The constraints on developing a new role
Sluggish Japan is part of a region with fast-changing balances of economic and political power and uncertain relations of cooperation and competition between several great regional powers. Three new nuclear powers emerged in the 1990s and all states in the region (with the partial exception of Japan) have been increasing their defence budgets and modernizing their military forces. The region has lacked multilateral security institutions capable of defending the national interests of members and is characterized by divergent political systems with unresolved territorial and maritime disputes. In addition the competition over energy and other necessary resources is growing. The pace of change, the fluidity and uncertainty of future developments in the region, all combined to present Japan with a much more confused, if perhaps less immediately threatening, regional security environment than was true of the four decades of the Cold War. However, as Japanese began to rethink their place in the world they were subject to both domestic and external constraints, which both shaped and restricted their options.
First, the country was wedded to the famous peace Article Nine of the Constitution. At no point was there a realistic possibility of obtaining the two-thirds majority in the legislature, followed by a majority in a national referendum, that would have been needed to revise it. It was only through careful reinterpretations by successive LDP governments and through the passage of specific legislation that it became possible for Japan's Self Defence Forces, beginning in 1991, to participate in UN PKO missions and to be deployed abroad in support of American combat missions - but only under conditions that precluded the Japanese from taking part in actual combat. Although Japan developed powerful modern forces and an effective coastguard, these were firmly geared towards self-defence and not towards the projection of force.8
Second, Japan was constrained by inability or unwillingness to carry out bold new economic policies and substantive institutional reform, which kept the country in economic stagnation for much of the 1990s. Even when a modest economic recovery began after 1998 it arose from the greater volume of exports to the rapidly growing economy of its giant neighbour, China, rather than from major structural reforms at home.9
Third, the domestic economic difficulties led to a curtailment of Japanese external investment, especially in Southeast Asia, which contributed to the sense of Japanese decline relative to the rise of China. Much of this was due to the perception of a rising China and of a Japan in decline rather than to a consideration of the actual amounts of capital involved. For example, little was made of Japan's contribution of some $44 billion to the IMF and the ASEAN countries .during the 1997 Asian financial crisis, even though it exceeded by far China's contribution of just over $2 billion. But China's contribution, and its refusal to devalue its currency, were praised within the region and by American leaders, with the Chinese held up as virtual saviours of the region.10 Nevertheless the perception of decline had a basis in fact. Japanese ODA, which had been a key instrument in Japan's foreign policies towards East Asia, has been declining since the bursting of the Japanese bubble.11
Fourth, Japan faces a problem of a declining population. It peaked at just under 128 million in 2005 and it has been declining ever since. By 2050 government demographers calculate that the population will have dropped to 87 million. The number of children has declined for twenty-seven consecutive years and children constitute only 13.5 per cent of the population as a whole (the lowest among the thirty-one leading countries). About 22 per cent of the population is sixty-five or older. These trends will continue. According to government demographers, the elderly will outnumber children by about 3:1 in 2020 and by about 4:1 in 2040.12 Although Japanese will remain wealthy, household wealth will stop growing and by 2024 household wealth will have returned to 1997 levels. Tax revenues and savings will diminish, which in time will confront Japan with increasingly difficult choices about priorities and the provision of services. Defence spending will come under greater pressure and military recruitment will become even more difficult. Given Japanese aversion to immigration, these trends are unlikely to be reversed.13
Fifth, externally, Japan has been under constant pressure by its American ally to contribute more to American military and security commitments in the region and beyond. Japan can hardly disavow its key protector without facing huge new problems of how to arrange for its own national security and to assure itself of regional stability in Northeast Asia, which is characterized by strategic distrust between the resident states. The post-Gold War environment has raised anew the old problem of how to balance Japan's Asian and Western identities, or put differently, how to balance relations between China and America. At the same time, as indicated by the problem of relocating the Futenma American marine base, the extent to which Japanese people are prepared to pay the monetary and social costs of what Americans perceive as Japan's share of the burden of defence of Japan and the region has been thrown into doubt as never before.14
Sixth, Japan has been constrained in refashioning its identity, by demands from South Korea and China in particular, that it address more openly its fifty-year history of aggression until its defeat in 1945.
Finally, despite the recognition of a need for reform, most Japanese resisted reform in practice. With a per capita GDP of nearly $40,000 perhaps life was too comfortable to face the upheavals that systemic reform would entail. Indeed successive opinion polls suggested that most Japanese recognized the need for fundamental reforms, but felt threatened by the future.