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Japan at a Turning Point -1-

Notes for remarks by Mr. Sadaaki Numata,
Executive Director, Japan Foundation Center for Global Partnership,
The Japan-America Society of Colorado,
Monday 3 November 2008

1.   I am particularly grateful to you for having given me the opportunity to visit Denver for the first time today.

My previous two visits to Colorado were to Colorado Springs and the NORAD headquarters. I am glad that I have finally made it to Denver today.

I am looking forward to witnessing the drama unfolding tomorrow here in Colorado, on which the world has been focusing its attention as one of the key states in determining the outcome of this presidential election.

I am happy to have the opportunity to meet again the Executive Vice President of this Japan-America Society of Colorado, Tom Reid. In the early 1990s, he, as Washington Post Bureau chief in Tokyo, and I, as Deputy Spokesperson of the Foreign Ministry, were often pitted against each other in press conferences. Despite that, or rather because of that, I came to respect him as a great friend. I also had the pleasure of knowing another journalist, the late Bill Hosokawa of the Denver Post, when he was Honorary Consul General of Japan. I would like you to join me in paying tribute to this great Japanese-American, who left the legacy of a fellowship named after him to Japan-America Society of Colorado.

2.  There are a number of things said about diplomats, most of which are unkind, like “An ambassador is an honest man sent to lie abroad for the good of his country”. This is a total lie. I mean the “lying” part, not the “honest” part. I prefer the one by Demosthenes, the ancient Greek orator, which goes:Ambassadors have no battleships at their disposal, or heavy infantry, or fortresses; their weapons are words and opportunities.If Demosthenes had been alive today, he might have said that ambassadors possess no hard power; they are the practitioners of soft power. Today, I will try to address the question of Japan’s place in the world, and Japan’s relationship with the United States in general and Colorado in particular by using the concept of soft power as a handle. I mean by soft power not just popular culture such as manga, anime, sushi or fashion. It has many aspects that have to do with images, ideas and values, such as economic, human capital, cultural, diplomatic and political.

3. I personally feel that globalization has affected Japan’s soft power, especially its image abroad. Let me elaborate this under three headings: (1) Wired world; (2) Too little, too late; and (3) Shadow-boxing with the market.

(1) Wired world

In the early 1990s, when I was a novice spokesperson, I learned the hard way just how highly “wired” the world was. Too often, Japanese political leaders would make careless comments on such sensitive issues as race or work ethic in the United States, only to realize too late that their utterances were being transmitted almost instantaneously by wire services far beyond Japanese shores. I had to scurry around trying to prevent these stories from causing anti-Japanese fireworks.

(2) Too little, too late.
  The Iraqi invasion of Kuwait in 1990 was a prime example of the CNN syndrome, whereby people vicariously experience in real time through the TV screen the traumas and sufferings of others thousands of miles away. As the world’s attention was riveted on the mobilization of the 11-nation Coalition forces against Iraq at the beginning of 1991, Japan’s inability to contribute personnel to the Coalition (put boots on the ground) stood out. When we finally decided to make a financial contribution of US$ 1.3 billion, the international media’s response was “too little, too late”. This gave rise to the debate in Japan as to whether Japan would remain shackled by the legacies of its postwar pacifism or become a “normal country” capable of playing a political and security role in the international community commensurate with its economic strength.
(3) Shadowboxing with the market

In the late 1990s, when Japan was still trapped in the long, dark post-bubble tunnel, the Japanese government took a series of measures to put the economy back on track toward domestic demand-led growth and stabilize the financial system beset by huge “bad loans”. The international media often decried these measures with epithets like “too little, too late” (again!), “lack of political leadership” or “arterial sclerosis”. In this, Wall Street, the US government, and the western media seemed to be acting in unison. Fielding sharp questions from the international media as Foreign Ministry Spokesperson, I felt as though I were shadowboxing with the market.

All this should not obscure the basic fact that Japan has been playing an important stabilizing role in Asia for the past few decades, and will continue to do so for some time to come. Japan has been searching for ways to extend this role beyond Asia and contribute to international peace and security. Let me break this role down into its three main components, i.e. security, economy and politics, and see which factors are constant and which are variable in each of the three components.

(1) Security

Japan’s option of never again becoming a military power that would threaten others and ensuring its security through its own self-defense capability and alliance with the United States has been a key stabilizing factor in Asia since the end of WWII. This has remained a constant after the end of the Cold War, as elements of instability such as the Korean Peninsula and the Taiwan Strait remain. Steps are being taken to enhance Japan-US defense cooperation, including ballistic missile defense and the realignment of the U.S. Forces in Japan. The variable is how far and how fast the debate in Japan may proceed on the Article 9 of the Constitution and the right of collective self -defense to enable further effective functioning of the Japan-U.S. Security Treaty. Constant efforts are required on both sides to nurture this alliance further. An important element in this is how we can manage together the problem of North Korea, which deeply affects the Japanese psyche not only with its nuclear weapons development but also with its abduction of at least 17 Japanese nationals, including a 13-year old girl in the late 1970’s and early 80’s.

The “normal country” debate has evolved considerably over the past decade and a half. JSDF personnel participated in UN peacekeeping activities in Cambodia, East Timor, etc. GSDF personnel engaged in humanitarian and reconstruction activities in Iraq. MSDF vessels have been refueling the Coalition’s vessels in the Indian Ocean as a part of the Operation Enduring Freedom. However, the extent to which the JSDF can take part in such activities for international peace and security remains a point of sharp contention between the government and the opposition. As one who witnessed on the spot the challenges confronting the two frontline states, Afghanistan and Pakistan, before and after 9/11, I personally would like to see Japan more actively engaged in helping the two countries counter the dire threats of terrorism, which now command even greater attention from the international community than Iraq.

(2) Economy

A constant factor in the post-WWII Asia is the essential role that Japan has been playing, as the No.2 economy in the world and the most advanced market economy in Asia, for the economic development and prosperity of the region. Not only has Japan acted as the leading goose and the principal donor of ODA, but also as a linchpin in the intensifying economic interdependence among East Asian countries. For example, Japanese companies operating in China employ nearly 10 million Chinese.

In the meantime, Japan has been facing the challenge of globalization. During the so-called “lost decade” following the collapse of the bubble economy in the early 1990’s, Japan suffered from the problem of bad debts. It took years for us first to identify the non-performing loans, then to disclose them, and finally to cut them off from banks and financial institutions. In order to do so, a total of about 500 billion dollars of public money was spent, including about 120 billion dollars for capital injection.

Non-performing loans, which consisted of more than 8% of the total assets of banks, are now down to less than 2%. The lessons that we learned from this bitter experience are (a) transparency, (b) fairness and (c) speed. Today, as leveraged capitalism has collapsed in the United States and elsewhere, Japan is ready to share its own experience and lessons to help improve the situation.

At the same time, people in Japan are increasingly worried about the damage being done to the real economy, with falling export demands, rapid appreciation of the yen and declining industrial production and consumption. At the same time, there are those who see a chance for Japan to come back to the international financial scene, as seen in Nomura buying the Asian and European operations of Lehman Brothers and Mitsubishi UFJ Financial Group (MUFG) buying up to 20% of the stake in Morgan Stanley.

(3) Politics

Japan has been a constant democratic presence in Asia under its postwar Constitution. As the oldest and most mature democracy in Asia, Japan has acted as a role model to other Asian countries in their nation-building and democratization efforts, and has represented the Asian voice in the G8 Summit.

The variable is the fluidity of the political system. The public’s demand for dismantling the “iron triangle” of politicians, bureaucrats and business leaders as well as moving away from pork-barreling for parochial constituency interests driven by LDP factions resulted in the political reform legislations in 1993 under Prime Minister Hosokawa, the first non-LDP prime minister since 1955. There is also the challenge of a rapidly aging society (people over 65 accounted for 20.8% of the population in 2008) and a declining birthrate (the total fertility rate was 1.34 in 2007). The mounting public anxiety over the future, based on the prospect of heavier burdens of social security, has become a key domestic political concern.

It is against this background that the Upper House election in July last year gave the control of the Upper House to the opposition parties led by the DPJ, while the Lower House remains under the control of the LDP/Komeito coalition. The DPJ’s success was attributed in large part to the strategy of its leader, Ichiro Ozawa, to zero in on the backlash of globalization, whereby the pains of drastic reform and restructuring continued to be felt in many quarters and frustration was mounting on the part of those missing out on decent jobs or feeling marginalized in rural areas.

As key legislations continued to stall in the protracted tug-of-war between the government and the opposition, speculation has been rife that Prime Minister Taro Aso, who assumed office last September, may call an election of the Lower House any time soon. It would provide the Japanese voters with a real opportunity to choose the prime minister between Taro Aso and Ichiro Ozawa. Last Friday, Prime Minister Aso announced a new economic stimulus package that will free up about 5 trillion yen ($50.8 billion)in taxpayers' money to cushion the impact of the global financial crisis. It includes 2 trillion yen in handouts, which will be distributed regardless of income, and 20 billion yen worth of government loan guarantees for small and medium enterprise businesses. The Prime Minister indicated that he returning the economy to health was his immediate priority and he did not intend to call a general election in the near term.

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