August 31, 2007; Volume 02, Number 31

of the

Japan Considered Podcast

[Listen to the audio file by clicking here]

Clink Links Below for Today's Topics

Introduction
Professor Dennis Yasutomo on Overall International Relations
Professor Edward Lincoln of New York University on the Economy: Domestic and International
Mr. Gregg Rubinstein, Director of GAR Associates, Washington, DC, on Recent Changes at the Ministry of Defense
Concluding Comments

Good Morning. From beautiful Spring Valley. In the Midlands of South Carolina. Today is Friday, August 31st, 2007. And you are listening to Volume 03, Number 31, of the Japan Considered Podcast.

Introduction

Weather's somewhat improved here this week. I hope yours is too. Thanks to all of you who e-mailed in your comments about the last program. Lots of good suggestions. Lots of offers of additional information on the topics covered. Couldn’t ask for better feedback. I’ve responded directly to many of you. And I hope those who didn’t receive a response realize that your effort wasn’t wasted. I read each of the e-mails, and will consider them all when planning new programs.

This week I have a special treat for you. Comments on the effects of Prime Minister Abe’s long-awaited cabinet reshuffle. From three guest commentators! All three interviewed yesterday afternoon via SkypePhone.

First, Professor Dennis Yasutomo of Smith College gives his thoughts on the effect of the reshuffle on Japan’s overall international relations and foreign policy.

Then, Professor Edward Lincoln of New York University does the same for economic policy: domestic and international.

And finally, Mr. Gregg Rubinstein from Washington, describes the likely effects of the cabinet reshuffle and the recent personnel changes in the Ministry of Defense.

When planning this week’s program, I intended to conclude the show with my own analysis of the effect of the cabinet reshuffle on Japan’s domestic politics. However, each of our guest commentators went considerably beyond the “three or four minutes,” originally planned. And, once interviewed, their material was so good, I didn’t think it should be cut to fit the program.

Sooo, my comments on the domestic political scene will have to wait until next week. Sorry about that. But it can’t be helped. As it is, we’ll go waaay over time. Though I think you’ll all agree that the extra time has been well spent.

Professor Dennis Yasutomo on Overall International Relations

First up, Dennis Yasutomo provides his comments on the effects of the cabinet reshuffle on Japan's overall conduct of foreign relations.

RCA: Professor Dennis Yasutomo. Thanks for joining us today on the Japan Considered Podcast.

DY: Thank you, Bob. It’s a pleasure to be back.

RCA: You’ve agreed to talk with us briefly today about the effect of the cabinet reshuffle on Japan’s overall foreign relations. How does this change strike you, in general?

DY: One of the things that has struck me, and I realize that hindsight is perfect, but I sometimes wonder what would have happened if Abe had started out last year with a cabinet configuration like the one he has in his second cabinet.

To me, as I look it this cabinet, it seems to me to fit him better than his original cabinet. In the sense that Abe strikes me as more of a traditional type politician than a dyed-in-the-wool reformist. His rise in the LDP seems fairly conventional, in that sense. A hereditary politician; a blue-blood. He came up within a faction. He was hand-picked to be a successor. And he didn’t seem overly identified with many foreign policy issues. He made North Korea his major pet foreign policy issue. But you could argue that’s a domestic issue. He was  not a foreign policy wonk.

So, I sort of view him as maybe not as comfortable as a reformist. And once he became prime minister, I see him as a traditionalist trapped in a reformer’s clothing. I understand there are a lot of changes in the Party. But he did seem a little bit hand-cuffed, so to speak, by Koizumi’s reformist legacy. He had to be reformist. Despite all the things going on in the Party. Whereas he might have been better served by a more traditional line-up. To compensate for his lack of experience. I think that’s what you see in this relatively high-powered cabinet.

Foreign Minister Machimura had served before as foreign minister under Koizumi. The Ministry of Finance’s Nukaga served as the director general of the Defense Agency before. The current Defense Minister, Komura, served as foreign minister before. Machimura has experience with recent foreign policy issues. I believe it was Nukaga who was Defense Agency Director when Japan first sent its Self Defense Force overseas along with a Japan International Cooperation Agency unit for disaster relief in Honduras. And, Koizumi sent Komura to strategic countries as a special envoy after 9/11.

So, if you think of it in this perspective , this new line-up does not seem to signal a departure from the foreign policy line that Abe has been following thus far.

You asked me to mention some positive aspects. You do wonder if the foreign policy isn’t in the hands of more experienced veterans.

RCA: How do you believe that all of this has affected the foreign policy agenda? Has it made any difference for specific policies?

DY: I think the agenda is fairly set. I think most of the commentary we have read have already identified all of the things on the table. I can think of only one issue that might jolt things.

We know that Japan is going to assume the chair of the G-8 Summit next year. And as we speak, Chancellor Merkel is in Japan. So the transition already has started. But G-8 Summit issues already are on the table: global warming; trade; terrorism; and so forth.

We can expect Africa to be in the spotlight for a while because Japan will reconvene the Tokyo International Conference on African Development, TICAD. Which was a Japanese initiative a couple of decades ago. It meets every five years. And Koizumi has already pledged to double aid to Africa.

I think we can see Abe continuing to try to stabilize relationships with East Asian neighbors. As we speak, Defense Minister Komura is meeting with his Chinese counterpart. The comfort women flap created a stir. But I think the relationship is going to be a little bit more stabilized.

And you can expect the current line-up to continue his initiatives toward Australia, India, and so forth.

I think the one jolt may be the implications of the Special Measures Law, which seems to be the hottest topic right now.

RCA: How will that be affected?

DY: This may be a long shot. But I am wondering if at the end of the day, despite all of the problems over whether or not to extend, renew, the Anti-Terrorism Special Measures Law, which authorizes the Maritime Self Defense Force to be in the Indian Ocean doing support refueling activities. I wonder if, in the long run, this may actually result in Japan becoming more involved in Afghanistan. And not less.

What I found interesting was that Ozawa may have, ironically, opened a door to increase Japanese commitment. Rather than less. A lot of the focus is on his intention to try to prevent the extension of the Special Measures Law. And he has argued that the reason is that it’s not a legitimate operation. That it hasn’t been legitimized by a UN Security Council Resolution. Which raised some eyebrows.

But Ozawa also said that the operations on the ground in Afghanistan – NATO, the ISAF operations – International Security Assistance Force effort – does have legitimacy. It has been sanctioned by the United Nations. And, others in his Party, like Maehara, are arguing that Japan really should step up inside Afghanistan, on the ground. By providing more ODA. By getting more involved in police training. And also supporting what’s called these Provincial Reconstruction Teams. These PRTs are smaller civil-military operations. I think there are about 25 or 26 of them now, scattered throughout the country.

But, if you think back to what Abe said during his visit to Brussels, when he delivered a speech at NATO Headquarters. He pledged that Japan would, in fact, support more strongly NATO ISAF efforts on the ground. And he specifically mentioned these PRTs.

So, what you have here is an interesting convergence of what may be a DPJ, Minshuto, policy line, and the Abe Cabinet’s line. So, the question is whether or not some kind of – I hate to use this term …. But you wonder if there might be the potential here, if things are done in a sensitive way, to get some kind of a bipartisan agreement on moving more actively into Afghanistan. Not with military forces. But in other ways.

This may be a long shot. I’m just trying to think ahead; think outside the box. This may be one of the implications for the Abe Cabinet long-term.

But I think the key still remains Abe. He may have the best line-up in the world. From his perspective. But I think he still needs to make  it move, and not let it be a window-dressing cabinet. From a traditional point of view, he’s got a line-up in place that can, perhaps, take the initiative. These ministers have experience. They know policy. They know their own Party. And they know the Democratic Party of Japan.

So, I guess that’s my initial impression of the Second Abe Cabinet.

RCA: That’s really helpful, Dennis. I’ve taken far more of your time than you agreed to give. I appreciate that as well. Thank you for joining us today with your thoughts on this important topic.

DY: Thank you very much, Bob. It’s always a pleasure.

Professor Edward Lincoln of New York University on the Economy: Domestic and International

Next, Ed Lincoln tells us how the cabinet reshuffle is likely to affect Japan's domestic economy and international economic relations.

RCA: Professor Ed Lincoln. Thank you for joining us today, on the Japan Considered Podcast.

EL: It’s a pleasure to be with you again.

RCA: you’re a frequent visitor here. Today, I was hoping that you might comment for us on the effect of this cabinet reshuffle earlier in the week on Japan’s overall economic policy: domestic and foreign. Do you think it will have any influence?

EL: Actually, probably not very much. There’s only one major economic policy I can think of at the moment. And I’m not sure that it makes that much difference, even for that one. Which would be raising the consumption tax rate. Which, my guess is, that is not going to happen now until the next Lower House election.

RCA: How would that be affected?

EL: Well, the LDP certainly has to feel that the voters are not very happy with them. And the next thing that comes up for them in a couple of years is the Lower House election. So, it seems, any prudent politician would not advocate doing something on the economic front, like raising taxes, that might note appeal to the voters.

RCA: You know, Ichiro Ozawa’s Party campaigned on the basis of a number of social welfare programs that would require an increase in the consumption tax. So maybe they’d be willing to go along with an increase? Do you think so?

EL: Well, Bob, I’m sure we’ve had cases in the United States of politicians who ran on platforms advocating new social welfare programs. But who were mighty quiet when it came to the question of where the money come from to pay for them. So I think we’re likely to see that with the Democratic Party in Japan.

RCA: You don’t have as much faith in these folks as I thought you might! What about some of the specific personnel changes. Are you happier with the economic side of the Cabinet lineup than you were three months ago?

EL: When was the last time I was happy with the economic lineup of a Japanese cabinet? Perhaps, not ever. If one actually thinks that the politicians are supposed to provide strong leadership for the ministries and agencies they run. In this case ….  It’s not bad.

My one qualm, I guess, would be with Mr. Nukaga running the Finance Ministry. To the best of my knowledge, Mr. Nukaga has had absolutely no record in the past of working on any economic issues. Now, apparently he did serve very briefly as an economic minister in the Mori Cabinet, for about a month or two. But then was pushed out of that because of a scandal. Not related to the Ministry. But related, I guess, to his office finances.

But other than that, he really hasn’t done anything. And I don’t think he held that post long enough to have had any impact on economic policy. So, he is likely to be a particularly weak minister for the Ministry of Finance.

RCA: At least, weak on specific policy issues, I suppose.

EL: Right; right. And, again, if you say policy issues, probably the big thing that the Ministry of Finance needs to think about over the next year or two is when and how much they are going to push for an increase in the consumption tax. You don’t have to be a rocket scientist to come in and say, “Boys. We’re not going to do that. Wait a little while.”

RCA: So, you see the political forces resisting an increase in the consumption tax. When it actually should be increased?

EL: Well, not necessarily. Yes, it’s true the Japanese government has been running very large fiscal deficits over the past decade. And at some point it needs to deal with that issue. But this is one of those issues where it’s not necessary to take drastic action today. The deficit’s not going to blow up in their faces tomorrow. It may not happen for fifteen or twenty years. So, it’s enough to be aware that actions need to be taken to bring the deficit down, over a period of time. To chip away at it. And that’s going to involve some increases in taxes. It could be any kind of taxes. And, restraint on spending.

They’ve actually done some of this. I haven’t checked the numbers lately. But the size of the annual deficit ratio to GDP has been coming down some. Helped by the fact that the economy’s growing. And that helps to push up tax revenue. And there has been some restraint on new spending in the government.

So the deficit has come down some. That means increase in the consumption tax is not an urgent matter at the present moment. It probably should be done. Personally, I’d raise income taxes, not consumption taxes. But they have their reasons for believing that consumption tax is the way to go. It probably ought to happen at some point in, say, two to five years. But if it doesn’t happen in the next two years, it’s not a tragedy.

RCA: What about on the foreign economic side, Ed? Do you see anything there that might be affected by the cabinet reshuffle.

EL: Not much. About the only thing you could point to, I think, would be to say that with the poor showing in rural districts, suggesting that farmers and others in rural areas were pretty unhappy with the LDP. That could cause the Party or the government to say this is not a time for any action whatsoever for opening agricultural markets.

Well, that may be true. But, my response would be, “When was the LDP actually ever very active in opening agricultural markets?”

It’s been a very slow slog over the last twenty years – twenty-five years – to get agriculture opened up in Japan. Or, at least those parts of the agricultural market that have been pretty closed. We all know Japan does, in fact, import a lot of food. But there are important pieces of that market, like rice, that have not been opened.

So, the LDP never has been a big advocate of moving in that direction. The game they have played over and over again has been to wait until the very last minute. Make a couple of concessions. To make sure a trade negotiation didn’t actually fail. Then turn to the farmers and say, “Oh dear, it couldn’t be helped.”

Frankly, if we had a big negotiation, like the Doha Round …. Let’s just imagine that we were on the verge of a final agreement in the Doha Round tomorrow. The Japanese government would make some concessions and do exactly the same thing. Turn to the farmers and say, “We did our best. We stayed up all night long, three nights in a row. But at the end, we had to do ….”

So, I don’t think there’s really going to be that much of a change. Possibly some change in rhetoric. Koizumi, at least, talked about the time coming for changes in agricultural policy. One presumes that kind of talk will disappear. But in terms of actual behavior, I don’t think this makes much difference.

RCA: A final point on the international side. Something that’s puzzled me for some time. This blossoming of free trade agreements that Japan has negotiated around the world. They just did one with ASEAN, I understand. And others in Southeast Asia. Are these significant?

EL: Well, do we have two or three hour?

RCA: No. We’ve got fifteen seconds.

EL: Well, this was a big change in policy for Japan. It only goes back to about to the year 2000. Japan actually was a little bit late to the game. Japan is not the only country in the world running around negotiating these things. They’ve become very popular. The number of them has exploded over the last decade. The U.S. government is doing it. Singapore. South Korea. Australia. Everybody is getting into this game. So, the Japanese are doing something that a lot of other countries are doing.

Are they important? Yes. They are. They are a major departure from some of the principles of that drove the GATT system from 1947, up to present. The WTO, now. A principle that says if you offer a trade concession to a trade partner, you have to offer it to all other members of the WTO. There’s an exception that says, ah, but, if you pick a country, or a group of countries, and you get rid of substantially all of your barriers with that country, then we’ll let you out of this requirement. That you offer that to all of the other members of the WTO. And so, it is different. It does mean that you’re opening up to a country, or to a small group of countries. And not to everybody.

Whether that’s good or bad …. Economists have been debating that for a number of years. I think it’s bad. Partly, because it leads to what Jagdish Bagwhati calls a spaghetti ball of differing rules. These are the kinds of agreements that only a lawyer could love. Because of the opportunity to argue about whether about a product that is shipped from one country to another country deserves to come in under the rules of which agreement. Did it really come from that other country? Was it only assembled in that country? Did it really come from China, and then pass through somewhere else. And on and on and on. So there’s endless room for disagreement about which rules apply, which tariff rules apply when products come in.

But, these agreements have been very popular. Lots of governments have been negotiating them. And Japan has jumped on to that bandwagon.

RCA: Do they actually influence economic flows among countries?

EL: Probably. Now, in many cases, including some of the ones the United States has negotiated. Let’s say, the United States and Singapore. Or Japan and Singapore. Singapore is so small that, no. It doesn’t really make any difference. But something like, let’s say, the United States and South Korea. South Korea is actually big enough that it would make a difference. Japan and all of ASEAN. Yeah, that might make a difference.

One final comment on this. People who have looked in detail at these agreements tend to think that the ones Japan has negotiated are not particularly thorough. That language in the GATT Agreement that said – still says – substantially all restrictions on trade, obviously is not very precise. And the agreements that Japan has signed tend to leave out, on balance, more things than other governments leave out. Particularly in the area of agriculture.

RCA: Sounds to me like they’re more political agreements than economic agreements.

EL: That’s probably true for many of the governments that negotiate these. It’s a way of rewarding governments that you happen to like. So, that political concern. What can we do to cement a relationship with another country that we have other non-economic reasons for wanting to cement ties with. I think they tend to get used for that.

RCA: That’s very interesting. We’ve taken more of your time than we agreed to take, yet again, on this program. But I thank you very much for joining us and for providing us with your thoughts.

EL: Good to be with you again. And keep up the music.

RCA: All right. Thanks, Ed. Bye.

Mr. Gregg Rubinstein, Director of GAR Associates, Washington, DC, on Recent Changes at the Ministry of Defense

Finally, Gregg Rubinstein provides insights into the effect of both the cabinet reshuffle and the recent personnel changes on the operation of Japan's Ministry of Defense. A topic we hear very little about in either the Japanese or English language media.

RCA: Mr. Gregg Rubinstein, from Washington. Welcome, and thank you for joining us again today, on the Japan Considered Podcast.

GAR: Pleasure to join you, Bob.

RCA: I was hoping that today you could help us sort out the effects of the cabinet reshuffle earlier this week on the Ministry of Defense, and the Ministry’s mission. Do you think it will have any influence? Could you comment for us on that?

GAR: Well, my concern is not so much with the politics of the cabinet reshuffle. But the effect that recent events have had on realignment of key ministry personnel. And how that’s going to affect how the Ministry of Defense does its business.

As I thought about this, I see what’s happened to the Japan Defense Agency over the last fifty-some years, as we’ve known it. Transition ha d started. Maybe three or four years ago. There have been several stages.

First would be the adoption of the current so-called National Defense Program Guidelines, the so-called Kaigo, in 2004. That was a document that finally said, no, it’s not just about the defense of Japan. It’s about regional security as well. And joint operations, etc. And how we have to align ourselves and operate differently than we have since the fifties.

The second stage of that was the transition from JDA to the Japan Ministry of Defense. Giving them a somewhat greater say over budgeting and planning. As well higher standing. A little more clout within the Japanese government structure. We’ve talked about that in the past.

The third part, probably an on-going restructuring of JMOD organization that is going to have quite an impact on the way they organize themselves for both defense operations and defense acquisitions. As I say, that’s an on-going process. It started a couple of years ago. And it’s probably going to take another couple of years to shake out.

Okay. All well and good, so far. However, as many people long experienced in the ways of Japan and the bureaucracy, and particularly, the Defense bureaucracy, knows, none of this is going to make much sense without some significant shifts in key personnel as well. Otherwise you get the pouring of old wines into new bottles effect.

But, in fact, the real significance of what’s happened in the past couple of weeks with personnel shake-ups in JMOD is exactly that. The other shoe dropping on key Defense Ministry bureaucrats. 

When I say a new generation has come with the departure of Vice Minister Moriya and some of his cronies, it’s not like there’s been a clean, revolutionary sweep. The difference in age and seniority between the outgoing and the incoming groups in the key positions is really only a few years. But that few years is very critical in the way that these new officials look at the world.

This is the first group…. I’m speaking now of the new vice minister, Masuda Kohei, and some of the key bureau directors-general. They’re the first people who’ve been shaped as much, or more, by the post-Cold War as the Cold War system. They have substantially different views, I think, on the potential scope for Japanese defense operations. As well as cooperation with us. And interaction in multinational security activities. First of all, they more understand the need to depart from status-quo positions. And they are more willing to press the envelope to do so.

Now, the question is, how much of a benefit is all this for U.S.-Japan defense cooperation. And the like. Basically, from our point of view – the U.S. – getting Japan to do things we would still like them to ….

As you know, there’s a lot on the plate right now. Yes, this is the end of the Bush Administration. And there’s been a change of government in Japan. And this generally isn’t a time when you expect a lot of new initiatives. And, indeed, there aren’t a lot of new initiatives. But there’s still a big agenda out there on realignment of U.S. bases. Further defense planning. Host nation support matters. Japanese deployment in the Indian Ocean. Which have come under question, of course, in recent weeks.

I think you will find the Defense officials, on the one hand, more forthcoming, as far as international cooperation and working with the U.S. in regional security. But also more inclined to push back when they disagree. I think this is a point that some of my friends in the government have still not quite absorbed.

We have continued for many years to say that Japan must do more. But also at the same time, the unspoken half of that sentence is, … must do more. But also, continue to do what we want them to do. I think there’s been insufficient appreciation of the disconnect between those two ideas.

Well, I think it will become more clear in some of the dialogues we’re going to have with Masuda, Takamizawa, and Kanazawa generation of key Defense Ministry officials. Life is going to become more interesting, if less comfortable.

RCA: Well, let’s hope folks in Washington recognize that, and are able to work with the change.

GAR: Well, you know, it’s neither good nor bad. It is inevitable. And probably overdue. But there it is. The ice finally cracked after a long freeze.

RCA: How about the new minister? Any thoughts on him, specifically?

GAR: Komura is fairly well thought of here, from his previous exposure as foreign minister. And then he also was parliamentary vice minister at JDA about, I think, nine or ten years ago. The reading of him seems to be fairly good. But beyond that, no particular indication.

I think it’s going to be interesting to have that old Bouei-Zoku War Horse, Nukaga, in the Finance Minister’s position. That might be quite helpful as far as the Defense getting the nod on what, in any case, is going to be a very tight budget squeeze, this year and next.

RCA: I’ve seen that the annual budget trial balloons coming up from the Defense Ministry are quite large and colorful this time around. Maybe Minister Nukaga can facilitate that.

GAR: Well, there’s going to be a big reach-out. And then there’ll be the usual bureaucratic horse-trading and coordination over the next few months. And then somewhere in December they’re actually get down to serious business. And reach for that tenth of a percentage of whatever. And that, in this case, is going to make the difference between whether some programs go forward, or get delayed, or cut back. There really isn’t much more wiggle room.

And this, of course, is also going to impact the host nation support negotiations with the U.S. All of the money comes out of the same pot. 

RCA: All of this is helpful. Gregg, thank you very much for joining us again. I might mention that your interview on the Japan Considered Project website has become a very hot number. You’re getting a lot of reads.

GAR: Glad to hear it. Hopefully there’ll be some constructive feedback as well.

RCA: Well, I thank you for doing it. And as always, thank you for your support for the Podcast. I appreciate it.

GAR: My pleasure, Bob.

Concluding Comments

Well, there you have it. Three of the very best. All providing thoughtful and prudent commentary. Thanks to Dennis, Ed, and Gregg. We’re way over time again this week. But I hope you’ll agree, it’s been worth it.

Of course, the assessments and opinions of the commentators are their own, and do not necessarily reflect my assessments and opinions, or those of the Japan Considered Project.

Continue to send your comments directly to me at RobertCAngel@gmail.com. And also, any that you may have for our guest commentators. I’ll be sure they receive them. Thanks for tuning in. And

Goodbye All. Until next week.