SPECIAL REPORT 

tial Asian relationship.

The study group consisted of Richard L.

Armitage, Armitage and Associates; Dan E.

Bob, Office of Senator William V. Roth, Jr.;

Kurt M. Campbell, Center for Strategic and

International Studies; Michael J. Green,

Council on Foreign Relations; Kent M.

Harrington, Harrington Group LLC; Frank

Jannuzi, Minority Staff, Senate Foreign

Relations Committee; James A. Kelly, Pacific

Forum, Center for Strategic and International

Studies; Edward J. Lincoln, Brookings

Institution; Robert A. Manning, Council on

Foreign Relations; Kevin G. Nealer, Scowcroft

Group; Joseph S. Nye, Jr., JFK School of

Government, Harvard University; Torkel L.

Patterson, GeoInSight; James J. Przystup,

Institute for National Strategic Studies,

National Defense University; Robin H.

Sakoda, Sakoda Associates; Barbara P.

Wanner, French and Company; and Paul D.

Wolfowitz, Paul H. Nitze School of Advanced

International Studies, The Johns Hopkins

University.

the region are demonstrating the universal

appeal of democratic values. China is facing

momentous social and economic changes, the

consequences of which are not yet clear.

Major war in Europe is inconceivable for

at least a generation, but the prospects for

conflict in Asia are far from remote. The region

features some of the world’s largest and most

modern armies, nuclear-armed major powers,

and several nuclear-capable states. Hostilities

that could directly involve the United States in

a major conflict could occur at a moment’s

notice on the Korean peninsula and in the

Taiwan Strait. The Indian subcontinent is a

major flashpoint. In each area, war has the

potential of nuclear escalation. In addition,

lingering turmoil in Indonesia, the world’s

fourth-largest nation, threatens stability in

Southeast Asia. The United States is tied to the

region by a series of bilateral security alliances

strategy.

Japan, too, is experiencing an importan

transition. Driven in large part by the forces 

globalization, Japan is in the midst of its gre

est social and economic transformation sinc

the end of World War II. Japanese society,

economy, national identity, and internationa

role are undergoing change that is potential

as fundamental as that Japan experienced

during the Meiji Restoration.

The effects of this transformation are ye

to be fully understood. Just as Western count

dramatically underestimated the potential o

the modern nation that emerged from the M

Restoration, many are ignoring a similar

transition the effects of which, while not imm

diately apparent, could be no less profound. 

the United States, the key to sustaining and

enhancing the alliance in the 21st century lie

in reshaping our bilateral relationship in a w

that anticipates the consequences of change

now underway in Japan.

Since the end of World War II, Japan h

played a positive role in Asia. As a mature

democracy with an educated and active elec

torate, Japan has demonstrated that change

in government can occur peacefully. Tokyo

has helped to foster regional stability and

hostilities that could

directly involve the

United States in a major

conflict could occur at a

moment’s notice

The opinions, conclusions, and recommendations expressed

or implied in this paper are solely those of the authors and

do not necessarily represent the views of the National

Defense University, the Department of Defense, or any other

government agency or nongovernment organization.
As partners in the broad Western alliance,

the United States and Japan worked together to

win the Cold War and helped to usher in a new

era of democracy and economic opportunity in

Asia. In the aftermath of our shared victory,

however, the course of U.S.-Japan relations has

wandered, losing its focus and coherence—

notwithstanding the real threats and potential

risks facing both partners.

Once freed from the strategic constraints

of containing the Soviet Union, both Washington and Tokyo ignored the real, practical, and

pressing needs of the bilateral alliance. Wellintentioned efforts to find substitutes for concrete collaboration and clear goal-setting have

produced a diffuse dialogue but no clear definition of a common purpose. Efforts to experiment with new concepts of international security have proceeded fitfully, but without

discernable results in redefining and reinvigorating bilateral security ties.

This lack of focus and follow-through has

been evident in both countries. Some in Japan

the crisis on the Korean peninsula—punctuated by the horror of the Okinawa rape incident—captured the attention of policymakers

in Washington and Tokyo. These episodes

prompted them to recognize belatedly the costs

of neglecting the bilateral relationship. The

subsequent Taiwan Strait confrontation in

March 1996 gave even more impetus to efforts

on both sides of the Pacific to reaffirm the

bilateral security alliance.

The 1996 U.S.-Japan Joint Security Declaration went a long way toward directing attention in both capitals toward the need to refurbish the alliance, and led to concrete changes

that updated defense ties in the form of the

revised Guidelines for U.S.-Japan Defense

Cooperation, the 1996 report of the Special

Action Committee on Okinawa, and the bilateral agreement to cooperate in theater missile

defense research. But the symbolism of the

1996 declaration stood alone, unsupported by

sustained high-level attention. As a result, the

United States and Japan soon returned to

bickering and poor policy coordination.

The costs of the deterioration in the U.S.-

Japan relationship have been insidious as well

as obvious. By the end of the 1990s, many U.S.

policymakers had lost interest in a Japan that

appeared incapable of renewing itself. Indeed,

ship as an important element of a broader

effort by Washington to constrain its region

diplomacy. And as the United States and—t

lesser extent—Japan sought to improve rela

tions with China, both demonstrated a clear

desire to downplay the notion of a containment strategy.

In fact, the only active security dialogu

between the United States and Japan has bee

a byproduct of a desire to coax North Korea

out of its self-imposed isolation. The United

States, Japan, and the Republic of Korea all

concur that close cooperation and unity of

purpose offer the most effective strategy to d

with Pyongyang.

This record of diffidence, uncertainty, a

indirection has no single father, nor does it

support an oversimplified laying of blame.

Rather, it demands a recognition that the ti

has arrived for renewed attention to improv

ing, reinvigorating, and refocusing the U.S.

Japan alliance.

Both the United States and Japan face a

uncertain security environment in Asia at a

time of political transition and important

change in both countries—for the United

States, a new national leadership, and for

Japan, a continuing process of economic,

political, and social transformation. At the

2 SPECIAL REPORT

this lack of focus and

follow-through has been

evident in both countries
Over the past decade, the ruling Liberal

Democratic Party (LDP), faced with internal

divisions, a clash of traditional interest group

agendas, and a growing split among key constituencies, has focused primarily on hanging

on to its dwindling power. At the same time, the

political opposition has failed to produce credible, well-conceived policy proposals. The net

effect is an LDP struggling to maintain its grip

on the reins of government, an opposition

unable to provide a governing alternative, and

a Japanese public, faced with a lack of credible

alternative leadership, reluctantly returning the

LDP to office. The result has been a government stuck in neutral, incapable of more than

muddling through.

Nevertheless, the necessity of economic

reform and restructuring, driven by the pressures of a relentless globalization of the international economy, are likely to lead to political

change. These economic forces are breaking

tional flag and anthem, and in focusing on

such territorial claims as the Senkaku islands,

has evidenced a new respect for the sovereignty

and integrity of the nation state. The implications for the U.S.-Japan relationship stemming

from these changes are profound.

A similar process is at work in the United

States. The growing role of Congress as a force

in foreign policy, the rising influence of state

and local governments, and the dramatic

transformation of the private sector as the

initiator of economic change—driven by

technology and the empowerment of the individual—are altering the influence of oncecentral foreign policymaking institutions.

But, just as Japan’s risk-averse political

leadership has held back the nation’s economic

transformation, the lack of clear direction from

Washington also has taken a toll. Episodic

executive branch leadership has failed to produce a well-conceived game plan for America’s

relationship with Japan. This, in turn, has

accelerated the erosion of political support and

popular understanding of the importance of

the alliance. In short, the political, economic,

and social changes underway in the United

States put an even greater premium on executive branch leadership in foreign affairs.

a common perception and approach regardi

their relationship in the 21st century. The potential for conflict in Asia is lowered dramat

cally by a visible and “real” U.S.-Japan defen

relationship. The use of bases granted by Jap

allows the U.S. to affect the security environment from the Pacific to the Persian Gulf. T

revised Guidelines for U.S.-Japan Defense

Cooperation, the basis for joint defense plan

ning, should be regarded as the floor—not 

ceiling—for an expanded Japanese role in t

transpacific alliance, and the uncertainties 

the post-Cold War regional setting require a

more dynamic approach to bilateral defense

planning.

Japan’s prohibition against collective se

defense is a constraint on alliance cooperati

Lifting this prohibition would allow for close

and more efficient security cooperation. This 

a decision that only the Japanese people can

make. The United States has respected the

domestic decisions that form the character o

Japanese security policies and should contin

to do so. But Washington must make clear th

it welcomes a Japan that is willing to make 

greater contribution and to become a more

equal alliance partner.

We see the special relationship between

the United States and Great Britain as a mod

SPECIAL REPORT 

the Japanese political

order is experiencing

protracted change
4 SPECIAL REPORT

■ Development of a force structure that has

the characteristics of versatility, mobility, flexibility,

diversity, and survivability. Any adjustments should

not be based on an artificial number, but should

reflect the regional security environment. As this

process unfolds, changes to force structure should

be made through a process of consultation and

dialogue, and be mutually agreeable. The United

States should take advantage of technological

changes and regional developments to restructure

its force presence on the archipelago. We should

strive to reduce the American military footprint in

Japan as long as our capabilities can be maintained. This includes continued consolidation of

U.S. bases and rapid implementation of the terms of

the 1996 U.S.-Japan Special Action Committee on

Okinawa (SACO) agreement.

■ Making priority availability of U.S. defense

technology to Japan. Defense technology must be

seen as an essential component of the overall

alliance. We should encourage the American defense industry to make strategic alliances with

Japanese companies to facilitate a greater two-way

flow of cutting-edge military and dual-use technologies.

■ Broadening the scope of U.S.-Japan missile

defense cooperation.

There will be a healthy debate in both

countries arising from the larger role that we

advocate for Japan. And U.S. Government

officials and lawmakers will have to recognize

that Japanese policy will not be identical to

American policy in every instance. It is time for

burdensharing to evolve into power-sharing

and this means that the next administration

will have to devote the considerable time that

will be necessary to bring this into being.

Intelligence

The changing nature of the potential

threats and the evident dangers for both the

United States and Japan in East Asia require

greater cooperation and integration of intell

gence capabilities between the two allies. De

spite the importance of the bilateral alliance

intelligence sharing with Japan contrasts

sharply with the increasingly close relationships we have enjoyed with our NATO partne

in this area. While global developments have

driven that trend, so, too, has the recognition

it is time for burdensharing to evolve into

power-sharing

In 1996, the U.S.–Japan Special Action Committee on Okinawa (SACO) agreement called for a realignment, consolidation, and reduction of U.S. bases on Okinawa. The United States and Japan must complete implementation of that accord,

which will reduce U.S. assets by about 5,000 hectares and 11 facilities, including th

Marine Corps Air Station at Futenma.

We believe the SACO agreement should have had an important fourth goal—

diversification throughout the Asia-Pacific region. From a military perspective, it is

important for U.S. forces to have broad and flexible access across the region. But

from a political perspective, it is essential to ease the burden borne by the

Okinawans so that our presence is sustainable and credible. American thinking

about force structure in Japan must not stop with the SACO accord. The United

States should consider broader and more flexible deployment and training options

for the Marines throughout the region.
intelligence represents the road to that goal.

Moreover, a division of labor—apportioning

analytical tasks according to the comparative

advantages of each partner—offers gains for a

resource-strapped intelligence community.

Japan has the capacity to bring valuable information and insights to a strategic intelligence

dialogue because of its global engagement.

Perhaps more important, a strategic

vision of intelligence cooperation with Japan is

long overdue. Failure to strengthen U.S.-Japan

intelligence ties only raises the risks that our

perception—and possibly our policies—will

diverge when challenges demand common

understanding and action within the alliance.

Improved intelligence cooperation is no

less important for Japan. The path to a greater

international contribution by Japan requires

both a stronger indigenous Japanese intelligence capability and greater cooperation with

the United States.

Strengthened intelligence cooperation will

help Japan to improve its own policymaking,

crisis management, and decisionmaking

processes. In addition, both within and beyond

Asia, Japan faces more diverse threats and more

complex international responsibilities, which

call for intelligence that provides a better

understanding of its national security needs.

Japan’s national security priorities. Transnational

issues, such as illegal immigration, international

crime, and terrorism all require coordinated interagency programs in both countries.

■ The United States should support Japan’s

reasonable desire to develop an independent intelligence capability, including its own satellites. Improving the quality of sharing requires immediate

attention. 

■ U.S. policy should give priority to joint

staffing of analytical centers, reciprocal educational

programs, and similar elbow-to-elbow initiatives to

enrich the intelligence network.

An enhanced intelligence relationship

between the United States and Japan also needs

political support in both countries. In this

regard, Tokyo needs to take several basic steps:

■ Japanese leaders need to win public and

political support for a new law to protect classified

information.

■ While improved intelligence capabilities will

offer improved support to Japanese policymaking,

economy. Japan remains the thirdlargest

customer for U.S. goods, and its continued

frailty has meant lost opportunities for Amer

can workers and businesses. A weak Japan

contributes to volatility and uncertainty in

global capital flows. In addition, an inwardlooking, frustrated, insecure Japanese popula

will be less willing or able to play a larger ro

in the alliance.

Unfortunately, Japan has experienced a

disappointing decade of economic stagnatio

and recession. From 1992 through 1999,

average annual real economic growth was

only 1 percent. The decade ended with a rec

sion in 1997 to 1998, and again in the seco

half of 1999.

The restoration of sustained economic

growth in Japan will depend in large measu

on opening markets and recognizing that th

key to economic recovery rests in allowing th

SPECIAL REPORT 

international crime, and

terrorism all require

coordinated interagency

programs in both

countries

an economically healthy

Japan is essential to a

thriving bilateral

partnership
enjoy the cozy sanctuary of lifetime employment), protected industries, and bureaucrats

long accustomed to calling the shots for various industries continue to protect the status

quo. Moreover, the Japanese tend to be averse to

radical change, except in circumstances where

no other options exist. And some in Japan

argue that the nation’s economic problems

have yet to reach crisis proportions. The lack of

a sense of urgency, and a national character

resistant to abrupt shifts in established practices, impede adoption of necessary restructuring measures that are politically and psychologically painful.

At the same time, it is important to recognize that Japan has made some progress in

addressing its economic problems. For example,

many Western economists have given high

marks to Tokyo’s so-called Big Bang financial

sector deregulation package and the banking

bailout of 1998. Foreign direct investment has

increased dramatically (though it remains

lower than in any other major industrialized

economy). These developments have introduced

greater competition and new business models.

Businesses have begun to place greater emphasis on profitability over relationships, a shift

that has weakened the increasingly archaic

has produced a ratio of debt to gross domestic

product of at least 1.2:1, far higher than in the

rest of the world’s major developed economies.

A more innovative approach that uses

private sector dynamism to drive economic

change is now in order. For Japan, the price

still will be high. Restoring the long-term

health of the Japanese economy will require

some short-term costs that Japanese politicians

so far have refused to incur. The United States

should urge Japan to develop policies along the

following lines:

■ Further systemic reform of the Japanese

economy. Greater reliance on markets that are open

to all players—both domestic and foreign—is

critical to a sustained economic recovery:

■ Continued short-term fiscal and monetary

stimulus. Despite Japan’s growing debt problems,

Tokyo should focus on areas that promise to foster

future growth. The era of building bridges, tunnels,

and high-speed rail links to nowhere must end.

■ There must be greater transparency in

accounting, business practices, and rule making.

The quality of Japanese economic statistics should

endangers the global economy. In these area

including the creation of corporate goodgovernance standards and greater transparen

in business practices, U.S. Government atten

tion and action continue to matter.

The U.S. should pursue several key goa

in the years ahead that will foster an improv

bilateral partnership:

■ American economic interests must be

expressed in one voice. Washington must have it

priorities straight in order to deal effectively with 

systemic change Japan is undergoing. In this

regard, the next administration must gain the

support of the American people for a focused eco

nomic agenda.

■ Washington should start a dialogue on e

hancing foreign direct investment in Japan. Fore

firms bring new technologies and new business

models that help the economy both directly and

through their competitive impact on Japanese fir

■ The new administration must make a ne

round of global trade negotiations one of its high

priorities. American leadership is vital to this init

tive. In this endeavor, the United States and its

partners should seek the elimination of industria

tariffs, agricultural subsidies, and barriers to trad

in financial services, and should pursue the nego

ation of internationally accepted accounting stan

dards, particularly for financial institutions.

■ Because of the importance of U.S.-Japan

economic relations, bilateral trade negotiations

6 SPECIAL REPORT

banking problems have

yet to be addressed

adequately
cooperation and to open the door to new bilateral endeavors.

There should be no surprises in diplomatic cooperation. Japan often has promoted

ideas, such as the Asian Monetary Fund, without coordinating with Washington. The United

States too often has brought Japan belatedly

into its own diplomacy. Both countries suffer

when policymaking-by-afterthought characterizes our relationship. It is past time for the

United States to drop the image of Japanese

cooperation in foreign policy as checkbook

diplomacy. Japan must recognize that international leadership involves risk-taking beyond

its traditional donor’s role.

U.S. policy must consider Japan’s goals,

even as it strives to ensure that our agenda is

well understood and actively supported by

■ Reforming the United Nations as an institution to deal more effectively with conflict prevention, peacekeeping, and peacemaking activities. The

U.S. should continue to support Japan’s quest for a

permanent seat on the Security Council. However,

there are obvious obligations of collective security

with which Japan must come to grips.

■ Encouraging the People’s Republic of China

to become a positive force in regional political and

economic affairs. The United States and Japan

should engage in an ongoing strategic dialogue on

this subject.

■ Fostering reconciliation on the Korean

peninsula. Washington and Tokyo should continue

to support the Trilateral Coordination Group (South

Korea, Japan, and the United States) to deal with

issues related to the peninsula, while looking for

opportunities to broaden their cooperation.

Japan and Asia—for better or for worse. At t

dawn of the new millennium, the inescapab

forces of globalization and the dynamics of t

post-Cold War Asian security setting pose new

and complex challenges to the United States

and Japan. How the two countries respond,

individually and as alliance partners, will

define significantly the security and stability 

the Asia-Pacific as well as the possibilities of

the new century—much as their interaction

has affected the economic, political, and stra

gic contours of the past.

SPECIAL REPORT 

it is past time for the

United States to drop the

image of Japanese

cooperation in foreign

policy as checkbook

diplomacy

The Strategic Forum series presents original research b

members of the National Defense University as well as

other scholars and specialists in national security affai

from this country and abroad. The opinions expressed o

implied in this publication are solely those of the autho

and do not necessarily represent the views of the

National Defense Universtiy, the Department of Defense

or any other governmental agency.

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