Mr. Chairman, Senator Inhofe, and Members of the Committee, thank you for the opportunity to testify today on the current state of U.S.-Japan relations, and to look ahead at the role the relationship will play in future economic and security developments for both countries. Despite current difficulties in the relationship, I believe that close ties with Japan are essential for the United States to retain a credible strategic position in East Asia and for future economic prosperity in both Asia and America. Yet we must also recognize that relations between the United States and Japan will be more tenuous over the next several years, requiring close communication and a frank assessment of how the relationship benefits each partner.
This past January, Washington and Tokyo observed the 50th anniversary of the U.S.-Japan Alliance, one of the most successful bilateral agreements in recent history. Yet the past seven months of the U.S.-Japan relationship have been consumed with a growing disagreement over whether Japan will fulfill the provisions of a 2006 agreement to relocate Marine Corps Air Station Futenma from its current crowded urban location to a more remote setting on the northern part of the island. Given that the state of U.S.-Japan relations concerns not only the economic relations between the world's two largest economies, but directly influences the larger strategic position of the United States in the Asia-Pacific region, any substantive change in the U.S.-Japan alliance or in the political relationship that undergirds it could have unanticipated effects that might increase uncertainty and potentially engender instability in this most dynamic region.
All political relationships change, and that between Japan and the United States is no exception. Policymakers on both sides of the Pacific have continually adjusted the alliance to reflect national interests, capabilities, and perceptions of the strengths of each other. The strategic realities of maintaining a forward-based U.S. presence in the western Pacific have been intimately tied to the domestic political policies of administrations in Tokyo and Washington for the past half-century. Yet today, new governments in both countries have policies that seem, on the surface, to indicate goals different from their predecessors, thus raising anxieties in both capitals.
Last August, Japanese voters ended the rule of the Liberal Democratic Party after fifty-four years of near-continuous power. For Japan, Asia's oldest and most stable democracy, this was a change of epochal proportions. The proximate cause of anger voter was the inability of the Liberal Democrats to end Japan's nearly two-decade long economic slump, which has seen the country's once unstoppable business sector stagnate, develop unevenly, and lose ground to emerging exporters such as China and South Korea. Numerous scandals and being out of touch with the voters also doomed the LDP and encouraged Japanese to cast their ballots for change.
Yet the electoral victory of the Democratic Party of Japan equally was the reflection of trends that have been reshaping Japanese society for decades and leading to deep currents of unease. These include worries over Japan's falling population rate and demographic decline, the supplanting of permanent employment by temporary jobs, the shrinking number of married couples and families, and a pervasive sense of isolation from its neighbors and indeed the world. A two-decade period of stagnation, at the very time that China has burst on to the world scene economically, politically, and militarily has added to the frustration of Japanese officials and citizens alike. Many in Japan worry that the country is turning inward, leaving behind the goal of "internationalization" that was the vogue two decades ago. Some statistics support this interpretation, as the number of Japanese students studying in the United States has dropped by half in the last decade, to just 29,000; this at a time when Chinese students in the U.S. have increased by 164 percent since 2000. In certain ways, these broad concerns have highlighted the importance of the relationship with the United States even as some have questioned the wisdom of continuing to tie Japan so closely to America.
The Democratic Party of Japan capitalized on these dissatisfactions and fears to win a resounding electoral victory. Their election "manifesto" spoke directly to Japanese voters, promising a new era of politics, in which business interests would be supplanted by citizen interests, in which creating an equitable economy would supercede a focus on corporate balance sheets, and in which Japan would privilege promoting global peace over unreflectively maintaining its status-quo relationship with the United States. Yet the DPJ has found governing more difficult than electioneering. Given that the DPJ itself is an uneasy coalition of ideological opposites, from former Socialists to pro-alliance realists, Washington must be prepared for continued debates within the DPJ in coming months over foreign and domestic policy, and for the likelihood of leadership changes at the top of the party that may push it in different directions and potentially create further instability in Japanese politics. These DPJ debates will occur at the same time that new political parties form and dissolve, many breaking off from the LDP, the former ruling party. Far from entering an era of stability last August, Japanese domestic politics are likely to become even more fluid and chaotic over the next half-decade or more.
For the United States, Prime Minister Yukio Hatoyama's desire to consider a different location for the Futenma base has raised questions about his administration's overall commitment to U.S-Japan relations. Such concern is overstated, I believe, but Prime Minister Hatoyama does have a different vision of the future of the U.S.-Japan relationship than did his predecessors. His repeated assertions that the alliance remains at the core of Japan's security policy is to be taken at face value, but so should his desire for Japan to play a more expansive global role, craft a closer relationship with the nations of East Asia, and take a lead in birthing a new East Asian Community, no matter how vague the specifics of his plan. With respect to the narrower issue of the Futenma relocation, the current Japanese administration has until now been equally influenced by the necessity to maintain its coalition with the Social Democratic Party in the Upper House of the Japanese Diet as it has been by a desire to listen to the voices of the people of Okinawa and reduce the Marine Corps burden on that island, which, ironically, the 2006 agreement was crafted to do.
Unfortunately, however, the Futenma issue has been folded into larger questions about Mr. Hatoyama's foreign policy, thus raising doubts about the DPJ's commitment to maintaining the U.S.-Japan relationship as the most important one for both countries in the Pacific region. Hence the attempts here to understand whether Prime Minister Hatoyama's repeated calls for a more "equal" alliance with Washington mean more "independent," and what such policies might lead to. Much of the worry in the U.S. government comes from the newness of the DPJ and the inherent uncertainties in dealing with any government that does not have a track record we can interpret and use for predictions. Such, I may add, is a constant source of concern among Japanese at our presidential transitions, so we are, perhaps, now finding ourselves in Japan's shoes for the first time in over half a century.
Our relations are further influenced, despite the laudable efforts of U.S. officials here and in Tokyo, by the continued worry of Japanese opinion leaders and policymakers over long-term trends in America's Asia policy, thereby fueling part of their interest in China. I will mention perhaps the two main concerns: first, that the United States will, over time, decrease its military presence in the Asia-Pacific, thereby weakening the credibility of its extended deterrence guarantee, and second, that Washington will itself consider China in coming decades as the indispensable partner for solving problems both regional and global. Both these concerns exist despite repeated U.S. assurances that our military presence will not shrink, and despite the very public problems cropping up in Sino-U.S. relations in recent years. Ironically, perhaps, these Japanese concerns almost exactly mirror U.S. worries, from frustrations over Japan's continued reluctance to increase its security activities abroad to our casting a wary eye on exchanges between Beijing and Tokyo.
Despite this litany of problems both real and perceived, the U.S.-Japan alliance, and the broader relationship it embodies, remains the keystone of U.S. policy in the Asia-Pacific region. There is little doubt that America and Japan share certain core values that tie us together, including a belief in democracy, the rule of law, and civil and individual rights, among others, which should properly inform and inspire our policies abroad. Our commitment to these values has translated into policies to support other nations in Asia and around the world that are trying to democratize and liberalize their societies. Today, Asia remains in the midst of a struggle over liberalization, as witnessed by the current tragic unrest in Thailand, and the willingness of both Tokyo and Washington to support democratic movements will remain important in the coming decades. Indeed, I believe a political goal of our alliance with Japan must be a further promotion of "fundamental values such as basic human rights, democracy, and the rule of law in the international community," as expressed in the 2005 U.S.-Japan Security Consultative Committee Joint Statement. To that end, Japan and the United States should take the lead in hosting democracy summits in Asia, designed to bring together liberal politicians, grass roots activists, and other civil society leaders, to discuss the democratic experiment and provide support for those nations bravely moving along the path of greater freedom and openness.
Political development in Asia has benefited not only from U.S.-Japan diplomatic engagement, but also from the security burdens both countries have shouldered to maintain stability in the western Pacific, throughout the Cold War and after. There are over 35,000 U.S. military personnel stationed in Japan, and another 11,000 are afloat as part of the 7th Fleet; three-quarters of our military facilities are in Okinawa. Without the continued Japanese hosting of U.S. forces, this forward-based posture is untenable, particularly in a period of growing Chinese naval and air power in which the acquisition of advanced weapons systems indicates increased vulnerability of U.S. forces over time. Similarly, options for dealing with any number of North Korean contingencies would be significantly limited without access to bases in Japan. The role of the U.S. Navy in maintaining freedom of the seas, and the U.S. Air Force in ensuring quick and credible U.S. reach anywhere in the region will become even more important as other nations in the Asia-Pacific continue to build up their national military capabilities.
Beyond such traditional security concerns, Japan and the United States continue to be among the handful of countries that can act as significant first responders to humanitarian disasters. We did so jointly during the Boxing Day tsunami of 2004 and earlier this year in Haiti, and will remain the leading providers of such public goods well into the future. For any such actions in the Asia-Pacific region, our bases in Japan are indispensable to timely, effective intervention.
Maintaining this presence is a full-time job for officials on both sides of the Pacific. Both Washington and Tokyo have revised the Status of Forces Agreement (SOFA) governing the U.S. military in Japan to respond to local concerns over judicial access to U.S. service members, and domestic pressures to reduce Japan's $4 billion annual Host Nation Support (HNS) are a continuing feature of bilateral discussions. The new Japanese government has indicated its desire to consider further revision of SOFA and HNS, which portends continued, sometimes difficult negotiations between both sides, though I would be surprised by any significant changes in either.
It is clear, however, that the presence of U.S. military forces is welcomed by nearly all nations in the Asia-Pacific and sends a signal of American commitment to the region. From a historical standpoint, the post-war American presence in the Asia-Pacific has been one of the key enablers of growth and development in that maritime realm. And today, for all its dynamism, the Asia-Pacific remains peppered with territorial disputes and long-standing grievances, with few effective multilateral mechanisms such as exist in Europe for solving interstate conflicts. Our friends and allies in the area are keenly attuned to our continued forward-based posture, and any indications that the United States was reducing its presence might be interpreted by both friends and competitors as a weakening of our long-standing commitment to maintain stability in the Pacific. The shape of Asian regional politics will continue to evolve, and while I am skeptical of what can realistically be achieved by proposed U.S.-Japan-China trilateral talks, it seems evident that we must approach our alliance with Japan from a more regionally oriented perspective, taking into account how our alliance affects the plans and perceptions of other nations in the region.
Yet when our alliance was signed in 1960, it was titled the "Treaty of Mutual Cooperation and Security." Cooperation took precedence in the eyes of American and Japanese, and that should serve as our guidepost for the future as we contemplate how Japan and America can work together in economic and social spheres. Our common activities are undertaken to promote not just stability, but also well-being, as delineated in Article II of the Treaty. Economically, of course, we are increasingly intertwined. Our bilateral trade last year was worth over $132 billion, making Japan our fourth largest trading partner even despite a fall of nearly $80 billion in trade from 2008. Japanese companies in 49 states employ approximately 600,000 Americans in high-paying, skilled jobs. Japan is also the world's largest purchaser of U.S. Treasuries, currently holding over $768 billion worth, more than China's official portfolio of $755 billion in American securities. America's continuing economic recovery is dependent in part on Japan's willingness to continue to employ Americans and buy our debt, and as both countries seek to balance their export and import sectors, openness to trade is of vital importance, as are trade policies designed to reduce barriers. Here, both countries need to focus more attention on job growth and trade opportunities, helping with retraining programs and promoting entrepreneurship by reducing bureaucratic impediments.
Both our countries are leaders in scientific research and development, and bred multinational corporations that continue to change the nature of global commerce. Current Ambassador to Japan John Roos has made expanding U.S.-Japan economic cooperation, particularly in the high-tech areas he is so familiar with, a priority of his tenure. Joint research and development in energy efficient and clean energy technologies, such as smart grids and nuclear power, will benefit not merely our two economies, but can bolster our export industries and promote better practices and higher growth in developing nations. This, too, will help promote stability in Asia and around the globe, thus feeding directly into the security responsibilities of the U.S.-Japan alliance.
With all of these suggestions, however, we must maintain our realism. The heady days of the 1980s are long over for Japan, when pundits breathlessly proclaimed it the next superpower. And today, while the Hatoyama Administration is long on ideas, it is short on specific policies. Officials on both sides of the Pacific must seek to avoid mismatched expectations that will only lead to disappointment and more hand-wringing over the future of our relationship. For the foreseeable future, American policymakers must accept that Japan will be most focused on its internal politics and problems, even as we attempt to create new initiatives to leverage Japan's strengths and interests.
Japan will continue to play a major role in Asia over the next decades, as that region continues to be the engine of global economic growth. As it does so, the role of a democratic Japan should become increasingly important in Asia as democracies young and old continue to evolve, and as authoritarian and totalitarian regimes oppress their own people and threaten others.
Japan cannot, of course, play this role by itself, and the United States must fully embrace its role as a Pacific nation, one inextricably tied to Asia, but most importantly, one with a vision for an Asia that is increasingly freer, more stable, and more prosperous. That means a renewed commitment to expending the human and materiel capital required to maintain our position in the Asia-Pacific region.
As we look to the kind of Asia that we hope develops in the future, there is much that continues to commend Japan to the region's planners and peoples. Much in the same way, the U.S.-Japan relationship, plays a currently indispensable role in ensuring our country's commitment to the Asia-Pacific and in providing a necessary stabilizing force to powerful tides of nationalism, competition, and distrust in that region. Our relationship with Japan is indeed a cornerstone of the liberal international order that has marked the six decades since the end of the Second World War as among the most prosperous and generally peaceful in world history. For that reason, among others, we should look forward to maintaining it for years to come.
Thank you and I look forward to your questions.
Michael Auslin is a resident scholar at AEI.