Bill Emmott
Bill Emmott - Internationbal Author & Adviser

The UK, Japan and the changing international order - Bill Emmott and Masayuki Tadokoro

UK-Japan Global Seminar Series, February 1st 2016

The Chatham House seminar, ‘The Future of Capitalist Democracy: UK–Japan Perspectives’, held
in London on 21–22 September 2015, exposed a wide range of concerns common to scholars and practitioners in both countries, not only about the economic condition of our liberal democracies but also about the domestic and international politics that surround and in uence them.

Domestic political backlashes against inequality, corporate malfeasance and the stagnation of real incomes over the past decade are being reinforced by uncertainties about the durability of the post-Cold War international order. Russia’s military intervention in Ukraine, China’s strategic and territorial claims in the South China and East China seas, the rise of Islamic State of Iraq and Syria (ISIS) and the Syrian civil war, the migrant crisis affecting Europe and the Mediterranean, and evolving threats to cyber security – all constitute serious challenges to the rules of the global game.

A natural, and perhaps inevitable, question that emerges in the light of such concerns is: ‘How can the United Kingdom and Japan work together to deal with these issues?’ This, however, is a question more appealing to diplomats than to scholars or journalists. We are sceptical about the idea that bilateral cooperation can play a significant role in these matters, even if we are not at all opposed to it. Rather, we feel – and our feeling was con rmed by the September discussions – that what is most valuable is to enhance British and Japanese awareness and understanding of each other’s perspectives and, in particular, of the differences in emphasis or priority seen in the two countries, and thereby to help each other promote solutions more effectively in multilateral forums.

This essay aims to contribute to that process. There is plainly a great deal of overlap and agreement between Japan and the UK on many issues. There is always a lot that each country can learn from the other. But it is in the differences – whether of perspective, of experience or of emphasis – that the most important learnings lie. This essay will therefore explore differences more zealously than it seeks similarities.

Attitudes to China’s rise and its regional policies

In Japan, China is seen as clearly the major threat to regional stability. Britain’s and Japan’s mutual ally, the United States, seems to agree. So there is much puzzlement, and not a little concern, at
the impression that Britain sees China differently. Especially during the visit to China by the British chancellor of the exchequer, George Osborne, in September 2015 and then the state visit to London by China’s president, Xi Jinping, a month later, the British government was seen by many
1 in Japan (and indeed by many independent observers in the UK) as kowtowing to China in pursuit of investment and trade, and disregarding the legitimate interests of allies such as Japan.



As, respectively, a journalist and a scholar, neither of the authors of this paper is in any sense a spokesman for his country’s government. Together, we share a sense of irony that, at the time of a Chatham House event discussing ‘capitalist democracy’, one of the countries that can be said to have given decisive shape both to modern capitalism and to modern democracy was sending its nance minister to act, in effect, as a salesman in the world’s largest capitalist dictatorship; and that the UK was promoting its commercial relationship with China as vital for the future of its own capitalist democracy. When governments act as salesmen, whether for exports or for inward investment, it
leads to bad compromises and is always likely to distort markets. A price is always paid. Democratic politicians’ goals are short-term, for a few jobs here and headlines about billion-pound contracts there, so even when – as with the British chancellor – they portray themselves as acting in the long-term interest of their country, they are in truth motivated in other ways.

When governments act as salesmen, whether for exports or for inward investment, it leads to bad compromises and is always likely to distort markets. A price is always paid.

Beyond the aesthetics and immediate politics of British policy, however, this question of how to deal with a China that presents both business opportunities and security threats at the same time reveals a crucial difference of opinion between European of cials and Japanese ones about the right approach to China.

European of cials share the view that the rise of China, and in particular its assertiveness in the South China Sea and East China Sea, poses a threat to stability, though even in modern times distance makes such threats feel less urgent. (Countries far away in Europe still fret more, for instance, about Russia’s activities in Ukraine than they do about maritime territorial disputes in Asia.) America’s decision2 to sail a warship on 27 October 2015 close to China’s new arti cial islands in the South China Sea so as to signal that it rejects the territorial claims they imply seems in Europe to make sense: we rather admire it. But European of cials – including the British, detached though they often seem from European Union decisions – are taking a very pragmatic view of China.

Of cial Britain – as distinct from scholars and commentators, whose views are more diverse – does not seem to think that it can do very much about China’s territorial assertiveness. It therefore prefers to leave it to others to deal with the issue. This may seem strange, given that for centuries European navies, in effect, controlled the South China Sea. But such is today’s European reaction, perhaps conditioned by a lack of con dence in its capabilities: a renunciation of old roles and responsibilities, thanks in part to post-colonial legacies, and a considerable downplaying of the importance of maritime territorial disputes in Asia. Europeans see China’s economic role in the region and in the world as simply a new reality which needs to be accommodated, adjusted to and even exploited, even if China’s assertive behaviour is a somewhat unpleasant part of that reality. In British politics and commentary, while there has been much criticism of the kowtowing to China by David Cameron’s government, there has also been widespread acknowledgment that Britain is simply playing catch-up with the also-kowtowing Germans and French in their commercial dealings with China.

That is why Britain and other big European countries were so quick to join China’s initiative for the Asian Infrastructure Investment Bank (AIIB), to Japan’s and America’s horror. Britain concluded that the



AIIB was going to happen regardless, and that one way or another Chinese capital was going to play an important role in regional investment. It therefore made sense to get involved at an early stage, as this seemed to offer Britain at least a chance of having a modest in uence over the new institution (although this decision admittedly goes against the traditional British approach to working with Europe).

Japan does not fundamentally dispute the idea that power shifts demand adjustments also to existing multilateral institutions. Certainly there is Japanese agreement that the Bretton Woods institutions of the IMF and World Bank are obsolete in their current form, and that China – as the second-largest economy in the world – has to be better incorporated and represented in future structures for global economic governance.3 The Japanese sense, however, that the UK should have and could have done

a better and more responsible job of responding to the shift in global economic power – notably by giving China an incentive to operate within existing norms and principles rather than encouraging it to challenge these through unilateral actions. And Britain is alleged to have failed to consult, or at least warn, its American and Japanese allies about what it was envisaging. Chancellor Osborne has practically run British foreign policy towards China, yet he seems not to have tried very hard
to coordinate policy with the US or Japan. Nor has he shown any serious concern about regional geopolitical problems caused by China. As a consequence, there is a Japanese sense that for the UK today, East Asia is merely a place to make money, nothing more.

More broadly on the economy, all over the world analysts have spent much of the past year trying to assess whether turmoil on the Shanghai stock exchange could signal that China’s high-growth period might be over and that a serious nancial collapse could be imminent. Chinese economic weakness has been worrying the West more than Chinese strength. This concern has also been present in Japan, given the country’s own much larger trading relationship with its continental neighbour. But the difference between Japan and Europe is that – while Japanese are not known for hard-nosed realism – a combination of its geopolitical environment and the quick recent shift in the balance of military capability in favour of China (which is now spending four times more on defence than Japan) means that Japan simply cannot afford the European luxury of ignoring the geopolitical implications of China’s changing behaviour. The paradoxical attitudes of Europe – where people worry about a Chinese downturn while being quite happy to see Russia suffer economically as a result of the sharp decline in oil prices – can also be explained by the tangible European security concerns arising from Russia’s behaviour towards Ukraine.

Attitudes to Russia and its policies in Ukraine

On China, there is serious concern about the consistency of Britain’s policies and about the principles behind them. That concern is matched, however, by British concern about the consistency of Japan’s policy towards Russia. Some British policy-makers feel that while Japan’s government devotes a
lot of time to calling for respect for international rules when it comes to China, it shows a different attitude to Russia. Yes, it has abided by the US-led sanctions on Russia over the latter’s annexation of Crimea and intervention in Ukraine, but the European suspicion is that Japan is lukewarm about this. Europeans hear much talk of a Japanese desire for a deal over the Northern Territories, despite what



Russia has done in Ukraine, and wonder whether at some point Japan might break ranks in order to further this goal.

Japan has been maintaining the unity of the G7 in its objection to Russia’s expansionism. It has also participated in multilateral economic sanctions despite the fact that the Ukrainian issue poses no more direct threat to Japan than China’s aggressive actions in the East and South China seas pose to the
UK. Russo-Japanese relations were downgraded a great deal after the Russian annexation of Crimea, despite the fact that Prime Minister Shinzo Abe had met President Vladimir Putin as many as ve times in 10 months before the annexation. But after annexation, Abe instead visited Ukraine in June 2015, clearly expressing Japan’s support for the territorial integrity of that nation.

Having said that, Japan is certainly not diplomatically monolithic. There are voices calling for a
more ‘independent’ approach towards Russia.
4 It is reasonable to speculate that within the current administration some are still indulging in the hope of a breakthrough on the territorial issue by inviting Putin to Japan. Is there any possible grand bargain to be made out of appeasing Russia? It
is highly unlikely. In the rst place such a deal would not work. It is hard to imagine that President Putin would make territorial concessions on Russia’s eastern front while fanning jingoism at home. Secondly, Japan simply cannot afford to alienate the US, given Japan’s heavy strategic dependence on America. Thirdly, the territorial issue is largely a matter of principle for Japan. The disputed islands have very little material value, but are a symbol of unlawful and opportunistic Russian expansionism. Thus, it would be meaningless to get these useless islands back by undermining Japan’s objection to changing the status quo by force. Besides, if Japan condoned Russian expansionism in Ukraine, its position
vis-à-vis China over the territorial issue in the East China Sea would be badly damaged. It may now perhaps be a comfort to some Japanese thinkers that the increased intervention by Russia in Syria in the autumn of 2015, which happened to occur just ahead of the 13 November ISIS jihadi killings in Paris that drew Britain and others into a new phase of military action in Syria and Iraq, has presented Europeans with equivalent dilemmas, which they too must resist.

There are, however, differences between Japan’s and Britain’s national interests when it comes to relations with Russia. For Japan, having China as a neighbour poses an immediate security threat. Thus, it has a strong reason to keep engaged with Russia rather than push Russia into the arms
of China. Meanwhile Russians, despite an ostensibly intimate relationship with China, are deeply suspicious of it. They are concerned about their territorial integrity in East Siberia, where very few Russians live along the border with populous and powerful China.

It is dif cult to remember now, more than 20 years on. But soon after the end of the Cold War, Japan was criticized for its lack of exibility towards Russia. In fact, Prime Minister Abe’s nuanced approach is very much driven by his desire to have more exibility in Japan’s relationship with Russia, hitherto rendered completely rigid by the relatively minor territorial issue.5

Europe’s refugee crisis, immigration and terrorism

Two big Japanese concerns are Europe’s handling of the Mediterranean, Afghan and North African migrant crisis, and the occurrence of terrorist attacks in European cities as extensions of the wars in the Middle East. It is clear that the Japanese would be utterly unprepared, intellectually or in



practical terms, for large-scale population in ows. How is Europe going to deal with the migrant crisis? Both Japanese and British observers nd it moving to see Germans welcoming migrants, even if such positive sentiments are laden with doubts about the practical impact of seemingly open-ended generosity. But given the magnitude of the problem, a humanitarian attitude alone will anyway not solve it, particularly when anti-immigrant political parties are gaining influence all over Europe (an in uence which terrorism is now bound to increase further). It is easy to say that stabilization of the Middle East is the key. Nobody seems to know how to achieve this.

This concern was underlined by the aftermath of the Paris terrorist atrocity of 13 November. After such a shocking assault on Europe’s liberties, civilization and indeed way of life, the natural tendency will be for governments to respond forcefully, both by strengthening internal security and by trying to retaliate against ISIS fighters in Syria and Iraq. But to what end? Experience with terrorism on all continents tells us that closing borders or allowing tighter security to infringe liberties will not solve the problem. Nor will raining down bombs from the sky.

The connection between Europe’s refugee crisis and terrorism is, in any case, that the refugees are seeking to escape exactly the sort of violence and insecurity that Parisians have now experienced. So to close borders to asylum-seekers on grounds that there is a risk of terrorists slipping through under cover of the migrant flows makes little sense. Fully passport- and border-free travel between the 26 member countries of the Schengen Agreement (which does not include Britain) might be suspended in order to restore public con dence in the authorities’ control, but to go further would likely create more problems than it would solve – especially by dividing European countries from each other, just when they need to collaborate more if they are to improve security. Temporary border controls are already appearing all over the Schengen Area.

The connection between Europe’s refugee crisis and terrorism is, in any case, that the refugees are seeking to escape exactly the sort of violence and insecurity that Parisians have now experienced. So to close borders to asylum-seekers on grounds that there is a risk of terrorists slipping through under cover of the migrant ows makes little sense.

Collaboration need not, and surely should not, be limited to Europe. The migrant crisis is principally a European issue, certainly, as this is happening in Europe’s own neighbourhood. Europeans called the Mediterranean that name, the ‘middle earth sea’, because in Roman and Greek classical times they thought of it as the centre of their world, and believed that that notion applied as much to the Mediterranean’s southern coasts as to its northern ones.

But as with most really big refugee ows – such as Vietnamese ‘boat people’ from the late 1970s to early 1990s – a bit of help from Europe’s friends in the rest of the world, including Japan and the US, will always be welcome. It is notable that the new Canadian government has pledged to take in more Syrian refugees (25,000) than Britain has, which is both inspiring and shaming. It would be splendid if Japan could follow Canada’s example and also expose British policy for what it is. Sadly, Japanese policy so far does not make this a likely prospect.

Whether or not that changes, three things are clear. First, that the ow of refugees from the war
in Syria, the instability in Libya and the various con icts and repression in North Africa is going to continue and will probably increase. So this should be thought of as a fact of life, for the time being. Second, that inside Europe the refugee crisis is going to increase tension between and within the


countries of the EU, while it also is severely damaging public confidence in the EU. After all, people are inevitably asking, if the EU cannot find a collective solution to a shared issue such as this, what is the point of it? It was always said that the EU’s main function was to solve common problems. Third, it is clear that European countries will have an increasingly noisy and bitter debate between those who are in favour of immigration in principle (whether by refugees or others) and those who see it as a threat to their way of life and culture.

At present, humanitarian issues are at the forefront of the debate. But the argument is bound to move
on to the skills the refugees bring, to the ageing and shrinking of populations in some European countries (especially Germany), and to the role that immigration can play in dealing with demographic issues. Opponents will stress the current levels of unemployment in Europe (less true in the UK) and the cultural aspects of immigration, as well perhaps as stressing the dangers of adding to the potential for terrorism.

This debate could develop in worrying directions. Europeans are generally more sympathetic to immigrants on humanitarian grounds – especially as Europe feels so impotent in the face of the Syrian civil war, amid new interventions in Syria by Russia and Iran – than on demographic or other practical grounds. The leader of the UK Independence Party (UKIP), Nigel Farage, struck a chord with many when he said that he didn’t care whether immigration might add to UK GDP: he was prepared to sacri ce potential economic gains for reasons of culture and national identity. His candour can be admired, even if one disagrees with his position (and he has not yet had to specify how much poorer he would be prepared to make his country by clamping down tightly on immigration).

The key future benchmark, though, will not so much be Britain as France, and specifically the French presidential election of May 2017. Then the big question will be whether the Front National, the anti- immigrant and anti-EU party led by Marine Le Pen, can succeed in getting into the second round of voting. Unlikely as this may be, it would be reckless to rule out entirely the chance that she could even win in the second round, if circumstances in the French economy and in the migrant crisis move in the wrong direction. The horrors of 13 November 2015 can only have made this prospect more plausible.

To be sure, the immigration issue should not be reduced to a simple question of ‘yes’ or ‘no’, ‘for’ or ‘against’. It has long been a natural part of European history, throughout which the crucial questions have been how fast immigration could be and how well the new populations could be integrated. Few people realize that Boris Johnson, the very English mayor of London who made a high-pro le visit to Japan in October 2015, had Turkish and Russian ancestors who immigrated to Britain during the mid- 20th century. But the questions of both politics and practicality are less about the fact or desirability of immigration than about its speed and about how best to integrate the newcomers.

For Japan, the Rugby World Cup that was hosted in the UK in 2015 has, in one sense, had a positive
effect on attitudes to immigration. Japan’s rugby team achieved its great triumph over South Africa under a foreign coach, with 10 out of 31 players of the national squad being originally from abroad and with only ve of those foreign-born players actually possessing Japanese citizenship. Regardless of their legal status, once in the cherry uniform they are all simply members of the Cherry Blossoms or simply ‘JAPAN’ – as the national team is traditionally called by Japanese rugby fans – and are national heroes. An article by Masayuki Tadokoro in the monthly journal
Chuo-Koron therefore calls for serious discussion on immigration policy, arguing for a transformation of ‘Nippon’, a traditional identity based upon perceived ethnic homogeneity, into a more multi-ethnic and international identity of JAPAN by introducing the dynamism that immigrants bring with them.6


While no country can unconditionally accommodate unlimited in flows of immigrants, in today’s globalized world a prosperous and safe country will inevitably attract people from outside. Thus, the choice we are facing is not between a categorical ‘yes’ and ‘no’ to immigration. The question we must ask is how best we can maximize the interests of host countries, sender countries and immigrants themselves.

We hope that Masayuki’s article will have some impact but acknowledge that he is in a minority. Although Japan is paying lip service to European humanitarian efforts and has always been a major financial supporter of the UNHCR (the UN’s refugee agency), the country has so far admitted only 11 Syrian refugees.7 Japanese business has long been interested in introducing labour from abroad. A group of politicians from the Liberal Democratic Party (LDP) came up with a plan to take in 10 million migrants over 50 years.8 But these ideas have never taken off, and there seems to be no real prospect for a breakthrough under the current government. Why is Japan so reluctant to reform its immigration policies? Japan does have its share of xenophobia, comparable to the sentiments articulated by UKIP or the Front National, but it is hard to believe that such views are particularly in uential. The main reason for Japan’s extreme resistance to immigration reform is a vague but widely held sense of insecurity on the part of the majority of ordinary Japanese, combined with a long history of relative ethnic homogeneity.

It is widely believed in Japan (probably rightly) that many of the social virtues enjoyed there are
due to the high levels of trust and consensus in its society. It is also widely believed that large in ows of immigrants might endanger these very qualities – which include low crime rates, highly reliable services and products, and processes for settling disputes without excessive litigation. Certainly, European reality does not seem to be offering strong counter-arguments. It may be false to assume that immigrants are likely to more violent, less honest and more litigious than Japanese people. But it is true that the shared language, norms and manners and simple habits of the Japanese contribute to easier communication and effective coordination among members of this society.

Will there be a shift in public attitudes? ‘Eventually inevitably but perhaps too slowly’ is the best answer. It is inevitable because Japan already has sizeable numbers of de facto immigrants and depends upon them. Japan hypocritically refrains from actually calling them immigrants, but it simply is a fact of life that many of the 200,000 or so ‘technical interns’, for example, play indispensable roles at factories, construction sites, farms and convenience stores.9 The ‘technical interns’ who are allowed to stay for three to ve years in order to ‘learn valuable vocational skills’ are, as can easily be seen, practically guest workers, and a considerable number of them do not leave after their term is over. Some of them stay on in legal ways, such as through marriage with Japanese partners, while others do so illegally.

As in Europe, where the introduction of immigrant workers was not a result of genuine public discussion but started as an easy way to nd cheap labour, in Japan the reality precedes serious policy debate. European experiences also suggest that the sooner Japan takes active measures to integrate newcomers into its community, the better the chance of avoiding ghettos. In fact, out of sheer daily necessity, some local governments, which host many foreign inhabitants, are already implementing quite advanced policies, offering various services to the newcomers. Notable success stories such
as Japan’s rugby team do hopefully have positive impacts on public recognition of the valuable



contribution immigrants are making, as well as of the pressing need for sensible policies on the national level.

It is unfortunate, therefore, that the terrorist attacks in Paris are likely to strengthen the negative image of immigration among Japanese and further delay serious discussion of immigration policy. Despite the fact that the last major terrorist attack in Tokyo, in 1995, had nothing to do with immigrants but was conducted by a home-grown cult group, Aum Shinrikyo, the incident in Paris will be referred to as evidence of the danger of accepting immigration. Japanese people and institutions, to say nothing of Western mass media, also forget that Japan accepted sizeable numbers of refugees (about 11,000) from Indochina in the 1970s and that these arrivals were generally well treated. Japanese people are learning an incorrect lesson if they assume that social cohesion is attributable

to a static historical homogeneity of the population. Rather, such cohesion is something a nation reproduces through constant efforts and adaptation to change.

The issue of inequality

Divisions over immigration in Europe seem to symbolize a growing gap between those who lack the skills to compete in an increasingly globalized market economy and those who are better off under global competition. So alongside immigration, the important question is whether this divide, and rising levels of inequality, could pose future political and economic threats. More pithily, one could simply ask: is Thomas Piketty10 correct? A quarter of a century since the collapse of the communist Soviet Union, is there any chance we could see a major re-emergence of an anti-market movement? Does Jeremy Corbyn, the newly elected Labour Party leader in the UK, represent a sign of serious popular revolt against capitalism?

Such questions are more readily posed by outsiders than by locals, for locals often fail to perceive trends and movements that are gradual, as is the case with inequality and feelings against globalization. That said, what is remarkable about the European response to its long recession and stagnation since the 2008 financial crisis is how little rebellion there has been against capitalism and inequality, rather than how much. The see-sawing results for the Front National in France’s regional elections in December 2015 illustrate it: a ‘shock’ success as the leading party in the rst round of voting, but then a total failure to win any councils in the second round a week later, with the party’s vote stuck at 27–28 per cent.

Europe is encountering many of the same forces and going through many of the same experiences
that Japan did after its bubble burst in the 1990s. Britain currently likes to think of itself as different, thanks to its past two years of fairly strong economic growth and falling unemployment, but it is less different than many people think. Japanese, British and other Europeans can blame many of the same people and institutions: reckless bankers and property speculators; politicians who exploited the excesses of credit-fuelled boom years for their own purposes; regulators who failed to do their job of supervising and intervening; company managements that responded to nancial stresses by resorting to fraud. Some of the solutions adopted for an apparent lack of competitiveness are producing similar consequences in Europe to those in Japan. Most notable are supposed labour market ‘reforms’ that simply create an underclass of low-paid workers; these protect corporate profits but contribute to anaemic consumer demand as wages remain depressed and productivity growth low. Such dual labour


markets are more a feature of continental Europe – including Italy, Spain, France and Germany – than of Britain, but some of the same issues exist in the UK.

European countries may be more susceptible to political and social upheaval as a result of economic hardship, because they lack the sort of social cohesion that has helped Japan to live fairly peacefully and cozily with long-term economic stagnation. So the persistence of high unemployment – with nearly 23 million people out of work in the EU, compared with less than 8 million in the US (despite
a population three- fths the size of the EU’s) – makes it reasonable to worry that eventually patience will snap, in one or more European countries. That is not currently very likely in Britain, despite Corbyn’s election as Labour leader, simply because joblessness is now low and wages are at last rising, after seven years of stagnation. However, any reversal of that progress could produce a pro-left backlash. On the other hand, a challenge to the political and social status quo is quite likely in France and other EU countries eventually, especially given the added pressure of immigration.

A key point connecting the immigration issue and inequality is that such sources of alienation
are likely to favour right-wing, nationalist forces at least as much as anti-market left-wingers. Unemployment and the loss of a sense of hope and opportunity are arguably more important and more dangerous issues than the inequality examined by Piketty. True, inequality might prompt people to conclude that European democracies are rigged systems in which only the rich – or, rather, wealthy corporate lobbies – have a say, and that justice is no longer available. But this is a theoretical danger rather than a real one. The real danger lies in unemployment and stagnant incomes, which together are feeding a sense of disillusionment and hopelessness. To repeat, this favours right-wing extremists too. So far, left-wing parties have struggled to nd a formula both to win elections and govern successfully. This is not dissimilar to the problems faced by the Democratic Party of Japan (DPJ) after its historic election victory in 2009: it worked out how to win, but not how to govern, especially in an environment in which public finances were under tight constraints.

A key point connecting the immigration issue and inequality is that such sources of alienation are likely to favour right-wing, nationalist forces at least as much as anti-market left-wingers. Unemployment and the loss of a sense of hope and opportunity are arguably more important and more dangerous issues than the inequality examined by Piketty.

The funny thing about Corbyn and his very left-wing friends who now run the Labour Party is that they have been so quick to try to convince voters that they are really moderates who do not have extremist views or plans. They want to represent themselves as the authentic voices of reasonable, moderate people, standing up against what they would like to depict as the ideological extremists of the Conservative government. Far from seeking to lead a popular revolt against capitalism, they are trying to paint themselves as tribunes of common sense and of fairness. This posture may not last, but that is how they have begun.

This ought not to be too surprising. Most people understand the basic realities of a modern economy, and are now much less easily convinced by ideas of an interventionist state that uses taxpayers’ money to solve social ills. In Japan and in Britain, voters have shown themselves willing to support political parties that they believe are competent to govern, rather than favouring alternative ideologies. This implies that neither the Labour Party led by Corbyn nor the DPJ, which increasingly resembles the old Socialist Party that survived only by attracting protest votes under the former LDP-dominated political system, can be serious rivals to the ruling parties. At the same time, the rise of UKIP in the UK and the


recent increase in popularity of the Communist Party in Japan seem to represent general distrust in the existing mainstream political parties.

What does surprise is how little anger the public has shown about corporate frauds such as the one recently exposed at Volkswagen and its pollution-test ‘defeat-devices’. This was a clear conspiracy
to deceive both ordinary car buyers and the regulatory authorities about the true level of polluting emissions from diesel cars. Yet although the consequences for VW may well turn out to be very serious indeed, the public seems collectively to have shrugged its shoulders.

This, in fact, is fairly analogous to the public reaction in Japan to the Olympus and Toshiba scandals. Do we all now have such low expectations of legal and ethical behaviour by big corporations that we don’t care any more? This brings with it the worry that a fundamental aspect of accountability might be disappearing, perhaps amid a widespread and dangerous sense of complacency. For accountability, surely, has been a key incentive for action, innovation and even economic growth in our capitalist systems. Without it, don’t we risk fading away in a morass of debauchery, rather like the Roman empire or, arguably, the Chinese imperial system?

It is no idle comparison. Even if parties competent to govern have been re-elected in both our countries, following the failures by the DPJ and by Labour, there can be seen alongside this a more disturbing mood of alienation and even some shedding of a sense of democratic responsibility. Declining rates of electoral turnout are one sign of this;11 another is the rise of street politics as
an apparent substitute for full political activism; a third, in Britain at least, is the rise of Scottish separatism, as alienation with ‘Westminster’ has led to a search for solutions closer to home, in a development that has been disastrous for Labour. This can also be seen in the public opposition in Japan to Prime Minister Abe’s collective self-defence legislation and in Britain to the renewal of the Trident nuclear deterrent programme. Neither yet represents a majority view. But both might well cause concern in political circles in our major mutual ally, the US.

A sense of insecurity in Japan, worsened by ageing

It has been widely perceived among Japanese that inequality in their country has been growing as business has become ever more globalized and as the domestic economy has adjusted to the bursting of the financial bubble 25 years ago. A simple international comparison of statistics (Gini coef cients) tells us that Japan’s level of inequality stands somewhere between the highly unequal Anglo-American economies and the relatively equal continental European countries. It also tells us that the level of inequality in Japan has increased considerably over the past two decades, during which the country’s economic growth has been largely stagnant.

There has been intensive discussion among experts over how to interpret such statistics. It is now widely accepted that the increase is more due to the ageing of the population than to a widening gap between rich and poor. The stronger perception of growing inequality seems to be related to a low level of income growth. It is hard, for example, to nd major grievances towards the new super-rich in the contemporary Japanese discourse. Rather, the main problem is a sense of insecurity resulting from a loss of con dence in major institutions (both formal and informal) that previously sustained high levels of trust throughout society.



A major example is reduced job security. Although Japan’s unemployment rate is very low by European standards, at 3.1 per cent of the workforce, job security has constantly deteriorated over the past two decades.12 It is true that Japan’s famous ‘lifetime employment’ system was largely a myth, as the system covered only a fraction of white-collar workers. Still, it represented an important ‘social contract’ between loyal employees, who worked hard and put in ultra-long hours; and their employers, who retained staff over the long term regardless of business cycles, and who invested a great deal in training. This arrangement underpinned the stability of the Japanese middle class, offering a model for a decent lifestyle in postwar Japan. But as the Japanese economy has stagnated, even major companies can no longer afford to maintain excess labour capacity under increasingly competitive market conditions. At least, that is what they say. Despite the much-predicted ‘race against the machine’, there is little sign in the Japanese labour market of workers being replaced by automation. Technological progress is there in theory, but is not evident in productivity statistics.

Thus, an increasing part of employment now consists of low-paid part-time jobs, which are less secure and offer fewer employment benefits than full-time and regular contracts. This shift is the product of successive relaxations in labour law, which have facilitated a two-tier labour market. Almost 40 per cent of workers are now subject to part-time and irregular contracts,13 a far cry from the old image of the Japanese labour market as guaranteeing lifelong employment and a strong social contract. Now the Japanese middle class feels much more insecure, and young people are much less hopeful about the future than their parents or grandparents were.

Corporate governance is another area in which the loss of confidence in once-trusted institutions is increasingly in evidence. Competition has had many positive impacts on Japanese business – improving ef ciency, reducing oligopolistic corruption and creating more opportunity for entrepreneurs. It has, however, also created perverse incentives that risk encouraging corporate misbehaviour in the absence of effective oversight and governance. Thus, rather than seeking to maintain their company’s reputation and investing with a long-term view, managers are often tempted to cheat in the search for quick pro ts or to cover up losses. Both Olympus and Toshiba, traditional blue-chip firms, carried out fraudulent accounting, while construction rm Asahi Kasei’s falsi cation of data about foundation piles resulted

in a scandal involving tilting apartments.14 Japan needs an effective corporate oversight mechanism for today’s more competitive trading environment, one that reduces the business sector’s traditional dependence on informal arrangements among trusted insiders.

The value of corporate governance and reputation in potentially offering businesses a competitive advantage is evident in the tourism boom that Japan is currently enjoying. The industry is seeing a rapid increase in visitor numbers, with many of the arrivals coming from China. Chinese tourists are surprisingly high spenders, making large purchases in Japanese shops rather than buying the same items in their home country. One of the main reasons why they prefer to travel to Japan to shop,
rather than buy imported Japanese goods at home, is that they do not trust Chinese businesses; many purportedly believe that Japanese goods sold in China are fakes. In contrast, Chinese consumers trust the safety, quality and authenticity of goods sold in Japan. This illustrates the value of brand credibility.


It is ironic that Chinese consumers – some with anti-Japanese views stirred up by nationalism at home – are sometimes more trusting of Japanese businesses than are many Japanese themselves.

All in all, however, while Japan shares many problems with Europe, the country’s socio-economic conditions continue to be characterized more by a gradual decay than by any prospect of immediate crisis. One could describe Japan as a kind of laboratory for the concept of ‘secular stagnation’, as proposed most notably by a former US treasury secretary, Professor Larry Summers. Indeed, in contrast to the economic hardships witnessed in Europe, Japanese people have been living a rather comfortable kind of stagnation ever since the nancial bubble burst in the 1990s. The problem is that this is not sustainable. Rather than promoting reforms, policy-makers have responded to the weak economy largely through ineffective government spending, nanced by public borrowing. As a result, Japan’s gross public debt has risen to over 240 per cent of GDP.15 Unlike Greece, Japan can still largely nance its public borrowing internally, but there are limits to its ability to do so indefinitely. People know that the existing pension, healthcare and social-welfare systems are unsustainable

and unreliable; this encourages risk aversion and stymies entrepreneurship, which in turn weakens economic growth. Underlying all these issues is the rapid ageing and shrinking of the population.

Relations with the US

Both Britain and Japan depend economically, politically and in security matters on their close relationship with the US. Relations with their respective neighbourhoods – the EU, and East and Southeast Asia – also matter greatly, although in neither case are those relations easy. Moreover, there is an inextricable link between the British and Japanese alliances with the US and these neighbourhood relationships, since America necessarily sees both countries as instruments of in uence in Europe and Asia.

Despite that common thread, there is a basic difference between Japan and Britain in security terms. For Japan, the alliance with the US has been the ultimate guarantor of the country’s security. This has always meant that any differences of opinion or matters of domestic controversy have been subsumed by the broader imperative of keeping the Americans on-side. That is also a fair analysis of the new security legislation passed by the Abe government in the late summer of 2015: these laws are based on reinterpretation by the Abe cabinet of the country’s constitution, in order to permit the government to exercise the so-called right of collective self-defence which allows the Self-Defense Forces (SDF) for the rst time to come to the aid of one of Japan’s allies if it were to be under attack. In theory, the new legislation gives Japan more freedom to provide military support for America

or other allies. In practice, the conditions under which the right of collective self-defence can be exercised are still very restrictive. Thus the new security legislation represents only a modest and technical evolution rather than a fundamental change in Japan’s military outlook, and its principal effect is to reassure America.

For the UK, in contrast, the ‘special relationship’ with the US has principally been a framework for continuing to play a global role, rather than a means for dealing with immediate threats. In that relationship, the UK enjoys a greater sense of independence from the US than Japan does, even if it is generally reluctant to risk offending its American partner. However, the UK’s potential exit from the EU – should voters choose to leave the EU in the in/out referendum promised by the current



government by the end of 2017, but that will quite probably be held during 2016 – constitutes a challenge to the basis of its relationship with the US. While Japanese politicians and of officials rarely comprehend quite how toxic the issue of Europe has become in domestic British politics, they surely understand Britain’s instinct towards some separation or distance from Europe, as they have similar feelings towards Asia. But whether Japanese politicians and of officials would follow those feelings so far as to threaten Japan’s relationship with the US must be doubted.

The EU is not a security community as such. Nevertheless, the US has made it clear publicly that it would prefer Britain to remain a member of the EU. America values British influence over the EU in matters of foreign and security policy, especially given the challenges of dealing with the EU’s unstable neighbourhood. If Britain were to leave the EU, it would clearly risk being bypassed in the future

by US foreign policy, not as a matter of hostility but as a matter of pragmatism. Already, Berlin has become America’s most important point of contact in Europe, especially over policy towards Russia, but Britain has so far remained in a position of close second.

The situations are different, but Japan shares Britain’s worry about being bypassed in US foreign policy. American ‘freedom of navigation operations’ in the South China Sea, which involve sailing warships through the implied territorial waters around China’s arti cial reefs, provide Japan with some comfort in this regard. If America is willing to make a show of force in resisting Chinese territorial assertiveness in areas disputed with the Philippines, Malaysia and Vietnam, then there can be little doubt that it would also do so in the case of Japan’s Senkaku Islands in the East China Sea, which are also claimed by China as the ‘Diaoyu Islands’ and are subject to China’s own freedom of navigation operations. The Abe government’s determination to resist efforts by local politicians in Okinawa to push out American bases also re ects this concern.

Britain still feels con dent that, if push came to shove, America would stand by its side. But if it
were to withdraw from the EU after a vote in 2016 or 2017, its in uence in Washington would be diminished, even though America would remain an ally. American eagerness to strike big regional trade agreements in the Paci c (through the Trans-Paci c Partnership or TPP, now agreed but still
to be rati ed by Congress) and in the Atlantic (through the Transatlantic Trade and Investment Partnership or TTIP, under negotiation) could provide an early test of that future distancing between America and Britain. Japan will be rmly in the TPP, if the agreement survives the US Congress. According to the US trade representative, Michael Froman, if Britain were to leave the EU, it would be left outside TTIP. He may or may not be making an accurate forecast, but the threat is there.

What of America’s future foreign policy intentions? The cycle of presidential elections, with all their standard bombast about standing tall in the world and making America great again, always serves to cast long-term trends in a short-term fog. The 2016 election campaign is no exception. Yet it is always near and present dangers that serve to provide real tests of American engagement around the world, and today’s challenges to international order from ISIS, Russia and China are creating just such a
test. From the Obama administration, the response has been to remain rmly engaged, even if with a caution about the use of ground troops that returns American policy to that of the 1990s. Whether the next resident of the White House will continue this attitude remains to be seen.

Bill Emmott and Masayuki Tadokoro 

george parker and jamil anderlini, ‘britain’s red-carpet welcome for xi baf es traditional allies’, financial times, 18 october 2015,

tom phillips, ‘beijing summons us ambassador over warship in south china sea’, guardian, 27 october 2015, world/2015/oct/27/us-warship-lassen-de es-beijing-sail-disputed-south-china-sea-islands.

it has been widely felt by japanese nancial of cials that china and some other asian economies are under-represented in the imf despite their increasing economic weight. the frustration with the imf became particularly strong during the asian nancial crisis in 1997–98. see, for example, eisuke sakakibara, nihon to sekai ga shinkansita hi, tokyo chuokoron shinsha, 2000. the japanese government lobbied for redistribution of quotas of the imf. but the us congress accepted the change only in december 2015 after the aiib was founded. see, for example, ‘azia age giron’, nihon keizai shimbun, 24 april 2006.

for example, see the remarks made by muneo suzuki, a former vice-minister for foreign affairs, available in ‘日ロ関係改善へ、もっと日本の‟独 自色”を出せ!, 28 april 2015,
see, for example, harry gelman, russo-japanese relations and the future of the us-japanese alliance (santa monica, ca: rand, 1993).

masayuki tadokoro, ‘imin to tomoni japan o yarou’, chuo-koron, december 2015.

elaine kurtenbach and mari yamaguchi, ‘japan, wary of outsiders, keeps doors closed to refugees’, associated press, 28 december 2015,
see the group’s report, entitled jinzai kaikoku! nihongata iminseisaku no teigen, 12 june 2008, iminseisaku080612.pdf.

10 thomas piketty, french author of the international bestseller capital in the twenty-first century (harvard, ma: harvard university press, 2014).

11 国政選挙における年代別投票率について’, ministry of internation affairs and communications, news/sonota/nendaibetu/ (last accessed on 14 january 2016).

12 robin harding, ‘japan unemployment falls to 20-year low’, financial times, 27 november 2015, 11e5-bd82-c1fb87bef7af.html#axzz3x4zkd9th.
13 労働力調査, 10 november 2015, p. 2, available at (last accessed on 14 january 2016).

14 see michael woodford, exposure: inside the olympus scandal: how i went from ceo to whistleblower (portfolio, 2012); kana inagaki, ‘toshiba says it in ated pro ts by nearly $2bn over seven years’, financial times, 7 september 2015, b029-b9d50a74fd14.html; and leo lewis, ‘tilt piles pressure on japanese reits’, financial times, 16 november 2015, cms/s/0/f00de660-8c6f-11e5-a549-b89a1dfede9b.html.

15 債務残高の国際比較(対gdp比), ministry of finance japan, (last accessed on 14 january 2016).

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