Abstract
On December 3 2008, Japan joined around 100 other countries (notable
exceptions being the US, China
and Russia) in signing a ground-breaking
treaty banning stockpiling and use of cluster bombs. Foreign
Minister
Hirofumi Nakasone committed some US$7mn to clean-up projects in areas affected
by cluster
bombs.
For historical reasons, US military forces remain a
commanding presence in Japan. In Q408, Japanese
and US officials met with
leaders from fourteen local government prefectures hosting US military
services. The meeting encouraged the governments of both countries to work
together to address the
environmental issues that stem from base hosting.
More meetings in a similar vein are slated to be held in
the future,
although they will not supplant the well-established Japan-US joint commission
that oversees
the Status of Forces Agreement (SFA). Meanwhile, in November
2008, US Ambassador Thomas
Schieffer met Defence Minister Yasukazu Hamada
to discuss the realignment of US military facilities in
Japan scheduled
for completion by 2014. Schieffer expressed his hope that Japan would bolster
its
budgetary contribution to ensure that the deadline will be met. The
project involves the relocation of the
US Marine Corps’ Futenma Air
Station to the Okinawa Prefecture.
In a blow to the Japanese missile
defence shield program, in November 2008 defence ministry officials
announced that a Maritime Self-Defence Force destroyer had failed to shoot
down a mock ballistic
missile in space. Since the August 1998 launch of a
ballistic missile by North Korea, Japan has been
particularly keen to
develop an effective missile defence shield with the assistance of the US.
The last year has seen Japan engage in a number of bilateral and multilateral
forums with its Asia Pacific
neighbours. Q408 saw Japan and South Korea
hold talks in Fukuoka, Japan to discuss regional security
issues and
defence policies. The eighth such dialogue since 1998, the meeting was a
prologue to a
trilateral summit between Japan, South Korea and China held
on December 13 2008. Meanwhile, Japan
and India have signed a declaration
on security co-operation to establish a partnership that will be ‘an
essential pillar for the future architecture of the region,’ according
to Indian Prime Minister Manmohan
Singh. The partnership paves the way for
joint exercises, disaster management and counter-terrorism, and
is only
the third such agreement to be signed by Japan – the others being with
Australia and the US.
Turning to domestic politics, we note that
Japan’s new prime minister, Taro Aso, will have limited
powers to
reform the economy. The key to reviving the economy over the long term
ultimately rests in
changing the political system. In the absence of a
massive shakeup of the political scene, we see little
reason to expect
significant economic reform.
Japan’s economy entered Q408 in its
weakest state in seven years, and this has already forced Prime
Minister
Aso to prioritise economic growth over structural reform. Real GDP shrank by a
downwardly
revised 3.0% annualised rate in Q208, compared with a
preliminary reading of 2.4%. On a quarter-on
quarter (q-o-q) basis the
economy contracted by 0.8%, with external demand down 0.1 percentage
points
(pps) and domestic demand 0.7pps. If this decline persists
throughout Q408, then Japan will be in
technical recession – at
least by the most common acceptance of the term – for the first time
since late
2001. Even if Japan avoids a technical recession, it is clear
that the country will experience a period of
below-trend growth in
2008-2009.
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