Japan and East Asian Monetary Regionalism

Towards a Proactive Leadership Role?

Shigeko Hayashi

• Publisher: Routledge
• Year: 2006
• Print ISBN: 9780415365581
• eBook ISBN: 9781134215140
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Democracy
• Index: Politics & International Relations

Based on original fieldwork including interviews held with Japanese officials, this text provides important new insight into Japan and East Asian relations, principally through the close examination of changes in Japan's regional policy. Furthering discussions on Japan's new regional activism, Hayashi explores how Japan and East Asian relations have developed, how Japan's regional policy has changed, and why.

In addition, the book challenges conventional views on Japanese foreign policy, arguing that it is not reactive but incrementally effective. The book incorporates three major case studies that provide detailed narratives and analysis of Japan and Washington's diverging ideological approaches, Japan's policies towards the East Asian financial crisis, and its policies towards East Asian regionalism.

1 Introduction

The nature of Japan’s relationship with East Asian¹ countries has prompted a large volume of studies in the area of International Relations (IR) and International Political Economy (IPE). These studies argue that Japan has been reluctant to take the lead in the region for various reasons such as its colonial history and the special presence of the US in this region. Within this context, many studies have focused on Japan’s economic as opposed to political leadership in the region, leading to a great deal of books and articles on economic relations between Japan and its neighbouring countries. The more critical literature argues that Japan selfishly pursues its economic (and political) interests in a neo-mercantilistic way. A more benign view is that the increased inflow of Japanese private and public capital, specifically in the form of trade, investment and aid, has had a beneficial effect on the region’s economy, consequently raising Japan’s profile in East Asia.

Despite their significance, these studies on Japanese and East Asian relations have become increasingly inadequate and provide only a partial view, when considering what Japan has been doing in East Asia and what has been happening in the region especially since the 1990s. For one thing, East Asian relations, which tended to be characterised by informal regionalism or regionalisation, can no longer be considered merely as an economic process, and the region has gradually been experiencing a new phase of region building. We have observed since the late 1980s a significant increase in regional institutions that include East Asian countries, such as Asia Pacific Economic Cooperation (APEC), the ASEAN Regional Forum (ARF) and the Asia–Europe Meeting (ASEM). Also, since the late 1990s even an ‘East Asian only’ group, specifically referred to as ASEAN + 3 (China, Japan and South Korea), has been emerging. At the same time, Japan’s relations with the region have been changing. It has become increasingly apparent that Japan is politically more assertive and is willing to accept a greater regional role commensurate with its economic power. This change in Japanese policy has been occurring slowly throughout the last few decades, but is particularly noteworthy from the 1990s onwards.

What this book endeavours to do is to provide important new insights into Japanese and East Asian relations particularly through the close examination of the changes in Japan’s regional policy. To be sure, Japan’s new approach to regional matters has produced an increasing number of studies for the last decade. For instance, quite a few studies have pointed out the significance of Japan’s positive roles in Asia Pacific regionalism as well as brokering the Cambodian peace, as touched on in the next chapter. What this book tries to do is to advance further such discussions on Japan’s new regional activism: it approaches Japan’s recent regional policy by adding more new empirical evidence particularly on Japan’s East Asian, as opposed to Asia Pacific, policy and by more extensively exploring what has caused the shift in Japan’s regional policy.

This book puts this investigation into the larger context of the changes in Japanese foreign policy particularly after the end of the Cold War, bringing us to the discussions on the nature of Japanese foreign policy as a whole. In other words, Japan’s contemporary regional policy needs to be discussed from the broader perspective of the shift in Japanese foreign policy in general.

The nature of Japanese foreign policy has been the subject of academic controversy over the last few decades. Some claim that Japan does not have any strategy in its foreign relations and has failed to play a role commensurate with its economic power. They argue that Japan is just reacting to outside pressures, specifically from the US (Calder 1998: 517–41), or simply coping with international situations (Blaker 1993: 1–42). Worse, it is argued that Japan is not a sovereign state, i.e. ‘a state with central organs of government which can both recognise what is good for the country and bear ultimate responsibility for national decision-making’ (van Wolferen 1986/1987: 289). Additionally, Japanese leaders are thought to view the world through the prism of US–Japan relations, and thus the relationship with the US is seen as decisive for Japan’s other foreign relations, including its East Asian policy.

Others, however, hold quite opposite views, thinking Japanese foreign policy to be strategic, effective in achieving goals, and even aggressive, particularly in the area of foreign economic policy. While a large part of the negative thesis attributes, to a great extent, the ineffectiveness of the Japanese state in its foreign relations to its domestic political structures, the positive thesis considers that the strong bureaucracy and its network of political leadership and the private sector are the sources of its successful foreign policy. They argue that this system of ‘Japan Inc.’, which Chalmers Johnson depicted, in a more sophisticated formulation, as the capitalist ‘developmental’ state (Johnson 1982), has enabled Japan to achieve a number of objectives, including remarkable economic development and higher international status. This leads to the view that Japanese policymaking agents pursue their own agenda in accordance with the national interests, and East Asian policy is not necessarily the extension of US relations, although most scholars accept the strong influence of the US on Japanese foreign policy.

The wide divergence of views on Japanese foreign policy is indeed puzzling, and raises the question of how Japanese foreign policy can be best understood. The argument of this book is at odds with the negative thesis, as discussed throughout. However, the positive thesis also appears to be increasingly insufficient in explaining more recent Japanese foreign policy in that Japan has gradually become more interested in independent initiatives beyond the area of foreign economic policy, and, as touched on above, has shown more positive attitudes towards political (and even security) initiatives particularly in East Asia. It must also be noted that Japan has been increasingly trying to develop deeper relations with its neighbouring countries independent of the US, although this does not mean that Japan has been defying the US. It can be argued that, while its economic resources are still the main policy tool for Japan, it seems that Japan has shown its willingness to get out of the traditional pattern of ‘chequebook diplomacy’.

One reason for the negative concept of Japanese foreign policy is that most existing literature on this topic has neglected or underestimated an important characteristic of Japanese foreign policy, namely Japan’s quiet and gradual style of pursuing its policy agendas. This book argues that Japan has carried out its policies in a different style from what the dominant international relations literature usually expects: Japan has preferred to keep a low profile while quietly and incrementally carrying out its policies. Indeed, this style of Japanese foreign policy has been quite effective in realising policy goals, given the domestic, regional and international constraints. However, only a small number of studies have noted this important characteristic of Japanese foreign policy.² The book considers that neglecting, or underestimating, this has greatly contributed to misunderstandings over Japanese foreign policy.

Reflecting the above background, this book has two main objectives. First, it addresses the above inconsistent interpretations of Japanese foreign policy by presenting two arguments:

1. There has been an important shift in Japanese policy in the postwar period, from political minimalism to more initiative-taking politically, and even in the security area, independent of the US.
2. The quiet and incremental policy style is an important element to consider in the interpretation of Japanese foreign policy.

Second, along with this shift in Japan’s foreign policy in the postwar period, particularly in the last decade, the book provides significant insights into the development of Japanese and East Asian relations: it closely examines what Japan has been doing in the region and what has caused the shift in its regional policy.

The analyses of this book will be of great significance not only in the study of Japanese policy and politics but also in the areas of IR and IPE in general. Scholars in these fields tend not to take Japan’s weight as an actor in world politics seriously enough; however, neglecting the importance of Japan can lead to failures to analyse correctly important events in the international arena, particularly in East Asia. For instance, Japan’s role in the development of East Asian regionalism exemplifies the strong impact of Japanese policies, as detailed in the following chapters. One of the important reasons why East Asia has been behind in establishing a formal regional framework is that the region lacked political leadership: while Japan’s initiative was not welcome by regional countries, it was cautious of advancing such a mechanism, as seen in the case of the East Asian Economic Grouping (EAEG, later East Asian Economic Caucus or EAEC) proposal in the early 1990s, in which Japan’s ambiguous attitude was largely blamed for its failure. Of course, we cannot attribute the current development in East Asia only to Japan’s policy. Indeed, the East Asian financial crisis in 1997 and 1998 has greatly facilitated the process. However, the book would argue that the simultaneous emergence of East Asian regionalism and Japan’s growing political presence is more than coincidence. Behind such a development there is a long-term strategy of Japanese policymakers from the early 1990s. In a broader sense, Japan’s interests in regional cooperation go back to the 1960s, a history probably at the foundation of the recent development. In short, without a proper analysis of Japanese policy, it is not possible for us to understand what has been going on in the international arena, particularly in East Asia.

In addition to the main objectives above, three case studies – Japan and Washington’s diverging ideological approaches, Japan’s policies towards the East Asian financial crisis and towards East Asian regionalism – add significance to the book. They provide detailed narratives and analyses of Japan’s policies towards the important events in the 1990s, which deserve more scholarly scrutiny considering their great potential for offering insight into Japanese foreign policy.

The analysis of these case studies has been done on the basis of the author’s interviews with Japanese policymakers and intellectuals,³ together with documentary research. In particular, the author asked key individuals in the Japanese foreign policymaking circle what motivated them and what was intended in deciding particular policies. As we will see, these interviews greatly contributed not only to the analysis of the cases, but also to an understanding of the recent change in Japanese foreign policy as a whole. In addition, interviews were used to get behind the inconsistent information in newspapers, journals and other articles and to obtain accurate information about events. It was also helpful to ask for the subjective and objective views of those Japanese intellectuals concerned with Japan’s contemporary foreign policy in response to the events of the period.

The existing debates on the nature of Japanese foreign policy

In order to clarify the book’s arguments, namely an important shift in Japanese foreign policy during the postwar period and the style of Japanese foreign policy, it is useful to look at the existing debates on the nature of Japanese foreign policy in more detail. We critically examine the current debates from the two angles: whether Japanese foreign policy has been reactive or strategic; and whether Japan’s US relations are decisive for the rest of Japan’s foreign relations, including East Asian relations, or that East Asia has occupied a definite position in Japanese foreign policy. Subsequently, the arguments of the book are explained in a more specific way.

Japanese foreign policy as reactive or strategic?

Viewing Japanese foreign policy as minimal or even non-existent is still quite common not only among Japan specialists but also general readers. It is true that, for a couple of decades after the end of the Second World War, Japan put its diplomatic fate into the hands of the US so that it could focus on economic development. Its seikei bunri (the separation of politics from economics) policy was most conspicuous during that time, and Japan intentionally avoided becoming involved in complicated international diplomatic issues. However, a number of scholars see Japanese foreign policy as passive even after the 1970s, when Japan had risen as a great economic power.

Kent Calder presents Japan as a reactive state, arguing that this concept ‘merely maintains that the impetus to policy change is typically supplied by outside pressure, and that reaction prevails over strategy in the relatively narrow range of cases where the two come into conflict’(Calder 1988: 518). He associates this reactive nature with the domestic political structure in Japan, including the fragmented character of its domestic policymaking process and strong interest-group pressures. Calder concludes that external factors determine Japanese foreign policy under such domestic circumstances of policy immobilism, regardless of the interests of Japanese policymakers.

One of the problems with his discussion is that it is quite easy to find cases which contradict his claim. He stresses passivity in Japan’s foreign economic policy, whereas much literature notes the more positive and strategic nature of its policy compared with the political and security areas. In addition, some stress that even his evidence of Japan as a reactive state is not very convincing; namely, gaiatsu (foreign pressure), which Calder argues is the determinant of Japanese foreign economic policy, has not always worked effectively. Leonard Schoppa, in his analysis of US–Japan trade talks, shows that US pressure on Japan to bring about policy change produced widely varying results in terms of the Japanese government’s willingness to go along with US demands. He observes that gaiatsu is effective when it works through domestic politics: namely when it has domestic support inside Japan; when it can be arguably characterised as being in Japan’s national interest; when there is a domestic problem in search of a solution; and when it is legitimate and ratifiable (Schoppa 1997). In short, the point of Schoppa’s discussion is that international factors, specifically gaiatsu, could influence Japanese policy through domestic politics, but it could not automatically determine it, which contradicts Calder’s contention. In the same context, various articles in the edited volume by Akitoshi Miyashita and Yoichiro Sato stress the strategic nature of Japan’s foreign policy despite its numerous concessions to US requests, denying the proposition that Japan is just reacting (Miyashita and Sato 2001).

Like Calder, Michael Blaker denies the importance of strategic considerations in Japanese foreign policy when he describes this policy as minimalist or coping (he actually argues that Japan is trying to cope but unsuccessfully) (Blaker 1993: 1–42). By ‘coping’ he means that Japan is carefully assessing the international situation, methodically weighing and sorting out each alternative, waiting for the dust to settle on contentious issues, achieving domestic consensus and adapting to the existing situation with the fewest risks. In short, he sees Japanese foreign policy as being highly opportunistic. He is right in that Japan’s diplomacy was minimalist until recently, particularly in the security area. It seems also true that Japan’s diplomacy was not (perhaps still is not) very sophisticated tactically, which can be attributed to its deferring to the US in many political and security issues, thus sometimes failing to achieve sufficient objectives or missing opportunities to enhance national interests in some individual cases, as illustrated by his two case studies on Japan’s policies towards the third United Nations Law of the Sea Conference in the 1970s and the Gulf War in the early 1990s. However, many would disagree that this tactical inability of Japan’s diplomacy suggests a lack of strategy in Japanese foreign policy as a whole.

Donald Hellmann points out the contrast in policy across issue areas, arguing that Japan’s record on political-strategic decisions is as bad as its record on international economic policy is good, and ‘decision-making institutions have produced reactive, not active policies, regarding major political issues in foreign affairs’ (Hellmann 1988: 369). To him Japan is ‘more a trading company than a nationstate, a nation without a foreign policy in the usual sense of the word’ (Hellmann 1988: 358), and he attributes this limitation largely to Japan’s party politics, characterised by factional struggles, which gives Japanese prime ministers only limited power, together with relatively weak domestic institutions, like the National Defence Council (now the National Security Council) and the Japanese Defence Agency. Although Hellmann accepts the successful record of Japanese policy in the economic area, he does not entirely agree with analyses that credit that record exclusively to Japan’s domestic political economy, stressing the importance of the US-made international ‘greenhouse’ that allowed Japan to pursue its ‘neo-mercantilist’ policy. By arguing this, he, to a degree, downplays the strategic orientation of Japanese foreign policy even in the economic area.

On the other hand, there is some literature that emphasises the strategic character of Japanese foreign policy, particularly in the economic area. T.J. Pempel holds that for several decades following the Second World War Japanese foreign economic policy followed clearly defined and quite consistently executed objectives (Pempel 1977: 723–74). He argues that ‘the definition and implementation of foreign economic policy in Japan rests essentially on the domestic political structures of the country, particularly the strength of the state and its network of conservative support’ (Pempel 1977: 726). He does not neglect international forces, but considers that they are less important than domestic political factors in the shaping of Japanese foreign economic policy, and in some cases domestic forces ‘proved capable of explicitly resisting unwanted international pressures or of at least creatively manipulating such pressures’ (Pempel 1977: 759).

Likewise, Alan Rix, focusing on Japan’s trade policy, maintains the significance of its policy objectives in trade policymaking, arguing that Japan’s accommodating foreign pressures is not the automatic acceptance of them (Rix 1988: 297–324). He states that ‘international pressures are one (albeit highly significant) input to the domestic Japanese policy process’, and the ‘more important parameters of decision making are domestic: the long-term indicative objectives of government; the diversity of internal processes and the influence of the bureaucratic process itself on policy; and definitions of the national interest’ (Rix 1988: 314).

William Nester recognises the more aggressive nature of Japanese foreign economic policy. He is convinced that Japan is skilfully, successfully and singlemindedly securing its economic and political interests, and notes four Japanese foreign policy goals, namely economic and military security, rapid modernisation, acquiring great power status and world recognition of its accomplishments. These were pursued through state-led industrialisation and imperialism before the war and neo-mercantilism after the war (Nester 1990: 71–99). To him, Japanese foreign policy, particularly foreign economic policy, has been purposeful and shrewd, not passive.

Dennis Yasutomo also opposes the idea that the Japanese government is paralysed by policy immobilism and only reacts to external pressures purposelessly, neglecting its national interest (Yasutomo 1995). He accepts that Japanese policy is in a sense as reactive as other governments are, and ‘so much of Japan’s foreign policy is tailored to responding, either in anticipation or after-the-fact, to the expectations, hopes, and fears of foreign actors, both nation-state and non-nation-state’ (Yasutomo 1995: 188). However, he argues that his case studies about Japan’s multilateral bank policies and aid policies do not show that Japan is like a billiard ball, bouncing off the movement of others, and that Japan’s behaviour reveals a Japanese agenda, often pursued against the wishes of others. In short, what he stresses is that external stimuli provide the initial push, but ‘Japan then incorporates the stimuli into its own policy objectives and fashions a policy that may or may not respond directly to the intent or wishes of that stimuli’ (Yasutomo 1995: 188).

Furthermore, some scholars note that Japan has successfully advanced its agendas for its national interests but in a low-profile way. Ming Wan points out that what he calls Japan’s spending strategies has greatly benefited its national interests, arguing that the fact that Japan has not asserted itself in spending as much as expected does not mean that it does not make strategic choices (Wan 1995: 85–105). Also, as touched on earlier, some discuss that Japan’s economic power has successfully created its long-term influence in East Asia; a combination of private and public Japanese capital (trade, investment and aid) has gradually moulded a regional economic order favourable to Japan (Hatch and Yamamura 1996, Rix 1993a: 62–82 and Arase 1995). As discussed in the next chapter, the economic ties of Japan with East Asian countries have considerably strengthened since the 1980s. Such a development has been basically driven by the private sector, particularly through FDI, but government policy has also played a crucial role through aid or other measures to encourage private activity. Arase argues that the institutional structure of Japan’s overseas development assistance (ODA) policy reflects the role of the postwar Japanese state in guiding the private sector towards national developmental goals, and, while the private sector is not passive and has greatly benefited from the government’s ODA policy, ‘it is the state bureaucracy that holds the balance of power’ (Arase 1995: 247). Thus, according to them, Japanese foreign policy, specifically foreign economic policy, is very purposeful and skilfu...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Illustrations
• Acknowledgements
• Abbreviations
• Glossary of Japanese terms
• 1 Introduction
• 2 Historical review of Japan’s East Asian policy in the postwar period
• 3 The Washington Consensus versus the Japanese approach and implications for the East Asian financial crisis
• 4 Japanese policy towards the East Asian financial crisis
• 5 Japanese policy towards East Asian regionalism
• 6 The style of Japanese foreign policy
• 7 Conclusion
• Notes
• Bibliography