NO. 33 &emdash; August 29, 1997


Feature Article


Given its central role in economic activity, it is not surprising that Japan's energy sector &emdash; along with agriculture and finance &emdash; has been one of the three most tightly regulated areas of the economy in the post-World War II era. Ensuring stable and secure energy supplies became a national obsession after the first global oil crisis in the early 1970s. Development of nuclear energy and promotion of conservation were the twin thrusts of Tokyo's drive. While the government has made great strides in these two areas, several changes in international political and economic conditions have eased Japanese worries about energy security. Of growing concern today is how Japan can adapt to the changing global environment.

Tokyo now considers deregulation a key to future economic success. It is waving this "magic wand" over areas once considered taboo, including the energy sector. After five decades of being cosseted, however, Japanese energy firms are having difficulty making the adjustments in attitudes and operations needed to survive in a deregulated business world. The door is opening for more aggressive and agile foreign and domestic competitors. In fact, the restructuring of Japan's energy sector already is underway.


Weekly Review

Blueprint Developed For Administrative Reform by Jon Choy

Prime Minister Ryutaro Hashimoto led the government's Administrative Reform Council through four days of intensive discussions in late August, seeking a consensus not only on how to restructure and streamline the bureaucracy but also on how to overhaul the policymaking process. The council &emdash; composed of 13 experts from the academic, news media and business worlds, plus Mr. Hashimoto and Kabun Muto, head of the Management and Coordination Agency &emdash; came up with a plan to reshuffle by the start of the year 2001 the current 21 ministries and agencies into at most 11 ministries and a Cabinet Office.


Japan's Labor Market Improves Slowly From Recession by Douglas Ostrom

Experts agree that official data regarding the Japanese labor market paint a distorted picture of employment conditions, but they disagree as to whether the situation is better or worse than depicted. This question has gained increased importance in 1997 since workers' incomes increasingly have come to be seen as the key to higher consumer spending and, in turn, faster economic growth.


Japan, North Korea Appear To Turn Corner In Troubled Relations by Barbara Wanner

After a five-year deep freeze, Japan's relations with North Korea may warm up a bit following productive August 21-22 talks in Beijing between diplomats representing Tokyo and Pyongyang. The discussions frequently were marked by discord that threatened to rupture again the two countries' never-easy rapport. Nonetheless, the negotiating efforts of Kunihiko Makita, deputy director general of the Ministry of Foreign Affairs' Asian Affairs Bureau, and his North Korean counterpart, Kim Ryon Gil, yielded breakthroughs on three important issues: the right of Japanese women married to North Koreans to return to Japan for visits; Japan's provision of food assistance to the isolated, Stalinist country; and the resumption of bilateral negotiations to establish formal diplomatic ties between Tokyo and Pyongyang. Longtime observers of Japanese-North Korean relations are only cautiously optimistic about the outlook for the bilateral relationship, however, pointing to the unpredictability of the Pyongyang regime and Tokyo's deep-seated distrust of its neighbor.


Israel's Netanyahu Asks For Japanese Investment by Eric Altbach

Israeli Prime Minister Benjamin Netanyahu, in Tokyo August 24 through August 27 for talks with political and business leaders, encouraged corporate Japan to increase investments in Israel, especially in high technology fields. He also called on Tokyo to "take a leading role" in building peace in the Middle East by helping to finance a reliable water supply system for Israel and its neighbors. However, the discussions of trade and investment as well as economic cooperation between Japan and Israel were tempered by the recent breakdown of the Middle East peace process and concerns over terrorism.




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