Saturday, March 22, 2014

Seiji Maehara's Assessment of the Abe Administration

Japan's Foreign and Economic Policies: Assessing the Abe Administration
By DPJ Member Seiji Maehara 
March 14, 2014
(ver. 2; 030614; 11:30 pm)

Three years ago yesterday, the Great East Japan Earthquake struck my country, and caused great damage, the effects of which were tripled by the ensuing tsunami and nuclear accident at the Fukushima Daiichi power plant. Amongst all the outpouring of assistance extended to us from around the world, some of the warmest and most important aid was provided to us by the United States. And in the midst of this unprecedented tragedy, Operation Tomodachi was born and with it, the unparalleled assistance which continues to this day. Again, you have my deepest thanks and gratitude for your friendship.

Today, let me share with you how the Democratic Party of Japan (DPJ) views the Abe Administration, especially as it relates to its foreign policy and economic agenda.

On the topic of foreign policy, let me start by sharing my thoughts on Japan's relationship with South Korea, China, and the US. Next, I will move on to discuss their economic policy and explain the pros and cons of the current policy and provide you some thoughts on the longer term structural problems Japan needs to tackle. Finally, I would like to touch on what our relationship should be and how we can realize that by deepening our alliance.

On foreign policy, our relationship between South Korea and China remains frozen. It is a pity that we have not seen any summit meetings between Japan and South Korea or China, although more than one year has passed since PM Abe assumed office. South Korea is an important neighbor for us especially because we share fundamental values such as democracy, rule of law and a market economy. Both of us are also close allies to the US, and we must cooperate very closely with each other and with the US. This is especially true should something critical happen in North Korea. Having an untested, inexperienced, 31-year old inherit the leadership position who is trying to consolidate his dictatorial powers causes great concern. We must be prepared in case anything imminently dreadful would occur.

During the DPJ Administration, North Korea sank the South Korean warship, the "Chonan", and shelled the South Korean island of Yonpyondo. In response to these incidents, Japan and the United States immediately supported South Korea and helped to deter further North Korean provocation. Most importantly, we should not forget what China did during this time, which was to support the position of the North Koreans. This case very well illustrates the crucial significance of maintaining a strong trilateral cooperation among Japan, the US and South Korea for the security of the North East Asia region.

The DPJ Administration also placed much value on the relationship with South Korea and addressed some key bilateral issues as follows:

1) We made it very clear that the Takeshima Islands constitute an integral part of Japanese territory;

2) We adhered to two key statements on historical matters: the "Murayama Statement" in which Japan expressed apology for our colonial rule, and the "Kono Statement" in which we addressed the issues related to what is called "Comfort Women";

3) At the same time, key officials in the Administration such as the Prime Minister, the Chief Cabinet Secretary, and the Foreign Minister refrained from visiting the Yasukuni Shrine where class A war criminals are collectively honored; and

4) We also committed to make further efforts towards addressing the "Comfort Women" issue from a humanitarian perspective, while we firmly maintained our position that this issue had already been resolved by the Treaty on Basic Relations between Japan and the Republic of Korea.

It is my hope that without further delay, leaders of Japan and South Korea meet one another to re-establish and re-strengthen our relationship, especially from a strategic perspective.

Recently, two of Prime Minister Abe's top aides made statements like these:

Although the US Government said they were disappointed with Prime Minister Abe's visit to Yasukuni Shrine, no one under the Republican Administrations had made such misinterpretation or tried to find fault there. It is rather the Japanese side, which was disappointed by the Americans. The US is getting afraid of saying the right things to China. Americans said they are disappointed because they needed some excuses for China. Why the U.S. does not show more respect to their important ally like Japan.

I don't agree with those people. What I am reminded of here is the words of former Soviet leader Mikhail Gorbachev that "there are no friend or foe in diplomacy, there is only the interest of states." An alliance is formulated not out of charitable consideration. Parties to the alliance must understand respective national interests and respect them. The US-Japan alliance is, regardless of whatever party is on the ruling side, a crucially important bilateral relationship. Of course, the interests of alliance partners may conflict with each other. But what is most important is keeping our internal conflicts private and between ourselves and not allow others to view our disagreements. Behind the scenes, we might fiercely argue with each other, but still we should still showcase our strong bond to outsiders. We have to understand precisely, which country would benefit from a worsening of the Japan-US relationship.

Next, I would like to touch upon our relationship with China. This relationship is also a strategically important one. Again, I wish that the Japanese leader will meet his Chinese counterpart as soon as possible, just as I wished in the case of the Japan-Korea relationship. That being said, I would like to briefly share with you the historical context of the Senkaku Islands so that both Japan and the US can have a common understanding on this issue vis-à-vis China.

The Senkaku Islands were incorporated into Japanese territory in January 1895 via a cabinet decision, after Japan carefully observed the situation for ten preceding years and confirming that there was no conflicting influence or rule from any other country. There is no doubt that the Senkaku Islands constitute an integral part of Japanese territory. Around 1970, China started to claim the islands belonged to them. Coincidently, China's claims came only after the UN made public that there might be underground resources (such as oil and gas) embedded in the surrounding ocean area. Before this time, even the Communist Party's official gazette, The People's Daily referred to Senkaku as "Senkaku of Okinawa" and the maps the Chinese government published did not include Senkaku.

I recall my first meeting with Secretary Clinton after I assumed the post of foreign minister when she clearly assured me that, "Senkaku is within the application of Article 5 of the Japan-US Security Treaty". This was the first statement of its kind made by the Obama Administration. Whenever I think of this, it renews my respect and appreciation to Secretary Clinton and reminds me of the sincere efforts of Assistant Secretary Kurt Campbell to make this happen.

On the Senkaku issue, China claims that:

1) Japan should take back our decision of nationalizing the Senkaku islands;
2) Japan should confirm that there are territorial disputes here, and;
3) Japan and China should jointly develop this area.

However, let me make it very clear that Japan would never ever agree on such claims. The DPJ Administration only acquired ownership of the Senkaku Islands out of the concerns that the quiet control over the islands, (in other words, the status quo) might be undermined by the then Tokyo Governor's statement that the Tokyo regional government might purchase the land and cause unnecessary friction. China's claim that Japan nationalized the Senkaku Islands to reinforce our effective control over the islands has no basis in fact. Japan has and continued to maintain sovereignty over the Senkaku Islands and this was only a transfer of ownership of the islands from a private Japanese owner to the central government. I believe it is important that we persistently work on this issue, while acknowledging that China has a different viewpoint.

In addition, China has also promulgated other problematic issues such as an Air Defense Identification Zone (ADIZ) which China unilaterally set in place, advancing an ever increasing military budget, and continuing their reckless behavior in South China Sea where they could impede and threaten the freedom of navigation on the high seas. In concert with the US and other like-minded countries, we need to say what we have to say in a firm and confident manner. We must continue to communicate and have dialogue with China and work with them to promote a peaceful rise. There is a saying that overall agreement matters more and smaller difference matters less. I very much appreciate the broader perspectives this saying includes and with that in mind, I would like to improve and strengthen our relationship with China.

Let me also offer a few words on Japan-US relations. Needless to say, for Japan, the US is the most important partner and ally in the international community. More than that, not only is this alliance important for our bilateral relationship, but it is extremely crucial for the stability and prosperity of the entire Asia Pacific region; sort of a public good. Many people in this region who share our fundamental values have high hopes for the continuation of our strong alliance. Given the situation on the Korean Peninsula, the rise of China, and a certain level of instability in the domestic politics of various areas within Asia, both Japan and the US need to closely cooperate with each other and further deepen our alliance. From this perspective, I would like to offer three of my thoughts here.

The first is on Okinawa. The Okinawa Prefecture accounts for about 0.6% of Japan in terms of size, but it hosts 74% of the US military facilities and areas that exist in Japan. In this sense, without the cooperation of Okinawa and its people, we cannot guarantee the effectiveness of the Japan-US alliance. Therefore, we must expedite the return of those facilities and areas that both authorities have already agreed upon, and in a real, tangible way, reduce the burden on Okinawa. At the same time, in light of the fact that there remains numerous cases of US service members or members of its civilian component who have committed crimes in Japan, both countries need to engage in even more serious discussions on how to ensure the transfer of custody of those Americans who have committed those crime are transferred to the Japanese side. This discussion could include the reviewing of the Status of Forces Agreement itself.

I would also like to draw your attention more specifically to the return of the Futenma Air Station and the construction of its replacement facility off the coast of Henoko and Camp Schwab. I would like to begin this topic by sincerely apologizing for any confusion and inconvenience we caused to the affected people, especially to the people in Okinawa during the Hatoyama Administration. Now, we see a very brave decision made by Governor Nakaima of Okinawa which has marked a significant and practical first step towards the construction of a replacement facility.

That being said, we cannot be too optimistic about future progress since there remains deep-rooted opposition in Okinawa and there have been reports that anti-security alliance activists are gathering in Okinawa. It is yet to be seen whether the construction will move forward as planned.

If the DPJ were still the ruling party, and while I would not say this publicly, but since I have developed a strong belief that the Japan-US alliance is crucially important throughout my 20 years as a lawmaker, let me dare say that we must have an alternative or Plan B. In other words, even if the current replacement plan in Henoko should get bogged down in the future, we have to be prepared that such a deadlock would not undermine the very foundation of the Japan-US security arrangement. That's why leaders in both countries have to start thinking about a "Plan B" in a very quiet manner, so that an alternate plan in is our hands should the Henoko plan fail.

The second thought of mine is about the recent discussion on collective self-defense. For the purpose of enhancing the effectiveness of the Japan-US security arrangement, various measures such as inspecting suspicious vehicles, escorting US vehicles, mine sweeping operations, and providing fuel and materials to US forces should be made available depending on various specific scenarios. What I believe is important is that we take an approach based on specific scenarios, not based on conceptual or theoretical debate. On a case-by-case basis, we have to identify whether we need to change the interpretation of collective self-defense, whether such measures can be taken within the expanded interpretation of individual self-defense, or whether such measures can be taken by revising the existing law to deal with contingencies in the areas surrounding Japan. As we review the Guideline after a 17-year interval, I hope this will lead to some tangible progress which will eventually enhance the effectiveness of the Japan-US security arrangement while taking into account the real needs of the US side.

Another dimension I would like to mention on discussing collective self-defense is the reactions from our neighbors, especially South Korea. Last year, I visited Seoul twice and exchanged views with South Korean Diet Members, government officials, and academics. What struck me was how negatively my Korean counterparts viewed the discussion of collective self-defense in Japan and how much they were alarmed by this discussion. I repeatedly explained that we are focused on threats on the Korean Peninsula when we have such discussions and that once we become able to exercise collective self-defense, this will actually contribute to the security of South Korea. However, my explanation fell short of earning their understanding. Since close cooperation among Japan, the US and South Korea will be indispensable if some unforeseen events occur on the Korean Peninsula, I cannot fully underscore the importance of earning South Korea's understanding and cooperation as it relates to this important issue. I believe Prime Minister Abe, as far as he aims at changing the interpretation on collective self-defense, needs to explore every possible way to improve the relationship with South Korea. Of course, I do hope that South Korean President Park Geun-hye will also be like minded on this issue.

My third thought is about TPP. I will not go into the details on what is being negotiated given that multilateral negotiations are still ongoing as well as parallel bilateral consultation, but all the parties have to make concerted efforts toward striking a deal, by constantly reminding ourselves of the strategic importance of the TPP. If Japan and the US, which are allies in the security dimension, can also join together on the same platform of free trade and economic partnership, that can only further strengthen our cooperative relationship. That's why many countries including China and South Korea are following the course of this negotiation with a very keen interest. What is required of Japan and the US is a negotiation strategy based on such a broader perspective followed by making a real decision.

Keeping with the theme of economics, let me specifically talk about the Japanese economy. The economic policy of the Abe Administration consists of three pillars. The first is quantitative easing of a new dimension, the second is agile and expeditious fiscal spending, and the third is implementing a growth strategy. Most notable is the supplemental budget of 10 trillion yen which is the equivalent of approximately $100B dollars, and the massive quantitative easing where our Central Bank, the Bank of Japan, will undertake about 70% of newly issued Japanese Government Bonds (JGBs). These measures led to a rapid depreciation of the yen and an approximate 60% rise in stock prices over the last year. Candidly, I can appreciate PM Abe's efforts to change people's mindset by strongly advocating the need to conquer deflation and thus revive the overall economy.

That being said, stimulating the economy by leveraging debt has resulted in an even larger and ever increasing fiscal deficit. Even if the BOJ massively undertakes JGBs, and provides huge amounts of yen, resulting in the depreciation of the yen's value and raising the asset prices of commodities such as stocks and bonds, these policies cannot last forever. Just as the US has been struggling with the same thing, Japan will also face quite a bit of difficulty when ending these monetary easing policies. We need to clearly recognize that these policies are just like some adrenaline shots. Moreover, we have started to see some side effects as well.

The weakened yen has raised the import price of oil, LNG, and food products, which has resulted in the decrease of disposable income of many households whose salaries or pensions remain at the same level. A weak yen has not necessarily increased Japan's exports, while it has increased Japan's imports, resulting in a deficit of not only the trade balance but also to the current account balance. If the current account deficit takes root, money is going to flow out of Japan and thus we will need to rely more on foreign countries for selling the JGBs. This means that we have to face a fall in the value of JGBs, and bear the risk of rising interest rates.

In any case, we should not just live and die by the fluctuation of current stock prices, we need to squarely tackle the structural problems of Japan. When I say structural problems, I would say they include the following items which impede the future economic growth of Japan:

1) The decreasing trend of the overall population;
2) an aging population combined with a diminishing number of children;
3) a massive and ever increasing fiscal deficit; and
4) strict government regulations in the fields of agriculture, medical care, and energy.

In the last general election, the DPJ lost a large number of seats, but that is the nature of an election system centered on single-seat constituency where results dramatically fluctuate from election-to-election. And now, I would like to once again establish our policies and principles, lead the realignment of opposition parties, bring back a sense of positive tension to politics, and return as a ruling party to take the helm of our domestic and foreign policies. My wish is to advance the partnership between Japan and the United States in a way that is deeply rooted in our respective national interests, and make concerted efforts with you towards peace and prosperity for the world.

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