Friday, April 5, 2013

Revitalizing Japan’s politics and economy the key to Japanese foreign policy and regional stability

Looking at East Asia through Japan’s eyes, there are a number of challenges that, if not managed carefully, risk spoiling the future stability and prosperity of Japan and the entire region

Four challenges in particular stand out: the North Korean nuclear threat; Japan–China tensions surrounding the Senkaku Islands; Japan–South Korea relations, which further deteriorated after former South Korean President Lee Myung-bak’s visit to Takeshima; and the need to reinvigorate Japan’s politics and economy.

The urgency of these challenges is amplified by a number of key regional trends. First, leaders in North Korea, the United States, China, South Korea, and then Japan have newly come into office or been re-elected in the past several months. This presents new opportunities for resetting relations with fresh policy approaches and cooperation. But on the other hand, once the honeymoon periods fade, there is the risk that leaders will be tempted to act against regional interests for short-term domestic popularity gains. Second, nationalist frustrations have surged across the region, magnifying the risk that narrow nationalist interests will take precedence over regional ones. Third, the balance of power in the region is continuing to shift as emerging economies such as China, India, and many ASEAN countries post rapid economic growth and increase their military spending. Managing the shifting balance of power—so as to maintain and strengthen regional peace and prosperity—is difficult enough given the inherent instability that accompanies power shifts and the troubles involved in coordinating complex global issues among an increasing number of geopolitically important stakeholders. And in the context of domestic politics and surging nationalism, this gargantuan task is even further complicated.

In order for Japan to address the North Korea question effectively in unison with the other Six Party Talks members, manage it territorial issues and mend relations with China and South Korea, it must revitalise its own domestic politics and economy. Japan’s ability to help promote a stable and peaceful liberal regional order depends on its economic dynamism and its relations with other countries in Asia. With a debt-to-GDP ratio of nearly 200 per cent, Japan can ill afford further prolonged inaction and stagnation. In the short term, until the Upper House election scheduled for July, the administration of new Japanese Prime Minister Shinzo Abe is likely to focus predominantly on the objective of revitalizing the Japanese economy. But beyond the election, there is a crucial need for more stable governance and a boosting of economic growth. If the Liberal Democratic Party (LDP) wins the election as predicted, and thus gains a majority in both houses, it should have a stable enough base to push through more substantial economic reform. In particular, in order to really boost economic growth, there is a need to deregulate inefficient sectors of the economy such as agriculture. This prospect, however, is unlikely to go down well with many LDP Diet members, as changes in agriculture policy will affect their core constituents. 

On the other hand, failure to move strongly to address Japan’s economic situation will lead to an unstable financial situation, negatively affect Japan’s international credibility, and hinder its ability to participate in regional free trade negotiations such as the Trans-Pacific Partnership, the China-Japan-ROK free trade agreement, and the Regional Comprehensive Economic Partnership.

An Upper House election victory for the LDP may also embolden the Abe administration to prioritize more hawkish foreign policy objectives on sensitive questions. This includes issues such as revision of the constitution’s Article 9 peace clause, recognition of Japan’s right to exercise collective self-defence, and efforts to get tougher on China over the Senkaku Islands. However, moving boldly and quickly on such sensitive questions is likely to undermine Japan’s relations with its Asian neighbours, and this in turn will negatively affect Japan’s economy, too. While Japan needs to conduct open and frank domestic debates about these issues, it is important that potential changes are implemented with sensitivity to its Asian neighbours, given Japan’s history of aggression, and that changes are based on liberal internationalist strategic considerations, not nationalist motives.

It is no secret that Japan is facing multiple tricky challenges in East Asia today, and resetting regional relations will require careful management of these issues both domestically and internationally. The North Korean nuclear threat, the Senkaku Islands issues between Japan and China, the Takeshima and other historical disputes between Japan and South Korea, and Japan’s stagnating economy and volatile domestic politics are all threats to Japan and the region as a whole. The need to address these challenges to regional stability is even more urgent than it otherwise would be given current regional trends. Intensifying nationalist tendencies across East Asia and the temptation for national leaders to look inward and focus on domestic issues makes solving these challenges increasingly difficult. However, given the need to manage the shifting balance of regional power and emerging complex regional and global problems that cannot be solved by any single nation, it is crucial that national goals are aligned with, rather than undermining, regional cooperation and goals. Making certain that efforts to garner short-term domestic political advantage do not derail long-term regional goals is the key to a successful reset for East Asia.

Hitoshi Tanaka is a senior fellow at the Japan Center for International Exchange and chairman of the Institute for International Strategy at the Japan Research Institute, Ltd. He previously served as Japan’s deputy minister for foreign affairs.

This article is an extract from East Asia Insights Vol. 8 No. 1 March 2013, and reprinted with the kind permission of JCIE. East Asia Forum

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