How can Japan protect its peace and prosperity, which have continued for more than 70 years? 2018 will be a year in which a carefully thought-out strategy — and the resolve and ability to take action to appropriately implement it — are sought.
Tensions triggered by North Korea are growing. North Korea tested a nuclear device more than 10 times as powerful as the atomic bomb that was dropped on Hiroshima and launched intercontinental ballistic missiles. If North Korea comes to possess technologies enabling the miniaturization of a nuclear weapon and the reentry of such a warhead into Earth’s atmosphere, it would possess the capability to launch a nuclear strike on the U.S. mainland.
Since the Cold War ended, the United States, which has overwhelmingly dominant military power while maintaining a “nuclear balance” with Russia and China, has been at the forefront of ensuring global security. North Korea, which regards the United States as an enemy, is attempting to break this stable international order with the objective of preserving its own dictatorial regime.
Greatest risk since WWII
U.N. sanctions and steps independently taken by nations including China have restricted trade with North Korea and deepened its isolation. Pyongyang has been exposed to military pressure applied by Washington. Even so, the international community is not certain whether North Korea’s reckless behavior can be stopped.
The United States insists “all options are on the table.” Will the international community leave the solution of the issue to U.S. military might? Conversely, will North Korea lash out? In such a volatile situation, an accidental outbreak of hostilities could happen.
The fighting could spread to every corner of the Korean Peninsula. If North Korea’s medium-range ballistic missiles were not wiped out in one fell swoop, the destruction could spread to Japan. It is no wonder that the sense of anxiety about what could be the most horrific situation to affect Japan since the end of World War II has been mounting.
The Japanese government has a grave responsibility to handle the threat, as it views that menace as a “national crisis.” The Self-Defense Forces and the U.S. military should step up their cooperation, and the nation’s missile defense should be steadily reinforced. Assuming that the worst-case scenario happens, steps should be ensured for the evacuation and protection of citizens in Japan and Japanese living in South Korea, as well as dealing with evacuees who would arrive from the Korean Peninsula.
Of course, the goal to strive for is to prevent war from erupting and resolve the current standoff through diplomacy. In close cooperation with the United States and South Korea, the government should tenaciously continue to encourage China, which holds significant control over the lifelines of North Korea’s economy, to exercise influence over North Korea.
A half-baked solution that leaves North Korea with even part of its nuclear capability would create problems for the future.
The Nuclear Nonproliferation Treaty (NPT) recognizes the United States, Russia, China, Britain and France as states possessing nuclear weapons. In addition, India and Pakistan have developed nuclear arms, and Israel is also said to possess these weapons. To prevent heightened concern among the international community, each of these nations rigidly maintains a restrained approach to the use of nuclear weapons.
Pyongyang is totally different. North Korea is a rogue nation that uses its nuclear program as a tool for saber-rattling diplomacy and has had no qualms about breaking a slew of international promises. If sanctions slapped on North Korea were lifted, it could sell its nuclear and missile technologies to nations in the Middle East and terrorist organizations to bring in foreign currency. This would invite disaster on a global scale.
Be that as it may, it is worth taking a cool-headed look at North Korea. According to U.N. estimates, North Korea’s gross domestic product is about $16 billion (about ¥1.8 trillion). Per capita, this is less than one-50th of the figure for Japan.
Kim Jong Un, chairman of the Workers’ Party of Korea, has trumpeted a policy of placing equal emphasis on strengthening his nation’s nuclear capability and rebuilding the economy. This differs from the “military-first politics” adopted by Kim’s father, Kim Jong Il. Kim Jong Un chose a difficult course of satisfying both the military and people. The possibility of turmoil within the regime snowballing into self-disintegration cannot be small.
North Korea should be pressed to hold dialogue to relinquish its nuclear and missile development programs through bargaining that continues to contain Pyongyang but does not drive it to lash out. To achieve this, maintaining the international encirclement of North Korea will be essential. The resolve to engage in a long-term approach will also be needed.
1962’s lessons for 2018
The Cuban Missile Crisis of 1962 shocked the world. It was triggered by the Soviet Union bringing nuclear weapons into Cuba. While applying military pressure on Moscow, U.S. President John F. Kennedy tenaciously continued behind-the-scenes negotiations with Soviet Premier Nikita Khrushchev and finally managed to realize the removal of the nuclear weapons.
A nuclear war was averted at the last moment because Kennedy persisted in his stance of seeking a diplomatic solution to the crisis.
To overcome the North Korean crisis under the U.S. initiative and bring about stability in the region, it is essential for U.S. President Donald Trump to exercise self-restraint against impulsive actions, and at the same time not to easily concede.
As long as Trump’s words and actions are unpredictable in some ways, the support of military experts, including Defense Secretary Jim Mattis and National Security Adviser H.R. McMaster, will remain indispensable, as does appropriate advice and moves by Japan and other U.S. allies.
It is hoped that Japan will deepen its relationship with the United States at many levels, not only between the leaders, but also between both countries’ cabinet members; government officials; and “uniforms,” members of the U.S. military and the SDF. Unless East Asia’s situation dramatically changes, the Japan-U.S. alliance will continue to be a linchpin of Japan’s diplomatic and security policies.
A source of worry is the impact that the inward-looking stance of the Trump administration, which touts its America First policy, could have on international relationships.
If the United States, which withdrew from the Trans-Pacific Partnership framework, tries to forcefully resolve trade imbalances bilaterally, mutual trade and investment could shrink due to a backlash from trading partner countries.
To maintain its prosperity, the only choice for the United States is to cooperate with relevant countries and sustain the multilateral economic order. This message must be conveyed to Trump.
Delicate steering is necessary for diplomacy with China, which has been advancing its policy course of making itself rich and powerful.
Unnecessary confrontation will lead neither to advantages for Japan or China, nor to the stability of East Asia. For confidence-building, Japan, while keeping an eye on Beijing’s movements, should make demands as necessary — an approach, which is effective even though it seems to be a roundabout way.
Foster trust with China
To prevent China’s “One Belt, One Road” mega economic zone project from being exclusive, Japan’s cooperation is understandable from a strategic viewpoint. It is obvious that China will find it advantageous to join hands with Japan, which has abundant experience and know-how in assisting developing countries.
It is essential for negotiations with China to be backed by national strength. By maintaining defense capability and economic power, Japan can have a greater influence over China. If Japan keeps in step with the United States, Australia, India and other countries, which share the same values, in making assertions against China, Beijing will find it impossible to ignore.
To avoid unduly alarming China with the notion that an encirclement is being formed against it, the benefits of international cooperation should be emphasized.
The favorable relations between Japan and China seen in the 1980s were the fruit of strong connections built between then Chinese leader Deng Xiaoping and Japanese political and business leaders. The power relationship between the two nations has changed since then, and it cannot be returned to the one seen in the past. But the importance of having direct talks with Chinese President Xi Jinping, who has solidified his power base, remains unchanged.
First, Japan should pave the way for mutual visits to be made by the leaders of the two nations, which have been suspended. The two sides should try to find common ground for the sake of mutual benefit by holding a series of talks and narrowing differences in stances.
Turning to Japan’s domestic economy, there are many positive indicators. Employment and the stock markets are in quite good shape, and corporate earnings are on a rising trend for many companies. Meanwhile, money is accumulating in households and companies.
Cash held by households increased by ¥5 trillion over the year to ¥83 trillion. Combined with deposits and savings, the amount increased by ¥25 trillion to ¥943 trillion. Overall financial assets held by households reached ¥1.845 quadrillion, up ¥83 trillion.
Summing up the household financial assets and those held by private companies, which exclude financial institutions, the total amount stands at an extraordinary level, exceeding ¥3 quadrillion.
Individuals are refraining from consumption, and companies are also refraining from improving the treatment of employees and capital investment. This situation will not help achieve a virtuous cycle in which salary increases push up consumption and then lead to further salary increases.
To overcome deflation, which Prime Minister Shinzo Abe positions as the top-priority policy pledge, the propensity to save money, which is seen among individuals and companies, must be changed. Breaking free of conventional thinking, a bold policy that could mobilize idle money should be employed.
Discuss future burdens
The Bank of Japan’s monetary easing policy of a new dimension initially had a target period of about two years, but the policy has been in place for a prolonged period of five years. The central bank holds more than 40 percent of outstanding government bonds. A negative interest rate is heavily weighing on the management of financial institutions.
Won’t problems arise if the policy remains in place? Ahead of a personnel decision to be made about the Bank of Japan governor in spring, the government and the central bank should sum up the current monetary policy.
Among many members of the public, a sense of anxiety about the future, associated with the aging of society and a low birthrate, is spreading. This is a more pressing issue for members of younger generations. Long-term stability in medical care, nursing care and pension systems serves as a foundation on which people can prepare, with a sense of security, for the “era of the 100-year life,” which is promoted by the government.
It will be inevitable for the consumption tax rate to be further raised after its hike to 10 percent in October 2019 to cope with increases in expenditures for social security benefits. It is an urgent task to compile a new plan for “integrated reform of social security and tax systems.”
Over the past six years, a total of five elections for the House of Representatives and the House of Councillors were held. To win these elections, the ruling parties twice put off a scheduled hike in the consumption tax rate and listed measures that appeared to be pork-barrel policies.
Delaying fiscal reconstruction will no longer be tolerated. This year, in which there is no scheduled national election, will be a good opportunity to discuss the burdens to be shouldered by the people. In the Liberal Democratic Party’s presidential election slated for autumn, in which Abe likely will seek reelection for a third term, he and whoever may challenge him are expected to compete over measures to achieve stability in social security and the nation’s finances.
What is needed in politics is to eliminate the anxieties of the people and to open up prospects for the future.