Provisional Translation

Address by Prime Minister Ryutaro Hashimoto to the Japan Association of Corporate Executives

24 July 1997

Thank you for giving me this opportunity again to address you today at this informal discussion group of the Japan Association of Corporate Executives. I recall speaking here last year on structural reform in our country. Today, I would like to draw your attention to how our nation s foreign policy should be shaped, focusing especially on our foreign policy toward Russia, and also on our relations with China and the "Silk Road" region.

The State of the World

May I begin with my perceptions of the current state of the world so that everyone can fully grasp why I have decided to speak today about such a topic.

As many have already stated, we are now living in the post-Cold War era. This era is most notable for the fact that the military confrontation between the United States and the Soviet Union has come to an end, and the ideological conflict between liberalism and communism has concluded. The disappearance of communism as a goal gives an opportunity to steer many countries toward a liberal, free-market economy in a broad sense, although the specific path taken and the rate of progress achieved by each country vary. For example, and I will elaborate on this later, China has opted for a socialist market-economy path. Furthermore, with the end of the Cold War, the Soviet Union collapsed, bringing many new countries into existence. As a result, a new task has been to achieve political and economic stability in those countries and to create a new international order encompassing surrounding countries.

Furthermore, we are now in the age of the so-called borderless society. We could not even imagine the evolution of an international economic community some time ago; economic activities now go beyond national borders and corporations have come to select the countries in which they operate. On the one hand, the globalization of economic activities, by enhancing interdependence between countries and regions, has created a situation in which problems can no longer be solved easily. On the other hand, by expanding the potential loss resulting from a cut-off of exchanges with partners, such globalization has the potential to contribute to maintaining peace. A long time ago, Charles Louis de Secondat Montesquieu said that peace is the natural result of commerce and all unions are based on mutual necessity. The expansion of such interdependence was limited to the countries of the former Western bloc during the Cold War. However, as I said earlier, the end of the Cold War has created the possibility of expanding this in one stroke to encompass other countries, including the nations of the former Soviet Union.

Reaffirmation of the Japan-U.S. Security Arrangements

What is it, then, that Japan should do, given this state of affairs?

As you all know, since the establishment of my administration, I have, more than anything else, devoted myself to reaffirming the significance of the Japan-U.S. security relationship. There have been times when, both in Japan and the United States, people have questioned whether the Japan-U.S. security arrangements were still necessary in this post-Cold War era. The end of the Cold War did not, unfortunately, signify an end to all international conflicts. Moreover, I have been keenly feeling that it is the Japan-U.S. security arrangements which provide a sense of security to the countries of the Asia-Pacific region from my conversations with leaders from other parts of Asia. Therefore, while tackling the difficult issue of U.S. military bases in Okinawa, I have been striving to reaffirm the significance of the Japan-U.S. security arrangements. Of course, this issue has by no means been fully resolved. As for the so-called Memoranda of May 15, the part which was not made public at the last occasion will be handed to the Okinawa Prefecture tomorrow. I believe, however, that we have made headway, through the efforts in compiling the Japan-U.S. Joint Declaration on Security issued by President Clinton and myself in April of last year and through the review work of the Guidelines for Japan-U.S. Defense Cooperation on which the Interim Report was issued in last June.

The basic objective of Japan s foreign policy is to maintain the peace and prosperity of the Asia-Pacific region. In that sense, maintenance of the Japan-U.S. security arrangements, as I have just described, and the creation of frameworks in this region through such fora as the ASEAN Regional Forum and Asia-Pacific Economic Cooperation can be characterized as creating a platform to stage Japan s basic foreign policy.

However, I believe that amidst the sweeping changes in international relations resulting from the end of the Cold War, the foreign policy of our nation has come to an important period in which we must greatly push to enlarge the horizon of our foreign policy toward the Asia-Pacific region as we forge a new diplomatic perspective. I prefer to call this perspective Eurasian diplomacy.

Enthusiastically Developing a Eurasian Diplomacy

I am sure that you are all aware that this summer, a model for a new security order spanning from the Atlantic Ocean across Europe was agreed upon between the nations of Europe and North America and Russia, and the North Atlantic Treaty Organization has reemerged in a new form. Indeed, we have seen the clear emergence of one part of the post-Cold War international political and economic structure centering on Europe, which, in the economic sector, had already come into existence in a new shape in the post-Cold War era through the Maastricht Treaty.

I have carefully watched this new structure, stemming from the United States, across the Atlantic Ocean, through Europe and over the former Soviet Union, to reach the Pacific Ocean as a vast region which takes on the characteristics of a Eurasian diplomacy viewed from the Atlantic." It was in this context that before the Denver Summit the leaders of European countries and North America were interested in how Japan would react to the idea of having a Summit of the Eight.

At such an historical period of transition, have we not reached a time when we must introduce a new dynamism into our nation s foreign policy by forging a perspective of a Eurasian diplomacy viewed from the Pacific"? As we look forth beyond Japan, out across a huge continent, this perspective which now emanates from within us spans the Russian Federation, China and the Silk Road region, encompassing the Central Asian Republics of the former Soviet Union and the nations of the Caucasus region.

As I stated earlier, one of the traits of the post-Cold War era was the birth of many states, beginning with the Russian Federation, as a result of the collapse of the Soviet Union. These countries have encountered various difficulties as they basically seek to shift to democracy and a market-economy system. The Russian Federation has experienced the birth pains of democratization and transition to a market economy, the lack of an effective organization governing its vast landmass, the downward spiraling of productivity and other great hardships in dealing with the dark legacies of the Cold War era, symbolized in the challenge of dismantling nuclear weapons. Still, from out of that process, in both the political system and economic structure, and in the pursuit of honor and dignity as a nation, we have seen the slow but certain birth of a new Russia. It was from that perspective that the United States and Europe have made a diplomatic decision to expand NATO, as described earlier, and to have a Summit of the Eight at this year s Denver Summit.

Turning our eyes to China, we have seen it take the open and reform policy under the slogan of socialist market economy. Although China has achieved high economic growth, in the transition to a market economy, it faces many challenges, including reform of state-run enterprises and regional disparity. In addition, it holds issues which must be dealt with in the environment and energy sector. I firmly believe that participation by China in international frameworks and strengthening of its status as a constructive partner in the international community will stably advance openness and reform in China and, is therefore indispensable for the stability and prosperity of the Asian region. There are some difficult issues in Japan s foreign policy toward the Russian Federation, such as the Northern Territories issue, and Japan has certain issues in its foreign policy toward China which arise due to its location as a neighboring country. However, the developments in these two great powers, Russia and China, now hold the key to the formation of an international order. One might even go so far as to say that the focus of world diplomacy has shifted from an axis of the Atlantic Ocean and Europe poised on conflict between the United States and the Soviet Union to an axis spanning the Eurasian landmass encompassing many nations, small and large. Hence, just as Japan has long since had to stress to the United States the legitimacy of our policy of active engagement in China, I believe that it is time to strive even harder to build even more constructive relations with Russia and with China. Many have already pointed out that China and Russia have broken away from a relationship of conflict and are now coming closer together in the economic and other sectors. Take, for example, the energy sector, in which the way that China, which is rapidly becoming an energy importer in order to keep up with its rapid pace of economic growth, develops its relationship with Russia, which views energy development as the trigger which will revitalize its own economy, will have a tremendous impact on the energy situation in Asia and indeed, in the entire world, as well as on the global economy as a whole.

Furthermore, in this post-Cold War era, the Central Asian Republics and nations of the Caucasus region which have come into existence in this vast area, which we may call the Silk Road region, are making great efforts to establish affluent and prosperous domestic systems under a new political and economic structure and to forge peaceful and stable external relations with their neighboring countries. Furthermore, the rich oil and natural gas resources in the Caspian Sea region are having a steadily expanding influence on the world energy supply. In addition, these countries have great potential to serve as bridges, offering distribution routes within the Eurasian region. Fortunately, these countries have great expectations of Japan as an Asian country, and at the same time, Japan has deep-rooted nostalgia for this region stemming from the glory of the days of the Silk Road. Indeed, there already exists a solid foundation upon which to build firm relations with these countries as friendly states.

Positive assistance by Japan for the nation-building efforts of these countries will most certainly have a constructive significance, not only for these newly independent states, but also for the peace and prosperity of Russia, China and the Islamic states, and I am certain that it will expand the frontier of Japanese foreign policy to the Eurasian region at the dawn of the 21st century. It is from this perspective that I would like to talk to you about how we should shape our foreign policies, centering on our policies toward the Russian Federation, followed by our policies toward China and our policies toward the Silk Road region.

Relations with the Russian Federation

After the Second World War, the international community experienced a series of trials and errors to create a new order. However, among the interrelationships linking the United States, China, Japan and Russia, nations which exert an important influence on the peace and stability of the Asia-Pacific region, it cannot be denied that the Japan-Russia relationship has lagged behind. While it is true that there have been diverse historical developments between the two countries, it would not be good for relations between neighbors such as Japan and Russia to remain at the current level, either in terms of the interests of Japan and Russia or the Asia- Pacific region overall. Improvement in this bilateral relationship is without doubt one of the most important issues facing both of our governments as we approach the 21st century. Last month, at the Denver Summit of the Eight, I told President Boris Yeltsin directly that I think that we must improve the Japan-Russia relations with a view to creating new cooperation, to which the president responded reassuringly, Indeed we should.

What, then, are the principles which should guide us in improving Japan-Russia relations? I would like to touch on three principles today.

First of all is the principle of trust. At the time of the negotiations for the 1855 Japan-Russia Treaty of Commerce, Navigation and Delimitation, the Russian vessel Diana, on which the Russian delegation, whose head was Commodore Putyatin, was on board, sank in an earthquake-generated tsunami. A film featuring this process has recently been produced, and I am pleased with this in that we can be reassured of friendship between Japan and Russia. At the time our nations were in the throes of grave negotiations aimed at securing our respective interests. Still, we put aside our differences and cooperated to build a new boat for the Russians. I believe that this story shows that in relations among states as well, ultimately, unless the people on both sides of the table truly trust each other, there can be no real progress. I have tremendous respect for the achievements which President Yeltsin has made in overcoming the many serious difficulties which have been faced in the grand reform through which the former Soviet Union gave birth to Russia and in the process of undertaking the great and historic task of reform toward democracy and a market economy. In my talks with President Yeltsin at the Denver Summit of the Eight, which was the second occasion for us, we deepened our personal friendship and I could sense in our discussions President Yeltsin s as a human being. It was in such an atmosphere that I proposed to President Yeltsin that we seek the possibility of meeting again over a weekend before the end of the year in a casual manner, should he have such an occasion as to travel to the Russian Far East. According to recent reports, President Yeltsin has stated that he hopes to meet with me soon and I sincerely look forward to again meeting the president and to further deepening the friendship and trust which we share.

The second principle in seeking to advance Japan-Russia relations is mutual benefit. Given our geographic position as neighbors and the great influence we both wield, it is certain that there will be many cases in which we must coordinate our interests. At such times, an approach through which one side gains, unilaterally creating both a "winner" and a "loser", can in no way yield a true resolution. In considering this point I should like to recall the wisdom of President Yeltsin s oft-emphasized statement that in the process of concluding the Cold War between East and West there were neither winners nor losers.

The third principle which I would like to speak of is that of maintaining a long-term perspective. Specifically, improvements in the Japan-Russia relationship must aim to create a sound foundation for the 21st century so that in that century and the following centuries to come, our children and our children s children can inherit it and build further upon it. Indeed, if we are to achieve that, we must seriously consider the role of our generation and consider what type of bilateral relations our governments and our peoples should shape to build our legacy to our children and grandchildren.

The Northern Territories Issue

Needless to say, our objective is to improve the overall relations between Japan and Russia, keeping these three principles in mind, and thereby create a relationship with which our two countries can be delighted, spanning a massive continent from the Asia-Pacific across to the western limits of the Eurasian landmass.

In order to achieve this goal, we must improve our relations across a broad spectrum. First of all, I would like to talk about the issue of concluding a peace treaty by resolving the Northern Territories issue, which is the most difficult task persisting throughout the more than half-century since the end of the war. As a result of long years of efforts made by many people concerned, the best foundation exists in the form of the Tokyo Declaration, agreed upon between us at the time of the visit to Japan by President Yeltsin in October 1993. At the Denver Summit, President Yeltsin and I shared the view that the Tokyo Declaration must be steadily implemented, and I believe that indeed, this very issue is the one that can only be overcome through the three principles I mentioned earlier.

First of all, I would name the Framework Negotiations concerning Japanese Fishing Vessels Operating in the Waters near the Four Northern Islands as an example that the principle of trust has moved us forward even in the most difficult issue. The parties to this negotiation have held direct and unreserved discussions during these three years and have discussed difficult issues head-on, creating a substantial level of trust in each other which has fostered a positive environment absent from previous negotiations.

Secondly, I firmly believe that no resolution of the Northern Territories issue can be achieved in a manner which creates a winner on one side and a loser on the other side. It took fifty years for our countries to truly come to understand this principle, which seems to be self-evident . Henceforth, I intend to devote my utmost and pool my wisdom with President Yeltsin in order to achieve that goal based on the principle of mutual benefit.

Thirdly, we must remember that the Northern Territories issue is a matter which our nations have been unable to resolve in fifty years. Obviously, it is very difficult to resolve it. Still, through the hard work of our predecessors, we have achieved many advances, beginning with the Tokyo Declaration. One example of a major advance toward the resolution of this issue is the movement to foster continuing trust in the islands through visits to graves in the Northern Territories, mutual visits between Japanese citizens and current Russian residents of the Northern Territories and Fishery Frameworks which are currently under negotiation, among other measures. More than anything, steady, concrete progress could become a landmark that will not have our children s and grandchildren s generations inherit this issue. Considering the positive achievements made thus far, I believe that it is the responsibility of our generation to now show the way forward toward the resolution of this issue. I would like to discuss this matter calmly, based on a long-term perspective.

Japan-Russian Federation Economic Issues

In the economic relations between Japan and Russia as well, there is a need to seek concrete progress based on these three principles. From this perspective, I would like to take advantage of this opportunity to put forward two ideas.

First of all, I propose that consideration focus on strengthening economic relations with Russia, especially in Siberia and the Far East region, and in particular, in the energy sector. There already exists the Support Plan for Russian Trade and Industry, which I proposed during my tenure as Minister for International Trade and Industry, as well as the Cooperation Committee, which was created based on an agreement concluded with twelve former Soviet republics. Through these and other fora, careful assistance is being provided for efforts to make a transition to a market economy, and these must be continued. The ideas which I would like to outline here consist of efforts beyond these to promote development and foster cooperation, especially in the energy sector in Siberia and the Far East region.

Needless to say, Russia is a nation of great natural resources, which if used and developed effectively can trigger stable economic development and contribute to stabilizing the energy needs of the Asian region, where economic growth is generating rising energy demand, and thereby stabilize the energy supply of the world as a whole. Further, the links in the energy supply-and-demand relationship shall be clearly connected to fostering relations of trust and peace throughout East Asia.

Specifically, we certainly could move ahead in dialogue on energy development in Siberia and the Far East between Japan and Russia. For example, we continue to cooperate in the oil and natural gas projects in Sakhalin, which been already commenced, natural gas development projects and economic and technical possibility of pipeline construction projects in places like Irkutsk and Yakutsk, can no doubt provide opportunities for discussion and examination. We can certainly further enhance the dialogues which have already begun through such fora as the Japan-Russian Federation Inter-Governmental Commission on Trade and Economic Affairs. Naturally, in order to move ahead with such projects, it is essential that an adequate investment environment be created in Russia, and I am confident that we can expect great things from cooperation through the Initiative for the Japan-Russia Cooperation in the Sphere of Investment, on which President Yeltsin and myself shared the view at the Denver Summit of the Eight. Furthermore, the Energy Charter Treaty can play an extremely important role as an international agreement on investment promotion and trade liberalization in the energy sector, and I have great expectations for its enactment. In addition, there is certainly a need for us to cooperate further to realize the holding of a conference of the eight countries on energy issues proposed by the Russian Federation in Denver.

Secondly, I should like to tell you of the great interest with which I listened to a recent speech given by President Yeltsin broadcast on the radio. In his radio address of 11 July, the president stated that he had ordered the drafting of a plan aiming to foster Russian corporate executives including 5,000 executive trainees, each year t through the dispatch abroad of young, talented Russians. As a response to President Yeltsin s enthusiasm, I intend to take up his challenge and propose that in the future, in consultation with you, the representatives of our nation s business community, the young generation of Russians learn from all of Japan s experiences, spanning the macro- as well as the microsectors, gaining from actual hands-on corporate know-how beginning with our nations economic policies thereby developing the human resources essential for contributing to the building of a new Russia. I would like to tell President Yeltsin that we are more than willing to extend our active cooperation to build human resources in Russia.

I have candidly outlined for you my thoughts on Japan-Russia relations, although clearly, some are still in the process of being formulated. I sincerely look forward to having the earliest possible opportunity to discuss with President Yeltsin in a frank and friendly atmosphere the issues that I have just described, as well as other issues which must be addressed in creating a multilayered bilateral relationship between our two countries that encompasses the security sector and contributions to the Northeast Asian region.

Japan s Relations with China

Next, I would like to touch upon Japan s relations with China. But today, I am not going into details and I would like to briefly mention basic ideas.

As everyone knows Japan and China share a 2,000-year history of friendly relations. However there was a truly unfortunate historical experience at a certain time in recent history. Japan, sincerely recognizing and reflecting on such past history, under its Constitution based on democracy and pacifism, after the Second World War achieved rapid economic growth and became the first Asian country to establish itself as an advanced industrialized nation. On its part, China has overcome many tasks and effected a great transformation, and has recently achieved dramatic development especially through open and reform policy.

In view of these historic experiences and the status of our two countries in the international community of today, continued stability and development in our two nations into the 21st century is extremely important, not only for our bilateral relationship alone, but for the peace and prosperity of the Asia-Pacific region and therefore that of the whole world. We must also recognize the fact that this indeed imparts to our two nations a great responsibility.

This year marks the 25th anniversary of the normalization of relations between Japan and China. I am planning to visit China at the beginning of September and intend to take advantage of that opportunity to add a new page to the long history of friendship between Japan and China. And at the same time, I believe that the two countries must tackle many international issues, while Japan encourages greater cooperation between China and the international community so that China can secure its standing as a constructive partner in the today's Asia-Pacific region.

In this regard, it is absolutely vital that China, whose economy is expanding, participate in the international economic system and therefore Japan continue to support the early accession of China to the WTO and is more than willing to cooperate for that. I conveyed this message to the other leaders at the Denver Summit meeting. Furthermore, while continuing to promote cooperative relations in such international fora as the United Nations Security Council, APEC and ARF, I believe that it is important to deepen dialogue between Japan and China on issues directly related to the stability of this region, including the issue of the Korean Peninsula.

Two common issues in which Japan and China ought to cooperate in particular are topics I would like to discuss today, namely the environment and energy.

Considering environmental issues, in addition to the need to protect rare species and forests, the issue of air and water pollution resulting from the rapid economic development pursued by China has the potential to exert a direct influence on our nation, which borders China, in the form of acid rain and other effects. Japan, principally through the Japan-China Friendship Environmental Protection Centre, makes efforts to monitor air pollution levels, take urban air pollution control measures and transfer related techniques. The Third Conference of the Parties to the United Nations Framework Convention on Climate Change (COPIII) is scheduled to be held in Kyoto in December of this year. Although the positions of participating countries on this conference have not yet converged, I believe that in the months remaining before this conference there is a need to continue to engage in dialogue with China and other developing countries in order to gain their cooperation despite positions on the conference are still diversified among participating countries.

Similarly, in the energy sector, I believe that the high rate of economic growth currently being achieved by China will have a tremendous influence on global energy issues. As such, on the demand side, it is necessary that we consider how Japan and China can cooperate to improve China s energy efficiency rates, which are as low as one-tenth of Japan s. On the supply side, securing new sources of energy is an issue which may pose various difficult challenges, and I believe that dialogue on joint oil-field development cooperation and ways to promote the use of nuclear energy will become even more important in the future. Furthermore, as I mentioned earlier in the context of Japan-Russian Federation relations, the establishment of a secure energy supply structure in Russia is important for China as well. Indeed, cooperation on development of natural gas in Irkutsk has already begun between China and Russia, and one proposal would be for a development concept including cooperation among China, Russia and others including Japan.

Of course, there are other common issues on which Japan and China can cooperate, including food supply, population and health and medical care, including measures to combat HIV. After my visit to China, a visit to Japan by a leader of the Government of China is planned, and I believe that these opportunities will allow us as neighbors who stand in a position of responsibility for our region and the world to further deepen our dialogue with each other.

Turning our eyes to the history of civilization, treasures kept in the Shosoin of the Todaiji Temple was brought to Japan through a route called the 'Silk Road'. I believe that many people including myself try to imagine what impact the civilization introduced to our country had on people at that time and on us at the present time. With this in mind, we would like to cooperate as much as possible to preserve and succeed to the future those historical and cultural heritage in this area which are in danger.

Japan s Relations with the Countries of the Silk Road Region

In closing, I would like to touch upon Japan s diplomacy vis- -vis the Silk Road region.

Japan has already used Official Development Assistance (ODA) and other means to help the development of the New Independent States of Central Asia, and has sought to enhance its bilateral relations with these countries. In the future, Japan s foreign policy toward this region will be crafted as an organic component of the broad scheme of relations with Eurasia. In this process, I believe there is a need to develop even more elaborated foreign policies than in the past. Member of the House of Representatives Keizo Obuchi reported to me on his impressions immediately after returning from his trip earlier this month to the countries of Central Asia, where he met with their leaders and other officials. Mr. Obuchi s impressions matched exactly the line of thought which I have outlined here.

I would like to channel Japan s foreign policies toward this region into three directions. First of all, there is political dialogue aiming to enhance trust and mutual understanding. Secondly, there is economic cooperation as well as cooperation for natural resource development aiming to foster prosperity. Thirdly, there is cooperation to build peace through nuclear non-proliferation, democratization and the fostering of stability.

Specifically, in terms of enhancing trust and mutual understanding, a remaining task is to strengthen even further the exchanges with countries with which there have already been exchanges of officials and at the same time, to realize exchanges at the official level with countries with which there has not been a sufficient level of exchanges. Indeed, in the near future, a minister-level visit to this region is planned. In terms of cooperation to foster prosperity, it will certainly be important for Japan to promote regional cooperation aiming to create a transport, telecommunications and energy supply system, and for Japan to cooperate in developing energy resources in that region. I am ardently watching the efforts of Japanese corporations toward their participation in the exploitation of oil and other energy resources in such countries as Azerbaidjan and Kazakhstan. In terms of cooperation for peace, to begin with, this autumn, Japan will invite appropriate experts from the region and concerned countries to Tokyo for a Comprehensive Strategy Seminar, which we will host with a view to more actively contribute to enhancing peace and stability in this region.

It is clear to all that private-sector exchanges must play a vital role in these developments. I know that all of you are already keenly interested in this region and I understand that some missions are planning to visit Central Asia in the near future. I have great expectations that these will be extremely fruitful.


Today I have tried to present my thoughts on what Japan should do in order to foster political and economic stability in the Eurasian continent by touching upon my views of Japan s relations with Russia in particular, and also with China and the "Silk Road" region. We should avoid situations in which a clash of national interests on a particular issue constrains wide-ranging exchanges between two countries and limits the realization of fruitful opportunities by the peoples of both countries. In a sense, conflict of interest and confrontation lie in our minds. Whether we can overcome confrontation, therefore, depends largely on creative thinking, which would enable those responsible for managing confrontation to examine wide possibilities. If there is way in which the Government could help, please do not hesitate to ask.

I hope that my comments here today will have stimulated your thoughts and I look forward to your comments. I would like to thank all of you for your attention today.