Chapter I. The International Situation of 1993

Section 1. Overview

The world in 1993 continued to evolve in uncertainty and unpredictability. Economies in the industrialized countries showed few signs of recovery; regional conflicts such as that of the former Yugoslavia; North Korea's suspected development of nuclear weapons; proliferation of weapons of mass destruction and missiles; and the turmoil in the countries of the former Soviet Union, all of which remained without effective solutions.

In these circumstances, the international community is groping for a new framework for peace and prosperity through the United Nations, Japan-Europe-U.S. trilateral cooperation and regional institutions. The international community is making efforts to construct partnerships with the former Eastern bloc countries as well as with the developing countries, to strengthen peace-keeping activities and foster regimes of non-proliferation, and to enhance macroeconomic policy coordination and a multilateral free trading system. In fact, some of these efforts bore fruit in 1993, such as the new start of the resuscitated Cambodia, the mutual recognition of Israel and the Palestinian Liberation Organization (PLO) and the agreement on the Declaration of Principles on Interim Self-government, and the substantial conclusion of the Uruguay Round trade negotiations, all of which give a bright prospect for the future.

This chapter will present an overview of the international situation of 1993, and Chapter II will make evaluations on how the international community strives, under the present situation, for a more secure, prosperous and humane world and how Japan participates in such efforts as a responsible member of the international community.

Section 2. Major International Events

1. Regional Conflicts and Efforts Toward Peace

After the end of the Cold War, with increasing danger of eruption of conflicts rooted in ethnic or tribal disputes and religious confrontation, various efforts are being made through such international fora as the United Nations and international conferences for the Middle East peace process. While some of these efforts have bore fruit, as in the case of the Cambodian peace process or the agreement between Israel and the PLO on the Declaration of Principles on Interim Self-government, difficult conditions still continue in other cases, such as the conflicts in the former Yugoslavia and in Somalia.

1-1. Cambodia

Following the election of the constituent assembly in May 1993, the Constitution was promulgated in September in Cambodia. Under King Sihanouk, as the constitutional monarch, the Royal Government of Cambodia, led by Prince Ranariddh (FUNCINPEC Party), and Mr. Hun Sen (Cambodian People's Party, the former government of Phnom Penh) as the First and Second Prime Ministers respectively, was established, putting an end to the civil warfare that had lasted for over 15 years.

Among the factors that enabled Cambodia to make a new start were the presence of Prince (now King) Sihanouk as a charismatic political centripetal force, the end of East-West confrontation, the absence of any ethnic or religious confrontation, and the disputing factions` feeling of war fatigue. The existence of the Paris Peace Agreement as a framework for a comprehensive peace, and the continuing firm commitment of the international community to the peace process were important elements in forging peace in Cambodia. In the implementation of the Peace Agreement, the U.N. Transitional Authority in Cambodia (UNTAC) played a major role. It involved itself not only in cease-fire surveillance but also in other wide-ranging areas, including the organization of elections, inspection of administrations and repatriation of refugees.

The major tasks remaining in Cambodia are how the reborn country will incorporate into its political order the Pol Pot faction, which did not fulfill its promise to disarm and abstained from the election, and how the international community will support the reconstruction of the country in order to consolidate Cambodian peace (Refer to Chapter II, Section 2, 1-3 for details of support by the international community).

1-2. Middle East Peace

In the Middle East, efforts for peace have been made in the bilateral negotiations between Israel and the Palestinians, Syria, Jordan and Lebanon respectively, and in the multilateral talks which complement and support the bilateral negotiations through discussions involving extra-regional parties on problems common to the region. As a result of such efforts, in September, the mutual recognition of Israel and the PLO and the agreements on the Declaration of Principles on Interim Self-government, including the accord on the autonomy of Gaza Strip and Jericho, ended the confrontation between the two parties. It has an epochal significance in the sense that the peace process started by the Madrid Middle East Peace Conference in October 1991 has actually begun to take its course.

In addition, immediately after the agreement between Israel and the PLO, Israel and Jordan signed a proposed agenda for negotiations. In October, Israeli Prime Minister Yitzhak Rabin and PLO Chairman Yasser Arafat had a summit meeting, and Israeli Foreign Minister Simon Peres and Jordanian Crown Prince Al Hassan Bin-Talal had a meeting. Thereafter, active negotiations have been conducted on such issues as the form of Palestinian autonomy, the territorial problem between Israel and Jordan as well as economic cooperation.

However, many problems still have to be solved in order for Middle East peace to be realized. There are problems related to the final status of the West Bank and the Gaza Strip such as the ones on Jerusalem, Israeli settlements and Palestinian refugees, which have been shelved during the course of the negotiations on interim self-government between Israel and PLO. Moreover, the two parties are facing difficulties over the implementation of the agreed Declaration of Principles. Concerning other bilateral negotiations, Israel and Syria have so far made no progress on the withdrawal of the Israeli army from the Golan Heights. Likewise, the negotiations between Israel and Lebanon have not made any progress concerning the security arrangements of Southern Lebanon.

For further progress in the Middle East peace negotiations, the agreement between Israel and the Palestinians needs to produce visible improvements in the daily lives of the Palestinians residing in the occupied territories, which will reinforce the local support for the peace process. The international community has extended various supports for this. In particular, in the conference to support the Middle East Peace in October, it was announced that almost $2 billion would be provided as assistance over the next five years (Refer to Chapter II, Section 2, 1-3 for details of the support by the international community).

1-3. The Former Yugoslavia

The conflicts in the former Yugoslavia (the Socialist Federal Republic of Yugoslavia) were a warning amidst the euphoria which had spread in the world after the end of the Cold War. The still unclear prospect of the situation is casting a large shadow on the international community as a symbol of the new instability of the international community.

The process of the collapse of the former Yugoslavia began to accelerate in June 1991 once the secessions of Slovenia and Croatia from the former Yugoslavia were proclaimed. Since April 1992, armed conflicts in Bosnia-Herzegovina intensified, and by 1993, the Serb-controlled area reached 70 percent of Bosnia-Herzegovina. In the background lies the fact that most of the weapons of the former Yugoslav people's army in Bosnia-Herzegovina were captured by the Serbs, and that the Serbs, as they are farmers in a large part, originally held an overwhelmingly large area of Bosnia-Herzegovina. In addition, the Muslims do not have a mother country to rely on for support, while the Serbs and Croats do. Moreover, during 1993, a new war broke out between the Croat and the Muslim forces. In addition, no solution has yet been found on the problem of the U.N. protected zone in Croatia.

Under these circumstances, mediation efforts have been continued under the co-chairmen of the Geneva Peace Conference organized by the European Commission and the United Nations. In October 1992, co-chairmen Cyrus Vance and David Owen proposed the "Vance-Owen Plan" (Note 1), which did not materialize due to the rejection by the Bosnian Serbs in a referendum in May 1993. Thereafter, because the Serbs were becoming dominant in the ethnic zoning in Bosnia-Herzegovina, co-chairmen Owen and Thorvaid Stoltenberg submitted a proposal to form a union consisting of three different ethnic republics. While the Serbs and Croats accepted the proposal in principle, the Muslims rejected it on the grounds that the zoning proposal based on the present situation was advantageous to the Serbs and was tantamount to an approval of the armed invasion by Serbia. The negotiations broke down in September. Even though negotiations have been held intermittently, there is no prospect for the solution of the armed conflict.

The United Nations continues, in addition to humanitarian assistance, to impose sanctions against the Federal Republic of Yugoslavia (the new Yugoslavia). It is deploying the U.N. Protection Force (UNPROFOR) as well, to ensure the implementation of humanitarian assistance in Bosnia-Herzegovina, the maintenance of the cease-fire in Croatia and the prevention of conflicts in Macedonia. In December, Mr. Yasushi Akashi was appointed as Special Representative of the Secretary-General for the former Yugoslavia cum Chief of Mission, UNPROFOR Representative.

The conflicts in the former Yugoslavia are ethnic problems with a historical background bursting out in the form of exclusive ethnicism after the end of the Cold War. The reactions of the interested countries toward the settlement of the conflict have not always been unified, reflecting the respective national interests, which also complicated the process of reaching a settlement.

1-4. Somalia

Efforts by the international community continue mainly through the United Nations toward the improvement of the situation in Somalia which suffers inter-clan conflicts and starvation. While some progress has been attained concerning the starvation, expected results have not been obtained on the peaceful settlement of inter-clan conflicts, partly because of intensifying hostilities which at one point involved clashes between the United Nations and certain Somali factions.

In Somalia, due to grave starvation and a civil war, 2 million out of the total population of 6 million were in a desperate life or death struggle. In order to find a way out of this humanitarian crisis, the U.N. Security Council decided to deploy the Unified Task Force (UNITAF) in December 1992, with the objective of securing a safe environment for humanitarian assistance. UNITAF was able to attain the expected results. In March 1993, the Security Council adopted a resolution for the transition from UNITAF to the expanded United Nations Operation in Somalia (UNOSOM II) whose main tasks are to promote disarmament, humanitarian assistance and political reconciliation, the operation of which was launched in May. Recognizing that the early realization of disarmament of opposing armed Somali parties is indispensable in achieving peace, UNOSOM II was even authorized to take enforcement measures, if necessary. In addition, because obtaining the agreement of all Somali parties was virtually impossible due to the complex strife between clans, the agreement of the parties to the conflict was not a precondition to the deployment. However, when an armed Somali faction [General Muhamed Aidid's Somali National Alliance (SNA)] attacked Pakistani soldiers of UNOSOM II in June, UNOSOM II took enforcement measures to disarm SNA and to arrest its leader, General Aidid. Nevertheless, this only resulted in more victims on both sides. For this reason, skepticism mounted in the countries contributing troops about the continuation of dispatching their troops. In particular, the fact that U.S. soldiers fell victim caused a change in U.S. public opinion, getting President Bill Clinton in October to announce the withdrawal of U.S. troops by the end of March 1994. France, Germany, Italy and other countries also announced withdrawal plans.

Thereafter, international efforts have continued among the countries concerned toward a political solution that involves General Aidid's SNA. The United Nations has also begun to review its involvement in Somalia. Now that disarmament is to rely on the cooperative efforts of the Somalis, the United Nations is shifting principal objectives of its operation to support the reconstruction of the Somali police and judicial systems.

1-5. The U.N. Peace-keeping Operations

With the increase in regional conflicts, the U.N. Peace-keeping Operations (PKOs) increased remarkably. During 1993 alone, six Peace-keeping Operations were newly set up. Seventeen Peace-keeping Operations are currently in place throughout the world. In 1993, in particular, the success of the elections and the establishment of the new government in Cambodia, owing largely to the UNTAC, which was said to be an unprecedented experiment before the deployment due to its scale and wide-ranging tasks, newly demonstrated the effectiveness of the realization of peace with the involvement of the United Nations. Moreover, in such countries as El Salvador and Mozambique, where Peace-keeping Operations are deployed, a steady progress has been seen in the peace process toward the implementation of elections.

On the other hand, while UNOSOM II was, as stated in item 4 above, given a powerful authority in Somalia based on Chapter 7 of the U.N. Charter to ensure a safe environment for humanitarian assistance, it eventually had the character of a "peace enforcer," which caused clashes between the United Nations and some Somali parties. As for the UNPROFOR in Bosnia-Herzegovina and Croatia, though efforts such as the establishment of safety zones have been made to break the deadlock, difficulties still continue partly because of the weak will for peace among the warring parties.

In addition, as the cost of the Peace-keeping Operations increases (estimated to reach $3.6 billion in 1993) due to qualitative enhancement and quantitative expansion, the financial constraints on member countries began to become apparent. Consequently, questions with financial implications, such as those on the necessity to establish the Peace-keeping Operations, the definition of their mandate, and the establishment of their terms were seriously discussed in the Security Council. Thus, discussions are continuing on "checking" the increase of Peace-keeping Operations from a financial viewpoint.

2. Non-proliferation Regimes

2-1. Strengthening of the Non-proliferation Regimes

In the post-Cold War era, the strengthening of the non-proliferation regimes has become one of the most important issues for international peace and security. In the countries of the former Soviet Union, their harsh economic condition makes unclear the prospect for the safe and secure destruction of nuclear weapons and there are also growing concerns about an arms export drive motivated by the need for hard currency, possible outflow of materials related to weapons of mass destruction and the brain drain of scientists. Moreover, because of the outbreak, and the increasing danger of outbreak, of regional conflicts in the wake of the end of the Cold War, there is an increasing demand for weapons in these regions.

Various moves were made to strengthen the non-proliferation regimes in 1993. Concerning the Nuclear Non-proliferation Treaty (NPT), which is the core of the non-proliferation regimes, it is important to enhance its universality by encouraging the adherence of Israel, India, Pakistan, Ukraine and other countries that have not signed the Treaty. Also significant is the need to stabilize the nuclear non-proliferation regimes by encouraging nuclear disarmament efforts in the countries possessing nuclear weapons and extending indefinitely the NPT, for which a review and extension conference will be held in 1995. This recognition was confirmed in the Tokyo Summit. Moreover, moves toward the conclusion of a comprehensive nuclear test ban treaty have shifted into full swing, as the United States, Russia, the United Kingdom and France continue their nuclear testing moratorium and the Conference on Disarmament in Geneva gave its Ad Hoc Committee on a Nuclear Test Ban a mandate to negotiate a comprehensive nuclear test ban treaty (CTBT).

Furthermore, export control regimes of nuclear-related items, most importantly, the London Guidelines, and the safeguards system of the International Atomic Energy Agency have been improved and strengthened. Moreover, the Chemical Weapons Convention, which includes the establishment of a broad inspection system, was signed in January, as a part of the efforts toward the elimination of chemical weapons. Along with this, progress has been made toward the strengthening of export controls of weapons of mass destruction, such as chemical and biological weapons, and related dual-use items and technology related to missiles, means of delivery of these weapons. In this context, it was decided to abolish by March 1994 the Coordinating Committee for Multilateral Export Controls (COCOM) which had controlled the outflow of weapon-related technology to the former Eastern bloc countries. With the appearance of new countries of concern, deliberations are under way to establish a new export control regime in lieu of COCOM. In addition, the international community is extending assistance to the former Soviet Union to promote the disposal of nuclear arms and to establish the International Science and Technology Center designed to offer scientists projects with a peaceful objective.

2-2. Problems Related to the Non-proliferation Regimes

(1) North Korea's Suspected Development of Nuclear Weapons

In spite of continued international efforts to strengthen the non-proliferation regimes, there were moves to challenge these efforts.

North Korea's suspected development of nuclear weapons is one such challenge. North Korea acceded to the Nuclear Non-proliferation Treaty (NPT) in 1985 and concluded the full scope Safeguards Agreement with the International Atomic Energy Agency (IAEA) in April 1992. However, the ensuing process of IAEA Ad hoc inspections (Note 2) revealed that the respective features of plutonium, radioactive wastes, and irradiation records of spent fuels did not tally, leading to the suspicion of the existence of undeclared plutonium in North Korea. Responding to the situation, the IAEA demanded in February 1993 a "special inspection," based on the Safeguards Agreement, seeking access to additional information and to two undeclared facilities which are suspected to be for radioactive waste storage. North Korea, pretending that the "nuclear threat" from the United States and the "unfairness" of the IAEA would undermine the ultimate interest of the nation, decided in March to withdraw from the NPT, leading to the likelihood that the withdrawal would become effective in June.

In this situation, the international community incessantly requested North Korea to reconsider its withdrawal from the NPT and to fully adhere to the IAEA Safeguards Agreement, at such fora as the IAEA, the U.N. Security Council and the Tokyo Summit. The U.S.-North Korean talks which were held amid these moves by the international community, brought North Korea to announce, in June (the first round of the talks), that it would suspend as long as it considers necessary the entry into effect of its withdrawal from the NPT, and in July (the second round), that it was ready to have consultations with the IAEA on the question of safeguards as well as to have a North-South dialogue to discuss such issues as nuclear problems.

In the second round of U.S.-North Korean talks, agreement was reached to hold another round of talks within two months. However, North Korea thereafter showed no sincerity toward consultations with the IAEA or the North-South dialogue. To make matters worse, it showed reluctance even to accept the regular inspections of the declared seven facilities (as distinguished from the above-mentioned special inspections). In these circumstances, the third round of U.S.-North Korean talks was not held as scheduled, while the United States continued to maintain unofficial contacts with North Korea to search for a solution. Due to the persistent efforts of the countries involved, principally the United States and those of the IAEA, North Korea finally agreed in mid-February 1994 that it would accept the inspections required by the IAEA on the declared seven facilities. However, this is not a total fundamental solution to the problem. First, it is important that the third round of U.S.-North Korea talks be held after North Korea accepts the above-mentioned inspections and starts a serious dialogue with the Republic of Korea. In addition, North Korea must dispel concerns held by the international community about its development of nuclear weapons through the full return to the NPT, the full implementation of IAEA-North Korea Safeguards Agreements and the implementation of South-North Joint Declaration on the Denuclearization of the Korean Peninsula. It is hoped that North Korea will take positive steps, but it is hard to predict North Korea's behavior.

This is a very serious problem particularly for the security of Northeast Asia. Japan continues to concentrate on diplomatic efforts, by maintaining close coordination with the United States, the Republic of Korea and other countries concerned.

(2) Ukraine

Although Ukraine had previously agreed to eliminate the strategic nuclear weapons deployed in its territory and to accede to the NPT as a non-nuclear-weapon state under the Lisbon Protocol of May 1992, it refused the ratification of the first Strategic Arms Reduction Treaty (START I) and the accession to the NPT, because of opposition in the Ukrainian Parliament which claims Russian threats to its security. The international community, the G-7 members, in particular, have made use of various occasions such as the Tokyo Summit to persuade Ukraine. In November 1993, the Ukrainian Parliament decided to ratify START I subject to a number of conditions, including the provision of security guarantees by nuclear-weapon states. In January 1994 in Moscow, however, the Presidents of the United States, Russia and Ukraine signed a statement concerning the elimination of all the nuclear weapons of the former Soviet Union that are deployed in Ukraine, leading to the adoption by the Ukrainian Parliament of a resolution to approve the ratification of START I in February. Thus, progress has been made in resolving this problem. It is said that there are some 1,500 nuclear warheads and 176 Intercontinental Ballistic Missiles (ICBM) in Ukraine, the third largest number in the world which surpasses the combined total numbers possessed by the United Kingdom, France and China. Japan and other countries continue to persuade Ukraine, recognizing that it is indispensable to international peace and security that Ukraine be integrated into the international framework for nuclear disarmament and non-proliferation by way of its ratification of START I and accession to the NPT as a non-nuclear-weapon state.

(3) Nuclear Testing by China

While a moratorium on nuclear testing was being maintained by the United States, Russia and other countries, China conducted a nuclear test in October, which was very controversial in the sense that it could undermine the rising momentum in the international community in favor of a comprehensive nuclear test ban treaty.

Thus, the international situation surrounding the issue of non-proliferation is characterized by uncertainty. This issue cannot be solved by superpowers alone as was done in the strategic arms reduction negotiations during the Cold War era. In tackling this issue, detailed international coordination and cooperation are indispensable both on exports and imports of weapons and materials related to weapons of mass destruction. Moreover, the problem is not confined to how to improve the non-proliferation regimes but the issue of non-proliferation is closely related to other problems. For example, North Korea's suspected development of nuclear weapons is related to the domestic political regime of North Korea as well as to the issue of the unification of the two Koreas. As for Ukraine, it is necessary to take into account its relations with Russia and its progress in the transition toward democracy and a market economy. In coping with the issues of non-proliferation, the international community is required to take into consideration various factors bearing on the issues from a broader point of view.

3. Japan-U.S. Relations

[Change of Government in Both Countries]

A governing party change took place in both Japan and the United States in 1993, the first time that this had happened in the same year in the postwar Japan-U.S. relations. Such changes in the political situation do not diminish the importance of the Japan-U.S. Security System or the close Japan-U.S. relations. President Bill Clinton said he regards Japan-U.S. relations as the "most important bilateral relations for the United States." The new Japanese government under Prime Minister Morihiro Hosokawa also confirmed its basic stance of making every effort to "continue to forge good, constructive Japan-U.S. relations" as the cornerstone of Japanese foreign policy.

At the same time, however, in so far as the change of government reflects the changing expectations of the public toward policies, the inauguration of new governments in both Japan and the United States will inevitably affect the bilateral relationship. In 1993, amidst this change, the consolidation of bilateral relations was pursued (Refer to Chapter II, Section 2, 1 for the Japan-U.S. Security Arrangements).

[Miyazawa-Clinton Meeting]

Exchanges between the governments of Japan and the United States after the inauguration of the Clinton Administration started in full swing in February after most officials of the new administration were appointed. Foreign Minister Michio Watanabe visited Washington in February to make the first contact with the leaders of the new administration, including President Clinton. In April, Prime Minister Kiichi Miyazawa visited the United States and held his first summit meeting with President Clinton. At this summit meeting, both leaders reaffirmed to firmly maintain the basic framework of the Japan-U.S. relationship with the Japan-U.S. Security Arrangements at its center. They also agreed to further develop cooperative relations in the three areas of (1) politics and security, (2) global issues and (3) trade and economics. They decided that a framework for comprehensive consultations ought to be established to strengthen the relationship in the areas of trade and economics which face the largest number of issues and agreed that the Heads of Government Meetings should be held at least twice a year.

After difficult negotiations, the framework for trade and economic relations was agreed upon at the second Japan-U.S. summit meeting which was held on the occasion of the Tokyo Summit in July (The Joint Statement on the Japan-United States Framework for a New Economic Partnership). Based on this agreement, it was decided that the talks on "Japan-U.S. Framework for a New Economic Partnership" (hereinafter referred to as the Framework Talks) would be held.

Moreover, prior to his visit to Japan, President Clinton nominated former Vice President Walter F. Mondale as the new Ambassador to Japan, which indicated symbolically the importance the Clinton Administration attaches to relations with Japan. President Clinton also emphasized the importance of the Asia-Pacific region for the United States in his speeches in San Francisco, Tokyo and Seoul on his journey to attend the Tokyo Summit.

In the area of foreign policy, since the start of the Clinton Administration, the Government of Japan has worked on coordinating policies on important diplomatic issues. This has brought steady progress in policy coordination between the Governments of Japan and the United States especially on the suspected development of nuclear weapons by North Korea, and on China, Cambodia, Vietnam, the ASEAN Post-Ministerial Conference, Asia-Pacific Economic Cooperation (APEC) and other issues in the Asia-Pacific region. In addition, close cooperation was maintained between Japan and the United States on the issue of assistance to Russia.

[Hosokawa-Clinton Meeting]

Prime Minister Morihiro Hosokawa held his first summit meeting with President Clinton in September immediately after assuming office, on the occasion of attending the U.N. General Assembly.
At this meeting Prime Minister Hosokawa conveyed to the U.S. President the Japanese policy to firmly maintain the basic framework of the Japan-U.S. relations based on the Japan-U.S. Security Arrangements, as well as explained the direction of domestic reforms he would be taking.

The two leaders also met in Seattle during the APEC Economic Leaders Meeting in November, and Prime Minister Hosokawa explained political, economic and social reforms which he intended to push forward, to which President Clinton expressed his general support. Prime Minister Hosokawa proposed a Japan-U.S. summit meeting to be held on February 11, 1994 as a follow-up on the Miyazawa-Clinton agreement in July, which President Clinton accepted.

Based on this agreement, Prime Minister Hosokawa paid an official visit to Washington in February 1994 and held his third meeting with President Clinton on the 11th. The two leaders however could not reach an agreement on the Framework Talks as stated later. Nevertheless, they both recognized that the favorable cooperative relations between Japan and the United States on political, security and global issues should not be undermined in any way by disagreements on economic matters.

[Japan-U.S. Economic Relations]

Japan and the United States are deeply interdependent economically, and through active cooperation on trade, investment and industries, the two countries fundamentally enjoy mutually beneficial relations. In the meantime, both countries share the recognition that the continuation of the present size of trade imbalances is politically impossible (Note 3). It was against this background that the "Joint Statement on the Japan-United States Framework for a New Economic Partnership" was announced after the Miyazawa-Clinton meeting in July.

In this comprehensive framework, Japan intends to achieve, over the medium-term, a highly significant decrease in its current account surplus, and to actively pursue as medium-term objectives (1) the promotion of strong and sustainable domestic demand-led growth and (2) the increase of market access of competitive foreign goods and services, with the aim of promoting a significant increase in global imports of goods and services. The United States will also actively pursue the medium-term objectives of substantially reducing its fiscal deficit, promoting domestic savings, and strengthening its international competitiveness. Moreover, on the environment, population, AIDS and other common economic issues of global implication, Japan and the United States will also jointly pursue positive cooperation from a global perspective. Three sectors, namely, government procurement, the insurance market and automobiles and auto parts, were designated as "priority areas" and the agreement in these areas were to be reached by the first Japan-U.S. summit meeting in 1994.

According to this Joint Statement, in proceeding with the consultations under the Framework Talks, the consultations will take place under the basic principle of a two-way dialogue between Japan and the United States; benefits under this Framework were to be applicable to third countries on a Most Favored Nation (MFN) basis; matters were to be limited within the scope and responsibility of government; and if issues within the sectoral and structural areas arose, utmost efforts would be made to resolve differences through consultations, where appropriate, under applicable multilateral agreements. The Government of Japan also intended, by adhering to these principles, to prevent protectionist pressures seen in some parts of the United States and to prevent unilateral measures and steps toward managed trade between the two countries such as the establishment of numerical targets in specific areas.

At the Japan-U.S. summit meeting of February 11, 1994, despite the energetic prior negotiations, the two countries could not agree over the relation between objective criteria and numerical targets in the priority areas of government procurement, insurance market and automobiles and auto parts. Both countries agreed that the Framework Talks should have a period of reflection.

[Future Prospect]

As a result of the inability to reach an expected agreement in the Framework Talks, it is likely that disagreement between the two countries over trade and economic problems will become even more severe. As stated above, the two governments clearly agree and recognize that the discord in trade and economic matters should not adversely affect the Japan-U.S. cooperation on political, security and global issues. However, strong irritation is expressed in debates in U.S. Congress and the mass media about the massive trade imbalances with Japan, and voices of dissatisfaction or concern are also mounting in Japan concerning the U.S. reactions.

The importance of cooperative relations between the two countries in political/security and economic areas will remain unchanged in the future for both Japan and the United States. Moreover, the role of Japan-U.S. cooperation in contribution to peace and prosperity is further increasing, not only for the Asia-Pacific region, but for the entire world. To bring about a sense of stability in Japan-U.S. relations is, therefore, the common interest and international responsibility of the two countries.

In order to give a sense of stability to Japan-U.S. relations in the situation where the common threat of the Soviet Union has disappeared, it is indispensable to further deepen the Japan-U.S. cooperation for world peace and prosperity and to seek visible improvements in trade and economic relations between the two countries. While improving trade and economic relations between Japan and the United States will require efforts by both countries, it is particularly important for Japan to implement domestic-led demand economic management that can contribute to the growth of the world economy and to take voluntary measures that can further enable access to the Japanese market of competitive foreign products, services and investment.

In a medium- and long-term perspective, the conditions for opening a brighter prospect for the future Japan-U.S. relations can be seen in both countries. For example, reforms which both countries are pushing forward -- the revival of the U.S. economy based on fiscal deficit reduction and the strengthening of competitiveness, and the economic and social reforms in Japan aiming to upgrade the living standard of the people and create a more open society -- are likely to work toward a further strengthening of Japan-U.S. relations. The cooperation of Japan and the United States for the future of the Asia-Pacific region, which has potential for dynamic development, is also expected to further strengthen the bilateral relationship. Exchanges of persons between the two countries continue to grow and deepen. Increasing efforts of the two Governments are, then, all the more important, to improve the present trade and economic relations.

4. Russia

In 1993, the long-standing domestic political confrontation between President Boris Yeltsin and the Supreme Soviet was settled and a new democratic constitutional system was established by way of a national referendum in December. However, Russian domestic politics are still unstable, since anti-reformist forces gained ground in the State Duma (lower house) of the New Parliament, as a result of the elections simultaneously held with the national referendum on the New Constitution. The success of the Russian reform is a key to building an international framework for peace and stability in the post-Cold War era, and it is necessary to continue to pay attention to its further development.

[Establishment of the New Constitution and the New Parliament]

The confrontation between the President and the Supreme Soviet, which had continued since 1992, further intensified in 1993, and the so-called dual power situation continued to exist. In order to make a breakthrough in this confrontation, President Yeltsin proclaimed in September a presidential decree to suspend the function of the Supreme Soviet and to hold elections for the New Parliament. The anti-President force led by Vice President Alexander Rutskoi and the Chairman of the Supreme Soviet, Ruslan Khazbulatov, refused to obey to the presidential decision, by staying with weapons in the Parliament building. Finally, as they used weapons and brought about a riot in Moscow in October, the President was forced to send the military forces to bring the situation under control.

Having thus settled the confrontation with the Supreme Soviet, the President decided to hold the election of the New Parliament in December and to hold simultaneously a national referendum on the draft of the New Russian Constitution. This presidential initiative was intended to exploit the opportunity presented by the virtual dissolution of the Supreme Soviet for the purpose of adopting the New Constitution which had had no prospect for the adoption due to the opposition by the Supreme Soviet. In this national referendum, 54.8 percent of those eligible voted, and by the majority of 58.4 percent of the votes, the New Constitution was adopted.

The main feature of this New Russian Constitution is that it provides a President-led governing system, in which the President is bestowed with strengthened authorities, including those to determine the basic direction of both external and domestic policies as well as to dissolve the lower house of the Parliament.

On the other hand, against a background of the rising nationalism and of mounting dissatisfaction of the Russian public about the social situation, the new parliamentary election simultaneously held with the referendum resulted in a better-than expected score by the conservative forces, such as the Communist Party, and a great gain by an extreme-right nationalist party, particularly in the State Duma (lower house). With a rise of such forces against reforms, it is expected that difficulties will persist in the relationship between the President and the New Parliament. Moreover, such Russian domestic politics are influencing Russian economic reform policy and foreign policy, as seen below.

[Economic Reforms of Russia and Assistance by the International Community]

Russia, which has started on the formidable path of democratization at home, is also facing harsh economic conditions. Although the situation slightly improved compared with 1992 after the adoption of the monetary tightening policy and other measures, the country is still in difficulty in 1993, with inflation of around 900 percent and negative economic growth of around minus 12 percent.

Assistance to Russia suffering from such harsh economic conditions is extremely important to firmly establish democracy and a market economy in Russia as well as to construct a framework for peace and stability in the post-Cold War era. With this recognition, in the preparation process of the Tokyo Summit, the G-7 Joint Ministerial Conference on Assistance to Russia was held in Japan in April. At this conference, support measures suited to the Russian domestic economic situation were formulated. Specifically, the package included the establishment of the Systemic Transformation Facility (Note 4) in the International Monetary Fund (IMF) to help reduce the high inflation rate in Russia and promote macroeconomic stabilization, and the provision of about $1.5 billion in the first tranche through this facility was realized. Support through the World Bank for structural reforms and reforms in important sectors, as well as assistance to medium- and small-sized enterprises through the European Bank for Reconstruction and Development were also part of the package. In addition, at the Tokyo Summit, the establishment of the Special Privatization and Restructuring Program to support the privatization in Russia, and the Support Implementation Group to exchange information and coordinate among the G-7 on Russian assistance were agreed upon.

On the other hand, in the new cabinet formed after the new parliamentary election, moderate reformists, including Prime Minister Chernomyrdin became the mainstream. While continuing on the path of reforms, some modifications were being undertaken, such as the expansion of subsidies to government-controlled enterprises.Russia also faces difficulty in disposing of nuclear waste. In October, its dumping in the Japan Sea of radioactive waste became a major controversy. Joint working group meetings were held twice between Japan and Russia, and it was decided to implement a joint survey of the seas together with Korea in early 1994 (Refer to Chapter II, Section 2, 1-4 for details of Russia's ocean-dumping of radioactive wastes).

[External Relations]

Russia continues its efforts to strengthen relations with the industrialized countries. With the United States, it signed the Strategic Arms Reduction Treaty II (START II) in January 1993 and issued the "Moscow Declaration" at the summit meeting of January 1994, confirming the partnership between the two countries. With the European Union, strengthening of relations particularly in trade is being promoted, as was seen in the issue of the "Joint Declaration on Partnership and Cooperation," anticipating the future free trade agreements on the occasion of President Yeltsin's visit to Europe in December. In addition, President Yeltsin expressed the intention to participate actively in the new European security system on the same occasion. As for the relations with Japan, President Yeltsin visited Japan for the first time as the President of Russia in October. As a result of the summit meeting with Prime Minister Hosokawa, the Tokyo Declaration was signed, thereby establishing a newly advanced basis for negotiations toward the solution of the territorial issue. Russia has also been participating in the efforts toward peace in cooperation with other industrialized countries, in such areas as the Middle East Peace process and the conflicts in the former Yugoslavia, as part of the endeavor being undertaken by the international community toward world peace and stability.

As regards the relationships with the former Eastern bloc countries, Russia has participated actively in efforts to solve ethnic disputes in the countries of the former Soviet Union by way of deployment of the Peace-keeping forces of the Commonwealth of Independent States (CIS). At the same time, disputes have arisen with some of the countries over such issues as the treatment of Russian residents in these countries. The confrontation was visible, particularly with Ukraine, over such issues as control of nuclear arms, division of the Black Sea naval forces, territorial claim over the Crimean Peninsula and the issues on external debts and assets. As for the question of control of nuclear arms, the Presidents of the United States, Russia, and Ukraine made an announcement to eliminate all nuclear arms deployed in Ukraine on the occasion of President Clinton's visit to Russia in January 1994.

The rise of extreme rightists resulting from the new parliamentary election held in December triggered concerns in the countries of the former Soviet Union and Central and Eastern Europe, and brought to strengthen the request by Poland and others for membership in the North Atlantic Treaty Organization (NATO). Russia, for its part, took the position that it could not accept the idea of making a new division in Europe by expanding NATO. In this situation, the NATO summit in January 1994 came up with the concept of "Partnership for Peace (PFP)" as a concept for the security in the whole Europe including Russia. President Yeltsin expressed to President Clinton his intention to actively participate in the PFP, when the latter visited Russia immediately after the NATO summit.

5. International Economy

5-1. Industrialized Economies

With the end of the Cold War, economic issues seem more likely to be politicized. Also with the deepening interdependence of the world economy, there is an emerging need for international coordination even for issues which were previously considered to be entirely within the domain of domestic policy. Amid such a situation, it is indeed significant that the Uruguay Round negotiations of the General Agreement on Tariffs and Trade (GATT) was virtually concluded in December 1993 in view of, among others, the importance to ensure sound development of the world economy based on multilateral cooperation centering on the industrialized countries.

At the same time, the industrialized economies as a whole continue to be sluggish, while North America is registering steady growth and the United Kingdom and a few others are showing signs of modest recovery. In particular, the still rising unemployment has become a major political and social issue. U.S. President Bill Clinton, who was elected on a platform of economic reconstruction, and other leaders of major industrialized countries continue with their efforts toward economic revitalization. However, it seems that considerable time will yet be required until a full recovery of the world economy.

In countries of the Organization for Economic Cooperation and Development (OECD), the real economic growth rate of 1993 is forecast to drop to that of some 1 percent from those of 0.8 percent in 1991 and 1.5 percent in 1992 respectively, which were on a moderately recovering trend. As for unemployment, the total number of unemployed people is expected to reach about 35 million in the OECD countries in 1994 (OECD source).

Against such a background, the industrialized countries are making efforts to pursue policy coordination with a view to regaining sustainable growth and increasing employment through policy coordination. At the Tokyo Summit of July 1993, the member countries expressed their determination to coordinate appropriate measures under the "double strategy:" macroeconomic policies in fiscal and monetary fields, on the one hand, and microeconomic structural adjustment policies such as alleviating the rigidities in the labor market on the other.

In the area of trade, while the growth of the world trade volume in 1992 showed a sign of slight improvement with a 5.2 percent growth over the previous year, it is estimated to remain at around 2.6 percent in 1993, reflecting the sluggish economies of the major industrialized countries (OECD source). In such an environment, the conclusion of the Uruguay Round is strongly expected to lead to a further vitalized and developed world economy.

Also, there is further progress in regional integration and cooperation. In Europe, the integration has deepened, as the European Union (EU) was established in November 1993, and it shifted to the second stage of the economic and monetary integration in 1994. Its integration has also been enlarged with, among others, the entry into force of the European Economic Area agreement in January 1994. In North America, the North American Free Trade Agreement (NAFTA), although creating a political controversy in the United States, was ratified in November 1993 and took effect in January 1994.

Under the multilateral free trading system, the Asia-Pacific countries and areas, not having regional institutional frameworks, have registered economic growth varying with their diverse development levels. Thus, the Asia-Pacific region has come to play an underpinning role in the development of the world economy from not only a production but also a demand side. In an effort to further promote economic cooperation in the region utilizing its above- mentioned characteristics, a diverse range of activities have been conducted in the Asia-Pacific Economic Cooperation (APEC). In November 1993, the leaders of this region met for the first time at the APEC Leaders Economic Meeting to exchange views on the role of the entire region, possible forms of cooperation and contribution to the world economy.

5-2. Developing Countries

In contrast to the generally sluggish industrialized economies, the economies of developing countries as a whole are in a relatively favorable condition, although they vary regionally. The growth rate of developing countries as a whole was 4.5 percent in 1991, 5.8 percent in 1992, and is estimated to be 6.1 percent in 1993. In particular, the Asia-Pacific region has attained stable growth rates ranging from 5 to 10 percent, and many countries in Latin America have also shown remarkable improvements in their economies (the figures are from IMF statistics).

At the same time, countries in other regions continue to face difficult economic situations. The Sub-Saharan African countries, in particular, have registered negative growth in per capita GDP since 1987. Such bleak economic situations in the least developed countries are attributable to all kinds of problems of the developing world including external debt problems, sluggish primary commodity markets, high population growth rates, difficulties in domestic economic reforms, and macroeconomic instability.

To promote economic development in developing countries and thereby integrate them into the world economy is indispensable to ensure world peace and prosperity and to address such global-scale problems as the environment. From such a perspective, it was agreed at the Tokyo Summit that the assistance be tailored to the economic development stages and performances of the respective recipient countries, and that it is important to pursue a comprehensive approach, covering not only aid but also trade, investment and debt strategies. Moreover, at the Tokyo International Conference on African Development of October 1993, participants shared the view on the importance of help for self-help efforts through promotion of trade and investment, as well as providing international aid.

5-3. Countries in Transition

The countries in transition, such as those in Central and Eastern Europe and in the former Soviet Union and Mongolia continue to experience difficult economic conditions. Economic growth in the Central and Eastern European countries registered an average rate of minus 5 percent in 1992. In particular, countries like Romania and Bulgaria, whose main products are agricultural commodities, are facing difficulties in economic reconstruction. The countries of the former Soviet Union are in even more difficult situations, recording on the average a negative 18 percent growth and 2,000 percent inflation rates in 1992. In Russia, inflation of around 900 percent is forecast for 1993. Moreover, the New Independent States (NIS) of the former Soviet Union, which rely heavily on the Russian economy, were heavily affected by the raise by Russia of the energy prices to the international level, its monetary tightening policy as well as its suspension in July of the circulation of the former Ruble bills inside Russia (the figures are from OECD statistics and those announced by the Russian National Statistics Commission).

With the recognition that the success of reforms in these countries and their full integration into the world economy are indispensable for world peace and stability, the major industrialized countries have been coordinating their support to the self-help efforts of these countries through such fora as the Tokyo Summit. Concerning Russia, for instance, in the preparation process of the Tokyo Summit, the joint Ministerial meeting of Foreign and Finance Ministers of the G-7 and that of the G-7 plus Russia were held in April in Tokyo, where an international framework for assistance coordination was created and a package of specific assistance measures was compiled.

6. Major Regional Movements

6-1. North America

In North America, as in Japan, voices clamoring for "changes" have increased, and have resulted in a change of the governing parties in both the United States and Canada.

(1) The United States

In January 1993, a Democratic President took over for the first time in 12 years. The new Clinton Administration advocated "changes" and "American renewal," and made it clear that it would place priority on rebuilding the domestic economy. There were some stumbles such as those in personnel appointments during the early stages of the Administration. However, after the mid-year, successes or progresses were seen in such priority issues as reducing the fiscal deficit, the North American Free Trade Agreement (NAFTA) and health care reform. Together with the improving trend of the economy, the Administration's political foundation gradually became stable.

In the congressional deliberations on the Budget Reconciliation bill in August which incorporated measures to cut the fiscal deficit by full-fledged tax increases and expenditure cuts, the Administration was able to contain the strong opposition of the Republicans and some Democrats, and secured the passage of the legislation with a very slim majority. Moreover, regarding the NAFTA implementation legislation, the President himself led the campaign to persuade Congress, and finally in November, the bill was passed, although there had been strong opposition within the Democratic Party due to the opposition from some sectors like the labor unions. As for the health care reform, the Clinton plan for dramatic reform was announced in September and efforts to translate it into legislation are under way. With such results, the support rating of the President which at one time had dropped to about 30 percent, recovered to the 50 percent level at the end of 1993, almost the same rating as that at the time of inauguration. However, the factors which can complicate the President's political management have not disappeared; for example, it remains imperative both politically and economically to make progress on fiscal deficit reduction. Distrust toward politics among the public continues to prevail. Regarding the handling of Congress, the President is sometimes obliged to form a different alliance to pass through legislation, as was seen in the opposition to the NAFTA legislation by many Democrats who themselves constitute the President's party as well as the majority in Congress. Moreover, in November 1994, the mid-term elections will be held in which one third of the Senators and all the Representatives will face elections. Primaries to select party candidates will begin in March. This will pose the Administration continued difficulty in dealing with Congress. In this situation, the Clinton Administration will make its utmost efforts to cope with such tasks as the health care reform and anti-crime measures as top priority domestic issues.

The U.S. economy bottomed out in the second quarter of 1991, and while lacking strength, the economy has entered a recovery phase. Thereafter, although there has been some seesawing, a modest economic growth of slightly over 2 percent on the average continues. The unemployment rate persisted high at the 7 percent level even after the economy entered a recovery phase, but in December 1993, it dropped to 6.4 percent, the lowest level since the beginning of 1991. The trade deficit expanded in 1992 registering $84.3 billion, which was a 29 percent increase over the previous year. This marked a shift from the declining trend that had continued for four years. This was brought about by the fact that the U.S. economy started to recover at a time when economies in the rest of the world were still sluggish. The trade deficit is certain to further increase in 1993 ($108.8 billion in January to November 1993, a 43 percent increase over the same period of the previous year). On the other hand, the fiscal deficit, which recorded a new high of $290.3 billion in FY 1992, decreased for the first time in four years in FY 1993 at $254.9 billion. Based on the Budget Reconciliation Act which passed in August 1993, the Clinton Administration will make further efforts to reduce the fiscal deficit.

In foreign policy, reconstruction of the domestic economy was again emphasized, constituting one of the three main pillars of foreign policy, together with the maintenance of military capabilities appropriate to cope with threats in the post-Cold War era, and the promotion of democracy and a market economy. Placing special emphasis on these points, the Clinton Administration energetically supported, among others, reforms in Russia in coordination with other G-7 countries, promoted peace in the Middle East, and strengthened relations with the Asia-Pacific region. The enthusiasm of the United States was notable regarding the Asia-Pacific region in particular. This was mainly because the dynamic economic growth in this region is most relevant to the recovery of the American economy that the Clinton Administration pursues, and there were a number of occasions, such as the G-7 Summit in Tokyo and the APEC ministerial meeting in Seattle, at which policies concerning the Asia-Pacific region could be expressed. On the other hand, the Clinton Administration went through a "trial and error" process on the new post-Cold War challenges such as the regional conflicts in the former Yugoslavia and Somalia, where the Administration's leadership was at times questioned. Henceforth, President Clinton, as the first president elected after the end of the Cold War, will be required to define a role for the United States in the post-Cold War international community while coping with individual issues.

(2) Canada

For Canada, 1993 was a turbulent one during which two prime ministers were sworn into office in succession. Prime Minister Brian Mulroney of the Progressive Conservative Party who was in power for two terms (nine years), announced his intention to resign in February because of popular dissatisfaction caused mainly by his administration's failure in economic policy and constitutional reforms. At the end of June, a new Party leader, Ms. Kim Campbell was elected as the first female prime minister in the history of Canada. Then, in the October general elections, the Liberal Party, which advocated job creation as its top priority policy, obtained a majority in the House of Commons, and a new cabinet led by Prime Minister Jean Chretien was formed in November.

With regard to Canada's economy, the speed of economic recovery is still slow. It seems that assuring employment and reducing the fiscal deficit, which are the main goals for the new Administration, will be accompanied by many difficulties.

6-2. Europe

In Europe, efforts continue to build a new framework of order in the post-Cold War period with the European Union (EU) as one of its central pillars. However, there are ethnic problems such as persistent conflicts in the former Yugoslavia. With the sluggish economy in the background, exclusive attitudes are also observed. Japan promoted dialogues and policy coordination with Europe which shares common values on a wide-range of issues such as the economy, politics and security. There is a need to further expand such cooperative relations.

(1) Developments Toward Integration Centering on the EU

At the beginning of 1993, the European Communities (EC) accomplished the creation of a single market where movements of people, goods, capital and services in principle are free. The Treaty on European Union came into effect in November and the European Union (EU) was created, which is an expanded and strengthened form of the EC, with enhanced political cooperation. The EU aims to establish the European Central Bank, to introduce a single currency (by the beginning of 1999 at the latest), to execute common foreign and security policies, to strengthen cooperation in justice and home affairs, as well as to introduce the European citizenship. These are epoch-making experiments accompanied by a partial transfer of sovereignty of the member countries.

On the other hand, the geographic scope of the European Union will further expand beyond the present borders of the EU. In January 1994, the European Economic Area (EEA) agreement became effective, launching a single market that encompasses the 12 countries of the EU and five member countries of the European Free Trade Association (EFTA) excluding Switzerland. Negotiations to permit Austria, Sweden, Finland and Norway to acquire EU membership by January 1995 are under way. In addition, efforts continued to set a framework for dialogue and policy coordination between the EU and the Central and Eastern European countries, and in 1993, Association Agreements were signed with Romania in February, and with Bulgaria in March.

Thus, Europe is strengthening the degree of integration, particularly among Western European countries, and further widening the geographic scope of integration.

(2) The Sluggish European Economies

In the European countries, however, reflecting their sluggish economic situations, there has been an increased tendency to turn protectively inwards, and to lose enthusiasm toward the European integration.

The countries of the EU as a whole registered negative growth in 1993 for the first time in 18 years (the EU forecast in November was -0.4 percent), with over 17 million unemployed and the unemployment rate exceeding 10 percent. Faced with such a daunting economic situation, the Governments of the EU countries have had little room to maneuver in stimulating the economies and combating the unemployment, since monetary easing was delayed because Germany maintained high interest rates for a long period, and large-scale fiscal measures could not be taken because of huge fiscal deficits. In addition, these countries are also suffering from structural problems such as high fiscal deficits, rigid labor markets and the eroding industrial competitiveness. It is projected that unemployment will further increase in and after 1994.

Under these circumstances, political criticism toward governments and existing political parties are accumulating in the EU countries while extreme rightists seem to be gaining support, as they campaign to exclude foreign workers.

Meanwhile, the real economic performances of the countries in the region are not converging, which is a prerequisite for economic and monetary integration. On the contrary, the United Kingdom and Italy temporarily departed from the Exchange Rate Mechanism (ERM) in September 1992, and the fluctuation band of the ERM was widened substantially in August 1993 (from +-2.25% to +-15%). These developments run counter to the moves toward the economic and monetary integration's ultimate goal -- single currency.

Amidst these conditions, whether the European Union can achieve the integration as originally planned and contribute to the stability and prosperity of the European region, as well as the international community as a whole, largely depends on how each member state can overcome its domestic economic problems.

(3) Trends in the Former Socialist Countries including Central and Eastern Europe

After a few years of reforms, there has emerged in some groups of people in Central and Eastern European countries, a sense of dissatisfaction toward rapid economic reforms and a trend of growing nationalism. For example, in Poland, a party which had formerly been affiliated with the Communist Party increased its seats considerably in the election in September 1993. However, the overall trend toward democratization and reforms has been maintained. The Central and Eastern European countries, in particular, the Czech Republic, Poland and Hungary, where the reforms are most advanced, have shown keen interests in becoming members of the EU and the North Atlantic Treaty Organization (NATO). They are seeking to secure their political and economic stability by strengthening their cooperation and solidarity with the Western European countries.

Developments in the political and foreign policy of the countries of the former Soviet Union, notably Russia, Ukraine and Kazakhstan, can greatly affect the security of the region including the neighboring Central and Eastern European countries. In particular, reliable control and removal of the nuclear weapons by the countries in the former Soviet Union as well as their accession to the Nuclear Non-proliferation Treaty (NPT) are crucial issues for the entire international community.

In the region of Central and Eastern Europe, as well as in the former Soviet Union, armed conflicts of ethnic and religious origin have surfaced and intensified after the communist regimes had collapsed. The conflicts in the former Yugoslavia and the countries of the former Soviet Union, which still present bleak prospects for resolution, remain a source of instability for this region.

(4) Search for a New European Security Order

Against the background of aforementioned developments in the different parts of Europe, the Conventional Armed Forces in Europe (CFE) has been gradually implemented, and a security framework for a more effective prevention of regional conflicts and crisis management continues to be sought in various fora such as NATO, the North Atlantic Cooperation Council (NACC) and the CSCE.

The CSCE, by promoting its institutionalization and enhancing its cooperative relations with the United Nations and NATO, is trying to strengthen its function of conflict prevention. NATO, in addition to its function as a collective defense organization, is considering to establish a system that can effectively cope with Peace-keeping Operations and crisis management and to coordinate activity with the Western European Union so as to tackle current security problems. The expansion of the NATO membership, which some of the Central and Eastern European countries are seeking, is an issue that concerns the basis of the security structure of Europe and North America including the United States and Russia. The NATO summit meeting of January 1994 officially agreed on the "Partnership for Peace" program proposed by the United States in October 1993. While it avoided reaching an immediate conclusion on the question of expanding the NATO membership, consideration is being given on how to cope realistically with the promotion of dialogue and cooperation between the Central and Eastern European countries and NATO.

6-3. Asia and Oceania

(1) Progress in Regional Cooperation

Amidst the dramatic changes in the international community, the Asia-Pacific region attracts attention for achieving rapid economic growth under a generally stable political situation. Various forms of regional cooperation are also being promoted in this region. As a forum for discussing the region's political and security issues, the ASEAN Post-Ministerial Conference has been held regularly, and the ASEAN Regional Forum with the participation of Russia, China and others was decided to be held starting in 1994. Moreover, as regards economic issues, Asia-Pacific Economic Cooperation (APEC) had, in addition to its annual ministerial meeting, the first Leaders Economic Meeting, at which the leaders of this region gathered for the first time and freely exchanged views with a view to promoting "open regional cooperation" in the region.

(2) China and Surrounding Countries/Areas

While faced with such problems as mounting inflation, widening regional differences as well as bribery and corruption, China is pushing reforms and open-door policies under the name of "the socialist market economy" and is at present recording the highest economic growth in the Asian region (about 13 percent per year in 1992). In external affairs, after the Tiananmen Square incident of 1989, its relationship with the United States has been uneasy mainly due to human rights issues, non-proliferation issues and trade frictions. However, efforts to improve the relations are continuing, as seen in the conditional extension of the most favored nation treatment by the United States in May 1993 and the holding of the summit meeting of the two countries in November. As for Japan-China relations, a summit meeting was held in Seattle in November, where they confirmed the basic policy orientation which consists in developing bilateral relations on a future-oriented basis bearing in mind contributions they jointly make to the world.

On the reversion of Hong Kong, no major progress has been seen in the negotiations between the United Kingdom and China. Taiwan is playing an important role in the prosperity of this region as a member of APEC. Moreover, in Mongolia, reform efforts toward democratization continue to be made.

(3) The Korean Peninsula

In the Korean Peninsula, despite the positive moves toward relaxing tensions which had been made in recent years, South-North relations stagnated in 1993 mainly due to the pending issue of suspicions over North Korea's nuclear weapons development, the interruption of the Inter-Korean Prime Ministerial Talks since the autumn of 1992 and lack of prospect for the implementation of mutual inspections based on the Joint Declaration on Denuclearization in the Korean Peninsula.

In the Republic of Korea (ROK), President Kim Young Sam, elected in February, is promoting campaigns to build a new nation, by eradicating corruption and carrying out several reforms, such as the introduction of the system to use real names in monetary transactions, as a part of economic revitalization.

In North Korea, the economy is said to be under severe conditions, such as shortages of energy and food, as well as sluggish production activities. In order to maintain the present political regime under such conditions, moves are under way to consolidate the succession of power from Kim Il Sung to Kim Jong Il, and to further tighten the socialist regime under strict control over information. Moreover, on the occasion of the ROK-U.S. combined Team Spirit exercise in March, a quasi-war alert was declared, stressing the sense of external crisis.

(4) Southeast Asia

In Southeast Asia, the ASEAN countries have strengthened their cooperation and solidarity ties through activities of ASEAN, an organization which has promoted inter-regional cooperation for the past quarter of a century. They have also kept high economic growth rates, making the region one of the most energetic areas in the world. Japan intends to cooperate with ASEAN, which is an important stabilizing factor in the Asia-Pacific region, as "mature partners jointly thinking and jointly acting" for the peace and prosperity of the region. For example, as regards the promotion of political relations and security in the Asia-Pacific region, Japan is encouraging dialogues through such fora as the ASEAN Post-Ministerial Conference, and plans to participate actively in the ASEAN Regional Forum at the ministerial level, which will start in 1994. Moreover, at the working level, Japan intends to utilize the Japan-ASEAN Forum actively as a venue for policy dialogues of a wide spectrum on political and security issues, in addition to economic issues, economic cooperation and cultural cooperation.

In the Indochinese region, the Cambodian conflict has ended and market-oriented economic reforms are proceeding in Vietnam and Laos. Each country in this region is attempting to join the dynamic economic development process of the ASEAN countries and the Asia-Pacific region. In encouraging harmonized development of the region, the "Forum for Comprehensive Development of Indochina" to be established at the initiative of Japan, is expected to play an active role as a venue for information and opinion exchanges concerning the socio-economic development of the entire Indochinese region.

Moreover, in Myanmar, while problems related to human rights and the transition to a democratic government still remain, positive moves have been seen such as the release of political offenders.

On the other hand, confrontations over the territorial rights of the Spratley Islands remain a destabilizing factor for this region.

(5) Southwest Asia

In Southwest Asia, with a large number of people living in poverty, reforms to liberalize economies are being pursued, and regional cooperation is also being promoted as seen in the signing of the Preferential Trading Arrangement at the South Asian Association for Regional Cooperation (SAARC) established in 1985.

The Kashmir issue between India and Pakistan remains the major destabilizing factor for the region. With the inauguration of a new administration in Pakistan under Prime Minister Benazir Bhutto, the foreign secretary level dialogue, which had been suspended for more than one year, was resumed in January 1994. On the other hand, the suspicion of nuclear weapons developments by the two countries is raising concerns in the international community. Japan is urging the two countries to accede to the NPT, in such fora as the bilateral non-proliferation talks with each country.

(6) Oceania

In both Australia and New Zealand, where general elections were held under difficult economic conditions, the ruling parties managed to stay in power in both countries with a very slim majority. In foreign affairs, both countries place much importance on their relations with Asian countries, and are actively participating in regional cooperation frameworks in the Asia-Pacific such as the APEC and the ASEAN Post-Ministerial Conference. In their relations with Japan, cooperation on global issues such as the Uruguay Round trade negotiations is proceeding. In small island countries in the South Pacific, regional cooperation, mainly through the South Pacific Forum (SPF), is being encouraged.

6-4. Latin America and the Caribbean

Latin American countries, having overcome the "lost decade of the 1980s" symbolized by civil wars, accumulated external debts and hyperinflation, are now generally making steady progress on democratization and reforms toward a market economy. During 1993, presidential elections were peacefully held in five countries in the region. In Peru, where President Alberto Fujimori took measures to temporarily suspend the Constitution in April 1992, return to democracy is being promoted through the promulgation of a new constitution, following the implementation of polls to elect the members of the Democratic Constitutional Congress. Moreover, as a result of market-oriented economic reforms, the Latin American region has become the second growth center of the world following East Asia, and inflation is generally subsiding with the exception of Brazil. On the other hand, in order to make the process of democratization and economic reforms produce lasting results, deeply rooted social contradictions such as structural poverty, are major issues to be addressed.

Such positive tendencies in both economic and political aspects have led to the strengthening of regional cooperation in Latin America and the Caribbean. There has emerged a momentum to adopt concerted efforts through the Organization of American States (OAS) or through the Rio Group (consisting of 12 major countries in Latin America) in order to cope with common issues of the region, such as the fight against attempts to reverse democracy. Furthermore, moves toward regional economic integration aiming at trade liberalization have been implemented. Much attention is to be drawn to how these moves evolve in relation with the North American region, now that the North American Free Trade Agreement (NAFTA) has come into effect.

With growing interest of the Latin American countries toward the Asia-Pacific region, economic links between these two regions are strengthening. It has been decided that Mexico would join APEC in 1993 and Chile in 1994, and their future contribution to APEC will draw attention.

Recognizing that ensuring long-term stability in Latin America will lead to global stability, the foreign policy of Japan toward this region has the primary objective of supporting democratization and reforms toward a market economy. Based on this policy, Japan extended assistance to support Peru's return to democracy, hosted in March 1993 the Special Session of "Partnership for Democracy and Development in Central America" (PDD), and extended financial cooperation of $2.5 million for "International Civilian Mission to Haiti" deployed by the United Nations and the OAS. In the post-Cold War international community, the Latin American and Caribbean countries are gradually emerging as cooperative partners in such areas as U.N. Peace-keeping Operations (PKOs) and non-proliferation issues. Against such a background, Japan is trying to strengthen its policy dialogues with these countries. Japan has had dialogue with the Rio Group at the ministerial level every year since 1989, and invited in May 1993 the foreign ministers of the Troica countries of the Rio Group (Chile, Argentina and Brazil) to Tokyo to have a ministerial meeting. Moreover, the normalization of diplomatic relations between Peru and Venezuela which had been suspended since April 1992, was brought about in June 1993, owing at least partially to Foreign Minister Kabun Muto's call on both countries concerned and the Rio Group countries. This can be considered as a concrete result of the policy dialogue that Japan has held with Latin American and the Caribbean countries.

6-5. Middle East

Major progress was made in September in the peace process which began in October 1991: the Declaration of Principles on Interim Self-government and mutual recognition between Israel and the Palestine Liberation Organization (PLO). However, numerous issues still have to be worked out to achieve a comprehensive peace agreement (see Chapter I, Section 2, 1-2 for Middle East Peace, and Chapter II, Section 2, 1-3 for its assistance).

With new developments seen in the Middle East peace negotiations on the one hand, destabilizing elements still remain in the region. In short, in some parts of the Middle East region, terrorist activities by extremist factions which advocate Islamic fundamentalism are intensifying. Moreover, while Iraq accepted in November the U.N. Security Council Resolution 715 on monitoring and verification of weapons of mass destruction, it has not fully complied with the Security Council resolutions which include the resolution on Iraq-Kuwait boundary demarcation. As for Iran, its behaviors such as the opposition to the Middle East peace negotiations and its alleged involvement in developing weapons of mass destruction and missiles are sources of concern in the international community, and this concern was discussed at the Tokyo Summit.

In these circumstances, Japan has forcefully urged Iraq on various occasions to accept the U.N. Security Council resolutions. Japan has also strongly called on Iran to take concrete actions to remove the apprehension of the international community. On the other hand, Japan provided an ODA loan to the hydroelectric power plant construction in May with a view to contributing to the stabilization of the region by assisting realistic policies of the Iranian government aimed at, inter alia, its economic reconstruction.

6-6. Africa

In many African countries, reforms to shift their political systems from military to civilian control, and from one-party dictatorship to multiparty democracy are in progress. Presidential elections and parliamentary elections were held in more than 10 countries in 1993. At the same time, many countries are suffering from domestic confusion or other difficulties which arise in the process of democratization.

Economically, many African countries are embarking on economic reforms to introduce a market economy. In particular, the "structural adjustment program," under the guidance of the World Bank and the International Monetary Fund (IMF), has improved the economic growth rates in half the countries which have implemented such a program. In other cases, however, such a program has not produced the expected results in the short-term because of, among others, institutional vulnerability, poor infrastructures and the immature private sector, and of most concern, the stringent policies taken under this program have severed the people's life.

On the other hand, amid the worldwide economic recession, aid fatigue is beginning to appear on the part of donor countries to Africa where results are slow in emerging. Moreover, as new requirements such as assistance to the countries of the former Soviet Union and Central and Eastern Europe or tackling global environment issues argue for a large amount of the available funds, the outlook for the economic aid toward Africa has become more uncertain.

Japan will continue to encourage the efforts of political and economic reform in Africa. In October, with the objective of arousing the interest of the international community on the problems Africa is facing, Japan held in cooperation with the United Nations and the Global Coalition for Africa the "Tokyo International Conference on African Development." The Tokyo Declaration which might be considered as the future guideline for African development was adopted in this conference. Along with the need to assist Africa, the importance of self-help efforts by African countries was emphasized in the Declaration.

As for economic cooperation to Africa, Japan has so far concentrated on grant aid and technical cooperation, with total aid for 1992 reaching $860 million (a 10.1 percent share in the total ODA of Japan). Moreover, with a view that human resource development is especially important for the development of Africa, Japan launched in FY 1993 the "Invitation Program for African Youth" in which 100 youths are to be invited from African countries to Japan every year (50 for the initial year).

In addition, following the participation in the U.N. Angola Verification Mission in 1992, Japan has been participating in the Peace-keeping Operation in Mozambique since 1993 in an attempt to help solve and prevent regional conflicts.

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