March 2013

Japan Center for International Exchange

A Reset for East Asia:
Managing Risks Under New Leadership
Hitoshi Tanaka, Senior Fellow, JCIE

Looking at East Asia through Japan’s eyes, there
are a number of challenges that, if not managed carefully, risk spoiling the future stability and prosperity of Japan and the entire region. Four challenges inparticular stand out: the North Korean nuclear threat;
Japan-China tensions surrounding the Senkaku
Islands; Japan–South Korea relations, which further
deteriorated after former South Korean President Lee
Myung-bak’s visit to Takeshima; and the need to reinvigorate Japan’s politics and economy.
The urgency of these challenges is amplified
by a number of key regional trends. First, leadersin North Korea, the United States, China, SouthKorea, and then Japan have newly come into officeor been re-elected in the past several months. This
presents new opportunities for resetting relations
with fresh policy approaches and cooperation. But
on the other hand, once the honeymoon periods
fade, there is the risk that leaders will be tempted toact against regional interests for short-term domestic popularity gains.

Second, nationalist frustrations have surged acrossthe region, magnifying the risk that narrow nationalist
interests will take precedence over regional ones.
Third, the balance of power in the region is continuing to shift as emerging economies such as China,
India, and many ASEAN countries post rapid economic growth and increase their military spending.
Managing the shifting balance of power—so as tomaintain and strengthen regional peace and prosperity—is difficult enough given the inherent instability
that accompanies power shifts and the troubles involved in coordinating complex global issues among
an increasing number of geopolitically important
stakeholders. And in the context of domestic politics
and surging nationalism, this gargantuan task is evenfurther complicated.

The North Korean Nuclear Threat
With the transfer of power to Kim Jong-un just overa year ago, there was some hope that he would chart a
course for reform and opening. Two rocket launches

last year and a third nuclear test in February haveall but killed any such hopes. Earlier optimism arosefrom signs that Kim Jong-un was changing North
Korea’s power structure. While his father, KimJong-il, preferred to rule by centering power in themilitary, Kim Jong-un has gradually worked to reassert the Workers’ Party of Korea’s control over themilitary. But rather than being a sign of Kim Jongun’s strength, this may be an indication that he is notconfident in his own ability to control the militaryor keep his grip on power in the face of a serious
challenge from military elites. Indeed, such changes
to the power structure appear to have increased theneed to placate military demands and continue pastpatterns of military adventurist behavior. Thus North
Korea is likely to continue to try to strengthen its
military capabilities and negotiating leverage. Thisapproach may be based on North Korea’s belief thatits nuclear weapons and delivery systems serve as
an important deterrent and the feeling that it needs
to prove the credibility of its nuclear weapons andlaunching devices, which are now said to be able tostrike the US mainland. Military strengthening may
also be a tactic for seeking external assistance, suchas through diplomatic blackmail to prop up its faltering economy.
The big question going forward is how to deal with
the North Korean nuclear threat. As has been discussed in previous issues of East Asia Insights, there
is an urgent need for policy consistency among relevant nations, in particular strong economic sanctions
measures through UN Security Council resolutions,contingency planning in case North Korea launches
adventurist military provocations, and ultimately, a
diplomatically negotiated comprehensive settlement.
Also crucially, negotiations must be conducted with
North Korea’s true power center and not necessarily
its Ministry of Foreign Affairs.
Recently, great attention has been focused on theneed for policy consistency among nations and therole of China. While Japan, South Korea, and theUnited States look poised to push for tougher sanctions, the efficacy of sanctions can only be realized
if all nations apply them. Most crucially, this means
EAST ASIA INSIGHTS

persuading China to implement sanctions effectively
and use its economic leverage over North Korea.
There are some signs that the Chinese leadership islosing patience with North Korea, and China agreed
to increase the severity of sanctions in the latest UNresolution against North Korea after the December
rocket launch. Moreover, China lost face after it publicly warned North Korea against going ahead with
its third nuclear test. But whether the balance has
actually been tipped among China’s foreign policy
makers—away from the fear of refugee flows and theconcept of North Korea as a buffer state and toward
the realization that failure to punish North Korea isseriously damaging China’s international credibility
and regional stability—remains unclear.
To this end, Japan, South Korea, and the UnitedStates must present a clear and united message thatChina’s refusal to adequately enforce sanctions against
North Korea will have seriously negative ramifications beyond affairs on the Korean Peninsula. In theworst-case scenario, China risks losing its place as acredible stakeholder in the region. How the new leadership under Xi Jinping will react over the next few
months will provide a litmus test as to whether a coordinated approach can be forged. Ultimately, withoutcoordination between the other five Six Party Talks
members (China, Japan, Russia, South Korea, and theUnited States) vis-à-vis North Korea, the current pattern of negative relations between North Korea andthe outside world will continue its downward spiral.

The Senkaku Islands and Japan-China
Relations
Another serious challenge to the stability of East Asia
is the tension between Japan and China surrounding the Senkaku Islands. The situation has become
particularly dangerous as both sides are adopting
increasingly stubborn postures. Prior to 2010, China
maintained a relatively low-key posture toward theislands, but now it is taking a much more aggressive
approach. Whereas China previously took the stancethat Japan should merely acknowledge that there
is a territorial dispute over what it calls the Diaoyu
Islands, it now seems to be going a step further by2March 2013

sending ships and planes in ever greater numbers into
the vicinity of the islands in what appears to be a bid
to test Japan’s resolve and establish the perception in
the international community that China and Japan
exercise joint control over the territory, rather than
the status quo view that Japan exercises effective control. Of particular concern was a recent incident inwhich a Chinese naval frigate locked its fire-control
radar onto a Japanese ship putting the two countries
precariously close to exchanging fire for the first timein the postwar era.
Looking at Japan, the administration of the newPrime Minister Shinzo Abe is often seen as a clear
example of Japan’s increasing rightward ideological shift. Moreover, after the incident in late 2010 inwhich a Chinese fishing boat rammed a Japanese
Coast Guard ship, Japan was perceived as weak forbowing to Chinese demands to release the fishingboat captain. China used its economic power to pressure Japan, suspending rare earth exports and arresting four China-based Japanese employees of Fujita
corporation. If Japan were to bend to Chinese pressure again, it would set a highly negative precedentand embolden China to continue to use such coercive
methods of diplomacy.
Given the current flare up in tensions, and theunlikelihood that either side will back down, the potential for even a small mistake to lead to violent conflict is far too high. Resolving the issue in the shortterm may be unrealistic, but there is an urgent needto calm tensions and manage the issue carefully toprevent it from negatively affecting the Japan-China
bilateral relationship and regional stability. An excessively narrow framing of the Japan-China relationship focused on the Senkakus is counterproductive.
It should be remembered that the impact of thesesquabbles between neighbors—the second and thirdlargest economies in the world—has regional andglobal ramifications as disruptions ripple along production chains. Moreover, in order to cool public
sentiments, reaffirm the importance of the bilateralrelationship, and increase mutual trust, Japan andChina should increase their cooperative efforts toward breakthroughs on the China-Japan-ROK and
EAST ASIA INSIGHTS

the Regional Comprehensive Economic Partnership(RCEP) free trade negotiations. Efforts should also be
increased for the establishment of an official ChinaJapan-US trilateral forum with a 2+2+2 framework—
including both foreign and defense ministers fromeach of the three countries—that includes discussions
on increased confidence building measures, transparency, and joint operations for search and rescue andnatural disasters.

Territorial Issues, Comfort Women, andJapan-ROK Relations
A third challenge to regional stability is the fallout
from former South Korean President Lee Myungbak’s Takeshima visit, which stirred Japan-ROK tensions and reopened historical wounds. Both the new
South Korean President Park Geun-hye and Prime
Minister Abe have recognized the need for cooperative Japan-ROK relations and appear to be moving
cautiously in that direction. But the territorial dispute
over the Takeshima Islets, which Korea calls Dokdo,
and disagreements over historical disputes and particularly the comfort women issue, still have the potential to upset the reemerging cooperative mood if
not managed carefully.
Similar to the dispute over the Senkakus, resolving
the Takeshima dispute over the short term may not berealistic, as neither side is willing to drop its claim. But
it is important that it is managed in a calm way so as
to not affect substantive areas of cooperation. To thisend, South Korean nationalism—rooted in anti-Japanese attitudes from the colonial era—and Japanesenationalism—keen to break out of its postwar pacifist constraints—must not be unnecessarily inflamed.
Politicians on both sides must understand the severity of the long-term damage to regional stability that
exploiting territorial disputes for short-term gains
does. Visits to the islets, such as by Lee Myung-bak
last August, or the proposed holding of a Takeshima
Day event by the Japanese central government mustbe jettisoned as a mode of domestic political gain.
Regarding historical disputes and the comfort
women issue, there are people inside the new Japanesecabinet and surrounding Prime Minister Abe with3March 2013

strong views against the 1993 statement by then Chief
Cabinet Secretary Yohei Kono, apologizing for andrecognizing the role of the Japanese military in forcibly recruiting some of the comfort women, and the1995 Murayama statement apologizing for Japan’s wartime actions. These statements have been in place as
official Japanese government positions for nearly twodecades, and the Abe administration should not underestimate the likelihood that any attempts to change
them will have severely negative effects on Japan’s relations with South Korea, Asia more broadly, and theUnited States and its Asian-American communities.
The stakes of Japan-ROK cooperation are high.
Given South Korea’s stunning economic development
and democratization, the bilateral dynamic shouldbe transitioning toward a strategic partnership between two democracies, rather than being mired inhistorical and territorial disputes. In addition to theimportance of bilateral ties for both countries’ economies, as the region’s two most economically advanced
democracies, Japan and South Korea must act as regional leaders and cooperate to shape the evolution of
the region toward a stable and prosperous rules-basedorder as the balance of power continues to shift. Also,in order to effectively address the North Korean question, intensive cooperation between the two nations
is indispensable.

enough base to push through more substantial economic reform. In particular, in order to really boost
economic growth, there is a need to deregulate inefficient sectors of the economy such as agriculture.
This prospect, however, is unlikely to go down wellwith many LDP Diet members, as changes in agriculture policy will affect their core constituents. On theother hand, failure to move strongly to address Japan’s
economic situation will lead to an unstable financial
situation, negatively affect Japan’s international credibility, and hinder its ability to participate in regional
free trade negotiations such as the Trans-PacificPartnership, the China-Japan-ROK free trade agreement, and the RCEP.
An Upper House election victory for the LDP may
also embolden the Abe administration to prioritize
more hawkish foreign policy objectives on sensitive
questions. This includes issues such as revision of theconstitution’s Article 9 peace clause, recognition ofJapan’s right to exercise collective self-defense, and efforts to get tougher on China over the Senkaku Islands.
However, moving boldly and quickly on such sensitive questions is likely to undermine Japan’s relationswith its Asian neighbors, and this in turn will negatively affect Japan’s economy, too. While Japan needs
to conduct open and frank domestic debates about
these issues, it is important that potential changes are
implemented with sensitivity to its Asian neighbors,
given Japan’s history of aggression, and that changes
are based on liberal internationalist strategic considerations, not nationalist motives.

Revitalizing Japan’s Politics and Economy
A fourth challenge to regional stability is the revitalization of Japan’s politics and economy. Japan’s ability
to help promote a stable and peaceful liberal regional
order depends on its economic dynamism and its relations with other countries in Asia. With a debt-toGDP ratio of nearly 200 percent, Japan can ill afford
further prolonged inaction and stagnation. In theshort term, until the Upper House election scheduled for July, the Abe administration is likely to focus predominantly on the objective of revitalizing theJapanese economy. But beyond the election, there is a
crucial need for more stable governance and a boosting of economic growth. If the Liberal Democratic
Party (LDP) wins the election as predicted, and thus
gains a majority in both houses, it should have a stable
EAST ASIA INSIGHTS◆ ◆ ◆It is no secret that Japan is facing multiple tricky challenges in East Asia today, and resetting regional relations will require careful management of these issues
both domestically and internationally. The North
Korean nuclear threat, the Senkaku Islands issues between Japan and China, the Takeshima and other historical disputes between Japan and South Korea, andJapan’s stagnating economy and volatile domestic politics are all threats to Japan and the region as a whole.
The need to address these challenges to regional stability is even more urgent than it otherwise would be4

March 2013

given current regional trends. Intensifying nationalist
tendencies across East Asia and the temptation for national leaders to look inward and focus on domestic
issues makes solving these challenges increasingly difficult. However, given the need to manage the shifting balance of regional power and emerging complex
regional and global problems that cannot be solved
by any single nation, it is crucial that national goals
are aligned with, rather than undermining, regional

cooperation and goals. Making certain that efforts togarner short-term domestic political advantage do
not derail long-term regional goals is the key to a successful reset for East Asia.
Hitoshi Tanaka is a senior fellow at JCIE and chairmanof the Institute for International Strategy at the Japan
Research Institute, Ltd. He previously served as Japan’s
deputy minister for foreign affairs.

East Asia Insights
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from the Japanese perspective.
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EAST ASIA INSIGHTS

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5© 2013 Japan Center for International Exchange

March 2013