THE EUROPEAN

FUTURES

OBSERVATORY

The Japan Briefing

Background

Since 1945, Japan has been a central element in the US strategy of containing the USSR. With the fall of the Berlin Wall, this strategy has changed, forcing the Japanese government to give consideration to the future of its foreign policy. Japanese history since 1945 has been dominated by the rise of the Japanese economy. Japanese business, with the guidance of the Japanese government, has come to establish Japan as a major actor in the global economy by 2005.

 

The original basis for this rise was the manufacturing sector – particularly in automobiles, consumer electronics, and shipbuilding. The surpluses generated by these sectors gave rise to the global presence of the Japanese banking sector. However, the stock market crash of 1987 exposed the weaknesses of the banking sector. By 2005, the banking sector had still failed to recover the position it occupied before the 1987 crash.

 

The weakness of the banking sector fed into the real economy. The 1990s saw the beginnings of the stagnation of the real economy in Japan, which still persisted in 2005. This was the result of two forces. Japanese society had started to age sooner than any of the other ‘Western Capitalist’ societies. The high savings rate of the aging population coupled with high levels of fiscal debt caused by increasing welfare payments served to act as a drag on the economy. The advantage enjoyed by Japanese manufacturing started to be eroded first by the development of the ‘ASEAN Tiger’ economies and then by the rise of China.

 

Much of the Foreign Direct Investment into the ASEAN Tiger Economies and into China had been financed by the savings of the Japanese private sector. This ownership role allowed Japan, whilst stagnating domestically, to remain a major player in the world economy. Although remaining a major economic power, Japan had not established itself as a global political and diplomatic power. Much of Japanese influence was expressed regionally in East Asia.

 

In 2005, Japan continued to rely on the US security umbrella, and still acknowledged US leadership in its relations with China and North Korea. Energy supplies – particularly from Russia – and the influence over the ASEAN Tiger economies was the basis of the regional rivalry with China. The issue of immigration into Japan from the Korean peninsula was the source of animosity with North Korea.

 

These issues had started to come into sharp focus by 2005. At that point, the Japanese leadership had started to question the future effectiveness of the US security umbrella and had started to consider the possibility of developing an independent Japanese military presence, including the realisation of their nuclear capability. We can see this as the question of whether or not Japan would realise the political potential to which its economic power entitled the nation.

 

By 2005, Japan was facing a number of key challenges to the future:

1. How would Japan engage the US, and at what level?

2. How would Japan ensure the security of energy supplies from the Russian neighbour?

3. How would Japan respond to future commercial rivalry with China?

4. How could Japan develop the ASEAN Tigers to suit its own interests?

5. Would the population changes to 2025 cause an economic disaster?

6. Can Japan develop an independent defence force?

 

 

The Nationalist Mission

In recent years, Japan has started to realise some of the diplomatic and political promise that it might enjoy. It is your task, by 2025, to set in motion policies that will consolidate and extend that influence. Your primary task is to ensure that Japan remains pre-eminent in East Asia and occupies a leadership role in the international order.

 

By 2025, you will have:

 

1. Secured the sources of foreign energy imports for the Japanese economy.

2. Ensured that the development of the ASEAN Tiger economies reflects the economic influence of Japanese financial institutions.

3. Diminished the reliance upon American military might.

4. Ensured that international institutions reflect the full extent of Japanese economic power.

5. Promoted Japanese led East Asian institutions as models for international co-operation.

 

 

 

The Liberal Mission

In recent years, there has been a divide emerging in the relationship between the US and Japan. It is your task, by 2025, to set in motion policies that will restore and enhance that relationship. Your primary task is to revive the Japanese economy, which underpins domestic prosperity and which underwrites the ability of Japan to act on the global stage.

 

By 2025, you will have:

 

1. Lessened the dependence of the Japanese economy on foreign energy imports.

2. Reduced the dependence of Japanese society on welfare payments.

3. Integrated Japan as part of a global collective effort to maintain peace and security under the leadership of the US.

4. Developed international institutions that include an engaged US.

5. Spread economic opportunity and liberal democracy throughout the world.

 

© EUFO Limited 2005

 

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