So, summing up, what I want to say is essentially this: reform is very tough anyway. There are people in this room who know that much, much better than I do. It usually takes a long time. You could argue that Australia has been under a reform process for 20 years. Japan has been seeking to reform seriously maybe four, and only just beginning to seriously get going in a tough, hard, rigorous way. Bear in mind that this is a harder society and a harder economy to restructure than most other economies in the West. It is effectively a one-party state. You look at the problems of changing one party states. Look at the problems of changing the Soviet Union, look at the problems of changing China, where at least you had the top strata of policy makers broadly in agreement in the way to go.
Look at the changes in another way, another sort of one party state totally different, Indonesia - very, very much harder than undergoing change, making change take place, for example, here, United States, Britain, New Zealand. And the reason is that all the main sectors of society are integrated and most of them have a considerable stake in the status quo. Very, very hard to shift. So they’ve got to overcome that. But, by the same token, in my view there is movement taking place in Japan slowly - not as quickly as we would like but it is still taking place.
Now, what about the immediate environment, the international environment in which Japan operates. You can’t really look at what is happening in Japan and the potential relative decline of Japan without looking at what is happening on the other side of that mirror, and that is the rise of China, because I think most people who spend time thinking about these issues in Tokyo would see the rise of China as being the overwhelming development for the East Asian region for the next two decades. To some degree, I think we have had our eyes taken off that particular ball by what has been happening in the Middle East since 11 September, and also what is happening in the Korean Peninsula more immediately.
But the overwhelming external policy preoccupation of the Japanese is how to manage the rise of China. I’m not talking here about containing China, I’m not talking here just about rivalry with China, but how to deal with this new phenomenon. Now, in one sense the Japanese are dealing with it by going with it, by investing very heavily in China, by working with the Chinese. Their trade relations are there, their investment relations are growing and increasingly the major Japanese corporations are going offshore to China.
So they are dealing with China in one respect by going with it, by joining with it to their own advantage. Even though there are problems created in Japan by moving offshore, there are still enormous economic advantages in so doing. But also of course what they are looking to is to see how they can deal with the rise of China to avoid being disadvantaged in their dealings with East Asia, and that is behind both what Japan is doing in terms of its policy of a series of FTAs - free trade agreements - with East Asian countries, and what China is doing with its policy of one great big free trade agreement between China and the ASEAN countries. It is a jostling for position as China increases in size and in power and, in a relative sense, Japan diminishes in economic influence.
The second external preoccupation is the more immediate one of the Korean Peninsula - what is happening in North Korea. Let me just say right now that in policy circles in Japan, some would argue that this is the most important security issue facing Japan since the Second World War. And you can see that if you look at the proximity of North Korea. There are other issues which colour Japanese perceptions of North Korea, particularly the abductee issue which has been running - the domestic issue involving what to do in relation to Japanese who were kidnapped by the North Koreans in the ‘80s and who’ve since come back to Japan and what more the North Koreans need to do - it’s a very, very big issue at a popular level. But amongst the policy makers, the real concern is the possibility that North Korea may become a nuclear weapons state and all the unpredictability that that involves. And there is currently enormous focus in Japan going on to that issue.
I shall also mention, in relation to the Iraq war, the stance they’ve taken has been much more forward looking and much more supportive of the United States than most of the forecasts would have been had we foreseen this scenario two or three years ago. There’s several reasons for this. One is Koizumi’s own view and the view of his government that this is the way to go, this is the correct thing to do, and this is in Japan’s overall strategic interests. No question about that. The second factor, which is just as important, is that the Japanese were seeing Iraq through the prism of North Korea, that it is crucial at this particular period in time that like minded countries - which means essentially the United States, Japan, South Korea as well as other countries such as Australia or members of the P5, Britain and France - approach the North Korean problem with as much unity as possible, that it was to the disadvantage of all of us if splits were to appear. Equally, of course, in a narrower way the Japanese saw it as absolutely crucial that they could work in tandem with the United States - and that very much remains their policy and it is, let me say, a crucial issue.
The other point I’d just make, relations with the United States, I think I have probably covered. It remains very important to them, it remains important because that’s the way the government thinks. It also remains important because most Japanese policy makers would see advantage in retention of a considerable American strategic interest in East Asia at the time of the rise of China. This is not because of a particular threat from China, it is merely because of the natural need to see balance when one part of East Asia is growing at the speed which China is.