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No. 33 — August 27, 1999

 

Feature Article

MOUNTING ANXIETY OVER NORTH KOREAN SECURITY THREAT FUELS DEFENSE DEBATE IN JAPAN by Barbara Wanner

Summary

Increasing concern over signs that North Korea may test a next-generation long-range missile, the Taepodong-2, barely a year following the overflight of its Taepodong-1 rocket and just five months after Pyongyang dispatched spy ships to Japanese waters has dramatically changed the security focus in Tokyo. More than 50 years of often-reluctant debate on the nation's defense role had yielded only incremental changes in Japan's military mind-set. During the past year, however, policymakers have pushed various bills, explored strategy options and taken actions aimed at enhancing Japan's ability to respond to a potential regional threat.

In particular, lawmakers passed legislation implementing the September 1997 guidelines for U.S.-Japan defense cooperation, a blueprint aimed at dealing with regional contingencies. Furthermore, the cabinet of Prime Minister Keizo Obuchi not only quickly ordered the Maritime Self-Defense Force's pursuit last March of the intruding North Korean vessels but also approved in short order a new operational plan to deal more effectively with future incursions. The government also green-lighted a project on joint technical research for a U.S.-proposed antiballistic missile shield and committed the nation to launching four intelligence satellites by the end of FY 2002.

Most notable, according to many experts, was the late July enactment of a bill authorizing the establishment of special panels in both Diet houses to review the constitution's strictures on Japan's defense role. Since 1945, successive governments have interpreted Article IX, the so-called war-renouncing clause, as barring SDF participation in collective defense activities. Analysts on both sides of the Pacific have attributed Japan's reluctance to assume more responsibility for national and regional security to Tokyo's die-hard adherence to this reading of the constitution and to the public's staunch pacifism. Although the two legislative groups are expected to deliberate the highly sensitive constitutional issue for years, some observers see in the Diet's action the emergence of a more hawkish body politic.

Other knowledgeable sources object to this sort of blanket assessment. They admit that events in Northeast Asia have broadened public awareness of the dangers lurking in Japan's backyard and have given greater impetus to defense-related initiatives. However, deeply embedded attitudes, domestic political maneuvering and budgetary constraints will continue to temper the consideration of policies or legislation deviating too sharply from the nation's postwar pacifist tradition. So, too, will pressure from the United States and South Korea, both of which want Japan's continued close cooperation in developing and implementing a common strategy toward North Korea.

Virtually every defense expert concurs that the budding national security debate is necessary to effectively chart Japan's military course in the highly uncertain post-Cold War environment. They quickly add, however, that the public discussion must yield more sophisticated strategic thinking. In this view, policymakers are so preoccupied with developing the "right" response to Pyongyang's actual and threatened missile launches that they are unduly limiting the examination of options. If Japan wants to realize its regional leadership goals, Tokyo must do more to safeguard Northeast Asian stability than simply sanction Pyongyang for testing missiles.

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Weekly Review

PROPOSED THREE-WAY BANK MERGER IGNITES CONSOLIDATION FEVER by Jon Choy

Executives of Dai-Ichi Kangyo Bank, Ltd., Fuji Bank, Ltd. and Industrial Bank of Japan, Ltd. stunned their domestic competitors August 19 when they confirmed to reporters that the three banks were negotiating to create a holding company that would bring them under one roof. If the merger is completed as envisioned in the fall of 2000, the resulting megabank will be the world's biggest in terms of assets. Moreover, because of the prospective partners' existing tie-ups, the holding company likely will encompass trust banking and insurance operations; thus, it will be able to provide all the financial needs of its clients. Government officials and analysts in Japan praised the pending combination, saying that it not only would help the three remain competitive in the international banking arena but also would trigger further consolidation in the Japanese industry. Foreign observers also gave the plan the thumbs-up. However, they were less confident that the merger would live up to its potential.

 

BANK LENDING IN JAPAN DECLINES AT RECORD PACE: TIME FOR GLOOM OR CHEERS? by Arthur J. Alexander

The headlines were unambiguous in reporting that Japanese bank lending in July was a record-breaking 6.1 percent lower than a year earlier. Closer analysis suggests, however, that developments in Japan's financial structure and big, onetime changes in loan portfolios largely account for the downward trend in lending since late 1998. In addition, smaller loan volumes would be consistent with a more profit-oriented approach to lending and borrowing by banks and businesses in Japan.

 

UNITED STATES, JAPAN INK ACCORD ON TMD RESEARCH by Barbara Wanner

The United States and Japan signed a memorandum of understanding August 16 governing joint research on a U.S.-proposed, sea-based theater missile defense system. Although the accord received minimal media coverage, the groundbreaking transpacific agreement to develop an advanced antiballistic missile shield is an important by-product of the Pentagon's 16-year effort to foster greater U.S.-Japan armaments cooperation and two-way defense technology exchanges. Some experts suggest that joint TMD research has the potential to bring the United States and Japan to the cutting edge of what the Pentagon predicts will be a "revolution in military affairs." This phrase describes an approach to strategic planning governed by the sophisticated integration of communications systems, intelligence satellites, sensors and other high technology tools.

 

JAPAN PLEDGED AID FOR IRAN, TURKEY by Marc Castellano

Tokyo will provide ¥7.5 billion ($62.5 million at ¥120=$1.00) in low-interest, extended-repayment loans to Iran, resuming government-to-government financial assistance that has been frozen since 1993 due to objections from Washington. The government also has earmarked ¥41.8 million ($348,300) for infrastructure projects in Turkey. In addition, it committed $1 million for emergency aid to Ankara, which is struggling to deal with the aftermath of an August 17 earthquake that killed at least 13,000 people and perhaps many more and that caused widespread structural damage. Foreign Minister Masahiko Komura concluded these agreements during an August 16-22 trip to Iran and Turkey as well as to Austria.

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