Basic Strategies for Japan's Foreign Policy in the 21st Century New Era, New Vision, New Diplomacy November 28, 2002 Task Force on Foreign Relations for the Prime Minister Executive Summary (unofficial translation) I. Current State of the World for Japan Major changes are underway in the international community of today. First of these challenges is the globalization of economy and society. Second is the remarkable advancement and increasing power of military forces. Third is the rapid expansion of the Chinese economy. In all of these developments there are opportunities and potential threats to Japan and to other countries of Asia. Japan must fully investigate and seek responses to these challenges. For Japan's foreign policy in its development from now, Japan must formulate clear strategies as a state , which have been lacking so far. The basis of all strategy is "national interest". Without a debate on the national interest it is impossible to set a course for the nation. First among the basic national interests of Japan is to maintain peace and security. Japan must change its thinking about international peace activities so that its own actions would conform with international norms. Second is to support the free trade system. Japan should establish a network of bilateral free trade agreements (FTAs), to supplement the WTO system. Third, Japan must protect freedom, democracy and human rights. It is Japan's duty as well to demonstrate a consistent commitment to the protection of these values. Fourth, Japan must actively promote people to people exchange and development of human resources, through exchanges in academia, culture and education. Japan has not seen the external world enough so far. Japan has to face the reality of the world and to actively engage itself in world affairs. II.Regional Issues for Japan 1. The United States of America The United States is the most important country for Japan. How the relationship should be, however, has up until now avoided redefinition, including the Japan-U.S. security system which is central to the relationship. Japan must undertake a comprehensive reexamination of its relationship with the United States focusing on security. The reexamination exercise would lead to further enhancement of the Japan-U.S. relationship. If this work is not undertaken, the rifts between the allies will grow from barely tangible to substantial, and confidence in the alliance among the two nations could be shaken. It is not unusual that the policy priorities of Japan and the U.S. should be different at times. It is impossible that the Japan-U.S. relationship will become like the one between the UK and the U.S. Japan, while upholding objectives common with the U.S, must have its own axis of coordinates and engage in diplomacy that is complementary to that of the U.S. Now that the economic tensions are relaxed between the two countries, policy coordination should be pursued. 2.China The relationship with China is the most important theme in Japan's foreign policy at the outset of the 21st century. For both countries, the relationship is one that interweaves "cooperation and coexistence" with "competition and friction." It is important that politics is not brought in too much to the economic aspects of the Japan-China relationship. Japan should assimilate China's "vitality". The only solution to the hollowing out of Japanese industry due to Japanese direct investment in China is Japan itself becoming an attractive, high-value added manufacturing economy. China's military buildup can pose a serious threat to Japan and other countries of the region. Japan should make strenuous demands for transparency from the Chinese side as regards China's burgeoning military budget. As regards Official Development Assistance (ODA) to China, Japan must define aid recipients narrowly so that the assistance can gain the understanding of the Japanese people more easily. The history problem and the Japan's relationship with Taiwan are recurring sources of discord in the Japan-China relationship. As regards the history problem, both Japan and China while drawing lessons from history, it is time they liberated themselves from an "enchantment with history" and aimed for a future oriented relationship. Since the normalization of the relationship between the People's Republic of China and Japan, tremendous changes have taken place on Taiwan. It is natural that the Japan-Taiwan relationship should undergo certain change as well. 3. Korean peninsula (1) South Korea (Republic of Korea) ROK is Japan's most important strategic partner in the region, sharing with it the three basic systems of democracy, market economy and an alliance with the United States. The sharing of these basic systems is bringing the values and national interests of the two countries closer together. We should also underscore the awareness of each other as partners that was fostered among the younger generation by the World Cup soccer tournament. The next goal for Japan-ROK relations is the signing of an FTA. This should serve as the core for the achievement of a comprehensive economic partnership, and a new sense of community that it fosters will be important. Japan and ROK can serve as the hub for an expanding network of democratic, market-economy countries in East Asia and the Pacific. (2) North Korea (Democratic People's Republic of Korea) There will be no normalization of relations between Japan and North Korea until North Korea itself resolves the many problems that it has caused: abductions, development of nuclear weapons and missiles, spy boats, narcotics smuggling etc. The resolution of these problems would bring peace, which would lead to greater prosperity for East Asia as a whole. North Korea itself needs to make substantial efforts if it is to become a member of the international community. Japan's objective is not to overturn the regime in North Korea but to gradually change the nature of its political and economic systems. 4. East Asia and the Pacific (1) ASEAN Stability in ASEAN is extremely significant for Japanese security. There are, however, large disparities within the ASEAN region, and the course for Japan to take is to engage in dialogue with the ASEAN 5 first, and then seek the application of those results to the expanded ASEAN group. Economic partnership with ASEAN should be pursued in such a way that it will encourage increased integration of the region. Japan should pursue the "East Asian community" initiative referred to in Prime Minister Koizumi's Singapore speech. Japan can and should make important contributions to ASEAN in education, human resources development and the promotion of democracy. (2) Canada and Australia Located along the Pacific Ocean, Japan, Canada and Australia have much in common strategically. Japan should consider developing common policies with Canada and Australia in some areas. Japan should view its relationship with these two countries strategically and in a different light from the G8, and should incorporate them into its diplomatic assets. 5. South Asia This region is important from a security standpoint as the one region in the world most likely to see nuclear conflict. There is potential for economic complementation between India and Japan in areas like IT. Japan needs to be aware of India's strengths and utilize them to boost Japan's own economic vitality. If Pakistan collapses, it could lead to proliferation of nuclear and missile technologies, and also increased terrorism. The conflict over Kashmir has global repercussions. Japan should make an effective contribution to the resolution of this conflict. 6. Middle East and Central Asia Japan should engage in "Middle East silk road diplomacy" to promote the following agenda: 1) elimination of Iraq's weapons of mass destruction, 2) elimination of the threat of international terrorism, 3) energy security from Gulf countries, 4) "soft power" support for an end to the Israel-Palestine conflict, and 5) expanding relations with Iran. The most desirable solution to the Iraq problem is for Saddam Hussein to completely eliminate his weapons of mass destruction, followed by the natural dismantlement of the Hussein regime. Japan should do whatever it can to further those aims. In the Middle Eastern peace process, Japan should make a strong demarche to both Israel and Palestine in an attempt to bring them back on the road to peace. 7. Russia Japan-Russia relations are at an important turning point, with Russia itself undergoing vast political changes. Japan should engage in a fundamental review of its Cold War policy towards Russia, and indeed it cannot leave relations with Russia unchanged. Russia provides an area where there are still large possibilities for Japanese foreign policy. Russia itself seeks closer ties with Japan. Russia is now an open society in which public opinion has a strong role to play. Japan should make bold moves to strengthen the communication pipeline, initiate Track II dialogue, and discuss territorial issues with Russia from a wide range of perspectives. 8. Europe The EU is moving steadily towards becoming one of the world's largest quasi-states. The development of the EU should be regarded highly in the context of world history for the implications it has for the balance in the international community. In the new world order, Japanese foreign policy will require strong partners case by case. It is the EU that can reasonably be expected to be a partner in several of these cases. Japan should study how best to cooperate with the EU and its strategy for the EU over the long term. 9. Latin America Japan has no negative legacies in Latin America; this is a region where it can make use of its abilities and capacities without constraint. However, Japan's presence in Latin America has been steadily declining since the nineties. Japan should expand economic cooperation for Latin America, with a view to possibly signing FTAs with MERCOSUR and other Latin American countries. 10. Africa If left unattended, Africa's failed states could export terrorism and other destructive factors to the rest of the world. Bringing about democracy and good governance in Africa is essential for world stability and prosperity. Aid to Africa should not look for short-term returns, but should be seen as a part of international activities to maintain order in the world. It will be important to develop TICAD (Tokyo International Conference on African Development). 11. United Nations The United Nations is a place where the interests of its members clash. Japan would not sit at the Security Council for six years.. There has been no progress in its strategy to obtain a permanent seat on the Security Council or in its efforts to have the "former enemy clauses" deleted. However, the United Nations' functions to maintain world peace and stability are extremely important. It would be difficult for sovereign states on their own to perform the United Nations' peace-keeping and peace-building functions in its stead. Japan should provide the United Nations with all the cooperation it can in order to ensure a better future for the organization. Nonetheless, there is nothing that explains or justifies Japan's inflated level of assessed contribution. Japan needs a strong resolve to reduce its assessed contribution to rational levels of 15% or thereabouts, which is in line with its GDP. III. Japan's Agenda by Sector 1. Security Factors for instability in the East Asian region include North Korea's nuclear weapons program and the rapid modernization of the People's Liberation Army in China. The Japanese alliance with United States, which Japan opted for in the interest of its sovereignty and independence, may need to be strengthened in the future, and certainly cannot be expected to weaken. It will be important for Japan to reinforce its counter-terrorism systems. Intelligence gathering, in particular, will be fundamental for national security. The question of U.S. military bases, which have been located in such a way as to place excessive burdens on Okinawa, can only be resolved if the entire issue is rethought from a nationwide perspective that includes both Okinawa and the mainland. The debate on the right to collective defence should be advanced to a more realistic discussion that would enable Japan to effectively participate in collective security arrangements. Japan should be a country that contributes to behind-the-lines support which does not require the use of military force. The dispatch of noncombatant troops to the ISAF (International Security Force) in Afghanistan is one example. 2. The Japanese economy in the context of global trends Japan will be more directly influenced by Chinese economic development than any other country and has a responsibility to articulate a national economic vision under this new paradigm. The essential first steps will be to quickly dispose non performing loans and at the same time reform the economic structure itself. The promotion of science and technology will be an absolute prerequisite to achieving this. Nor can regulatory reform be avoided. Japan must rectify high-cost structures, enhance educational facilities, and accept more foreign students, with the ultimate aim of attracting direct investment from overseas in high value-added areas such as high technology industries and research and development. Structural reforms in the agricultural sector are also essential. Japan must study mechanisms to mitigate the impact on domestic agriculture and to ensure food security. 3. Economic integration in East Asia The highest priority for the Japanese economy is East Asia, which is the growth center for the world economy. Japan should accelerate the integration of East Asia and should take the lead in this area, seeking to become the core country in a community that advances together. Japan should make strategic use of economic partnership agreements in order to achieve this. The goal should be the creation of a borderless East Asian economic sphere. When complete, the integrated East Asian economy will be a partnership that includes Japan, China, South Korea, ASEAN, Taiwan, Hong Kong, and furthermore Australia and New Zealand. Japan should pursue economic partnerships, which should serve also to balance China's expanding sphere of influence. At the heart of this will be FTAs, first with ASEAN, where Japan has strong trade and investment ties, and also with South Korea and Taiwan. 4. Sustainable development and humanitarian assistance ODA must be administered with greater efficiency under current tight fiscal conditions, and Japan should therefore prioritize the regions to which it provides aid and the types of aid it provides. Priority regions would include ASEAN, East Asian countries, the Indian subcontinent, the Middle East, Central Asia, and the Caspian Sea countries. Priority aid areas would include the development of basic infrastructure to promote economic integration and growth in East Asia, environment and energy, poverty eradication, peace-building, and promotion of understanding of Japan. The biggest issue in Japanese ODA is ODA for China. Japanese ODA should be directly linked to Japanese national interests. It will also be important to support the involvement of the Japanese people at the individual level in international development and humanitarian assistance activities. 5. Energy The Asian region's energy security issues are coming to the fore, and it is urgent that Japan reduce its dependency on the Middle East. In addition to diversifying its sources of energy supply, Japan should also look at Russian oil, Caspian Sea oil and African oil. The government should support the activities of core energy companies. Japan should also not overlook the importance of nuclear power in light of energy conditions in Asia. 6. Environment Japan should promote international coordination on environmental issues from the perspective of sustainable growth as well as domestic political and economic issues. Assuming that United States will not be ratifying the Kyoto Protocol anytime soon, Japan should consider its strategic framework. Over the medium and long terms, it will be important to create an international framework on global warming that includes both United States and the developing countries. Japan should lead international opinion on this. It should also seek the establishment of international environmental rules in Asia, particularly for Chinese companies, which are the largest potential polluters. 7. Academic and cultural exchange Cultural power stands alongside economic power as an important pillar of Japanese foreign policy. Japan should culturally deepen philosophies considered vital by the world at large, for example anti-terrorism and the promotion of science and technology. Institutions for studies on foreign countries are still weak in Japan. It will be important to create research centers for modern Japan, America, Asia and other areas. Foreign students should be effectively accepted using close coordination among industry, government and academia. IV. CONCLUSION: CREATION OF A "FOREIGN POLICY AND SECURITY STRATEGY COUNCIL" It has become increasingly the case that Japanese foreign policy seeks to "treat the symptoms," to resort to rearguard efforts to deal with clearly visible changes or trends for which the outcomes are certain. The political side has lacked a long-term strategy and vision for foreign policy. The bureaucracy has not implemented bold policies. The Prime Minister needs to be given perspectives and options other than just those presented by the Ministry of Foreign Affairs, and there needs to be a process by which the Office of the Prime Minister provides general coordination. To provide for this vision and to present these opinions, Japan should create, in an authoritative form, a "Foreign Policy and Security Strategy Council" (name tentative) that would advise the Prime Minister on medium and long-term foreign policy guidelines. The world is undergoing vast changes as the United States emerges as a hyperpower, China takes on new dynamism and the EU continues to work towards an integrated state. The changes in international situations coming in the next 20 years will be greater than those experienced in any other 20 year period in modern history. It should be obvious that Japanese foreign policy needs to rethink its priorities in this new world.