Chapter 1. International Environment Surrounding Japan


1. Outline


(1) In Asia, throughout 1973, there were moves that gave rise to expectations for the stabilization of this region, such as the conclusion of cease-fire agreements for Vietnam and Laos, progress in working-level relations between the United States and the People's Republic of China, and moves for a normalization of relations among the countries on the Indian subcontinent. However, the peace in Indochina did not take firm root.

In Sino-Soviet relations, the tension between the two countries continued throughout 1973, although there was some progress in their working relations. The situation in the Korean Peninsula did not move toward stabilization despite the dialogue between the North and South which was continued off and on, and the situation there became tense again late in 1973 through early 1974.

(2) For the world economy, 1973 was a year of great trial. The world economy sank deeper into confusion due to both the shift of major currencies to the floating exchange rate system early in the year and the acceleration of the global inflationary trend.

Especially, the oil production cutback by Arab countries in connection with the Middle East war in the autumn of 1973 seriously affected the world economy. The sudden rise in crude oil prices caused by this measure accelerated the trend toward global inflation throughout 1973, which was reflected in increased prices of food and other primary industry products, and also caused a serious drain on foreign exchange reserves of the oil-importing countries.

These moves in the world economy were also reflected in the Japanese economy, and they accelerated the tempo of price increases in Japan, seriously affected its national life and caused renewed recognition of the fact that the economic structure of the country depends heavily upon other countries for natural resources and energy.

The developing countries, which had played, so to speak, a subordinate role in world politics and economic affairs before, became stronger in their demand for a reform of the world order with the oil crisis as the turning-point. This trend was revealed in discussions at meetings mainly attended by the developing countries, such as the Conference of Non-Aligned Countries and the Conference of Islamic Countries. The holding of the special U.N. General Assembly on natural resources proposed by Algeria was a conspicuous example.


2. Dialogue and Confrontation between the United States and the Soviet Union


(1) The United States and the Soviet Union, the two superpowers that greatly influence international politics, continued efforts to promote the easing of tensions in 1973 in their bilateral relations, while their basic rivalry remained.

The two countries reached agreement on such noteworthy matters as the Agreement on the Prevention of Nuclear War and the basic guideline concerning the second round of the Talks on Strategic Arms Limitations (SALT-II) on the occasion of General Secretary Leonid Brezhnev's visit to the United States in June 1973. They also continued talks in many other fields, including the Conference on Security and Cooperation in Europe (CSCE) and the Mutual and Balanced Force Reduction Negotiations (MBFR). Meanwhile, Secretary of State Henry Kissinger visited the Soviet Union twice (in May and October).

The two countries continued efforts to improve their bilateral working relations, and agreement was reached to increase trade between them on the occasion of General Secretary Brezhnev's visit to the United States.

(2) Behind their efforts to avoid a direct confrontation and to promote dialogue, however, the basic fact that there is a conflict of interests and a "power" rivalry based on nuclear deterrence remained unchanged.

The Soviet Union reiterated that there would never be ideological co-existence with the West, although it would promote peaceful co-existence with the Western countries. While promoting its dialogue with the Soviet Union, the United States also has regarded the Soviet Union as an adversary and firmly maintained its basic attitude of making a distinction between its allies and the Soviet Union.

While promoting their dialogue on the one hand, both the United States and the Soviet Union did not, on the other, change their attitude toward building up their military power, including nuclear weapons as well as their navies and air forces. In1973, both countries conducted several underground nuclear tests (the United States held 10 tests in Nevada, while the Soviet Union conducted 15 tests in Siberia, Kazakh and elsewhere). With respect to missiles, the Soviet Union attempted to catch up with the United States in terms of quality while maintaining its quantitative superiority, as was reflected in its tests of large-sized missiles in and after the summer of 1973 and also in its efforts to develop them into MIRVs. As if in response to this, the United States showed the posture of improving the efficiency of its strategic missile system, as was indicated by Secretary of Defense James. R. Schlesinger's statement (in January 1974).In the field of conventional weapons, the two countries also continued efforts for development and improvement.

(3) Moves of the United States and the Soviet Union to improve their bilateral relations through a dialogue did not necessarily help ease local tensions in various parts of the world. The two countries could not prevent the outbreak of the fourth Middle East war. In the process of bringing about a cease-fire, they jointly proposed a cease-fire plan and acted as co-chairmen for the peace negotiations, making efforts for a cease-fire while avoiding a direct confrontation. On the other hand, the United States on October 15 alerted all its forces abroad in response to the movement of Soviet troops. This fact revealed the dual nature of the relations between the Soviet Union and the United States that exists behind the so-called relaxation of tensions.


3. Polarized Socialist Countries


(1) In contrast to progress in the U.S.-Soviet dialogue, the state of tension between China and the Soviet Union was carried over from 1972. The two countries exchanged charges repeatedly by seizing every opportunity in 1973. Especially conspicuous were the Chinese representative's criticism of the Asian collective security plan at the 29th session of ECAFE (in April), China's criticism of Soviet naval ships sailing through the Tai-wan Strait (in May), the exchange of charges on the occasion of Brezhnev's visit to the United States and the tenth Chinese Communist Party Congress (in June and August, respectively) and General Secretary Brezhnev's criticism of China in Tashkent (in September), Troubles between the two countries occurred one after another, including the mutual deportation of diplomats for allegedly having engaged in espionage activities.

On the other hand, the two countries maintained normal diplomatic relations. It should not be overlooked that there were such moves as the return of both the Soviet ambassador and the representative to the Sino-Soviet border talks to their posts in Peking (in May), the conclusion of an agreement on Chinese civil air service to Moscow (in July) and the signing of the Sino-Soviet trade agreement for 1973 (in August).

(2) Reflecting the Sino-Soviet confrontation, there was a continued division of socialist countries into two groups-one which clearly took the side of the Soviet Union and the other which did not side with moves to strengthen the unity of socialist countries by excluding China.

Moves by countries supporting the Soviet Union to strengthen their unity were active throughout 1973. General Secretary Brezhnev visited Poland and the German Democratic Republic (in May) and Cuba (late in January 1974 through early February), and there were such meetings as the 27th COMECON general assembly (in June), the Crimea summit talks among the Soviet Union and eight East European countries (in July), a series of talks between Premier Aleksey Kosygin of the Soviet Union and the prime ministers of East European countries (in August) and the conference of central committee secretaries of the communist parties of the Soviet Union and East European countries (in December).

Moreover, there were moves to promote the international communist movement under Soviet leadership, and the proposal made by First Secretary Kadar Janos of the Hungarian Communist Party for the holding of a conference of world communist parties attracted attention.

In contrast to these moves, North Vietnam, North Korea and Romania maintained good relations with China as well, and China also paid attention to its relations with these countries.

(3) A look at the economies of the socialist countries in1973 as a whole shows that agricultural production in both the Soviet Union and China was steady, and that both countries actively imported plants and technology from Western countries. However, the basic problem of how to increase efficiency in the management of a socialist economy still remained unsolved.


4. Readjustment of Relations among Advanced Western Countries


(1) Japan and West European countries, including the members of the expanded EC which started functioning in January 1973, increased their economic power and their international statures rose. On the other hand, it became necessary to adjust relations among the advanced countries, such as the United States, the states of Europe and Japan, in connection with efforts of the United States to improve its relations with the Soviet Union and China, Among the United States, Europe and Japan, efforts had been made to adjust their interests, especially over monetary and trade problems. Between the United States and Europe, there were issues on which their views did not necessarily agree, such as the sharing of defense efforts concerning the security of Europe. The so-called plan for a "declaration of principles" proposed by (then) U.S. Presidential Assistant Henry Kissinger in April 1973 was an attempt, against the background of such a situation, to strengthen cooperative relations among the advanced countries of the West with common political ideals and social systems by mutually confirming their basic common understanding regarding political, economic, security and other problems.

(2) Moreover, the attitudes, which Western Europe and Japan, that heavily depend on petroleum from Arab countries, took in order to cope with the situation during the Middle East war in the autumn of 1973 and the oil crisis, were not necessarily in line with that of the United States.

Later, great efforts were made to adjust views among the countries concerned over these problems. As for the energy problem, major oil-consuming countries held a conference in Washington in February 1974, but the gap between some countries such as the United States and France still remained unbridged. It was still uncertain what would become of the plan for a "declaration of principles."

(3) In the expanded EC, the situation became difficult because delicate differences of interests among the member countries emerged over the oil crisis, and it is expected that progress toward the economic integration of Europe will face some complications in the future, It is considered that moves of various European countries, centering on the EC, will greatly affect not only mutual relations among the advanced countries of the West but also the world economy and other aspects in the future.

Under such circumstances, Japan tried to promote closer relations with the advanced countries of the West.


5. Moves for the Reorganization of the International Economic and Social Order


(1) The year 1973 saw great changes in the international economic order, including international trade, currencies and natural resources.

The international monetary situation had remained calm under the Smithsonian monetary system until the early stage of 1973, when the currency market became confused and the dollar was devalued and the yen and other major currencies shifted to the floating rate system, The global monetary unrest was brought to an end after several meetings of the finance ministers of principal countries and the annual meeting of the IMF in Nairobi in September, and opinions of the various countries were adjusted in order to start a new international monetary system, To these developments, Japan made positive contributions.

As regards trade problems, the GATT ministerial conference in Tokyo (in September) adopted the Tokyo Declaration which decided to open new rounds of the Multilateral Trade Negotiations to promote a further liberalization of world trade.

(2) In 1973, natural resources and energy became serious problems, Crude oil prices, which had been on the increase in recent years, were raised further by a big margin following the cutbacks in oil production by the oil-producing Arab countries in connection with the Middle East war, and this posed a serious problem to the world economy, both giving rise to uncertainty about the demand-supply position in oil and affecting the monetary problem.

One after another, the industrial countries of the world, including Japan, took measures to control the consumption of oil on the one hand, and intensified moves to solve the problem through international cooperation on the other, In December, the United States called for the formation of an action group for energy, and a conference of major oil-consuming countries was held in Washington in February 1974 at the proposal of President Richard Nixon. Japan took part in the conference and endeavored to realize harmonious relations of cooperation between the oil-producing and oil-consuming countries.

(3) The big increases in crude oil prices caused a lopsided flow of money into the oil-producing countries, creating an unstable factor in the international economic situation. This made the IMF's job of reforming the international monetary system difficult, Moreover, the steep rise in oil prices brought about stagflation in the advanced countries through the acceleration of commodity price increases, the worsening of their international payments position and production difficulties stemming from energy shortages, thereby giving rise to fears about the growth of protectionism and regionalism. The developing countries without oil suffered a serious blow because of, on the one hand, the increased crude oil prices, increased import prices for semi-processed raw materials as well as the difficulty in obtaining such materials, and, on the other, the prospect of little increase in aid from the advanced countries.

(4) In 1973, moves to seek a new international order concerning the sea gained momentum, and the U.N. General Assembly decided to hold the third U.N. Conference on the Law of the Sea in June 1974, As a result of remarkable progress in recent years in the utilization of the ocean due mainly to the expansion of economic activities, there emerged such serious problems as the dwindling and drying up of marine resources and the pollution of the sea. On the other hand, the trend among the seaboard countries to use wide areas of the high seas exclusively for their own purposes and to monopolize the resources there has become more conspicuous than ever before.

It is considered that this trend will greatly affect Japan which as a maritime nation has benefited much from the traditional principles of free competition on the open oceans.


6. Stronger Voices of the Developing Countries


(1) The developing countries have been strengthening their voices in recent years, as is evident in matters concerning natural resources, energy and the sea. Especially, as was seen in the example of the oil-producing Arab countries' oil strategy, there was a strong trend in 1973 among the developing countries to make various economic demands intertwined with political demands concerning natural resources, trade and aid, in order to achieve national self-reliance.

The fourth Conference of Heads of State and Chief Ministers of Non-aligned Nations held in Algiers in September adopted various declarations and resolutions which incorporated not only the developing countries' political claims, but also their demands on economic problems that were more radical than ever before. Several meetings of the leaders of the Arab nations since the autumn of 1973 as well as the summit talks of Islamic nations in Lahore in February 1974 also showed conspicuous moves to make political demands relating to the economic problems of the developing countries.

(2) This trend, on the one hand, caused a further sharpening of the conflict of interests between the advanced countries and the developing countries in such forums as the United Nations and, on the other, resulted in enhancing the importance of various U.N. agencies as forums of dialogue between the North and the South. It was also observed that there were differences in interests and stands between the developing countries that have petroleum and other important natural resources and those which do not have such resources, thus showing that problems facing these developing countries had become complicated.

Japan, which has close relations with the developing countries, offered them as much cooperation as it could, through international organizations and bilateral arrangements, with a deep understanding of their basic desires and their complicated problems.


7. Situation in Asia and the Pacific Region


(1) Moves of the United States, China and the Soviet Union, as well as those of Japan, greatly affect the situation in Asia and the Pacific area. In 1973, the state of tension between China and the Soviet Union persisted. In relations between the United States and China, however, the two countries agreed to establish respective liaison offices in each other's capital as a result of (then) Presidential Assistant Kissinger's visit to China in February, and their relations actually developed into those almost equivalent to diplomatic relations. The situation in Asia as a whole proceeded in the direction of calming down with the progress in the U.S.-Soviet dialogue as the background, and the cease-fire agreements for Vietnam and Laos were concluded.

(2) The United States, on the one hand, maintained its policy of reducing its forces in Asia by degrees under the Nixon doctrine, and, on the other, honoring its treaty obligations to various Asian countries, continued to maintain its presence there to the extent necessary for the peace and stability of that area. In particular, the strengthening of close relations between Japan and the United States, with the Japan-U.S. Security Treaty as the axis, by eliminating through mutual efforts most of the factors of friction which had occurred in their bilateral relations in recent years, contributed much to the peace and stability of Asia. The United States completed the withdrawal of its forces from the Republic of Vietnam in March. In its relations with Taiwan, the United States ended its free military aid to Taiwan in fiscal 1974 (as announced in June), and began to withdraw part of its forces in Taiwan (in September). The United States also held several consultations with Thailand over the problem of withdrawing U.S. forces in Thailand, and part of its troops were pulled out in September.

(3) The domestic situation in China since the latter half of 1973 contains aspects which could not necessarily be described as stable. However, no major change was seen in the diplomatic field.

Working relations between Japan and China made progress throughout 1973 despite some twists and turns, and Foreign Minister Masayoshi Ohira's visit to China in January 1974 contributed to the promotion of their working relations.

(4) The Soviet Union continued brisk activities in this area, and often raised the subject of its Asian collective security plan. The Soviet naval fleet in East Asian waters and the Indian Ocean intensified its activities, and the Soviet Union conducted tests of MIRV missiles in the east Pacific area between the summer of 1973 and early 1974.

In Japan-Soviet relations, Prime Minister Kakuei Tanaka visited the Soviet Union in October and discussed the conclusion of a peace treaty and other matters including the northern territorial issue.

(5) In the Korean Peninsula, several meetings were held between the North and South Korean Red Cross societies, while the North-South Coordinating Committee also had its meetings in the first half of 1973, in the wake of the joint statement issued in July 1972. However, the stands of both parties over North-South relations were delicate. Following North Korea's establishment of diplomatic relations with countries that have diplomatic relations with the Republic of Korea and North Korea's participation in the World Health Organization along with the South (in May), the Republic of Korea in June issued a realistic and epoch-making statement to the effect that it was not opposed to the simultaneous participation of the North and the South in the United Nations. However, North Korea immediately made its negative stand clear. That the U.N. General Assembly in November reached a consensus in expressing its expectations on the continued dialogue between the North and the South attracted attention as reflecting international public opinion in favor of avoiding a showdown on the Korea issue. However there occurred several incidents showing tense relations between the North and the South late in 1973 through early 1974, and no significant progress was made in the North-South dialogue.

(6) In Indochina, a strong tendency toward peace developed through the conclusion of the Vietnam cease-fire agreement in January 1973, the Paris international conference on Vietnam in February, and also the conclusion of the Laos cease-fire agreement. However, there were ups and downs in the situation in Cambodia thereafter, including the battle over Phnompenh. In Vietnam where the cease-fire agreement went into force, violations of the cease-fire occurred in succession. In Laos, things developed toward the formation of a coalition government after the turn of 1974, and the situation has been returning to normal.

Elsewhere in Southeast Asia, the internal instability of many countries increased due to internal and external factors. In the Philippines, the political system was reorganized under the Marcos Administration (in January). In Thailand, a civilian government was established as a result of a change of government in October. It was observed that the demonstrations staged in Thailand and Indonesia on the occasion of Prime Minister Tanaka's visit in January 1974 were related to some extent to the internal factors of these countries.

(7) Australia and New Zealand showed moves to increase their freedom of action under the labor governments established late in 1972, and the leaders of both countries visited various Asian countries as part of a diplomacy that attaches importance to Asia.


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