regional countries set up what is called a Chiang Mai Initiative of networks of currency swaps. I think currently the Japanese and Chinese and Koreans are trying to utilize this mechanism or exploring the use of this mechanism to support the Koreans in dealing with some of the difficulties. I'm not familiar with the details, but there is, I think, interest, in the Japanese government and bureaucracy to use a regional mechanism to deal with the economic affairs.

I'm not sure what will materialize in the coming ASEAN Plus Three and East Asian summit that will be scheduled in the middle of December, but there is, I think, the occasion where the Japanese will become -- not including the prime minister, but Japan as a country will be forthcoming in dealing with the economic crisis.

FUNABASHI: Thank you. Yes?

QUESTIONER: Herbert Levin. Professor Tanaka, there's been an enormous generational change, perhaps most clearly seen in Korea, towards the United States. You're on the Tokyo campus. Do all the young people think exactly the same way you do? (Laughter.)

TANAKA: Well, of course not. I'm one of the aging professors and we are having incoming students, and the students now, the freshman were born in 1989. They weren't born at the time of the Tiananmen Square incident or at the end of the Cold War. That's all history.

I think, you know, quite a number of Japanese youngsters are, I think, fairly well educated, but frankly speaking, they are very -- fairly well satisfied despite the sort of economic recession. Maybe the attitude may change if we are entering into a prolonged period of recession now, but then their focus is more inward-looking and then as a professor we would like them to become more outward-looking.

But then, the university campus is becoming more internationalized nowadays. There's a change. In our particular case, in the University of Tokyo we have currently 2,400 foreign students, international students, and 750 Chinese students, and about slightly less than 600 Korean students. And so our Japanese students are working together with our neighbors. And then, in my impression, many Chinese students and Korean students are very energetic and forthcoming, and then that could be very exemplary figures for our Japanese students.

FUNABASHI: Yes?

QUESTIONER: Thank you very much. Akio Miajima. I'm on a mission to the United Nations, so obviously my question is about the United Nations and the global issues. As you may know, from January 1st next year, Japan is going to be admitted to the Security Council again, and we hope that it will be a wonderful opportunity for strengthening our partnership between Japan and the United States, and also for our engagement for the world. And so we have been -- we hope that we can intensify our dialogue with Obama camp, Obama people on this issue from now on. But I'm concerned about how the public and intellectuals will see the opportunity, or the maybe challenge for the future.

FUNABASHI: Mike, do you have any comments on this?

LEVI: I think there are two separate questions. One is how much importance does the United States give to the U.N., and the other is how many of the key issues that we face together are focused at the U.N. and the Security Council in particular? All signs are that the new administration will make the U.N. more prominent in its thinking. News reports are that when the new U.N. ambassador is announced today, that will be made Cabinet rank again, something that was the case during the Clinton administration but wasn't the case during the Bush administration. So that's a sign that the new administration sees the U.N. as a much more important tool.

That said, there is a question of which issues will be addressed through the Security Council versus issues addressed through U.N. processes that aren't at the Security Council, and issues that are addressed in completely other areas. One in particular that will come up in a significant way at the Security Council is Iran. And Japan has played an important role in dealing with the Iranian situation. Even though we've tended to talk about the Permanent Five at the Security Council plus Germany, Japan has played a critical role because of its commercial relationships, because of its energy relationships, and because of its role in global nuclear commerce.

So that's one area that I'd give you as an example of where I think we could see intensified cooperation between the United States and Japan -- add the U.N. -- in dealing with the common global problem.

FUNABASHI: Thank you very much.

In wrapping up this session, let me ask one question to each of the panelists. First Sheila. Professor Tanaka talked about the need to strengthen the Japanese-Chinese integration. Particularly, he focused on societal, transnational engagement. I think that perhaps that also is very much crucial for strengthening the tie, the relationship between the U.S. and Japan. It seems to me that the transnational tie has somewhat weakened -- been weakened recently. There are not so many Japanese students now studying in the United States as before, but it's, you know, just one example -- illustration. But I'm very much interested in how the U.S. and Japan can achieve strength from that transnational societal deeper relationship.

SMITH: Well, that's a good question. I think the mood on university campuses has shifted somewhat, and I think Tanaka-san is very right to point out that the younger people today are looking in different directions, but they're a little bit more inward-looking. They're not moving to go abroad or study abroad as much as before. I was at Keio last year, a different university, but -- and I was struck by the excitement that a lot of Japanese students were feeling about studying Korean, Chinese, about being focused more on Northeast Asia, and being slightly more skeptical, shall we say, about the U.S.-Japan relationship or the need to go to the United States to study.

So I think there is a generational shift, and I think that was already brought up, but I think there's also just a little bit less enthusiasm, let's put it that way, for coming to the United States, spending time here. I had a number of people tell me, both faculty as well as educators and foundation representatives, that there is a little bit concern about being a foreigner in America today than there has been in the past, and so I think we have a little bit of a legacy there to work on.

I think, though, in general we're looking at a moment where we need resources, we need Japanese engagement, we need -- and there are people in the audience here who work on this project, and I hope that the foundation world will pay a lot of attention in particular to younger-generation exchanges and those kinds of things.

FUNABASHI: Mike, you talked about Japan's commercial activities in Iran and Japan's dependence on Iranian oil for its security -- energy security. Looking back over that the past several years, there are a couple of instances in which the United States and Japan found their interests divergent and the Iranian energy issue was one of them. And I was told by one of the former Bush administration high-ranking officials that when Japan and Iran agreed on Azadegan oil and gas exploration, there was a very much tense moment within that -- some decision-making process in the Bush administration, and some raised even the question of sanctioning Japan if Japan and Iran deepened the energy relationship, particularly the Azadegan case.

In the coming years when the Iranian nuclear issue certainly will be most likely to be put on the highest agenda in the administration, how do you put this commercial interest between Japan and Iran in this context, and how do you see that strategic implication of this for U.S.-Japan alliance management?

LEVI: First, to be clear, at present the bulk of Japanese oil from the Middle East comes from elsewhere. It comes from Saudi Arabia, from UAE, so right now there isn't this deep relationship with Iran. The question is whether there might be in the future. To some degree Iran has solved the problem for Japan by being such an unreliable partner in that relationship. It cut the Japanese participation in that project from about 75 percent to 10 percent. That's not the sort of thing that Japan is looking for in creating strategic relationships to provide energy security. So you may see already Japan turning to other places, to Russia, for example, to Central Asia, which have their own complications but which at least don't enter into this dynamic when it comes to the Iranian nuclear problem.

I don't see a situation where the United States is going to start sanctioning Japanese companies for their activities in Iran, but I do think there will be a strong push from an Obama administration for broad cooperation in dealing with Iran and there will need to be an effort from Japan, at least in the near term, to really focus on other avenues for shoring up its energy security. Otherwise there will be significant friction over those points that the United States is trying to squeeze Iran, and that will become a more prominent part of the strategy now as oil prices drop and as Iran becomes more economically vulnerable. It will be important to have the cooperation of those countries that have strong commercial relationships with Iran.

FUNABASHI: Professor Tanaka, there is one very much unfortunate incident and controversy, you know, now in Japan, the Tamogami affair. The former air force commander in chief of the Self-Defense Force published a paper which got awarded, and in which he actually, in effect, white-washed Japan's past, and it started a lot of controversy in Japan and it already started to strain Japan's relationship with neighboring countries. Luckily, Prime Minister Aso fired him immediately, so that damage was at least a minimum, in my view.

But my question to you is that we have seen this history issue straining Japan's relationship with -- not only with neighboring countries but also with the United States, as illustrated in former Prime Minister Koizumi's continuous visits to the Yasukuni Shrine and some politicians' position on the Comfort Women issue. How do you see a better way of managing this kind of issue, particularly from a Japanese perspective? This is my question to you.

TANAKA: Well, first I think Prime Minister Aso was right in immediately firing -- unseated the general to command our Air Self-Defense Forces. I think this immediate response was the type of thing that the Japanese government should do if these similar things happen. But then I think we need to somehow create a scheme where the -- not just students but those in responsible positions of government to understand not just the history itself, but how the Japanese government has caught this issue in the post-war period. So understanding of what happened in the 1930s, 1940s in a more or less educated way is necessary for students and those in the responsible positions of the government, but I think how these issues have been managed or -- you know, should also be known.

There is no easy way to say this because there are a certain number of really, you know, politicians as well as commentators and scholars who are really determined to propagate their view, to change the -- or try to argue against most of the commonsense view of history. So this is a difficult issue to manage because it's becoming rather ideological. But then I think, as a government, it should be necessary to have a fairly clear view of what is tolerated in terms of the statements of the people in the operation of the government hierarchy.

FUNABASHI: Thank you very much. I hope that the discussion here in this first session at least has provided some food for thought for thinking of -- when you think of the future U.S.-Japan relationship. The first session is adjourned.

Thank you very much. (Applause.)

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