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Politics, KUDO_Yasushi, Nos.13-15  Aug. 29, 2013

(JAPAN POLITICS CHANGED?) Abe Administration: Aiming for a Strong Economic Revival and Realistic Foreign Policy

Photo:SHIOZAKI_FUKUSHIMAWith an emphasis on measures to spur economic growth, Prime Minister Shinzo Abe’s administration is pressing forward to put the Japanese economy back on its feet. Amid concerns raised by overseas media and others about the nation’s “tilt to the right,” how does Japan intend to play its role in Asia based on the prime minister’s pet theory of giving priority to the Japan-U.S. relationship? Glen S. Fukushima, who now works as a senior fellow at the Center for American Progress in Washington, D.C. after a long and outstanding career in Japan, and Abe’s close aide Yasuhisa Shiozaki, acting chairman of the Liberal Democratic Party’s (LDP) Policy Research Council who has known Mr. Fukushima since his days as a student at Harvard University, sat down to discuss this. Yasushi Kudo, chairman of the Editorial Board, served as the moderator.

※Translation of an interview conducted in Japanese (The Genron NPO, February 2013)

Japan’s Economic Stagnation Behind Its Diminishing Presence

Kudo: Around the world new leaders have taken office and in Japan the Abe administration has been launched. Meanwhile, the United States is shifting its pivot to Asia and the Pacific and has begun to show a strong interest in Asia’s economy and regional security issues. I would like to ask both of you for your opinions on what kind of role Japan should play in Asia amid such developments.

Mr. Fukushima, I heard that upon your return to Washington for the first time in 22 years, you felt that Japan’s presence had diminished significantly. What do you think are the underlying causes?

Fukushima: After working in Washington at the Office of the U.S. Trade Representative from 1985 to 1990, I came to Japan in June 1990 as the vice president of the Japanese arm of the U.S. company AT&T. Upon returning to the United States for the first time in 22 years, I felt two things. One was that Japan’s presence has declined even more sharply than expected. The other was that U.S. interest in other Asian countries such as China, the Korean Peninsula, India and Myanmar has risen rapidly. I believe perhaps the biggest reason is the weakening of Japan’s economic power.

Kudo: I heard that even the number of researchers on Japan in the United States has decreased considerably?

Fukushima: In the United States, the number of scholars who focus only on Japan has fallen. Recently, I was among 10 experts on Asia invited by the U.S. Senate’s Committee on Foreign Relations to brief the committee staff, but of the 10, eight were experts on China, one was an expert on the Korean Peninsula, and I was the only one researching on Japan. Even during the discussions, while there was strong interest in China, there was not so much positive discussion with regard to Japan. Rather, it was more of a desire for Japan not to stir up conflicts in Asia. I asserted the importance of Japan as well as Japan-U.S. relations, and advocated that it would be better for Japan and the United States to cooperate. But the whole atmosphere there was, from my point of view, rather dominated by an underestimation of Japan’s role.

Kudo: Mr. Shiozaki, you also studied in the United States when you were young and focused on issues between Japan and the United States. How do you assess this kind of phenomenon?

Shiozaki: I have lived in the United States on two occasions. The first time was in 1967-68 when I was a high school student. The place I lived in was close to San Francisco and where Japan was a relatively popular topic of conversation, but still the atmosphere in the United States at that time toward Japan was only to the extent that, for example, a few people had begun to say Toyota cars were “pretty good.”

Later in 1980, when I studied at Harvard University, it was just when Professor Ezra Vogel, who wrote “Japan As No. 1” the year before, was also there and jointly teaching a class with Professor Robert Reich, who later became U.S. secretary of labor in President Bill Clinton’s administration. I remember being asked during class at that time to “please speak to the class about Japan’s industrial policy” and I did. I guess if it were now, one wouldn’t even be asked “Would you like to discuss industrial policy?” In other words, at that time it was a “rising Japan,” as Mr. Fukushima just said, and it grabbed attention not for the magnitude of its economic power but for the potential of its economy.

In the end, I believe the biggest factor is that during Japan’s two lost decades, the Japanese economy lost its sense of direction and economic growth dissipated. Moreover, during Japan’s economic malaise, China’s economy expanded. In the 1980s, it used to be a closed China prior to economic reforms and open door policies and a “Japan in a small market,” but now it is “Japan in the global market.” Twenty years have passed, yet Japan has failed to resolve fundamental structural issues during this time. In contrast, China, although there are probably a whole lot of problems domestically, has shown such impressive growth that it makes those issues unnoticeable.

The Abe Cabinet has become the first in a long while to declare economic growth as its top priority exactly because of this desire to revive the Japanese economy from such a state. Right now, although many investors around the world are keeping their eyes on Japan, I do often get asked “Is this change for real?” I believe we must grasp this momentum and make it real.

2 Expectations, 2 Concerns Regarding Abe Administration

Kudo: While the new Japanese administration is tackling economic growth as its top priority, what kinds of expectations does Washington have of Japan?

Fukushima: When it comes to the Abe administration, I believe the United States has two expectations and two concerns. The first expectation would, of course, be the economy. Since it is hoping for a revival of Japan’s economy, there is heightened interest in “Abenomics”. However, although I believe such interest will continue until the House of Councillors’ election in July, I have reservations about how it will fare afterwards.

Another expectation is the strengthening of U.S.-Japan relations. Bilateral ties, including the Okinawa issue, have soured over the past three years and so Washington is placing its hopes on Abe, who is seen as “one who places emphasis on the U.S.-Japan relationship.”

As for matters of concern, the first is the danger that Abe may exacerbate relations with other countries in Asia, especially China and South Korea. Editorials such as one recently in the New York Times have taken up such issues as the “comfort women” and Yasukuni Shrine. The other concern is the risk that economic recovery may be neglected if the prime minister places too much emphasis on such other issues as Japan’s security, the right to collective self-defense and constitutional reform.

Abe to Bring About Fundamental Changes to Japanese Economy

Kudo: Mr. Shiozaki, what do you think about these two expectations and two concerns?

Shiozaki: For all of them, I sense “that’s probably the case.” First, regarding the two expectations, they must without doubt head in a good direction and I believe they most likely will. The question is, however, whether they will proceed in a sustainable manner. Something that did not work out for 20 years will not be fixed in six months, so I think it will take several years. Therefore, we must truly bring about fundamental changes to the Japanese economy. In his policy speech recently, Abe stated clearly that “dealing with the issues in ways that are a continuation of what has been done thus far would not work.” That is to say, he will do things differently and I believe that in itself is correct. Another thing is that he has said himself that we “cannot depend solely on fiscal stimulus indefinitely.” This really means “the LDP will not return to its old self.” In order for the prime minister to steadfastly carry out these two promises, I think we must all cooperate.

With regard to Japan-U.S. relations, I too have worked with the prime minister on them as chief Cabinet secretary (during the first Abe administration) and it was the kind of relationship where even at the chief Cabinet secretary level I was able to dine alone with the U.S. ambassador, just the two of us. The relationship between the prime minister and the U.S. president was also very good. However, since then, especially given the issue of U.S. bases in Okinawa, we have unfortunately come to the point where resolving this has become a very difficult task. Abe is very aware of the importance of our relationship with the United States so I am sure he will work on accomplishing it.

The problem is with the two concerns that Mr. Fukushima pointed out. I think there are worries in the United States too about Japan’s relations with China and South Korea. But I also think that, if anything, it would actually be better to manage things under such an atmosphere of concern in Washington. Abe fully understands the tactics of diplomacy with China and South Korea, so I am not that worried. However, when there are things that must be said, I will say them to Abe this time too, just as I did on many occasions when I was chief Cabinet secretary.

As for the other concern, the economic policies will not come to an abrupt end in July and as it is no simple task we must keep going. In fact, for issues that really need to be pressed hard, we must then cut to their core after winning the House of Councillors election, and I think Abe too realizes that. First of all we must win the upper house election, and as for economic issues I believe both the government and the LDP will continue to address them even after the election.

Restoring “Japan-U.S. Relations that Contribute to the World”

Kudo: What kind of Japan-U.S. relationship does the Abe administration have in mind? Is it trying to repair the collapsed foundation, or is it trying to establish a new relationship that goes beyond mending fences?

Also, on the economy, right now the government is drawing on all mechanisms of the “three-arrow” components of “Abenomics”, so what kind of changes to the Japanese economy is the administration ultimately aiming to achieve?

Shiozaki: Since the foundation for forging a new Japan-U.S. relationship has collapsed, we must first mend and restore it. During the first Abe government, relations were shifting to a “Japan-U.S. relationship that can contribute to the world.” In order to do that, defense in the Asian region must be sound and reliable for a start. Given the ever-changing circumstances in the surrounding environment, we too must adjust accordingly. With the plan to relocate the Futenma base to Henoko having suffered such damage, we must now put the pieces back together and move forward with the relocation to Henoko so as to enable the U.S. military’s overall realignment to be implemented properly. Otherwise, stability in regional security cannot be maintained. We will work together as we patch up our ties. That is the first step. Then there are the North Korean issues and various other areas such as South Sudan on which we can work hand in hand. How should we create a relationship of cooperation in the world within a new Japan-U.S. alliance? Abe, with the intention of achieving that, spoke about it during his first administration, but things have since regressed significantly. We must address that once again and establish a system under which even Japan alone can contribute to peacemaking when conflicts arise in the world. It will then be a matter of how to make good use of the Japan-U.S. alliance, as well as how to establish and develop Japan’s new role in the world in such circumstances.

House of Councillors Election Not End for Economic Policy

Shiozaki: There is no way we can beat China economically in terms of volume, but I believe that is not something we need to be too worried about. Rather, the point is whether we can maintain Japan’s qualitative leverage and once again improve quality even further. Consequently, that will be reflected in the economic growth rate. In other words, the matter is how to improve our power of innovation. For example, although Kyoto University professor Shinya Yamanaka won the Nobel Prize for developing iPS cells, what do we think of the reality of our society’s closed nature from the fact that not even one single Nobel laureate of foreign nationality is doing research in Japan? Instead, even among our Nobel Prize winners, quite a number have moved from Japan to the United States. Take, for example, Shuji Nakamura who invented the light-emitting diode. Like myself he hails from Ehime Prefecture, but he left for California and never returned. With this kind of thing happening, Japan will never give rise to new potential. In recent years, more and more students graduating from Japanese high schools leave to enroll in U.S. universities directly. Since the foundation of economic power is human resources, a nation from which talented people move out will not survive very well. Without reforming this kind of social structure and attitude, it will be impossible to secure economic growth. I therefore think this is by no means something to be pursued only up until the House of Councillors election.

Japan Can’t Make Up Its Mind to Join TPP?

Fukushima: I too can understand that the issue of Japan’s economic growth is a long-term task and not something to pursue just until July. However, with regard to the TPP (Trans-Pacific Partnership) which has not yet been taken up in our discussion today, the U.S. side believes that it is one way of joining forces with Japan on the economic front. Yet Japan is dragging its feet and is unable to make up its mind. I am sure there are quite a lot of people even in the United States who are wondering why. In Japan, many media reports tend to say “the United States is putting pressure on Japan to join the TPP,” but the fact is that in the United States, some people in Congress and government agencies involved in economic policy, as well as industrial circles, especially the auto industry, do not want Japan to take part. There are quite a lot of people who do not want Japan to participate as they worry that if Japan joins in, not only will negotiations drag on but plenty of exceptions to the lifting of tariffs, which are supposed to be reduced, will also be included. On the other hand, at the White House and State Department, many people would like to have Japan join the TPP because other nations involved will also benefit from Japan’s participation, and also in the sense that it would contribute to the strengthening of U.S.-Japan relations. In spite of this, Japan has been very slow and has yet to make a decision. So there is the question of why Japan is not joining even when it is clear that it will benefit in the medium to long term.

It is also important to get talented foreigners to come and work in Japan. For example, in the case of the advanced scientific research institute of a Japanese university where I became a member of the board three years ago, there was only one foreign national there at that time, but now the number has increased to three. Even so, that is still only three foreigners in the whole advanced science and technology institute. I had expected that 30-40 percent of them being foreigners. Furthermore, the number of students who go to study in the United States from Japan has dropped sharply, from 47,000 in 1997 to 19,000 last year. The number of Japanese going abroad has declined and there have also been fewer foreigners coming to Japan. I think this situation must be changed.

Japan’s Inward-Looking “Closed Society”

Shiozaki: Absolutely. In fact, when we compare the number of Japanese students there when I went to Harvard with the number today, it is indeed very sad. Japanese people have unfortunately become inward-looking. I have heard business executives say that studying abroad does little to benefit one’s career. I know that Mr. Fukushima has been an external board member at a major bank in Japan, but I think even now there are still very few foreign board members. In addition, at major exporters such as steelmakers or automakers there are relatively few foreign executives. Considering all this, the Japanese economy most probably will not last long if our companies engage in global business with only Japanese involved in corporate governance. I believe this is one difference between South Korea and Japan.

Moreover, even at universities there are inward-looking elements such as faculty councils and there remains a status quo in which university presidents can do nothing. There are a number of such things that can be changed by revising the School Education Act. That would probably face opposition from faculty councils at universities across the nation, but I think we will not get anywhere unless we go ahead with such reforms regardless. Particularly in the case of national universities, the secretariats are under the education ministry’s thumb. Even in the private sector, we need to find a way to negotiate change with those people who are trying to hang on to their vested interests. This, I believe, is the challenge facing us from now on.

TPP in Context of U.S.-Japan Alliance

Kudo: I guess the world is hoping to see this kind of ability to get things done in Japanese politics and yet Japan cannot readily deliver, and I think this leads to the diminishing of Japan’s presence. The TPP issue is a typical example.

Shiozaki: Until now, we have been in the opposition camp and so have received relatively little information and could only limit our remarks to certain aspects, but I think this is no longer the time to make such excuses. Given the Abe government’s basic policy of “open conservatism,” we must make our country more open. I believe this policy remains unchanged. The problem is we cannot just say “we’ll open up” without knowing what kind of impact it will have. That is why we are now investigating how far-reaching the impact will be, such as how the agricultural industry will be affected, as well as for other areas of concern such as medical services and insurance.

I believe the United States should at least discuss the TPP in the context of the Japan-U.S. alliance. Up to now, I guess Washington might have been worried about criticism that it is forcing the TPP upon Japan, but I think there should be an open and honest dialogue to discuss in a more candid manner what should be done, given our alliance, and how we should go about establishing such an order.

On Japan’s part, if we are hoping to bring the Japan-U.S. alliance to a new stage, discussing the TPP in the way it has been done so far will not work anymore. We need to be a little more realistic and think about how we can move in the direction of an open economy.

Kudo: Mr. Shiozaki has explained the new Japanese administration’s point of view. In what areas does the United States have particular hopes of the Abe administration?

Fukushima: Since the government has changed from the Democratic Party of Japan (DPJ) back to the LDP after three years and three months, hopes of a revival in the Japanese economy are growing. But how Japan wants to define its relationship with the United States in terms of security from now on is also drawing attention. What kind of role will Japan play in Asia, especially economically? I think this is the viewpoint from which the TPP issue is being considered. By making the TPP a high quality agreement, the United States is also aiming not only to strengthen U.S.-Japan economic relations but also to enable it to bring China and others to these high standards in the future.

Kudo: I am relieved to hear what you said as I was worried that today’s main theme might be dominated purely by concerns.

U.S. Expects Active Japanese Role in Relations with China, South Korea

Fukushima: Of course, there are also people who are expressing concerns. Especially among intellectuals, scholars and journalists such as those at the New York Times, these people are worried about Abe with regard to such issues as Yasukuni Shrine, comfort women, Article 9 of the Constitution, and moves to make school textbooks more nationalistic. In Washington, those who specialize in China or the Korean Peninsula — scholars, government officials, think tank staff members and the like — think that the Abe administration may aggravate Japan’s relations with Asia. On the other hand, policymakers in Washington are focusing on things like bolstering the U.S.-Japan security relationship in concrete terms and getting Japan to join the TPP so as to revive its economy.

However, from the U.S. point of view, it would be difficult to coordinate measures against North Korea if relations between Japan and South Korea are not put in order. So if Japan can maintain good relations with South Korea and China, the United States sees that as something good for itself too. In that sense, it is hoping Japan will play a positive role.

Raising Competitiveness of Japan’s Agricultural Industry with TPP

Shiozaki: Although I do not think it is about simply joining the TPP, Abe actually brought up the possibility of a Japan-U.S. free trade agreement with U.S. President George W. Bush on a visit to the United States during his first administration. This was not made public. Of course, that would be impossible as long as the agriculture issue is not dealt with, and so the discussion went no further. But since it is true that Japan has a political issue with regard to agriculture, I think we must come up with some way of resolving it. In the first place, Japan’s agricultural industry has weakened to such a state that it was possible to kick the LDP out of office three years ago. In response to that, the DPJ government embarked on lavish spending on support measures, but true policies to strengthen agriculture have yet to be announced by the Abe Cabinet. In their absence, there is no way the government can say it will join the TPP. First and foremost is what to do to improve the competitiveness of the agricultural industry. From my point of view, the agriculture issue is a topic that cannot be avoided in discussions at the government’s headquarters for Japan’s economic revitalization and the Council for Regulatory Reform. Within the party, I would like to take up the issue as much as possible. I have been told by the prime minister to take charge of discussions in the party on how to revitalize local economies and I think in these too agriculture cannot be left out. Of course, there is no doubt resistance exists within the LDP when it comes to agriculture, but I believe this task somehow has to be dealt with.

Japan-China-U.S. Relations Not to Be Considered Bilaterally

Kudo: Ever since the administration of President Barack Obama began placing priority on Asia, the region has become a focus of global attention. This calls into question how Japan intends to secure its own interests and build up its presence. But in Japan I can only see intensifying discussions in military terms, such as policies toward China or the United States. How does the United States see this kind of debate in Japan?

Fukushima: What I felt in Washington is that while Japan seems to see relations as bilateral, as in the Japan-U.S. relationship, Japan-China relationship, and U.S.-China relationship, the United States looks at them as multilateral relations. So even when considering the U.S.-Japan relationship, Washington thinks about how Japan’s relations with Asia will impact U.S.-Japan ties and how U.S.-Asia relations will affect U.S.-Japan ties. One of the reasons for the U.S. rebalance toward Asia is that Washington also wants to be involved in the impressive economic growth in Asia. Another reason is the awareness that after its retreat from Afghanistan and Iraq, the most important security issues from now on will probably be North Korea and China. The United States senses the importance of Asia in both economic and security terms. As the world’s third-largest economy and an ally in terms of values and political structure, Japan is clearly important to the United States. So I think the challenge is how Japan and the United States are to cooperate and pursue their respective interests on the security and economic fronts. I think the United States has high hopes of Japan, but Japan’s handling so far has been hesitant with regard to the TPP, while on the security front tensions with its Asian neighbors are mounting. If relations between Japan and these Asian countries are not good, Japan-U.S. cooperation will also experience limits. I think that is how the United States sees it.

Japan Must Rebuild Own Asia Network

Shiozaki: Indeed, up till now Japan has only looked to the United States, and it is true that it has perceived relations with China and others at the bilateral level. I think what the United States is most probably anticipating is that Japan can do something when it is having a hard time with China, and that Japan can make better use of its position in Asia.

Japan has been losing its influence in Asia on many occasions, although recently in Myanmar and some other places more weight has been attached to relations with Japan given progress in democratization. But I feel that up to now Japan has not done enough to reach the point where it establishes relations on its own and takes the lead among other Asian countries, as the United States is hoping for.

A little while ago, Abe visited Vietnam, Thailand and Indonesia. In the case of Thailand, it was the first time a Japanese prime minister had visited since Junichiro Koizumi did so 11 years previously. It is such an important nation for Japan and yet Japanese prime ministers had not visited there for such a long time. When Abe explained such matters as the Senkaku Islands issue in each of the three countries, the reactions differed, and there are countries that are very conscious of China. What should be done with such countries? I am sure Japan and the United States must discuss this also. I have referred to the Japan-U.S. alliance in a global setting, but first of all in order to make the alliance in Asia a meaningful one Japan must do more to establish its own network. We should naturally be assertive in the things we need to advocate, but at the same time there is no need to be so hard as to worsen relations with South Korea and China.

Multi-tiered Diplomacy to Avoid Conflict

Kudo: Sino-Japanese relations are very tense at the moment over the Senkaku problem. Is the United States worried that if things go on like this there might be a big military conflict between Japan and China?

Fukushima: Well yes, there are quite a lot of people who are worried. Among security experts, especially those in the Navy and Air Force, many think there is a possibility that the problem will get worse should any incident arise. Right now, the Chinese leadership is also in its transition period and it is not exactly clear to what extent the political leaders are in control of the Chinese military. With China in this situation on the one hand, Japan is also becoming more nationalistic on the other. Given all this, more and more people are concerned that there could be trouble if an incident occurs even if unintended by both sides.

Kudo: Which means they are thinking that Japan and China had better work things out to avoid a dispute.

Fukushima: That’s right. The U.S. viewpoint is that it wants Japan and China to bring things back under control as much as possible so that no conflict will occur. The view that “it falls within the sphere of the Japan-U.S. security treaty and so the United States will protect us” seems to have dominated discussions in Japan, but from the U.S. perspective, it is more like “please don’t make this into a conflict.”

Shiozaki: Former U.S. Secretary of State Hillary Clinton has said many times that Japan holds administrative rights to the Senkakus and in that sense they are covered under the security treaty. We can take advantage of it and think that ultimately the United States will come to our rescue. But for all I can see, the message from the United States really is: “Ultimately it will be covered, but we want you to do it right on your own so the situation will not actually reach this stage.” Japan must make every possible effort itself instead of thinking it can simply depend on the United States should the worst-case scenario arise. The DPJ was very happy that “Clinton said it!” and did not do much to tackle the issue on Japan’s part. But that, after all, is just the final defense line and does not mean it is alright for things to get to such a stage. I think it would be unwise not to engage in diplomacy at multiple levels to avoid such an outcome.

Kudo: When it comes to territorial issues, it is very difficult for countries to make concessions, but at least in order to avoid conflict what kind of steps is the Japanese government trying to take?

Shiozaki: I believe these are in terms of both hard and soft power. Of course, there is the beefing up of the Japan Coast Guard, but at the same time deepening discussions with Taiwan in fisheries talks is also important. In dealing with China, there are some policies where we push and others where we pull and we must make an effort to coordinate these properly.

Kudo: Mr. Fukushima, how do you think U.S. concerns regarding Abe’s government can be addressed?

Fukushima: One way would be by focusing on economic recovery, and another would be by improving relations with South Korea and China. This would dispel such concerns.

Japan Needs Diplomatic Realism

Kudo: Since the launch of the Abe government, many mainstream media around the world have taken the view that Japan is tilting to the right. I think in most cases the reports were based on misunderstanding, but I feel the fact that Japan in the meantime has failed to dispel this view clearly is also partly responsible for these concerns. What are your views on this?

Shiozaki: The economy and a swing toward the right are pretty closely connected. But rather than a real drift to the right, I think it is more due to Japanese society having become more inward-looking. At times like this when the economy is in such doldrums and peoples’ livelihoods have become increasingly difficult, it is unlikely that any country would become more tolerant to the outside world. I sense that what is really happening in Japanese society now is that the degree of introversion has increased in conjunction with economic stagnation. In order to change this, the economy has to become stronger and more open. I think that would prepare the ground for the nation possibly to become more open-minded.

Fukushima: When talking with Americans, there are two arguments that are most persuasive in response to claims that Japan is tilting to the right under the Abe government or that it will exacerbate relations with Asia. One is that during Abe’s first administration, he adopted a realistic approach that included not visiting Yasukuni Shrine and picking China for his first overseas trip, during which he drove forward the notion of a mutually beneficial relationship based on common strategic interests with China. The other one I often use as an example is U.S. President Richard Nixon. Nixon was an anti-communist, conservative Republican. But it was exactly because he was anti-communist that he improved relations with China and restored diplomatic relations. Consequently I explain that as in the case of Nixon, Abe too is a political realist, so that despite his personal ideology he is aware, given the situation in Japan, it is beneficial to have good relations with China and will indeed act realistically. This argument is understandable and persuasive to many Americans.

Kudo: That is to say that in terms of foreign policy, even Abe will handle things based on realism. Indeed, it is true that five years ago, when Sino-Japanese relations were strained, it was Abe who worked to mend ties and paved the way for an improved relationship. Mr. Shiozaki, as senior vice foreign minister at that time, was one of those who supported Abe’s moves from behind the scenes and the Tokyo-Beijing Forum hosted by us, The Genron NPO, provided the stage for it. This time too I believe efforts from the private sector will be necessary, but to put it simply, if the Japanese and Chinese leaders can just smile and shake hands that would be the end of the story.

Shiozaki: However, when the other side is repeatedly violating our airspace and intruding into our territorial waters, I do not think we will be shaking hands.

Kudo: Some kind of action must be taken to avoid that.

Shiozaki: With regard to the Senkakus, it is difficult for Japan to step forward to improve relations at a time when China is taking such actions as intrusion into our territorial waters. That is because foreign affairs, especially when it comes to territorial issues, are also a domestic matter. Most important of all is the mood of the people in the country and so if we want to improve things overall the first thing that needs to be improved is the economy. On top of that, the government must work to convince the nation about its relations with China.

On the other hand, Abe knows best what happened when Japan-China relations deteriorated to the state they did under Koizumi: Japanese companies doing business in China had an extremely hard time and many were trapped in that situation. I too heard about those circumstances every time I went to China as senior vice foreign minister. It is not good for things like that to happen. As in the case of what happened most recently, if you ask exactly how severe the impact was from the damage done by the riots, the answer is even domestic production in Japan was affected. Abe knows this very well and I trust that he will deal with the situation resolutely.

Kudo: Japan’s relationship with China is a very important element in Asia. Mr. Fukushima, you mentioned earlier that with Washington’s rebalance toward Asia it hopes Japan will take a more proactive role in the region, but can you elaborate a little on what kinds of role the United States wants Japan to play?

Fukushima: Breaking them into two major categories, there is the economic aspect and the political-security front. Economically, the expectations are for Japan to strengthen its economic relations with other Asian countries, such as with Myanmar and India, and particularly with democratic nations. Japan has so much economic power and technical competence that it is capable of making a significant contribution. On security, it is hoped that Japan will step up its ties not just with the United States but also with South Korea, Australia, the Philippines, Singapore and New Zealand, and work with Washington in keeping North Korea and China in check. I believe these are the two major areas.

Tough and Moderate Approaches in Foreign Policy

Shiozaki: The Armitage Report III published last year mentioned whether Japan can remain a “tier-one” nation. When defining a tier-one nation, what comes first is the economy. Without economic clout, one cannot be an influential nation. In Asia, leaving volume and scale aside, I believe the revival of our economy into one that exudes strength must be the starting point. Abe’s recent visits to three countries in Southeast Asia were followed by visits to several others by Foreign Minister Fumio Kishida. Through dialogue and exchanging honest views, there are all sorts of combinations that can be formed and it is important that we become a Japan that is connected to all kinds of networks. Of course, there are formations which will include China, and summits between Japan and China, or trilaterally with South Korea, will be held this year. We must handle these pairings too. When speaking of tensions in the region, it comes down to relations between South Korea and Japan, which are especially vital. If these two countries do not get along well, things in Asia as a whole, and especially in the Far East, will be difficult. Last year a lot happened on account of South Korea, but with the emergence of a new South Korean president who is also close to Abe I believe things will work out fine in many respects if they can keep each side under control, bring about more positive public sentiment and put Japan-South Korea relations back on firm ground.

Fukushima: If things head in the direction described by Mr. Shiozaki, I think they will be welcomed by the United States. I believe Washington has great hopes that Abe can strengthen relations with South Korea and improve economic ties with China. As I explained earlier, there are differences between the views expressed in the New York Times editorial, which was harsh on Japan, and those of policymakers in Washington in their assessment of Abe. Things like Abe’s past remarks regarding comfort women still leave a mark, but I believe as long as he does not say anything more on that issue it will not turn into a major problem. Diplomacy requires realism. I believe Abe will, after all, play his foreign policy cards in a way that presents a mix of hard-line and moderate approaches.

Kudo: Thank you for joining us today.

Translation of an interview conducted in Japanese (The Genron NPO, February 2013)

Yasuhisa Shiozaki, acting chairman of the Liberal Democratic Party’s Policy Research Council, joined the Bank of Japan in 1975 after graduating from the Department of Liberal Arts, College of Arts and Sciences, the University of Tokyo. He completed his master’s degree (public administration) at the J.F. Kennedy School of Government, Harvard University in 1982. First elected to the House of Representatives in 1993, he has served as parliamentary vice finance minister, chairman of the Standing Committee on Judicial Affairs of the House of Representatives, senior vice foreign minister, chief Cabinet secretary, minister of state for the abduction issue.

Glen S. Fukushima, senior fellow at the Center for American Progress, was involved in trade negotiations with Japan and China as director for Japanese affairs (1985-1988) and deputy assistant U.S. trade representative for Japan and China (1988-1990) at the Office of the USTR. He completed his MBA at Harvard Business School and doctorate degree at Harvard Law School. His business career includes vice president of AT&T Japan Ltd., president of Arthur D. Little Japan, president and CEO of NCR Japan, and president and CEO of Airbus Japan. He has also served as president of the American Chamber of Commerce in Japan.

Yasuhisa Shiozaki and Glen S. Fukushima