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Reproduced from New Challenges, New Frontier: Japan and ASEAN in the 21st Century, by Yoichi Funabashi (Singapore: Institute of Southeast Asian Studies, 2003). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http://bookshop.iseas.edu.sg >

Asia & Pacific Lecture Series, no. 3

NEW CHALLENGES, NEW FRONTIER Japan and ASEAN in the 21st Century

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted problems of stability and security, economic development, and political and social change. The Institute’s research programmes are the Regional Economic Studies Programme (RES including ASEAN and APEC), Regional Strategic and Political Studies Programme (RSPS), and the Regional Social and Cultural Studies Programme (RSCS). The Institute of Southeast Asian Studies (ISEAS) launched the Asia and Pacific Lecture Series in Singapore in May 1997. The aim is to provide both the private and public sectors the opportunity to hear eminent scholars, professionals, businessmen, policy and opinion makers and political leaders speak on global and regional political, economic, financial, business and social trends, issues and challenges.

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Published in Singapore in 2003 by Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 E-mail: [email protected] Website: http://bookshop.iseas.edu.sg All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 2003 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions expressed in this publication rests exclusively with the author, and his interpretations do not necessarily reflect the views or the policy of the Institute or its supporters. ISEAS Library Cataloguing-in-Publication Data Funabashi, Yoichi, 1944– New challenges, new frontier: Japan & ASEAN in the 21st century. (Asia & Pacific lecture; 3) 1. Japan—Economic policy—1945– 2. Singapore—Economic policy. 3. Japan—Foreign economic relations—Asia, Southeastern. 4. Asia, Southeastern—Foreign economic relations—Japan. 5. Economic assistance, Japanese—Asia, Southeastern. 6. Japan—Foreign economic relations—China. 7. China—Foreign economic relations—Japan. I. Title. I. Title: Japan & ASEAN in the 21st century II. Series. DS501 I5992 no. 3 2003 ISBN 981-230-191-7 Typeset by Superskill Graphics Pte Ltd Printed and bound in Singapore by PhotoPlates Pte Ltd

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Yoichi Funabashi NEW CHALLENGES, NEW FRONTIER Japan and ASEAN in the 21st Century

INSTITUTE OF SOUTHEAST ASIAN STUDIES

CONTENTS

New Challenges to Asia and Japan 1 New Directions of Japan’s Foreign Policy 24 Articulating Asian Ideas 37

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This paper was delivered by Dr Yoichi Funabashi, Chief Diplomatic Correspondent and Columnist, Asahi Shimbun, at the Third Asia and Pacific Lecture organized by the Institute of Southeast Asian Studies in Singapore on 19 September 2003.

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NEW CHALLENGES, NEW FRONTIER Japan and ASEAN in the 21st Century

New Challenges to Asia and Japan 911 and Terrorism The 21st Century has played host to a number of new challenges for Asia, particularly in the post-mortem of September 11th. Terrorism threatens a great number of lives in the culturally and ethnically diverse societies of the Asia-Pacific with the potential for religious polarization. Economic and political disparities in the respective countries have long been the Achilles’ heel in building viable regional cooperation ever since the days of Gunnar Myrdal’s “Asian Drama: An Inquiry into the Poverty of Nations” published in 1968 and now Asia anxiously anticipates the advent of political Islam, in Indonesia, Malaysia and 1

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the Philippines, as the activities of extremist Islamic groups increase in prominence. These difficulties pose a fresh menace to security in Asia and are the catalyst for the US’ renewed focus. Anxiety caused by security issues is creating cracks in many preexistent security alliances. The new century has beheld tensions over the realignment of Maritime Asia, with a possible power vacuum in Asian waters of critical importance. A tumultuous Indonesia of the late ’90s, provides a poignant example of the dangers. Traditional US-centred alliance systems have been thrust into uncertainty as the albatross of security issues erodes away previously solid relations. New difficulties have surfaced with notable regard to Eurasian security. How will US coalition partnerships with Eurasian powers such as Russia, China and India and traditional relationships between maritime allies such as Japan and Australia evolve from the perspective of interaction and respect for one another? Shall the upshot of contemporary events push Asia towards a new offshore alliance system? Or shall new alliances, such as the proposed “Asian NATO”,1 involving Japan, India, Australia and Singapore, rise to 1

“US Dreams of Asian NATO”, China Daily, 18 July 2003.

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prominence? Where is Taiwan’s place in these designs? The US commanded alliance system established during the Cold War has suffered continuous wear and tear since 911. 911 was the starting point for an increasingly insular US security policy, a characteristic linked to the Bush Administration’s growing sense of vulnerability. Robert Kagan encompassed US sentiment in his comment: “With the threat brought directly to American soil, overlapping that of America’s allies, the paramount issue was America’s unique suffering, not the West”.2

Unilateralism has become ever more prominent during the past few years and the growing gap in military capability between the US and the rest of the world, facilitates the use of unilateral force. Secretary of Defense Donald Rumsfeld clearly reminded the world of this fact when he alluded to the “workarounds”3 should Britain not agree to enter war in Iraq. The tremendous military might of the United States has rendered the 2

Robert Kagan, Of Paradise and Power: America and Europe in the New World Order, Knopf, page 84. 3 Department of Defense News Briefing: Secretary Rumsfeld and Gen. Myers, 11 March 2003, 1.30pm.

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military and even political strength of its allies practically meaningless and this reality has not passed unnoticed by either its friend or foe. But, the real problem does not concern the capability gap. This has already existed for the last half century and was most pronounced during the 1950’s. The key issue is an increasing gap in perception. The US and its allies no longer necessarily share the same sense of threat. The further the US has pressed ahead with its war on terror, the more hatred it has encountered and the more it has opened itself up as a target for terrorists. USallies feel threatened by the excess of the American reaction, particularly its inclination to strike pre-emptively and change foreign regimes. They are beginning to feel the danger of being entrapped in US-led wars and feel Washington is taking it for granted they will simply “render services”.4 Under the growing influence of the neocons and right-wing religious activists, the US is inclining towards “ad-hoc” alliances, which provide no assurances for the

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Yoichi Funabashi, , 29 July 2003. “US alliance offers great benefits–and risks”.

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undertakers, as Rumsfeld himself confirmed when he emphasized the concept of a coalition of the willing. The US will decide with which countries to partner, according to the mission. Although Washington has just recently shown a greater inclination to lean on the United Nations and its allies in the reconstruction of post-war Iraq, there is general uneasiness about its tendency to distance itself from the UN in the long-term. It cannot be taken for granted that the US and its allies continue to share the same vision of world order. Is the US seeking to achieve global stability under the umbrella of its unipolar structure and through unilateralism? Should this be the case many US-alliances will be profoundly rocked. The US-Japan alliance has not escaped unscathed from uncertainties in the US alliance system. Japan, like other US-allies, feels under increasing pressure to reaffirm its commitment. As a defense policy expert at the Japanese Defense agency confided, “we can no longer take the Japan-US alliance for granted. We feel as though the alliance is no longer a given and that we are constantly being tested by the United States”. Some have started to call the process a “marketization” 5

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of the alliance or a shift from a “fixed rate” bilateral alliance to a “floating rate” alliance.5 Theorists suggest that in future the US compulsion shall be to negate the priorities of the declining Japan in favour of the rising China. Thus, America’s position and military presence in Asia is set to alter quite substantially with potential changes in partnership. As Morton Abramowitz and Stephen Bosworth proffer: “America’s role in the region [East Asia] and its military posture there will look very different at the end of this decade than they did at the start of it...Japan will remain a major economic player in the region for years to come....But its strategic value to the United States, although still great, is declining”.6

Tokyo nervously monitors the unravelling of Sino-US interaction and is deeply uneasy about being excluded from the framework. During the late ’90s, when the US-Japan alliance experienced a period of relative instability, China was perceived to be trying to outflank Japan. Jiang Zeming’s

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Funabashi Yoichi, “Domei o Kangaeru” [Rethinking the Alliance], Iwanami Shoten, 1998. 6 Morton Abramowitz and Stephen Bosworth, “Adjusting to the New Asia”, Foreign Affairs, July/August 2003.

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visit to Pearl Harbor at his own request and Clinton’s failure to reaffirm the stabilizing importance of the US-Japan alliance in Asia during talks in Beijing, as if the alliance were something to be ashamed of, intensified Japan’s uneasiness. The ambivalent relationship between the US and China whether as strategic partners or strategic competitors, has significant repercussions for Japan and at the same time Japan also fears US-China enmity. Should US-China exchange take a turn for the worst, the result would have an equally grave impact upon the US-Japan alliance. Globalization The tide of globalization has washed up both the best and the worst times for Asia. It has established English as the world’s lingua franca and Asia is by no means an exception. English drives the knowledge economy and Internet and “in South East Asia, the response to globalization is to acquire language skills, not in many languages, but in one, the English language, which is seen as the key to success in the globalization age”.7 The benefits of 7

Dr Rujaya Abhakorn, lecturer in Southeast Asian History, Chiang Mai University, Thailand, quoted in Rahul Goswami “Globalization challenges Asian languages”, Asia Times, 31 July 2003.

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globalization have harvested a new competitive edge for English speaking Asia; India, Singapore, the Philippines, Australia, New Zealand, Malaysia and Hong Kong. By the end of the 1990s, the global reach of Singapore’s high-tech products, for example, earned the country $60 billion in annual exports, one third more than China. In the Philippines and India, there has been a veritable explosion in the service industry. The former hierarchical vision of the developmental model has changed substantially. Asia’s flying geese formation has evolved horizontally into a new leapfrog strategy. This latter formation has been embraced with particular zeal by Korea, who, by harnessing the Internet market, has established itself as the world’s most prevalent user of broadband. Internet frenzy has grasped the country with such vigour, that 70% of all households now possess hi-speed Internet connections. 8 Japan, who previously spearheaded the flying geese formation, has hence testified to its economic strategy becoming outclassed and outmoded.

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“Broadband spreads at an explosive rate”, International Herald Tribune, 17 September 2003.

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The Asian economic crisis of the late ’90s, however, had a devastating impact on East Asia. Economies were sent back in time and Indonesia, one of the key players in the region was among the worst affected. The political stability of the Soeharto regime was shattered yet its legacy lingers on. Government corruption persists and terror suspects have easy access to false identification papers with which to escape in collusion with corrupt officials. There is a severe lack of political clout and on the debilitating issue of terrorism the Indonesian Government is failing on multiple fronts. Since the Bali bombing, the Indonesian Government has taken more steps to combat terrorism but, as ICG’s Jakarta representative Sidney Jones warns, it is still “unwilling, with few exceptions, to acknowledge publicly the organization’s existence”9 for fear of offending Muslim leaders. Little can be solved unless this issue of terrorism is addressed seriously. That also includes curbing the radicalism of pesantren, extremist Muslim boarding schools,

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Sidney Jones, “Indonesia faces more terror”, International Herald Tribune, 29 August 2003.

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to which every Jemaah Islamiyah act of terrorism can be linked.10 East Asian Regionalism After the collapse in the late ’90s, a new awareness of the grave dangers of globalization was sparked in Asia, motivating East Asian countries to seek economic security under the blanket of East Asian regionalism more seriously. The crisis also aroused Asia to the dangers of the US’ selective commitment to the region. While Washington came to the rescue of South Korea, the plight of Indonesia and Thailand was overlooked. ASEAN+3 was subsequently developed upon the pre-existent regional foundations of ASEAN with the valuable new input of Japan, China and Korea. It has been enthusiastically promoted with the notion of regionalism at the forefront, and symbolizes Asia’s propulsion onto the world stage as both a regional, economical and political force. ASEAN has furthermore precipitated a process whereby dialogue between Japan, China and Korea is institutionalizing and an embryonic Japan-China-Korea trilateralism 10

International Crisis Group, “Jemaah Islamiyah in South East Asia: Damaged but Still Dangerous”, Jakarta/Brussels, 26 August 2003.

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may come into play in the foreseeable future. This reflects on a more profound level, emerging trends of “strategic alliances” among business groups and companies. Haier (China), Samsung (South Korea) and Sanyo (Japan), now seek to build a new Asian standard for network home appliances.11 Some computer software companies and electronics makers have also agreed to develop basic open source software to compete with Microsoft Windows.12 Thus, the promotion of regionalism through ASEAN+3 stands to reap great rewards for all parties concerned. A tighter regional economy will be advantageous to Asia as a region, but furthermore will help stabilize the global economy. Should Asia stabilize economically, other issues of political stability and security shall follow more easily both regionally and globally. A web of Free Trade Agreements among Asia-Pacific countries will advance East Asia in fuller integration into the world economy.

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“Sanyo forms alliance with Haier, Samsung in home networking”, Kyodo News, 21 August 2003. 12 “Japan, China and Korea join forces to ditch Windows. Open source alternative on the way”, , 1 September 2003.

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Globalization has also inspired a new sensation of rediscovery among Asian peoples and a fresh appreciation of their own individual cultures. The Asian economic crisis of ’97 and ’98 enhanced this new Asian sense of common interest and danger but was already preceded by a drive for Asianization as Kishore Mahbubani and I both described in our respective articles “The Pacific Way”13 and “The Asianization of Asia”.14 The Asian consciousness was “animated by a workaday pragmatism, the social awakening of a flourishing middle class and the moxie of technocrats”.15 Japan’s Asia policy was also brought to a new stage during this time. Japan braced itself to harness this growing tide of Asian vigour, involving itself in the construction of deeper regional ties and refusing merely to spectate from the sidelines. Japan was recogniscent of the substantial advantages of tighter Asia operation. Increasingly, politics and a greater spirit of independence were infused into its approach to the region and it became trapped 13

Kishore Mahbubani, “The Pacific Way”, Foreign Affairs, January/ February 1995. 14 Yoichi Funabashi, “The Asianization of Asia”, Foreign Affairs, 1993. 15 Ibid.

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in a perceived struggle between East and West. Japan swung like a pendulum between the two, believing it could only join with one or the other at any given time. Its hesitancy to join Malaysian Prime Minister Mahathir’s EAEC, however, spelled out the primacy of the US in Japanese foreign policy. The Malaysian MITI Minister expressed her country’s vitriol at the decision when she told her Japanese counterpart in 1992 that it was strange Japan must always comply with the United States.16 The decision was ultimately of critical importance in maintaining Asia-Pacific cooperation. The EAEC threatened to distance the United States and encourage a North American Bloc. With both NAFTA and the EAEC Asians-only vision, a serious situation of protectionist regionalism threatened, isolating the US from the Asia-Pacific and plunging Japan into dilemma. Japan, therefore, turned its attentions to the establishment of an Asia-Pacific concept. APEC underwent a period of maturity between 1993 and 1996 when in ’93 US President Bill Clinton elevated it to the 16

Yoichi Funabashi, “Asia Pacific Fusion: Japan’s Role in APEC”, Institute for International Economics, 1995, page 206.

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level of a leaders conference. Shortly after, in 1994, the Bogor Declaration marked APEC’s peak. Thereafter, however, the Asian economic crisis forced further progression to one side. Japan in the meantime, woke up to the need to safeguard its trade and investment in East Asia and subsequently pursued Asian regionalism. It pushed for ASEAN+3 and the potential for Japan-China-South Korea trilateralism with a renewed vigour. JapanChina-South Korea trilateralism was originally proposed by the late Prime Minister Keizo Obuchi and was met by Chinese hesitation. It was then skilfully promoted by the Korean President Kim Dae Jung who played an intermediary role of smoothing the path. 911 and the Iraq war have precipitated yet more change in Japan’s East Asia policy. Japan is deeply disturbed by the debilitating effects of terrorism and counter-terrorism strategies on Southeast Asia especially where the Muslim societies of Indonesia, Malaysia and the Philippines are concerned. Terrorism is likely to pose serious geopolitical risk both to Southeast Asia, to Japan’s economic interests and the developing Japan-ASEAN relationship. Japan and also the US will likely find the strategic importance of developing 14

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regionalism and regional co-operation in EastAsia, in order to build the region upon more stable and secular foundations. The Rise of China As China rises through the ranks, it becomes progressively clear that its role shall be the single most important factor to reshape East Asia in the 21st century. Its participation in the World Trade Organization is but one example of China’s so-far successful global economic strategy, the future outcome of which shall send critical currents throughout the rest of Asia. China’s emergence has nevertheless inevitably resulted in fears of its economic foreboding, in particular “hollowing out” effects on its neighbours, whose manufacturing sectors have felt the backlash of the infusion of cheap Chinese goods on the market. Some view the new Chinese influence in a similar light to a pre-modern day tribute system.17

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China, under the Ming Dynasty, imposed a tribute system for foreign states wanting to exchange trade. The tributes served not merely as a gift to the emperor, but rather an acknowledgement of political submission and Ming “overlordship”. Information from University of Calgary, “Old World contacts, merchants and traders: The Chinese tribute system”. .

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Despite causes for concern on the one hand, the rise of China has also been of considerable benefit to East Asia. Almost all ASEAN countries have been advantaged by China’s boom, especially from an increase in trade export. In 2002 China-ASEAN trade volume hit $54.77 billion, up 37.1% on the previous year and ASEAN countries benefited from $690 million worth of Chinese investment.18 Japan for instance currently runs a $24 billion trade surplus with China and Hong Kong combined.19 70% of Japanese companies operating in China are now reporting solid profits. Sony predicts that by 2008, its sales in China will actually exceed its domestic sales. China overtook the US as Japan’s biggest import market and Korea’s biggest export market in 2002. In India total trade turnover with China rose from $69.54 million between 1991–92 to $1.47 billion in 1998–99.20 Still, the meteoric rise of China makes China’s Asian neighbours nervous. The country remains full of riddles and pitfalls 18

“China-ASEAN Economic Co-operation upgraded”, People’s Daily, 25 February 2003 19 “China should say no to a stronger currency”, Asian Wall Street Journal, 08/14, page A9. 20 China: Exim bank study, .

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and its sheer size and phenomenal pace of development make the calculus look uncertain. Energy is just one example of this. China, once an oil exporter shipping almost a quarter of its oil production abroad during the ’80s, has transformed into one of the world’s major oil importers. This change, propelled by double-digit economic growth and the transition to a consumer economy has seen it increase its imports of crude oil by 15% year on year to 69.4 million tons in 2002. In the same year, the value of imported crude oil hit $1.54 billion, up 9.4%.21 It is projected to overtake Japan in crude oil imports during this year. A struggle for oil and gas accompanying the Chinese ascension threatens to add to an already existent rivalry between Japan and China. China and Japan are heavily reliant upon oil imports and a sense of rivalry has emerged as both seek to make agreements with other countries. The latest sparks of competition fly as both countries cast the foundations to build pipelines from Angarsk in Siberia and Japan anxiously awaits the outcome of the pending situation with Iran 21

“China’s crude oil imports up 15% in 2002", People’s Daily, 11 February 2003.

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who recently, “dropped a hint that they would negotiate with other countries besides Japan”. Japan automatically regards this to be China.22 This is not, however, the only path of uncertainty in Sino-Japanese relations. Since the late 19th century, Japan has reigned as Asia’s primary interlocutor with the world, with the exception of the 1930s and ’40s, of course. The rising influence of China on the global scene, however, is bringing its supremacy under question. The threat to Japan’s privileged position is multi-faceted. Not only is China endangering Japan’s economic domination in Asia but it possesses the considerable advantage that it is establishing itself as a multi-dimensional power. In contrast, Japan put all of its eggs in one basket and has based its diplomacy on principally economic foundations. Its economic mastery is the only card in hand and the vulnerable position it faces today is exacerbated by the reminder that it never achieved the status of a full power. The Sino-Japanese relationship was plagued during the 1990s by nuclear and

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Ibid.

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missile issues. Nuclear tests in 1995 outraged both the hawkish right and anti-nuclear left in Japan, leading to an unprecedented, although limited in its effect, suspension of about $75 million in aid. The Chinese rattled the Japanese public again in March 1996 by bracketing Taiwan with ballistic missiles. This increased unfriendly sentiment among the Japanese population towards China from only 17.8% in 1985, to 51% in 1996. In the nuclear/missile dispute, China argued from the beginning that US-Japan co-operation in theatre missile defence undermined China’s nuclear deterrence and could be extended to defend Taiwan. Such an argument posed a problem to Tokyo. Japan possessed no nuclear weapons. This begged the question whether China’s concern over its ability to maintain a nuclear strike capability was predicated upon a desire to target Japanese territory. Furthermore it suggested that China’s policies of “no first use” and “no use against non-nuclear states” did not apply to Japan.23

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Michael Green, “Japan’s Reluctant Realism. Foreign Policy Challenges in an Era of Uncertain Power”, Council on Foreign Relations, 2001, page 18.

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Among the myriad of tensions to exist between China and Japan over the past 50 years, however, the single most obstinate problem to plague relations undoubtedly remains the unresolved conflict over historical issues. After the disaster of Jiang Zeming’s visit to Japan in 1998, a visit “pregnant with opportunity”24 but which ended in diplomatic disaster, this sensitive subject lingers on. From the Japanese perspective, China tends to play “history cards” whenever it is on the defensive, firstly in the wake of the Tiananmen Square incident and secondly in face of Japan’s suspension of its yen grant. The insistence of a line of Japanese Premiers in paying personal visits to the Yasukuni Shrine, combined with China’s reluctance to accept any “final word” on the historical issue, prevent the two countries from progressing in the construction of trouble-free relations. The North Korean Crisis The world is on the fringes of a nuclear crisis. The risk that North Korea could soon pronounce fully-fledged nuclear status is real and the consequences grave. In its dealings

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Ibid., page 97.

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with the anxious outside world, Pyongyang seems to be emulating the Pakistan formula, whose cunning successfully procured both nuclear power and economic aid. Kim Jong Il is playing a similarly skilful game. There are some that argue this is a mere bargaining chip, but as Victor Cha powerfully expostulated, the notion that North Korea’s proliferation is for bargaining purposes runs contrary to the history of why states proliferate. “Crossing the nuclear threshold is a national decision of immense consequence, a step rarely taken deliberately for the purpose of negotiating away these capabilities.”25 East Asia could fast become the focus of a devastating arms race. China and South Korea harbour suspicions that Japan, the only testament to the mortifying effects of the A-bomb, shall join this worrying competition for nuclear armament. Korea has long been regarded as “a dagger aimed at the heart of Japan”26 and the North Korean nuclear threat is the sharpest

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Victor Cha and David C. Kang, “Nuclear Korea. A Debate on Engagement Strategies”, Columbia University Press, Columbia, forthcoming. 26 Meiji oligarch Yamagata Aritomo, Michael Green, “Japan’s Reluctant Realism. Foreign Policy Challenges in an Era of Uncertain Power”, Council on Foreign Relations, page 113.

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and most threatening dagger in Japan’s history. Japan’s position in helping to resolve the North Korean nuclear crisis was heavily compromised by the recent revelations about Japanese abductees during the Cold War. Japan is the only country to have suffered the nuclear holocaust. As a consequence, there exists a strong political foundation and constituencies for the support of non-nuclear principles, i.e. the three no’s, (not own, not manufacture, not introduce). Yet it has, in theory, always existed beneath the nuclear umbrella of the United States ever since the formation of the US-Japan alliance. As long as the US-Japan security alliance remains intact, Japan must stay beneath the US nuclear umbrella. Even if North Korea conducts nuclear tests, it does not necessarily follow that the umbrella will no longer be effective. North Korea developing nuclear arms is quite different from them using them. Japan needs to stand firmly by its non-nuclear policy and use a stable US-Japan alliance and the US nuclear umbrella to denuclearize the Korean peninsular and eventually promote arms control and reduction in Northeast Asia. In addition, Japan should pursue its development of a ballistic missile defence system as a hedging strategy. North Korea’s 22

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nuclear development programme poses an immediate threat to Japan and a BMD system would mesh well with Japan’s national security strategy, which is of a defensive, as opposed to offensive, nature. The threat posed by the US military to initiate surgical strikes against North Korea is a serious consideration. The US is deeply concerned over North Korea’s potential to export and trade weapons of mass destruction with terrorists and it is possible that the US may articulate this paranoia through more US pre-emptive strikes. The recent six way talks over the North Korean nuclear crisis are certainly a promise of improvement but are by no means a guarantee. Many problematic issues shall likely prevent the agreement of a solution, particularly between the US and North Korea. Kim Jong Il is unlikely to relinquish his only and final card against Washington that is to say, nuclear weapons. The US on their part could pose problems should Bush not concede to a deal leaving Kim in power.27

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“As talks with North Korea draw near, can a mix of incentives and pressure avert an Asian nuclear arms race”, Financial Times, 08/13, page 9.

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The stance of the five countries is ambiguous. It is as yet unclear whether those countries, China and the US particularly, share the same vision of East Asia’s path of future stability, particularly on the Korean Peninsular. Could the appending talks lead to a defacto US-China bipolarity regime or eventually end in a US-China rift? It is too early to predict the outcome. New Directions of Japan’s Foreign Policy “Reluctant Realism” Japan as a global civilian power plays the non-military role of a stabilizer in the world. This is the natural extension of the Yoshida Doctrine adopted after the end of the Cold War, duplicating the United States’ stance on issues of security and international politics. During the past decade, however, Japan’s position has witnessed an evolution, to the Yoshida Doctrine “plus alpha”. Today, Japan has made a far stronger commitment to global peace and stability with its peace-keeping and peace-making operations having gained considerable impetus. Japan’s participation in peace-making and peace-keeping operations in Cambodia, Mozambique, East Timor and Afghanistan are all prime examples of this 24

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new articulation of the Japanese global civilian vision. The work of Japan’s NGO, JMAS (Japan Mine Action Service), in defusing the perilous threat of unexploded mines in Cambodia’s killing fields, is just one of numerous projects. What is more, the Japanese Government envisages an increase in Japan’s role as a global civilian power in the future. The Frontier Within, a blueprint for mapping out Japan’s goals in the 21st century, commissioned by the late Prime Minister Keizo Obuchi, proposes that: “A civilized, civilian power in the coming age will be a society that is open to the world, sharing the values of respect for human beings, freedom and democracy. ...The Japan of the period ahead [shall] play a constructive role in the international community as a civilian power”. This new blueprint will center around: “(1) engagement in security affairs, (2) involvement in global systems, particularly economic order and (3) cooperation with developing countries (ODA)28”.

The post-Cold War era has observed Japan’s evolution as a global civilian power, 28

The Frontier Within, The Prime Minister’s Commission on Japan’s Goals in the 21st Century, January 2000.

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following its realization of the limitations of its economic influence and the Yoshida Doctrine. The traumatic Gulf War experience was a rude awakening. “The notion that economic power inevitably translates into geopolitical influence turned out to be a materialist illusion....many Japanese now seem to subscribe to that view...Ironically, as Japan’s international power has advanced, the underpinnings of its political and economic systems have been called into question”.29 The curbed success of the country’s economic exertions towards its fast-developing neighbour has forced it to acknowledge that China can no longer be integrated into the world under Japan’s wing. The threat from North Korea has also been a cause for considerable anxiety, after the Nodon and Teopodon missile tests of 1993 and 1998 respectively. Despite all denials, their purpose was clear: Japan was a target. If North Korea goes nuclear, it will have considerable implications for the US-Japan alliance system, an integral and fundamental part of Japan’s stability in the past.

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Yoichi Funabashi, “Japan in the New World Order”, Foreign Affairs, 1991.

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North Korea’s nuclear issues and China’s missile diplomacy once again made the Japanese keenly aware of the critical importance of maintaining the US-Japan security relationship and this new realization brought about mutual alliance declarations for both countries in April 1996, which reaffirmed and redefined the alliance system. It furthermore complements American military strength in a dynamic relationship. To make these complementary roles more legitimate is key to maintaining the US-Japan alliance in the 21st century. In many respects, the 1990s for Japan were, of course, wasted. But, its brutal awakening was not lost without consequences. Japan’s sensitivity towards power balances in Asia, particularly regarding China, increased and the new challenges of the post-Cold War era pushed it towards a new realism — a “reluctant realism” — where the need for more forthright diplomacy became clear. Thus the shift in Japan’s circumstances forced it to assume a less passive international role. A More Normal Country In recent times, Japan has developed a yearning for a more independent line in 27

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foreign policy, particularly where Asia is concerned. The chief example is Japan’s policy towards the Cambodian peace settlement in the early 1990s when Japan explored its own approach in collaboration with Thailand. Needless to say, this rebellion was not greeted with open arms by the United States, who observed its once docile ally taking up the freedom of an independent diplomatic force with disquiet. It is not unknown for Japan’s foreign policy to be described as “mercantilist”. I would argue, however, that the motivation is rather more ideational. With the Cambodia peace settlement in the early 1990s for instance, Japan pursued an independent course, separate from the US. Its decision to send the SDF to the region in 1992 was gratified when the presence of Japanese peacekeeping forces enhanced Japanese credibility in Cambodia. Such policies, which Japan also extended to Myanmar and East Timor, reflect its strong desire to become a “normal” nation.30

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Michael Green, “Japan’s Reluctant Realism. Foreign Policy Challenges in an Era of Uncertain Power”, Council on Foreign Relations, chapter six.

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Japan’s longing for its own independent approach to foreign policy has been much more pronounced in its East Asian policy with Cambodia, Myanmar, Iran, and East Timor. At some point during the mid-1990s, there emerged an interest in developing ASEAN as a “balancer” in the increasingly complex USChina-Japan triangle. In 1997, Prime Minister Ryutaro Hashimoto sought to build a more explicit strategic relationship with ASEAN. I joined the ranks of those who argued for ASEAN as the “fourth leg” in Asia-Pacific stabilization. This assertion proved premature. The Asian economic crisis, Japan’s economic stagnation and Japan’s political instability transformed that position quite fundamentally. There emerged a perception in Japan and in Asia that China was developing its own strategic calculus to check Japan’s wider role in Asia but a more positive course for the Sino-Japanese relationship was envisaged by Prime Minister Junichiro Koizumi in his speech to the Boao Forum in 2002. He commented: “Some see the economic development of China as a threat. I do not. I believe that its dynamic economic development presents challenges as well as opportunity for Japan. I

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Yoichi Funabashi believe a rising economic tide and expansion of the market in China will stimulate competition and will prove to be a tremendous opportunity for the world economy as a whole”.

Both countries need to recognize and appreciate their mutual interests on both a regional and global scale and explore the frontiers of co-operation. They are both major players in the world and share positions of critical importance on issues such as reform of the United Nations & Group of Eight and the North Korean problem. Japan is developing into a more normal country but its transfer to a normal country in the classical sense is not yet complete. It remains as a global civilian power and so it should. As for the US-Japan alliance, we will have to explore the division of labour model for the US-Japan alliance more aggressively. In Japan’s case, we have no choice but to play the complementary “feminine role” to the US’ “masculine role”, and have turned to global civilian power, and defensive military power. The crucial point is to make the division of labour legitimate, not to make America’s ally an object of attack with accusations of “free riding”, or of ridicule along the lines of the “doing the dishes” taunt. 30

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Japan’s regional strategy should basically continue to be the Asia-Pacific while it should emphasize stronger East Asian regional cooperation. It is now high time for Japan and Southeast Asia to revitalize APEC once more. A US constructive engagement in the region is all the more important in light of present anti-terrorism, anti-poverty and sea-lane uncertainties. The US shall likely involve itself in Southeast Asian security and there is a real need to strengthen the security dialogue among the East Asian countries. APEC took the first steps in this direction by expressing a common position on the denuclearization of the Korean peninsular last year in Mexico. Japan’s New Politics For Japan to exert influence on the global and regional scale in the future, it is similarly of the utmost importance that more attention be paid to domestic politics. Political inefficiency back home is a poison running through the veins of Japan’s international status. The “three Ds” (deflation, debt and demography) persist and shall put considerable constraint on Japan’s conduct in foreign affairs in the foreseeable future. New players in the field of foreign policy decisionmaking have, however, helped the process to 31

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diffuse and the Diet and the media have had more say on foreign policies in recent times. New individual efforts are contributing towards the changing face of Japan. The honourable contributions of NGOs, for example JMAS that I mentioned earlier, which conducts de-mining activities in the killing fields of Cambodia, are projects we hope can flourish. They are an instance of civil society’s engagement in moving towards better links with Asia. Another example is JICA, the Japan International Cooperation Agency, now under the new leadership of Ms Sadako Ogata, former UNHCR commissioner, for whom Southeast Asia has been a central focus. Their work, specializing in technology and knowledge transfer, is key in coaxing structural economic and monetary form, in the Philippines and Indonesia especially. Nevertheless, not all is good news. While making huge leaps towards regionalism on the one hand, Japanese politics have, during the last half a century, revolved simultaneously around questions of “war and peace”, such as Article 9 of the Constitution. A new brand of politics will likely dawn on Japan, that is to say, the politics of identity shall come to the forefront. Prime Minister 32

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Koizumi’s visits to the Yasukuni Shrine and the North Korean abduction issues are indications of this new dynamic. Japan’s inability to deal with its historical legacy adequately has impeded both the emergence of a multilateral security framework and the development of constructive security relations in the East Asia. Japan can become a “normal country” only if it addresses this legacy more earnestly and pursues a path towards historical reconciliation with its neighbours. It is, nevertheless taking steps in the right direction. In 1995, on the occasion of the fiftieth anniversary of the end of World War II, Prime Minister Tomiichi Murayama expressed “feelings of deep remorse and...heartfelt apology” for Japan’s “colonial rule and aggression”.31 In 1998, Japan and South Korea made considerable advances towards reconciliation when Prime Minister Keizo Obuchi made more explicit Japan’s sincere apology and President Kim Dae Jung voiced appreciation for “the role that Japan has played in promoting peace and

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Yoichi Funabashi, “Reconciliation in the Asia-Pacific”, United Sates Institute of Peace Press, page 5.

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prosperity”32 in the region in the last half century. A crucial part of multilateral cooperation is the nurturing of a “culture of dialogue” and a “custom of dialogue”.33 In order to advance the process of reconciliation between Japan and China, the culture of dialogue must be increased. The path of reconciliation is a rocky one and even the most gifted and committed politicians, however, cannot necessarily overcome widespread popular resistance to the idea or to the practicalities of reconciling with longtime adversaries. Furthermore, in order to pursue deeper reconciliation, democracy is a basic requirement. Only a democratic system can ground the reconciliation process at the level of people to people contact. Another new compulsion in Japanese politics is the politics of trade protectionism. Japan increasingly jumps to the defensive in regard to trade and investment with the unceasing inundation of products from China. Its commitment to free trade and open regionalism could easily fray and protectionist

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Yoichi Funabashi, “Reconciliation in the Asia-Pacific”, United Sates Institute of Peace Press, page 5. 33 Ibid., page 181.

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forces, which hamper Japan from joining the web of free trade with Asia-Pacific countries, are already strong. Take goldfish from Singapore, chicken from Thailand and pork from Mexico for example. In November 2002, Japan concluded its first FTA with Singapore, but thanks to the paranoia of protectionist agricultural groups, the deal excluded agriculture, thus somewhat undermining the ethic of free trade. Goldfish are the sole primary export of any significance from Singapore and yet they were disallowed. Similar fears were ignited over the FTA with Thailand, one of the world’s greatest agricultural exporters and again this sector was eliminated from negotiations. Pork, Mexico’s third largest export in 2001,34 also does not come under the terms of the FTA, despite totalling only 6.5% of the Japanese total pork meat import. 35 Japan’s FTA initiatives could run into severe difficulty unless is begins to address protectionist issues on home ground.

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Japan Watch, 22 June 2003, “Belated start with a Burden: Japan’s FTA negotiations”. 35 Toward the Japan-Mexico Free Trade Agreement (an appeal by the International Market Committee of Japan Foreign Trade Council), October 2000.

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Tokyo will play host to the JapanASEAN Commemorative Summit this December, where the Japanese Government hopes to advance free trade negotiations with Thailand, Malaysia and the Philippines. It will no doubt face protectionist opposition but Prime Minister Koizumi needs to pull rank and promote free trade relations. The possibility that Japan’s protectionist forces shall spread from traditional agriculture and fishery sectors to the manufacturing market is a cause for immediate concern. A protectionist cloud is hanging over the textile, nursing and financial services at present and there is an imminent danger it shall start to rain. For Japan to go protectionist would be an immense tragedy. All it would succeed in, is sealing the country off from the advantageous products, contacts and exchange on offer in Asia. Even more importantly, it will mean isolation from Asia’s society, peoples and ideas. Japan must open its labour markets and society to Asian peoples. Careful thought has to accompany this policy and the currently inadequate immigration system must evolve. Integration strategies are needed to complement such a step, to better prepare 36

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Japan for its new life of co-habitation with different peoples and races. It is equally essential that the inevitable backlash in the form of anti-immigration movements, rightwing politics and laws be pre-empted with the necessary measures. Among all of the reforms and revitalization plans currently under discussion in Japan, to open up society and harness Asian dynamics, energy and ideas is the greatest frontier and one that shall serve Japan with the deepest reservoirs. Articulating Asian Ideas In the final part of this speech, I wish to say a few words about the strategic importance of ASEAN to Japan. ASEAN and Japan will soon celebrate the thirtieth anniversary of their relationship. We have come a long way! One word I can think of to describe how ASEAN has treated Japan is “embracing”. And I use this term with a deep sense of appreciation, particularly against the background of Japan’s struggle to overcome its difficult past and to once again be accepted by the world. After total defeat in WWII, Japan was encouraged to make Southeast Asia its focus for recovery by the US, offering reparations 37

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and helping to insulate the region against communism. In the aftermath of the Cold War, it is in Southeast Asia where Japan desires most passionately to project an independent image, separate from US foreign policy. This re-entry into East Asia in the aftermath of WWII, was made possible only through ASEAN’s embrace of Japan and Japan has returned the compliment through its economic development and success, a factor that played a pivotal role in revitalizing the region. One of the greatest success stories of Japanese involvement in the region is its leading role in the promotion of the Asian Development Bank. When Japan helped form it, its per capita GDP was a mere $670, one fourth of the US level. Japan has been the most generous donor, fostering economic growth and co-operation. The ADB subsequently became the most reliable financial “home doctor” in the region. During the Asian economic crisis, the ADB’s support to Indonesia, Thailand and South Korea totalled $10 billion, helping these countries to recover and stabilize economically. On the security front, Washington’s vital participation 38

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was secured via Tokyo and the US-Japan alliance has offered an umbrella of stability under which human network and exchange programmes were able to cultivate. As Gerald Curtis, a leading political scientist on Japanese politics and foreign policy praised, “the strengthening of Japanese-ASEAN relations is one of the outstanding achievements of postwar Japanese diplomacy”. 36 Japan’s diplomacy once again bore fruit when ASEAN became a catalyst in facilitating the birth of the summit meeting between Japan, China and Korea as a by-product of the ASEAN plus three leaders conference — it was the first of its kind in the millennium history of the three countries. Japan can now advance this previously successful ASEAN diplomacy in two ways. Firstly, in stabilizing Indonesia. Indonesia’s position is fundamental to the progress of ASEAN regionalism and Japan can play a key role in improving the integrity of not only this country but furthermore the integrity of ASEAN. Secondly, Japan’s ODA can be resourcefully channelled into helping develop 36

Yoichi Funabashi, “Tokyo’s Depression Diplomacy”, Foreign Affairs, 1998.

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the economic and social infrastructure of the “second tier” countries of Vietnam, Cambodia, Laos and Myanmar. It would be highly beneficial were Japan to continue to extend funds as it has done to the original ASEAN countries throughout the 1970s and 1980s and accelerate the advancement of civil society. Japan’s ODA to Vietnam is probably set to surpass its ODA to China next year and Japan should continue its tried and tested formula on this course of developing the new ASEAN member countries. Thirdly, Japan should expand its ASEAN policy to link up with its policy towards India. India will certainly emerge as a dynamic and significant world player with its vibrant democracy, high tech prowess, English proficiency, huge stakes in the Indian Ocean and Straits of Malacca and its Eurasian geostrategic position. Traditionally Japan’s policy towards ASEAN has been separated from its policy towards India, but it is perhaps high time for Japan to synthesize two policies in a strategic and coherent way. 911 and the period that ensued brought us back to reality with a thump, agonizingly reminding us of the desperate situation in many parts of the world. Japan and ASEAN 40

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can and should contribute to easing the plight of less fortunate peoples and to a method of nation building, best suited to their needs. East Asia in the past half century is testimony to many miracles. Firstly came Japan’s economic boom followed by South Korea, Singapore, Taiwan and Hong Kong in the 1980s and now the miracle of China. This trend is in part reflected by the movement of the Olympic games. First Tokyo in 1964, followed by Seoul in 1988 and soon to be Beijing in 2008. Which successful Asian city shall be the next host? Singapore? Jakarta? Bangkok? Saigon perhaps? Alternatively, will the Olympic Games be co-hosted by Southeast Asian cities in the same way Japan and Korea co-hosted the 2002 World Cup? Nevertheless, Asia is yet to articulate its ideas and values in universal terms. At the end of the day, the problem of EAEC was its failure to express values palatable to the peoples of the region, perhaps except for its anti-Western and anti-American rhetoric and passions. This worried Japan, a country which has learned a great deal about the selfdefeating consequences of its emotional and ideological anti-West geopolitics in the first half of the 20th century. But, does ASEAN+3 41

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present shared values? What about Japan and ASEAN? Will regionalism be able to blossom fully without articulating its shared values? Singapore Senior Minister Lee Kuan Yew began his memoirs From Third World to First: The Singapore Story, 1965–2000 using the following memorable phrase: “There are books to teach you how to build a house, how to repair engines, how to write a book. But I have not seen a book on how to build a nation out of a disparate collection of immigrants from China, British India and the Dutch East Indies, or how to make a living for its people when its former economic role as the entrepot of the region is becoming defunct”.37

He and you, the citizens of Singapore are an embodiment of successful nation building. Through immense trial and error, numerous lessons and ideas, you have emerged triumphant, defying all the odds to come out on top. And Japan, too. Japan’s post-World War II metamorphosis from a good loser to a good builder, to a good citizen

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The memoirs of Lee Kuan Yew, “From Third World To First: The Singapore Story, 1965–2000”, HarperCollins, 2000.

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and lastly to a good neighbour has direct relevance to nation building in the new world disorder. This process, the successes and failures, opportunities and limits has, I think, a universal significance. Japan’s achievements in modernization and democratization, both in the Meiji period and the post-war era, have been an inspirational beacon to non-Western civilizations throughout the twentieth century. First, on Meiji reform, a prime example is Turkey, where Kemal Ataturk based his revolution on the Meiji model to create the most secular Moslem society in the world. Some reformists in Saudi Arabia are studying to model the Meiji reforms by introducing a constitutional monarchy. In Asia, too, China and Korea have watched Japan’s experiment in modernization particularly closely. They have learnt from its economic development model, catch-up strategy and democratization process, taking careful note of its successes and failures. In fact, in more recent times one of the countries to have looked to the Meiji reforms for inspiration was none other than Japan itself, after its defeat in World War II. The well of Meiji inspirations was tapped again and again to channel its post-war 43

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aspirations, real or mythical — as exemplified by the works of Shiba Ryotaro, the greatest Japanese storyteller of the Meiji era. So Japan’s journey has already provided an extremely rich resource for the world to draw upon. In particular, I want to stress that the paradigm of the good loser has immediate relevance to the most critical current challenge to international order, which is: how do we deal with the “losers”? How can we restore them, and bring them back to the mainstream? By losers I mean, for one, the losers whom globalization has rendered less competitive; billions of people from failed and failing states such as North Korea, Indonesia and Pakistan; and civilizations still unable to modernize and democratize, which includes many countries in Africa and the Islamic world. Although Iraq cannot emulate the Japanese model precisely, differentiated by numerous distinctions in cultural background and social make-up, many lessons in nationbuilding are, however, relevant to post-war Iraqi reconstruction. It is now the moment for Asian countries to articulate their ideas, that is to say Asian ideas. It has become increasingly clear that US military answers alone are unable 44

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to solve all problems. Far from it, in fact. As Iraq and Afghanistan teach us, it can on occasion, exacerbate a situation. Still, it is not enough for the rest of us to simply blame American unilateralism either, although this is, of course, a considerable problem. We need to explore Asian approaches and how to grapple with these problems. On this point, Japan and ASEAN have a great deal of wisdom on offer and a variety of ideas from antiterrorism to anti-poverty policies. Most important of all, is how to build a nation. In terms of our pasts, Japan and Singapore and our rise from gutter to success, share much in common. It is our purpose that we impart our mutual ideas of nation building with the rest of Asia and also the world. Some of the methods may appear unorthodox if orthodoxy is to be judged according to the Western standard. Their unique nature did not go unnoticed and some policies were heavily criticized. However, 911 and events since are proof that nation building is not an easy task and that holding free elections does not guarantee a good nation-building blueprint. The notion of a textbook formula for developing democracy does not hold water. 45

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Singapore is the owner of abundant enviable qualities; national resilience, a solid middle class, good education system, both US/Anglo-Saxon and Chinese ties, a spirit of secularism and last but not least, Singapore is a maritime trading nation and civilian power. Many of these characteristics are reciprocated by Japan. Yet, you cannot successfully pursue nation building in a strategic vacuum. Both Singapore and Japan have benefited greatly from free trade, freedom of navigation and stability and security, to which the United States has contributed in maintaining and promoting. Both of us should continue to maintain our friendly ties with the US and help it make a deep commitment to the region. The Japan-Singapore Economic Partnership Agreement is a good beginning in open regionalism and Asia-Pacific integration for free trade and nation building in the new age of globalization. Our EPA is certainly one of many FTAs, which Singapore has forged with its partners, but it was the first for Japan. I believe its historic significance will turn out to be on a par with Japan’s first trade agreement with a foreign country, the Treaty of Amity and Commerce between the US and Japan 150 years ago and its entry into 46

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GATT after Japan’s independence from the occupation 50 years ago. I genuinely hope this FTA initiative will help Japan’s momentum in promoting FTAs with other ASEAN and Asia-Pacific countries.

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About the Author Dr Yoichi Funabashi is an award-winning Columnist and Chief Diplomatic Correspondent of the Asahi Shimbun. He is also a contributing editor of the prestigious journal Foreign Policy published in Washington, D.C. In 1994 he won the Japan Press Award, which is Japan’s equivalent to the Pulitzer Prize. His books in English include Alliance Adrift (Council on Foreign Relations Press, 1998, winner of the Shincho Arts and Sciences Award); Asia-Pacific Fusion: Japan’s Role in APEC (Institute of International Economics, 1995, winner of the Mainichi Shimbun Asia Pacific Grand Prix Award); and Managing the Dollar: From the Plaza to the Louvre (1998 winner of the Yoshino Sakuzo Prize). Dr Funabashi received his B.A. from the University of Tokyo and Ph.D. from Keio University. He has held visiting fellowships at Harvard, Columbia and the Institute for International Economics, as well as visiting professorships at the University of Tokyo and the Asia-Pacific University, Oita, Japan.

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Titles in the Asia & Pacific Lecture Series:

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JESUS P. ESTANISLAO The Philippine Economy: An Emerging Asian Tiger

2.

AMARTYA SEN Beyond the Crisis: Development Strategies in Asia

3.

YOICHI FUNABASHI New Challenges, New Frontier: Japan and ASEAN in the 21st Century

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