Chapter I.
General Overview

C. Efforts toward a stable and prosperous Asia-Pacific

To ensure the safety and prosperity of Japan, it is crucial that Japan strengthen cooperative relations with those countries playing major roles in the realization of the stability and prosperity of the surrounding Asia-Pacific region, while also developing and strengthening the various multilateral frameworks which contribute to this objective. From this perspective, Japan stresses its alliance with the United States and other bilateral relationships with neighbors such as the Russian Federation, the People's Republic of China and the Republic of Korea, and, as evidenced by vigorous Japanese summit-level diplomacy, strengthened efforts in 1998 still further toward the development of close ties with these countries. Japan is also working to boost regional stability and promote development by strengthening ties with the ASEAN and Oceania countries and by promoting regional cooperation efforts such as the Asia-Pacific Economic Cooperation (APEC) forum and the ASEAN Regional Forum (ARF). These efforts will be the foundation for realizing a century of peace and prosperity built on human dignity, the vision of Asia in the 21^st century put forward by Prime Minister Obuchi in his December Policy Speech at the Japan-ASEAN Summit.

1. Japan-United States relations

a) Overview

Recognizing that close Japan-U.S. relations provide a vital foundation for the stability and prosperity of the Asia-Pacific, Japan and the United States are engaged in consultations and cooperation which go beyond bilateral ties to encompass a far broader range of issues. These Japan-U.S. relations remain the axis of Japan's foreign policy. While Northeast Asian security, Asian and world economic destabilization, and many other difficult issues pose challenges to the world, close consultations and policy coordination between Japan and the United States are growing even more important.

In 1998, Japan and the United States maintained close coordination in working together to address such important issues as the Asian economic crisis, the nuclear tests conducted by India and Pakistan, and the missile launch by North Korea. In particular, during President Clinton's November visit to Japan, his first in two years and seven months, the two leaders confirmed in the Summit talks that Japan and the United States would continue to coordinate closely in regard to the North Korean issue and strengthening the international financial system, and that both countries would contribute to Middle East peace and other aspects of world peace and prosperity above and beyond bilateral relations, a conclusion which will add momentum to the promotion of Japan-U.S. cooperation. During his visit, President Clinton also took opportunities such as his appearance on the television program "Town Hall Meeting" to convey to the Japanese people in his own words the U.S. support for Japan's efforts towards economic recovery.

As part of the close Japan-U.S. dialogue, in early 1998, U.S. Ambassador to the UN Bill Richardson visited Japan in February, Secretary of State Madeleine Albright in April and July, respectively meeting with Prime Minister Hashimoto and Foreign Minister Obuchi, while in May at the G8 Summit in the United Kingdom, Japan-U.S. summit talks took place, as well as talks between foreign ministers. In the course of this series of talks, Japan explained to the United States its efforts toward the recovery of the Japanese economy, including economic stimulus measures and strengthening of the financial system, while both countries discussed a response to issues such as the Asian economic crisis and the nuclear tests carried out by India and Pakistan. In addition, while President Clinton's visit to the People's Republic of China attracted attention, it was confirmed through the close Japan-U.S. exchange that development of the respective bilateral relations between Japan, the United States and China would contribute to the stability and prosperity of the Asia-Pacific region.

In the latter half of 1998, Foreign Minister Koumura visited the United States in August, immediately after Prime Minister Obuchi took office, meeting with Secretary of State Madeleine Albright and Secretary of Defense William Cohen, while the Japan-U.S. Security Consultative Committee (the SCC, or "2+2") met in New York in September. Prime Minister Obuchi also took the opportunity of his attendance at the September session of the United Nations General Assembly to hold his first summit meeting with President Clinton, confirming that Japan and the United States would work together toward the recovery of the Asian economy and the stability of the world economy; that both countries would together take a stringent and resolute posture regarding the missile launch by North Korea, and would maintain even closer consultations and cooperation; and that the commitment of both countries under the Japan-U.S. Security Treaty is a firm one (see Chapter II, Section 1. A.2., on Japan-U.S. Security Arrangements).

b) Japan-U.S. economic relations

Attention has been focused on an early recovery of the Japanese economy and Japan-U.S. cooperation with a view to stabilizing the world economy throughout 1998. Noting the importance of Japan's achieving an early domestic demand-led economic recovery in terms of the recovery and stability of the Asian economy and the world economy, the United States strongly urged Japan to stabilize its financial system, introduce stimulatory fiscal policies and implement further deregulation. The United States attaches importance to prompt and effective implementation of measures contained in such initiatives as the Financial Revitalization Act passed in the Diet in October and the Emergency Economic Package decided in November. At summit meetings in September and November, both leaders shared the awareness that coordination between the United States and Japan as the world's first and second largest economies was vital to the stability and prosperity of the world economy and the Asian economy. In addition, the Asian Growth and Economic Recovery Initiative, announced jointly on the occasion of the Informal APEC Economic Leaders' Meeting by Japanese and U.S. leaders to help those Asian countries faced with economic difficulties, was well-received by many countries.

Main developments in the various specific areas of Japan-U.S. economic relations were as follows.

c) Widening Japan-U.S. cooperation

Within the framework of the Japan-U.S. Common Agenda for Cooperation in Global Perspective, launched in 1993, Japan and the United States have been advancing various projects in 18 areas under the four pillars of "Promoting health and human development," "Responding to challenges of global stability," "Protecting the global environment," and "Advancing science and technology." The Common Agenda Open Forum was jointly hosted in March by the Ministry of Foreign Affairs and the U.S. Department of State, and was attended by former U.S. President James Carter, former Prime Minister Noboru Takeshita, former Deputy Prime Minister Yohei Kono and many others from the governments of countries concerned, international organizations, the business community and NGOs. The forum saw a vigorous exchange of opinions among participants on the themes of "health" and "conservation," stressing the importance of further strengthening dialogue between the governments and private sectors (NGOs and business communities) of Japan and the United States, and with third countries, including countries of the Asia-Pacific, developing cooperation in a mutually complementary form. Also pointed out was the need to raise public awareness in both countries through means such as public relations activities, developing an environment conducive to activities by NGOs. In Japan, a Common Agenda Round Table comprising key private sector figures and chaired by Mr. Gaishi Hiraiwa, Honorary Chairman of the Japan Federation of Economic Organizations, has been providing the Japanese and U.S. Governments with advice and guidelines since February 1996, and in November an environmental education project was launched in Indonesia as the first project to be organized by the Round Table.

Japan-U.S. cooperation has also been expanded and strengthened beyond the Common Agenda in such areas as electronic commerce, the Y2K issue, civilian use of global satellite measurement systems, and democratization.

2. Japan-Russia relations

With regard to relations between Japan and Russia, the Tokyo Declaration, which was signed during the visit of President Boris Yeltsin of Russia to Japan in October 1993, has been a cornerstone of the development of bilateral relations. Japan's basic policy toward Russia is to make every possible effort to resolve the issue of the attribution of the Northern Territories based on the Tokyo Declaration, thereby concluding a peace treaty and fully normalizing relations between Japan and Russia. Japan also supports Russia's reform initiatives and is working to strengthen cooperation and relations in all fields. Strengthening Japan-Russia cooperative relations is also seen as a major contribution to the stability and prosperity of the Asia-Pacific region. With regard to the territorial issue, Japan considers it important to ensure, simultaneously, steady progress toward resolution of the Four Islands attribution issue and development of an environment conducive to the resolution of this issue, including mutual visits between Japanese citizens and current Russian residents of the Four Islands and assistance to the residents of these islands, with these two efforts advanced as the two wheels of a wagon.

The Japan-Russia Summit held in Krasnoyarsk in November 1997 achieved concrete results in a wide range of areas, including the Krasnoyarsk Agreement, whereby leaders agreed to make their utmost efforts to conclude a peace treaty between the two countries by the year 2000 based on the Tokyo Declaration, and the announcement of the Hashimoto-Yeltsin Plan in the economic sector. As a result of this Summit, 1998 saw the evolution of close high-level political dialogue, with Japan-Russia relations making steady progress in all areas. The Japanese-Russian Joint Committee on the Conclusion of a Peace Treaty, established to advance work toward treaty conclusion and chaired by the foreign ministers of both countries, with a vice-ministerial working group established under its auspices, has worked intensively, while the Hashimoto-Yeltsin Plan in the economic sector has also been implemented steadily.

In terms of high-level political dialogue, firstly, Foreign Minister Obuchi visited Russia in February, meeting with Foreign Minister Yevgeny Primakov and President Yeltsin. In talks with the President, the Krasnoyarsk Agreement on peace treaty conclusion was reaffirmed. Foreign Minister Obuchi also conveyed Japan's intention to extend to Russia untied loans amounting to up to the Japanese yen equivalent of US$1.5 billion from the Export-Import Bank of Japan for the next two years in the form of co-financing with the World Bank.

President Yeltsin visited Japan in April, holding a "no-tie" summit with Prime Minister Hashimoto in a relaxed atmosphere in Kawana, Shizuoka Prefecture. This Summit further deepened the personal trust and friendship between the two leaders fostered at the Krasnoyarsk talks in 1997. With regard to peace treaty negotiations, Prime Minister Hashimoto presented to President Yeltsin a proposal from Japan toward resolution of the territorial issue, and both leaders agreed that the peace treaty should contain a solution to the issue of the attribution of the Four Islands on the basis of paragraph 2 of the Tokyo Declaration, and also incorporate the principles governing Japan-Russia friendship and cooperation as we move into the 21^st century (the Kawana Agreement). In the economic sector, leaders agreed to consider working together to establish a Japan-Russia Investment Company in order to promote investment into Russia, and also agreed to continue to steadily implement and expand the Hashimoto-Yeltsin Plan.

High-level "continuous dialogue" was continued through the Japan-Russia Summit held at the time of the May Birmingham Summit of the Eight, with foreign ministers from both countries also meeting in May, June and July at the time of the G8 Foreign Ministers Meeting and the Ministerial Meeting of the ASEAN Regional Forum (ARF). Prime Minister Sergei Kiriyenko also visited Japan in July. It was the first time in Japan-Russia bilateral relations that a Russian prime minister had visited Japan.

Prime Minister Obuchi spoke with President Yeltsin by phone immediately after his inauguration, affirming that the new administration would institute no change in Japan's Russian policy, namely to advance Japan-Russia relations. In addition, former Prime Minister Hashimoto visited Russia in September as Supreme Foreign Policy Advisor to the Prime Minister, meeting with President Yeltsin. In October, Foreign Minister Koumura visited Russia in advance of the Prime Minister's trip, meeting with Foreign Minister Igor Ivanov as Joint Chairs of the Japan-Russia Joint Committee on the Conclusion of a Peace Treaty. The Foreign Ministers reaffirmed the Krasnoyarsk and Kawana Agreements in the form of a Japan-Russia joint announcement. Foreign Minister Koumura also held talks with Prime Minister Yevgeny Primakov immediately after his appointment, as well as First Deputy Prime Minister Yuri Maslyukov, newly appointed the Russian Joint Chair to the Japan-Russian Federation Inter-Governmental Committee on Trade and Economic Affairs.

In November, Prime Minister Obuchi made an official visit to Russia as the first Japanese prime minister to do so in 25 years. A summit meeting with President Yeltsin resulted in both leaders signing the Moscow Declaration on Establishing a Creative Partnership between Japan and the Russian Federation. This Declaration stated both countries' commitment to further strengthening Japan-Russia cooperation in all areas, including politics, economy, security, culture and international cooperation, toward the 21^st century, developing the bilateral relationship into an era of "agreement" by strengthening "trust." In regard to the peace treaty negotiations, the Russian side provided its response to the proposal made by Japan in Kawana in April, with Japan to take this home for consideration, presenting Russia with the results of these considerations by the 1999 Summit. Leaders also reaffirmed their determination to make the utmost efforts to conclude a peace treaty by the year 2000 based on the Tokyo Declaration and the Krasnoyarsk and Kawana Agreements, agreeing to further accelerate negotiations. Other results of the Summit included agreement on the establishment of a Subcommittee on Border Demarcation and a Subcommittee on Joint Economic Activities within the framework of the Japanese-Russian Joint Committee on the Conclusion of a Peace Treaty, as well as the implementation of so-called free visits to the Four Islands by ex-residents and their families. Prime Minister Obuchi also announced the following new measures in regard to Japan-Russia cooperation, which were warmly received by President Yeltsin.

• Extension of loans in the amount of US$800 million within the framework of untied loans from the Ex-Im Bank in the amount of US$1.5 billion provided as co-financing with the World Bank
• Substantial expansion of technical and intellectual cooperation in the form of the Japan-Russia Partnership for Reform
• Establishment of the Japan-Russia Youth Exchange Center to dramatically expand exchanges on the personnel level
• Provision of medicines and medical supplies worth around US$10 million as emergency medical cooperation

At the same time, a series of economy- and administration-related documents were signed and announced, including the Agreement between the Government of Japan and the Government of the Russian Federation concerning the Promotion and Protection of Investments and memoranda on Japan-Russia cooperation in areas such as tourism and the environment.

In parallel with this high-level political dialogue, 1998 saw further progress with defense exchange between the two countries, including mutual visits by Defense Agency Joint Staff Council Chairman Kazuya Natsukawa and Anatoly Kvashnin and implementation of joint search and rescue exercises between Japan's Self-Defense Forces and the Russian Navy. In addition, a Framework Agreement was signed in regard to the operation of Japanese fishing vessels in the waters around the four Northern Territories. Japan-Russia cooperation was also realized and strengthened in a number of areas, such as implementation in Russia of the Japan Cultural Festival.

3. Japan-China relations

a) Japan-China dialogue

Given the enormous significance of the Japan-China relationship in terms of the peace and prosperity of the Asia-Pacific region and the world, it will be crucial in securing regional stability and prosperity of the Asia-Pacific region to prevail upon China to become a more constructive partner in the international community, while also further developing Japan-China ties through the expansion of exchanges at all levels. Based on this perception, both Japan and China are committed to further enhancing exchanges at the summit level. In 1998, close and frank exchanges of views were conducted through high-level talks on issues between the two countries, including occasions such as the first visit to Japan by a Chinese head of state, President Jiang Zemin.

President Jiang Zemin's visit to Japan was rescheduled from September to late November due to measures to combat floods being taken by the Chinese Government, but through the efforts of both sides, the visit was realized during the milestone year of the 20^th anniversary of the conclusion of the Treaty of Peace and Friendship between Japan and the People's Republic of China. summit talks with Prime Minister Obuchi saw a frank and in-depth exchange of views in regard to a broad range of areas ranging from bilateral political and economic issues to the international situation. The Japan-China Joint Declaration produced on the basis of these talks referred to a wide-ranging common understanding of the international and regional situation and Japan-China relations as a whole, based on a "partnership of friendship and cooperation for peace and development." A joint press announcement was also issued which revealed wide-ranging and concrete Japan-China cooperation (33 items), including the Beijing-Shanghai High-Speed Railway, preservation of Silk Road cultural heritage sites, human rights, non-proliferation and civil order and police exchange, and it was announced that environmental protection and youth exchange would be promoted as priority areas in Japan-China cooperation. On completion of his Tokyo schedule, President Jiang Zemin also took the Shinkansen to Sendai, where Chinese writer Lu Xun once stayed, followed by an agriculture-related tour in Hokkaido, where he also spoke with local residents. President Jiang Zemin's visit to Japan was extremely significant in terms of forming a framework for joint action toward achieving common goals and in stabilizing Japan-China relations over the long term. It will be important to further develop bilateral ties through, for example, the implementation of the cooperative efforts identified in the joint press announcement.

Other visits by eminent figures included the visit to Japan by Vice-President Hu Jintao in April ahead of President Jiang Zemin's visit, deepening exchange with the various Japanese circles, while from the Japanese side, Foreign Minister Koumura visited China in August, engaging with his Chinese counterpart in broad-ranging exchanges of views on Japan-China relations as a whole, including preparation for President Jiang Zemin's visit to Japan. Mutual visits also took place between high-level defense personnel, among them Chinese Minister of National Defense Chi Haotian's visit to Japan in February, a May visit to China by State Minister Fumio Kyuma, Director-General of the Defense Agency, and an informal September visit to Japan by General Zhang Wannian, Vice Chairman of the Central Military Commission. It will be important to develop a series of concrete confidence-building measures, working toward even more frequent visits by defense-related persons from both countries.

b) Japan-China economic relations

Total trade between Japan and China now amounts to around US$64 billion (1997). China is Japan's second largest trading partner, while Japan is China's largest trading partner, and interdependence is deepening. In addition, with growing concern over the renminbi (yuan) rate and other elements of the Chinese economy in the context of the Asian economic crisis, high-level Japan-China consultations on the East Asian economy were also held among vice ministers in September. Measures taken by Japan and China have a major impact on the Asian economy, and it will be important to sustain such close exchanges of views. In terms of China's accession to the World Trade Organization, agreement was effectively reached between the Japanese and Chinese Governments on trade in goods in 1997, and China is currently working to advance negotiations in the area of trade in services.

Looking to economic cooperation with China, when President Jiang Zemin visited Japan in November, it was agreed that Japan would provide yen loans of up to 390 billion yen to China over FY1999 and FY2000 to cover the "latter two-year portion" of the Fourth Batch of Yen Loans toward China. ^{Note 3}

In the fishing sector, the new Japan-China Fisheries Agreement, signed in November 1997, received the approval of the Diet at the end of April 1998. Bilateral consultations have since continued toward the early entry into force of this agreement.

c) Relations with Taiwan

With regard to relations with Taiwan, Japan has maintained its relations with Taiwan as exchanges of a private and regional nature, or in other words, non-governmental, unofficial ties in line with the 1992 Japan-China Joint Communique. Dialogue between China and Taiwan reopened in October 1998, and Japan has continued to state that it hopes that the issue regarding Taiwan will be settled peacefully between the parties on both sides of the Taiwan Strait.

d) Toward the 21^st century

In just over a quarter of a century since the 1972 normalization of relations, Japan-China ties have developed swiftly in all areas. At the same time, as Japan and China are neighboring countries with deep links in historical terms, and have different political systems and national circumstances, the process of deepening exchange has presented various issues in need of coordination.

Efforts need to be made toward the early destruction of abandoned chemical weapons in China which were owned by the former Japanese Army, which is one of the issues to be settled between Japan and China, while consultations need to be continued toward resolution of maritime law issues such as the delimitation of the continental shelves in the East China Sea and exclusive economic zones and maritime investigation. In addition, with regard to the issue of recognition of past history, which again drew strong attention during President Jiang Zemin's visit to Japan, both countries affirmed in the Japan-China Joint Declaration that squarely facing the past and correctly understanding history were the important foundations for further developing relations between Japan and China, and that it would be important to firmly maintain this basic stance. With regard to the Senkaku Islands issue, Japan will continue to deal with this matter in line with Japan's basic position that the Senkaku Islands are an integral part of Japanese territory and that Japan has effective control over them. The central tasks facing the peoples of both Japan and China will be to steadily address these various causes of concern between Japan and China, further deepening mutual understanding through the expansion of exchange at various levels, the younger generation included, also working together on the various challenges facing the international community.

4. The Korean peninsula

a) Japan-ROK relations

b) Japan-North Korea relations

5. Southeast Asia

a) ASEAN

Although member states of the Association of South East Asian Nations (ASEAN) are currently confronted with serious economic difficulties, they continue to have an important political and economic role to play in realizing the stability and prosperity of the Asia-Pacific region. Based on this recognition, Japan engaged in various efforts in 1998 to strengthen cooperative ties with the ASEAN countries, aimed at realizing the stability and prosperity of the Asia-Pacific region.

First, Japan worked to secure the peace and stability of the Asia-Pacific region through the ASEAN Regional Forum (ARF), bilateral security dialogues and defense exchanges. Foreign Minister Obuchi and State Secretary for Foreign Affairs Koumura attended the ARF Ministerial Meeting held in Manila, the Philippines, in July 1998, where exchanges of views took place on issues such as the nuclear tests conducted by India and Pakistan, the Asian economic crisis and the situation in each Southeast Asian country. In terms of bilateral security dialogues, a politico-military talk and a regular defense talk were held with Thailand in 1998 in response to Prime Minister Hashimoto's proposal at the Japan-ASEAN Summit Meeting held in December 1997, that political and security dialogues with ASEAN member states should be strengthened.

Further, the stability and prosperity of the Asia-Pacific region hinge on the economic revitalization of the economies of ASEAN member states, which have been under severe economic conditions since the currency crisis broke out in 1997. Recognizing this, Japan, on such occasions as the Japan-ASEAN Foreign Ministers' Meetings held on the occasion of the ASEAN Post-Ministerial Conference in Manila in July, the APEC Ministerial and Leaders' Meetings in November and the Japan-ASEAN Summit Meeting in Hanoi in December, announced its strong commitment to the revitalization of the Japanese economy, which amounts to two-thirds of Asia's GDP, and to the continued maximum possible support for Asia and its intention to strengthen Japan-ASEAN cooperation through, for example, the Japan-ASEAN Solidarity Fund (Chapter I, B.3). In particular, at the Japan-ASEAN Summit Meeting held in December, Prime Minister Obuchi presented the following four initiatives for Japan-ASEAN cooperation toward the 21^st century. The ASEAN member states expressed great appreciation and high expectations in regard to these initiatives, which would be materialized as the Obuchi-ASEAN Initiatives.

• Promoting dialogues and cooperation for the 21^st century (enhancing summit-level dialogues and holding the "Vision 2020 Japan-ASEAN Consultation Conference")
• Cooperation to address the Asian economic crisis (implementing the "New Miyazawa Initiative," establishing a special yen loan facility with a ceiling of 600 billion yen for three years)
• Cooperation to tackle "Human Security" related issues (enhancing cooperation for strengthening social safety nets by making use of ODA, establishing "Human Security Fund" in the United Nations)
• Promoting intellectual dialogues and cultural exchanges (supporting the holding of the second "An Intellectual Dialogue on Building Asia's Tomorrow" symposium in one of the ASEAN countries)

a) Cambodia

Since the end of the 1980s, Japan has regarded Cambodia as the most unstable element in Southeast Asia, and has been actively involved in the Cambodian peace process. In particular, Japan played a leading role in the general election process held in Cambodia in 1998, which resulted in the formation of a new government.

As obligated under its Constitution, and also in order to normalize the domestic situation in the wake of the July 1997 armed clashes, Cambodia had to hold free and fair elections in 1998, establishing a democratic government, but there was strong international concern that an election would be held without the participation of Prince Norodom Ranariddh (former First Prime Minister), who was out of the country at the outset of the year. To break through this situation, Japan prepared the Four Pillars ^{Note 4} of a political solution for Cambodian issues, which State Secretary for Foreign Affairs Koumura put to Second Prime Minister Hun Sen and Prince Ranariddh during visits to Cambodia and Thailand in February. Both parties accordingly accepted the Japanese proposal, with the result that Prince Ranariddh returned home in March and participated in the July elections. In response to a request from the Cambodian Government, Japan provided ballot boxes and financial support for the purchase of ballot station equipment, etc., as well as for vote-counters' wages. Japan also provided personnel support through the dispatch of 32 short-term international observers and one expert.

As a result of the 26 July election, the Cambodian People's Party (64 seats), the National United Front for an Independent, Neutral, Peaceful and Cooperative Cambodia (FUNCINPEC, 43 seats) and the Sam Rainsy Party (15 seats) captured National Assembly seats. Although this election was considered as having been generally free and fair by a Joint International Observer Group, Japan included, after the elections, the Sam Rainsy Party and FUNCINPEC both staged demonstrations rejecting the election results. Japan responded by appealing repeatedly to all Cambodian leaders to respect the election results, which were the will of the Cambodian people, to establish a new government immediately, and to cooperate under the leadership of King Norodom Sihanouk. Moreover, State Secretary for Foreign Affairs Nobutaka Machimura visited Cambodia in October, seeking tenacious efforts on the part of the leaders of the Cambodian People's Party toward establishment of a coalition government and leadership on the part of King Sihanouk toward a breakthrough in the situation.

In November, King Sihanouk exercised his leadership in bringing Prince Ranariddh home to Cambodia, and also by chairing consultations which produced an agreement on the establishment of a coalition government comprising the Cambodian People's Party and FUNCINPEC. A new government headed by Prime Minister Hun Sen consequently came into being on 30 November. In response to these developments, Cambodia's right to UN representation was restored in December and its accession to ASEAN cleared, with steady progress made toward Cambodia's reinstitution in the international community. Prime Minister Obuchi took the opportunity at the time of the Japan-ASEAN Summit which was also held that month to meet with Prime Minister Hun Sen (participating in the ASEAN Summit as an observer), informing him that a Consultative Group Meeting for Cambodia would be held in Tokyo in February 1999 and inviting Prime Minister Hun Sen to Tokyo at that time.

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