Daily Archives: December 5, 2012

Shintaro Ishihara, the former governor of Tokyo, recently unveiled a new political party which, he says, will help build a “stronger and tougher Japan”. This is the same Shintaro Ishihara who recently provoked an increasingly bitter row with China over control of a string of islands in the East China Sea. As Mr Ishihara and other leading Japanese politicians strike a more strident foreign policy tone and a more aggressive attitude toward China, they should consider the recent history of a quite different country in a quite different region.

When Mikheil Saakashvili rode Georgia’s Rose Revolution to power in 2004, the international community lauded the small nation’s transition to democracy. Mr Saakashvili quickly reached out to Washington and the Bush administration, eager to build a new strategic friendship in the region, reached back. But US officials worried aloud that Mr Saakashvili, convinced that US support offered him a shield, might stumble into conflict with Russia, Georgia’s hostile neighbour to the north. Four years later, exactly what happened.

Georgia’s young president, eager to score patriotic political points by standing up to the superpower bully next door, sent tanks into the breakaway region of South Ossetia, giving Moscow the opening it needed to push the Georgians almost all the way back to Tbilisi, Georgia’s capital. The US remained on the sidelines, reminding Georgia’s president that it had warned him about poking the bear. As then Secretary of State Colin Powell had warned him, the United States would not go to war with Russia over a breakaway province in the southern Caucasus.

There is a lesson here for Japan as tensions build over a string of contested islands in the East China Sea. Japan calls these rocks the Senkaku Islands, China calls them the Diaoyu Islands, and both countries claim ownership. When Japan recently moved to assert its claim, anti-Japanese protests surged through Chinese cities, and the Chinese government let them burn a bit longer than usual before dousing the flames.

Chinese demonstrators destroyed many Japanese stores and products and called for boycotts of Japanese companies, inflicting serious damage in a market that is increasingly important for Japanese corporations. In September Toyota and Honda’s sales in China were respectively 49 per cent and 41 per cent down on the same month last year. Some Japanese firms are rethinking their expectations of sales in China and reluctantly looking toward other countries for a larger share of exports and supply chains.

In addition, China is becoming more assertive in the contested waters between the two countries. In the East China Sea, China has moved ships into Japanese territory almost every day for the past month. Beijing’s message to Tokyo is clear: “Don’t push your luck.”

The concern in Washington is that Tokyo isn’t listening. Despite both the commercial and security dangers, some Japanese officials have lately tried to score points at home with an aggressive posture abroad, including in dust-ups with China. Old arguments about the 1930s are stiffening spines in both countries. The growing prominence of leaders like Toru Hashimoto, the mayor of Osaka, who has built another new nationalist party, and men like Mr Ishihara who have actively brought Japan and China closer to commercial and political conflict, has raised temperatures across the region. It was Mr Ishihara who provoked the Senkaku spat by threatening to use municipal funds to buy the islands.

Japan’s Liberal Democratic Party may well return to power following upcoming elections—elevating party leader and former prime minister Shinzo Abe back to his old job. He will have to move quickly to build his popularity with voters—this is a country that has burned through 17 prime ministers in 24 years—if he is to earn enough public confidence and political capital to extend his rule. He has offered conciliatory comments toward Beijing, but an October visit to the Yasukuni Shrine, resting place of men that Japan’s neighbours consider war criminals, suggests he might be willing to push things a bit further with China when his poll numbers slide.

Japan is not Georgia, a small country that must lie in Russia’s long shadow and make friends where it can. Georgia is a developing country with crumbling infrastructure and a host of fundamental economic challenges. Japan, for all its problems, remains the world’s third largest economy. It is a stable industrialised democracy and home to some of the world’s most dynamic multinational companies.

That said, Japan should learn from Georgia and avoid a confrontation with its neighbour. China still needs access to Japanese markets. It wants to welcome Japanese companies and investments, and gain more access to Japanese technology. But it doesn’t need any of these things as much as it did five years ago, and the trend is not good for Japan. As China signs deals with new partners in the region, as Chinese customers in the US and Europe recover more of their purchasing power, and as Chinese consumers are able to afford more Chinese-made products, Japan’s importance for China will continue to diminish.

China’s leaders are just as likely as Japan’s to try to build their popularity by demonising an often threatening neighbour. In Georgia Mr Saakashvili hoped to boost national pride with a quick win, but it was Vladmir Putin who came away looking like a winner. Japan’s leaders should keep that lesson in mind.

Finally, Japanese Defence Minister Satoshi Morimoto called last week for a revision of Japan’s security alliance with the US to put greater emphasis on the Chinese maritime threat. Talk of historic partnerships is one thing, and US-Japanese relations are vitally important for both sides. But though Washington can and will come to Japan’s defence if China tried to take the Senkaku islands, it cannot defend Japanese companies that are sure to take a beating in Chinese markets. That’s the true battlefield.

The best way for Japan to meet the challenge posed by rising China is to rebuild the dynamism of Japan’s economy from within and to build new commercial ties–in Asia and beyond. That will require wisdom, patience and political will. If the country’s next generation of leaders is up to the task, they will discover that success is the best defence of national interests.

The writer is the president of Eurasia Group, a political risk consultancy, and author of ‘Every Nation for Itself: Winners and Losers in a G-Zero World’

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