The US-Japan alliance in action: Threats
to thwart, opportunities to seize
Co-Hosted by the American Enterprise Institute (AEI) and the Japan
Institute of International Affairs (JIIA)(Summary*)

Date: 13 March 2013
Venue: American Enterprise Institute (AEI), Washington, DC*

JIIA is responsible for this summary.

Opening Remarks:
Mr. Yoshiji Nogami, Japan Institute of International Affairs
At the same time as a shift in economic gravity toward the Asia-Pacific region,
geopolitical tensions have been growing in the region. North Korea is threatening theregion and world with nuclear and missile development, and China is increasingly
nationalistic. Japan and the United States have responsibility and vital interests inpreserving open and rule-based security and political architecture which has served theregion well. It is important to look at the security landscape of the region and develop ashared understanding of the challenges we face. I hope this seminar will serve such
efforts.
Mr. Jim Zumwalt, US Department of StateI am fundamentally optimistic about U.S.-Japan relations. When Prime Minister Abe
visited Washington last month the leaders provided a vision for us and the responsibility
is now on us to realize that vision. The discussions focused on the four pillars of ourrelationship: 1) our security alliance, 2) our global partnership, 3) and mutually
beneficial economic relationship, and 4) our people to people exchanges.
The security alliance has been strong for 60 years because we share common interestsand values. The ability to station US forces in Japan enables the United States to play arole in securing regional peace and security. We have a lot of work ahead in realigning
our forces in Japan, but the fundamental goal is a strong and enduring alliance. I am
confident that because we share these objectives we will be able to work through thedifficult issues that we face.
Our global partnership is really remarkable. Japan is a part of the solution to many of
the issues we face. Virtually everyone in the State Department today sees a part of theirrole as working together with Japan.
In terms of economic ties, we have a strong vibrant relationship. Japan is an important
market for the United States, but also a source of investment, providing good jobs for
American workers.
The main reason I am fundamentally optimistic about the U.S.-Japan relationship is that
we have strong public support in both countries for strong relations.
Question-and-Answer Session

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Q: Yesterday, China announced that is planning to send a survey team to the Senkaku
Islands. Do you think this kind of action is legitimate? Also, do you see any sign ofJapan and China dealing with this issue with cooler heads?
Mr. Zumwalt: It is possible for countries to manage their territorial disputes and still
have a positive relationship. Troubles between Japan and China will have an impact
beyond the two countries, so we have been calling on both sides to make attempts to
reduce tensions and work to resolve this issue using peaceful means.
Q: Regarding Japan's military spending and consequent posture of engaging more
actively in alliances with the US around the world, how do you see that developing?
Mr. Zumwalt: Japan's military budget has declined for 10 years in a row so even with
the increase this year spending on defense is less than 10 years ago. Obviously we arevery interested in working together with Japan to strengthen our alliance, and I think
you will see new areas where we will be working together.
Mr. Nogami: In terms of cooler heads, Japan has always said that the door is open for
discussion, but it is extremely difficult to have coolheaded discussion when provocation
continues.
Q: What is your assessment of the Asia rebalance and what are the implications forJapan and Japanese foreign policy?
Mr. Nogami: I think the United States policy of Asia rebalancing is welcomed not only
by Japan but by many countries in the region. However, the allocation of resources by
the United States is essential in securing this policy orientation.
Q: When Prime Minister Abe visited the United States, many people were disinclined to
expect a positive outcome. How far you believe each side will need to go to bring Japan
formally into the TPP?
Mr. Nogami: Prime Minister Abe’s economic policy consists of three arrows: 1)
monetary and quantitative easing, 2) fiscal policy, and 3) structural policy. Joining the
TPP is seen as a litmus test for the Abe government to fully implement the third arrowof structural reform policy. I think it is therefore a matter of time before Prime Minister2

Abe announces Japan's determination to join the TPP, despite opposition within theparty.
Mr. Zumwalt: While most of the focus is on expanding export markets, there are threeareas where countries that participate in the TPP benefit. As well as market access, there
is also structural reform. Implementing trade liberalization requires difficult politicaldecisions about economic reforms that lead to greater economic growth. There is also
strategic value to Japan of seeing regional trade liberalization include the United States.
I think the Prime Minister is considering all of those aspects in making his decision on
TPP. The TPP would also be a much more meaningful agreement for the United Stateswith Japan in it.
Panel I: The challenges of the Asia-PacificModerator: Mr. Michael Auslin, AEI(1) Mr. Yusuke Anami, Tohoku University Graduate School
The rise of China exposes various challenges to the order of the Asia-Pacific region, butopinions among Japanese scholars are divided. One group believes that economic
development in China will continue and inevitably lead to development of the PLA
capabilities, allowing China to reshape the order of the Asia-Pacific region. This image
is widely shared by the Japanese media. Another group indicates that the governance of
the Chinese Communist Party is starting to crumble from the bottom and the major
challenge to the Asia-Pacific region will come from domestic turmoil within China.
More than 80% of the GDP of Shanghai is produced by state-owned enterprises, andstudies show that nearly 70% of the wealth of China belongs to the state rather than theprivate sector. The party controls all the major banks, industries and resources. This
concentration of wealth has allowed the CCP to strengthen the PLA to hedge domestic
and international pressure to democratize China, and also allowed the CCP to carry out
huge space and construction projects as well as the Olympic Games, boosting the imageof a rising China. However, this image has been established by sacrificing minimumsocial welfare for the Chinese people. This is no longer sustainable, with growing
frustration among the peasant classes. The fact that the budget for internal security
recently surpassed the publicly announced defense budget proves that China is sufferingfrom critical domestic instability. The Gini index in China is approaching 0.5, and thisextremely unequal situation is tearing the country apart.

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The CCP relied on xenophobic nationalism to distract the Chinese people from thisunfair reality of the Chinese society. The image of China under siege was recreatedthrough the media and education, mainly targeting Japan. Scholars in Japan warned thiswould not solve China's domestic problems, and would lead to worsening relations withJapan. This concern was shared by Hu Jintao and Wen Jiabao, who led the CCP from2004 until recently. China and Japan agreed on a “mutually beneficial relationship basedon common strategic interests,” but the negative influence of the xenophobic
nationalism built up since the 1990s prevented the joint development plan on natural
resources in the East China Sea from being realized. Since then the Senkaku Islands has
become a major issue. We now don’t know where to start to rebuild the strategic
relationship to solve these problems.
(2) Mr. Bruce Klingner, Heritage Foundation
I will focus my remarks on North Korea. There are many uncertainties regarding North
Korea, including their capabilities and objectives. The widespread depiction in the lastfew weeks has focused on North Korean statements outlining the threat of nuclear war.
We can point to precedent in that there are ongoing US-South Korean military exercises
which happen every March, and the attack on the Cheonan occurred in March.
Combined with recent breakthroughs in North Korean capabilities, one can be fairly
nervous. One concern is an increased risk of miscalculation and retaliation. Kim
Jong-un is less experienced than his predecessors and may stumble across a line that his
predecessors would have known to stop short of. Also the new president of South Korea
Park Geun-hye has made very clear that her policy of trust-politik is built on a pillar ofstrong deterrence, and she will respond forcibly to any attack. Even a limited response
could escalate to an all-out conflict.
(3) Mr. Tetsuo Kotani, Japan Institute of International Affairs
I am going to focus on maritime security issues, especially the Senkaku Islands
confrontation. China never claimed the ownership of the Senkaku Islands between 1895
and 1971. China's assertiveness over the Senkaku Islands started in 1992 when China
enacted the law on the territorial seas and included the Senkaku Islands, the Spratly
Islands, and other islands in the Western Pacific into Chinese territory. In 2010 China
enacted the islands protection law, under which all uninhabited islands are under state
ownership. The Japanese government purchased the islands to respond to China's
creeping expansion in the Western Pacific. In history, China has occasionally become
assertive in the West Pacific when the United States left Asia, but today China has
become assertive in the context of the US rebalancing, testing the US strategic position4

in Asia. This could be viewed as a strategic counteroffensive in order to become thedominant power in the region.
We have three future scenarios in Asia: 1) China continues to grow its military power
becoming the dominant power in the region with all countries in the region losing their
independence, 2) Japan, the US and other regional countries align to balance the rising
Chinese military power, and 3) Japan, the US and other regional countries welcome
China as a constructive and responsible partner and we all behave based on internationallaw. Our task is to guide China and the region into this third scenario. Prime Minister
Abe’s diplomacy is known as value-based diplomacy to realize the shared values in thisregion, and also establish a rule-based order in this region. Obviously the US in Japan
shares the same strategic goal of a liberal Asia, and to achieve this goal the twocountries need to collaborate closely.
Discussion
Q: We have seen China stretching the capabilities of the Japanese Coast Guard around
Senkaku Islands. Do you see a role for space and air based maritime domain awarenessto better coordinate Japanese responses and to include other allies in the region?
Mr. Kotani: The East China Sea is something of a blind spot for every country, but
Japan and the US have relatively good situational awareness there. Space and also
UAVs are very important assets for us to increase our maritime domain awareness.
Q: With regard to the different schools of thought on the future of China, where is thecenter of gravity among Japanese academics, and which scenario is more difficult tohandle?
Mr. Anami: There is still a serious divide among the scholars. People are finallybecoming aware that the current economic system is unsustainable. However, mostacademics think that the Communist Party will manage the situation and continue toexpand their influence. A rising stable China is definitely easier for us to handle. If theCommunist Party loses control of the society that is bad news for the entire world. It is a
big irony that we need to support the Communist Party although they have different
values to us.

5Q: Three days ago the New York Times reported that South Korea is discussing having
nuclear weapons of its own. What are your thoughts on a potential nuclear arms race in
Korea?
Mr. Klingner: I can understand the idea that pursuing nuclear weapons would not trigger
an arms race because China and North Korea already have nuclear weapons, and I canalso understand the concern in South Korea with OPCON Transfer in 2015 that there
will be reduced operational support and capabilities. However, I do not think it would
be useful for Korea or Japan to pursue nuclear weapons. Instead, South Korea should
devote resources to its response capability to conventional attacks from North Korea.
The US is committed to defending its allies through all necessary means.
Q: Would it make sense to get China to cooperate in having the International Court ofJustice address the issue of the Senkaku Islands?
Mr. Kotani: If China is willing to bring the case to the ICJ, of course Japan will accept
this challenge.
Q: How do the US authorities view China's position toward North Korean provocation?
And how you see the second term of the Obama administration’s policy towards North
Korea?
Mr. Klingner: The Chinese attitude towards North Korea is divided. There is increasing
criticism towards North Korea, but we have seen that China has been more part of the
problem than part of the solution, by being obstructionist in the UN Security Council,
and failing to implement its resolutions. Regarding the second Obama Administration
policy, the big question is what impact John Kerry will have. Mr. Kerry was eager toengage North Korea in the past, but he may be less enthusiastic than in the past, and hemay face internal opposition.
Q: Can you elaborate on how the US government can bring in North Korea to the right
direction?
Mr. Klingner: A three track policy is required. A combination of conditional engagement
offers, a more comprehensive approach to punitive measures, and sufficient military
measures.

6Panel II: The US-Japan alliance in East and Southeast Asia
Moderator: Mr. Hideki Asari, Japan Institute for International Affairs(1) Mr. Ely Ratner, Center for New American Security
The topic of how the United States and Japan are going to cooperate more broadly inthe region is timely for a number of reasons. The United States is facing resource
constraints, forcing US strategists to think about how to leverage the abilities of allies
and partners. A heightened security environment is demanding that we think morecreatively about the reach of the Alliance. And Japan is currently showing willingness toplay a more active role in the region. The countries that the US and Japan reach out toshould not be limited to a small number, as excluding partners would not be productive.
Also, if the efforts are perceived simply as a balance against China, they will receive
pushback.
On the military side, there are many ways that the US can move beyond a hub andspoke model. First is building cooperation among regional partners, with more capablecountries contributing capacity in intelligence, surveillance and reconnaissance (ISR) as
well as missile defense. It is also interesting to think about how the United States can
support Japan's relationships in the region, as a more diversified set of strategic partners
complicates the decision-making of potential adversaries, having a stabilizing effect.
Fully regional efforts in humanitarian assistance, disaster relief, and intelligence sharing
are also important.
On the economic side, for the United States commitment to be enduring and sustainable,
there has to be a stronger economic element, and if Japan believes as others do that theUnited States should have a stronger economic role in the region, then the TPP plays animportant part in that.
On the political issue, I think it would be more effective for Japan to cast the challenge
from China as part of a broader set of issues related to regional security rather than abilateral issue, working through regional institutions and with key countries in theregion, as well as key outside players.
(2) Mr. Yukio Okamoto, Massachusetts Institute of Technology
This region faces a dynamic evolution, with significant growth potential in many
countries with growing populations. The growth prospects of China are both anopportunity for the world as well as a big challenge due to its sheer size. Looking at the7per capita GDP of China tells you how much growth potential they have, as it iscurrently that of Japan in 1976. Given that China has 11 times the population of Japan,
we are seeing 11 Japans of 1976 today. That is a mighty challenge. We really have to
induce China into observing international rules and abide by strong environmental
protection.
However, the biggest instability is on the security side. My personal view of the
Senkaku Islands issue is that it will get more serious, because of the long-term maritime
strategy formulated around 1987, to gain military control of the South China Sea andEast China Sea by around 2010. However, now they are moving into the second phaseof the long-term naval strategy to have A2/AD capability in the Pacific Ocean facing
Japan. Originally, the main purpose of this was to be able to attack Taiwan from the east,
but now it is more for maritime resources in the region and sea lines of communication.
In line with this the Senkaku Islands have gained much more importance, sitting at the
gateway for China to the Pacific Ocean. Therefore China aims to seize it, or at least to
neutralize it. There can be no hope for an improvement in the situation until a change ofthe leadership to a new generation with a more enlightened view about theirinternational position. Until then we have to rely on the deterrence of the Japan-US
security system.
Japan must try to do more in order to become a real ally for the United States. The main
problem is a lack of action by the administration. I hope that things will start to change
under Prime Minister Abe.
(3) Mr. Ernie Bower, Center for Strategic and International Studies
From the Southeast Asia perspective the US-Japan alliance is underutilized. The
Southeast Asian nations would like to see a balance to a rising China, despite
welcoming the rise of China, as there are questions about China’s ambitions. For the
US-Japan alliance there are immediate opportunities for regional cooperation instrengthening ASEAN connectivity, in the South China Sea, and in several other areas.
Southeast Asian countries question whether the US rebalancing will be sustained. The
US was already present and will continue to be present on the military and security front,
as well as in business interests. What is missing is a political commitment to Asia, andto realize this, American politicians must talk about why Asia is important to Americans.
The United States and Japan need to cooperate on strengthening Myanmar,

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strengthening the ASEAN Secretariat, and ASEAN connectivity. Japan is a stronger allyof the United States if it is a stronger partner of ASEAN, and the reverse is also true.
Discussion
Q: I get a sense in ASEAN regional forums on security issues that there is a hesitanceamong ASEAN countries against pushing forward with cooperation on security issues incase this provokes China. What are your thoughts on that? Is there a security
architecture that will come out in the next decade or are we going to have to manage a
web of relationships?
Mr. Bower: It will be both delicate work at the country level at the same time asbuilding the architecture. The framework for the architecture is in place. The ASEAN
Defence Ministers Meeting Plus (ADMM-Plus) is very important. Over time asignificant pattern of coordination will be built.
Q: It seems that over the last 20 to 30 years there has been a naval race between Japanand South Korea. Would it not be better to overcome any differences and talk about a
US-Japan-South Korea alliance instead?
Mr. Okamoto: The history between South Korea and Japan is a very touchy subject. I
hope that there can be discussions to agree on a complementary nature of our arsenal.
Mr. Asari: Very few people think that there is a Japan-South Korea naval race. The
issue of Takeshima is very different from the event in the East China Sea. There is aterritorial dispute, but Japan never challenges this with physical force.
Mr. Ratner: Obviously it is in the interests of the United States to see Japan and South
Korea cooperating. It can be frustrating because the strategic logic for the cooperation isso strong, thinking about the North Korea challenge.
Q: Like Japan, Australia’s largest trading partner is now China, and Australia has asecurity agreement with the United States. Japan is also coming closer to Australia.
How do you view this triangular security cooperation?
Mr. Bower: I think that describing structures that exclude China is not possible. China's
economic growth and prosperity and feeling of security is important to every one of us.
At some point the Chinese will understand that their actions in the South China Sea and9the Senkaku Islands are undercutting their own national interests. In describing
structures that exclude China I am concerned that we might continue to provoke theChinese into doing things that are counter-productive for themselves and for all of us.
Closing Comments:
Mr. Yoshiji Nogami, Japan Institute of International Affairs
I think that this kind of exchange is extremely important. There are many topics that we
did not have time to cover, and there is still a huge task ahead of us in developing ashared understanding of the challenges that we are facing today, so we would like tocontinue this kind of exercise.

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