AMERICAN ENTERPRISE INSTITUTE

JAPANESE INTERNATIONALISM IN AN ERA OF UPHEAVAL

DISCUSSION PARTICIPANTS:

MICHAEL AUSLIN, HOOVER INSTITUTION; AEI (FORMER)

YUKI TATSUMI, STIMSON CENTER

2:00–3:00 PM THURSDAY, NOVEMBER 9, 2017

EVENT PAGE: http://www.aei.org/events/japanese-internationalism-in-an-era-of- upheaval/

TRANSCRIPT PROVIDED BY DC TRANSCRIPTION – WWW.DCTMR.COM MICHAEL AUSLIN: Welcome to the American Enterprise Institute. My name is Michael Auslin. I’m a former AEI scholar, now at the Hoover Institution, but spent 10 years here. I’m very happy to be back, first of all. It’s like a homecoming, even though I haven’t left DC, and very glad to be able to have a conversation today with my good friend, Yuki Tatsumi, of the Stimson Center on this small collection of essays about . I’m very glad that all of you have decided to join us for the hour to talk about Japan’s new internationalism and what that might mean and the like.

So I think the way we’ll do it is I’m going to very briefly introduce what the book is about, what this collection of essays is about, and then have a conversation with Yuki on this, and then open it up so we can have a conversation amongst ourselves.

For those of you who don’t know Yuki, she is one of the leading analysts of Japan particularly on defense issues and security issues in Washington and has been at the Stimson Center how long?

YUKI TATSUMI: Thirteen years.

DR. AUSLIN: Thirteen years at the Stimson Center—one of the fixtures in DC— to try to understand how Japan is applying elements of national power to its foreign policy and security preferences and playing that out in the world.

It’s a busy week right now. First of all, the president is in Asia. He was in Japan a few days ago. He was I think just leaving China and is on his way probably to Vietnam next and then the Philippines — a 10-day trip, so the longest since George H. W. Bush took his trip in 1991 — five countries, a lot going on. And at the top of that list, of course, is North Korea. So it’s a propitious time I think to be talking about what’s happening in Asia, and we’ll interweave elements of the US position throughout this conversation.

But it’s also — it’s a significant week in other ways. Today, is the — what is it — the 28th anniversary of the fall of the Berlin Wall, or the breaking through the Berlin Wall, November 9, 1999. So I think that makes it 28, right, 28 years. Two days ago was the 100th anniversary of the Bolshevik takeover in Russia, overthrowing the provisional government in Russia, in 1917.

So it’s a week to think a lot about world-changing moments, which sort of begs the question then, why Japan? Does Japan fit into this at all? And other than the answer that this was the best time to schedule this event, I would say that, yeah, there are reasons to talk about Japan in the context of a lot of these larger issues.

For those of us who work on Japan and some of the folks in the room who actually literally were doing alliance management back in the ’70s and the ’80s, you know, it’s a different world to talk about the role that Japan plays, and as you think about engaging with Japan, the height, so to speak, the glory days of Japan’s international prominence, its international presence and influence has been long over.

And to our detriment, I think, we have overlooked not only Japan as a player internationally and certainly regionally, but internationally, but also have quite frankly ignored a lot of what’s been going on in Japan for the past 25 years, you know, sort of our modus operandi. You know, the second that Japan’s bubble burst, that it was no longer going to be growing at 10 or 6 or whatever percent per year, we started looking for greener fields to pay attention to. And while that may be the way that we do things around the world, it certainly doesn’t mean that Japan disappeared or that it didn’t maintain a vibrant society, an important role in Asia and a global role.

And this set of essays was really a first attempt to at least try to discuss that to some degree in the shadow of China, in the shadow of Korea and, quite honestly, to tackle a topic that many people think is somewhat fusty and not all that important. In this town, what we primarily do is look at the alliance. I’ve done it, most of my friends do it, we look at, you know, is it a new era in the alliance? How do we deepen the alliance? Where is the alliance falling short? And that’s — you know, that’s natural. This is what the town does. But this is only a tiny part of talking about Japan.

First of all, Japan on its own as an international player, Japan’s own set of preferences, its own foreign policies, its own security policies, how it articulates them, how it tries to pursue them, what its goals are, that’s one element to it. But then there’s a whole other element of Japan as Japan. And if you’re in this room, it’s probably because you haven’t forgotten that Japan remains the world’s third-largest economy or, as I like to call it, the second-largest free economy in the world; that it is a country of 126-something million people, which makes it very significant in a population sense; that it remains one of the most durable and enduring democracies in the world, where we have an increasing democracy deficit; that it has an articulated civil society with all sorts of civil liberties that is challenged in many places around the world; that it has maintained all of these strengths even as it has struggled for 25 years with maintaining an economy and trying to keep a vibrant economy and the like so that we to, I think again, our detriment have not paid attention to Japan as much as we should have.

That was really the genesis for this set of essays, trying to understand more from a Japanese perspective, to the extent that I could, Japan’s role in the world. And if you take a look — there are copies of the book, if you don’t have it. There are copies out there so please do pick one up.

There’s no attempt to make this a coherent narrative, but they are five extended essays, ranging from I think 5,000 to 12,000 words, something like that, on Japan. The first one, and I’m going to turn over to Yuki in just a second but just to let you know what the book talks about. The first one was written for the National Bureau of Asian Research and tries to take the big picture of Japan’s national power: How do you actually define it, how do you capture it, and then how does Japan use that national power to play a role out in Asia and out in the world? And that’s the longest essay. It’s about 13,000 words.

Then there’s a more narrow look at Shinzo Abe himself that was a piece published in Foreign Affairs, trying to understand if Abe really was different. Was he more of the same? Was he overpromising and under-delivering? Was there really something where we could identify, this is a different leader, and therefore, this is going to be a different type of country going forward? And you’ll see my conclusions on that, and we can talk about it, but I’m certainly interested in your thoughts.

Then, in the middle, there is an obligatory piece about the alliance. Where does it go from here? But it was written particularly with the view of what was happening in both Japan and the United States at the time, looking at Japan, again, with Abe — is he really a different type of actor? Is he the nationalist that people talk about and, therefore, potentially some type of danger?

And, equally, this was written originally during the election campaign, looking at the contest between Donald Trump and Hillary Clinton. That’s not what’s in here, but it was looking at how each of them might deal with the alliance going forward and, quite honestly, like everyone else in town, written from the perspective that we should expect a Hillary Clinton presidency and so, therefore, that’s what it might look at.

It didn’t get published before the election, so obviously there was a pretty significant rewrite, which was to put in Donald Trump. But what Trump policies might look like and, more importantly, the impetus behind them. Is it really a populism and a nationalism on the part of the United States that will cause us to turn away from Asia? But already by the time I was rewriting it, we were seeing clear signs from the Trump administration that, in many ways, other than TPP, this would be a sort of steady as she goes, continue the policies of your predecessors’ type of approach. So it’s trying to understand if the alliance really would be changed by what was happening inside the countries.

The next piece is one that I’m particularly interested in myself. I hope you’ll read it, and I’d really like to get your thoughts. It’s called “Japan’s Eightfold Fence.” It is a — I think it’s about 6,000 words or so. And it’s a piece that really tries to get at, have we just missed what’s been going on in Japan for 25 years? The basic argument is we’ve “misunderestimated” Japan, as George W. Bush might have put it. We’ve “misunderestimated” Japan. We haven’t paid attention, and we haven’t really understood the ways that the society has evolved in the 25 years since the bubble burst and we all turned our attention away from Japan.

So it looks at — the real core of what I wanted to try to get at was, does Japan have a different idea about modernity than we do? Because I think there is a presumption on our part in the West about what modernity is. If you’re a modern nation, you are X in certain ways. And I try to talk about what that is in terms of ideas of openness, ideas of diversity, ideas of the lack of borders against a world that should be interconnected in so many ways. And if you don’t partake of X, then in some ways you’re not really modern.

And I think you see arguments about that vis-a-vis Japan. Why does Japan not let in immigrants and foreigners? Why doesn’t it have a robust sort of dog-eat-dog capitalist system, things that we again presume are the markers and identifiers of modernity? And I may be wrong here because I’m not a political philosopher, theorist, or scientist, but it certainly seemed to me that’s — that’s what I was picking up in the debate. And yet, how can you say Japan’s not a modern country? It is a modern country. It is modern. It is in and of modernity, but a modernity that’s different from ours in significant ways — not in complete ways, but in significant ways.

And so this tries to get at that question of: Is Japan modern? How is its modernity different? There’s a long section that deals with the emperor in Japan because, as I was writing it, he announced that he would be abdicating, the first emperor to abdicate in over 200 years, which raised the question of why does Japan even have an emperor anymore, right? What role does the emperor play? Is it significant? Is it a complete vestige of the past? Or does it have something to say about Japan’s identity, Japan’s culture, and the like?

And then, ultimately, that chapter tries to link it then to how all of that, Japan as a modern nation that has self-consciously erected certain borders against the world to maintain itself, how does that play out in the global sphere, meaning, ultimately, how do you take all of that and say, OK, now Japan is playing a role in the world? Can you even square those circles, and what are the limitations to that? And that’s really what I try to do.

But with all — not caveats but all honest upfront, it’s a first stab at doing something that, honestly, I don’t think we’ve done for 25 years, which is take a serious look at one of the most important countries in the world. We haven’t had, you know, a full book looking at Japan in probably 25 years. There was Karel van Wolferen back in 1989. I know there were real problems with them. There was Bill Emmott, “The Sun Also Sets.” That was ’90ish, sometime around there. What was the next one after that, really? There’s been almost nothing that I could think of and, you know, friends can yell it out. But what I’m saying is, for 25 years, we haven’t had a book that’s really been looking at what’s been going on in that country.

And then that leads into the last essay, “Asia’s Other Great Game,” which tries to make Japan relevant in the debates that we’ve all been having about whether America and Asia, whether China — nd the argument simply being that in Washington, it seems to me, that we have talked about the great game in Asia simply as a Sino-US competition for influence, power, and the like. And that, to me as an Asianist, completely misreads one of the key dynamics in Asia, which is the Sino-Japanese competition, which long, long, long predates the United States’ role in Asia and I presume — as a historian, I feel fairly comfortable saying this — will long, long, long antedate the United States’ role in Asia. Neither China nor Japan is going anywhere. And it’s their competition that in many ways has shaped Asia over the centuries.

And while we like to think it’s all about us and it’s all about the Seventh Fleet and it’s all about TPP, there is a much richer and deeper engagement I think that we can look — or as rich and deep an engagement that we can look at, which is what Japan and China are doing vis-a-vis each other, trying to do together and trying to do against each other in the region, as well as — I would say, again, in honesty, this part did not work out nearly as well, but it’s still something I think to explore — does either of them either explicitly or implicitly hold themselves up as models for development in Asia going forward, meaning is it really just a binary in Asia? You either take the China route of, you know, lack of political freedom, great political centralization, a hybrid economy, but one in which the top-down approach allows you to do things a lot more quickly and easily. Or do you take the Japanese approach, which is much messier, democratic, beholden to interest groups, in some ways, you know, a controlled economy in certain elements, but certainly one in which the democratic, liberal element plays a more significant role?

Are those the two choices for Asia? If you’re Vietnam or if you’re Malaysia or Burma or India even, do you look at those two and say, well, these are the two paths I have to choose? And if that is the case — and I’m not saying it is, but if that’s the case, then how do Beijing and Tokyo themselves interpret that competition throughout the region?

So I would say that all of these, and I hope it doesn’t mean you won’t read the essays, and they’re designed as essays, but all of them are — they’re all first attempts at asking these questions. They’re interrogative rather than declaratory. They’re really questions as opposed to saying, this is the gospel truth. But I hope what it does is show that there’s a great deal more to Japan that we have ignored not necessarily at our peril, but it certainly impoverishes I think our understanding of what’s going on in Asia and how it might influence the US and US policy going forward. So I’m very glad you’re here. And that’s really the book in a nutshell.

So, with that, I want to — actually, I’m going to turn it over to Yuki by asking her a question as someone who’s looked at this for a very long time, is an expert in the defense and security issues, understanding how policy is made in Japan — security policy, how it’s implemented, how it’s legislated, and therefore, how it interacts all these different points with different countries about Asia.

And ask you if you think this is a new era for Japan. Is there really something different here, or is this just a muddling through that means that, you know what, for the most part, we really don’t have to pay that much attention to Japan because it’s not going to significantly impact what’s going on in the region?

MS. TATSUMI: Thank you, Misha. And then thank you all for joining us. And it’s a great opportunity to celebrate this awesome monograph. I’ve got an autographed copy of this so I feel especially privileged.

DR. AUSLIN: I’m happy to sign for anyone.

MS. TATSUMI: So what I — I want to start responding to your question by saying how much I appreciate this collection of essays. And it’s not because I was invited to talk about this, but because of the historical take that you take, because it’s the nature of our business, right? We live in this how quickly we can get out this short commentary that follows the most current events that are unfolding. And it’s often very, very hard to sit down and take a little bit longer stretch and perhaps utilizing a more of a historical perspective on how things have evolved to the current state. And it’s just hard if you’re in Washington, DC. And, to his credit, I think all of Misha’s essays have that very important aspect of it.

And because Japan, for the reason that you alluded to in so many of your essays here, some of those — some of the limitations that Japan has had, and I would argue continues to have as the way forward, you really have to go back to the history and then especially the history since the Meiji modernization of how this nation has been developed, how it experienced war and defeat, and how it internalized that experience and created the societal structure that we see today.

And in terms of the security and defense realm, I would argue the jury is still out. Again, because we’re in DC, we’re so used to seeing Prime Minister Abe as a leader, and that will certainly remain the case until year 2021, until he hosts the Tokyo Olympics.

But, in my mind, we’ve seen this before, that in the early 2000, when they had another prime minister called Jun’ichiro Koizumi, who also had a pretty bold idea about what Japan can be and what he likes Japan to do. He talked about very dramatic economic structural reform. He talked about more robust defense profile, a much more active role for Japan within the context of the US-Japan alliance and just more of the — pursuing more of an American-style civil society where certain authorities are more centralized in a way, but then all the other ones are more — you know, powers are more distributed across the country, across the bureaucracy.

And we saw that leader staying in the office roughly five years, and he left because of the term limit. And then we started seeing the every year — one prime minister per year for just about six years until we have the current prime minister, Shinzo Abe.

So he — in a sense, I would argue, he has an even more bold idea for where he thinks he wants to take Japan. But I still have this lingering question because of the nature of the politics in Japan that whether his successors — I would say multiple, because there will be multiple successors after Abe leaves the office in 2021 — whether this vision, how much of this bold vision that he puts out, which is coined by proactive contributions to international peace. Misha’s essay alluded to this, too. He really kind of loosened some of the ideational constraints, notional constrains that Japanese defense and security policy had and whether that may be arms export abroad or what the Self-Defense Force can do in terms of assisting the countries, militaries of the other countries, particularly in Southeast Asia. This goes back to Japan-China competition. What Japan can do more productively in the contingency, in emergency situation in the Northeast Asia, supporting US military operations. Those are really bold ideas that he has. I’m not quite sure whether his successor will share that view.

And because of the nature of the parliamentary politics, if his successor has wildly different ideas, there are certain — these institutional changes that we’re seeing and many of us are applauding as long, long overdue, are only as good as the premise that Japan has a leader that is willing to exercise those tools. And as a parliamentary democracy, the degree in which prime minister’s desire to exercise those tools varies very, very wildly.

DR. AUSLIN: Can I ask you about —

MS. TATSUMI: Yeah.

DR. AUSLIN: So, ultimately, leaders can push countries a certain way down the road, but if there’s not support for what they’re doing, you know, they have to retrench, or in a democracy, certainly you’ll lose your mandate. So, ultimately, what Japan does or doesn’t do in the world depends on how much its people want to do in the world.

How do you see that? Are the Japanese people — you know, the rep is Japan’s turning inward, right, the students aren’t studying abroad anymore. I mean, in many ways, you know, it feeds into this image of the exotic Japan, the Japan behind the eightfold fence that I was talking about. How do you see that? Is that true?

MS. TATSUMI: I think the answer is very mixed. And depending on which population that you hear, you ask that question to. The way I see it — and I’m from a generation where we all go abroad. It was cool to go abroad. But I think — so depending on who you talk to in today’s Japan, college or even younger generation, I think that answer varies.

And then I think that is because of 25 years of economic stagnation. I’m probably the last generation that actually remembers how Japan was wildly rich during the middle of the bubble economy. The class behind me graduating college were already facing severe, you know, employment, you know, recruiting — (inaudible) — and all of that.

So I think up to, I would say, close to college graduates up to early ’90s had the mentality of if you go abroad, you expand yourself, you kind of put yourself out there, and you will have a better life than your parents have built for you. But I think after that generation, it’s incrementally not so.

DR. AUSLIN: But were you the aberration, meaning was it that generation that was different from the others? The others were more internally focused. Or was it just the postwar period? So is Japan reverting back to the norm, I guess is what I’m asking. If it’s true — if it’s true that Japanese are doing less abroad, there’s less interest, there’s less engagement, maybe less understanding. I don’t know if that’s true. That also needs to be interrogated and asked. Which is the aberration: today or you guys in the postwar? Because of all of us who were working these issues worked in that era when Japan was out there, postwar, building internationally.

MS. TATSUMI: Yeah. I think even going back from the Meiji era — and your study goes way back, much, much longer back too — Japan has gone through cycles it seems like. So it goes through a period or a couple of generations of really outward looking, very vibrant, active generation, and when some system shock happens, then Japan turns inward. And then I think that expansionist, more active, outgoing path really blossomed in the Meiji Restoration era, Taisho democracy, and it kind of — but the system shock was that in the process, militarism came, Washington Treaty came, and this destructive World War II came.

And then I think in that immediate post–World War II period, Japan was — Japan had no choice but go inward. I mean, it was under occupation. But then after that, then economic — they started the post–World War reconstruction. As the economy grew, people’s optimism about the future of the country also grew. Then you see these generations of businessmen who tried to expand Japanese economy, trading more outside, exporting more, and building its national asset. And then the bubble burst as that system shock. So I would say the last 25 years that we’re seeing in that — another downward cycle.

And then I think Abe — to me, what Prime Minister Abe is trying to do is to kind of trigger that — another cycle of outward looking, expanding, more robust Japan, more active Japan. But that’s where your question was so pertinent is that, is public with him? And my answer is I don’t know. And then if you look at the — just a cursory look of the polling data on the constitutional reform, for example, that inherently suggest that Japan will be more robust in the defense and security realm. Public is either close to evenly divided or slightly against going that route.

But, at the same time, if you ask them about soft power, all that, you know, Japan feels quite comfortable seeing Pokemon and all their soft culture spreading all around. So I think there is a bifurcation that was a product of that World War II defeat.

DR. AUSLIN: So there’s so much in what you just said. So, first of all, I would say on these waves, they used to be centuries long, right? It would be centuries of engagement and then centuries of putative isolation, right? So you think about the Nara period, you know, back in the 700s. So from about — there’s a period of about 250 years where Japan is just frantically engaged with the world around it, stretching from the introduction of Buddhism in 550 CE to the move to the Heian, Kyoto, the Heian capital, right about 800. There’s about 250 years where Japan completely transforms itself — I mean, completely transforms itself, much more than it did under Meiji.

And then it gets to Heian, and for some period, there’s a series of decisions, some say that there were things that were going on outside in the Chinese world that caused essentially Japan to turn inward for hundreds of years. Again, it did not have the same amount of engagement out.

And then you get the irruption of the Europeans, irruption, I-R-R-U-P, irruption of Europeans into Japan, starting in the late-mid-16th century, this very frenetic moment where Japan also descends into civil war, and then another 250 years of what’s called “Sakoku,” which is a term the Japanese themselves never used, by the way, but that’s the closed country. It’s a term they never used. It was invented by the Dutch and it was translated into German and then made its way into Japanese. So the Japanese never said were a closed country. And then you get to Meiji. But the cycles appeared to shorten.

What I would say — history lesson is over — what I would say is that — I can’t help it. It’s like going back to the old days, but vis-a-vis what you said, that the last period of real modernization for Japan, that is the Meiji period, was occasioned by a half century of fear about the international environment. And it didn’t start with Commodore Perry. It started with the Russians.

So if you wonder where the Russians play in Asia, it was the Russians coming down from the north because they had already crossed Siberia, and coming down into — through Sakhalin and into what’s today Hokkaido, which then was not part of Japan. It was called Ezo. It was a separate realm of the Ainu, the indigenous Ainu. That was the first exogenous shock to the Japanese that the homeland was at risk from these foreign encroachments.

Then you had the British coming up from the south, and the Japanese knew about this because they were reading the Dutch reports that were coming in from Siam and other places that were tracing the British coming up. And they knew well that the British were getting there. It just happened that the Americans beat them first. So coming from the east were the Americans. So you see these three pincers of movement. And that is really what shocks the system into a modernization, security, defense, and then you can’t control it, so ultimately politically.

And that’s the Meiji Restoration, which, given our historical bent today, I would be remiss if I didn’t mention that next year, 2018, is the 150th anniversary of the Meiji Restoration. It’s the sesquicentennial — I always wanted a chance to use that word — it’s the sesquicentennial of Japan’s modernization but not just Japan’s modernization, of Asia’s modernization because the choices that Japan made starting in 1868 pushed Asia down a modernization path.

Again, so the question is: Does Japan face something similar today? Does the rise of China on its west, does the emergence of a nuclear North Korea to its quasi-north, let’s say its northwest, the rise of an , 250 million in its south, does that occasion raise the same sense of strategic concern if not panic that we saw in the late 18th and early 19th centuries that suddenly made Japan into the Japan that we think of today, so that Abe may be a leading indicator of this and is out ahead of — I think he is out ahead of the people for the most part. It’s not that they’re not worried about China and Japan. They’re just not — China and Korea and the like. They’re just not quite where he is yet.

So is he a leading indicator where what we are going to say in the next couple of decades really is a Japan that goes through a second Meiji in its own way, maybe not on the domestic politics, but on the security side a second Meiji, where it will be transformative because it will say, we can’t outsource our security to the US, our defense, and if we want to maintain the freedom to play a role, we have to really change what we’re doing out there. Do you see any elements of that, or is that just way too overblown?

MS. TATSUMI: I think there are definitely drivers — driving indicators that show that. But then I think the challenge for Japan today of going down — you clearly see it. Abe really started to set in motion a reaching out to , reaching out to India, and really began to take this all-of-the-government approach in engaging Southeast Asia, which usually — which historically has been very anchored in providing development assistance, frankly.

But now, you hear amongst Japanese, not only trade officials or international aid folks, but then more and more on the security realm, strategic use of official development assistance. And some of those policy decisions that Abe has made up to today — relaxing the arms export, revising of the offshore development assistance charter to allow Japan to provide assistance for the donor — donate assistance to recipient countries for national security purposes — so those are all indicators of how Japan is very conscious of the rise of China right next door.

In a sense, Japan is somewhat doing that also in Africa. They have a ICAD I think, the International Conference for African Development. It is solely focused on how to facilitate sustainable economic development in Africa. But that also has gained a renewed focus since Abe came in, and they started using the word “quality” rather than “quantity,” implying that Chinese aid may be massive in its volume, but then when it comes to sustainability of it or actual genuine benefit to the recipient country, we do it better. You know, we transfer technology. We train local people. We create local jobs. So you see that, definitely that competitive element.

What’s challenging for Abe, because being ahead of public in this, is that — I think this kind of goes back to your, you know, eight-ring and also constraint, that Japan has been so used to them being I guess affluent and — by all standards. I mean, we talked about Japan being economically stagnated, but if you travel to Japan today and especially you stay in the metropolitan area, you don’t think Japan is that poor. What are you — you know, what is this economic stagnation everybody is so worried about?

So I think the public is still at the point where they don’t see the decline. They don’t feel the decline. I mean, they see it in the different way in terms of — you know, it’s harder to — you know, harder to get jobs, harder to get full-time employment with full benefits. So they see piecemeal by piecemeal that they don’t really feel like they really, really have to change at the public level.

And then I think Abe really kind of tries to I guess in a sense awaken the public and saying, we have these challenges, and if we don’t do anything about it today Japan will — Japan has an aging population, and if the fertility rate continues to go down, we will not be able to maintain the first country status that everybody in this room is so used to see Japan being. And then I think that’s where Abe is having a problem with.

Another challenge that I would argue that Prime Minister Abe is having a problem with is this competitive nature of his diplomacy. A large part is driven by the rise of China. But for those policy directions to be sustainable post-Abe, while he’s in the office, he needs to create a narrative of that robust Japanese external engagement without using the word “China” or “Chinese threat.”

DR. AUSLIN: Interesting.

MS. TATSUMI: And I think we already start seeing that. He starts talking about, you know, the — most recently in the summit, President Trump and Prime Minister Abe agreed on the free and open Indo-Pacific. And their core principle is rule of law, valuing individual rights. I mean, all those, you know, modern, Western, democratic values are in there but without using the word “China.”

So I think that effort is — he’s been working on it for a while. I think he’s going to sharpen that, sharpen his pencil and continue to sharpen that concept. And whether that will become something more palatable to Japanese public, to have a more of a buy-in or have a broad sharing of that strategic vision amongst his successors’ cohort, I think the jury’s still out.

DR. AUSLIN: So before we go to questions to have a discussion, let’s get down to brass tacks because you mentioned the challenges that Japan faces. And I said Britain because I had a — I was at a meeting this morning with a senior — a very senior British official, and they’re thinking the same thing, too, right? What does Brexit mean? Will we remain robust? You know, we’re a small island, and how do we compete with — you know, with everything that’s going on?

So we can say all we want about Japan, but you mentioned the demographics. And, actually, I think the fertility figures have actually ticked up a little bit, but, you know, it’s still — it’s under replacement, and it doesn’t help that much, right? So population is declining. Japan has lost competitiveness over the past 20 years. Japanese companies that used to be world leaders, when was the last great innovation coming out of a Japanese company. You know, we used to be so used to things coming out of Sony or Panasonic or whatever. When was the last time it was coming out of Japan? The risk averseness in general of Japanese corporations sitting on piles and piles of cash.

So if you talk to friends in China, they’ll just scoff. They’ll just dismiss Japan. And I had one senior Chinese academic who said, we have more millionaires in China than the population of Japan, the entire population of Japan. So we have nothing to worry about. We generate more wealth than there is in the entire population of Japan. So there’s no way they can keep up with us. They’ll talk about the declining, you know, the fact that an already comparatively to them smaller country is declining in population. They’ll face their own problems.

American friends will say the same thing. They’ll say, this is not a competitive country. It’s stagnating. It’s not innovating. It’s behind on artificial intelligence. It’s losing its grip, if it hasn’t already completely lost it, on high-end industries, chips, and the like, and that’s being offshored.

So let’s get down to brass tacks. Can Japan remain, as you’re indicating, viable economically in a way that not only keeps first-world-level, you know, standards of living at home, but actually translates into national wealth that you can use abroad? Or is this just — I mean, you might as well fold up the tent now because it’s going to happen sooner or later.

MS. TATSUMI: If you ask the Japanese, I think they don’t want to discuss that grim future, I would say.

DR. AUSLIN: Who does?

MS. TATSUMI: Who does, right? And it goes back to that, I guess, persistent where we’re doing this Brexit and forethought in Europe, we thought we were going to see all these ultra-rightist government, you know, popping up here and there, and you look at Japan and say, oh, my God, they’re so stable.

DR. AUSLIN: Yeah.

MS. TATSUMI: And I think stability comes at the cost of those bold ideas and quickly moving. And I think it depends on where you put your value. I think Japan historically has — as it tries to absorb influence from abroad, as it modernizes itself, or as it tries to economically develop itself, it has always chosen to internalize those new elements and create something that is more palatable with the existing societal norms and cultural framework.

And I think they’re in the midst of doing that even now. They talk about innovation; they talk about, you know, small business. Small business needs to be, you know, needs to be more vibrant. But then, let’s face it, you know, their loan practice is still very traditional, not very conducive to startups. This risk averseness really inhibits vibrant venture culture because here you talk about venture — you know, a venture company going — starting the business, bankrupt themselves and restart again, and that’s a part of the healthy business cycle if you’re trying to start up your own business. But in Japan, once you have a failure, most cases, you’re done. You know, no bank will lend you money. You know, there will be no — you know, credit holders.

So there always is a desire to get to somewhere more vibrant, somewhere better, which often gets held back by Japan’s I guess almost reflex to try to hold on to what they know. So if you value those, you know, continuing outflow of bold ideas and dynamism, I don’t think we will see a whole lot of that from Japan. But then, after everybody, all the other countries go through political turmoil and social upheaval, you look at Japan, you can bet that Japan continues to be one of the most socially stable and safe country.

So I think my answer — you know, it kind of depends on what you value.

DR. AUSLIN: Yeah. And that’s really what I was trying to — I think you articulated it so well, and this is where I was trying to get to in that “Eightfold Fence” essay was that trade-off between stability and dynamism or uncertainty and certainty.

But that also, before we move to questions right now, but also should note that in Japanese history, that stability, which can be centuries long, is then punctuated by extraordinarily destructive instability. Whether it’s the 1930s or it’s the Sengoku civil war period of the 1500s, there are periods of extraordinarily destructive — if you want to think of it as creative destruction, you can, but it’s mostly just destruction — instability, and then you get back to this, oh, there’s Japan. It hasn’t changed for 50 years. So we may not in our lifetime see it, but I certainly would think that the balance of history shows us that there is at least a good chance that you’ll see another cycle like that.

So why don’t we move to questions now. We’ve got about 15 minutes to engage in a discussion. I don’t know if you’ve — you know, if you’ve read some of the essays and have reactions, it would be interesting to hear, or general questions on this or anything else we’ve been covering. We do have a mic, so if you don’t mind, just saying who you are and asking a question, I’d appreciate it.

Yes. Over here.

Q: Stanley Kober. You’ve touched on the economy. I’d like to probe that further because I think it’s really much more gray. Japan’s national debt is over 200 percent of GDP now and growing. On a per capita basis, that’s over $90,000 per person compared to about $60,000 for the United States. And this raises the question, they can’t work it down. Do they default? Do you have a sovereign default and what the implications of that would be? I see no indications it’s going to be worked down.

DR. AUSLIN: So, unfortunately, you’re asking that to two security people who have no idea how to really talk about the economy, but —

MS. TATSUMI: Any economists out here that can help us?

DR. AUSLIN: Yeah. That’s what we need. I would say, though, that one difference, of course, is that the vast majority of the Japanese debt is held at home, and so the default is a different type of equation. They don’t have to go out on world markets yet to finance that debt, and so they don’t have to worry about interest rates in the same way. And, obviously, you’ve had basically zero or negative interest rates in Japan for decades.

So, again, unfortunately, I really — I don’t know the answer. I don’t know if Yuki knows the answer, but they are testing the proposition that you can have — I think the latest figure I saw was 242 percent debt to GDP. It’s probably higher than that now, maybe 280.

The one more I think to worry about is China, which is heading into that with a far more opaque banking system, far more informal lending mechanisms under the table. You know, Japan’s big bang in the 1990s really did clean up a lot of the questionable debt, the bad debt, righted the banks’ balance sheets, that maybe, you know, allows for a strength in the system that you can add on this debt that’s mostly domestically held. But I’m already, you know, way out beyond my knowledge level.

I think, you know, for what we do, the question is how does that somehow translate into constraints on budgets and what the government can do in terms of a defense budget or a foreign affairs budget or an overseas development aid budget. And certainly that is a fundamental feature of dealing, you know, as Japan in the world today is you’re constrained.

You know, I mean, there was only a few years ago — the current Foreign Minister Taro Aso, whom probably many in this room know, when he was the — maybe he was only in the Diet, I forget, but anyway, he was calling for a 50 percent cut in ODA because he was looking at the same questions you were, and saying, look, the investment isn’t worth it for us, you know, but then you talk to someone else who says, yeah. But if you cut 50 percent of your ODA, what role are you really playing in either strategically trying to shape countries like Burma or give aid to countries that are on the fence about China or the like? And certainly if you talk to people in the defense — you know, in the ministry of defense, as Yuki does all the time, they will tell you, we want to do X, but you cannot get it past the treasury people. They simply — just they have the say on what this budget is.

So short of the perception of an existential crisis, and, by God, we need, you know, three aircraft carriers and we need them in six months, you can’t move the needle on that because there is this general question of how do you maintain this huge entitlement state that Japan really has. With an aging population, this is all about entitlements.

I don’t know what the latest figures are. Somebody here knows. What’s the entitlement figure? What’s the budget? I mean, it’s hundreds of billions of dollars a year. and it’s going up. Japan is the oldest, you know, advanced society on earth. Those numbers are continuing to increase. The pyramid is inverting in terms of workers versus retirees. So all of that is about keeping this, you know, this advanced standard of living at home. And so far, the country is wealthy enough to do it. How far that plays out, I don’t know. But those are some of the things we should be looking at. Thank you.

Right up here in the front and then here.

Q: Thank you. Miguel Rodrigues. I have been a long-term believer in maintaining world order, you know — (inaudible) — states and whereby great powers pursue their core national interests. And, in the world of today, as I look upon the — (inaudible) — some countries have been more willing to express that profile, like China and Russia, and others like and Japan. There are obvious historical reasons for that relating to the last war. And yet, countries like Saudi Arabia and its new crown prince are raising their profile.

My question is to what extent do both of you believe in the changes, broadly speaking, and the Prime Minister Abe. Will they continue beyond him? Do they reflect a feeling in Japan as, you know, like in Germany within the European Union? My feel, the European Union, they are shouldering the responsibility of leading in the EU. Is that a more widespread consensus that he is just, you know, expressing the tip of the iceberg and so on? Thank you.

MS. TATSUMI: Very good question, thank you. I think that’s what we debate all the time, right? How much of these policy changes that are set by Abe will outlast Abe when he leaves? One of the things that he has done differently about changing these policies, he has been extremely successful in institutionalizing this change.

So I’ll give you one example which is kind of an inside baseball, but then — there’s an organization, National Security Secretariat, which, you know, they will like to call it the Japanese version of NSC. When it first started, actually under a Democratic Party of Japan, they really kind of tried to start it, but then they really didn’t go anywhere, that they were just largely seen — that small office was largely seen as another layer on top of this multilayer. It doesn’t really have any strong coordination power among the ministries. So they’re just making life difficult for all the government bureaucrats.

Since Prime Minister Abe came back to the office in 2012, that institution has transformed so much. It has been entrusted with so much more authorities, both tangible and intangible, that it really has become the core of interagency coordination, some of those key decisions were formed and shaped and kicked up for chief cabinet secretary or Mr. Abe’s approval. Those are institutional changes that have been done by him touching the personnel system of the government agencies.

One of the reasons those interagency offices in Japan really didn’t quite become influential in the past is that, at the end of the day, everybody in those interagency offices belonged to the home ministry, so their loyalty was not to the cabinet office that they’re at but they’re more with their home agency.

What Mr. Abe did during his tenure, which he practically inherited what DPJ tried to do, is that take those personnel assignment authorities beyond certain levels of senior officials away from the home ministry. And now the cabinet office holds that authority. So what that does is senior officials, who’s technically seconded to this interagency office, it can very well be their only ticket, but if they do well in that one-way ticket position they have so much more influence than, you know, than they could have had in their home agency. So the loyalty of those senior level people, who’s technically seconded from those different agencies are completely different now.

So some of those institutional changes will definitely stay after Mr. Abe leaves the office because it did require legislative change to make this happen. So what he’s been smart about doing is that something that needs to be sustainable, like personnel needs to be sustainable, some of those interagency decision items needs to be sustainable. He kind of legislated them into the system that it’s going to be very hard to undo.

DR. AUSLIN: Have you written about the NSS?

MS. TATSUMI: Not yet.

DR. AUSLIN: OK. So that’s a great topic for somebody to write on is this type of institutionalization. I will preface giving you three scenarios by saying that something— it’s probably implicit in what we’ve been saying, but it should be explicitly stated that Shinzo Abe is the most consequential Japanese premier in a generation or more. I mean, I look over to Rust and Robin for sort of confirmation of that, that — I mean, I guess you certainly can go to Nakasone in the ’80s and before that, I don’t know who you’d pick. Who would you pick? Sato, yeah.

MS. TATSUMI: And then Yoshida.

DR. AUSLIN: And then Yoshida for sure, right after World War II, Sato in the ’50s, right, or ’60s — early ’60s, right? And then Nakasone in the ’80s and then Abe, right? So he’s clearly one of the handful of most significant premiers, which we’re just not used to thinking about.

But let me give you three scenarios to your question. Number one is that he leaves office and all of this, it doesn’t fall apart because, as Yuki said, it’s been institutionalized, but it’s simply ignored by his successor — risk adverseness, lack of political will, lack of political support, whatever. Japan has all this on the books — it does nothing with it. That’s number one.

Number two, they continue to sort of do what Abe has been pushing them toward and the way he’s institutionalized it, and they figure out the world’s not ending. By God, it’s not — you know, we’re not going back to the 1930s, we’re not in a fight with people, there’s a lot more we can do. It’s just — it’s natural now. It is a normalized country. And so they then continue to do more of it. That would be number two.

And then, number three, which is they sort of drift until there’s a real crisis and then what they discover in that crisis is that this institutionalization, the framework is there, the ability to do something very big, very fast is there, and they simply do it. They take advantage of it, and then that changes the mind-set.

So it seems to me it’s either going to be neglect — sort of a benign neglect, a, you know, realization that doing this doesn’t end the world, or suddenly something becomes a catalyst where it becomes clear why you have all these things, and they take it and that then maybe moves them in a new direction.

And for anyone out there who’s just thinking, well, yeah, but, you know, ultimately, what’s Japan really going to do, all I would say is talk to your Chinese friends because they are the ones who remain the most concerned about Japan. And I think it’s a genuine concern. I don’t think it’s a red herring. I think when you talk to people in China, when they talk about their concern about what Japan can do, they know that Japan retains this inherent strength and these capabilities, and they’re very, very worried about that. So we may think there’s not much they can do. That is not the perception inside the region.

So we have time for one, maybe two more questions. We have one here and maybe another one.

Q: Thank you for coming. My name is Mitsuo Nakai, Japan native, US citizen. I’ve been away from Japan about 40 years now, so you guys probably know much more about Japan than me. But from my perspective, I’m old-fashioned. Reagan, the president, said a country without war is not a country. By the same token, I’m thinking, you know, a country cannot defend yourself, your country is not a country.

Now, I know we have a security treaty with Japan and the US and so forth, which has been good. It’s been enormously good, positive. But if you can’t defend your country — China is doing it, other countries are doing it. They’re spending money. In fact, China’s spending what, 7.3 percent of GDP, something like that, enormous amount to build up the military and so forth. We can talk about the economy all day, but, I mean, in my opinion, it’s not good enough.

You know, I’m not talking about going back to imperialism. That’s not what I’m saying. But I think maybe — now that Abe has won the election, maybe it’s time for him to keep moving on changing the constitution, including Chapter Nine. OK. But his hands are tied in the back because of public opinion. I’m sure she knows all about it.

So my question is, which direction the Japanese public is moving toward, how much Abe can try to change the constitution? Look at North Korea, look at China, you know. You’re going to — that’s my question.

MS. TATSUMI: It’s a difficult question. It’s kind of ironic because there are certain things in the realm of security and defense that is actually hard for Prime Minister Abe to do because of the perception that people have about him. So when he first became the prime minister in 2006, even in this country, oh, my God, Mr. Abe became prime minister. Is he going to, you know, try to make Japan more independent from us? You know, is he going to be more aggressive?

So those — for better or for worse, that is the perception that he gives out. And that makes certain changes that he wants, I think, and then also I would even argue may be good for Japan, like constitutional changes so that Japan has the full-fledged self-defense force that can both defend and attack. Those things are difficult because of this perception.

So hindsight is 20/20, but it would have been much easier for someone like Prime Minister Noda to do exactly the same thing. And I bet you, you would see much less pushback on —

DR. AUSLIN: And he did some, right?

MS. TATSUMI: He did some, like arms export control relaxation, he started that. He was —

DR. AUSLIN: Purchasing F-35s.

MS. TATSUMI: Purchasing F-35, and that was a catalyst for taking this whole new look at the way that Japan has been doing arms export business. And that really paved the way for Prime Minister Abe setting the course on current arms exports, revising the ODA, and all the other ones. So I think I would say, yes. A country that cannot — I would say two things. The country that cannot defend itself is not a country.

DR. AUSLIN: Right.

MS. TATSUMI: That is absolutely true. But, at the same time, someone has to pay the bill for that defense force. So, in that sense, economy and defense do go hand in hand.

DR. AUSLIN: Yeah. And I was just saying this is a very good point to raise, that this has been bipartisan in Japan. It has been bipartisan. It’s not that it’s just Abe sort of comes to power and says it’s time to, you know, reconstitute the imperial Japanese military. It’s not what he — you know, this was from Noda, and it was even a little from Kan. I mean, they’ve been moving in this direction. And then it started with Abe in his first term, and it was Koizumi before that.

So I know we’re out of time. Maybe we can just get one last question in and then we’ll finish up. We’re not running anywhere quite yet. Yes, right here in the front please.

Q: Hi. My name is Chris Cerone. Thanks so much for your presentations here today. I think there is — there seems to be some agreement that Japan would most likely benefit from an infusion of new ideas and dynamism. If you look around the world, countries in that sort of situation tend to look toward immigration as a way to do that. I know that’s a touchy subject in Japan, but could — what are the prospects from your perspective of Japan maybe recognizing that and acting on it in a serious way as a way to address some of the economic challenges, the budgetary challenges, and even aging population challenges?

MS. TATSUMI: From where I sit, things are not looking very optimistic because even before talking about immigrants, I think Japan is one of the few countries that don’t recognize dual citizenship. So, you know, the gentleman sitting next to you, he probably had given up the Japanese passport when he became naturalized. And it’s — you know, they still — there’s no sign that they will change that policy. If they start changing that policy and allowing, just simply by allowing having dual citizenship or, you know, like I’m not saying that, you know, EU in a way, but — you know, Schengen in a way.

But just by simply allowing that, that will make the peoples back and forth between — in and out of Japan much more dynamic, whether that may be for schooling or business, or, you know, simply going overseas to live and come back and that — it seems to me that accepting immigrants for Japan is kind of like three steps too far right now, that there are a couple of steps that need to happen, which is dual citizenship issue I think in my mind is one area.

And the other area is the permanent residency system that, right now, you know, there are — I mean, the department — Ministry of Justice does have a process. At this point I think, you know, our permanent residency process is pretty broken. My husband is a victim of that currently.

But more conducive to this idea of maybe not an immigrant because an immigrant — the idea of immigration is that people who look very different from you also hold the same passport as you, and that’s a little bit too far of a stretch for Japanese. But maybe they can start by getting a little bit more used to the idea that, you know, people who look very different than you, but they speak Japanese, they live in Japan, they work with you, they do things with you, and they’re a legal permanent resident. I think if that notion starts getting more acclimated and more societally widely accepted, I think it will be a good kind of — intermediate stepping stone for Japan to address some of those, you know, labor shortage and the aging issue.

DR. AUSLIN: Yeah. Briefly, I would say not only do I completely agree but that’s the — you know, first of all, that — but even if you do that, that’s going to be a very small slice, right, people who can speak Japanese and, therefore, operate within the Japanese economy and society. It’s going to be pretty minimal as opposed to the way we do it here.

That said, though, Japan has an enormous number of foreigners. They’re not immigrants. It’s not the way we think of that they have — you know, they have rights and they’re on the books and the like, but they come over as students. They’ve been there for years behind the scenes, doing construction, doing service work. They’re behind the — you know, behind in the restaurants, in the backrooms and the like. As Japan has both its population has shrunk, as it became wealthy enough that a lot of Japanese didn’t want to do what used to be known — I don’t know if they still call it the three Ks, right, kitanai, kitsui and kurushii. So dirty, risky and then sort of like unenjoyable, boring, something like that.

MS. TATSUMI: Suffering.

DR. AUSLIN: Suffering. You know, we don’t want to do that type of work so you’ll let in people from all over — North Koreans and Southeast Asians and Middle Easterners, and they were all around. I used to go to Ueno Park on a Sunday, and everyone would be out, you know, out there. Remember, you’d go to Ueno Park, and there would be thousands of, you know, Iranians and Pakistanis and others who had come to work in Japan. So they actually have probably kept the economy going in a lot of ways in which it’s invisible, but it’s not — it has not made its way to that level of saying, OK, we have this and we’ve live through it so now we can bring it to that next level.

Maybe you see very small glimmerings of that where Abe has said, we can do it in areas of national need. So they’re bringing in, for example, foreign nurses because of the elderly situation in those happen to be particularly from the Philippines. So Filipino nurses are particularly — are a different category now. You can come in because they’re needed. You have to pass a basic language test I think.

But, again, you might just be seeing the thin wedge in, but that’s one of the great questions facing Japan. And it is this question of barriers and boundaries against the world to maintain the stability and the coherence that Yuki talked about that we think is negative, but it’s a trade-off that the country so far is willing to make. Does that continue? That’s why Japan’s story hasn’t ended yet. But our time has.

So I thank you for coming. I hope you enjoyed the discussion. We’ll be hanging out for a little bit. There’s coffee, there’s cookies, and there are copies of the books if you don’t have it. So thank you very much. I appreciate it. (Applause.)

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