Comprehensive Security in Asia: Views from Asia and the West on a Changing Security Environment

COMPREHENSIVE SECURITY IN ASIA

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COMPREHENSIVE SECURITY IN ASIA Views from Asia and the West on a Changing Security Environment

EDITED BY

KURT W. RADTKE & RAYMOND FEDDEMA

BRILL LEIDEN • BOSTON • KOLN 2000

This book is printed on acid-free paper.

Library of Congress Cataloging-in-Publication Data Comprehensive security in Asia : views from Asia and the West on a changing security environment / edited by Kurt W. Radtke & Raymond Feddema. Includes bibliographical references and index. ISBN 9004112022 (cloth : alk. paper) 1. Asia—Politics and government—1945-. 2. National security—Asia. I. Radtke, Kurt W. (Kurt Werner), 1945- II. Feddema, Raymond. DS35.2.C645 2000 327.1'095—dc21 99-086420 CIP

Die Deutsche Bibliothek - CIP-Einheitsaufhahme Comprehensive security in Asia : views from Asia and the West on a changing security environment / ed. by Kurt W. Radtke & Raymond Feddema. - Leiden ; Boston ; Koln : Brill, 2000 ISBN 90-04-11202-2

ISBN 90 04 11202 2

© Copyright 2000 by Koninklyke Brill NV, Leiden, The Netherlands All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Brill provided that the appropriatefees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910 Danvers MA 01923, USA. Fees are subject to change. PRINTED IN THE NETHERLANDS

CONTENTS*

List of Abbreviations Preface and Acknowledgements Words of Thanks "An Overview of the Contributions to this Book — Issues Affecting the Stability of the Region, in Particular that of Japan"

ix xi xviii

1

KURT W. RADTKE

East and South-East Asia viewed at the regional level 1 "East Asia as a Periphery in the New World Order"

19 21

LAM PENG ER

2 "Asia-Pacific in Transition, or Mutually Assured Instability"

40

KURT W. RADTKE

3

"Nuclear Proliferation Challenges in East Asia and Prospects for Co-operation—A View from Europe" ....

66

FRANK UMBAGH

4

"Environmental Security and Co-operation in Asia" ....

134

MIRANDA A. SCHREURS

5

"The Chinese Economic Development and Security Interests: Implications for Europe"

159

RADHA SINHA

6

"China's Strategy for the Internationalisation of Energy Supplies and Asia's International Environment"

194

HAMA KATSUHIKO

7

"The Recent Asian Currency Crisis and Its Implications" To TERUHIKO [TWU Jaw-yann]

208

You may contact the editors at [email protected]. or [email protected]

VI

CONTENTS

Japan and the region 1 "Regional Order in the Asia Pacific, Japan and UN Security Council Reform"

223 225

REINHARD DRIFTE

2

"2nd Order Cybernetics and 'Comprehensive Security': Contributions from Contemporary Systems Theory"

240

MICHAEL SCHILTZ

3

"The Impact Of Japanese Direct Investment On Regional Stability. Some Consequences of the Expansion of Japanese Networks in Southeast Asia for Comprehensive Security"

270

ROGIER BUSSER

4

"Okinawa: An Aporia in the Security of the Asian Pacific Region"

289

IGARASHI AKIO

Korea and the region 1 "Comprehensive Security and Regional Nuclear Co-operation in East Asia: The Case of South Korea"

305

307

HAHNKYU PARK

2 "Farewell to a Model? German Experiences with Unification and Its Implications for Korean Strategies"

325

MANFRED POHL

China and the region 1 "Study Report on the American Situation in 1997— 1998: Chinese Energy Strategy for the 21st Century: Production, Consumption, Trade and Security"

341

343

ANGANG H U

2

"Factors Affecting Medium and Long Term Sino-US Relations"

357

WANG XIAODONG

Southeast Asia and the region 1 "The Southeast Asian Approach Towards the South China Sea. Conflict Resolution from a Comprehensive Security Perspective" RAYMOND FEDDEMA

377

379

CONTENTS

Vietnam and the region 1 "Vietnam's New Concept of Security in the Context of Doi-Moi"

Vll

403 405

NGUYEN VU TUNG

The European approach towards regional comprehensive security 1 "European Views on Comprehensive Security"

425 427

KEES HOMAN

Index

447

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LIST OF ABBREVIATIONS

ADB AFTA AMF ANSGO APEC APPCED ARF ASEAN ASEM CFE CNOOC CNPC CPV CSBM's CSCAP CSCE CTBT DPRK EAEC EC EEC EEZ ESCAP ESDI EU FAO FDI FSU GATT GDP GDR GNP HCNM IAEA ICBM's IMF IRBM's JAEC JICA JETRO

Asian Development Bank ASEAN Free Trade Area Asian Monetary Fund Asia Nuclear Safety Consultation Organisation Asia-Pacific Economic Co-operation Asia-Pacific Parliamentarians Conference on Environment and Development Asean Regional Forum Association of Southeast Asian Nations Asia Europe Meeting Conventional Forces in Europe China National Offshore Oil Company China National Oil and Gas Company Communist Party of Vietnam Confidence- and Security-Building Measures Council on Security Co-operation in the Asia-Pacific Conference on Security and Co-operation in Europe Comprehensive Test Ban Treaty Democratic People's Republic of Korea East Asia Economic Caucus European Community European Economic Community Exclusive Economic Zone Economic and Social Commission for Asia and the Pacific European Security and Defence Identity European Union Food and Agricultural Organisation Foreign Direct Investment Former Soviet Union General Agreement on Tariffs and Trade Gross Domestic Product German Democratic Republic Gross National Product High Commissioner on National Minorities International Atomic Energy Agency Intercontinental Ballistic Missiles International Monetary Fund Intermediate-range Ballistic Missiles Japan's Atomic Energy Commission Japanese International Co-operation Agency Japan External Trade Organisation

x

KEDO KFEM KMT KWP LDP LWR MAD MAI MIRV MITI MTCR NAC NATO NEACD NGO NIE's NPT ODA OECD OECF OSCE P5 PKO PLA PRC SEANWFZ SEATO SEZ SME's SNF SPNWZ TAC TMD UNCED UNCLOS UNDP UNSC UNTAC WEU WHO WTO ZOPFAN

LIST OF ABBREVIATIONS

Korean Peninsula Energy Development Organisation Korean Federation for Environmental Movement Kuomintang (Guomindang) Korea Workers Party Liberal Democratic Party Light-water Reactor Mutually Assured Destruction Mutually Assured Instability Multiple Independently Targetable Re-entry Vehicle Ministry of International Trade and Industry Missile Technology Control Regime NIE's, ASEAN and China North Atlantic Treaty Organisation Northeast Asia Co-operation Dialogue Non-Governmental Organisation Newly Industrialized Economies Nuclear Non-Proliferation Treaty Official Development Assistance Organisation for Economic Co-operation and Development Overseas Economic Co-operation Fund Organisation for Security and Co-operation in Europe Five Permanent Security Council Members Peace Keeping Operations People's Liberation Army People's Republic of China Southeast Asia a Nuclear Weapon Free Zone Southeast Asia Treaty Organisation Special Economic Zone Small and Medium seized Enterprises Strategic Nuclear Forces South Pacific Nuclear-Weapon-Free Zone Treaty of Amity and Co-operation Theatre Missile Defence United Nations Conference on Environment and Development United Nations Conference on the Law of the Sea United Nations Development Programme United Nations Security Council United Nations Transitional Authority in Cambodia Western European Union World Health Organisation World Trade Organisation Zone of Peace, Freedom and Neutrality

PREFACE AND ACKNOWLEDGEMENTS

This book has its origin in two conferences on security in East Asia held in January 1998 at Hayama near Tokyo. The main aim was to create an image of Japan's security environment from a wider perspective, and put into relief the major issues affecting the stability of the region, but in particular that of Japan. This book likewise focuses on regional

issues of which Japanese policy makers are very much aware when considering the security of the region. It was hoped that this approach would enable European scholars and policy makers to reach a better understanding of the consequences of these developments in Asia for Europe. It is hardly an exaggeration to state that the vast majority of publications in English dealing with contemporary developments in East Asia address themselves either directly to a North American public, or at least focus very much on the implications of developments for East-Asian relations with North America. It is not primarily a study of the security policies of the governments in the region. Focusing on the set of issues should provide us with the necessary background to understand approaches taken by East Asian governments to security, in particular that of the Japanese government. Japan is not particularly known for possessing an independent foreign policy or security strategy, apart from an awareness that the "Peace Constitution" seems to have been used by the Japanese to profit from economic enterprise, rather than wasting money on military security. Since the time of the Ohira cabinet in the late seventies Japan has also been known for its own particular security concept, "comprehensive security". Rather than studying the history of this concept in Japan (and elsewhere) the convenors of the conferences wished to focus on the international environment that had produced approaches to security structurally different from those known in NATO-Europe and the North America. Although numerous papers at the conference dealt with issues ranging from nuclear energy in Korea to pollution in Southeast Asia, an effort was made to address those issues that directly or indirectly had an important impact on Japan's security. The conferences were entitled "Asian Concepts of Comprehensive Security and Their Implications for Europe" and "Regional New

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PREFACE

Order in the Asia Pacific—Past, Present, and Future", to which we invited scholars mainly from Asian countries and Europe.1 They were initiated and organised by Raymond Feddema (University of Amsterdam), Akio Igarashi (Rikkyo University, Tokyo) and Kurt W. Radtke (then at Leiden University, The Netherlands, now at Waseda University, Tokyo). The conference(s) became a meeting ground for scholars from numerous countries and regions in Asia, Europe and America, in which individual scholars discussed concepts of security and regional order in an academic and co-operative spirit, taking care not to engage in unproductive exchanges along such lines as "us Europeans—you Asians—". Most of the contributors to the present book participated in that conference. Among the contributors we find adherents of quite diverse theoretical approaches. There was a general recognition that order and security required the conceptualisation of societies beyond their purely military, political and economic aspects to include culture and environmental concerns, and we opted for the term "comprehensive security" mainly to refer to the multi-layered character of contemporary security issues. Joe Camilleri once provided the following working definition of comprehensive security: a "particular practice or relationship may be deemed relevant to comprehensive security when it is likely to create new conflicts or exacerbate existing ones either between or within nations, especially to the extent that these are likely to involve the use of threat of force. As a corollary to this, a particular practice or relationship may be said to contribute to comprehensive security when it helps to resolve or obviate conflicts between and within nations, and especially armed conflicts."2 We used the term "comprehensive security" in this rather general sense, and not with reference to the specific Japanese paradigm ("Sogo anzen hosho") that acquired some popularity during the period 1 2

For a list of participants, refer to the end of this introduction. Joe Camilleri, "The Pacific House: The Emerging Architecture for Comprehensive

Security," in Mo Better Alternative. Towards Comprehensive and Co-operative Security in the

Asia-Pacific, edited by David Dickens, Wellington, 1997, pp. 77ff., here p. 83. 3 For an early survey of the history of this term, see R. Barnett Beyond War: Japan's Concept of Comprehensive Mational Security, Washington, 1986; for more recent

surveys in Japanese, Nakanishi Hiroshi "Soogoo anzen hoshoo senryaku no saikoosei", in Kokubun Ryosei, Mihon. Amerika. Chuugoku, TBS Brittanica, Tokyo, December 1997, pp. 85-133; Nakanishi Hiroshi, "Anzen hoshoo no riron to seisaku", in Nihon kokusai seijigakkai hen, Kokusai seiji, 1998 March, vol. 117, and also Nakanishi Hiroshi "Soogoo anzen hoshooron no bunmyaku—kenryoku seiji to soogo izon no

PREFACE

Xlll

of the Ohira cabinet in the late seventies.3 We did not entertain any pretence that using the term would lead towards the development of a new theoretical paradigm. Nevertheless, the term "comprehensive security" appears to be a useful starting point for discussions on security especially at a time, when financial and economic crises threaten to affect the internal cohesion of societies in the region with possible consequences for international security. Our adoption of the term was not related to its use as a main theme of some CSCAP working groups. In our mind, "security" refers not only to safety from military threats and physical violence, but also from other manmade threats, such as threats to the health and well-being of the individual (environment, poverty).4 The term is also widely used with reference to maritime security.3 It figured prominently at the "CSCAP Comprehensive And Co-operative Security Working Group Meeting" held in Kuala Lumpur, 17—18 September 1997. Topics addressed included: * Challenges to Environmental Security (Malaysia, New Zealand and Russia); * Food Security (China and Japan); * globalisation and the Retreat of the State (Europe); and * Energy and Security (Vietnam).6 Participants in our two workshops focused on related themes. They generally agreed that differences of culture and ideology among individuals as well as societies as a whole need not be in the way of co-operation to maintain, and strengthen concepts of regional order and security. It was pointed out that some countries preferred national concepts of security, while others preferred a multilateral approach. The legacy of the "Cold War" has different meanings for different countries and continents, and the development of new approaches koosaku," in Nihon seiji gakkai hen Kiki no nihon gaikoo—70nendai, Nenpoo seijigaku

1997, Iwanami shoten, 1997, pp. 97-115; David Dewitt, "Common, Comprehensive, Co-operative Security," in The Pacific Review, Vol. 7, No. 1, pp. 1-15. 4 "The Pacific House: The Emerging Architecture for Comprehensive Security," p. 83. ' For instance, at "The Third ASEAN Regional Forum (ARF) Track Two Conference on Preventive Diplomacy," jointly sponsored by the Institute of Defence and Strategic Studies (IDSS) Singapore, and the International Institute for Strategic Studies (IISS) in the United Kingdom, held in Singapore from 9-11 September 1997. b

S e e No Better Alternative.

Towards

Comprehensive and Co-operative Security in the Asia-

Pacific, edited by David Dickens, Wellington, 1997, and Unresolved Futures. Comprehensive Security in the Asia-Pacific, edited by Jim Rolfe, Wellington, 1997.

XIV

PREFACE

must take this into account. These would include new approaches toward lnstitutionalisation due to its different functioning and other meanings given to it in various parts of the world. This could result in the building of new institutions designed to enhance transparency, not only in military matters, but also to increase transparency in international currency markets with their formidable impact on the security and individual lives of hundreds of millions of people. "Democracy" promises each individual a say in matters affecting his/her own life; "market economy" promises "efficiency". They are both used as guidelines for creating a "better" reality, but do not lend themselves easily to being used as ready-made analytical concepts. One of the purposes of international dialogues is to go beyond slogans of the day, and find a common language that enables us to deal with issues affecting all of us. Dialogues on security at the government and private level have contributed to the spread of a common language and terms used in international debates and discussions, based on scholarship in the English language.7 There are recognisable strands of national "traditions of scholarship" such as in Japan, Russia and other successor states of the Soviet Union, in China, or in various continental European countries. By and large it is fair to say that scholars from these countries seldom rise to prominence in the hit lists of citation indixes based on English language publications. When Raymond Feddema, Igarashi Akio and Kurt W. Radtke joined hands to organise a conference on security issues their main aim was to create a platform for private, independent scholars from countries in Asia, Europe and America to exchange views on security-related issues without prejudice to any particular approach. Judging from our personal experience and research in Asian political history we are convinced that it remains useful and necessary, from an academic point of view as well as as for the benefit of practitioners, to remain abreast of dis' It should be added that numerous such "private" dialogues are in fact sponsored by government or semi-government institutions. To mention only a few: "The Council on Security and Co-operation in the Asia-Pacific (CSCAP)" was established in Kuala Lumpur in June 1993, and the Northeast Asia Co-operation Dialogue or NEACD commenced in California later that year. Early Canadian and South Korean initiatives for multilateral dialogue were not very successful. It is frequently argued that the use of English imposes a conceptual framework on other cultures, but at the same time most participants in dialogues are aware of the fact that the adoption of a common language is unavoidable.

PREFACE

XV

cussions on these issues that take place among scholars and practitioners within countries such as Korea, China, Japan, or countries in Southeast Asia. Their arguments are not necessarily conducted within the framework of our international "epistemic community". It is not an easy task to keep track of the dynamics of these discussions, as frequent visitors to China, Korea and Vietnam, for instance, would readily admit. Some scholars from these countries are gradually adopting conceptual frameworks familiar to scholars and politicians from outside this area. There is a real danger that the ARF (Asean Regional Forum), an initiative originating from within Southeast Asia, will be taken over by the "international community". In a speech on 21 July, 1998, at the Henry L. Stimson Centre, the Assistant Secretary of State For East Asian And Pacific Affairs Stanley Roth had this to say: "The U.S. and other like-minded states have had success in promoting a greater role for defence officials in ARF proceedings . . . . Though our efforts on this front initially met with resistance from the Chinese and from some ASEAN countries, the additional seat (for defence officials) was inaugurated at the Fourth ARF Ministerial in Malaysia last year . . . . Still, certain measures will need to be taken if the forum is to realise its true potential. First, ASEAN will have to relinquish some of its control over the ARF. There is already discussion within ASEAN scholarly circles about the need to do so . . . But the ARF's non-ASEAN members now outnumber its ASEAN creators, and so some means must be devised to reflect this, perhaps by permitting an equitable sharing of the privileges and responsibilities of the chairmanship. At the same time, the ARF needs to become more institutionalised . . . . Ultimately, of course, for the ARF to evolve, its members will have to be prepared to surrender a degree of sovereignty for the greater good."8 Whatever the political needs and intrinsic merits of government led institutionalisation of international dialogues, I am convinced that truly private channels of communication to generate new ideas independently remain important. The academic global community is sometimes in a better position to discuss possibilities for international co-operation beyond the nation state from a position of academic independence. Their efforts may contribute to the establishment of USIA, 23 July, 1998.

XVI

PREFACE

an intellectual framework that may underpin the need for international co-operation as the basis for comprehensive security, a term that also addresses issues such as social and environmental stability. This volume is intended to make a modest contribution to this aim. Mote on editing

The editors had established a tight schedule to ensure that this volume should appear in print by late summer 1998. Virtually all contributors handed their papers in on time. Due to unfortunate circumstances beyond the control of the contributors and editors, the publication of this volume suffered a delay of more than a year. Although the international situation keeps changing at a rapid pace this editor (K.W. Radtke) is convinced that even with such a delay, the insights offered by the contributions are as valid as they were a year ago. Only one contributor is a native speaker of English; writing in English necessarily implies leaving the framework of one's own language and culture, and trying to transmit messages whose import is sometimes not readily understood by readers acquainted with another linguistic and cultural framework. Some contributors quote numerous German, Russian, Chinese and Japanese titles in their original languages, and since these sources can only be consulted by those able to read them in the original translations of titles were not always provided. Editing the English usage of non-native speakers is not only a matter of dealing with grammatical mistakes, but implies treading a tight line between adjusting a manuscript to become "acceptable" to a native speaker to some extent, and preserving the original character of the manuscript. The widespread use of English as a common language of international communication often makes it appear as if that framework of thought has blotted out other alternatives— which is clearly not the case. Those involved in editing the English usage of this book beg forgiveness from the contributors for interfering with their original manuscripts, and ask readers to bear up with the imperfections that still remain. List of papers of the Hayama workshops

Below please find a complete list of papers presented at our Hayama workshops: Introduction: Kurt Radtke (Leiden University) "Comprehensive security = stability without hegemony(?)"; Raymond Feddema (University of Amsterdam) "Why Regionalisation of Security Perceptions?".

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Session 1: "Theoretical Issues and 'Comprehensive Security'":

C. Homan (Netherlands Defence College) "European Views on Comprehensive Security"; Manfred Pohl (Hamburg University) "Farewell to a Model—German Experiences with Unification and Korean Disillusion: From Euphoria to Securing the Status Quo?"; Michael Schiltz (Catholic University, Leuven), "2nd Order Cybernetics and Comprehensive Security: Contributions from Contemporary Systems Theory"; Seok-Soo Lee, "Historical Evolution of Comprehensive Security in South Korea". Session 2: "Theoretical Issues and 'Comprehensive Security'":

Wang Xiaodong (Beijing, editorial board "Strategy and Management") "Sino-US Relations in 1997"; Lee Jong Won, "Order in the Asian Pacific Area Observed in Regional International Relations"; Hahnkyu Park, "Regional Nuclear Energy Co-operation in East Asia; A Korean Perspective". Session 3: "Regional Economic Stability and Issues of 'Comprehensive Security'":

R. Busser (Leiden University), "The Impact of Japanese Direct Investments on Regional Stability"; Riuhei Hasse (Kobe University), "Modernisation and Human Security in East Asia". Session 4: "Regional Economic Stability":

Akiyama Takuo (Long Term Credit Bank, Tokyo), "Emerging Financial Markets". Session 5: "Specific Issues of Comprehensive Security":

K. Hama (Soka University, Tokyo), "The Shift in China's Energy Strategy and the Question of Security"; Raymond Feddema (University of Amsterdam), "The Southeast Asian Approach Towards the South China Sea: Conflict from a Comprehensive Security Perspective"; Nguyen Vu Tung (The Institute for International Relations, Hanoi), "Vietnamese Views on Security in (Southeast)Asia"; George W. Tsai (Chengchi University, Taipei), Sino-American Relations after The Summit: Its Security Implications". Session 7: "Specific Issues of Comprehensive Security":

Kim Dalchoong, "Maritime Security Issue in East Asia in the 1990s"; R. Drifte, "Regional Order in the Asia Pacific and UN Reforms"; F. Umbach (Research Institute of the German Society for Foreign Affairs), "Nuclear proliferation—Challenges in East Asia". Session 8: "Regional Economic Stability":

Radha Sinha (Sophia University, Tokyo), "The Chinese Economic Development and Security Interests: Implications for Europe"; Kurt W. Radtke (Leiden University), "Mutually Assured Insecurity";

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M. Wiesebron (Leiden University), "Transformation in Latin America. Integration and Reforms. Mercosul and Nafta—Recipes for stability?"; Hu Angang (Chinese Academy of Sciences, Professor, Tsinghua University), "Chinese Energy Strategy for the 21st Century: Production, Consumption, Trade and Security". Words of Thanks

The editors of this book should like to express their particular thanks to Prof. Dr. Akio Igarashi and Mrs. Shibuya (Rikkyo University) who provided invaluable academic and logistic support before and during the conferences, Prof. Moon Chung-in (The East-West Centre, Yonsei University, Seoul, Korea) who gave his active support in the preparatory stage of the conference, and last, but not least, Mrs. N. Karthaus-Tanaka (Leiden University) for her administrative support. The holding of the conference would have been impossible without the generous support of our sponsors, The Asia Committee of the European Science Foundation, The International Institute for Asian Studies (Leiden), the Research School CNWS of the Faculty of Letters, Leiden University, and the Embassy of the Netherlands in Tokyo, for which we should like to express our deep gratitude on behalf of all participants in this conference.

An Overview of the Contributions to this Book

ISSUES AFFECTING THE STABILITY OF THE REGION, IN PARTICULAR THAT OF JAPAN, EAST AND SOUTHEAST ASIA VIEWED AT THE REGIONAL LEVEL KURT W. RADTKE

Studies on (comprehensive) security, like most studies that approach an "interdisciplinary" theme, tend to exhibit a certain reluctance to become involved in doctrinal debates conducted among the adherents of any particular "theoretical school".1 In a geographical area that comprises previous empires reshaped into a nation state (China and Russia), a city state (Singapore), Malaysia and Indonesia which are still engaged in solidifying the work of erecting a nation state on the territories of former colonies, and countries (areas) that remained divided in the context of the Cold War (South and North Korea, Taiwan), only Japan can look back on a past as a modern nation state with a history comparable to that of Germany and Italy. The regional international system can only be understood in the context of its colonial past, and the role of outside (superpowers such as the Soviet Union and the United States. Japan is clearly the leading economy dwarfing all other economies in the region, but so far relies for its security on its special relationship with the United States. The maintenance of Japanese security is central to the position of the United States in Asia as a whole, to the extent that in any security 1 Despite the apparent dominance of (neo)realist writings in the field of international relations theory, serious doubts about basic theoretical flaws have been raised not only by post-modernists such as Lene Hansen, but also by some conservative scholars. Maarten Brands "The Obsolescence of Almost All Theories concerning International Relations," Uhlenbeck Lecture 14, NIAS (Netherlands Institute for Advanced Study in the Humanities and Social Sciences, Wassenaar, The Netherlands), 1997. He quoted, amongst others James Rosenau who wrote that "it is sheer craziness to dare to understand world affairs," in: "Probing puzzles persistently: a desirable but improbable function for I.R. theory," in S. Smith, K. Booth and M. Zalewski, eds., International Theory, Postiuism and Beyond, Cambridge 1996, pp. 309-317.

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KURT W. RADTKE

issue affecting Asia its impact on Japan is of vital importance to the United States. While crises involving the United States and China on the Korean Peninsula, in the Taiwan area, and in the South China Sea have their own momentum, they cannot be separated from the effect such crises may have on Japan. Japan, however, is not known for the development of its own active security policy— not a few scholars ritually conclude their surveys of Japanese defence policies by stating that Japan, in effect, seems to follow US policies, either willingly, or with some reluctance, but invariably following. Such a political environment is extremely difficult to capture with the aid of one particular theoretical approach. Nor will an accumulation of studies of bilateral relations between Japan and its neighbours be of much use either. A key issue is whether, in the future, Japan will play a role more independent of US policy than is the case today. "Co-operative security" as described in Homan's contribution to this volume has so far been an overall success in managing stability in the area from the Atlantic to Russia (the Soviet Union) relying on a fairly well developed institutional framework. Just as Germany's unification cannot serve as a model for Korean unification (see Pohl's contribution), so one may argue that the environment in East and Southeast Asia has so far not been conducive to the transfer of Atlantic style "co-operative security" to Asia, and as Homan concludes this may not be easy. One reason is that "co-operative security" relies on the common acceptance of ideals of a democratic society and others, while there is no consensus in Asia on the pursuit of shared ideals. "Comprehensive security" is not an alternative to "co-operative security". At a minimum level "comprehensive security" seeks to arrive at common and shared definitions of threat, such as threats caused by the destruction of the environment, the issue of dealing with nuclear waste, unstable energy regimes, and economic-political-social instability that threatens not only the country involved, but the stability of a whole region. Umbach, Pohl, Schreurs, Park, Hama and Hu An'gang demonstrate

that energy requirements, the question of nuclear cycles, the environment, proliferation and security are inseparably linked. Umbach shows how behind the apparent facade of the status quo both Japan and Korea have a certain potential (and ability) to deviate from the current non-nuclear stance if the credibility of current US strategic assurances weakens. He emphasises the continuing importance of the US—Japan security alliance, but pleads for Japan to assume greater

AN OVERVIEW OF THE CONTRIBUTIONS

5

responsibilities, and initiate a broader as well as more open security debate in Japan in order to bolster new directions taken by its foreign and security policies. Given the lasting mistrust of its Asian neighbours, Japan can only assume new regional responsibilities in a close alliance with the US that also reassures the other East Asian states. As a matter of course, "comprehensive security" is also concerned with military threats. As was briefly pointed out in the Preface, "comprehensive security" is not yet a well-defined concept, and this is demonstrated by the various meanings attached to this term by the contributors to this volume. In the absence of a close political and military alliance of countries in Asia sharing the same sense of mission as is the case with the Atlantic alliance, Japan's conceptualisation of threat and approaches to deal with it can only be understood from the regional Asian context. It is not by chance, then, that it was the Japanese government that first advocated the concept of "comprehensive security". The collection of essays in this volume is intended to present an image of the security environment in (North) East Asia from various angles, without imposing a clear black and white conceptual order. On the basis of their different personal environment scholars from Asia, Europe and the United States reflect on security issues, and they agree that countries and areas in the region should cooperate to reduce threats to stability that would eventually affect all. The diversity of threats illustrates the security context of Japan, and by the same token indicates that it would be difficult, if not impossible, for Japan to act as the leading power in Asia attempting to restructure the internal system of countries in the way the United States does. During the height of the confrontation between the Soviet Union and the United States both countries portrayed themselves as leaders of fundamentally different "systems". "Socialism" and "democracy" each established a systemic approach for societies to deal with the challenges of a changing world. Democracies attempt to spread the risks of political decision making by using the institutions of regularly elected parliaments and governments subject to parliamentary control, also as a precaution to prevent the long-term usurpation of power by one particular interest group. The institution of "markets", and checks against the monopolisation of markets by large enterprises follow essentially the same strategy to enable numerous economic actors to develop flexible

4

KURT W. RADTKE

responses towards change for the best of society as a whole. The state is seen as a facilitator to create and maintain the necessary infrastructure for these institutions. In a socialist system both economic and political choices are subject to collectivised institutional decision making which is justified along ideological principles. Competition and struggle between both "systems" were frequently conceptualised as a fight for hegemony for power between alliances and the leaders of both "camps". It thus seemingly confirmed the validity of the "(neo)realist" thesis about world order created through the power of sovereign states in a world that without leaders would degenerate into anarchy. In this sense, world history was a continuation of the historical dynamics of state systems that began in Europe with the creation of the first sovereign nation states in 1648. The transfer of "Western" political systems—such as the nation state, democracy and socialism—to virtually all parts of the globe has apparently led to the incorporation of all regions into one global system. "Global order" is, however, a much more complex term that cannot be easily and neatly subsumed in such a simple way. "Market democracy" may have won the battle against socialism, but it is still too early to claim that the post-1991 global order under the leadership of the US is capable of stabilising the social, economic and political dimensions for all. The largest countries in terms of population—China, India, Russia, Indonesia, Nigeria and Brazil exhibit worrying signs of instability. The "international community" is no less an imagined one than are nations. The majority of the global population in Latin America, Africa and Asia has no direct voice in the "international community". English has become the common language of the internet, the international media and the academic community, but more than half of the global population does not use the Latin alphabet. It is sometimes argued that after the demise of the Soviet Union, China is the only important country that is still outside the global order of market democracies, and that with the anticipated accession of China to the WTO (World Trade Organization) the basic framework will have been completed for a global economic order capable of maintaining stability in an active way. "Comprehensive security" seeks to contribute to stability by pointing out existing or potential weaknesses that may threaten the status quo, or future stable development; usually, less attention is paid on how to construct a hegemonic order.

AN OVERVIEW OF THE CONTRIBUTIONS

D

The first contributor to this volume, Lam Peng Er affirms that it is the United States, and not Pacific Asia, that will dominate in the twenty first century. At the same time, he is rather cautious when it comes to defining the new global order. "World order is here simply defined as the lack of a nuclear or world war coupled with predictability in the rules of the game . . . there can be local or regional disorders in East Asia that are limited to that area but do not disturb the general order." Even though regional conflicts in Korea, Vietnam and Cambodia were intertwined with superpower rivalries, East Asia was not pivotal to the political economy of this international order. Its ideological, strategic and economic centres were the US and the USSR. In East Asia, the US constructed a system of alliances, supported the capitalist market, and often paid lip service to democratisation among its allies. The Soviet Union forged alliances with the PRC, North Korea and the Indochinese communist bloc, supported socialism and state directed economic central planning, and encouraged communist insurgencies in Southeast Asia. This order was stable at the systemic level after the 1961 Cuban missile crisis. At the regional and local levels outside the European theatre, the absence of MAD (Mutually Assured instruction) induced order meant that these areas were often prone to instability caused by converging local, regional and superpower competition. While the Cold War system avoided a third world war, the order it brought at the global level did not necessarily lead to distributive justice and equality in the international system. Lam Peng Er emphasises that the demise of the Soviet Union does not justify regarding China as a threat to the global system in terms that compare China to the threat formerly posed by the Soviet Union. The US should be more relaxed in its dealings with China. The dominant view seems to be that the next century belongs to East Asia, where China will become a more complete superpower than Japan, while the rest of East Asia will steadily increase in wealth. Lam's central argument is that, regardless of which analytical prism we adopt, we may observe an unipolar Pax Americana at the global level. Keywords are: strategic alliances in which the US is the leading partner, leadership in military and information technology, ideological leadership in democracy, capitalism, privatisation and market opening, leverage over UNSC (United Nations Security Council), the World Bank, the IMF (International Monetary Fund), APEC (Asia-Pacific Economic Council), and the universalisation of American pop icons, music culture and lifestyles.

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The US is the key architect of an order constructed to reflect its own interests. In East Asia, there are no challengers or any coalition of challengers on the horizon which can displace the US hegemon. With the exception of Japan, Asia is a periphery in the global political economy, more than ever dependent on the huge US domestic market. East Asian NIEs (Newly Industrialising Economies) increased in wealth, but theirs is essentially a "dependent development," because they still rely on multinational corporations for technology and capital. So far there are no attractive ideological "Asian alternatives" to liberal democracy, market capitalism and privatisation. Lam then goes on to review four paradigms of a new world order, an ecological one, a globalist one based on regional or international organisations, a state-centric, realist paradigm that stresses power politics, and a neo-liberal order underpinned by free trade and democracy, and concludes that there is no realistic alternative to global US leadership. One may question whether the spread of market democracies will not be stunted by the limits imposed by non-sustainable development, and it is not surprising that energy and the environment is a major theme for four contributors to this volume. Radtke points out that the destabilisation of large, relatively poor countries such as China, India, Indonesia or Russia constitutes a genuine threat to global order—and that despite the apparent strength of the US, Europe and Japan their combined power may not be enough to prevent the collapse of order in huge areas with large populations. Echoing the former global order based on "Mutually Assured Destruction" (MAD), he posits that we have now entered the age of "Mutually Assured Instability" (MAI). It may well be that in terms of direct economic consequences Europe and the United States remain surprisingly insulated from the direct effects of economic upheaval in Asia (see the articles by Umbach and Radtke in this volume). More intense Japanese economic interaction with Asia exposes Japan to fluctuations in the economies of Asian countries, but Japan finds it difficult to compete with the United States when it comes to bringing about structural change in the economies of its Asian neighbours. The US regards such restructuring as essential. In fact, throughout this century the US has consistently followed a policy of imposing (and aiding) structural change within defeated nations, and a similar strategy is being followed in the case of those Asian countries who were "defeated" by the Asian economic crisis. During the past

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one hundred years, emerging challengers to the power of Great Britain and the United States—Kaiser's Germany, Hitler's Germany, Japan, and the Soviet Union were defeated or collapsed. From the US point of view, the five major Asian players do not constitute a challenger to be "defeated", but countries to be restructured and "integrated" into a new kind of global system. The image of past "challengers" has not disappeared completely, however. Increasing tensions with China over Taiwan, and the treatment of issues such as "Tibet" recall US visions of former enemies, such as the Soviet Union. Rejection of a US led global order by Malaysia or China tends to be equated with "outdated nationalism". It is questionable whether the dynamics of "markets" contributes to systemic stability, nor is the restructuring of states in the US image a solution to fundamental conflicts of national interest among the major players in East Asia, even if they should all become successful market democracies (which in the middle run is highly unlikely). In this context the identification of shared common threats along the concept of "comprehensive security" may be a major contribution to security that does not rely on the restructuring and integration of countries. Moreover, this concepts avoids the labelling of countries like China as "heretic"—a classification that may add to ideological enmity even if no immediate mutual threats are involved. Lasting disorder on any large scale in China and Russia must be a matter of serious concern, and not only because both countries possess major nuclear arsenals. Quite apart from the effects of massive flows of refugees to neighbouring countries such as Korea, Japan and Central Europe such instability might seriously undermine the promises and legitimacy of market democracy. During the first three decades of this century failing marketisation had been a cause of the rise of fascism and socialist planned economies. In contrast to Europe, US leadership in Asia is not equivalent to imposing a new hierarchy among the five major Asian powers, Japan, China, Russia, India and Indonesia, who together are unable to construct a stable regional system of international relations. The security function of Japan, Korea, Taiwan and Singapore displays a completely different pattern of "division of labour" in the security field than that observed among the sovereign member states of NATO. The Asian crisis demonstrated once more that security is affected by economic instability, such as that in Indonesia, and that an approach to security focusing exclusively on military power is

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useless in preventing such dangerous situations from arising. As Sinha demonstrates in detail, China's economic dependence on the US and on Japan in the second instance, remains very great. In his opinion this will push China in the direction of further integration. It is mainly China's security concerns (Taiwan, Tibet, Xinjiang, South China Sea) that for the time being stand in the way of a more rapid integration of China into the regional and global system. Umbach focuses on specific "hard" issues of military security, both at the international and the domestic level. The attempt by the religious organisation AUM Shinrikyo to engage in the large-scale killing of Japanese citizens demonstrated that contemporary security can no longer be seen in terms of "battles along clearly demarcated front lines". He concludes that in order to prevent those new security dilemmas, to stabilise and not to undermine regional and global stability, a much broader and deeper security co-operation between nuclear powers and non-nuclear weapon states is urgently needed. Co-operation is also needed to deal with the proliferation challenges of the Soviet nuclear legacy and the inherent risks of Russia's strategic nuclear armed forces. Countries like North Korea might feel tempted to employ terrorist means against the population of Japan or the United States should North Korea become involved in a major conflict (Radtke). In this context Umbach refers to the fact that the US is maintaining a nuclear retaliation option against ABC weapons, but adds that the US will also rely increasingly on the use of conventional deep-strike, long-range, high-precision weapons systems. He discusses in detail the link between nuclear energy and the issue of proliferation in an age where the distinction between the military and civilian application of advanced technology is difficult, if not impossible, to draw. He goes on to discuss the issue of the significance of China's military build-up, and the implications of plans for a Theatre Missile Defence (TMD) system. His exposition of the technical and political aspects of military modernisation, and its consequences for the prospect of a larger Japanese autonomy in security matters versus the United States, provides the basis for an understanding of the physical environment which Japan's military security policies will face in the future. Schreurs once more draws attention to differences between the European and Asian security environment, and focuses on "soft" areas of security co-operation. In her view, Asia lacks many of the

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factors that contributed to international stability within Europe in the post WW II period. Having suffered numerous wars, Asia is still characterised by great differences in economic wealth and political regime type. There is still much mutual distrust, also fuelled by territorial disputes. Schreurs' main aim is to survey the pollution and resource problems in the East and Southeast Asian region, document some of the forms environmental co-operation has taken, and explain why co-operation is now beginning to emerge. Such co-operation may eventually contribute to reducing distrust. Nuclear energy is an option that is attracting growing attention in China and elsewhere in the region, but also creates common concern about nuclear safety issues. China's growing energy demands will have a major impact on international energy markets. Deforestation, water pollution and other issues are slowly leading states to build networks linking actors to address regional pollution problems. ESCAP (The Economic and Social Commission for Asia and the Pacific), APEC and ASEAN, the World Bank and the Asian Development recognise that economic development and environmental concerns cannot be separated, but there are still extremely few informal environmental or resource regimes in East and Southeast Asia. Sinha's contribution on "Chinese economic development and security interests: implications for Europe" demonstrates that economic issues and security issues cannot be separated either. China cannot afford to overburden its economy with excessive military expenditures. He argues that a continued high rate of economic growth is only possible if economic restructuring does not lead to undesirable inequality. Instability in China as a result of an economic downturn may indirectly influence stability in the region; a rapid growth rate, on the other hand, might lead to growing competition for food, fuel and natural resources. One should, however, guard against overestimating the weight of the Chinese economy from a global perspective. Neither for trade share nor for foreign investment is Asia important to European countries. In Sinha's view, developments in Asia do not have many security implications for the European countries, except in a very broad general sense. Sinha's article is more ambitious than the title suggests. He shows how domestic politics, the economy, and the build-up of military forces interact and are related to the regional international system, and suggests several scenarios in which events in China and the region might affect the global system.

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Both Hama and Hu An'gang explore the current state of China's energy supplies and its interaction with international energy markets. Hama points out that there will be no change in the high rate of supplies from China's own sources in energy consumption. Secondly, the reliability of energy imports is mainly dependent on China's export capability and acquisition of foreign exchange which should not be an issue. Thirdly, the development of international energy resources can reduce the risk inherent in oil imports. He stresses indirect consequences of increasing Chinese energy imports, and discusses in some detail the role of the Middle East and Central Asia in China's attempt to diversify its sources of energy. China will share sea lanes with America, Japan and other Asian countries. Chinese navy units will need to protect not only Chinese oil transports. This will also raise the question how to settle the issues concerning joint navigational security, and what kind of institutions are needed for joint consultation. Just as environmental concerns may push regional co-operation, so do crises in the financial realm encourage players to look for ways to increase stability by fostering regional co-operation—this is the major theme of the contribution by To Teruhiko. The currency crisis confronted the countries of Asia with the question of how to form a stable regional currency system. He then goes on to explore the theoretical structure of the currency crisis, pointing out the differences of the crisis for ASEAN member countries and the NIEs. In addition to "purely" economic causes he refers to the upheaval in Cambodia June 1997 as the major immediate trigger for the crisis, as well as the role of smuggled Thai currency on Cambodian, Laotian, and Vietnamese markets in this crisis. Structurally speaking, however, there are clear differences in the way the international economic relations of Korea, Taiwan, Thailand and other East Asian countries are built up which go some way to explain the different causes and effects for each of the countries involved—as is also evidenced by the different degrees of recovery achieved in recent months. Twu also explains the way in which the Chinese and Japanese economies were involved in the crisis. Japan and the region

Historically Japanese discussions on security matters have been conducted in terms of "US centred" and/or "UN-centred" policies. Drifte discusses the kind of policies Japan has recently developed in the UN context, and to what extent such policies may influence the

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workings of international politics and order in East Asia. He draws attention to a less analysed aspect of the emerging new regional order and multilateralism in the Asia Pacific region, namely the interaction of the states in the region within the framework of the UN. This may give some indications of the extent of regional co-operation and cohesion. There are forty-nine countries gathered in what is known as the "Asian block". This block is of relevance to the election of member states to various seats on UN committees, including the non-permanent seats on the UN security council. The UN Transitional Authority in Cambodia (UNTAC) is the foremost example of a UN peace-keeping operation which has also opened a new regional role for Japan. Drifte concludes that Japan's ambitions to become a permanent member of the UN Security Council in a restructured United Nations are nurtured more by status thinking and recognition of economic contributions to multilateralism, rather than by a clear concept of multilateralism based on domestic consensus or input in terms of initiatives, concept or personnel. In addition, its impact on Asian cohesion and the formation of a stable regional order is ambivalent, because of the continuity of a strong US-focused bilateralism, and Japan's inability to come to terms with its historical legacy. Drifte then goes on to deal in detail with Japanese initiatives concerning a settlement of the Cambodian issue(s), initiatives generally welcomed by the Asian states which saw for the first time not only the sending of Japanese self defence forces abroad for a PKO (Peace Keeping Operation), but also the first Chinese participation in PKOs. The UN is also sponsoring the UN Regional centre for Peace and Disarmament in Asia (the so-called Kathmandu process), and this is the only regular meeting which also includes North Korean participants. He warns, however, not to attach excessive expectations to the role of the UN. Despite the urgency of the situation the UN is playing no role in reducing tensions on the Korean Peninsula, and all recent moves such as the Korean Economic Development Organisation KEDO, or the quadrilateral talks between North Korea, South Korea, China and the US are all at the initiative of the US and outside of the UN framework. Nevertheless, one of the most important contributions to regional cohesion and Asia's comprehensive security by the UN is probably supporting the integration of the PRC into the global order in various ways. On the other hand, the PRC will not allow the UN to intervene in any way in the issue of Chinese reunification, and it is only with great reluctance that the PRC has agreed to discussing

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competing territorial demands concerning parts of the South China Sea. Both issues, however, could have a very serious impact on Asian regional security. Discussing the possibility of a reform of the UN Security Council Drifte recalls that India, Pakistan, and Indonesia have all shown interest in a permanent security council seat, complicating Asian cooperation. He also points out the lack of a consistent, clear Japanese strategy to convince others of the appropriateness of Japanese claims. Schiltz analyses the philosophical background to Japan's security policies; it is only by establishing the parameters for the historical and domestic debates on security and foreign policy that we can understand the logic and defuse the apparent paradox in Japanese security policies. The title of his contribution may frighten off many a reader: "2nd order Cybernetics and Comprehensive Security: contributions from contemporary systems theory," and some may question whether such philosophical considerations are of any practical relevance. This editor (Radtke) is, however, convinced that exactly because of the apparent ease with which international discussions can be conducted through a generally accepted common language (English), with virtually no technical limits on communications in the age of Internet, we do need to wonder from time to time whether our use of language does in fact reflect our patterns of thought, our logic, which may not be the same as that of our neighbours. The abstract character of systems research does not go beyond the level of other natural sciences. Exactly because of the apparent ease with which we can communicate it is all the more necessary to realise that communication is a more complex phenomenon than providing a smooth translation from one language to another. Schiltz uses Japanese security policies as a case study to provide an illustration for Niklas Luhman's theoretical approach towards systems research. He stresses that the concept "comprehensive security" has turned into a kind of catch-all term. The Japanese post-war security system describes itself as "comprehensive security," and thus provides its own key to an understanding of the character of the Japanese security system. In order to observe how a system observes, one may make observations at a different level, performing a second order observation. In the first part Schiltz outlines the frame of Luhmann's theory of social systems. In the second part he presents a discussion of the relevance of his theory to the study of Japan's comprehensive security, which brought fourth "unique" concepts such as

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"autonomous defence" {jishu booei) and "comprehensive security" (soogoo anzen hoshoo). Japan is well known for its love of discussing "Japaneseness" (nihonjinron). Schiltz presents this as one example of a societal self-description, highlighting the alien-ness of the Japanese in contrast with the outside world. Asian values would be another comparable self-description. "Comprehensive security" is still in fashion at the end of the twentieth century. The term "both countered and reinforced some of the arguments of the new military "realists". "Comprehensive security" facilitated a domestic debate on national security in an environment where discussions of military security where surrounded by the misty shrouds of Article 9 of Japan's Constitution. Schiltz's discussion may remind us that citizens of other countries may be similarly forced by their own social environment to adopt modes of reasoning difficult to understand for those who are not privy to that environment. Japan is the only country in this part of the world that enjoys a living standard and a social, political and economic structure comparable, and in some aspects superior to the countries of (North)west and Central Europe. Its secu-

rity is highly dependent on the internal political and economic stability of its Asian neighbours, but Japan has to rely on the United States for its military security. At the same time, the internal structure of Japan's Asian neighbours differs in many aspects from that of Japan. Active co-operation on matters of military security with other Asian nations must, as a matter of course, be considerably less intensive than are the relations between France, Germany and Great Britain in the initial stages. While taking into account the differences with its neighbours, Japan endeavours to foster co-operation to the largest possible extent. This is the background to the concept of comprehensive security as formulated in 1980 by a study group appointed by Prime Minister Ohira, which called for Japan to use a blend of economic, political and military tools to maintain its security. It is questionable to what extent Japanese policy makers have striven consciously to apply the concept in Japanese foreign policy decision making. In his essay on the impact of Japanese direct investment on regional stability Busser argues that the concept of comprehensive security reinforced the legitimacy of Japan's foreign economic policy and the massive scale of its foreign direct investments in Asia as part of Japan's attempt to contribute to the greater stability of the region as a whole. He illustrates the Japanese governments' concern by outlining the involvement of three Japanese government institutions in

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aiding private investments in the region, the Export Import Bank of Japan, the Japanese Overseas Economic Co-operation Fund, and JETRO. Last, but not least, Igarashi deals with the costs and benefits of securing security to the ordinary citizen of Japan, by discussing the issue of the American bases in Okinawa. Common sense requires that in a democracy such as Japan the burden for the defence of the country ought to be shared evenly by all citizens—as the example of Okinawa shows, this is, however, not the case. Perhaps his essay is a timely reminder, towards the end of this volume, that security does not just serve the interests of the state, but is a matter that affects all citizens. By conceptualising security in a multi-layered, broad sense comprehensive security once more draws attention to the fact that in the end, the state, the political parties, the "economy", international and domestic enterprises ought to have one common objective: to serve the citizen. Korea and the region

Park takes up the issue of security and nuclear co-operation to demonstrate policy choices and the circumscribed space within which South Korean security and foreign policies can move. He defines comprehensive security in terms of policies designed to protect the people's life not only from traditional forms for military threat, but also from various other forms of threats such as hunger, poverty, environmental disaster, scarcity of energy, and the like. Affected by the reduced role of ideological conflicts world-wide, military security interests are no longer the predominant factors that dictate international relations in the post-Cold War era. Most states have begun to pay more attention to non-military security interests. Park shows, however, how the issues of nuclear energy in East Asian countries could provide a potential source of conflict in the region in the future. The nuclear energy option raises controversial issues among regional countries, including the issues of nuclear safety, nuclear waste management, and nuclear proliferation. Park goes on to discuss this issue in detail for the question of the nuclear fuel cycle programme, Japan being the only country in the world that pursues an active policy in that direction. South Korea is not happy about the United States' twotier non-proliferation policy, i.e. allowing Japan to reprocess US supplied fuel, but not South Korea. Park describes in detail the significance of the framework of KEDO co-operation for enhancing security in the region, but points out that, in contrast to the European Atomic

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community (EURATOM), there has been no such framework for regional co-operation to co-ordinate nuclear activities in East Asia, despite recent proposals for ASIATOM or PACIFICATOM. Considering its active nuclear programme and its geopolitical position in the region, South Korea also has a vested interest in the emerging concept of a regional nuclear co-operation system, but there are pros and cons. A regional nuclear co-operation framework could hinder the development of an independent nuclear fuel cycle programme in South Korea; second, a regional framework could generate new constraints in the nuclear relationship between the United States and South Korea if the US thinks that a regional framework might encourage reprocessing in East Asia. Pohl approaches the security issues of the Korean Peninsula from the point of view of Korean unification. He argues that German unification cannot be a model for Korean unification, but that there are still a few lessons to be learned. Only a gradual process will bring success on the road to Korean unification, and that this process must be carried by the Korean states themselves, and not imposed from without. He asserts that after unification there can be no doubt that a unified Korea will quickly assert itself as one of the leading powers in Northeast Asia. The ultimate common factor shared by both the North and South alike is a deep-rooted aversion to Japan. This editor (Radtke) has always held that exactly because of this, Japan must attempt to reconceptualise its foreign policy on a long-term basis in the direction of much more intense and friendly relations with South Korea, to begin with. China and the region

Hu An'gang's, central argument is that increasing the total volume of oil imports within a certain range need not constitute a threat to China's political independence. He focuses in particular on the composition of the "energy basket", and links the increasing supply of clean forms of energy, such as the import of natural gas to China's east coast, to existing environmental concerns. He demonstrates that it is possible to achieve a sound balance between the political demands of maintaining independence in decision making and the need to expand energy imports. The topic of China's independence also figures high in Wang Xiaodong's treatise on "Basic development trend of Sino-US relations in 1997". Although Sino-US relations have seen several ups and

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downs since then, his observations on the dynamics of developments in 1997 present a good example of the way many Chinese appear to conceptualise the Sino-US relationship. He argues that to look at it from a purely ideological angle today lacks the power to convince Differing from numerous other observers he stresses that not only China, but India too is an emerging great country with ambitions no less great than China's as she seeks to influence regional and even international affairs. Still, the fact remains that China is the only exception among major countries in Asia that have officially expressed their wish to adopt Western forms of political democracy. He underlines the weaknesses of China versus the United States, for instance in the ability of the US to damage the Chinese economy should it choose to close access to American (and global) markets. He also points out that it is unlikely that China will break the existing tranquil situation of her own accord—the real test will come when Taiwan takes initiatives in an attempt to change the present position. In conclusion he points out that from the long-term, strategic and basic angle, China will have to build democracy and a legal framework, and at the same time must press ahead with progress in economic and technological spheres. Southeast Asia and the region

In his article "The Southeast Asian Approach Towards The South China Sea. Conflict Resolution From A Comprehensive Security Perspective" Raymond Feddema shows how for a considerable period the Cold War setting put its stamp on the way countries in Southeast Asia, China and the United States have handled conflicts and conflict management. He demonstrates, however, that over time at the regional level Southeast Asian countries developed their own approach towards conflict resolution and conflict prevention. Rather than insisting on agendas with a fixed order of priorities for issues to be dealt with the new approach has stressed the linkages between the issues; accepting the inseparability of issues in a realistic manner countries in Southeast Asia pursued a comprehensive approach. Feddema takes up two issues that illustrate the point: problems related to the South China Sea and the Cambodian issue. In addition to the well-known issues of oil and military security Feddema emphasizes the importance of fishing rights in the EEZs, and environmental issues related to fishing. He also deals with institutions such as ASEAN and their role not only in conflict resolution, but also conflict prevention.

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Vietnam and the region

Nguyen Vu Tung's article on "Vietnam's new concept of security in the context of Doi-Moi" emphasises the vital necessity of coping with poverty and backwardness, the greatest enemies of Vietnam in this period. He is clearly concerned about the fact that the Asian crises and poverty threaten not only Vietnam, but other countries in the region as well. He does not ignore the domestic causes of the economic crisis, but adds that what has happened reflects the lack of a regulating body beyond the national level with regard to the international financial and stock markets, which have been increasingly integrated. Instability in the regional and global economy, therefore, is perceived to be a source of threat to Vietnam, which is increasingly concerned over beggar-thy-neighbour policies in the self-help settings. As one Vietnamese put it: "Will the world economic and political order be one of equality, justice and mutual benefits for all or the one imposed by a 'closed club' of big powers?" The European approach towards regional comprehensive security

In common with numerous other commentators from the region, globalisation is here not seen as transcending the role of the state, b u t rather

as a consequence of the powerful role of rich countries—poor countries find it difficult to devise policies to deal with the crisis, especially since none of them boasts any strong multinational companies that may function as influential global players. As is apparent from the essays above there is a general feeling for the need for increased co-operation in the face of shared military insecurity, and threats posed by economic and environmental problems. Although the ideological confrontations belong by and large to the past, there is still no general consensus among Asian nations on the direction economic, political and social

developments should take. This, however, is one of the main pillars of co-operative security as practised in Europe, skilfully outlined by Homan in his essay on the past and present of the Organisation for Security and Co-operation in Europe (OSCE). In his view, the priorities of the OSCE today are to consolidate common values and build civil societies: prevent local conflicts, restore stability and bring peace, to overcome real and perceived security deficits and to avoid creating new divisions by promoting a co-operative system of security. Present-day conflicts show a tendency to move from international to internal conflict, and this also influenced the concept of sovereignty and the right of the security council of the UN to

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intervene—a development not always welcome among countries in Asia, especially those who have still not completed the process of building a solid unified nation-state. Together with the political and military power plays of state actors, other conditions determining power relations between actors include the distribution of wealth and property rights, attitude of majority versus minority groups, and the extent to which democratic rights are guaranteed and human rights are respected. If the OSCE were to become a model for (South)east Asia it seems clear that conditions there differ considerably from the current situation in Asia.

EAST AND SOUTH-EAST ASIA VIEWED AT THE REGIONAL LEVEL

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EAST ASIA AS A PERIPHERY IN THE NEW WORLD ORDER LAM PENG ER*

During the Cold War era, East Asia was located on the periphery of world order.1 This Cold War Order was underpinned by the strategic stalemate which resulted from the nuclear balance of terror between the United States (US) and the Soviet Union (USSR). Even though regional conflicts in Korea, Vietnam and Cambodia were intertwined with superpower rivalries, East Asia was not pivotal to the political economy of this international order; its ideological, strategic and economic centres were the US and the USSR. In East Asia, the US constructed a system of alliances (including the Southeast Asian Treaty Organisation (SEATO) and interlocking bilateral military ties with Japan, South Korea, Taiwan, Thailand and the Philippines), supported the capitalist market, and often gave lip service to democratisation among its allies. Opposing the US-led bloc, the Soviet Union forged alliances with the People's Republic of China (PRC), North Korea and the Indochina communist bloc, supported socialism and state-directed economic central planning and encouraged communist insurgencies in Southeast Asia. This order was stable at the systemic level after the 1961 Cuban Missile Crisis because of the tacit understanding reached between the two leading (nuclear) superpowers; mutual assured destruction (MAD) deterred them from any direct military confrontation that could escalate and cross the nuclear threshold. However, at the regional and local levels outside the European theatre, the absence of MAD-induced order meant that these areas were often prone to instability caused by converging local, regional and superpower competition.

* Assistant Professor of the Department of Political Science, National University of Singapore. His main areas of research are grassroots democracy and local referendums in Japan. He is the author of Green Politics in Japan (London: Routledge, 1999), and has also published in Asian Survey, Pacific Affairs and Japan Forum. 1

I define East Asia as the region which encompasses Northeast and Southeast Asia.

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While the Cold War system avoided a Third World War, the order it brought at the global level did not necessarily lead to distributive justice and equality in the international system. In East Asia, while it was possible for Japan, the Newly Industrialising Economies (Singapore, South Korea, Taiwan and Hong Kong) and the late developers Malaysia and Thailand to attain economic progress, they were dependent on the huge US domestic market for their products and on American military might to maintain the regional balance of power. Many other countries in East Asia and beyond did not attain significant economic improvement, although they fell within the superpowers' spheres of influence. By the end of the Cold War, with the exception of the ascending NIEs and the descending former Soviet bloc and Eastern Europe, the pecking order remained essentially the same as it was at its outset: the US at the top of the power hierarchy, Western Europe, Japan, Canada and Australasia in the middle, followed by the third world countries in Asia and Latin America, and Africa at the bottom. In short, the central feature of this international system was the Cold War polarisation between East and West coupled with an economic cleavage between the rich North and the poor South.

THE POST-COLD WAR ERA AND COMPETING CONCEPTIONS OF WORLD ORDER

By 1991, the rapid collapse of the Soviet Union and the concomitant Cold War structure led to different conceptions of a new world order.2 However, most analysts find it convenient to label it "the Post-Cold War epoch" or "a new world order" without explicitly capturing its essential characteristic or giving a new name to this world order.3 If it is indeed a new order, what is it and why is it new? Is there an appropriate name for its "newness" anyway? The caution in labelling a new epoch is understandable because it may simply be too early to tell what its defining characteristics are. Nevertheless, we can identify a number of paradigms which may 2 Harkavy gives a good summary of seven competing images of the post-Cold War international system. See Robert E. Harkavy, "Images of the Coming International System", Orbis, Vol. 41, No. 4, Fall 1997. 3 Cox writes: "Because we cannot know the future, we cannot give a satisfactory name to future structures. We can only depict them in terms of a negation or

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inform us about potential and divergent outcomes of the global order and, by extension, East Asia, in the next three decades. This chapter addresses the following questions. First, what is a periphery in the context of a world order? Second, what are the main paradigms of a new world order? Third, which of these appear to be most plausible? The four paradigms I will examine are: an ecological order, a globalist order based on regional or international organisations, the state-centric, realist paradigm that stresses power politics, and a neo-liberal order underpinned by free trade and democracy.

THE EAST ASIAN PERIPHERY AND THE US CENTRE

Interpreting this region as a periphery in the new world order is contrary to the dominant view that the next century belongs to East Asia.4 According to this conventional view, China will become a potential negation of the dominant tendencies we have known . . . . This sense of transition away from known structures towards an as yet unnameable future accounts for the large number of approaches in different fields of study that begin with 'post'—post-industrial, post-modern, post-structural, post-capitalist, post-Marxist, etc." Robert W. Cox, "Towards a Post-Hegemonic Conceptualisation of World Order: Reflections on the Relevancy of Ibn Khaldun" in James N. Rosenau and ErnstOtto Czempiel (eds.), Governance Without Government: Order and Change in World Politics (Cambridge: Cambridge University Press, 1992) p. 139. 4 See for example Francois Godement, The Mew Asian Renaissance: From Colonialism to the Post-Cold War Era (London: Routledge, 1997), Mark T. Berger and Douglas A. Borer (eds.), The Rise of East Asia: Critical Visions of the Pacific Century (London: Routledge, 1997), Jim Rohwer, Asia Rising: How America will Prosper as Asia's Economies Boom (New York: Simon and Schuster, 1995), John Naisbitt, Megatrends Asia: The Eight Asian Megatrends that are Changing the World (London: Nicholas Brealy, 1995), James C. Abegglen, Sea Change: Pacific Asia as the New World Industrial Centre (New York: Free Press, 1994), Mark Borthwick, Pacific Century: The Emergence of Modern Pacific Asia (Boulder, Col: Westview Press, 1992), Frank Gibney, The Pacific Century: America and Asia in a Changing World (New York: Macmillan, 1992), William McCord, The Dawn of the Pacific Century: Implications for Three Worlds of Development (New Brunswick: Transaction, 1991), Simon Winchester, Pacific Rising: The Emergence of a New World Culture (New York: Prentice Hall, 1991) and Staffan Burenstam Linder, The Pacific Century: Economic and PoliticalConsequences of Asia-Pacific Dynamism (Stanford, California: Stanford University Press, 1986). For an articulate Asian voice which anticipates the coming "Asian Era", see Kim Il-Gon, "The New World Order and the Future of Asia: Characteristics, Underlying Factors, and Prospects for Development in East Asia", The APC Journal of Asian-Pacific Studies, March 1997. For a minority view which questions the hype about East Asian miracles, see Rodd McGibbon, "Charting the Pacific Century: Megatrend or Just Plain Hyperbole?", Pacific Review, Vol. 8, No. 2, 1996.

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more complete superpower than Japan while the rest of East Asia, notwithstanding the anomalies of Myanmar, Laos, Cambodia and North Korea, will further increase in wealth. Some optimists assume that East Asia is the once and future centre; the region will reclaim its historical site at the centre of the new world order. This sanguine view is underpinned by the following factors. First, around half of the global economic production and consumption may be located in East Asia by the mid-21st century. Second, China will emerge as a superpower with enhanced nuclear capabilities and a blue water fleet; Japan will become a "normal" great power when it loses its residual allergy to playing a more active political role commensurate with its economic might; the NIEs and other late developers will embark on arms modernisation once they have the economic means to do so. In contrast to the earlier centuries when most East Asian states fell to Western imperialism and colonialism, they will probably be less vulnerable to threats emanating from outside the region. Third, many East Asian countries will become more confident and strident about their values, culture and ideologies. Some Asians have proposed alternatives to American values (often confused with Western values) of liberal democracy and laissez faire capitalism. These include the alleged superiority of "Confucian values", "Asian democracy", and the East Asian model of state-led, capitalist development. Increasingly, Asian governments and intellectuals are prepared to challenge the cultural "hegemony" of the West, especially now that Asian societies have become more affluent.3 In short, the rise of East Asia is underpinned by its impressive economic growth. Certain East Asian countries will be in an even stronger position to translate their economic might into political, strategic and cultural influence sometime in the next century. The 1997—98 East Asian currency meltdown and concomitant socio-economic and political problems may even drag the region into an uncharacteristic three to five-year long recession. However, those optimists who subscribe to the belief that East Asia still has the fundamentals to succeed—high savings, strong work ethic, respect for order, stability and authority, a powerful developmental state and an highly educated work force—will probably believe that the crisis is only temporary. Some may anticipate that, in the long run, many East Asian countries are likely to emerge from the crisis as leaner 5

See for example Chan Heng Chee, "What the 'Asian Values' Debate is All About", Institute of Southeast Asian Studies, 1996 mimeo.

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25

and meaner economies. Thus, if East Asia were to recover strongly from the crisis after a few bad years, it would mean that the region was forced to take a few steps backwards before making its leap towards a developed status by the middle of the 21st century. Nevertheless, even if the region were to recover soon, East Asia is likely to remain a periphery; the flip side of the coin is Pax Americana perpetuated at the global level into the 21st century. My central argument is: regardless of which analytical prism we adopt, they tend to highlight an uni-polar Pax Americana at the global level. Indeed, the US superpower has extended its dominance even more impressively in the fields of strategic alliances, military and information technology, ideological leadership in the realms of democracy, capitalism, privatisation and market opening, leverage over the United Nations Security Council (UNSC), the World Bank, the International Monetary Fund (IMF), APEC and the universalisation of American pop icons, music, culture and lifestyles. Thus the prospects for the US to construct a Gramscian hegemony of "soft power" which underpins its status as a sole superpower have never looked so bright.6 Charles William Maynes wrote: "America's current hegemony has had an extraordinary impact on other countries in the post-Cold War era. Perhaps not since ancient Rome has a single power so towered over the international order with such a decisive margin of superiority."' Even though the American state and capital are not monolithic, do not always get what they want and need the support of certain domestic and international allies, the US is the key architect of this new world order which is constructed to reflect its interests. Put simply, during the Cold War, there were two competing orders: Pax Americana and Pax Sovietica; in its aftermath, a more pervasive and expansive Pax Americana world order appears to be emerging and no real challengers seem to be in sight in the next two decades. In East Asia, the US is likely to remain dominant despite the hype b According to Gramsci, a ruling bloc successfully establishes its hegemony not merely through coercion but especially when the ruled consent to the cultural, moral and intellectual values of the ruling bloc. Although Gramsci focuses on hegemony within a particular state and society, his idea on hegemony is also applicable to international relations. For an examination of hegemony, see Anne Showstack Sassoon, Gramsci's Politics (Minneapolis: University of Minnesota Press, 1987) pp. 109-134. 7 Charles William Maynes, "'Principled' Hegemony", World Policy Review, Vol. 14, No. 3, Fall 1997, p. 31.

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about China emerging as a regional hegemon. If this argument is correct, then Pax Americana, an old but central feature of the Cold War era, is still persisting in the "new" world order while East Asia remains a periphery. I use the term "periphery" in three different but compatible ways. First, East Asia is a periphery in terms of the global strategic balance; the US is still Number One and is in a league of its own in the projection of conventional military and nuclear power.8 Moreover, the US is unrivalled in launching the military-technological revolution: integrating space technology, command, control, computers and communications and "smart weapons". Despite premature and exaggerated notions of American decline, Washington continues to lead its allies in East Asia. There are no challengers or any coalition of challengers on the horizon which can displace the US hegemon. In addition, the military in many East Asian countries depend on the US for sophisticated weapon systems, spare parts and technical training. Indeed, the US remains the number one arms merchant in the world. Second, East Asia, with the exception of Japan, is a periphery in the global political economy. It is more than ever dependent on the huge US domestic market for its products, US-based multinational corporations for investments, American mutual funds and hot money to bolster their share markets and American banks for financial loans. While East Asian NIEs have increased in wealth, it is essentially "dependent development" because they still rely on multinational corporations (MNCs) for technology and capital. Despite suggestions that East Asian countries should adopt the yen as a regional currency as an alternative to the US dollar, the US dollar continues to remain the preferred currency for international trade. Moreover, East Asian countries are under-represented in terms of voting power in various international organisations including the IMF and the World Bank.9 An American newspaper reported: "The IMF, in the words 8

Mark Danner writes that "American forces thus remain abroad independent of the defunct Soviet Union, and to support that hegemony, the United States spends approximately 260 billion dollars a year on armaments and troops—an amount that, though a good deal lower than the peaks of the Reagan years, easily exceeds that of the next ten heavily armed nations combined". Mark Danner, "Marooned in the Cold War: America, the Alliance, and the Quest for a Vanished World", World Policy Journal, Vol. 14, No. 3, 1997, p. 4. 9 The US is dominant in the IMF. A.F.P. Bakker writes: "With 18 percent of the votes, the US has a right of veto over the most important decisions, such as

EAST ASIA AS A PERIPHERY IN THE NEW WORLD ORDER

27

of former US trade representative Mickey Kantor, is a 'battering ram' to open up Asian markets to US enterprises."10 Moreover, even the communist regimes of China and Vietnam are increasingly sucked into the vortex of global capitalism. Third, I use the term "periphery" in the Gramscian sense; East Asia does not provide any attractive ideological alternatives to liberal democracies, market capitalism and privatisation. The muchvaunted state-led capitalism of East Asia and the keiretsu-chaebol dinosaurs of Japan and South Korea are in trouble; "Asian values", "Asian democracy" and communism have no universal appeal. Indeed, the proponents of "Asian values" and "Asian democracy" have been silenced by the East Asian economic crisis. If Asian values are supposed to underpin impressive economic growth in that region, don't they also underpin its dramatic economic crisis? Japanese-style capitalism is also unravelling. This includes lifetime employment, seniority system, the keiretsu system and the collusion between bureaucrats and big businesses. Undoubtedly, US hegemony in the realms of strategic power, political economy, ideology and culture are not uncontested but there are, presently and in the near future, no real challengers to the US. Two qualifications to this Pax Americana should be made. First, order at the systemic or global level does not preclude the possibility of disorder at the local or regional level. World Order is here simply defined as the lack of a nuclear or world war coupled with predictability in the rules of the game. Conceivably, there can be local or regional disorders in East Asia that are limited to that area but do not disturb the general order. Second, Pax Americana or any other world order is no guarantee for justice, especially for the smaller countries. Hitherto, world order is by the great powers, from the great powers and for the great powers. In the case of East Asia, it may well suffer from major turbulence even when there is a new world order. Similarly, among the East Asian countries, there are capital increases and amendments to the Articles of Agreement, for which 85 percent of the votes are needed". A.F.P. Bakker, International Financial Institutions (London: Longman, 1996), p. 14. East Asian countries with the exception of Japan have very little influence in the IMF. The Group of Ten (US, Germany, Japan, France, UK, Italy, Canada, Netherlands, Belgium, Switzerland and Sweden) has 52.2 percent of voting ratios in the IMF. In the case of Japan it has 5.6 percent but the rest of East Asia are poorly represented in the IMF. See Bakker, International Financial Institutions, p. 20. 10 International Herald Tribune, 26 January 1998, p. 8.

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also winners and losers, and a lack of equality and justice for the weaker countries in the midst of a world order. In short, while a new world order is preferable to having no order, it is not necessarily a global arrangement that can satisfy the wants of humanity.

ALTERNATIVE WORLD ORDERS

To assess the periphery, it would be useful to examine different paradigms of world order. Even if we were to look at the world through different lenses and assumptions, the role of the American hegemon still looms large. The four paradigms of world order can be expressed in Typology A. The first is a Green Order where military brute force is irrelevant to address the threat of ecological disasters. These include the depletion of the ozone layer and the possibility that certain countries may even be submerged by rising waters from melting polar caps, deforestation, acid rain, the rapid extinction of more species of flora and fauna and severe industrial and nuclear accidents. The traditional nation-state system is ill prepared to deal with environmental problems that transcend the borders of its units; a Green Order would demand a regional or a global approach to deal with trans-national environmental problems. Hence, the two axis of a Green Order are the irrelevance of military power and the inadequacy of the nation-state to grapple with green challenges. The second is an international organisation-centred world order.11 A nascent supra-national organisation is the European Community (EU) whose members (the traditional nation-states) pool their sovereignty together, and share common institutions like the European Parliament and judiciary and possibly a common currency, the Euro. An UN-centred world order would be one where the UNSC can maintain the peace through peacekeeping and peace-enforcement activities. The two denning features to this model are the pre-eminence of a non-state actor, the UN, to deal with the issue of war and peace and the continued relevance of military power. The UNSC will carry military clout to deter recalcitrant forces which may dis11 See for example, J.W. Burton, World Society (Cambridge: Cambridge University Press, 1972). See also Robert W. Cox, "An Alternative Approach to Multilateralism for the Twenty-first Century", Global Governance, No. 3, 1997.

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rupt the peace, while the EU members will continue to retain its military power. The third is the realist model of international politics.12 This perspective views international relations essentially as competition among sovereign states in an anarchical world whose currency is military power. In short, it stresses the primacy of power and states as key actors and units of analysis. The realist literature often examines the critical role of a hegemon who underpins the stability of the international system. The fourth paradigm, a liberal world order, is predicated upon the norms that countries engage in the comparative and not the competitive advantage of global trade; the economic ties that bind is a positive-sum game, not a zero-sum game for its participants.13 The forging of economic partnerships and rising affluence underpinned by free trade will eventually lead to the emergence and the consolidation of a middle class in these countries. This particular class with the advantage of more resources, education, access to information and travel will prefer a democratic form of government to reflect its interest. Democratisation and the consolidation of democratic regimes will underpin international order because democracies do not go to war against each other. Thus, the two denning characteristics of a liberal order are the primacy of free trade rather than military power and the continued relevance of nation-states which will have democratic regimes. The next section will examine how these paradigms will inform us about order in East Asia. Competing Paradigms of World Order Primacy of Military Power Yes No State-centricity

12

Yes

Realist Model

Liberal Order

No

International Organisations

Green Order

On the assumptions of realism and its variant "neo-realism", see Robert O. Keohane (ed.), JVeorealism and its Critics (New York: Columbia University Press, 1986) and Andrew Linklater, "Neo-realism in Theory and Practice" in Ken Booth and Steve Smith (eds.), International Relations Theory Today (Pennsylvania: Pennsylvania University Press, 1996). 13 See for example, David A. Baldwin (ed.), Neorealism and Neoliberalism: The Contemporary Debate (New York: Columbia University Press, 1993).

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LAM PENG ER A RADICAL GREEN ORDER IN EAST ASIA?

A case can be made for a stronger international environmental regime, especially in East Asia. In their headlong drive for rapid economic growth, many Asian countries have suffered from environmental degradation. Japan's impressive economic growth in the 1950s and 1960s was bought at a heavy price; notorious cases of mercury and cadmium poisoning were some of the more visible incidents of environmental pollution. The backlash from local residents' movements in politics against big business polluters, a tighter regulatory and legal regime, the relocation of dirty factories to neighbouring countries with a less stringent regulatory regime and advances in green technology had significantly reduced the source of pollution in that country. However, the poorer Southeast Asian countries have given priority to rapid economic growth at the expense of the environment. For example, they have engaged in unsustainable logging for foreign exchange resulting in severe deforestation.14 Moreover, many of these countries are not democracies, lacking in transparency and public accountability, and practice crony capitalism and corruption; wellconnected friends of key political leaders enjoy business contracts, monopolies and access to bank loans. Malaysia, Singapore, Brunei and parts of the Philippines have been periodically shrouded by poisonous smog caused by indiscriminate burning of plantations and virgin forests in Indonesia for cash crop cultivation. Even in Japan, there were a few potentially serious nuclear station mishaps and cover-ups which resulted in greater disquiet among many local residents against the construction of more nuclear stations. Conceivably, a Green Order ought to be canvassed if environmental problems become catastrophic and life threatening on a massive scale to human beings, animals and plants. If the region is badly hit by multiple disasters such as Chernobyl-type nuclear accidents in Japan, Korea and China, more smog from the burning forests and plantations in Indonesia and, if states lack the capacity to deal with these serious man-made disasters, East Asia would be forced to 14

See Peter Dauvergne, Shadows in the Forest: Japan and the Politics of Timber in Southeast Asia (Cambridge: MIT Press, 1997) and Michael J.G. Pamwell and Raymond L. Bryant (eds.), Environmental Change in Southeast Asia: People, Politics and Sustainable Development (London: Routledge, 1996).

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respond to these problems as a region. Until and unless the magnitude of environmental disasters is really overwhelming, economic growth will continue to take precedence. After all, the legitimacy of both democratic and authoritarian regimes in East Asia is dependent on the ruling parties to deliver the economic goods. In short, if the ecosystem does not appear to be collapsing, the type of world order familiar and comfortable to the ruling elite is the realist balance of power and the liberal conception of economic materialism. Even in the more advanced case of Western Europe where postmaterialist mass values, Green Parties and stricter environmental laws have emerged: a Green Order is not in place. Like East Asia, regional order in Europe is still based on the balance of power and economic interdependency. The US, the largest and probably the most wasteful economy in the world, consumes the most energy and resources and emits the largest amount of ozone depleting gases. Since the US places greater priority on its national and producer interests, it dragged its feet at the 1992 Rio Conference and the 1997 Kyoto Conference over higher standards to curb environmental pollution. The lack of cooperation from the US is sufficient to hinder any attempts to shift towards a Green Order.

REGIONAL AND INTERNATIONAL ORGANISATIONS IN EAST ASIA

In the 1990s, the United Nations seemed to have taken a higher profile to address acts of aggression (e.g. Iraq's invasion of Kuwait) and peacekeeping operations in Cambodia, Namibia, Mozambique, Zaire, Somalia and Bosnia. Since the UNSC is no longer paralysed by vetoes driven by Cold War considerations, it appeared that the UNSC could perform the original role envisaged by the UN's founders: a concert of five permanent members which is able to deter or punish any transgressors of international order and stability. The IMF and the World Bank have also become key actors in the currency turmoil and economic crisis of East Asia in 1997 and 1998. These organisations, especially the IMF, have been imposing stringent economic conditions on South Korea, Thailand and Indonesia in a bid to restore investors' confidence and to pry open their markets in exchange for IMF rescue packages and loans. These countries could not ignore the bitter prescription of the IMF even though

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its actions were made at the expense of their political and economic sovereignty. Regional organisations to underpin regional order were further consolidated in East Asia. ASEAN as a regional organisation has expanded from seven to ten Southeast Asian countries. Moreover, the ASEAN states have also initiated the ASEAN Regional Forum (ARF) as a platform for confidence building, dialogue and the discussion of security issues. APEG has also been institutionalised to establish stronger economic linkages and market liberalisation across the Pacific. However, it is unlikely for the ASEAN states to emulate the EU soon because these Southeast Asian states are at different levels of economic development, they have different types of political regimes and also differ with regard to ethnicity, religion, culture and colonial heritage. With the exception of Thailand, they are young post-colonial states which are preoccupied and concerned about consolidating their statehood rather than to transcend it. They are unlikely to adopt a common currency, permit open borders and the freedom of labour migration within ASEAN. In the case of Northeast Asia, the region is even more "backward" than Southeast Asia in terms of regional organisational building. This is due primarily to the Japanese burden of imperial history and the perpetual tension between the divided states of China (Beijing and Taipei) and Korea (Pyongyang and Seoul). While some of these regional and global institutions seem to herald a new era of co-operation, the reality is that nation-states, especially the US, continue to drive most of these institutions. While the UN provided the fig leaf of international legitimacy to the multilateral forces arrayed against the Iraqi forces, the US was the real commander during the Gulf War. By virtue of the UN's location in New York, the perpetual threat of the US (a key financier of the UN) not to pay its arrears, Washington exercises a dominant influence in the UN [through the presence of the US and its allies France and Britain in the UNSC, and its insistence to retain military control in UN peacekeeping operations which involve its troops]. In fact, the American influence on the UN has never been greater. Its compliant ally, Japan, is the key donor to the UN. Russia, preoccupied by its internal problems and reliant on American and its allies' goodwill and assistance to its weak economy, has not behaved like its Soviet predecessor in the UNSC. Russia today does not cast paralysing vetoes in the UNSC like the USSR did in the past.

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A key reason why the ARF and APEC are operational is because it is in the US interest to support them. When Washington perceives that certain regional initiatives are against its interest, it has no qualms to reject them. For example, it had pressured Japan not to support the East Asian Economic Caucus (EAEC) which would have become an Asian club excluding the US. Similarly, it has rejected ASEAN's plan to introduce the Southeast Asian Nuclear Weapon Free Zone (SEANWFZ) even though it would have enhanced regional order. Washington was concerned that the nuclear free zone would pose problems for the freedom of navigation of its nuclear-bearing vessels in Southeast Asian waters. Unless ASEAN is willing to amend the treaty to take into account US strategic interest, the US would not endorse the SEANWFZ. Not surprisingly, Japan tacitly supported its ally. The US is pre-eminent in the IMF and the World Bank.15 During the 1997-98 currency and economic turmoil in South Korea, Thailand, and Indonesia, there was a convergence of IMF demands and US preferences for market opening and other forms of deregulation as a condition for IMF rescue packages. These concessions are likely to benefit US banks and producers. Even though certain representatives from the American Congress fear that the US contribution to the IMF package may become a repetition of the American rescue package for Mexico when its peso crashed, the Clinton Administration has taken advantage of the East Asian economic crisis to secure an advantage for US business interests, as well as strategic interests. Not surprisingly, Beijing has condemned the IMF as a tool of US state and business interests.16

THE REALIST PARADIGM: REALPOLITIK IN EAST ASIA

One can subscribe to this paradigm without believing that the US is "bound to lead" in East Asia.17 Paul Kennedy argues that, like lj

For a view that the US is also very influential in the Asian Development Bank, see Nitish K. Dutt, "The United States and the Asian Development Bank", Journal of Contemporary Asia, Vol. 27, No. 1, 1997.

l(> East Asia Today, "People's Daily Article Alleges Washington is Using Asia's Financial Woes to Further Its Own Interests", BBC London, 2300 hours, 6 January 1998.

" Joseph S. Nye, Jr., Bound to Lead: The Changing Nature of American Power (New York: Basic Books, 1990).

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the great powers that have preceded the US, Washington will suffer from "imperial overstretch" and relative decline because its economic base cannot support its heavy military and strategic commitments.18 From this perspective, even if the US had won the Cold War against the Soviet Union, it was a costly and draining victory. The US spent billions of dollars in its nuclear arms race with its rival with limited consumer spin-offs. In contrast, Japan single-mindedly concentrated on economic development after its loss in the Second World War and has overtaken its mentor in terms of per capita GNP in the 1990s.19 Adopting the realist paradigm, some analysts argued that if the US were to withdraw from the region, a vacuum would surely emerge and be filled by other regional powers, especially China and Japan. Since the end of the Cold War, many analysts have speculated that China could well emerge as a hegemon and displace the US from the region. They argue that if China emerges as an economic powerhouse in the 21st century, it will be able to translate its economic strength into military might.20 In the case of Japan, there is an increasing desire among certain mainstream politicians who hope that Japan will become a "normal" state unconstrained by Article 9, the no-war clause of its constitution.21 While most of them want Japan to maintain its alliance with Washington, any US withdrawal from the region is likely to result in Japan embarking on its own autonomous defence posture. If we were to adopt the realist paradigm in East Asia, we can chart four different regional orders that are contingent on two key factors: whether China will emerge as a regional hegemon and whether the US-Japan Alliance will be maintained.

18

Paul Kennedy, The Rise and fall of Great Powers: Economic Change and Military

Conflict from 1500 to 2000 (New York: Random House, 1987). 19 In 1995 Japan's per capita GDP was US$40,897 while that of the US was $27,799. Bank of Japan, Comparative Economic and Financial Statistics: Japan and Other

Major Countries (Tokyo: Bank of Japan, 1996) p. 1. 20 For an assessment of these views, see Avery Goldstein, "Great Expectations: Interpreting China's arrival", International Security, Vol. 22, No. 3, Winter 1997/98. 21 See for example, Ichiro Ozawa, Blueprint for a New Japan (Tokyo: Kodansha International, 1994).

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Typology B: Great Powers & Regional Order China as Rising Hegemon

US-Japan Alliance

Yes

No

Yes

Balance of Power

Pax Americana, Phase 2

No

Pax Sinica

Pax Nipponica

If Washington and Tokyo can tide over its recurring trade friction and mass protests against the US military bases in Okinawa prefecture, the combined weight of the two allies is likely to be able to balance a resurgent Beijing. Thus the balance of power will continue to underpin the regional order in East Asia. If the Alliance were to collapse, Japan on its own is unlikely to match resurgent China; Pax Sinica will maintain regional order. History will then repeat itself because China was traditionally the hegemon (military, economics and culture) in the region before the advent of Western imperialism. Should China fail to emerge as a hegemon and if this is coupled with the collapse of the Alliance, Pax Nipponica could well emerge. This is reminiscent of the Greater East Asia Co-Prosperity Sphere, which enveloped Korea, Taiwan, large chunks of mainland China and Southeast Asia. However, I would argue that the most likely outcome is Pax Americana. In the Clinton-Hashimoto Joint Declaration of April 1996, Tokyo committed itself to assisting the US in the event of a crisis in "areas surrounding Japan". This ambiguous region has been interpreted as the Korean peninsula, Taiwan Straits, the Spratlys in the South China Sea and the Gulf region.22 In 1997, Japan came up with its new defence guidelines to show how it could assist the US in a concrete way should crisis erupt in the region. Thus, Washington's position in the region has been bolstered by its ally's agreement to strengthen the alliance. In addition to its hi-tech military wizardry—amply demonstrated during the Gulf War—US hegemony is also reinforced symbolically and financially by a strong US dollar. During the 1997—98 currency turmoil, the US dollar was king; the Thai baht, Korean won and Indonesia rupiah had a free fall against the US dollar. Even the 22

Foreign Broadcast Information Service, Daily Report: East Asia, 96-101, 23 May 1996; also 96-114, 12 June 1996.

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Japanese yen fell significantly against the US dollar. If the Asian currency contagion were to broaden and deepen in the region (including China), the East Asian countries would have to scale back their arms imports and military modernisation because of severe budgetary constraints. (Ironically, Southeast Asia was one of the best markets for weapons because of affordability due to sustained economic growth.) Significant slashes in the defence budgets of the regional states would obviate a regional arms race and thus enhance regional stability. The economic weaknesses in East Asia also highlighted the resilience of the US hegemon and its almighty dollar.

THE LIBERAL PARADIGM: AN ASIAN PARTNERSHIP?

This perspective envisages that mutual benefit of trade, investments and affluence will underpin a community of nations in East Asia. Thus some have argued that Japan and China will forge a partnership because of complementary economic interests.23 In addition, there is a possibility that East Asian countries are gradually increasing trade with each other rather than continuing their traditional overwhelming dependence on the American and the European markets. Nevertheless, the US remains an important investor and trader in the region. The free trade and market opening rhetoric of liberalism may mask the fact that US banks, telecommunications and auto industries have the resources, expertise and political backing of Washington while Southeast Asian banks, telecommunications and auto industries lack the capacity to penetrate the saturated and well established US market. Neither can the Southeast Asian businesses easily penetrate the Japanese market. Thus the liberal discourse in the international political economy serves the interest of the big powers, especially the US and Japan.

CONCLUSION

East Asia was a periphery in the Cold War Order and appears to remain so in the post-Cold War Pax Americana. Besides the US 23 Robert Taylor, Greater China and Japan: Prospects for an Economic Partnership in East Asia (London: Routledge, 1996).

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dollar and military firepower, there are no countries in the region that can match American ideology in terms of universal appeal. Although Fukuyama overstated his case that the end of history is liberal democracy since all its rivals (fascism and communism) have been discredited, liberal democracy seems to shine even brighter because the proponents of "Asian values" seem to be reeling under the currency and confidence crisis in the region.24 Smug politicians, especially in Singapore and Malaysia, earlier argued that "Asian values" underpin the economic success of East Asia while associating liberal democracy with Western decadence and poorer economic performance. However, the economic crisis in East Asia starkly reveals that certain countries with "Asian values" suffer from nepotism, corruption, lack of accountability and poor economic health while the Western liberal democracies have enjoyed better growth and less social dislocation. Thus there are no challengers in East Asia who can match the ideological "soft" power of the US. In the case of the great powers of Japan and China, the former is in the same ideological camp as the US while Chinese communism, with its contradictory state and market economy, offers no attraction, promise or future to most intellectuals and the masses of other East Asian countries. Besides liberal democracy, other aspects of American cultural hegemony include the appeal of its lifestyles and icons. Hollywood, Coca-Cola, McDonalds, NBA and MTV may have only a superficial impact on the indigenous cultures of East Asia but no Asian countries, including China and Japan, have universal appeal similar to American consumerism, entertainment and values. Intertwined with the dissemination of American pop culture and values are the new technological platforms launched in the US. Microsoft and the rest of Silicon Valley are poised to continue their dominance of information technology including the Internet. Japan, despite its technological prowess, does not seem to have anything similar to the magic of Microsoft. Culturally, it lacks universal appeal other than the superficialities of karaoke, Godzilla and tamagochi. It is likely that the grave economic crisis in East Asia will blow over and the region will recover in health and wealth. Nevertheless, a richer East Asian political economy will still orbit around the US. The US appears to extend its dominance from the battleground to 24 Francis Fukuyama, "The End of History?", The National Interest, No. 16, Summer 1989.

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the playground. It is the only power that could dispatch two aircraft carrier fleets to the Taiwan Straits during the tension between Beijing and Taipei. US mutual funds, especially the one headed by George Soros, will continue to shake and move Asian stocks and currencies. Even though alarmists have speculated that China will emerge as the most likely challenger to Pax Americana in East Asia, crass consumerism rather than communism seem to appeal to the Chinese masses. Japan prefers to remain a subaltern of the US in an American hegemonic order rather than to venture into the unknown by itself, or even worse, be confronted with Pax Sinica. While East Asia may enjoy stability and prosperity in the 21st century, it is still as dependent as ever on the sole superpower across the Pacific to underpin its balance of power, trading regime and regional organisations like the ARF and APEC. What is the significance of our thesis if it is correct? First, if the US is likely to remain unrivalled in the region, then harping on the so-called "China threat" is only sensationalism and alarmism. Thus the US should not overreact and be more relaxed in its approach towards China; it should avoid further strengthening its military alliances, especially with Japan, to address a hypothetical "China threat". Second, if the US remains the top dog in the new world order, then it should exercise greater restraint and should avoid a brinkmanship-style of trade negotiations with Japan. Even if there are real grievances, it should not adopt a unilateral approach to trade disputes with Tokyo but should raise them at the WTO for resolution. Third, the US should be confident of its own values and should not be overly sensitive to the Lilliputians of East Asia who mouth the "virtues" of "Asian values" and "Asian democracy". Rather than mounting an ideological challenge to the US, the articulation of these values by certain Asian regimes is often defensive. It is also meant for domestic political consumption and to legitimise their illiberal rule in the wake of democratisation globally and regionally. Fourth, the US should avoid arrogance of power. It is in the selfinterest of the US to exercise its awesome power lightly and thus facilitating East Asian states to consent voluntarily to its leadership: if the US acts like a bully, it will surely encounter resentment and resistance in East Asia. Even if the relationship between the centre and the periphery is inherently unequal and sometimes conflictual, and even if the regional countries have different regime types and culture and are located at

EAST ASIA AS A PERIPHERY IN THE NEW WORLD ORDER

39

different stages of economic development, they can still share common interests like environmental protection and conflict resolution. Let us conclude with a historical observation: no hegemon can stay on top forever. Similarly, it is not predestined that East Asia will remain perpetually as a periphery in future world orders. However, even if Washington were to enjoy only a fraction of Rome's longevity as a great imperial power, it is likely to remain a hegemon for many decades to come. Acknowledgements

I like to thank Igarashi Akio, Professor of Law and Government, Rikkyo University for his intellectual and financial support which enabled me to present an earlier version of this chapter at a conference in Zushi, Japan.

ASIA-PACIFIC IN TRANSITION, OR MUTUALLY ASSURED INSTABILITY KURT W. RADTKE*

INTRODUCTION**

The Tiananmen Square Incident and the collapse of the Soviet Union symbolise the beginning of an historical turning point at whose long term significance we can only guess. We have now entered a period of economic and political instability in many parts of the world which in the minds of some throws doubts on the ability (perhaps even the willingness) of the US to maintain global systemic stability.' One of the areas of concern is the complex relationship between India, Pakistan, China, and Russia, as well as the internal situation in these countries. It is far from certain that the US is in fact in a position to prevent dangerous conflict involving these countries. The struggle against poverty is now a high priority of the communist parties of Vietnam and China, and in other countries as well. To give an idea of the scale of the issue: if China and India were excluded, the rest of developing Asia would account for only 7.3% of world output and 4.4% of world trade in goods and services. China's economic strength cannot be measured only by the profitability of its industries. An analysis of its weak points, in particular persistent poverty, is at least equally important.2 Poverty and unemployment are difficult

* Kurt W. Radtke is Professor at Waseda University, Tokyo, Research School of Asia-Pacific Studies. His main fields of research are "changes in politics and society in Twentieth Century China and Japan," "Sino-Japanese relations" as well as "comparative studies of China and Japan." His main publications include Poetry of the Yuan Dynasty, Canberra, 1984; China's Relations with Japan, 1945-83, Manchester University Press, 1990; China's Modernisatiuon, Westernisation and Acculturation (eds. K.W.

Radtke and A. Saich), Steiner, Stuttgart, 1993; The Dynamics of Pacific Asia, Kegan & Paul, 1997. ** The Lianhe zaobao (Singapore), Xinhua Newsagency reports, and USIA sources are quoted from their websites. 1 This issue was also touched on in Renmin ribao, 7 January 1998. 2 China's exports display at least two fundamental structural weaknesses. They are, relatively speaking, mostly low-tech and the large majority is related to

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to measure in China—street vendors, repairing push bikes and hair cutting on the pavement can hardly be compared to the job market of the US post-industrial service economy.3 China's ability to maintain its economic growth, and thereby its internal social and political stability, is dependent not only on its economic policies at home. Even if the weak banking system could be reformed in time,4 China's economy does not remain insulated from the effects of the current global economic crises. The pressures on China to devaluate first the Hong Kong currency and then its own have not disappeared yet, but China realises that such devaluation may contribute to the vicious cycle of competitive devaluation without aiding its exports significantly. For the moment, the unexpected strength of the Yen has helped to push off the date for a devaluation of the Chinese currency. Any Chinese devaluation will increase feelings of a "China threat" among its neighbours. One matter for concern is that delays in further economic reforms could encumber Chinese access to international capital markets which, in turn, might "hinder its ability to raise the huge amount of money needed to rejuvenate ailing state enterprises."0 The "Asian crisis" has put into relief rivalry between the US and Japan over policy towards Asia, and this was one factor delaying the implementation of policies to deal with the crisis at an early stage.6 The commitment of the US to stability in Asia remains undisputed, at least in public, but this commitment alone is not enough. Instability in Indonesia has already led to a greater role for the armed forces, whose conduct in Aceh and East Timor has evoked sharp criticism abroad. China's leaders are very much concerned about the stability in their own country, and a growing sense of insecurity may lead to a greater role for the PLA in Chinese politics at home and abroad. foreign, and not Chinese domestic investments. On poverty, see also Radha Sinha's article in this volume. 3 "Restructuring" and its problems, such as unemployment, are the focus of frequent conferences in Beijing and elsewhere; see, for instance, Lianhe zaobao of 6 February 1998. + China's internal bad loans and its weaknesses in its financial system have been recognised as a major point for concern since 1997. Some of the fundamental weaknesses of the financial system in Southeast Asia are also repeated in China. It is not a new problem—the Tiananmen Square crisis was preceded by an economic crisis that overlapped with a financial crisis symbolised by the flood of so-called triangular debt. 5

b

International Herald Tribune, 13 November 1997.

On the dispute between Japan and the US on the Japanese initiative for an Asian currency fund, see Lianhe zaobao, 7 January 1998.

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The structure of US hegemony underwent a considerable change in the seventies, and it did so once more as a result of the collapse of the Soviet Union. As formulated by Susan Strange and Joseph Nye, the functioning of the US as a hegemonic power is multi-level,7 but the composition of the levels is also changing according to circumstance. The current crisis has already revived the importance of states as actors, not only as guarantors of the proper functioning of markets, but also as the only reliable organisation to look after economic security in the strategic sense.

MUTUALLY ASSURED INSTABILITY—MAI

In the past, military equations such as MAD—Mutually Assured Destruction—propelled the search for international joint actions to achieve stability. At present, financial and economic developments pose a much more direct threat not only to welfare, but to systemic stability as well, to a large degree because they appear to be so unpredictable, and therefore difficult to manage. Neither the IMF, Moody's nor any other institution has scored high in predicting future economic trends. The predictable management of global affairs remains an elusive chimera. There is a growing awareness of shared vulnerability that may act as a strong element working in favour of international co-operation to secure stability—hence we might call this period of transition a period of Mutually Assured Instability. This period of instability pairs economic and military threats in ways quite different from the period of the Cold War, and it demands new kinds of political leadership and forms of institutionalised co-operation that take into account the asymmetries of Asia mentioned below.8 In the past military security was important but always remained linked to economic security—and this essential circumstance was not altered by the collapse of the Soviet Union. In the early post-war years, the fight against poverty in Europe and Japan was seen as an indis7

Stefano Guzzini, Routledge, London and New York, 1998 [The New International Relations], 176. 8 Among the recent flood of publications on the topic I shall limit myself to two books: "Scenarios towards Co-operation" is the subtitle of a recent book by Kokubun Ryoosei on the relations between Japan, the US and China (Kokubun Ryosei, ed. Nihon Amerika Chugoku, TBS Buritanika, Tokyo, 1997), and Anthony McGrew and Christopher Brook eds. Asia Pacific in the New World Order, Routledge, 1998.

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pensable element in the defence against Communism. The lessons for the superpowers of the wars in Vietnam and Afghanistan and of the arms race are quite clear: disproportionate military expenditures have the potential to sap the fundamental strength of the economy. This was by no means a new lesson, historically speaking—even modern "superpowers" need to find a proper balance between security-related expenditure, including the costs of maintaining hegemonic leadership, and the overall strength and cohesion of their economic and political system.9 In Europe, the incorporation of Germany into NATO was a core element in the strategy to contain the further expansion of the colonial Russian-Soviet empire, and it also insured the long-term leverage of the US in Europe. The European process of integration went through several phases. In the early stage, raising the ability to resist the Soviet Union was a predominant engine for integration. Subsequently, integration was motivated by the awareness that only the creation of a common market with a common currency could provide a home base for European companies to withstand the pressures of globalisation—in other words, enhance competitiveness versus US companies. Politics created the conditions for this transformation, but the structure of European domestic and foreign politics changed as a result of European integration. Long term effects on society, such as a thorough change in the social fabric, patterns of employment and the participation of citizens in the new political context have begun to be felt throughout Europe. The implications for parliamentary democracy as we know it are not yet clear. Apart from the well known concerns about the non-democratic character of EU decision making, one also wonders to what extent the new globalised elites will remain responsive to majority opinion in their original home countries. In Asia, the American defence arrangement with Japan fulfilled a function similar to the incorporation of Germany into Europe. Japan took part in the American containment of China in the context of the Korean War. In the absence of an overall organisation such as NATO the US established an array of security agreements with other regions and countries in Asia, increasingly directed not only against 9 Finding a proper balance between tax income and military spending was not only at the centre of policy debates in pre-war Japan on the speed of Japan's military build up, but has continuously been an important issue in the more than two thousand years of Chinese imperial politics.

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China, but against the Soviet Union and its satellites as well. Attempts to consider the creation of an "East Asian NATO" had to fail, if for no other reason than that the political, social and economic points of departure for countries and regions in Asia differed too much. NATO, after all, is not just a military defence arrangement but designed to support the implementation of shared convictions concerning democracy and a free economy. In this global constellation the room for Japanese and German political initiatives in foreign policy has been extremely limited.10 It is undoubtedly true that both countries still carry a specific moral burden and responsibility for their wars of aggression, but it should be open to debate whether the past should limit the independent participation of both countries in international politics in the twenty-first century. Although the United States is paying Japan compliments for its positive role in the Four Party Peace Talks involving the United States, the Republic of Korea, the Democratic People's Republic of Korea and the People's Republic of China, the absence of Japan from these talks simply highlights the limitations placed on a more independent role for Japan. After the collapse of the Soviet Union the structural differences between the western part of Eurasia, and the eastern part, have increased. On the western fringe the intensification and expansion of European integration through NATO has speeded up supranational co-operation. In Asia, China is looking for new definitions of its international role in Asia. One of its main imperatives is to avoid an open confrontation with the US, while aiming towards a slow but steady increase of Chinese influence in regions bordering the PRC, and that includes Taiwan. Hegemonic leadership by the US, as demonstrated in the Gulf War, was once judged to be a sufficient political force to ensure the stability of the international system. In the first two or three years after the collapse of the Soviet Union the miracle of the balancing forces of market mechanism seemingly obviated the need for political leadership. National strength cannot be measured merely in terms of comparing numbers of rockets and leaky anti-missile defence 10 See also the contribution by R. Drifte in this volume. There are numerous issues to be tackled by Japan, but it is doubtful to what extent Japan is able to play a powerful leading role. Ogura, Kazuo, "Challenges for Japanese Diplomacy in the Twenty-First Century," Japan Reviewof International Affairs, Winter 1998, vol. 11, no. 4, 321-332.

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systems. Put in a nutshell, in this age of globalisation the system of international relations can no longer be grasped without a firm knowledge of the nature of trade in financial derivatives, and this has added to the difficulty in judging the dynamics of strategic balances. The indicators of today's financial markets tell us little about the strength of economies five years from now. Unfortunately, historians are mere prophets of the past, and here they do not differ greatly from economists who can tell us very little about the workings of the international economy system five years from now. During the early nineties, the new uncertainties of the post-Soviet decade hardly involved the popular political mobilisation of democracies. The conscription system that had symbolised "citizenship" since the French Revolution was abolished in France. Rather than merely being a "technical" measure to enhance the professionalisation of military forces, such a transformation reduces the chance of democratic resistance to unpopular military intervention such as that in Kosovo. If market democracy is to become more than a hollow phrase, it must reform itself, and also endeavour to generate selfrespect among the economically weaker persons in society. The liberation from "socialism", from Korean "state capitalism" or the Indonesian variety, "monarchical capitalism", does not automatically engender democracy. A vague propaganda slogan rather than a specific guide to action, the contents of "market democracy" are subject to rapid change. The United States itself is not a static model, but developing in a fairly dynamic way. We cannot yet predict the course of its future internal development or the strategic approach it will take towards new developments in Asia Pacific in the coming years. In the absence of systemic predictability in general, and the need to cope with sudden crises, there remains little choice but to cooperate in the conceptualisation of threats and the creation of solutions. My personal interpretation of "comprehensive security" is that it offers an approach to deal with current uncertainties by striving towards a consensus on definitions of various kinds of threat, as a first step towards taking joint measures to increase security for all. In the period of the "Cold War" military security as well as the fight against poverty were seen as indispensable twins in defence against communist threats. It is high time to combine the drive for greater economic efficiency ("privatisation") with concerted efforts to

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combat the threats to stability posed by the spread of poverty and the hollowing out of middle classes in countries affected by economic downturns during the nineties. The collapse of the Soviet Union produced instability, not only within the territory of the former Soviet Union, but in Central, Southeast and Eastern Europe as well. The extension and intensification of European and American economic and political influence world wide is proceeding, but it is too early to conclude that their power is sufficient to maintain the economic and, in particular, financial stability of the global system. After all, global hegemonic leadership demands more than the strength of a "superpower", or "hyperpower", namely the maintenance of global stability in the face of regional (economic) crises." An economic, social and political meltdown in Russia, as well as other areas of the former Soviet bloc will have serious consequences not only for Europe, China and Japan, but also for the United States. Needless to say, the limited ability of the US and Japan to make use of the combined size of their economies (roughly 35% of global GDP) to support global growth raises fundamental questions about the authority of hegemonic stability in the long run. In the absence of "global frontiers" it seemed for a time as if the major threat to US security would now be posed mainly by what were called "rogue states", such as North Korea and Iran. In fact, the revamping of the security relationship between the US and Japan was inaugurated around 1994 by acute concerns about a perceived threat posed by North Korea. Threats by "rogue states" consisted, for instance, not only in their specific implications for the stability of the Middle East, but also as potentially threatening the global "authority" of the US by encouraging proliferation that in turn undermines the ability of the US to provide strategic protection of its allies. Political authority, as we know, remains intact as long as it is perceived to be credible. Non-proliferation works because the owners of WMD (weapons of mass destruction) and carriers of such weapons agree on the practicality of an institutionalised system of conflict prevention, that has the additional advantage of preserving the exclusive status of those countries that already possess such 11 Although there are numerous signs that the European Union wishes to increase its weight as a force in global politics, including its military dimension, its role is still far below its economic and military power. See Marise Cremona, "The European Union as an International Actor: the issues of flexibility and linkage," in European

Journal of International Relations, vol. v, no. 1 (March 1998).

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weaponry. The threat of recent North Korean long-range missiles is a very real one, and so is the threat of serious war between India and Pakistan. This course of events may undermine the effectiveness of the existing system of conflict prevention and, thereby, call into question the ability of the leading powers to maintain global stability. Such an awareness should encourage all parties in the international system to look for new concepts in security co-operation. In Asia, the international system seems overwhelmingly dominated by the fluctuations of Sino-American relations, to which should be added the role of the economic clout of Japan. It is as yet unthinkable that either of these powerful nation states would cede essential ingredients of sovereign power observable in the process of European integration. Europe, and not the United States, provides an institutional model for the gradual abolition of the all-mighty nation-state. Neither the United States, nor nations in Asia, are for the time being willing to surrender elements of their sovereignty—the United States, because it fears that this would impair its leadership, while nations in Asia assume they cannot embark on such a path before the nationbuilding process is completed. This makes the situation in Asia-Pacific considerably different from the situation in Central and Western Europe which hopes to regain a leadership position for the EU as a whole by sacrificing elements of their national sovereignty. It is still far too early to greet the advent of the demise of the nation state, a kind of Utopian wishful thinking that had its parallel in the Marx'ian dream of the withering of the state. In order to understand the US position on Asia, one must take US global strategy into account. The US is also vitally concerned about strengthening its leading role in the Americas. Published research suggests that the US may remain relatively undamaged by even a major economic crisis in Asia. Such thinking may strengthen tendencies in the US to distance itself from Asia,12 and seek stronger links with the more familiar South (Latin America) and East (Europe).

12

Chay Chandler, "What if the Worst Happens in Asia? Not so Bad," in International Herald Tribune, August 3, 1998. "It would be painful, but not disastrously so, according to experts at Standard & Poor's. DRIRI economists concluded that even under a "worst-case scenario", in which Japan's economy shrinks by 10 per cent, China's economic growth rate skids to 1 per cent from 8 per cent and Indonesia lapses into default on its foreign debts, the United States would experience only a "mild recession, while Western Europe would escape recession and merely grow more slowly."

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The "1998 Trade Policy Agenda of the United States" mentioned that In 1998 we expect US exports to Latin America (including Mexico) to exceed our exports to the European Union (EU). As the countries of Latin America continue their negotiations to create free trade areas or customs unions among themselves, however, it is essential that we ensure that they do not adopt rules that harm US interests.13 As the rivalry between the US and the EU in Latin America moves into higher gear, some specialists expect the establishment of a currency union between the US and Canada, thus further directing US attention towards the Western hemisphere. In geopolitical terms, the crisis has put an end to the isolation of the central parts of the Eurasian heartland from its Western, Eastern and Southern neighbours. In discrediting communism as a viable political guiding principle it has created the possibility of a world no longer ruled by the binary principle of "we" against "them". To some it appears as if China is taking the place of the Soviet Union, creating a new global "binary" split. Such a simplified view does not take sufficient account of the fact that in a situation different from the age of the Soviet Empire, China has no "empire" beyond its present territorial border, and that China's influence in its neighbouring countries—Korea, Russia, Mongolia, the Central Asian Republics and India—is quite limited. Post-1991 "market democracy" has no need to present itself as the positive mirror image of an "evil empire", and this circumstance by itself changes its identity. The prospect of a world without the Soviet Union has strengthend the position of politico-philosophical approaches that doubt the validity of the binary paradigm, created long before the Soviet Union finally collapsed, such as postmodernist theory.14

RESTRUCTURING SECURITY: TOWARDS COMPREHENSIVE SECURITY?

Just as we have seen broad moves towards the restructuring of political and economic systems, there is now also a need to restructure 13

USIA, file 9803030l.eco. Cf. Lene Hansen, "A Case for Seduction? Evaluating the Poststructuralist Conceptualisation of Security," in Cooperation and Conflict, vol. 32 (4) (1997), 369-397, and Michael Schiltz' article in this volume. 14

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approaches towards security. This can only succeed with the co-operation of the main actors on the global stage which include not only governments, but companies, banks and, at the political level, national political parties as well.15 Such restructuring goes far beyond purely "economic" and "military" issues. Comprehensive security avoids identification with any particular ideological order and assumes that dialogue can be used to discover common ground irrespective of systemic (political or economic) differences. Here there are some parallels to the process of detente in Europe—with the proviso that those systemic differences of politico-economic systems that figure so largely in Europe are of much less importance in Asia. The need to find some common ground was one of the factors that led to the birth of the idea of "comprehensive security" (soogoo anzen hoshoo), which first acquired some popularity during the period of the Ohira cabinet in the late seventies.16 Comprehensive security was to be more than just a way to initiate new dialogues on technicalities of maintaining military security. "Comprehensive security" stressed the need to discover shared values in Asia, exactly because the reality of political and cultural discontinuities of Asia made it so different from the civilizational unity of Europe. Other concerns, such as the greater Japanese susceptibility to economic threats, especially after the end of the Vietnam war, also played a role in establishing comprehensive security as a new initiative. Our definitions of what constitutes "security" depend on our definitions of threats. Comprehensive security sharpens our sense to the fact that security should not only be conceived in terms of security versus a specific threat emanating from a state, an "enemy". That had been the situation that necessitated the building of elaborate networks of alliances and institutions in Europe. Comprehensive security starts from the assumption that dialogues at the level of the state and elsewhere contribute to the formulation of mutually acceptable definitions of common threats. The threats do not necessarily emanate from rival states, but also comprise threats to internal stability in the area of 15

On the increase of actors and "stages" in international politics, Takada Kazuo

Kokusai kankeiron to wa nani ka? Tayoo ka sum JbaJ to JfbutaiJ.

l(> On the historical background of the term, see the introduction, and also David Dewitt, "Common, Comprehensive, Co-operative Security," in The Pacific Review, vol. 7, no. 1, 1-15. Cf. Muthia Alagappa, "Comprehensive Security: Interpretations in ASEAN Countries," in Robert A. Scalapino et al. Eds., Asian Security Issues: Regional and Global, University of California, 1988.

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economics, social unrest, ethnic divisions, or serious environmental damage.

PROSPECTS FOR INTEGRATION IN ASIA PACIFIC

Historically (not etymologically) speaking, "comprehensive security" looks very much like the opposite of "comprehensive war" (sooryokusen), a concept that arose from the (wrong) lessons of the First World War, and which included the mobilisation of all means, including economic weapons, to defeat the opponent. In a similar way, it is now necessary to approach the issue of peace from a multi-level, multi-dimensional perspective. The creation of ASEAN, motivated by the political and military confrontations in the period of the Vietnam War, did not result in a level of integration comparable to that which evolved in Europe. Despite some positive experiences of co-operation in the ARF, APEC, the ASEM and other similar processes, it is obvious that much still needs to be done. There is an increasing need for regional co-operation but the crises are unlikely to produce deeper integration in Asia.17 The unwillingness, or inability of Asian nations to ensure security in East Timor provides an unfortunate example, comparable to the unwillingness, or inability of European nations to intervene in the civil wars in the Balkan in the absence of US intervention. There is intense co-operation in the security sphere between the United States, South Korea, Japan, Taiwan, and some countries in Southeast Asia, but this is unlikely to lead in the foreseeable future to the creation of a common political and social framework along the lines of European integration. Japan's network of economic relations with China and her other neighbours in the region is not likely to lead towards genuine economic integration in the foreseeable future. This is not merely due to the effects of the current crisis. Integration would imply some form of symbiosis, but no major country in the region is likely to commit itself to such intra-Asian integration in the foreseeable future. In addition, both Japan and her Asian neighbours will remain dependent on access to US and European markets.

17 Cf. Yamamoto Yoshinori, "Chiiki toogoo no seiji keizaigaku," in Kokusai mondai, November 1997.

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APEC set out as an institution for economic integration but its role as a facilitator for political and defence dialogue is an important additional function. APEG is also judged useful by China as a means to further its accession to the WTO. Together these developments are changing the parameters of the international system in Asia. It is a system not likely to be caught in terms of a consistent theoretical model based on concepts derived from European history where economic integration was not just a means to increase the competitiveness of European companies in the world markets, but also served a largely political end of intra-European competition.

MILITARY THREATS AS A FACTOR PUSHING REGIONAL CO-OPERATION IN SECURITY MATTERS

So far, the concept of "comprehensive security" is still looking for new international or global institutions that may act as potent patrons for this approach. One might think of ASEM, the ARF or APEC as sources of likely institutional support, but apart from the CSCAP dialogue such support is still lacking. In order to illustrate the relevance of the comprehensive security approach I shall now present a broad survey of the implications of the current global crises on the structure of leadership and global restructuring in general.18 The East and South Asian political "system" exhibits paradoxical features, paradoxical when viewed in terms of Europe-based theories. The existing asymmetries in Asia do not make for any particular hierarchy— there is no recognisable pattern in which leading powers such as the US, China and India exercise leadership over each other, either at the global or regional level. Korea's economic dependence on Japan and the US is pronounced, but Japan's political influence on Korea remains limited. The US is careful not to provide "leadership" in the solution of territorial disputes between Japan and China (in particular the island chain Diaoyu lieyu/Senkaku). The absence of an overall hierarchy in the region does not imply equality either, and this also holds true for allies or quasi-allies of the United States. Despite the recent surge in multilateral institutional dialogues, the 18

A recent solid survey of the Asian crisis is Ajia kinyuu kiki (The Asian Financial Crisis) by Takahashi Takuma, Kan Shuu'u (i.e., C.H. Kwan), and Sano Tetsuji, Tooyoo keizai shinpoosha, Tokyo, 1998.

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US prefers to deal with military threats through its bilateral alliance arrangements as they occur. In realist theory on international relations there is no division of labour within a world-wide system of governance (Kenneth Waltz),19 but the economic and security functions of Singapore, Taiwan and Korea can only be explained with reference to an international division of labour among states. As US negotiations with Japan on co-operation in the Gulf War, the revision of the Guidelines (concluded in September 1997), and discussions on Missile Defence (September 1998) show, the specific implementation of the division of labour in defence and security issues is not necessarily the result of a long term vision, but may be given an unexpected push by sudden crises. Strategic co-operation with Asian partners of the US concerns the situation on the Korean Peninsula, the Taiwan area and the area of the South China Sea, but one may expect that different from alliances among equal partners, it will be the US which decides how, and at what level to respond to any crisis in these areas. It may therefore be said that objective threats and opportunities for co-operation, and the way threats and opportunities are perceived, have a major impact on the definition of the system of international relations in East Asia.

DEFENCE CO-OPERATION IN ASIA-PACIFIC20

A brief survey of major US assessments of the economic and political prospects of China published between 1988 and 1998 would result in an amazing sequence of abrupt changes in those assessments, both as far as opportunities and threats for the US is concerned. Since the "Taiwan crises" of August 1995 and March 1996 relations between the US and China seem to have improved suddenly and spectacularly, and that was clearly the message the US wanted to get across during Clinton's visit to Beijing in 1998. The visit of the US Defence Minister Cohen to a number of countries in Asia in January 1998 also included China. He denied that the US was apprehensive about the rising power of China but such concerns appear regularly in informal discussions and are, of course,

19

Guzzini, op. dt., 127. Watanabe Akio, "Nichibei anzen hoshoo kankei no shintenkai," in Kokusai mondai, March 1998. w

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hardly new.21 1999 saw a similar series of rapid changes in the temperature of Sino-US relations. China's rise as an economic great power is still accompanied by question marks—and the same holds true for its internal stability. This creates uncertainties for the security of East Asia as a whole. Japan has strengthened its security insurance through the renegotiations on the implementation of its security treaty with the United States as expressed in the acceptance of the "Revised Guidelines" (September 1997). Rather than being the expression of a particular strategy the introduction of these new laws will make it easier to avoid extra-legal military operations in the event of hostilities that concern Japan, and thus enhance the willingness of the United States to assist in the protection of Japanese security interests. Barring crises on the Korean Peninsula and tensions over Taiwan, both China and the US will try to avoid any serious military clash. The US has repeatedly denied that it aims to contain or "constrain" China. Moreover, there are good reasons for both countries to coordinate security policies in a variety of areas that also go beyond the Asian theatre. Although US politicians usually praise any reduction of tensions in the East Asia, the present author (K.W.R.) has frequently been told by colleagues from the PRC that in their view the US needs to maintain a certain degree of tension in the region in order to justify its (military) involvement in Asia. It may perhaps be closer to the mark to speculate that the US wishes to prevent the evolution of a strong bond between Japan and China bound by intense economic interaction, since this would conceivably reduce the ability of the US to influence the course of events in East Asia. There has been mention of the possibility that within less than two decades Sino-Japanese trade may well be the dominating trade relation in global trade, surpassing the role of US trade. In my view, the uncertainties of the Chinese economy are of such a dimension that such speculation is highly premature. 21 Presenting an idea at variance with the irrational Angst about the "yellow peril", a Dutch sociologist, Spykman in 1942 predicted the consequences of a post-war rise of China in the following terms: "A modern, vitalised, and militarised China of 450 million people is going to be a threat, not only to Japan, but also to the position of the Western Powers in the Asiatic Mediterranean. China will be a continental power of huge dimensions in control of large sections of the littoral of that middle sea . . . When China becomes strong, her present economic penetration in that region will undoubtedly take on political overtones." (Spykman 1942, p. 469, quoted in H.W. Houweling en J.G. Siccama, "Oorzaken van conflict en strategieen," in K. Koch, R.B. Soetendorp, A. van Staden (eds.), Internationale Betrekkingen, 141.

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KURT W. RADTKE JAPANESE INVOLVEMENT IN ASIA—CONSEQUENCES OF THE CURRENT CRISES

In the post-war period Japan has not been able (some would say, has not been willing) to exert political leadership in its wider region, and its foreign policy has been curtailed even more than that of Germany. This is in contrast to Japan's deep economic involvement in, and commitment to, other Asian countries. Japan's interaction with Asia appears clearly in the following figures: "Seventy percent of the dollar value of Asia's goods and services are produced in Japan. Before the crisis, 55 percent of Asia's exports went to other Asian nations. Over 40 percent of Japan's exports went to Asia as well."22 At times it has been said that trade flows act as weathervanes for future strategic alignments; if Sino-Japanese trade were indeed to grow as some expect, there would be tremendous implications for the relations of the United States with Japan, Korea, and China. On the other hand, trends of the moment indicate a negative growth for Japanese investments in China, largely because of purely economic factors. Without access to the policy and diplomatic documents not yet publicly available, it is not easy to judge how much room there is for an independent Japanese foreign policy in the face of US pressure on Japan evident in issues such as Japan's reactions to Mahathir's EAEC (East Asia Economic Caucus) proposal and, more recently, Japan's initiative in the context of a proposed Asian Monetary Fund (AMF). The inability to deal with systemic economic weakness since the bursting of the bubble has eroded Japan's potential to influence US policies directly or through an array of international organisations such as the IMF and the ADB (Asian Development Bank). Despite huge Japanese financial contributions to help take care of the crisis in Indonesia, political benefits for Japan have been rather limited. In fact, the quick reversal of short-term capital flows that undermined Japan's important economic partners Thailand, Indonesia and South Korea have seriously weakened the "home turf" of the Japanese economy. It would be unfair to put one-sided blame for the pro22 David Aaron, Under Secretary of Commerce for International Trade, in a speech on 23 July in Palo Alto on the Asian Financial Crisis. For a good overview of other interactions between Japan and Asian economies, see the testimony by Robert D. Hormats, Vice Chairman of Goldman Sachs, at the Senate Finance Committee on July 14, 1998. Sakakibara Eisuke, in Tomiuri Shinbun, November 26, 1999.

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tracted crisis on Japan's inability to deal quickly with its weak financial system after the bursting of the bubble. As Robert J. Samuelson noted, Japan is one loser, because other economies absorb about half its exports and because Japanese banks have suffered more loan losses.23 We may characterise the current situation more appropriately by referring to the need of each player to engage in a careful balancing act that must not upset regional or domestic stability. Following the collapse of the Soviet Union there are as yet no clear cut "front lines" in this region of the kind that split Europe for four and a half decades. Taiwan wishes to increase its ability to manage its affairs independently while, at the same time, struggling to reduce its economic dependence on mainland China. Both Taiwan and Japan endeavour to prevent serious tensions between the United States and China but, even so, agreed to consider long term missile defence projects directed not only against North Korea, but against perceived threats from China as well. Japan has referred to financial constraints that made the speedy implementation of such a system un-likely, yet the recent North Korean missile launchings may cause a reassessment of that position.24 Korea and China exchange defence missions and are now joined by similar exchanges between China and the US. As if to underline the fluidity of the situation, these came to a (temporary?) halt after the US bombing of the Chinese Embassy in Belgrade. Southeast Asia is perhaps less united internally than cooperation in ASEAN may suggest, but appears united in its policy of engagement with China without appeasement. The implications of the rise of Indian influence in the region are as yet unknown, although the tone of the Indian government towards Peking suggests serious rivalry rather than co-operation. North Korean rockets may push Japan further towards the development of independent capabilities, for instance, in the field of military satellites. Should US behaviour create doubts in Japan about its role as a dependable guarantor of its security, the Japanese government may have no choice but to take gradual steps towards the development of an independent missile defence capability. The current 23

International Herald Tribune, 13 November 1997. Current reports indicate that quite apart from lingering doubts about its reliability the high cost of deploying any version of a suitable Ballistic Missile Defence system may thwart its development. 24

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controversy about the quality of North Korean rockets is not just an intelligence problem—it also highlights the differences in perception of the threat between Japan and the US. For Japan, the threat is more immediate. The firing of missiles by North Korea has also led to South Korean demands to extend the range of South Korean missiles which were limited under a South Korean-US memorandum to 180 kms. The maintenance of stability and economic security in Eurasia cannot be achieved by the US, Japan and Europe alone. The giants of Asia in terms of population—India, China, Russia and Indonesia— possess the potential to make the difference between a stable and an unstable world in the twenty-first century. The recent bitter emotional and acrimonious exchange between India and China following India's public assessment of China as a potential threat may not have direct consequences, but demonstrates that Asia still has a long way to go before security can be maintained through a regional institutionalised system. In the absence of such a system each major power involved in the region continues preparing for contingencies even during phases of apparent reductions in tensions. In the past few years, the United States has continued to re-intensify its security relationships with a number of countries in Asia and Oceania, from Mongolia to Japan and Australia. Little insight is required to recognise that these policies create concern in Beijing about the construction of a new ring of containment around the People's Republic of China. Even if this should result in long-term tensions between China, its neighbours as well as the US, such a situation does not re-create the system of global rivalry with the Soviet Union which attempted to expand its influence throughout Indochina, Africa and other parts of the world. The US, in particular, is not likely to accept a reduction in its role as hegemonic leader which might be implied by the growth of true multilateralism. The US (and "realist" theorists) may even argue that multilateralism without such leadership may produce instability, if not anarchy.25 This leaves little room for an independent leadership role for Japan. By advocating a concept like "comprehensive 25 See the special issue on "Multilateral Co-operation in Asia-Pacific," in The Journal of East Asian Affairs (The Research Institute for International Affairs, Seoul), (Winter/Spring 1998), vol. xii, no. 1. For an interesting view of an American "realist", see Kurt Campbell who addressed the issue in the USIA's electronic journal "US Foreign Policy Agenda" of January 1998. He makes it perfectly clear that he

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security" Japan may also wish to have a greater say in the definition of threats, which so far has usually rested with the United States, and been mainly defined on the basis of US national interest.

POVERTY AS A BARRIER TO GLOBAL INTEGRATION

The recent series of financial crises in Asia has been compared to the "fall of the Berlin Wall". Perhaps the comparison may seem a mere journalistic hype but it is only a mild overstatement. These momentous changes present opportunities for positive change but we are all too aware of the tremendous risks involved. For the moment, in Eastern Europe as well as in Asia, and now in Latin America, the economic crises have the potential to weaken and hollow out the middle classes in the region. Even if economic growth figures would start to show a more positive picture, it is doubtful whether such growth is sufficient to offset the threat posed by rapidly growing poverty in Indonesia, Vietnam and Russia, to mention only a few countries. As mentioned above, statistical figures describing "the economy" in terms of output have an uncanny tendency to conceal fundamental weaknesses, such as long term unemployment and creeping impoverishment of sections of the population.26 The current reforms demanded by the IMF have systemic implications, also for the international system. They aim towards a clearer separation between the functions and authority of "purely economic" and political institutions. The primary function of the "division of labour" within economies has been an essential driving force towards modernisation, but there is also an international division of labour among nations in the field of security and international relations. As mentioned above, the nature of relations of the US with Germany and Japan makes it fairly obvious that they cannot aspire to the kind of regional leadership which the US attempts to maintain for itself globally. This, by the way, does not accord with "realist theory".27 This also makes the feasibility of a tripartite division of the world in a welcomes co-operation between China and Japan, provided the US remains deeply involved in this relationship. 2b This is not just a moral issue, but a factor leading to systemic underconsumption. 27 Paul Schroeder, "Historical Reality vs. Neo-realist Theory," in International Security, 19.1 (1994), 129-130.

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US, Western European and Japanese hegemony a highly unrealistic one—a main idea of trilateralism.28 If the restructuring of economies does not result in renewed growth in the near future, this delay would seriously undermine the political will, and even the ability, to bring about needed change at a time of instability and weakening economies. We are witnessing a race against time—and it is still too early to venture any prediction about the outcome of this race. The current crises cause economic hardship for the citizens and the governments affected. The lack of systemic stability is a security issue by itself, creating a common interest in stability even among those actors that are mutual competitors on the global stage. They also present a serious challenge to the self-congratulatory flow of articles eulogising the advent of a globalised economy. The lack of transparency of international financial markets can be compared to the threat posed by the lack of transparency in the field of military security. The crisis calls for the establishment of a new financial system with much [greater] transparency.29 Recently, the US and Japan joined hands to exchange specific figures on Japanese holdings of US government bonds and other instruments that can easily be converted at short notice and the capacity of Japanese banks to acquire dollars; figures vital for both governments to take concerted action in case of another financial crisis.30 So far, attempts to achieve greater transparency (Japan) or calls to impose new controls on financial markets (Malaysia) and George Soros(!) have not yet been crowned with success. The enforced acceptance of foreign led economic dictates has the potential to weaken the appeal of democratic ideals, both in Asia and in (south)eastern Europe. If markets judge governments, democratic voters lose confidence in the meaning of their democratic system. After all, the imputed "rationality of markets" operates at a level different to the value judgements so important to any democracy. In addition to this, the "rationality of markets" has little to do with predictable rational behaviour. Freedom of speculation in the face of an uncertain, unpredictable future is an essential part of the spiritual basis of 28

See also Gilpin, 1987, ch. 10. This idea was invoked by Deputy Treasure secretary Lawrence Summers, in a statement on 12 February (USIA, 98021204.eea). It will not be easy to achieve since it requires a balance of interests "among sovereign governments operating out of different cultures". 30 Nihon keizai shinbun, 17 September 1998. 29

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capitalism. Psychological effects make markets "overshoot" the "theoretically" optimal levels of balance, whereas economic science in general assumes that "markets" tend towards a "rational" equilibrium.31 Influenced by such ideas, some specialists in international relations ascribe a similar magic power to the idea of "balance of power". The "invisible hand" of the market is far from omnipotent, despite the quasi-religious powers with which it has often been credited. Alan Greenspan, head of the US Federal Reserve, expressed the need to maintain overall price stability as a corollary for the "proper" functioning of the market: "Nevertheless, even if we could ensure significantly more rapid productivity growth than we have seen recently, there are valid reasons for wishing to avoid ongoing declines in the general price level. If increases in both inflation and deflation raise risk premiums and retard growth, it follows that risk premiums are lowest at price stability. Furthermore, price stability, by reducing variation in uncertainty about the future, should also reduce variations in asset values." The "market" in the global sense is by itself not a mechanism that guarantees the broadest satisfaction for the biggest number of customers, nor is it a means to achieve justice. The "technical" nature of the relationship between the real economy, and its Platonic image as mirrored in international financial transactions, has made it increasingly difficult to arrive at an understanding of the workings of the international system in which military threats, struggle for resources, social instability, and the free will of individuals mix in games whose rules (if there are any) are difficult to surmise.

LIMITS TO US LEADERSHIP

If asked, most leaders habitually complain that leaders have much less room for initiatives than outsiders seem to assume. Likewise, the US might complain that it has less leverage over allies and countries with which it co-operates with than is normally thought. This 31

Acknowledging the relevance of "psychology" is of course nothing but common sense. The normative assumption of "rational" markets is at best wishful thinking far removed from business reality. It seems that realism about the "abnormal" behaviour of markets is now also shared with economists in China, such as Sheng Songcheng, head of the Financial Research Institute of the Shanghai Branch of the People's Bank (quoted in Gongshang Shibao, Taiwan, 8 January 1998).

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applies not only to US leadership versus Korea and Japan, but also versus Taiwan. The reversion of the sovereignty of Hong Kong was not so much the conclusion of the period of colonialism in China, but rather the first step in Chinese moves to gain de facto control over Taiwan. This strategy will aim towards achieving greater Taiwanese economic dependence on China, but the recent economic crisis in Asia has rather (temporarily?) increased Taiwanese abilities to make use of its financial reserves to conquer "international space of its own". There is concern in Beijing that Taiwan not only makes use of the economic crises in Southeast Asia but also in Korea to strengthen its international position in the region. This was symbolised, among other things, by the visit of an important high-level Taiwanese trade delegation to Thailand, India, Malaysia and the Philippines towards the end of last year. This also includes a strengthening of relations with North Korea which was a development that was initiated by the relaxation of Taiwanese restrictions on trade with North Korea adopted in November 1997.32 Li Denghui's moves towards publicly musing about Taiwan as a special kind of (independent) state separate from China seems merely another milestone in a long-term strategy. The US certainly regards Taiwan as an independent economic area.33 In February 1998 the US and Taiwan completed a bilateral market access agreement—an important step which moves Taiwan closer to membership in the WTO. Although in public China wishes to present itself as a self-assured country on the road towards (economic) great power status,34 Chinese efforts to become a member of the WTO seems designed rather to prevent any chance of China becoming isolated from international markets, with its great danger to the Chinese economy. The Communist Party is therefore prepared to go a long way towards reducing protectionism. One might speculate that a non-communist China led by a government representing Chinese private business interests might be a much tougher negotiator than the current government in matters of WTO access. It is not a foregone conclusion that a non-communist China would be less "nationalistic". 32

Lianhe zaobao, 29 December 1997. Taiwan's accession to the World Trade Organisation will be made on its own merits and is not dependent on China's accession, according to Deputy US Trade Representative Richard Fisher. (USIA website, East Asia—Pacific, 98031202.eea) 34 Lianhe zaobao, December 5, 1996, Xinhua, 21 November 1996. 33

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PROSPECTS FOR AND AGAINST INTEGRATION

Current developments in Asia underline once more that conceptualisation in terms of "economics", "politics", and "military security" is an array of tools to dissect "reality", but should not be confused with "reality" itself. Ethical and moral judgements cannot be viewed in isolation, as if they are set apart from the "objective" workings of "economics". Advocating "market economics" (this means different things to different people) does not relieve us of our moral obligation to judge the outcome of policies carried out in the name of that idea. Policy makers would be ill advised to rely on analyses that focus on "purely" economic, or political science models. The interaction of economics and politics, history, culture and security requirements creates dynamic patterns different for each of the participants in the international system. The individual "personality" of states— which itself is not a permanent, fixed trait—is subject to frequent change. The personal background of leading politicians may also influence not only the style, but also the substance of policies. None of the states involved, and this includes the United States as well, is able to dictate the shape of the future systems evolving in Asia Pacific. The US may set itself the task of preventing instability, but it lacks the positive means to create stability on the Eurasian continent as a whole. In the case of China, patterns of demography and urbanisation differ greatly from those in the traditional great powers. Their dynamics alone ensure a new pattern of development with important implications for the need to create new paradigms for economic as well as political organisation.35 A global system that relies on the ability of national and transnational actors to maintain a stable balance is not only difficult to realise but also difficult to conceptualise. Functional differentiation between politics, economics, private and government initiatives, and the interaction of local and global institutions and elites form a system whose dynamics cannot be understood by economics alone but will surely provide numerous challenges for complex disciplines such as International Political Economy. At a different level, as the current economic crises demonstrated once more, long cherished idealisation i:> This is the main point in Qin Hui and Su Wen, Pastorals and Rhapsodies: A Research for Peasant Societies and Peasant Cultures, (in Chinese, original title: Tianyuanshi yu kuangxiangqu), Beijing 1996.

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of the separation of "public" and "private" spheres is even more fictional than theorists and political practitioners have been ready to admit: in this crisis, "the dividing line between public and private liabilities too often becomes blurred".36

EXPANDING HEGEMONY? THE US AND GLOBAL RESTRUCTURING

The global restructuring process led by the US is also aimed at major changes in the relationship between the economy, society, and the political infrastructure, and reaches as far as the popular culture of countries.37 American statements on issues of restructuring exhibit a missionary zeal reminiscent of the "mission civilisatrice" of colonial powers in the nineteenth, and the early part of the twentieth century. Restructuring is also seen in "moral" terms. There was a spate of popular newspaper articles highlighting "Asian practices of corruption" in South Korea and Indonesia which compared them either explicitly or implicitly with superior "Western" traditions. The emphasis on the division of labour between economic and political institutions has been at the core of global restructuring since the collapse of the Soviet Union. The creation of healthy and strong companies able to operate in the global market place has, by now, become one of the most important ingredients for national stability and, by extension, national security. At stake is not merely an increase of global market access informed by traditional mercantilist ideas. A core aim is the systemic change of the very nature of the global economic system; the global restructuring of companies and pertinent economic laws forms an indispensable part. The attempts in China to create oil conglomerates able to compete globally must be seen in this light. Moreover, restructuring aims to homogenise the way that companies operate, in particular as far as their capitalisation is concerned. An important part of this transformation is therefore the conversion of the role of debt into equity which would allow a much more rapid penetration of the global economy by leading (financial) companies. The idea may be to restructure states by fostering internal structural economic reforms. Even if these ideas were successful,

See Greenspan's testimony on 12 February, in USIA file 980212.eea. For a Chinese comment, see for instance Renmin ribao, 7 January 1998.

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they would not necessarily lead to an international system in which national interests can be more easily reconciled. I should like to add a few words about the historical context of the current economic crises and their implications for global leadership.38 In the past decade, the US enjoyed a seemingly unassailable position as the only true global leader after the collapse of the Soviet Union. This was a period in which the United States, in co-operation with member states of the European Union, pressed for the restructuring of former members of the Soviet bloc according to American models. The coming shape of Pacific Asia seems to be significantly determined by the ability of the United States to persuade or force its partners in East and Southeast Asia to adopt institutional patterns of economic, social and political organisation along the lines of the "US model". Another major ingredient in shaping Pacific Asia will be the interaction between China and its neighbours and, more specifically, the degree to which the Chinese presence in Asia will make itself felt and what reactions this may cause both in Asia and, in particular, the United States. The economic crisis that commenced with the collapse of the Thai currency in July 1997 saw the United States once more as a leader. The crisis was used to increase pressure on countries in Asia to achieve a similar kind of restructuring in this part of the world. Economic difficulties and the character of economic restructuring in Europe (Russia, former Soviet bloc) differ considerably from the economic reforms attempted in Asia, including China. Chinese reforms were not so much inspired by the personal "will" of reformers under the leadership of Deng, but were forced upon the party and the leadership by economic changes beyond the control of the party, changes, which the leadership was wise enough to adopt, while trying to keep the political system in control of the situation (some might say, in order to keep themselves in power). The introduction of a "socialist market economy" in China reminds us, in an ironic way, of the ability of a totalitarian state to change its basic tenets and still pretend towards its citizens that its new policies are consistent with doctrine. Recalling an episode from the first hours of 38 p o r r e c e n t literature from a Japanese point of view, see for instance the special April 1998 edition of Kokusai mondai, and the June 1998 of Gaikoo jihoo, "IMF no konnichiteki kinoo to mondaiten. Ajia tuuka; kinyuu kiki to kokusai seisaku kyoochoo (Current Functions and Issues of the IMF. Asian currencies; financial crisis and international policy co-operation)."

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the Cold War, Kennan mentioned a task given in a Russian language course at the Soviet group in Riga, where participants were asked to draft a newspaper article in which the introduction of capitalism in the Soviet Union would be presented as a tremendous triumph of socialism.39 China is now seldom perceived to constitute an ideological challenge to anybody.40 More important is the degree to which China is irreversibly integrated into the world economic system. In the period before and after Clinton's visit to China there were numerous publications and speeches which explicitly listed US requirements for reforms in China. Most pressing, in this view, were 1) the conversion of the state-owned enterprise sector; 2) the reform of the banking sector, and 3) the full convertibility of the Chinese currency, as a "key step toward turning China into a full market economy."41 Despite repeated tensions among the two countries, both governments have a vested interest in maintaining "engagement", although domestic critics and political enemies may eventually gather sufficient force to disrupt current relations. We clearly need to locate current developments in an historical context. We should not exclude the possibility that the current crisis will produce an ideological backlash against current trends towards globalising marketisation. As K. Polanyi has pointed out—fascism, the New Deal and other ideas about a socialist planned economy were a reaction to failing marketisation more than a hundred years ago. From an historical perspective, the current crisis can be seen as another instance of problems brought about by globalisation, although this was denied by Paul R. Krugman.42 Globalisation, however, is

39

Guzzini, op. cit., 55. This point is also very strongly made by Wang Xiaodong in his contribution to this volume. 41 US Ambassador to the PRC James Sasser, in a speech on April 6, 1998 (USIA, 98040602.eea). 42 "La mondialisation n'est pas coupable," in politique etrangere, 1/98 (printemps 1998), 187-193. "The current process of globalisation involving low tariffs and the opening of financial markets was compared by Dani Rodrik of Harvard's Kennedy School to the earlier "globalisation" of the North American and European economies that eventually contributed to the world economic crises of 1929-1931," in: International Herald Tribune, 13 November 1997. On the international system in terms of "the 40

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only one level of tectonic shifts which has taken place in the nineteenth and twentieth centuries. The twentieth century has also been characterised by the rise of new "great powers" both within Europe and on a global scale: In chronological order Germany, the United States, the Soviet Union, Japan and finally China. The rise of these not always democratic new powers was not caused by any particular ideology, but their appearance repeatedly contributed to the outbreak of wars, in particular, the two world wars. Since its active involvement in the First World War, the US has consistently tried to change the internal structure of other countries, not only in defeated Germany, and Japan but also by its military intervention in Soviet Russia. After the Second World War the United States succeeded in making the main aggressors of the Second World War, Germany and Japan, situated on the Western and Eastern fringes of Eurasia, its most important allies in the Pacific and Atlantic areas. A major question for the twenty-first century will be whether the rise of China and India will fundamentally disturb the foundations of US leadership, requiring basic changes in US policies not only towards Asia, but a review of its global strategy as a whole.

duality of interstate system and world economy," see Robert Cox, Production, Power and World Order, New York, 1987.

NUCLEAR PROLIFERATION CHALLENGES IN EAST ASIA AND PROSPECTS FOR CO-OPERATION—A VIEW FROM EUROPE* FRANK UMBACH*

INTRODUCTION

At the end of November 1997, U.S. President Bill Clinton issued a still classified new directive for the American nuclear forces that defines the potential use of nuclear weapons in conflict situations. The new directive marks a departure from a nuclear strategy developed in 1981 under former U.S. President Ronald Reagan that called to fight an all-out, protracted nuclear war until victory, irrespective of social and military costs. According to the new guidelines, the future main purpose of U.S. nuclear forces will put the emphasis on deterring the use of nuclear arms or other mass destruction weapons against U.S. forces or allies by threatening a devastating response. These changes in the U.S. nuclear strategy have become necessary because the future nuclear defence planning and targeting requirements have to be reconciled with the denuclearization cuts of START-I and -II. Furthermore, these changes should encourage the ratification of START-II (which calls for reductions of nuclear warheads from 6.000 to 3.000-3.500 on both sides) in the Russian Duma.1 Nonetheless, the Clinton directive will preserve an retaliation option of using nuclear strikes against military and civilian targets, if U.S. and allied armed forces are attacked particularly with chemical or biological weapons. Therefore, the United States will retain a triad of nuclear forces consisting of bombers, land-based missiles (ICBMs) and submarine-based missiles (SLBMs) but on lower levels according to proposals of future START—III negotiations with * Frank Umbach is a Senior Research Fellow at the Research Institute of the German Society for Foreign Affairs (DGAP) in Berlin. This analysis is based on findings of a research project "Perspectives of Regional Security Co-operation in the Asia-Pacific Region", sponsored by the Volkswagen foundation, at the DGAP. 1 To ambivalent Russian reactions see Dmitrii Gornostaev, Nezavisimaya Gazeta, 9 December 1997, p. 1 and Nikolai Zimin, Segodnya, 9 December 1997, pp. 1 and 4.

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Russia (after the Russian Parliament ratifies START-II) that will further downsize the nuclear arsenals to 2.500—2.000 warheads. To some extent, this directive can be seen as a another indicator for a creeping denuclearization and a diminishing role of U.S. nuclear weapons in the context of their military planning for future conflicts. Although the U.S. thus is maintaining a nuclear retaliation option against ABC-weapons, simultaneously it will rely increasingly on the use of conventional deep-strike, long-range high-precision weapon systems, based on most modern technology, as it was already the case in the Gulf-war in 1991. To some extent, these denuclearization trends seem also to be in line with a growing delegitimation of nuclear weapons as calls for the abolition of all nuclear weapons and a nuclear free world by the prestigious international Canberra Commission2 and well-known retired U.S. officers such as General Lee Butler (the former commander-in-chief of all U.S. strategic nuclear forces) or General Andrew J. Goodpaster (former commander of NATO forces in Europe) have shown.3 And although the International Court of Justice's ruling on nuclear weapons was quite ambiguous, some activists of a nuclear free world felt be strengthened.4 Furthermore, they might also be encouraged by the fact that former forecasts of 20 nuclear powers by 1970 made in the 1960s by U.S. experts have never become true. The number had reached nine by 1990, including four undeclared nuclear powers (Israel, Pakistan, India, and South Africa). In addition, shortly afterwards, South Africa decided to dismantle its six nuclear bombs.0 Moreover, a horizontal nuclear proliferation after the implosion of the former Soviet Union (FSU) with new emerging nuclear powers on its territory (such as Ukraine, Belarus and Kazakhstan) has been successfully prevented. In contrast to these positive developments in the field of global non-proliferation and denuclearization efforts, however, a number of other regional and global trends and their security implications put 2 The "Report of the Canberra Commission on the Elimination of Nuclear Weapons", August 1996, can be obtained from the commission's site on the World Wide Web—http://www.dfat.gov.au/dfat/cc/cchome.html. 3 George Lee Butler, "Time to End the Age of Nukes", Bulletin of the Atomic Scientists, March-April 1997, pp. 33-36 and "Statement on Nuclear Weapons (by international Generals and Admirals)", The Washington Quarterly, Summer 1997, pp. 12-130. 4 B. Carnahan, "World Court Delivers Opinion on Legality of Nuclear Weapon Use", Arms Control Today (ACT), July 1996, p. 24. 5 J.W. De Villiers/Roger Jardine/Mitchell Reiss, "Why South Africa Gave Up the Bomb", Foreign Affairs, November/December 1993, pp. 99-109.

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the goal of a nuclear free world in question, at least in near and mid-term perspective: The implosion of the nuclear superpower USSR and the resulting proliferation problems have created new potential proliferation threats to both Europe and the Asia-Pacific region. Although any nuclear war between the U.S. and Russia seems nowadays more remote than ever, Russia is facing numerous dismantling problems and costs that aggravate problems of reforming its armed forces and coping successfully with the challenges of the nuclear legacy of the FSU. These challenges include the following two potential threats in the near future: a) increasing risks of the loss of command and control over nuclear weapons, both politically and militarily, that might lead to accidental or inadvertent and unsanctioned or unauthorised use of them; and b) an illicit export of nuclear materials and expertise to potential nuclear threshold countries. Any proliferation of mass destruction weapons or even an unlimited proliferation of advanced conventional weapon systems and the increasing technology diffusion might fuel the already ongoing arms build-up and arms competition in East Asia.6 It could lead to an open arms race, increasing risks of misperception, miscalculation and misunderstanding and finally to a violent outbreak of potential conflicts, so undermining the stability and security in the region. Against this background, new potential proliferation threats must be addressed in the dynamic and highly fluid security landscape of the Asia-Pacific region. Although nuclear-weapon-free zones have been established in the South Pacific—such as the 1985 Treaty of Rarotonga (the South Pacific Nuclear-Weapon-Free Zone or SPNWFZ) and Southeast Asia (the 1995 South East Asia Nuclear-Weapon-Free Zone or SEANWFZ),7 it remains an open question whether they are effective instruments for successful regional and global non-proliferation policies. 6

To the current regional arms build-up, technology diffusion and emerging modern defence industries in the Asia-Pacific region see F. Umbach, "Strategic Changes in the Asia-Pacific Region: The Dimension of Military Technology Diffusion and Proliferation of Advanced Conventional Weaponry", in: Joachim Krause/Frank Umbach (Eds.), Perspectives of Regional Security Co-operation in Asia-Pacific: Learning from

Europe or Developing Indigenous Models? Arbeitspapiere zur Internationalen Politik (ed. by the Research Institute of the German Society for Foreign Affairs/DGAP), No. 100 (Bonn: Europa-Union Verlag GmbH, September 1998), pp. 43-69. 7 See "Treaty on the Southeast Asia Nuclear Weapon-Free Zone", Strategic Digest

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Ultimately, they are dependent on the support of the nuclear weapon states—the US, Russia, China, France and Great Britain—and their national security interests.8 These interests are not always and exclusively defined by broader regional or global security concerns but often to more narrow national security interests. Characteristically, the support of the nuclear powers for these two nuclear-weapon-free zones was and is still limited (SPNWFZ) or so far even non-existent (SEANWFZ).9 Given European experiences, nuclear-weapon-free zones might promote confidence and security building measures (CSBMs), but can hardly be the major or the only non-proliferation instrument.10 Therefore, the analysis of motivations and the internal as well as external security environment of potential nuclear threshold countries remains an important prerequisite for defining specific and successful non-proliferation strategies. Moreover, as the result of the dynamic economic growth and population increase in the Asia-Pacific region, the energy demand in the next decades will increase several times (particularly in China). Given the limited existence of energy resources, almost all states in East Asia are looking into the available options, notably the civilian use of nuclear power. But the creation of new nuclear power stations, nuclear fuel fabrication, spent fuel storage and nuclear storage sites will raise considerable non-proliferation concerns because 3/1996, pp. 320-328. Although the treaty was drafted on the basis of similar agreements, it has certain unique features such as the inclusion of the "Exclusive Economic Zones (EE£s)" and continental shelves that has raised concerns particularly in the United States and China. Thus far, both nuclear weapon states have not signed the protocol of the SEANWFZ-treaty which ensures compliance with the treaty by the five declared nuclear powers—to the background see Amitav Acharya/J.D. Kenneth Boutin, "The Southeast Asia Nuclear Weapon-Free Zone Treaty", Security Dialogue 2/1998, pp. 219-230 and Rolf Muetzenich, "KernwafTenfreiheit in Suedostasien", Aussenpolitik 4/1997, pp. 390-400. 8 See also Jozef Goldblat, "Nuclear-Weapon-Free Zones: A History and Assessment", The Nonproliferation Review, Spring-Summer 1997, pp. 18-32. 9 See also Keith Suter, "U.S. Signs on At Last", 77K Bulletin of the Atomic Scientists, March-April 1996, pp. 12-13. 10 Although one motivation of ASEAN states was to include EEZs and continental shelves to make sure that China cannot deploy nuclear weapons in or around the contested islands and reefs in the South China Sea, this makes militarily little sense given the capabilities of modern long-range weapon systems (particularly missiles). Such zones can also lull their member states into a mistaken sense of nuclear security. To their positive role in promoting CSBMs between its members see Ralph A. Cossa, International Herald Tribune (IHT), 23 July 1996, p. 6. To an Indian critic of such zones see Brahma Chellaney, IHT, 7 May 1996, p. 8.

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the boundaries between the civilian and military use of nuclear energy are often small.11 Furthermore, new trends in Russia's and China's military policies indicate either a greater reliance on nuclear weapons both for prestige and compensating mounting deficiencies of its conventional forces (as it is the case in Russia despite the denuclearization of the last years as we will see later) or an accelerating modernisation process (as it is the case in China). The latter might not only increase the accuracy of missiles and other technical parameter, but also expand its current nuclear arsenal two or three times in the next 10-15 years. Such a future nuclear arms build-up of China might also raise and justify nuclear ambitions of other East Asian countries, notably Japan, Taiwan and South Korea (or a unified Korea after the collapse of North Korea).12 Japan, for instance, is already confronted by ambitions of two de facto and one potential nuclear power (Russia, China and North Korea) in the Asia-Pacific Rim. It might have a direct or indirect impact on its security, particularly if the U.S. would withdraw from the region or if the U.S. nuclear umbrella as a positive security guarantee for Japan would loose its credibility. Moreover, the Indian-Pakistani nuclear arms race and their weaponry programmes have also destabilising effects on Southeast and Northeast Asian states because it threatens the crucial sea links for their trade and energy flows and undermines regional CSBMs. The expansion of technology that has an dominant influence on lives of most people presents certainly numerous benefits and opportunities, but at the same time it poses also new security challenges. The globalisation of economies and technology available provide new opportunities for terrorists with a power of modern weaponry and transnational links which are unprecedented in human experience. The example of the AUM-Shinrikyo Doomsday Cult, which will be analysed later in this paper, has underscored these grave hazards with new dimensions. 11 These issues are discussed in the excellent paper by Hahnkyu Park, "Comprehensive Security and Regional Nuclear Co-operation in East Asia: The Case of South Korea" in this volume. 12 On South Korea's and Taiwan's nuclear ambitions in the past see Andrew Mack, "Potential, not Proliferation", The Bulletin of the Atomic Scientists, July/August 1997, pp. 48-53 and David Albright/Corey Gay, "Taiwan: Nuclear Nightmare Averted", ibid., January /February 1998, pp. 54-60. A renewed open nuclearization of Taiwan, however, might risk a pre-emptive military strike by the PRC.

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The following chapters do not aim primarily to identify the status and numbers of nuclear weapons in East Asia13 but rather to analyse some of the wider regional and global nuclear proliferation challenges and nuclear modernisation efforts in China which might produce new security dilemmas in East Asia. It concludes with the assumption that in order to prevent those new security dilemmas and to stabilise and not to undermine regional and global stability, a much broader and deeper security co-operation between nuclear powers and non-nuclear weapon states is urgently needed in the forthcoming months and years. Realistically, it should begin with enhancing military transparency, such as publishing White Papers with more detail information of the national defence policies, comparing military budgets, military doctrines and strategies, conventional and nuclear arms procurement plans, and by inviting experts to military exercises. While a wide-ranging and militarily significant nuclear-free zone in Northeast Asia seems only achievable in a longterm process of a nearly nuclear-free world, a register of nuclear arms would contribute to more transparency and confidence-building in the region in the short—and mid-term perspective.

PROLIFERATION CHALLENGES OF THE SOVIET NUCLEAR LEGACY AND THE INHERENT RISKS OF RUSSIA'S STRATEGIC NUCLEAR ARMED FORCES

The Implosion of a Nuclear Superpower and its Proliferation Challenges

Although significant steps toward a denuclearization and improving the safeguards mechanisms of the former Soviet nuclear arsenal have been made during the last years, the implementation process of START-II had to be extended from 2003 until the end of 2007. It gives Russia more time to dismantle launch and delivery systems— such as missile silos, bombers and submarines—with multiple war1S Gerald Segal, "Nuclear Forces in Northeast Asia", in: Young Whan Kihl/Peter Hayes (Ed.), Peace and Security in Northeast Asia. The Nuclear Issue and the Korean Peninsula (Armonk, NY-London: M.E. Sharpe, 1997), pp. 305-317; Dunbar Lockwood, "The Status of U.S., Russian, and Chinese Nuclear Forces in Northeast Asia", in: ibid., pp. 318-358 and Ralph A. Cossa, "Nuclear Forces in the Far East: Status and Implications", in: ibid., pp. 359-380.

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heads. Moreover, Washington, therewith, hopes to win more support in the Russian Duma for the still un-ratified treaty as a precondition for START—III negotiations.14 In the fall of 1993, the Russian minister for atomic energy, V. Mikhaylov, revealed for the first time that the Soviet Union had in 1987 approximately 45.000 nuclear warheads in its arsenal'3—12.000 more than the CIA had accounted in the mid of 1980s. In mid1993, the most reliable estimate, based on data from the U.S. Central Intelligence Agency (CIA) and the Russian Ministry for Atomic Energy (MINATOM), specified the Russian nuclear legacy still on 32.000 strategic and tactical nuclear warheads. 15.000 of them are active, or deployed, and another 17.000 are in storage or awaiting disassembly and disposal.16 Table 1: Reductions and Limits of Strategic Nuclear Warheads according to S T A R T I and II

ICBMs SLBMs Bomber Total

Mid 1991 U.S.A. USSR/RF

START-I U.S.A. USSR/RF

START II U.S.A. USSR/RF

2.450 5.760 2.665 10.875

1.444 3.456 1.066 5.966

500 1.728 772 3.500

6.612 2.804 855 10.271

3.258 1.744 820 5.687

795 1.744 461 3.000

Source: Frank Umbach, "Die nukleare Rustungskontrollproblematik und die Rolle der USA im postsowjetischen Raum", in: BlOst (Ed.), ^wischen Krise und Konsolidierung. Gefaehrdeter Systemwechsel im Osten Europas (Muenchen-Wien: Carl Hanser Verlag, 1995), pp. 360-371, here p. 360.

In the FSU, strategic nuclear weapons had only been deployed in Russia, Belarus, Ukraine and Kazakhstan. Those weapons were all either land-based ICBMs or weapon systems deployed on heavy bombers. In contrast to the tactical nuclear weapons, their safety against theft and unauthorised use had been perceived by Western experts as rather high. According to various Western and Soviet official statements, 80-85 14

Steven Lee Myers, IHT, 29 September 1997, p. 6. Moscow News 40/1993, 1 October 1993, p. 5. 'Nuclear Pursuits", The Bulletin of the Atomic Scientists, No. 4 (May) 1993, pp. 48-49; "Estimated Russian (CIS) Nuclear Stockpile (July 1993)", ibid., No. 6 (JulyAugust) 1993, p. 57, and D. Lockwood, "Report on Soviet Arsenal Raises Questions, Eyebrows", ACT, No. 9 (Nov.) 1993, p. 23. 15

16

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per cent of the Soviet nuclear weapons were deployed within the Russian Federation (RSFSR) itself, leaving some 4.000-6.500 warheads beyond the borders of the RSFSR. Confronted with disintegration tendencies in the former Soviet Union at the end of 1980s, the Soviet General Staff ordered already in the spring of 1990 to withdraw the more numerous and more widely dispersed tactical nuclear weapons from the potential conflict zones, particularly from the Transcaucasus republics. The Soviet General Staff obviously feared the possibility of "loosing nukes" despite of its numerous explanations of its safeguarded tactical nuclear weapons against theft or unauthorised use. However, Russia was not prepared for the rapid withdrawal of thousands of nuclear weapons that it experienced. Furthermore, not only nuclear weapons, but also the "nuclear archipelago" with its research laboratories, weapon design bureau's, testing areas, the command, control, communication and intelligence (C3I) facilities—like early warning radars—and production plants for nuclear warheads and ballistic missiles as well as the nuclear components, materials, and know-how have become a potential source of concern for non-proliferation strategies. Thus the stockpile of fissionable materials, facilities and skilled bomb-builders pose a latent problem of diversion to political factions, terrorists, or potential proliferants around the world. Most of the facilities were located in the Russian Republic, like the two nuclear weapon design laboratories in "Arzamas-16" and Chelyabinsk-70. Hence all nuclear warheads during the cold war had been exclusively produced within the Russian republic. None of the other Soviet republics had facilities for designing, manufacturing or refurbishing nuclear warheads. However, the same cannot be said about the missile production and other parts of the nuclear complex. The largest missile production facility, for instance, was located at Dnepropetrovsk in Ukraine. Moreover, the underground test sites were located at Novaya Zemlya in arctic Russia and in Semipalatinsk (Kazakhstan). The last one was formally closed by the president of Kazakhstan, Nursultan Nazarbayev, on August 29, 1991. Of particular importance for the future of the Russian strategic nuclear forces are also the 11 early warning radars. Six of them were located outside of Russia, in Skrunda (Latvia), Baranovichi (Belarus), Mukatchevo and Sevastopol (Ukraine), Saryshagan (Kazakhstan) and Lyaki (Azerbaijan). These early warning radar's are needed in order to maintain strategic stability (and to guarantee Russia's second strike-

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capability) because nuclear forces require numerous information as well as command and control systems (C2). Because of the loss of those early warning radar's and the rapidly ageing C3I system, Russia's high command is now becoming partially blind—a fact that could produce false alarms and makes adequate decisions both at the bottom and the top of the high command as well as in the political leadership much more difficult. Loss of Command and Control: Increasing Risks of an Unauthorised and Unsanctioned Launch of Russia's Nuclear Missiles11

During the Cold War, an unauthorised use of nuclear weapons seemed largely a theoretical scenario without presenting a real threat in peace times. However, when the Soviet Union collapsed in 1991, questions of command and control and "who has the nuclear button?" of the Soviet nuclear arsenal became utmost significant when the West insistently tried to find out who was in possession of the "nuclear briefcase"—thus during the August-putsch of 1991 and the bloody events in October 1993 or in the early autumn of 1996, when President Boris Yeltsin had been forced temporarily to give up control over his country's nuclear arsenal during a forthcoming heart operation.18 Each nuclear command and control system is confronted with the following dilemma: on the one hand, the system has to prevent an unauthorised use of nuclear weapons—called "negative control"; on the other hand, it has to guarantee the execution of an order to use them after authorisation—called "positive control". Both demands interfere with each other. It confronts the military commanders with the dilemma that measures which aim to reduce the risk of undesired use make the execution of a release order for nuclear weapons difficult or even impossible. Or put it in other words: The more reliable the guarantee of a retaliatory strike becomes, the less reliable is the guarantee against a non-sanctioned launch in event of error 17

On the following discussion see also the previous analysis by Frank Umbach, "Who Controls the Nuclear Button?", Jane's Intelligence Review (JIR), August 1992, pp. 353-356, and idem, "Control and Security of Nuclear Weapons in the Former USSR", Aussenpolitik 4/1992, pp. 362-372. From the Russian side see in particular the interview with the chief designer (pseudonym Yuri Mkolaev), Komsomol'skaya Praxida, 28 January 1992, p. 2. ia See, for instance, Chrystia Freeland, Financial Times (FT), 13 September 1996.

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or overreaction to an imaginary threat. Measures that reduce the risk of an unauthorised launch might thus impede the orders to execute an authorised retaliatory strike, and vice versa. All nuclear powers are confronted by these dilemmas. But the priorities and the specific concepts which the two superpowers placed on measures to resolve them—particularly as to the delegation of authority and devolution of top-down command and control—were often very different. But in the Cold War there was always on both sides a certain tendency to give priority to positive rather than negative control. Consequently, during the coup d'Etat of 1991, Gorbachev could not have been the only person at the most senior command level who had custody of the "black briefcase" to release the access codes for the use of the strategic nuclear potential.19 Furthermore, the monopoly which the General Staff enjoyed in the control of nuclear weapons was primarily designed to guard not against an accidental launch but mainly against a failure not to respond to an attack promptly and on a massive scale. Since that time, three major negative factors affecting Russia's Strategic Nuclear Forces (SNFj have been identified during the last years: (1) the decline of the human support element in both numbers and reliability, partly also as the result of an excessive psychological strain, (2) the growing probability of technical failure as a result of the ageing of nuclear warheads as well as of delivery systems, and (3) the current state of the ageing command, control, communication and intelligence (C3I) system of the Strategic Nuclear Forces. Many of those systems received practically no development during the last years, are functioning in a reduced composition, are degrading or have basically be stopped such as the work on improving Moscow's anti-aircraft defence system.20

19 Thus also the conclusion by Alexei Arbatov, "Taini yadernoi knopki. Nashi generali mogut nacat' atomnuyu voinu i ne sprosyas' i prezidenta Rossii", Novoe Vremya 4/1992, pp. 28-31. 2(1 Viktor Surikov, Praoda-5, 10-11 September 1996, p. 3 and R. Bykov, Komsomol'skaya Pravda, 15 March 1997, pp. 1-2. These facts have also been confirmed by the (former) Russian defence minister Igor Rodionov himself in February 1997. According to his alarming statement Russia's nuclear missile forces are close to collapse because of poor funding. Later, Prime Minister Viktor Chernomyrdin claimed again—in contrast to Rodionov—the firm and effective control of all nuclear weapons in Russia—see Igor Korotchenko, Nezavisimaya Gazeta, 21 February 1997, p. 1 and Juriy Golotjuk, Segodnya, 22 February 1997, p. 1.

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All three factors have its negative implications for Russia's main wartime automated nuclear command-and-control system, called "Kazbek". It is the heart of Russia's command and control system (as a complex network of cables, radio signals, satellites and relays) designed to authorise the launching of a nuclear strike after it caused an alert in each of the three nuclear suitcases, called "Cheget". This Russian system is based on a "triple key system"21, involving the Russian President, the Defence Minister and the Chief of the General Staff who all possess their own set of codes. This technical and administrative control of strategic nuclear weapons, however, was and is ultimately dependent on the trust within the party-military relationship or—being more concrete—on the absolute loyalty of the General Staff officers to the political leadership of the FSU and Russia. Meanwhile, this control system has eroded technically, financially and politically. Chronic budgetary shortfalls, worsening living conditions, low pension and wages (if they are paid at all), gaps in the early warning system and the maintenance of a "launch-andwarning"-nuclear strategy (the ability to launch a retaliatory strike before an attacking adversary's warheads hit their targets) have all contributed to increasing risks of erroneous, accidental or unauthorised missile launches because of technical failures, false warnings, misjudgements or political and socio-economic reasons. These factors are particularly destabilising because Russia has a computerised "doomsday" command-and-control complex, called "Perimefr". According to the U.S. expert Bruce Blair, this system allows the General Staff with its primary wartime post at Chekov (60 km south of Moscow) to launch ICBMs directly, thereby by-passing subordinate commanders and missile launch crews, to insure quasi-automatic retaliation in the event of a decapitation strike.22 At the same time, 21 See also Alexander A. Pikayev, "Post-Soviet Russia and Ukraine: Who Can Push the Button?", The Nonproliferation Review, Spring-Summer 1994, pp. 31-46, pp. 32ff. and A. Konovalov/A. Sutiagin, "Nuclear Weapons on the Territories of the CIS States: Problems of Safety and Security", in: Joachim Krause (Ed.), Kern-

waffenverbreitung und internationaler Systemwandel.

Neue Risiken

und Gestaltungsmoeglichkeiten

(Baden-Baden: Nomos-Verlagsgesellschaft, 1994), pp. 135-158. 22 Steven J. Zaloga, "Russia's 'Doomsday' Machine", JIR, February 1996, pp. 54-56; Bruce G. Blair, The New York Times, 8 October 1993, p. A35; id., "Global Zero Alert for Nuclear Forces" (Washington, D.C.: Brookings Institution, 1995), pp. 51-55. According to Russian sources, however, the involvement of the missile launch crews is needed—see Valery Yarynych, The New York Times, 1 February 1994, p. A17 and the interview with Nikolai Devyanin (the chief designer of the first modification of the president's "suitcase"), "Is the 'Nuclear Briefcase' Really Necessary?", Moscow

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the system has the technical capability that subordinate command posts to launch their missiles automatically without approval from Russia's political leadership and the General Staff if they are dead or unable to direct a nuclear retaliation strike. Western efforts towards co-operation on nuclear issues are still hindered by the military's reluctance for "glasnost" and an open dialogue about its command and control procedures and the current status of the "Perimetr" system which is unknown. But considering the loss of several early warning radars in the former Soviet republics, the radar and satellite system is vulnerable because of gaps in its network. Hence Western reluctance on the computerised "dead hand" system remains and call in question the secure command and control (C2) over strategic nuclear weapons. Furthermore, U.S. intelligence officials have pointed out in 1996 that the Russian "doomsday machine" has only recently been deployed though the system has been known for at least four years.23 Hence unthinkable scenarios involving the unauthorised launch of nuclear weapons, particularly in crisis, might not be excluded any longer.24 These uncertainties over command and control of Russia's nuclear arsenal and its "death hand" system had been highlighted in January 1995 when a Norwegian missile inadvertently alarmed Russia's SNF which triggered a heightened level of alert throughout its forces. It was the first time that President Boris Yeltsin declared to have used his nuclear briefcase by activating the Kazbek-system in a real alert. He speculated that Norway and NATO "might have been trying to test Russia's military readiness."25 The General Staff, indeed, raised the state of alert and combat readiness of Russia's strategic triad so that the whole command and control system was operating in combat mode. But fortunately, the retaliation attack was not initiated and the crisis ended. Later the Defence Ministry claimed to have pursued the trajectory of the rocket from the beginning to its end,26 and Yeltsin dismissed his former comments as a misunderstanding.2' News, No. 13, 1-7 April 1994, pp. 1 and 7. Nonetheless, I would follow here the assumption of Bruce Blair because of a number of reasons which cannot be discussed here in detail. 23 James Adams, Sunday Times, 29 February 1996. 24 The Tunes, 28 July 1995. 25 Quoted in IHT, 27 January 1995, p. 2. 2(1 Marat Zubko, Izvestiya, 27 January 1995, p. 3 and Veronika Kutsyllo, KommersantDaily, 27 January 1995, p. 1. 27 IHT, 27 January 1995, p. 2.

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Given the fact that Norway had informed the Russian side on 21 December 1994 of the rocket's launch for studying the northern lights phenomenon (like 607 other weather rockets before),28 however, the incident raised serious questions about the stability of Russia's strategic command and control system. A following investigation found out that a prelaunch notification message by the Norwegians was not properly delivered to the Russian early warning forces.29 Characteristically for these uncertainties, a US report stated at the end of 1996 that Russia's SNF have implemented new procedures to report accidental or unauthorised missile launches.30 It is, indeed, this combination of domestic power struggles and bureaucratic policies for short-sighted political ends, of inaccurate information and of misunderstanding, misperception or miscalculation that raises concern, particularly in crisis, over Russia's nuclear arsenal in general and a secure information chain in particular from major military installations to the supreme commander in chief of Russia that has still the most formidable nuclear forces both in Europe and in Asia. Moreover, nuclear weapons have become the last symbol of the former superpower status in Russia. Together with the disastrous state of Russia's conventional armed forces, preparation for nuclear war with the USA appears to remain a high priority for the Russian military establishment and for defining a new military doctrine and nuclear strategy. In order to strengthen "negative control" and to prevent any further erosion of its command and control system, Russia has basically two options: (1) to lower the status of alert (de-alerting) of its Strategic Nuclear Forces, and/or (2) to change the doctrine of its national nuclear strategy and to reject all hair-trigger and accident prone "launch-on-warning" postures of the Cold War on which Russia traditionally relied on and which still dominates its nuclear control system. Russia has taken only the first choice and has reduced the status of alert of its nuclear arsenal instead of favouring option two or going even further (in co-operation with the United States) to an end-state of zero alert—so-called "virtual arsenals" (disassembled

28 See also "Norway's Ambassador Per Tresselt, Plays Down Rocket Incident", Moscow News, No. 5, 3-9 February 1995, p. 5. 29 David R. Markov, "The Russians and Their Nuclear Nukes", Air Force Journal, February 1997, pp. 40-43, esp. p. 43. 30 Ibid., p. 42.

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weapons under multilateral inspection and monitoring).3' The complete mutual detargeting of all strategic missiles on 30 May 1994 was the result of the bilateral agreement signed by US President Bill Clinton and Boris Yeltsin four months before. But it was rather a political and symbolic step towards the West which has been reiterated by Yeltsin in May 1997 during his Paris visit.32 Militarily, this information can be retargeted in minutes if not seconds. Thus the agreement produced no significant changes in the operational launch readiness on both sides which are still regularly exercised. Furthermore, Russia has dropped the pledge on its 1982 "no-first use"-policy of nuclear weapons in the document "Principle Guidance on the Military Doctrine of the Russian Federation" in November 1993.33 It has underlined the increasing role of Russia's strategic and tactical nuclear weapons in its defence policies.34 Many Russian security and defence experts advocate placing a greater reliance on nuclear weapons to compensate for the deficiencies of conventional forces. Not only strategic nuclear weapons, but also tactical nuclear weapons play a much more important role presently in Russia's defence posture, and particularly in the Far East towards China. Aleksei Arbatov, for instance, argued in 1997: Chinese conventional build up greatly depends on massive imports of weapons and technology from Russia. Thus, besides the nuclear threat, Moscow has effective means of undercutting or at least seriously slowing down the emergence of this hypothetical threat. At a minimum, to deter effectively China's conventional offensive superiority at the theatre, Russia might rely on the option of employing tactical nuclear weapons in the border area to thwart the enemy's offensive operations 31 On those proposals see Bruce Blair, "Global Zero Alert for Nuclear Forces" and id., "Command, Control, and Warning for Virtual Arsenals", in: Michael J. Mazarr (Ed.), Nuclear Weapons in a Transformed World. The Challenge of Virtual Nuclear Arsenals (New York: St. Martin's Press, 1997), pp. 55-75, esp. pp. 62ff. 32 On the confusing statement (as one of many others by Yeltsin) see the reaction in the Russian press by Dmitrii Gornostaev, Nezavisimaya gazeta, 29 May 1997, pp. 1-2 and Pavel Felgenhauer, Segodnya, 28 May 1997, p. 3. 33 The document in: Izvestiya, 18 November 1993, pp. 1-4. It has modified the 1982 Soviet pledge not to use nuclear weapons against non-nuclear states (as a denuclearized Ukraine)—see also Dunbar Lockwood, "Russia Revises Nuclear Policy, Ends Soviet 'No-First-Use' Pledge", ACT, December 1993, p. 19. The Russian Minister of Defence, Army-General Pavel Grachev, declared it already in an article four months earlier, see Krasnaya £vezda, 9 June 1995, pp. 1 and 5. 34 See, inter alia, Vladimir Belous, "Key Aspects of the Russian Nuclear Strategy", Security Dialogue 2/1997, pp. 159-171 and Nikolai Sokov, "Russia's Approach to Nuclear Weapons", The Washington Quarterly 3/1996, pp. 107-114.

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while deterring China's nuclear response at the strategic level by superior (assured destruction) strategic retaliatory capabilities. Then Russia's deterrence would be credible: its nuclear capabilities would be sufficient to deny China's alleged military gains at the theatre but not threatening to its national survival and thus would not provoke its strategic nuclear pre-emption.35 The new emphasis on the role of nuclear weapons has also been confirmed in Russia's newly declared "National Security Concept,"36 signed by President Boris Yeltsin on December 17, 1997, and in new military doctrine and strategy proposals. It suggests an overwhelming reliance on nuclear forces in a host of military-political contingencies (including the right to use them as first strike and sometimes even for the pre-emptive use in ethnopolitical conflicts) that these forces cannot realistically and effectively confront.37 Characteristically for the increasing role of strategic and tactical nuclear weapons—which mostly (at least 6.000 operational warheads plus thousands in storage) have not been destroyed as former President M. Gorbachev had pledged in October 1991—in Russia's military planning is also the fact that the current restructuring of Russia's armed forces is conducted under the slogan "military reform under the nuclear missile umbrella."38 Instead of improving living conditions and raising the actual fighting capacity of Russia's conventional troops engaged in peacemaking missions and internal conflicts, the well-known Russian military expert and journalist Pavel Felgengauer has criticised the current reforms with the words: . . . money is being spent on superfluous nuclear missiles which, in accordance with agreements on non-targeting, are aimed "nowhere". The fairy tale of the reform "under the nuclear umbrella", the new missiles and discussions on parity, will be paid for not only with money, but also with the blood of Russian soldiers in future local conflicts in this country's southern regions.39 In this light, Russia places too much emphasis on nuclear scenarios (which are mostly unrealistic and do not solve any of its most impor30 Aleksei G. Arbatov, "Virtual Arsenals", in: Michael J. Mazarr (Ed.), Nuclear Weapons in a Transformed World, pp. 319-336, here p. 331. 36 Kontseptsiya natsional'noi bezopasnosti Rossiiskoi Federatsii', Rossiiskaya Gazeta, 26 December 1997, pp. 4 - 5 . 37 See also Aleksei G. Arbatov, "Voennaya reforma: doktrina, voiska, finansy", Mirovaya ekonomika i mezhdunarodnye otnosheniya (MEiMO) 4/1997, pp. 5-21, here p. 8. 38 Pavel Felgengauer, Segodnya, 23 October 1997, p. 1. 39 Pavel Felgengauer ibid.

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tant security problems at its southern flank) in order to justify its declining world power status without having the means to control them effectively. Moreover, regardless of the Duma's ratification of START—II in the forthcoming months or years and the ongoing consolidation of its nuclear armed forces (such as the integration of the Strategic Missile Forces, the Missile Space Forces and the Missile Space Defence Force into a single branch or the creation of a unified combat control system to provide centralised and stable control over all elements of the integrated Strategic Missile Forces),40 a decade from now Russia probably will have less than 2.000 warheads in its strategic nuclear arsenal as the result of the economic situation and its scarce financial resources it has to maintain its nuclear armed forces. Even the core of its strategic nuclear deterrence forces, the Strategic Missile Forces, will shrink dramatically in the years ahead.41 According to Aleksei G. Arbatov, with the implementation of START-II, Russia will not have more than 1.200-1.500 warheads in 2003 (the timetable for the implementation of START-I has meanwhile be extended to the end of 2007) because it is unable to deploy 700-1.000 additional warheads and SS—25 missiles at a rate of 100—200 per year.42 At the same time, however, thousands of strategic and tactical nuclear warheads are still waiting in storages for their dismantling. Presently, Russia has neither the financial resources to maintain a nuclear arsenal equivalent to that of the United States nor sufficient funds for dismantling all the nuclear warheads of the Cold War. Even the ratified START-I agreement is only 40 per cent funded by Russia's federal budget.43 Moreover, with the ratification of START-I and II and the financial pressure to downsize Russia's strategic nuclear arsenal, a radical restructuring is under way with the result that most of Russia's strategic nuclear warheads in the future will be based on mobile-ICBMs and SLBMs. Although these nuclear weapon systems will strengthen the nuclear deterrence effect (because they are more invulnerable 40

Ilshat Maichurin/N. Poroskov, Krasnaya ^vezda, 5 November 1997, p. 1. See also analyses by the Russian General Staff, reported by Dmitriy Gornostaev/ Andrei Korbut, Nezavisimaya Gazeta, 4 December 1997, pp. 1-2 and Yevgeni Fedorov, Kommersant, 20 January 1998, pp. 23^26. 42 Aleksei Arbatov, "Military Reform in Russia. Dilemmas, Obstacles, and Prospects", International Security, Spring 1998, pp. 83-134, here p. 116f. 43 Yevgeni Fedorov, Kommersant, 20 January 1998, pp. 23-26. 41

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than silo-based ICBMs), simultaneously it will further weaken Russia's command and control safeguard system (because safeguards on mobile—ICBMs and SLBMs on submarines are inferior to those on silo-based ICBMs given communication problems and their vulnerable links).44 Dismantlement Challenges and Problems of Denuclearization

Russia is facing a large-scale dismantlement of at least 27.000-28.000 nuclear warheads over the remaining years of 1990 and beyond, regardless of its START-II ratification. It includes warheads, missiles, fissile material and installations like missile silos.45 Officially, Russia is supposed to dismantle 9.200-9.450 tactical warheads which included 5.000 nuclear artillery shells and mines, and warheads of tactical missiles, 1.250 warheads of antiaircraft missiles, 1.200 warheads for carriers that were standard equipment of the navy, and 1.750—2.000 nuclear air bombs and missiles.46 In many respects, the dismantling process of mass destruction weapons and their components is more challenging than constructing them.47 According to the earliest START-II obligations in the year 2000, more than 4.000 nuclear warheads will have to be scrapped each year. Although the international community and in particular the United States has been helpful by providing financial aid, technical expertise and practical material aid (like transportation containers), these problems will remain on the international agenda for many years to come: Short-term attention is directed toward storage and transport problems of nuclear weapons as officials of MINATOM and the Russian

44

Bruce Blair, "Command, Control, and Warning for Virtual Arsenals", p. 61. Oleg A. Bukharin, "Meeting the Challenges of Dismantlement", Transition, 17 November 1995, pp. 30-33, here p. 30. 4)

4fi

Colonel Sergey A. Modestov, Nezavisimaya Gazeta-Nezavisimoe Voennoe Obozrenie,

16 May 1996, p. 6. 4/ A good overview of the scale and costs of dismantling nuclear, chemical and conventional weapon systems as a result of the arms control treaties for Russia and the West is provided by Susanne Kopte/Michael Renner/Peter Wilke, "The Cost of Disarmament: Dismantlement of Weapons and the Disposal of Military Surplus", The Nonproliferation Review, Winter 1996, pp. 33—45. To the dismantling problems themselves see Frank von Hippel/Marvin Miller/Harold Feiveson/Anatoli Diakov/ Franz Berkhout, "Verschrottung nuklearer Sprengkoepfe", Spektrum der VVissenschaft, October 1993, pp. 32-38, and Karl-Heinz Kamp, "Probleme nuklearer Abruestung:

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Defence Ministry have confirmed.48 The process to withdraw strategic nuclear warheads from the other interim nuclear successor states Belarus, Kazakhstan and Ukraine finished at the end of 1996. But many nuclear warheads have been stored in interim storage sites before they can be moved to the central storage facilities. From there, they will be transported to the MINATOM disassembly plants of one of the closed cities where the warheads have been made. But the withdrawals resulted in a shortage of Russia's storage capacity, compounded by the loss of almost 50 percent storage capabilities of the FSU after the implosion of the USSR. Currently, Russia has no more than 5-10 central storage locations,49 resulting in 17-120 percent over capacity in the existing facilities in 1992 and 1993.50 Although Russia claimed to have a theoretical dismantlement capacity of 5.000 6.000 warheads per year, it has never dismantled more than 2.000-3.000 warheads during the last years.51 After the demise of the FSU, reportedly only 500 experts capable of dismantling nuclear warheads remained at work in 1992.°2 But not only dismantling nuclear warheads remain an economic, financial, environmental and security problem, but also the need to draw off more than 100.000 tonnes of highly toxic liquid missile fuel, which afterwards has to be sent to factories in order to process it in a harmless environmental way. Although Russia has dismantled some of its strategic nuclear arsenal faster than the United States despite all problems,53 there are still about 1.200 metric tons of HEU (highly enriched uranium) and 150—200 metric tons of plutonium in various facilities throughout the FSU which demand Russian and Western attention. Currently, a huge nuclear storage site at the Mayak plant in the Urals is being Die Vernichtung von Kernwaffen in der GUS", Interne Studien und Berichte der KonradAdenauer-Stiftung (KAS), Sankt Augustin, 45/1993. 48 See, for example, Rady Ilkayev/Boris Barkanov, "Safety of Nuclear Weapons: An International Problem", International Affairs (Moscow) 9/1994, pp. 23-27. 49 O. Bukharin, "Meeting the Challenges of Dismantlement", p. 32. A. Surikov/ I. Sutyagin, "The Movement and Storage of Russian Nuclear Weapons", JIR, May 1994, pp. 202^203 concluded that Russia has 8 central storage sites, so-called 'Objects S\ 50 O.A. Bukharin, "Meeting the Challenges of Dismantlement", p. 32. The most probable level is being around 67 per cent—see A. Surikov/I. Sutyagin ibid. p. 203. 51 See also F. Umbach, "Das nukleare Erbe der militaerischen Supermacht UdSSR—Part I", Berichte des BlOst, No. 38, Cologne 1992, p. 12. 52 K. Belyanikov, Komsomol'skaya pravda, 4 February 1992, p. 3. 53 "U.S.-Russian Strategic Weapons Dismantlements", ACT, May 1995, p. 32.

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built with US support which will contain not less than 40 per cent of all Russia's weapons-grade plutonium. Nonetheless, these problems of safe storage, transport and dismantling will remain on the agenda also in the 21st century like the next ones. The demise of the Soviet Union did not leave only a huge nuclear complex and its infrastructure dispersed between almost all former Soviet republics, but also a dangerous toxic legacy. The environmental and radiation impact of at least 715 military tests of nuclear weapons54 (and additional ones for civilian purposes) over 41 years has already affected past and present generations of people living near those test sites or infrastructure facilities. The health damages suffered will be felt also in the next generations and confront those states with mounting health and social costs that they cannot afford in the foreseeable future. By the year 2000, Russia has to decommission some 200 nuclear submarines. 126 of them had already been decommissioned until 1995.35 Nonetheless, the naval infrastructure to handle the nuclear waste was unable to keep up with the original retirement of nuclear submarines, not to speak about the additional decommission of nuclear submarines as result of the nuclear arms control treaties. In 1993, Russia was using a total of 235 ships equipped with a total of 407 nuclear reactors, which was 60 per cent of the total number on all the world's ships with nuclear reactors. In the process of their operation, up to 20.000 cum of liquid radioactive wastes and 6.000 tons of solid wastes had been generated annually.06 Today, some 120—150 nuclear-powered submarines are rusting in the Northern Fleet and Far East as "potential Chernobyls".57 In 1993, 67 of Russia's 109 nuclear submarines were based in Murmansk.58 The Northern Fleet, Russia's largest, has 279 nuclear reactors (18 per cent of the world's 54

See also David Hoffmann, IHT, 28 October 1996, p. 1. °5 See also Douglas L. Clarke, "Naval Nuclear Waste Poses Immense Risk", Transition, 17 November 1995, pp. 34-38, here p. 34 and Joshua Handler, "Russia's Pacific Fleet—Problems with Nuclear Waste", JIR, March 1995, pp. 136-140. To the radioactive pollution of the oceans see Alexander Koldobskij, "Zur radioaktiven Verschmutzung der Meere und Ozeane", Oesterreichische Militaerische ^eitschrift (OeM^)

6/1994, pp. 625-632 and Tomas Ries, "The Nordic Region and Post-Soviet Radioactive Pollution", JIR, September 1993, pp. 398-400. 56

Andrei Baiduzhy, Nezavisimaya gazeta, 3 April 1993, p. 1. T.B. Cochran/R.S. Norris/O.A. Bukharin, "Making the Russian Bomb", p. 238 and Doug Clarke, OMRI Daily Digest, 29 September 1995. 08 On the situation of the Northern Fleet and Murmansk see the article by Vladimir Kucherenko, Rossiyskaya gazeta, 14 May 1996, pp. 1-2 and Joshua Handler, "The Northern Fleet's Nuclear Submarine Bases", JIR, December 1993, pp. 551-556. 57

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total),""9 including nuclear ice-breakers. Regular overhauls of active submarines have been suspended and crews are inadequately trained to maintain and operate the reactors due to failing resources. Current plans to decommission and dismantle 88 nuclear submarines are also hampered by high costs. In addition, at least ninety reactors are reportedly stored under "unsafe conditions". Ten of the submarines have defective reactors, which could sink at any moment, leading to "an ecological disaster", according to Admiral Oleg Yerefeev, commander of the Northern Sea Fleet.60 Furthermore, Russia's Northern and Pacific Fleet have accumulated 30.000 fuel cells weighing 535 tons in substandard temporary storage facilities. Reportedly, but unconfirmed, one nuclear submarine, called K-219, which sank in the Atlantic Ocean 600 miles east of Bermuda in October 1986 broke open in 1996 and unknown amounts of radioactive plutonium from its carried 32 nuclear warheads are now spilling into the Ocean.61 Environmental concerns arise particularly from the dumped reactors near the military closed island of Novaya Zemlya and in the Pacific. Since 1965, at least 20 reactors, seven of them are still of spent fuel, had been dumped of Russia's Arctic and Pacific coasts in violation of international treaties, lying to the International Maritime Organisation which enforces them. Norwegian experts estimate that 8.000 cubic metres of radioactive liquid waste in storage of the Northern Fleet might contaminate the whole Barents Sea or leak into the ground.62 Officially, since October 1993, all dumping of liquid and solid radioactive waste by the Russian navy has ceased. Although Japan, which is—with the bitter experience of Hiroshima and Nagasaki— in particular concerned about sunken reactors and suspected ongoing dumping of liquid nuclear waste in the Sea of Japan,63 has offered numerous aid, the Russian military seems to continue the dumping

59

Matthew Kaminski, FT, 21 August 1996, p. 2. Penny Morvant, OMRI Daily Digest, 19 September 1995. The Korean Herald (TKH), 26 November 1996, p. 1.
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FRANK UMBACH

of nuclear fuel and munitions into the ocean because all their storage facilities are full.64 Japan's offer includes building a radioactivewaste storage and reprocessing plant in Primorski Krai with a capacity to process 5.000-7.000 metric tons of waste per year,63 and additional joint inquiries to find solutions.

DANGERS OF AN ILLICIT EXPORT OF NUCLEAR MATERIAL AND EXPERTISE

Another proliferation challenge of Russia's nuclear legacy represents is the theft of nuclear material. Given the fact that the nuclear infrastructure was distributed over the entire territory of the FSU, all nuclear successor states have faced difficulties in managing nuclear weapon-related components on their territories. But nowhere else than in Russia has the scope of problems such great dimensions. The proliferation concerns in the West are therefore not only directed toward nuclear weapons but also toward hundreds of tonnes of nuclear material suitable for nuclear weapon manufacture.66 The arms control processes of START-I and II and their envisaged dismantling of thousands of nuclear weapons, including their warheads, have aggravated that problem. Russia will be left holding tens of thousands of containers of fissile materials in above-ground storage sites for many years to come. This problem has been compounded by the fact that in the FSU no fissile material control and accounting system existed. No one knows exactly how much nuclear materials they have in their store sites or other nuclear facilities. In most sites they do not even know if any nuclear material is missing. In that context, Western assistance programmes focus on three elements: (1) physical protection (barriers, sensors, and other technologies to 64 See, for instance, Sergei Agafonov, Izvestiya, 15 February 1995, p. 3. On the storage problems of nuclear fuel in the Russian navy see D.L. Clarke, "Naval Nuclear Waste Poses Immense Risk", p. 36f. 65 A contract has been signed for a floating nuclear waste recycling vessel with a number of Japanese and U.S. companies, funded by the Japanese government as part of its 1993 aid programme to support Russia's nuclear disarmament, in January 1996—see Doug Clarke, OMRI Daily Digest, 15 January 1996 and Penny Morvant, ibid., 8 February 1996. 66 See also Oleg Bukharin, "Nuclear Safeguards and Security in the Former Soviet Union", Survival, Winter 1994-95, pp. 53~72, and John P. Holdren, "Reducing the Theft of Nuclear Theft in the Former Soviet Union", ACT, March 1996, pp. 14-20.

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prevent access to the nuclear material); (2) material control and (3) material accounting. The two materials of primary concern are HEU and plutonium.67 The situation in the FSR has been aggravated by (1) the lack of nuclear safeguard expertise, (2) the inefficiency of border controls of the new independent successor states of the FSU, (3) failing or insufficient export control legislation and implementation in most of the FSR, (4) civil turmoil in some of them and (5) the frustrating economic situation which leads to crime and corruption as a matter of life in all FSR.68 Unless the agreed international safeguards are not implemented, civilian nuclear facilities can lose nuclear material suitable for weapons to the black market. The material can be used by nuclear threshold countries, "rogue states" or even terrorists. While the general discussion during the first years after the demise of the FSU focused on the question of whether the Russian government has control of nuclear weapons, the U.S. intelligence community is presently fearing that Russia might be losing control over the large and widely dispersed stores of plutonium and highly enriched uranium. Its ability to enforce export control measures remains problematic because of resource shortages, weak customs enforcement, institutional decay and widespread corruption and crime in all parts of the society, including in its armed forces.69 Without Western financial resources and support, "our nuclear specialists and their colleagues will never be able to prevent thefts and leaks from 'reliable sources'", as a Russian conference report concluded in March 1996.70 Meanwhile, 80 per cent of Russia's nuclear-technical security system is maintained "with American money" as was admitted by another Russian source in September 1997.71 These problems of safe storage, transport and dismantling will not be resolved in the near future but remain on the international agenda of the 21 st century. fa/

See also Joachim Krause/Erwin Haeckel, "Auf dem Weg zur nuklearen Anarchie? Die mangelhafte Sicherheit waffenfaehiger Spaltmaterialien in RuBland und der GUS", Arbeitspapiere z.ur Internationalen Politik (ed. by the Research Institute of the German Society for Foreign Affairs/DGAP), No. 99 (Bonn: Europa-Union Verlag, April 1998). 68 "Proliferation and the former Soviet Union" (Washington D.C.: Congress of the United States/Office of Technology Assessment, 1994), p. 23. 69 On a Russian source confirming these analyses see Obshchaya Gazeta, No. 30, July 1997, p. 2. According to this report almost 70 per cent of the technical means employed to protect nuclear installations are obsolete. 70 Anton Trofimov, Segodnya, 17 March 1996, p. 1 and 7. 71 Andrei Korbut, Nezavisimaya Gazeta, 30 September 1997, p. 1.

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FRANK UMBACH

Successful non-proliferation strategies do not only have to keep strict control over nuclear weapons, fissile material and other nuclear components, but also to prevent the proliferation of know-how. The collapse of the greatest nuclear power and its infrastructure in the world has also raised concerns that a nuclear "brain drain" to nuclear threshold countries or "rogue states" (like Libya, Iraq, North Korea) could provide them with a desired critical knowledge to build up their own nuclear weapons and include them in their military arsenals. In November 1991, a Japanese newspaper published for the first time a list of ten secret cities that were previously unknown and appeared on no map of the former Soviet Union (FSU).72 But it was only the tip of an iceberg, although the numbers of cities and their population are still officially secret. Altogether, more than 87 cities and centres have been exclusively built for nuclear, chemical and biological weapons production (including all of the defence ministry's missile and weapon-design plants).73 Approximately one million people lived and worked alone in the nuclear "nuclear archipelago". Of those, 100.000 people were employed in the nuclear weapon programmes of whom 10.000-15.000 had access to classified information; 2.000-3.000 had a detailed knowledge of weapon design and held top-secret information. In addition, 3.000—5.000 worked at a high-know level in the production of fissile material.74 But only 100-200 people had the full knowledge about design, development, manufacture and fielding nuclear weapons enabling them to manage and overview a nuclear weapon programme.75 These 10.—15.000 people with access to critical information constitute a "state secret" in the Russian view. They worked in Russia's closed cities where it was prohibited to leave the country or even the city without having any special permit. Furthermore, until 1991 they had only very limited information and contact with the "outer world", including contact with their neighbouring regions inside their own country. At that time, the KGB functioned as an efficient watchdog which guaranteed the tightening security of those cities. Moreover, elitism and 12

73

Yomiuri Shimbun, 17 November 1991.

"Russia's Secret Cities", The Economist, 25 December 1993. /4 See the interview with V. Mikhaylov, Komsomol'skaya pravda, 31January 1992, p. 1; id., Rossiiskaya Gazeta, 8 May 1992, p. 4. 70 See the interview with Ambassador Robert L. Gallucci, "Redirecting the Soviet Weapons Establishment", ACT, No. 5 (June) 1992, pp. 3-6, here p. 5f.

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secrecy have always characterised the people working in the nuclear weapon complex which nowadays has become rather a burden for them when having to accept the new and harsh socio-economic realities. The collapse of the USSR and the loss of many privileges and social security standards has upset the future of the "nuclear archipelago" as well as the personal life of ten thousands of people living inside this nuclear complex.76 The rising unemployment among engineers, technicians, and scientists as the result of deep cuts in government spending have reduced the demand for specialists. The former pride of Russia's nuclear elite has thus become a social and political burden.'7 Moreover, estimates predicted that 1.5 million highly qualified specialists from the FSU could leave the country by the end of this century. This would certainly result in a major loss of Russia's scientific potential, and ultimately damage its economic recovery. But thus far, it seems, that the internal brain drain and emigration (leaving the military-industrial complex but remaining in the country) and buying cheap labour represents the major problem for Russia, rather than a brain drain of nuclear experts leaving for abroad.78 In the past few years, however, the economic situation of the nuclear complex has further deteriorated. In 1993, nuclear weapon scientists threatened Russia's government with strikes and stopping the process of dismantling nuclear weapons for the first time in their history. Their salary was decreasing, former benefits have been stopped and their payment had been delayed up to two months (which is not a specific problem of that elite but rather commonplace) while the amount of work has drastically increased.79 In November 1994, a new special status has been established80 that regulates the leaving "' The suicide of Vladimir Nechai, director of the All-Russian Research Institute of Technical Physics, part of Russia's nuclear weapons laboratory Chelyabinsk-70, in December 1996, for instance, has drawn considerable attention in Russia and the West—see David Hoffmann, IHT, 24-25 December 1996, p. 5. n See the roundtable discussion in, Rossiiskaya Gazeta, 15 July 1993. /i! R. Adam Moody, "Reexamining Brain Drain From the Former Soviet Union", The Nonproliferation Review, Spring-Summer 1996, pp. 92-97, here p. 93. 79 Vladimir Gubarev, Rossiiskaya Gazeta, 23 June 1993. 80 The new status is based on the liberalised "Law on the Procedures of Exit from the USSR and Entry to the USSR for Citizens of the USSR" on 30 May 1991. The law entered into force on 1 January 1993. It prevents anyone with access to state secrets from emigration for at least five years (with the possibility of extension)—see R. Adam Moody, "Reexamining Brain Drain From the Former Soviet Union", p. 92.

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of the renewed closed cities. But it also highlighted the growing influence of the military-industrial complex81 and the increasing disappointment of U.S. promises of funds which had not been fulfilled until 1994/95.82 Nonetheless, the development of the nuclear complex under the new circumstances and deteriorating conditions is not so much an industrial or technical problem as a political one. That fact is highlighted in new disturbing trends in Russia that in a period when the Russian Air Force is allowed to overfly American territory, Russia's President Boris Yeltsin signed several decrees in 1996 and 1997 to close once more some of the opened cities (which formerly belonged to the so-called "closed cities").83 Against the brain drain challenge, the United States and Russia agreed in February 1992 to establish an international centre to prevent a migration of Russian nuclear experts to nuclear threshold countries or "rogue states".84 Funds have been committed to the "International Science and Technology Centre (ISTC)" by the United States, EU, Japan, Sweden, Canada and Switzerland and other support aid such as Nato's Science programme. But it took more than two years before the ISTC could begin its operation in March 1994, because of bureaucratic inertia in the West and suspicion on the Russian side by MINATOM and ministry of defence officials. A similar centre had been established in Kiev in 1994. But the ISTC— programmes have faced a lot of problems. Nonetheless, these centres have initiated a variety of lab-to-lab programmes, employing thousands of former Soviet weapon scientists in useful civilian work. In April 1996, about 236 ISTC project proposals have been initiated in Russia, Kazakhstan, Georgia, Belarus and Armenia which sponsor about 12.500 scientists for up to three years.85 But thousands more are still working in Russia's nuclear complex under difficult conditions or remain unemployed. Moreover, most of Russia's con81 Elena Viktorova, Segodnya, 12 November 1994 and Aleksandr Batygin, Rossiiskaya Gazeta, 24 November 1994. 82 Der Spiegel 24/1994, pp. 174 and 176. 83 Paul Goble, "A Past Too Much With Us", RFE/RL Analysis from Washington, 6 August 1997. 84 IHT, 18 February 1992, pp. 1-2 and "International Centre to Limit Brain Drain", ACT, March 1992, p. 24. 8J Nuclear Successor States of the Soviet Union. Nuclear Weapon and Sensitive Export Status Report, (Washington D.C. and Moscow: The Monterey Institute of International Studies/The Carnegie Endowment for International Peace, Monterey, 1996), No. 4, p. 57.

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version programmes have either never been implemented or proved to be successful in establishing substantial new commercial business in the nuclear cities. Meanwhile, as some Western and Russian experts have pointed out, a new dimension of the brain drain problem has been emerged out of the blue as a result of globalisation and the widespread availability of modern communication technologies. In the age of Internet, it seems often no longer necessary for nuclear experts to leave their country and go abroad to be involved in some clandestine nuclear programmes or to solve specific weapon programmes of nuclear threshold or "rogue states". Many other Western experts, however, remain sceptical about this new dimension, stating that Internet is sufficiently monitored by Western non-proliferation as well as intelligence experts, and that many problems in developing nuclear weapons have to be solved in those secret facilities themselves. Nonetheless, as we will see later in the case of AUM Shinrikyo, the problem of the future brain drain challenge might be discussed in terms of preventing the transmission of knowledge and expertise via Internet and international computer lines rather than in the context experts emigrating abroad.

NORTH KOREA'S NUCLEAR AMBITIONS

North Korea's ambitions to develop nuclear weapons and its sustained ballistic missile programmes are perceived as the most acute threat to regional security and stability in East Asia.86 Western experts fear that a failure to manage the crisis on the Korean Peninsula could trigger nationalist sentiments in neighbouring states and elsewhere. This could lead, for instance, to a militarisation of Japan's foreign policy and weaken its opposition to nuclear weapons. Hence the ongoing crisis on the Korean Peninsula has not only direct security impacts on both Korean states but also indirect implications for the stability of the entire Asia-Pacific region because it might pressure other Asian states—notably South Korea, Japan and Taiwan— to rethink their current non-nuclear status.

86 Research Institute for Peace and Security (RIPS, Ed.), Asian Security 1994-95 (London-Washington: Brassey's, 1994), pp. 2ff.

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FRANK UMBAGH

Following pressure of the former Soviet Union and its offer to build a nuclear power plant, North Korea joined the NPT (Nuclear Proliferation Treaty) on 12 December 1985. But it took seven years before it finally signed the IAEA (International Atomic Energy Agency) agreements on 30 January 1992 with a subsequent ratification on 9 April 1992. Already in December 1991, both Korean states signed a historic agreement ('Joint Declaration of the Denuclearization of the Korean Peninsula") to ban all nuclear weapons on the Korean peninsula. That agreement became possible because U.S. president George Bush had announced a series of unilateral U.S. nuclear initiatives in September 1991. They included the world wide withdrawal and destruction of all ground-launched theatre and sea-based tactical nuclear weapons, including those on the Korean Peninsula.87 But the agreement of December 1991 has never been implemented, due to disagreements over important modalities such as verification measures and the necessity for "challenge inspections" of any suspicious site on the other's territory, whether declared or not, at short notice.88 Furthermore, in February 1993 it stopped all IAEA inspections of its nuclear sites and decided unilaterally on 12 March 1993 to withdraw from the NPT. 10 years earlier, by analysing the Arab—Israeli War in 1973, the North Korean leadership became convinced that ballistic missiles will play a fundamental role in future warfare. According to Valeri I. Denisov, deputy director for Asian affairs at the Russian Foreign Ministry, the FSU opposed a North Korean plan to launch a war against South Korea in 1975.89 Thereupon, North Korea discarded the plan, but initiated indigenous missile programmes with the support of Russian and Chinese experts and technologies.90 In order to speed up those weaponry programmes, North Korea also purchased a small number of "Scud—B" missiles from Egypt. Despite experiencing significant problems in their missile programmes, North Korea finally conducted its first modified Scud-B missile test in April 1984. According to US and South Korean sources, North Korea possesses presently around 500 "Scud" missiles with ranges up to 500 km in 87

Peter Hayes, "The Future of the U.S.-ROK Alliance", in: Young Whan Kihl/ Peter Hayes (Ed.), Peace and Security in Northeast Asia, pp. 240-268, here pp. 259-261. 88 Seo-Hang-Lee, "Denuclearization Efforts on the Korean Peninsula", in: Pericles Gasparini/Daiana Belinda Cipollone, Nuclear Weapon-Free £ones in the 21st Century (UNIDIR/United Nations: New York-Geneva 1997), pp. 99-101, here p. 99f. 89 TKH, 23 July 1996, p. 1. 90 On Russia's assistance see Novie Izvestiya, 5 November 1997, p. 2.

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addition to 450 Frog artillery rockets. Pyongyang can mass produce those missiles at a rate of one hundred per year.91 While North Korea's economy is collapsing, Pyongyang is economically more and more incapable of supporting one of the biggest conventional armies in the world. South Korea, by contrast, can both limit its defence burden and simultaneously modernise its conventional forces by raising the quality that ultimately might balance off the quantitative superiority of its Northern opponent. By 1992, hard-liners in the North Korean regime might have argued that those trends combined with its loss of Soviet/Russian as well as Chinese support and their security umbrellas leaves only one option: to resume (or accelerate) efforts to develop a more effective nuclear deterrent capability as a compensation for the former close alliance with both communist powers.92 Consequently, in June 1990 and May 1993 North Korea tested successfully its new mobile ballistic missile, the Nodong^ 1, over the Sea of Japan. The Nodong—1 was based on Scud-B and - C technologies and North Korea's own development programmes. It is a completely redesigned system that covers with its range of 1.000-1.300 km not only the entire Korean Peninsula but also Japanese cities such as Niigata and Osaka. The full-scale production begun in 1991. Although this enlarged Soviet Scudmissile has only a poor accuracy, it is also more difficult to intercept. In October 1996, the United States had to press North Korea not to test fire a Nodong—I ballistic missile into seas just off the Japanese coast.93 At the end of 1997, U.S. and Japanese intelligence sources reported that the missile has either already been deployed or is at least in an advanced stage of development, including preparing for test flights. Thereupon, the U.S. Air Force has deployed special RC—135s reconnaissance aircraft (code named the "Cobra-Bell") in Japan for daily flights that cost over 100.000 US$ a day. Given the fact that the U.S. Air Force has reportedly only three of those spy planes, it is widely believed that the Pentagon only deploys them when it has solid signs of an imminent launch of ballistic missiles.94

91

Wyn Bowen/Stanley Shepard, "Living under the Red Missile Threat", JIR, December 1996, pp. 560-564, here p. 561. 92 Mel Gurtov, "South Korea's Foreign Policy and Future Security: Implications of the Nuclear Stand-off", Pacific Affairs, 1 (Spring) 1996, pp. 8-31, here p. 12. 93 TKH, 17 and 19 October 1996, p. 1. 94 Asian Defence Journal (ADJ) 11/1997, p. 68 and Jane's Intelligence Review & Jane's Sentinel Pointer, December 1997, p. 10.

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Furthermore, North Korea is also reportedly working on the capability to equip the Nodong—1 as well as the longer-range ballistic missiles Nodong—2, Taepo-Dong—1 (range 2.000 km) and Taepo-Dong—2 (range at least 3.500 km) with nuclear, chemical and biological warheads.90 Against this background, North Korea's Taepo-Dong-1 missile test on 31 August 1998 over Japan shocked the world and has threatened regional and global non-proliferation policies.96 When the multi-staged Taepo-Dong-1 missile was launched on 31 August 1998 100 km south of the port city of Ch'ongjin and flew across the Sea of Japan in a new game of dangerous brinkmanship, North Korea's explanation that it had launched a satellite, not a missile over Japan caused confusion and surprise.97 Regardless of whether the missile carried a satellite or not, it demonstrated that Japan is within range of North Korea's ballistic missiles, and that North Korea has made considerable progress in mastering technical obstacles of multi-staged long-range ballistic missiles whose range and capability caused surprise even in U.S. intelligence circles. Until that time, North Korea's ballistic missiles were not expected to reach the 4,000 km to 6,000 km range until 2000-2004.98 It signalled to both the U.S. and Japan that it has now the capability to strike at US military facilities at least in Japan and on Okinawa. It is even possible that US bases in Guam and Hawaii will eventually come within North Korea's missile range in a few years. Furthermore, the test was interpreted as another North Korean attempt to influence the continuing nuclear and missile talks with the U.S. in New York.99 At the same time, North Korea had probably enough extracted plutonium for at least one or two nuclear bombs.100 In contrast to 95 Leonhard S. Spector/Mark G. McDonough/Evan S. Medeiros, Tracking Nuclear Proliferation (Washington D.C.: Carnegie Endowment for International Peace, 1995), pp. 103ff. 96 Frank U m b a c h , "World Gets Wise to P y o n g y a n g ' s Nuclear Blackmail—Part O n e " , JIR, September 1999, p p . 3 3 - 3 6 a n d idem, "Proliferation Challenges in the Asia-Pacific Region a n d t h e Implications for the U.S.-Japanese Security Alliance", in: T h e J a p a n Institute of International Affairs (JIIA), "Security of Asia-Pacific. M i d T e r m R e p o r t " , Tokyo, M a r c h 1999, p p . 9 2 - 1 0 7 , here p p . 99ff. 9/ See also Newsreview (South Korea), 12 September 1998, p . 4f. 98 Greg Seidle, "North Korea's Failed Satellite Bid Verified", JDW, 23 September 1998, p . 5. 99 THK, 3 September 1998, p . 2; J o s e p h Bermudez, " N o r t h K o r e a n s Test T w o Stage I R B M over J a p a n " , Jane's Defense Weekly (JDW), 9 September 1998, p . 26 a n d Shim J a e H o o n , "Fire, Backfire", Far Eastern Economic Review (FEER), 10 September 1998, p . 2 2 . 100 Joseph S. Bermudez, Jr./Bhupendra Jasani, "North Korea's Nuclear Arsenal", JIR, Special Report No. 9, p. 10.

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the Nodong—1 programme, only very little is known about the other ballistic missiles and their tests such as Taepo-Dong—1 and —2.101 But North Korea is trying to sell its missiles to Pakistan, Iran and Libya which then could be targeted to Israel or U.S. bases and allied capitols in the Mediterranean region. Reportedly, North Korea is also developing cruise missiles as tests in the Sea of Japan in the summer of 1994 have shown. Table 2: North Korea's Theatre Ballistic Missiles Range Payload (km) (kg) Scud-B" 'Scud-C" Nodong-1

300 500 1.000

985 700 1.000

Number CEP (m) 100+ 100+

Taepo-Dong-1 1.500- 1.000 2.000

-

Taepo-Dong-2 3.500- 4.000

-

Fuel

Additional Comments

Liquid NBC-capable 1.000 1.000-2.600 Liquid NBC-capable 2.000-4.000 Liquid Unknown operational status; NBC-capable Liquid Under development; tested in Aug. '98 Under development

Sources: Wyn Bowen/Stanley Shepard, "Living under the Red Missile Threat", Jane's Intelligence Review, December 1996, pp. 560-564, here p. 564; Joseph S. Bermudez, "Taepo-dong Launch Brings DPRM Missiles into the Spotlight", in: ibid., October 1998, pp. 30-32 and other sources.

Facing increasing economic difficulties since the 1980s, Iranian financial and technical support also played an important role to sustain North Korea's ballistic missile programmes. That has given Iran wide access to those missile programmes in order to accelerate their own programmes as well as the possibility to purchase Pyongyang's ballistic missiles.102 The North Korean—Iranian connection became a major issue for Japanese-Iranian relations because Teheran received considerable economic aid from Japan. Although both North Korea and Iran quickly denied a mutual weaponry assistance, the co-operation between Iran and North Korea seems to continue according to various sources. Moreover, Pakistan's missile development has revealed 101 See also Joseph S. Bermudez, "Taepo-dong Launch Brings DPRK Missiles Back into the Spotlight", in: JIR, October 1998, pp. 30-32. 102 Greg Gerardi/Joseph Bermudez, Jr., "An Analysis of North Korean Ballistic Missile Testing", JIR, April 1995, pp. 184-190.

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a clandestine interregional proliferation network to evade international controls and sanctions, which is a good example for the increasing globalisation of security policies. Moreover, the Ghauri-missile (with a range of 1,500 km) was developed on the basis of North Korea's No-dong-missiles and, reportedly, sold even completely to Pakistan in 1997. The liquid-fuelled Ghauri missile is basically an enhanced version of the North Korean No-dong 1 (also called Rodong 1) missile which has a similar maximum range and itself is a Scudderivative developed in Russia in the 1960s.103 In this light, North Korea and China contributed directly to South Asia's accelerating nuclear arms race. At the same time, North Korea has also benefited also from technology transfers and probably from the test data of Pakistan's nuclear and missile tests.104 As U.S. officials have confirmed meanwhile, the USA was completely unaware of the Pakistani-North Korean proliferation network.103 Moreover, to enhance its operational capability to ABC-warfare, North Korea has created chemical warfare platoons at the regiment level. With its eight factories to produce chemical weapons and other facilities for producing biological weapons,106 North Korea is able to conduct simultaneous chemical and biological attacks on both the front and rear of South Korea with various delivery systems such as artillery, multirocket launchers and Scud-missiles as well as aircraft.107 With these military capabilities and given the highly tense and uncertain socio-economic and political situation in North Korea, the Korean Peninsula remains the most dangerous potential flash point in the region. In April 1996, North Korean representatives have reportedly threatened Japan and South Korea by warning that if both countries will not provide North Korea with food aid and lightwater reactors, both could fall victim to four nuclear missiles.108 Whether that was a hollow threat or not (South Korea claimed it was unlikely that North Korea has developed four missiles with a nuclear warhead) or not, its missile programmes remain a very effective political weapon. 103

Tim Weiner, IHT, 5 April 1998, p. 5. See also Joseph S. Bermudez, "A Silent Partner", JDW, 20 May 1998, p. 16f. 105 Frank Umbach, "World Gets Wise to Pyongyang's Nuclear Blackmail—Part One". 106 Lee Sung-yul, TKH, 1 January 1997, p. 2. 107 TKH, 15 August 1996, p. 9 and "North Korea. A Potential Time Bomb", JIR, Special Report No. 2, 1994, pp. 8ff. 108 \Yyn Bowen/Stanley Shepard, "Living under the Red Missile Threat", p. 562. 104

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With the transition of power to Kim II Sung's son, Kim Jong II, in the summer of 1994, nuclear weapons have—more than ever before—bolstered the weak legitimacy of the new regime to ensure both its survival of the new political regime as well as of the communist system at a time of national crisis. Nonetheless, in October 1994 the United States and North Korea reached in Geneva the 1994 Agreed Framework agreement.109 The agreement envisages that North Korea would stop all of its activities at the existing nuclear reactors and processing plants and would not produce new nuclear facilities. Pyongyang also agreed to place its 8.000 fuel rods in special cans for long-term storage and to permit regular inspections as the NPT demands. In exchange, the United States had to remove any obstacles for political and economic contacts. Most significantly, Washington promised to supply with international financing two modern light-water reactors (LWRs) until the year 2003 and 500.000 tons of free oil annually for five or six years in return for its freezing and dismantling of existing reactors and storage of spent fuel outside North Korea. The LWRs have to be build by South Korea which was willing to finance the major share of the multi-billion project.110 Other provisions of the agreement stipulate that the two sides have to move toward full normalisation of relations and to promote confidence-building measures.111 For implementing the agreements and executing its commitments, an international consortium, called the Korean Peninsula Energy Development Organisation (KEDO), has been established on 9 March 1995 by South Korea, Japan and the United States.112 KEDO is also charged with the safe storage and eventual removal of 8.000 109 On the negotiations see Leonhard S. Spector/Mark G. McDonough/Evan S. Medeiros, Tracking Nuclear Proliferation, p. 104f., Lee Soong Hee, "The North Korean Nuclear Issue Between Washington and Seoul: Differences in Perceptions and Policy Priorities", The Journal of East Asian Affairs, 2/1997, pp. 327-347 and the critical analysis by Leon V. Sigal, "The North Korean Nuclear Crisis: Understanding the Failure of the 'Crime-and-Punishment' Strategy", in: ACT, May 1997, S. 3-13. The Geneva Agreed Framework is reprinted in: Young Whan Kihl/Peter Hayes (Ed.), Peace and Security in Northeast Asia, pp. 437-441. 110 On South Korean's foreign policy toward its northern brethren in the context of the nuclear agreement see Mel Gurtov, "South Korea's Foreign Policy and Future Security". 111 "North Korea Agrees to Dismantle Nuclear programme", Pointer-JIR, November 1994, p. 3. 112 The charter of the KEDO is reprinted in: Young Whan Kihl/Peter Hayes (Ed.), Peace and Security in Northeast Asia, pp. 443-450.

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spent fuel rods located in a cooling pond at the Yongbyon nuclear facility in North Korea. The major share of the estimated 5.17 billion US$ costs of the LWRs will be provided by South Korea and Japan. Minor shares come from the United States, the EU and other countries.113 Given the current financial crisis in East Asia and South Korea and the unwillingness of the U.S. Congress to spend funds on this and other arms control projects, not all financial problems of the KEDO-project have been solved so far which might undermine the international credibility in the view of Pyongyang. In this light the EU could also support KEDO much more than it has done when it recognises the importance of KEDO in the light of the regional and global proliferation challenges on the Korean Peninsula and functioning as the first operative international organisation in Northeast Asia—a precedent that might also serve as a wider regional security model, thereby involving North Korea in the region. Meanwhile, North Korea's nuclear and missile blackmail strategies, including its refusal to give international inspectors full access to its nuclear sites,114 its ongoing missile and technology exports to Pakistan and Iran (which has contributed to their missile programmes as the Ghauri-missile test on 6 April 1998 and the Iranian Shahab3 missile test on 21 July 1998 have demonstrated), its own unexpected missile launch of the Taepo-Dong— 1 on 31 August 1998115 and revelations of a vast underground facility under construction (with more than 15,000 North Koreans workers) which U.S. intelligence sources have identified to be the site of a reactor or reprocessing plant116 have now threatened the entire October 1994 Geneva Agreed Framework and thereby the KEDO process. It has led to calls for a major re-evaluation of the US policy towards North Korea.''7 Even those U.S. experts who still favour a genuine commitment to, rather than abandoning the Agreed Framework, are arguing for a "new deal" by incorporating "new issues of concern by supplementing it with new

113

On details see Reinhard Drifte, "The EU's Stake in KEDO", European Institute for Asian Studies (EIAS), Briefing Paper No. 96/1 June 1996 and Young Whan Kihl, "U.S.-DPRK Nuclear Accord and KEDO", Asian Perspective 2/1997, S. 99-117. 114 Philip Shenon, IHT, 16 July 1998, p. 4 and David E. Sanger, IHT, 18 August 1998, pp. 1 and 4. 115 Don Kirk, IHT, 1 September 1998, pp. 1 and 4. 116 Dana Priest, IHT, 27 August 1998, p. 4 and Shawn W. Crispin/Shim Jae Hoon, "Broken Promises", PEER, 22 October 1998, p. 16f. 117 See, for instance, Peter T.R. Brookes, "High Time to Re-evaluate North Korea Policy", PacNet Newsletter, No. 38, 2 October 1998.

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and more comprehensive commitments" into the existing agreement because it may no longer be possible to save it.118 Furthermore, the fundamental issues of the Korean crisis—unification, sovereignty and security—ultimately remain unresolved. The Agreed Framework of 1994 only stopped the production of plutonium at the Yongbyon Atomic Energy Research Centre, but not the development, production and testing of missiles. Thereby, the current and future denuclearization and the maintenance of peace on the Korean Peninsula remains uncertain.119 Pyongyang still seeks to conceal, and possibly to destroy, important information on its nuclear weapons-grade plutonium stocks.120 Most experts believe that North Korea has still enough plutonium for two crude nuclear devices. Furthermore, as a consequence of preparing missile tests by North Korea, South Korea has become interested in developing a longerrange missile by itself. According to a 1979 bilateral agreement with the United States, however, South Korea is tied to limit its missile range to 180 km, independent from the Missile Technology Control Regime (MTCR) that allows up to 298 km with warheads of 500 kg or more. Both sides have clashed repeatedly on the issue because the U.S. side was concerned that it would weaken its leverage over Pyongyang. But in return it has supported South Korea's willingness to join the MTCR.121 North Korea's armed forces are facing tremendous difficulties as the result of the socio-economic crisis. But its military capabilities seems still formidable and have also been strengthened during the last years. According to South Korean sources, Pyongyang has also increased its stockpiles of food and oil for its armed forces and has introduced new weapons systems in its ground, air and navy forces.122 Moreover, South Korea has currently no adequate defence capabilities to counter North Korea's missile threat. It possesses only six Patriot missile batteries which are deployed only in the south to defend rear-area US bases. The current economic and financial crisis has slowed the modernisation of its armed forces although it will

118 Wade Huntley/Timothy L. Savage, "Agreed Framework at the Crossroads", NAPSJV'et Special Report, 11 March 1999. 119 See also Henry Sokoloski, "The Korean Nuclear Deal: How Might It Challenge the United States?", Comparative Strategy, 1995, pp. 443-451. 120 TKH, 9 November 1996, p. 1. 121 Kim Kyung-ho, TKH, 9 December 1996, p. 2 and ibid., 4 December 1996, p. 1. 122 Lee Sung-yul, TKH, 1 January 1997, p. 2.

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not have an impact on the military balance on the Korean Peninsula given the economic problems of North Korea and the continued presence of the U.S. armed forces on the South Korean soil.123 A mixture of motivations behind North Korea's "chaos" and "nuclear blackmail" strategies and tactics might also have played a role for its plan to store Taiwanese nuclear waste in an abandoned coal mine just one hour (40 miles) of the Demilitarised Zone. That plan has raised tensions in the bilateral relationship between Seoul and Taipei as well as serious security and environment concerns in South Korea because it could contaminate underground water on both sides of the border.124 Reportedly, the nuclear deal for its 60.000 barrels of radioactive waste—with a provision to increase its volume to 200.000 barrels—should have cost Taiwan so far only 69 million US$.12° Although North Korea has probably currently not more than one or two nuclear warheads, a sober analysis of 1996 warned: "While North Korea is unlikely to use nuclear weapons except under the most extraordinary situations, there are a number of scenarios that could conceivably lead to nuclear threats or, if mishandled by any side, to the unintentional use of nuclear weapons."126 Given the fact that North Korea has neither fully disclosed its nuclear weapons programme nor revealed its intentions and motivations it is still possible that it has built more nuclear and missile facilities underground and dispersed them across the country. Hence its nuclear programme might be significantly broader than it is presently assumed. Given the current political and economic situation in North Korea, it seems rather unlikely that Pyongyang will give up all of its nuclear ambitions (as one of its last trump cards) for the time being. Even more important for the future—as the talks on rice aid and the flood relief have shown since 1995—remains the problem that the North Korean leadership fears nothing else more than any opening up of its society to the international community127 which is one of the most important 123 See also Frank Umbach, "Financial Crisis Slows But Fails to Halt East Asian Arms Race—Part One", in: JIR, August 1998, pp. 23-27, here p. 24f.; Part Two, in: ibid., September 1998, pp. 34-37. 124 Charles S. Lee/Julian Baum, "Radioactive Ruckus", FEER, 6 February 1997, p. 16. 123 TXT/, 27 January 1997, p. 1. Another source speculated the paid price to North Korea up to 227.6 million US$—see ibid., 19 January 1997, p. 1. 126 Joseph S. Bermudez, Jr./Bhupendra Jasani, "North Korea's Nuclear Arsenal", 12

' See also Bates Gill, "The Divided Nations of China and Korea: Discord and

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prerequisites for all "soft-landing"-strategies and more far-reaching confidence-building measures.

PERSPECTIVES OF CHINA'S NUCLEAR FORCES

. . . But one thing is certain: PLA strategists have been struggling to figure out how to link conventional and nuclear weapons with the operational requirements of potential high-tech local wars over resources and territory around China's periphery. They are interested in how to integrate high technology weapons with "long-distance striking power" so as to deter and, if necessary, deny an adversary victory in any conceivable conventional and nuclear military conflict. PLA strategists have not been content with an undifferentiated, primitive, countervail second-strike deterrent status quo. Indeed, they appear to have their doubts about the credibility of this kind of deterrent, doubts that have probably been strengthened by the prospects of U.S. TMD [Theatre Missile Defence] development. Regrettably, in an era where much international effort is being put into delegitimizing the utility of nuclear weapons, Chinese military strategists have apparently been moving in the opposite direction, concluded the U.S. expert Alastair Iain Johnston at the end of 1995.128 In the 1980s, Chinese military technology was heavily dependent on Western support and co-operation which were always limited. The Western reactions to the bloodshed on the Tiananmen Square and their imposed sanctions confronted China with considerable problems for modernising its conventional and nuclear forces. Since that time, China had been forced to find an alternative co-operation partner. That motivation is one of the major reasons why the bilateral relations to Russia have been improved significantly since the beginning of the 1990s. Both states have initiated a strong relationship that focuses on Russian exports of advanced dual purposed weapon systems and technology to China in order to compensate the loss of the former technological co-operation with the United States and other Western countries. The completed major transactions include the export of modern multirole air fighters, different kinds of

Dialogue", SIPRI (Ed.), Yearbook 1996: Armaments, Disarmament and International Security (Oxford: Oxford University Press, 1996), pp. 133-144. 128 Alastair Iain Johnston, "China's New 'Old Thinking'. The Concept of Limited Deterrence", International Security, No. 3 (Winter) 1995/96, pp. 5-42, here p. 42.

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missiles and modern submarines as well as missile destroyers. In the future, China seems even be interested to acquire Tu~22 "Backfire" medium-range bombers'29 that could be used in nuclear operations. Reportedly, some 100 joint Chinese-Russian research and development projects are under way and more than 2.000 Russian technical experts are assumed to work in China in order to upgrade and modernise China's nuclear armed forces. Moreover, a Russian article of August 1997 reported that both sides agreed even to work out an automatic command and control system (C2) for China's strategic nuclear forces.130 But such a system is not necessarily expedient for a nuclear power with less than 300 strategic nuclear warheads. Is this another indicator for China's ambitions not only to modernise its nuclear forces but also to increase its numbers of missiles and warheads? Since the beginning of its nuclear weapon programmes in the mid1950s and the first nuclear weapon explosion on 16 October 1964, China has always given priority for developing and modernising its nuclear arsenal. Two years later, it launched its first nuclear missile on 25 October 1966, and detonated its first hydrogen Bomb on 14 June 1967. Today, the number of nuclear weapons is still one of the most closely guarded secrets in China's security policy. In the Chinese view, transparency is not in the interest of militarily "weak" or medium-sized nuclear states (in comparison to nuclear superpowers). According to most of the Western sources, China has currently not more than 300 deployed nuclear warheads—which is ten times less than the strategic nuclear arsenals of the United States and Russia after the ratification of START-II131—on some 70-100 intermediate-range ballistic missiles (IRBMs) and about 120 mediumrange bombers (Tu~16 "Badger").132 Although China, too, has built up a nuclear triad, most of the nuclear warheads are deployed on

129 Bin Yu, "Sino-Russian Military Relations", Asian Survey, 3 (March) 1993, pp. 303-316. 130 Nikolai Kuchin, "A Nuclear Deal of the Century?", Mew Times, August 1997, pp. 42-43. 131 Dunbar Lockwood, "The Status of U.S., Russian and Chinese Nuclear Forces in Northeast Asia", ACT, November 1994, pp. 21-24, here p. 23f. 132 SIPRI (Ed.), Yearbook 1996: Armaments, Disarmament and International Security (Oxford University Press: Oxford, 1996), p. 619; Leonhard S. Spector/Mark G. McDonough/ Evan S. Medeiros, Tracking Nuclear Proliferation, pp. 49ff.; The Defence Agency of Japan (Ed.), Defence of Japan. White Paper (Tokyo: Defence Agency/Japan Times, Ltd., July

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IRBMs and ICBMs. Most of China's ballistic missiles have a range of not more than 3.000 km, 20 have a range of 4.800 km and probably not more than seven ICBMs are believed to have a range of roughly 13.000 km and thereby the capability to reach U.S. territory beyond the west coast. In addition, estimations suggest another stored 150 ground-launched tactical warheads.133 Table 3: China's Strategic Nuclear Ballistic Missiles (ICBMs/SLBMs:134 < 5.500 km) Type/ Name

Range (km)

Payload (kg)

DF-5A (1981)

13.000+ 3.200

Number CEP (m) Fuel

Additional Comments

18-26

Liquid

liquid-silo based ICBM; modification with an 8 MIRV-warheads feasible

DF-31 8.000 (late 1990s)

700

0

Solid

Road-Mobile-based ICBM with MIRVwarheads

DF-41 12.000 (c.2005-10)

800

0

Solid

Mobile-based ICBM with MIRVwarheads; will replace DF-5

700

0

Solid

Solid-fuel SLBM

Julang-2 (late 1990s) 8.000

Sources: Wyn Bowen/Stanley Shepard, "Living under the Red Missile Threat", Jane's Intelligence Review, December 1996, pp. 560-564, here p. 563; and "British, French, and Chinese Nuclear Forces", The Bulletin of the Atomic Scientists, November/December 1996, pp. 64-67, here p. 67; Richard D. Fisher, "China Increases Its Missile Forces While Opposing U.S. Missile Defence", Backgrounder, The Heritage Foundation, No. 1268, 7 April 1999 and Richard D. Fisher/Baker Spring, "China's Nuclear and Missile Espionage Heightens the Need for Missile Defence", ibid., No. 1303, 2 July 1999.

1995), p. 52 and "Chinese Nuclear and Conventional Forces 1993", ACT, December 1993, p. 29. IISS (Ed.), The Military Balance 1996/97 (London/IISS: Oxford University Press, October 1996) numbers Chinese IRBMs on 70+ systems. However, some estimates are much higher—see "Size of China's Ballistic Missile Force", Centre for Defence and International Studies, via Internet: http://www.cdiss.org/chinabms.htm. 133 Robert S. Norris/Andrew S. Burrows/Richard W. Fieldhouse, Nuclear Weapons Databook, Volume V: British, French and Chinese Nuclear Weapons (Boulder, C O : Westview Press, 1994), p. 358 and Table 1.7, p. 11. 134 Ranges according IISS; Chinese definitions: short-range (< 1.000 km); mediumrange (1.000-3.000 km); long-range (3.000-8000 km); intercontinental-range (< 8.000 km).

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Given the facts that Chinese armed forces (PLA) are confronted with a technology lag of 20 years behind the West,135 China's missiles are believed to be far less accurate and thereby are still lacking the capability to deliver multiple warheads to separate targets (MIRV). The first and second-generation of research and development stages to deployment of Chinese nuclear weapons took around 11 years. The next stage to deploy the third generation of Chinese nuclear weapons might take even longer, but in the end will certainly narrow the technology gap with the West. The question is only to which extent. But ultimately neither the transition phase nor the final stage of China's ambitious modernisation programmes for its conventional and nuclear armed forces are reassuring for Beijing's neighbours. Table 4: Chinese Theatre Ballistic Missiles (SRBMs/IRBMs/SLBMs: > 5.500 km) Type/ Name

Range (km)

DF-11/ M-ll DF 15/

280-300 800-950

Payload Number CEP (m) Fuel (kg) 600

Solid

300

Solid

-

Solid

600

500

DF-21

1.800

600

30-50

DF 25 DF-3A

1.800 2.800

2.000 2.150

50-150

1.000

DF-4 JL-1

4.750 1.700

2.200 600

20 12-24

-

M-9

Additional Comments Road-Mobile; HE or nuclear warhead Road-mobile; separating HE or nuclear warhead Road-mobile; 2-stage; HE or nuclear warhead; derived from

JL-1 Under development Solid Liquid Transportable; 1 -stage; HE or nuclear warhead Liquid Liquid/caves/rollout 2-stage SLBM; nuclear Solid warhead; deployed on one or two Xia SSBNs

Sources: Wyn Bowen/Stanley Shepard, "Living under the Red Missile Threat", Jane's Intelligence Review, December 1996, pp. 560-564, here p. 563, and "British, French, and Chinese Nuclear Forces", The Bulletin of the Atomic Scientists, November/December 1996, pp. 64-67, here p. 67.

133 See also RIPS (Ed.), Asian Survey Security 1995-96 (London-Washington: Brassey's, 1996), p. 23.

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NUCLEAR PROLIFERATION Table 5: Chinese Nuclear Bombers Type/Name

Additional Comments

Range (km)

Payload (kg)

Hong-6 (B-6)

3.100

4.500

120

1965

"Badger" type

Qian-5 (A-5)

400

1.500 (?)

30

1970

"Mig-19" redesign

Number

CEP (m)

Source: "British, French, and Chinese Nuclear Forces", The Bulletin of the Atomic Scientists, November/December 1996, pp. 64-67, here p. 67.

China's nuclear strategy is currently still based de facto on a "counter city" second-strike capability.136 But its future nuclear strategy might rather be based on a "flexible response" and "limited deterrence" posture similar to Nato's in the 1980s according to convincing Western analysis. According to Chinese advocates of a "flexible response" and "limited deterrence" strategy, the Clausewitz dictum that warfare is the continuation of politics exaggerates the uncontrollability of nuclear war and is leading to undermine the credibility of China's deterrence policy.137 Internal discussions of nuclear strategy have indicated China's doctrine shifts since 1985 from an early, large scale and allencompassing "people's war", based on an attrition strategy, to local and limited wars under high-tech conditions around China's periphery. According to U.S. experts like Alastair Iain Johnston, those doctrine shifts have also led to an evolving concept of limited nuclear deterrence,138 resting on a limited war-fighting capability and denying the adversary any victory in a nuclear war.139 Such a limited 136 D. Lockwood, "The Status of U.S., Russian and Chinese Nuclear Forces in Northeast Asia", p. 23. 137 Alastair Iain Johnston, "China's New 'Old Thinking', p. 13f, and id., "Prospects for Chinese Nuclear Force Modernisation: Limited Deterrence versus Multilateral Arms Control", The China Journal, June 1996, pp. 548-576. 138 Chinese strategists explicidy distinguish "limited nuclear deterrence" from "minimum deterrence": In the first term, nuclear weapons play a much greater (counterforce-) warfighting role in the deterrence of both conventional and nuclear wars, particularly in the context of escalation control and intra-war deterrence—see Alastair Iain Johnston, "China's New 'Old Thinking", pp. 12 and 19f. 139 On the Chinese military doctrine shifts since 1985 see Paul H.B. Godwin, "From Continent to Periphery: PLA Doctrine, Strategy and Capabilities Towards 2000", The China Quarterly, June 1996, pp. 464-487; Nan Li, "The PLA's Evolving Warfighting Doctrine, Strategy and Tactics, 1985-95: A Chinese Perspective", ibid., pp. 443-463, Yao Yunzhu, "The Evolution of Military Doctrine of the Chinese PLA from 1985 to 1995", The Korean Journal of Defence Analysis, 2/1995, pp. 57-80 and David Shambaugh, "The Insecurity of Security: The PLA's Evolving Doctrine and Threat Perceptions Towards 2000", The Journal of Northeast Asian Studies, No. 1 (Spring) 1994, pp. 3-25.

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deterrence doctrine requires the development of a greater number of tactical, theatre, and strategic nuclear weapons with improved accuracy to target nuclear forces in addition to cities. In the view of Chinese experts, however, China's modernisation programme of its nuclear weaponry has rather "limited aims" whilst Western experts exaggerate the importance and the influence of the "limited deterrence" school in the PLA for the decision-making processes of the nuclear modernisation programmes.140 China's ambitious modernisation programmes of its nuclear forces, including that of its IRBMs "to provide strategic dominance over East Asia" (Richard Fisher),141 are another proof of the shifts because they seem mainly proactively doctrine-driven (a departure from the PLA's past rather reactive practice). They demand changes in the People's Liberation Army's (PLA's) force structure, strategy and concepts of operation. Given Western estimations of China's current fissile material stock, it can expand its nuclear forces after acquiring the MIRV142 technology two or three times of its present size (from 300 to 600-900 warheads).143 Despite facing tremendous problems in modernising its armed forces which is hampered by insufficient funds—although even the official military budget has increased by approximately 33 40 per cent in real terms over the past five years144— and the low level of its military technology base, numerous development programmes of its nuclear forces are under way. In contrast to the United States and Russia, the modernisation and expansion of China's nuclear and conventional armed forces had not been constrained by any international arms control regime until 1996. At the same time, uncertainty about these Chinese modernisation programmes and Beijing's long-term strategic intentions behind those military programmes under way arise primarily from the lack of transparency in its military sphere. 1+0 Hongxun Hua, "China's Strategic Missile Programmes: Limited Aims, not 'Limited Deterrence'", The Nonproliferation Review, Winter 1998, pp. 60-68. 1+1 Quoted following the article "China Upgrades Medium-Range Missiles Targeting East Asia", ADJ 8/1997, p. 63. 142 MIRV = Multiple Independently Targetable Re-entry Vehicle. 143 Alastair Iain Johnston, "China's New 'Old Thinking", p. 36. To China's MIRV development programmes see James Lamson/Wyn Bowen, "One Arrow, Three Stars: China's MIRV programme—Part l",JIR, May 1997, pp. 216-218 and Part II, ibid., June 1997, pp. 266-269. 144 See also "China's Military Expenditure", IISS (Ed.), Military Balance 1995-1996 (London/IISS: Oxford University Press, 1996), pp. 270-275 and Shaoguang Wang,

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The focus on improving the qualitative level of China's nuclear forces with the help of recruited former Soviet weapon scientists and engineers is directed toward a miniaturising of warheads, better targeting accuracy, penetration and anti-electronic interference capability, modernising its C2 networks, developing a MIRV capability as well as increasing the survivability and the camouflage of its nuclear forces such as storing them underground and deploying them on mobile, land-based launchers or submarines.145 The PLA navy is currently working on a new advanced nuclear submarine which will carry 12 SLBMs and will be deployed in the next decade. As part of the programme, this new type of a nuclear submarine will be equipped with a new SLBM, called Jiulong—2 (CCS-JVX-4), with a range of 8.000 km. It will allow Chinese submarines for the first time to target parts of the U.S. from areas located near the Chinese coast.146 Western experts anticipate that China will deploy 4-6 submarines, each armed with 12 SLBMS. That would add alone 48—72 warheads to China's nuclear arsenal, with even more, if China can succeed with its MIRV development (expanding the number of warheads on the SLBMs at least two or three times).147 A new mobile, solid-fuel ICBM, named Dongfeng-31 (DF-31), had been tested by China at the end of May 1995, a few days after the indefinite extension of the NPT and in August 1999. It also has a range of 8.000 km and can carry a payload of 200-300 Kt. The new ICBM is expected to be operable prior to the year 2000.148 Another solid-fuel mobile ICBM (DF-41) under development will have a range of

"Estimating China's Defence Expenditure: Some Evidence from Chinese Sources", The China Quarterly, September 1996, pp. 889-911. 1+5 See also Yang Huan, "China Strategic Nuclear Weapons", in: Michael Pillsbury (Ed.), Chinese Views of Future Warfare (Washington D.C.: National Defence University Press, 1997), pp. 131-135, here p. 134f; Dunbar Lockwood, "The Status of U.S., Russian, and Chinese Nuclear Forces in Northeast Asia", pp. 332ff.; Holly Porteous, "China's View of Strategic Weapons", JIR, March 1996, pp. 134-136; in context see also Vipin Gupta, "Assessment of the Chinese Nuclear Test Site Near Lop Nor", ibid., August 1993, pp. 378-381 and Yan Kong, "China's Nuclear Bureaucracy", ibid., July 1993, pp. 320-326. 146 See also Nigel Holloway, "Touchy Issue. China Gets Defensive on Missile Reductions", FEER, 23 October 1997, p. 29f. 14/ Alastair Iain Johnston, "Prospects for Chinese Nuclear Force Modernisation", p. 562f. 148 RIPS (Ed.), Asian Survey Security 1995-96 (London-Washington: Brassey's, 1996), p. 29f. and Paul H.B. Godwin, "Uncertainty, Insecurity and China's Military Power", Current History, September 1997, pp. 252-257, here p. 257.

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12.000 km and is anticipated to become operational before 20052010.149 Furthermore, China is also developing ground—and airlaunched, land-attack cruise missiles, partly from versions of its turbojet powered C-802 anti-ship missile. Reportedly, this cruise missile with a range of at least 120 km, carrying a payload of 165 kg, will incorporate a highly accurate Global Positioning System (GPS) guidance system and a terrain contour-matching radar to improve the accuracy required to perform precision-strikes against high-value civilian and military targets such as command and control centres or government buildings in Taipei.150 This and other future cruise missiles with their low altitudes will present a major detection challenge for future Theatre Missile Defence (TMD) radar and effective counter measures. A report to the U.S. Congress warned in 1997: "A missile fleet of this size could overwhelm any theatre missile defence capability planned for this vital region and fundamentally alter regional calculations of the balance of power."l3' However, China presently still lacks an adequate limited nuclear war fighting posture with a satellite based early-warning (EW) capability and sufficient counterforce as well as countervalue tactical, theatre and strategic nuclear forces to deter the escalation of conventional or nuclear war. But it is also clear that China is going to close this "window of opportunity"—the gap between its operational requirements of the limited deterrence strategy and its nuclear doctrine assumptions—for its perceived potential adversaries. It is the result of the logical conclusion of China's strategists that Beijing's deterrent is uncertain or even frail and with that not credible enough. It leads already to a greater Chinese interest in launch-on-warning or launch-under-early attack postures and hence pre-emptive nuclear strategies102 that ultimately will undermine crisis stability. Then the civilian and military leadership might face similar problems of command and control of nuclear weapons in crisis and war times like Russia nowadays. 1+9 John Wilson Lewis/Hua Di, "China's Balllistic Missile programmes. Technologies, Strategies, Goals", International Security, Fall 1992, pp. 5-40, p. 11. 150 \Yyn Bowen/Stanley Shepard, "Living under the Red Missile Threat", p. 561 and John Downing, "China Develops Cruise Missiles", Asia-Pacific Defence Reporter (A-PDR), August-September 1997, p. 6. 151 Quoted following the article by Barbara Starr, "China Could 'Overwhelm' Regional Missile Shield", Jane's Defence Weekly (JDW), 23 April 1997, p. 16. 152 Alastair Iain Johnston, "China's New 'Old Thinking'", p. 2If.

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In the view of China, an effective TMD-option of the United States and its allies Japan, South Korea and Taiwan against China's nuclear ballistic missiles would not only question its nuclear deterrence against those potential aggressors but also dramatically increase the U.S. ability to launch a disarming first strike against China. Consequently, China is—like Russia—essentially interested in the endorsement of the principles behind the ABM-treaty.153 Although Beijing's objections against TMD-systems in its three neighbouring countries are to some extent understandable, most of China's arguments are not very convincing and persuasive if they are analysed more in detail.154 Moreover, it had recently deployed between 150 to 200 of M-class—up from 30-50 missiles three years ago—ballistic missiles in southern China towards the Taiwan Strait and might plan to raise the number to around 650 in the next years, as a Pentagon report for submission to the US Congress and Taiwanese sources have indicated.150 With those nuclear weapon programmes under development and the ultimate goal of the Chinese political-military elite to narrow the technological gap to the United States and Russia and to create a less vulnerable, more flexible, and more reliable strategic retaliatory force, Beijing pushed through four nuclear tests (such as on 15 May and 17 August 1995 as well as its last 44th and 45th tests on 8 June and on 29 July 1996) from 1995 to 1996. China ignored thereby any international or regional repercussions before finally it pledged a moratorium as a pre-condition of the Comprehensive Test Ban Treaty (CTBT).156

1)3 See also Alastair Iain Johnston, "Prospects for Chinese Nuclear Force Modernisation: Limited Deterrence versus Multilateral Arms Control", p. 573f. 154 Frank Umbach, "World Gets Wise to Pyongyang's Nuclear Blackmail—Part Two", JIR, October 1999, pp. 35-39, here p. 37f. k5 ' Tony Walker/Stephen Fidler, FT, 10 February 1999, pp. 1 and 4; James Kynge, ibid., 11 February 1999, p. 12 and ADJ 3/1999, p. 56. 136 Tony Walker/Frances Williams, FT, 30 July 1996, p. 1 and TKH, 30 July 1996, p. 1.

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Table 6: China's Nuclear Arsenal vis-a-vis the Other Four Original Nuclear Weapon States Strategic Nuclear Weapons of the Original "Nuclear Five " (1999) Country

Suspected strategic nuclear weapons

Suspected non-strategic nuclear weapons

Suspected total nuclear weapons

China France Russia UK USA

284

150

434

482

0

7,200

6,000-13,000

482 13,200-20,000 200 15,500

100

100

8,500

7,000

Source: Ehsan Ahrari, "China Eyes NATO's Nuclear Doctrine", in: Jane's Intelligence Review (JIR), April 1999, p. 38f., here p. 39.

While the assumption that China will be able to close the gap between the nuclear doctrine and its operational requirements as well as capabilities over the next decade remains uncertain, China's nuclear strength will nonetheless increase as the consequence of the international denuclearization between the nuclear superpowers United States and Russia. By implementing START—II, both arsenals will be downsized to 3.-3.500 warheads. Consequently, the combined nuclear arsenal of both superpowers to Chinese strategic nuclear forces would fall from 70:1 to 7:1, or 3.5:1 compared with one of the nuclear superpowers (see the table above).137 Forthcoming START-III negotiations between the U.S. and Russian side will further reduce their arsenals to expected 2.000-2.500 nuclear warheads on each side or even more (in the case of Russia) until the end of 2007. A Chinese nuclear arsenal of some 600—900 warheads in the future would then automatically not only raise China's global political prestige but also the scope of its regional nuclear and conventional military options in the Asia-Pacific region (including towards the United States). Moreover, one has to take into account that China has in contrast to the United States no security commitments requiring a credible extended deterrence posture that justifies high numbers of warheads. However, it might help to explain another trend of China's discussions of military doctrine—the increasing linkage between the 15/ Alastair Iain Johnston, "Prospects for Chinese Nuclear Force Modernisation: Limited Deterrence versus Multilateral Arms Control", p. 563.

NUCLEAR PROLIFERATION

111

PLA's conventional and nuclear options.108 With a secure northern border towards Russia, China's military strategy has now shifted its attention from the more general peripheral defence of the country to concrete maritime defence in order to guarantee militarily its officially claimed economic zones and territorial sovereignty in the South China Sea and increased military options toward Taiwan.lo9 Against this background, China's increasing nuclear retaliatory capability might have primarily the function to prevent great power interference in local and limited conventional wars under high-tech conditions with small and medium powers such as those in the South China Sea. A credible nuclear deterrence option that guarantees nuclear escalation and its control similar to Nato's flexible response strategy of the 1980s requires thus both the qualitative modernisation and quantitative increase of China's nuclear arsenal vis-a-vis the United States and Russia. Although the most dramatic improvements of China's armed forces are indeed taking place in its strategic and theatre nuclear force modernisation, its future capabilities might be constrained by China's adherence to the CTBT, a fissile material cut-off, the possibility to deploy Ballistic Missile Defence (BMD) or Theatre Missile Defence (TMD) systems in Japan, South Korea, Taiwan and possible START—IV negotiations between all five nuclear powers.160 Critical technological limitations such as computer capabilities for satellitelinked C3I or increasing the number, accuracy and survivability of delivery means might also constrain an unlimited modernisation programme of its nuclear forces. However, as analysis of China's last military exercises and missile tests161 as well as revelations of exporting 46 powerful U.S. supercomputers to the Chinese Academy of Sciences162 (which could be used for the testing of nuclear warheads) have shown, those technical constraints might not be the major 1;>R See also Nan Li, "The PLA's Evolving Warfighting Doctrine, Strategy, and Tactics, 1985-95", p. 460. 1)9 Paul H.B. Godwin, "From Continent to Periphery", p. 474. l()l) Alastair Iain Johnston, "Prospects for Chinese Nuclear Force Modernisation: Limited Deterrence versus Multilateral Arms Control", pp. 564ff. lbl Greg Gerardi/Richard Fisher Jr., "China's Missile Tests Show More Muscle", JIR, March 1997, pp. 125-129 and M.V. Rappai, "Chinese Military Exercises. A Study", Strategic Analysis, November 1996, pp. 1119-1131. 162 G. Milhollin, IHT, 1-2 March 1997, p. 8., ibid., 13 June 1997, p. 5 and J. Gerth/M.R. Gordon, ibid., 28 October 1997, pp. 1 and 10.

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barrier against the modernisation programmes for China's nuclear armed forces. Relaxed U.S. export control for sensitive dual-use technologies could indeed help China to build stealthier and longer range cruise and ballistic missiles with a much greater accuracy163 as the recent Cox-report has also confirmed.164 At the same time, these Chinese nuclear weapon programmes, however, are not the only proliferation concerns of China's neighbours in North- and Southeast Asia as well as of the United States. China's weaponry and military technology export policy, too, dictated by the need to earn hard currency and to raise its politicalmilitary influence in the region, have caused uncertainty and instability in the region and particularly in its bilateral relation with the U.S.165 It also included the export of technology and delivery means such as dual-use nuclear technology, missile technology as well as dualuse chemicals and chemical-production technologies to nuclear threshold countries such as Pakistan, Iran, Iraq and other potential nuclear proliferation states. It underscores the main question whether China is willing and able to function as an important player of the international community in order to stabilise and not to undermine regional and global security. China is hitherto not a member of the MTCR in which 28 countries agreed not to export missiles capable of carrying a 500~kg warhead more than 300 km. Although the U.S. and China reached a quid-pro-quo compromise in October 1993, it called simultaneously for continued MTCR discussions and interpretations.166 Another fact is even more important. While Beijing has also promised and underscored its willingness to implement a nation-wide effective export control system to prevent sales of sensitive proliferation-related technologies and end-products, no specific plan for action 163

See also Nigel Holloway, "Cruise Control", FEER, 14 August 1997, pp. 14-16. Stephen Fidler, FT, 26 May 1999, p. 4. 160 See also Banning N. Garrett/Bonnie S. Glaser, "Chinese Perspectives on Nuclear Arms Control", International Security, No. 3 (Winter) 1995/96, pp. 43-78 and Mitchel B. Wallerstein, "China and Proliferation: A Path Not Taken?", Survival, No. 3 (Autumn) 1996, pp. 58-66. 166 China pointed out that the M - l 1 was specifically designed with an 800 kg payload and a range of 20 km short of the MTCR restriction of 300 km. U.S. experts in contrast noted that a lower payload will enhance the range of the Chinese declared one and thus fall under the MCTR. The compromise stipulated that China will not export missiles with a range of 300 km and with a payload of at least 500 kg—see Paul H.B. Godwin/John J. Schulz, "China and Arms Control: Transition in East Asia", ACT, November 1994, pp. 7-11, here p. 11. 164

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had been implemented until early 1997 in contrast to Taiwan. Then, however, China has taken new assurances, commitments and concrete steps which meet international standards: In May 1997, China's State Council issued a new directive to all government agencies and non-governmental entities on the control of nuclear-related exports to prevent covered exchanges of technical personnel and information; one month later, it published an interim list of nuclear-related dual-use technologies identical to the Nuclear Suppliers Group's dualuse list; in September 1997, the State Council established new nuclear export control regulations identical to the list used by the Nuclear Supplier Group; finally, in October 1997, China became a member of the NPT Exporters Committee (Zangger Committee). This was the first time that China has joined a multilateral non-proliferation export control regime. These various steps constitute a positive shift in China's nuclear non-proliferation policies and practices.167 However, they might conflict with other foreign and national security interests of China. During Jiang Zemin's South-East-Asian visits to India, Pakistan and Nepal at the end of 1996, he confirmed, for instance, to maintain its co-operation with Pakistan concerning the "civilian use of nuclear energy".168 It seems also to continue transferring missile components and technology to countries like Pakistan and Iran.169 It might also highlight a fundamental shift from China's traditional weapons and military related export policy to technology transfers, scientific assistance, production technologies, subcomponents, and dual use transfers which are much more difficult to monitor than exports of complete weapon systems or plants. This shift, however, is not a special Chinese version of a weaponry export policy but rather a global non-proliferation trend and challenge. Whether the new U.S.-China agreement of December 1997 that shall exclude any weapons and technology transfers for Iran's missile and nuclear weapon programmes will really change Beijing's long-term weaponry and dual-use export policies remains to be seen and will be dependent

"" On the evolution of China's arms control policies see Wu Yun, "China's Policies Towards Arms Control and Disarmament: From Passive Responding to Active Leading", The Pacific Review 4/1996, pp. 577-606; Hung-yi Jan, "The PRC's Policies Toward Nonproliferation Regimes", Issues and Studies, 11/1997, pp. 112" 132. 168 Neue Zuericher ^eitung (NZZ), 29 November 1996, p. 5 and ibid., 5 December 1996, p. 5. 169 Douglas, Waller, "The Secret Missile Deal", Time, 30 June 1997 and Thomas W. Lippman, The Washington Post, 23 May 1997, pp. Al and A33.

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on both internal and external developments during the transitional stage.170 Thus far, China is neither a "team player" nor a "rogue elephant".171 In order to promote transparency, security and stability in East Asia, the Chinese willingness to co-operate is an essential prerequisite for new arms control negotiations and the success of treaties and regimes such as a global fissile material production cut-off convention.172 Similar as in the case of the CTBT, an Indian signature is dependent on China and a Pakistani ratification on India's. Thus far, Chinese strategists seem not very concerned about future regional proliferation around its borders.173 Therefore, China stands at the cross-roads in its non-proliferation policy that might become a litmus test of its future role in regional and global affairs with direct implications of foreign policies towards Beijing. A continued Chinese nuclear and missile technology co-operation with Pakistan, for instance, might further backfire and finally be counterproductive for Beijing's own security some day in the not-too-distant future as the five Indian nuclear tests in May 1999 and New Delhi's justification as a counterbalance to China's nuclear arsenal (and not Pakistan's) have already demonstrated.

A NEW PROLIFERATION THREAT: THE EXAMPLE OF THE

AUM

SHLNRIKTO DOOMSDAY CULT—A WATERSHED IN TERRORISM?

In a world poised between the Gold War and the new millennium, the tale of Aum is a mirror of our worst fears. Heavily armed militias, terrorist cells, zealous cults and crime syndicates all find their voice in the remarkable ascent of this bizarre sect. For years, expert have warned us: the growing sophistication of these groups, combined

170 On the agreement see The Strait Times, 12 September 1997, p. 28 and Joseph Fitchett, IHT, 11 December 1997, pp. 1 and 4. 171 On the metaphor James V. Feinerman, "Chinese Participation in the International legal Order: Rogue Elephant or Team Player?", The China Quarterly, March 1995, pp. 186-210. 172 Lisbeth Gronlund/David Wright/Yong Liu, "China and a Fissile Material Production Cut-off", Survival, 4 (Winter) 1995-96, pp. 147-67. To a Chinese view see Xia Liping, "Maintaining Stability in the Presence of Nuclear Proliferation in the Asia-Pacific Region", Comparative Strategy, 1995, pp. 277-286. 173 Taeho Kim, "China and Virtual Nuclear Arsenals", in: Michael J. Mazarr (Ed.), "Nuclear Weapons in a Transformed World", pp. 207~217, here p. 214.

NUCLEAR PROLIFERATION

1 15

with the spread of modern technology, will bring about anew era in terrorism and mass murder. The coming of Aum Supreme Truth shows how close these nightmares have come to reality. (So the authors David E. Kaplan and Andrew Marshall in their remarkable investigation of Aum Shinrikyo)174 The Sarin nerve gas attack in the heart of Tokyo on 20 March 1995, killing 12 people and injuring about 5.500 others, was the first use of non-conventional weapons by a pseudo-religious sect using terrorist means. At the same time, destructive intentions of fanatical individuals and groups have also manifested themselves in the United States as the terrorist attacks in Oklahoma (killing 168 people) and the World Trade Centre in New York City have shown. But for Japan which has one of the lowest crime rates in the world173 and that has never experienced terrorist challenges like the United States or European countries (such as Italy, France or Germany) it was a deep and lasting shock. The image of a safe nation on a safe island had been shattered. It revealed that Japan is no longer an island secure against such security challenges. In that respect, the Sarin nerve gas attack was a watershed in terrorism for both Japan and the rest of the world.176 The widespread feeling of insecurity within the Japanese society and government continued in the following months, even after the raids of the Aum facilities and the arrest of Asahara. Rumours of new Aum attacks after the arrest of Asahara and key members of his followers seemed to be confirmed on 19 April 1995 when more than 500 people were sickened by mysterious fumes in underground train passages and train cars as well as two days later in a shopping complex near the JR Yokohama Station. Although nobody suffered serious ill effects and had to be treated in hospitals like after the Sarin attack, the nervousness of the Japanese society had been deepened because the police was again unable to prove whether the new incidents had been initiated by Aum followers or were merely copycat crimes. On 23 April 1995, Hideo Murai, the Science and 174

David E. Kaplan/Andrew Marshall, The Cult at the End of the World. The Incredible

Story of Aum (London: Arrow Books Limited, 1996), p. 3. "' Japan has also the world's highest rate of criminal conviction. But it stems at least in part from its practice of making no arrests until they have all the evidence needed for a conviction. n6 "Terror in the Heart of Japan. The Aum Shinrikyo Doomsday Cult". The Japan Times Special Report, July 1995.

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Technology Minister of Aum, was murdered by a follower in front of hundreds of police and press cameramen at the entrance of Aum's headquarter. On 5 May 1995—in the middle of the Golden Week holidays—a new gas attack was intended to kill innocent people. But the lethal chemicals could be discovered in time, preventing thus the possible death of estimated 10.000-20.000 people. On 16 May 1995, when Asahara was finally arrested, a letter bomb mailed to the Governor of Metropolitan Tokyo exploded in the hands of his secretary who lost the fingers of his left hand. Against that background and coming back from a trip to China, Prime Minister Tomiichi Murayama's helpless question "what is going on?" to his aides, underscored the widespread feeling of insecurity within the Japanese government and society.177 In the past, most of the terrorists were politically motivated and therefore their aims were rather limited with specific targets. They were often sponsored by governments of "rogue states" which also imposed certain constraints their action. But the Aum terrorism seems to follow no presumed rationality and had not imposed any constraints on their actions. In this light, Japan was not only facing a so far unknown "normal terrorism" but at the same time a new form of it, involving religion which turned to be more devastating than ever seen before in the world. The Aum leader and his followers had seen themselves surrounded by non-believers which are for them simply enemies. Any rational behaviour and communication between the attackers and the attacked state and society were therefore from the very beginning limited and hence the influence on preventing further attacks of Aum followers rather small. Even more important was the fact that the Aum cult had successfully infiltrated various departments of the Japanese government and industry including elements of law enforcement, the military and the defence industry. Moreover, the cult acquired conventional armaments and attempted to acquire non-conventional weapons and technologies from the United States and the FSU. It planned attacks not only on the Japanese but also on the U.S. government. Neither their intentions nor the technology acquirements were fully discovered by the Japanese and U.S. law enforcement and intelligence services until the Tokyo gas attack on 20 March 1995.

The Japan Times, 7 May 1995, pp. 1-2, here p. 1.

NUCLEAR PROLIFERATION

11 7

The Japanese investigators found evidence that not only Sarin had been produced, but also Tabun, Soman and VX.178 Furthermore, they also embarked upon intense research and development programmes for the production of biological weapons, using agents such as Botulism and Anthrax, Qjfever and even ebola. Reportedly, they had actually attempted to use bacterial warfare.179 Thereby, the cult followers developed and produced those chemical and biological elements "on a scale not previously identified with a sub-national terrorist group".180 It was possible for them to create such sophisticated research and production facilities without attracting the attention of either Japanese or foreign governments and intelligence circles. They planned to produce 70 tons of Sarin within 40 days after the production facility had been completed. Aum also purchased a Russian Mi—17 helicopter for 78 million Yen and smuggled it secretly into Japan. In addition, they wanted also to buy Russian tanks (including T-72s) for prices, ranging from 200.000-1 million US$. Investigated documents showed proposed arrangements for secret deliveries.181 They also organised military training tours in Russian military facilities after the permission of top-ranking military officers which involved training from members of Spetsnaz elite units.182 Furthermore, they bought KGB commando manuals for training of Aum's followers. Originally, it was even planned to spray Sarin via helicopter over Tokyo. Aum members had also constructed a vehicle used to spray Sarin in Matsumoto.183 As the investigation has shown meanwhile the cult carried out at least nine biological attacks until 1995. Most of the information concerning the production of lethal chemical substances, which Aum's Science and Development Agency was looking for, was received from brief searches in Internet. It provides innumerable ways to obtain such sensitive information as U.S. experts 1/8

See also The Japan Times, 10 December 1995, p. 2. Staff Statement U.S. Senate Permanent Subcommittee on Investigations. Hearings on Global Proliferation of Weapons of Mass Destruction: A Case Study on the Aum Shinrikyo, Washington, October 31, 1995, pp. 25ff. 180 Ibid., p. 21. 181 Eric Croddy, "Urban Terrorism—Chemical Warfare in Japan", JIR, November 1995, pp. 520-523, here p. 522. 182 Officially it had been denied by the Russian side that training of pilots took place. But Russian officials admitted that there are many private companies with helicopters at their disposal—see "Staff Statement U.S. Senate Permanent Subcommittee on Investigations. Hearings on Global Proliferation of Weapons of Mass Destruction: A Case Study on the Aum Shinrikyo", p. 39. 183 Maimchi Daily News, 21 October 1995, p. 1. 1/9

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FRANK UMBACH

have found out after the Sarin attack.184 Aum earmarked the U.S. as a major shopping centre not only for its programmes of developing mass destruction weapons but also for its vast business empire to finance the launch of Armageddon in November 1995 by gassing the Diet building (Japan's parliament). Aum was obviously engaged in a concerted effort to obtain scientific data and sophisticated research equipment "used in some of the most advanced biological laboratories". 18° The computerised chemical plant of Aum was, too, extremely sophisticated according to Japanese investigations. Very intriguing was also Aum's presence in Australia in an area which is known for its uranium deposit. The cult purchased a 500.000 acre sheep farm. They conducted mostly unknown experiments, but obviously for planning to mine uranium for the development of nuclear weapons186 and for experiments with Sarin on sheep at its Australian property.187 Thus a final report of the U.S. Senate subcommittee on investigations of the Aum Shinrikyo gas attack concluded in October 1995: The ease with which the cult accessed the vast international supermarket of weapons and weapons technology is extremely troubling. It is especially troubling in light of the current state of the economies and governments of the former Soviet Union. How much this cult acquired and how much more they could have obtained is still a mystery. How much the next group may be able to acquire is the question that also remains unanswered.188 The Aum Shinrikyo cult was developing not only chemical weapons such as Sarin, but also biological ones, studying laser arms, trying to mine uranium and making uranium enrichment for nuclear weapons 184 Staff Statement U.S. Senate Permanent Subcommittee on Investigations. Hearings on Global Proliferation of Weapons of Mass Destruction: A Case Study on the Aum Shinrikyo, p. 22f. 185 Ibid. 186 See also The Japan Times, 2 July 1995, p. 2. The author also thanks A. John McFarlane from the Australian Defence Force Academy for providing information on Aum's activities in Australia. On results of an Australian investigation see Jeff Penrose, "Western Australian Link to Japanese Doomsday Cult", Platypus Magazine (the Journal of the Australian Federal Police), December 1995, pp. 5-10. 18/ Staff Statement U.S. Senate Permanent Subcommittee on Investigations. Hearings on Global Proliferation of Weapons of Mass Destruction: A Case Study on the Aum Shinrikyo, pp. 4Iff. 188 Staff Statement U.S. Senate Permanent Subcommittee on Investigations. Hearings on Global Proliferation of Weapons of Mass Destruction: A Case Study on the Aum Shinrikyo, p. 55.

NUCLEAR PROLIFERATION

1 19

in Australia, assembling guns and rifles, making drugs and narcotics like LSD, and using truth serum on its own followers. Thereby, they operated world-wide: in Japan, the United States, Russia, Australia, Germany and other countries. The initial gas attack on Tokyo created a widespread chaos and apprehension but it caused relatively few fatalities among the population. The accidental release of anthrax in Sverdlovsk (Russia) in 1979, for instance, is estimated to have killed between 400 and 1.200 people.189 In the Tokyo gas attack case, analysts have attributed the rather small number of innocent victims to a variety of factors such as: the deliberate dilution of Sarin; to provide protection for the attackers and facilitate subsequent spread; the small quantity of Sarin used; the rapid response of emergency personnel, although it had heavily been criticised as insufficient in the Japanese press, and the unusually powerful air exchange systems of most of Tokyo's subway stations.190 In this light, the question arises whether and to which extent the international community has drawn lessons from the terrible experience in order to prevent similar tragedies in the future and to strengthen countermeasures against those new forms of terrorist threats and its non-proliferation policies.191 Meanwhile, Japan and other countries have started to examine the lessons and consequences after the Tokyo gas attack. The Japanese police admitted, for instance, errors, miscalculation, misjudgement and indecision during its investigation of the Sarin gas attack. New reports have also revealed how unprepared and unequipped the police and other special services were after the gas attack.192 Given the fact that not only Japan but also the United States, Russia and Europe were and are still largely unprepared to counter those new forms of international terrorism, it is of utmost importance to combine national countermeasures and to promote any form of information exchange. Ultimately, the Sarin nerve gas attack compels international co-operation on common anti-terrorist measures and non-proliferation efforts. 189

Ibid., p. 2. Ibid., p. 2f. See also Bruce Hoffman, "Terrorism and WMD: Some Preliminary Hypotheses", TheNonproliferation Review, Spring-Summer 1997, pp. 45-53 and John F. Sopko, "The Changing Proliferation Threat", Foreign Policy, Winter 1996-97, pp. 3-20. 192 See also FT, 21 August 1996, p. 5. 190 191

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Although one can assume that most terrorist groups will also in the future not cause mass killings, using rather non-conventional weaponry and prefer the use of chemical and biological weapons, nuclear terrorism should not be totally dismissed any longer.193 Only few groups will certainly have the means and skills to acquire nuclear material. But unfortunately, as the German strategic analyst Uwe Nerlich has pointed out, "most potent terrorist groups are likely to be both most capable of a determined pursuit of objectives and most capable of acquiring and handling weapons-grade nuclear material."194 It is also important to stress the fact that the quality of fissile material is only important for bomb making. But most other forms of nuclear terrorism would be just as effective using industrial-grade fissile material as weapon-grade material or a nuclear-enriched conventional explosion (by a crude, non-fissionable atomic bomb, also called "dirty bomb"). The Chechen case in Moscow in November 1995, when terrorists had hidden four cases of radioactive caesium (310 times the normal amount of radioactivity) in the well-known Ismailovo Park195 confirmed the use of a conventional device with a highly radioactive coating rather than a operational nuclear bomb. It created chaos and helplessness in Moscow's security circles. In this light, "thinking about the unthinkable" might be the only reliable, but certainly also most unpopular policy guideline of changing the current unpreparedness of highly vulnerable Western industrial societies. Thus far, in the West only the U.S. Energy Department maintains a nuclear emergency search team trained to disable terrorist nuclear devices—a programme, however, which is underfinanced and understaffed according to U.S. experts.196 Although Aum Shinrikyo is still under investigation and banned in Japan and Russia, it has survived. It is still active and recruiting successfully new members.197 While organised crime organisations and other non-state actors are 193

Also Japan is still threatened by terrorist challenges because the Japanese Red Army (JRAj is still able to conduct further terrorist acts despite recent successes of arresting JRA members—see Bruce Hoffmann, "Creatures of the Cold War: the JRA", JIR, February 1997, pp. 80-82. 19+ Uwe Nerlich, "The Political and Strategic Analysis of Nuclear Non-State Actors and Sponsoring States: What to Look for?", SWP-AP 2908, Ebenhausen, June 1995, p. 16. 195 Gavin Cameron, "Nuclear Terrorism", JIR, September 1996, pp. 422^425, here p. 425. 196 Jessica Stern, IHT, 20-21 July 1996, p. 6. 197 Kevin Sullivan, IHT, 30 September 1997, p. 2.

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121

forming powerful multinational alliances (such as the Russian and Colombian criminal organisations), the greater availability of expertise and resources could overcome former technological barriers as the example of Aum Shinrikyo has demonstrated. The threat of bioterrorism in particular is rising198 which demands more national and international attention and countermeasures.

A NUCLEAR WEAPONISATION?—JAPAN'S CURRENT NON-NUCLEAR WEAPON STATUS AND ITS FUTURE

In the context of analysing Japan's non-proliferation policies and its civilian nuclear energy programmes, a significant gap exists between Japan's own image as a pacifistic society and a country pursuing only peaceful policies, and the lasting distrust of other Asian nations in Japanese politics. In no other field the gap of views between Japan and other Asian nations is so profound as in the nuclear one. While since 1968 Japan has repeatedly declared to adhere to the three nonnuclear principles—namely not manufacturing, possessing, or allowing nuclear weapons on Japanese soil199—, experts outside Japan are often sceptical or even suspicious of Japan's civilian nuclear and rocket programmes. Despite Japan's ratification of the NPT in 1976, sceptical experts of other Asian countries and in the United States have pointed out that Japan is the only non-nuclear weapon state operating uranium enrichment and reprocessing plants simultaneously. All of them are technically capable of producing fissile material for nuclear weapons. In their views, it is particularly the magnitude of the civilian Japanese nuclear projects and specific programmes such as Fast Breeder Reactors (FBR) or Mixed Fuel Rods (MOX) that raise widespread proliferation concerns.200 With its 51 nuclear reactors (28 of them located along the Japan Sea coastline), Japan 198

W. Seth Carus, "The Threat of Bioterrorism", INSS/NDU-Strategic Forum, No. 127, September 1997. 199 p r j m e Minister Eisaku Sato advocated the policy of "three non-nuclear principles" in December 1967 which were adopted by the Diet (the Japanese parliament) in January 1968. Each subsequent government has repeatedly reaffirmed its support for these principles as part of Japan's national security policy. 200 See in particular Selig S. Harrison (Ed.), Japan's Nuclear Future: The Plutonium Debate and East Asian Security (Washington, D.C.: Carnegie Endowment for International Peace/Brookings Institution, 1996) and Eiichi Katahara, "Japan's Plutonium Policy: Consequences for Nonproliferation", The Nonproliferation Review, Fall 1997, pp. 53-61.

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is generating currently almost 30 per cent of its electricity from the civilian use of nuclear power and is, therewith, the third largest nuclear energy producer in the world (after the United States and France). Moreover, whilst Japan's plutonium stockpile amounted to 13.1 tons at the end of 1994, it might rise to 89 tons of fissile plutonium (about 125 tons of total plutonium) over the next two decades (the combined superpower arsenal accounts currently to 220 tons) that have to be separated in Japan or abroad under commercial contracts.201 Giving up Japan's plutonium programme, however, is not a sufficient guarantee of Japan's non-nuclear weapon status because it will always have the technological know how and experience to build them if necessary. Hence Japan will also retain the capability to acquire nuclear weapons through the continued existence of its civilian nuclear programmes such as other non-nuclear weapon states.202 Furthermore, Japan's plutonium programme has also created double standards in the U.S. non-proliferation policy because Tokyo had de facto the approval of Washington for its programme, while the United States simultaneously insisted that North Korea must abandon its plutonium reprocessing facilities. On the other hand, the mistrust in Japan's foreign and proliferation policies has even increased since the end of the Gold War when U.S. administrations moved their attention from arms control agreements with Moscow to regional and global non-proliferation efforts. The economic dynamics in East Asia, the rapid modern weapon technology acquisition and diffusion as well as an emerging Chinese hegemon on the horizon have not only contributed to the widespread feeling of insecurity in the region but also to the mistrust in Japan's future non-nuclear weapon status. In the light of Japan's changing security environment with China and North Korea as nuclear powers in its proximity, Tokyo might be forced to rethink its current status as a non-nuclear weapon state in the near future.203

201 Motoya Kitamura, 'Japan's Plutonium programme: A Proliferation Threat?", The Nonproliferation Review, Winter 1996, pp. 1—16, here p. 8 and Kumao Kaneko, 'Japan Needs No Umbrella", The Bulletin of the Atomic Scientists, March-April 1996, pp. 46-51, here p. 47. 202 Motoya Kitamura, "Japan's Plutonium programme", p. 10. 203 See, for instance, in context of the regional security in Northeast Asia Gerald Segal, "The Nuclear Forces in Northeast Asia", p. 313f. and Ralph A. Cossa, "Nuclear Forces in the Far East", p. 369f.

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Moreover, Japan's declared three non-nuclear principles do not have a legal basis in the constitution. Only the Atomic Energy Basic Law of 1955 prohibits Japan from manufacturing or possessing nuclear 904.

weapons. But those sceptical analyses are based on the assumption that Japan's security policy is solely or primarily dictated by external threat factors. A closer analysis of the history of Japan's security policy, however, suggests that it is rather determined by domestic factors such as the demilitarisation after World War II. Anti-militaristic attitudes have resulted in influential pacifistic and anti-nuclear social movements. Their persistent strength embodies a dual rejection of militarism, both at home and abroad.203 Nonetheless, in the view of many Asian countries, Japan has failed to come to terms with its imperial past. Furthermore, it questions the Japanese version of a "cheque-book diplomacy"—buying trust and influence of its Asian neighbours by offering extensive development aid-funds—that has obviously produced only limited positive results in this regard. In the view of its Asia-Pacific neighbours, without an unambiguous interpretation of its history, the Japanese government and Diet policy will not be able to stimulate lasting trust and confidence in its foreign policies. Japanese politicians and security experts explain Tokyo's intention to commercialise an indigenous plutonium fuel cycle with Japan's current dependence on oil imports and the lessons of World War II. Consequently, Japan is trying to reduce its oil and gas imports from abroad. The persistence of Japan's plutonium programme is also explained by domestic actors such as bureaucratic and industrial interests. Thus Japan's nuclear organisations are closely intertwined with each other that guarantees their self-serving and conservative bureaucratic interests.206 Additionally to those historical and domestic 204 Article 2 of the Atomic Energy Basic Law states that research, development, and use of nuclear energy is limited to peaceful purposes. The civilian use of nuclear energy should be controlled democratically, guarantee transparency for the public and involve international co-operation. 20 ' See in particular the excellent study by Glenn D. Hook, Militarisation and Demilitarisation in Contemporary Japan (London-New York: Routledge, 1996) and Peter Katzenstein/Nobuo Okawara, "Japan's National Security", International Security, 4 20<> It involves three key government agencies—the Science and Technology Agency (STA), the Ministry for Foreign Affairs and MITI—, two national research organisations—the Power Reactor and Nuclear Fuel Development Corporation (PNC)

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explanations, Japan's non-proliferation experts argue that Japan is neither capable to produce hundreds of kilograms of weapons-grade plutonium nor are sufficient numbers of Japanese nuclear scientists and engineers willing to participate in a nuclear weapons programme.207 Instead of that, Tokyo has opened all of its civilian nuclear power station activities to IAEA verification. Additionally, since 1994 it has disclosed specific figures of its plutonium stocks to increase international transparency measures of its nuclear fuel recycling programme. Those who speculate nonetheless about a future Japanese nuclear arsenal are in the view of Japan's experts often not well-informed about the basic technical means of nuclear armament.208 In their view, Japan would have to overcome considerable technical and political obstacles of immediately going nuclear. For example, it would need at least seven to eight years to acquire the technology and to build as well as to deploy nuclear armed submarines.209 Moreover, given the close nuclear relationship and programmes between the United States and Japan, Washington still enjoys a considerable leverage over Tokyo as result of its on-going technological and material support.210 It is historically explained by the fact that the US support of Japan's civilian nuclear power programmes after World War II had been seen as a pre-condition to prevent Tokyo from starting a nuclear weaponisation.211 Nowadays, the following five additionally political reasons speak rather against a future Japanese interest to acquire a nuclear option:212 (1) it damages Japan's security environment and prosperity because it is heavily dependent on energy imports from abroad (1990: 85.4% of its total energy and 99.7% of its oil consumption). For its economic survival, Japan has to rely on safe maritime transportation to import oil and gas and to export its goods which might be threatened by its own nuclear weaponisation; and the Japan Atomic Energy Research Institute (JAERI), the nuclear suppliers industry, and electric utilities—see M. Kitamura, 'Japan's Plutonium programme", p. 5. 207 See also K. Kaneko, "Japan Needs No Umbrella", p. 48. 208 R. Imai, "Post-Cold War Nuclear Non-Proliferation and Japan", Japan Review of International Affairs, Fall 1994, pp. 314-332, p. 322 and Matake Kamiya, "Will Japan Go Nuclear? Myth and Reality", pp. 5-19, p. 12f. 209 Matake Kamiya, 'Japan and the Bomb", Look Japan, June 1996, pp. 11-13, p. 13. 210 M. Kitamura, 'Japan's Plutonium programme", p. 5. 211 Ibid., p. 6f. 212 Matake Kamiya, "Will Japan Go Nuclear? Myth and Reality", pp. 9ff. and id., "Japan and the Bomb".

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(2) it undermines rather than promotes Japan's military security, particularly when China, South Korea, and Taiwan would implement countermeasures; (3) it threatens the U.S.-Japanese alliance which is based on a non-nuclear status of Japan; (4) it damages Japan's environment because Japanese nuclear weapons have to be tested. While the Partial Nuclear Test Ban Treaty of 1963 prohibits atmospheric and underwater explosions, Japan has no suitable underground testing sites;213 and (5) it limits rather than increases Japan's political influence on the regional and global level.214 However, Japanese security experts would not totally deny a nuclear weaponisation if Japan's security environment would rapidly and fundamentally change. The following two circumstances are considered as determining factors for a basic re-assessment of Japan's current non-nuclear weapon status: (1) nuclear acquisition programmes by South Korea, Taiwan and other potential nuclear threshold states in its vicinity and, simultaneously, (2) a failing function and/or lacking credibility of the U.S. nuclear umbrella for Japan. Only if nuclear rivals of Japan would force it to make unreasonable, intolerable concessions, could a nuclear option thus win broader public and political support in Japan.21° But even then, only a strong political government with a considerable political backing in the Diet could theoretically "re-educate" Japan's pacifistic society and its aversion connected with nuclear energy. A strong government is also a precondition to mute likely international criticism for withdrawing from the NPT-regime and risking a fundamental break with its traditional foreign policy still based on the Japanese-American security alliance. Given the turmoil of the political party system of Japan and the rather weak governments during the last years, such a strong political government in Japan seems rather unlikely for the time being. In the mid—and long-term perspective, however, and regarding the uncertainties of the future U.S.-Japanese security alliance which

213 "On the implications see again F. Umbach, "World Gets Wise to Pyongyang's Nuclear Blackmail—Part Two". 214 Matake Kamiya, "Will Japan Go Nuclear? Myth and Reality", pp. 9-12. 213 The author was a Visiting Research Fellow at the Japan Institute of International Affairs (JUA) between April 1995 and March 1996. During that time, he held numerous discussions with Japanese experts on this subject.

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is still the key factor of stability in East Asia, a discussion about acquiring a nuclear option cannot totally be excluded.216 If Japan's security environment in its neighbourhood should indeed drastically change and further reductions of the U.S.-Japanese forces in Japan take place, the credibility of the U.S. nuclear umbrella will further decline. In addition, for deterring small "rogue states" (like North Korea) or terrorists attempting to acquire nuclear weapons, the use of sophisticated conventional armament by the U.S. armed forces— as demonstrated successfully in the Gulf-War—seems to be the far more adequate response to that security challenge than to resort automatically to nuclear weapons.217 But those military-technical and political-strategic considerations have already undermined the credibility of the U.S. nuclear umbrella for Japan and other East Asian states despite all declarations.218 Against this background and even more than for Europe, a credible extended deterrence of the U.S. nuclear umbrella is still vital for East Asia's stability.

THE BALLISTIC MISSILE THREAT TO JAPAN AND ITS IMPACT ON JAPAN'S FUTURE DEFENCE AND NON-PROLIFERATION POLICIES

In the post-Gold War era, the risks are greatly reduced that Russian military incursions into Japanese territory might be undertaken to gain a strategic advantage over the United States. But at the same time, precisely because Japan has lost its strategic significance as a key participant in the strategy of Soviet containment, it is now exposed to more direct dangers. (So the Japanese expert Atsumasa Yamamoto in an analysis published in 1995)219 Until the end of the Cold War, Japan's foreign and security policy was based on the three well-known non-nuclear principles. But they were promulgated as part of the government's less well-known 216

See also F. Umbach, "The Future of the U.S.-Japanese Security Alliance", in: Manfred Mols/Joern Dosch (Eds.), International Relations in the Asia-Pacific. New Patterns of Interest, Power and Cooperation (LIT-Verlag; forthcoming in 2000). 217 See also K. Kaneko, "Japan Needs No Umbrella", p. 48f. 218 To U.S. assurances and bilateral efforts in the context of the U.S. security alliance and the new guidelines see Yasuhide Yamanouchi, "Nuclear Energy and Japan's Security Policy", p. 209f. 219 A. Yamamoto, "Ballistic Missile Security Risks Facing Japan", Asia-Pacific Review, Autumn/Winter 1995, pp. 29-51, p. 38.

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four nuclear principles. These four nuclear principles reveal the ambiguity of realistic and idealistic objectives of Japan's security policy. Besides the (1) adherence of the three non-nuclear principles, (2) promotion of nuclear disarmament and (3) giving highest priority to the peaceful civilian use of nuclear power, it also included (4) its dependence on the U.S. nuclear deterrence umbrella in accordance with the U.S.-Japan security alliance.220 This dependence on the U.S. nuclear umbrella conflicts openly with Japan's non-nuclear principles. Nonetheless, Japan's security experts still favour traditional arms control instruments of its nonproliferation policies such as promoting the NPT and CTBT, creating Nuclear Weapon-Free Zones (NWFZ) and demanding a "nofirst-use" policy as well as granting "negative security assurances" by the five nuclear powers to non-nuclear weapons states. Whether Japan's traditional three non-nuclear principles of Japan's diplomacy are also for the future a sufficient policy instrument for successful nonproliferation strategies, however, is increasingly debated in Japan itself. Considering East Asia's future energy needs as result of their economic growth and population increase in the region, almost all countries are looking into the available options, notably the civilian use of nuclear power. Consequently, there is an urgent need to coordinate their nuclear fuel cycle programmes and outlining plans for joint fuel fabrication, spent fuel storage, and reprocessing plants for the entire region221 as proposals for an ASIATOM or PACATOM indicate. All these civilian nuclear energy programmes, particularly the creation of additional nuclear storage sites, will raise considerable non-proliferation concerns in a region often characterised as highly insecure.

'm The Japan Times, 31 January 1968. 'm See also Ryukichi Imai, "Spent Fuel Storage Requirements As Seen from Japan", in: Nuclear Arms Control and Nonproliferation. Looking into the Future, UPS Policy

Paper 146E, Tokyo, December 1995, pp. 13-28.

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FRANK UMBACH Table 7: Theatre Ballistic Missiles Capable of Reaching Japan

Country Russia China

North Korea

Name

Range (km)

Scud-B/C Dongfeng-21/CSS-5 Dongfeng-3/CSS-2 Dongfeng-4/CSS-3 Dongfeng-21X

300-500 1.800 2.800 4.750 3.000

Dongfeng-25 Julang-l/CSS-N-3

1.800 1.700

Scud C No-Dong-1 No-Dong-2 Taepo-Dong-1

500-650 1.000 1.500+ 2.000

(*) At least 20+ deployed in development Tested in August 1998

Taepo-Dong-2

4.000+

in development

Notes (*) ( }

*. Being retired? (*) Advanced, longer-range version of the DF-21, in development In development SLBM; deployed on one or two Xia SSBNs

* Deployment details not known. Frank Umbach, "World Gets Wise to Pyongyang's Nuclear Blackmail—Part Two", Jane's Intelligence Review (JIR), October 1999, pp. 35-39, here p. 36.

The 1991 Persian Gulf War ("Operation Desert Storm") has shown that those TBMs like the Iraqi Scud-missiles had still a greater psychological impact than destructive power. Given the introduction of more sophisticated conventional, chemical, biological or nuclear warheads in the next years and decades, however, the power of destruction of those TBMs will rapidly increase. These ballistic missiles might be particularly destabilising due to their inherent elements of surprise (short launch and warning time) as well as of limited possibilities of an early detecting and of effective countermeasures. Unless a country threatened by those TBMs has no adequate early-warning systems for detection and an effective anti-ballistic missile defence to neutralise those missiles, it might see no other chance in a severe crisis than to opt for pre-emptive military options to destroy them before they are launched. But those pre-emptive military options would significantly undermine crisis stability and increase the escalation of conflicts in the region. Given Japan's perceived threat of ballistic missiles in its vicinity, Tokyo decided to participate in a joint Theatre Missile Defence (TMD) project, suggested by the United States, in response to North Korea's successful 1993 launching of the Nodong I medium-range missile. Tokyo's fears have been confirmed

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during the Taiwan missile crisis in March 1996 when one Chinese missile accidentally fell into the ocean near Japanese territory. The joint TMD-option of Japan with the United States, however, is currently still in the research stage. The United States has offered Tokyo several deployment options since 1994, estimating that the costs—4-17 billion US$—would absorb a considerable portion of Japan's defence budget. All options are designated to deploy advanced TMD-systems in 2004-5 to counter both the Chinese and North Korean missile threat. A final decision by the Japanese government, however, is seriously hampered by legal, political, strategic and economic considerations. Legal objections result from Japanese law and the prohibition of transferring weapon systems or associated technologies to third countries (like South Korea and Taiwan) or to deploy space-based components that constitutes a "militarisation of space". Other objections have questioned the missile threat to Japan or have qualified the TMD options as overtly hostile in the Chinese threat perception that might lead to an open arms race between China and Japan. Indeed, the discussion of TMD systems deployed in Japan, South Korea and Taiwan is driving the modernisation of China's nuclear arsenal and particularly of developing a MIRV capability. Instead of a TMD-option, Japanese security experts have proposed a further internationalisation of the global non-proliferation efforts. Those strategies include (1) the creation of a satellite-based international verification system to overcome the superpower dominated sources of information, (2) a multilateral fuel-cycle centre, with facilities to store and processing plutonium discharged from light-water reactors in East Asia (including those of China, Taiwan, and the Korean Peninsula), and (3) an extended and deeper security dialogue with other states or effective security institutions on a regional and global level.222 While these strategies are indeed a useful instrument for promoting regional and global non-proliferation efforts and CSBMs, it remains uncertain whether they are able to secure Japan against an highly uncertain situation on the Korean peninsula and China's expanding strategic nuclear forces. Even in the case that the U.S. and its major allies in Northeast Asia would stop their plans for 222 See also Ryukichi Imai, "Post-Cold War Nuclear Non-Proliferation and Japan", p. 330f. and Toshiyuki Toyoda, The Japan Times, 20 June 1995, p. 16.

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TMD development and deployment, Beijing's strategic nuclear force modernisation would nonetheless continue because of other militarystrategic reasons and probably internal bureaucratic factors as Chinese experts admit privately.223 Until North Korea's missile test and attempt to launch a satellite in August 1998, Japan was largely divided on the TMD-question. Finally, the sceptical considerations have been confirmed by North Korea's missile test which prompted Tokyo to agree to commit funds for research and development of a theatre missile defence system, together with the U.S. Thus North Korea's test-firing of its missile had fundamental security implications for Japan, East Asia and the future of the U.S. alliances in the region.224

CONCLUSIONS AND PERSPECTIVES

After the end of the Cold War, East Asia faces a number of new security challenges that have important implications on its future foreign, security, defence and non-proliferation policies. In particular destabilising are nuclear ambitions and ballistic as well as cruise missile acquisitions. Until the beginning of 1999, improved bilateral relations between Washington and Moscow, deep cuts in their nuclear arsenals, new global non-proliferation efforts, increasing world-wide calls for the abolition of nuclear weapons, and increased attention as well as hightech conventional military options toward regional conflicts, by contrast, all seemed to have reduced the deterrent value of nuclear weapons on the global scale and particularly in the United States which might also have negative implications for the credibility of extended deterrence in Northeast Asia. Regrettably, Russian and Chinese discussions of military doctrine and strategy during the last years, however, are moving in the opposite direction of efforts by the international community towards delegitimizing or even abolishing the utility of nuclear weapons because their conventional armed forces are no longer or still not able to compete with the over223 So the result of discussions the author had during the last three years with Chinese experts. See also James A. Lamson/Wyn Q. Bowen, "One Arrow, Three Stars—Part I", p. 218. 224 On the implications see F. Umbach, "The Crisis on the Korean Peninsula and the Security Implications for Japan and Northeast Asia—Part Two".

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whelming technological superiority of the U.S. conventional armed forces. Therefore, a world-wide abolition of nuclear weapons seems rather unrealistic and impractical for the time being. Furthermore, another new security challenge has emerged out of the blue. Compared to West European countries, both the United States and Japan seemed for a long time rather distant from the source of international terrorism and smuggling illegal nuclear or other special mass destruction material. There are several reasons why not only Japan, but also other East Asian and Western countries as well as Russia should be concerned about Aum Shinrikyo's Sarin nerve gas attack in 1995 as a precedent of a new form of terrorism and fundamental security challenge: (1) the willingness of the cult leader Asahara and his followers to use mass destruction weapons; (2) the truly global nature of the terrorist cult; (3) the amount of intellectual followers including lawyers, officers, scientists and engineers; (4) highly sophisticated research and production facilities for mass destruction weapons; (5) the failing control of Internet providing sensitive information to the development of mass destruction weapons and (6) the manifold unpreparedness of Japan and other high-industrialised countries to the new form of terrorism and security challenge. In this light, the timely development of common strategies and appropriate mechanisms and means by the West, Russia, Japan and other East Asian countries for countering and preventing the use of non-conventional weaponry by terrorist groups is a conditio qua non for future regional and global stability. In order to prevent those new security dilemmas and to stabilise and not to undermine regional and global stability, a much broader and deeper security co-operation between nuclear powers and nonnuclear weapon states is urgently needed. Realistically, it should begin with enhancing and deepening the process for more military transparency. It should include the publication of more detailed White Papers concerning the national defence policies, comparing detailed military budgets, military doctrines and strategies, conventional and nuclear arms procurement plans, and by inviting experts to military exercises as part of confidence-building measures. While a wide-ranging and militarily significant nuclear-free zone in Northeast Asia seems only achievable in a long-term process of a nearly nuclearfree world, a register of nuclear arms in the region would also contribute to more transparency and confidence-building in the region in the short—and mid-term perspective.

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Ultimately, the stability in the region will also depend in the foreseeable future on a strong and sustained engagement policy by the United States which encloses substantial political, economic and military means. In this light, the linchpin for stability in the Asia-Pacific region as well as for Japan's security and the maintenance of its nonnuclear weapon status remains the U.S.-Japan security alliance. In this light, maintaining and deepening of the U.S.-Japanese security alliance—as it was agreed in the spring of 1996—and with that the credibility of the U.S. nuclear umbrella is still the fundamental prerequisite and pre-condition not only for Japan's security and its future non-nuclear weapon status, but also for its Asian neighbours and their trust against a resurgence of a perceived Japanese military expansionism or a hostile bilateral relationship between Japan and China. But the Japanese society and government must realise and accept—as one of its security experts has concluded—that it "cannot afford to have the United States and other countries assume all responsibilities, because what is really at stake is Japan's own security. Japan cannot refuse to share the risk."225 Therefore, Japan and its bureaucratic elite have to take over new security obligations and responsibilities as well as to initiate a broader as well as more open security debate with its public in order to bolster new directions of its foreign and security policies. Given the lasting mistrust of its Asian neighbours, Japan can only assume new regional responsibilities in a close alliance with the United States that also reassures the other East Asian states. Although the bilateral Japan-U.S. partnership was, is and will not necessarily be always without some tensions, the security alliance between both states remains the essential political, defence and economic pillar for the entire Asian-Pacific region on which all the other bilateral and multilateral relationships will depend in the foreseeable future.226 Given China's rather suspicious perception of the now enlarged U.S.-Japanese security alliance, diplomatically the most difficult task for both states remains to change the Chinese view of this alliance as another instrument to contain China. This is, indeed a Hercules-task, but there is

223

Atsumasa Yamamoto, "Ballistic Missile Security Risks Facing Japan", p. 45. See also F. Umbach, "The Future of the U.S.-Japanese Security Alliance", in: Manfred Mols/Joern Dosch (Eds.), International Relations in the Asia-Pacific. New Patterns of Interest, Power and Co-operation (LIT-Verlag; forthcoming in 1999). 22(1

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realistically no other way ahead for Japan, the United States as well as for the EU if one considers the entire strategic environment of the Asia-Pacific region: Engagement where ever it is possible and containment when it is needed should be the primary guide of our strategic policies vis-a-vis China.

ENVIRONMENTAL SECURITY AND CO-OPERATION IN ASIA MIRANDA A. SCHREURS*

INTRODUCTION

The long-term stability of Asia is a matter of tremendous international importance. Asia lacks many of the factors that contributed to international stability within Europe in the post-World War II period. Europe's relatively wealthy, liberal democracies were integrated over time through the institutions of the European Coal and Steel Community, the European Economic Community, the European Community, and eventually the European Union. In addition, European countries worked together to assure their security through the North Atlantic Treaty Organisation (NATO) and the Organisation for Security and Co-operation in Europe (OSCE). These institutions have helped to foster mutual dependence and co-operation in economic, security, social, and political realms. Asia, in contrast, is still characterised by great differences in economic wealth and political regime type. Throughout much of the twentieth century, security tensions have run high. Deep scars were left by a series of tragic historical events, including years of colonialism, World War II, wars of independence, the Korean War, the Vietnam War, and the conflicts associated with the onset of the Cold War. Because of this history of imperialism and war, political distrust and animosity still colour relations among neighbours. Legacies of this history remain in the form of territorial disputes (e.g. the Spratly Islands and the Kuril Islands), the divided Korean peninsula, and the two Chinas (Taiwan and the People's Republic of China). Economic co-operation, moreover, is much less developed * Dr. Miranda Schreurs is an Assistant Professor in the Department of Government and Politics, University of Maryland at College Park. She specializes in comparative environmental politics in East Asia and Europe. She is co-editor with Elizabeth Economy of The Internationalization of Environmental Protection, Cambridge, Cambridge UP, 1997 and with Dennis Pirages of Ecological Security in Northeast Asia, Seoul, Yonsei UP, 1998.

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than in Europe. These factors lead some scholars to argue that Asia is more likely than Europe to see international conflict.1 There are, however, many signs that inter-state relations in Asia are improving. Security tensions have eased considerably. The opening of China and the end of the Cold War have made possible greater dialogue among states. China and Japan signed a friendship agreement in 1978. China and South Korea normalised relations in 1992. Even though Japan and Russia have yet to officially sign a peace treaty because of disputes over the Kuril islands (the Northern Territories) which both states claim, both countries have expressed a desire to complete a peace treaty by the turn of the century. Relations among Southeast Asian countries are also relatively stable. There are numerous signs of growing interest in co-operation in Asia. This is most advanced in the economic realm but is also now emerging in the environmental realm. This co-operation, moreover, could foster greater mutual dependence and thereby reduce the potential for conflict. Regional environmental co-operation, therefore, should be encouraged both for its positive environmental benefits and its potential to enhance dialogue among states. This chapter focuses primarily on environmental protection efforts at the regional levels in East and Southeast Asia. There are still very few international environmental agreements among the nations of these regions. Still, there are many signs that environmental protection is taking on a new importance for them. New environmental management capacities are being built not only at the domestic level, but also regionally. Pollution control technology transfers are increasing, information flows are improving, and environmental networks are forming. Growing domestic and international levels of concern with pollution are raising pressures for national governments to address environmental problems. There are also growing pressures on national governments to work co-operatively to solve regional and global environmental problems. The aim of this chapter is to briefly examine some of the pollution and resource problems in the East and Southeast Asian regions, document some of the forms environmental co-operation has taken, and explain why co-operation is now beginning to emerge. It also

1 See for example, Aaron L. Friedberg, "Ripe for Rivalry: Prospects for Peace in a Multipolar Asia," International Security, Vol. 18, No. 3 (Winter 1993/94), pp. 5-33.

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puts developments in Asia in a comparative perspective with Europe. The chapter suggests that critical factors behind the emerging environmental co-operation in the region have been an easing of security tensions, the building of informal and formal economic ties that have increased regional interdependence, growing environmental awareness at the domestic level, and international pressures. Environmental co-operation remains relatively informal and is unlikely to result in the development of an extensive set of international environmental agreements as exists in Europe or North America in the near future. Still, the environment may become an issue area that promotes a greater degree of stability in the region as new environmental networks emerge among scientists, environmentalists, scholars and government officials of different countries in Asia.

AN OVERVIEW OF ENVIRONMENTAL PROBLEMS IN THE EAST AND SOUTHEAST ASIAN REGIONS

Today serious human health and environmental problems threaten the industrialising states of Asia. Air, water, and soil pollution and loss of undeveloped lands are major problems affecting the lives of people in these areas. Regional environmental problems are also becoming increasingly hard to ignore. Tropical deforestation, ocean pollution, loss of biodiversity, acid rain, and depleted fisheries are among a growing list of regional environmental problems affecting quality of life and the health of the planet. The effectiveness of global environmental regimes addressing stratospheric ozone depletion, global climate change, and trade in endangered species also depends on the co-operation of countries in these regions. Pollution problems in Asia can be tied to population growth, rapid economic development, and state and corporate policies that prioritised development over pollution control. Moreover, public awareness of the environment has been quite low in much of the region. Population growth is a major concern for the region for a number of reasons, including the environment. India and China together account for two-fifths of the world's population. Indonesia is the fourth most populated country in the world. Strict population control policies in China have helped to reduce the birth rate in that country. Still, China's population is expected to increase by over 300 million in the next thirty years. Growth rates in Indonesia remain

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high. Indonesia's population is expected to grow from 197.6 million to 276 million between 1995 and 2025. The financial crisis of 1997 has temporarily dampened growth levels in Asia and even caused economic turmoil in Indonesia, South Korea, and Thailand. Still, the rapid economic development that marked the Asian region for a good part of the latter half of the twentieth century can not be ignored or forgotten. Because this economic development was pursued with little regard for the environment, many parts of Asia are among the most polluted in the world. Rapid economic development has pushed countries in the region to shift away from the use of traditional fuels towards commercial fuels. It has contributed to improved economic conditions but also increased consumption. Agricultural lands have been shifted into industrial production. Populations have become increasingly urban. In fact, twelve of the twenty-four megacities identified in a United Nations Environment programme and World Health Organisation report are in Asia (Calcutta, Bombay, Delhi, Karachi, Shanghai, Beijing, Jakarta, Bangkok, Seoul, Manila, Tokyo and Osaka). While some of these cities have made substantial progress in controlling air pollution—most notably Tokyo, Osaka, and Seoul—in most, pollution control measures are weak or absent. Many of these cities do not meet World Health Organisation standards for pollution control and respiratory ailments are becoming serious problems.2 Urban environmental pollution is a major issue that will plague countries in these regions for many years to come as demands grow for automobiles and other modern conveniences, including refrigerators and air conditioners. Already 30% of China's population is urban and the urban population is growing at a rate of 4% per year. By 2025, over half of China's population is expected to be urban.3 As a result of population growth and economic development energy demand is soaring in the Asian region. Per capita energy consumption in the industrialising states of Asia is still only a small fraction of energy consumption in the industrialised states of the world. Per capita energy consumption in the US in 1993 was 12 times as high 2

Mega-cities are defined as urban agglomerations with current or projected populations of 10 million or more by the year 2000. See "Air Pollution in the World's Megacities: A report from the United Nations Environment Programme and the World Health Organisation," Environment, Vol. 36, No. 2, 1994, pp. 4-13, 25-37. 3 The World Resources Institute, World Resources 1996-1997 (Oxford University Press, 1997), p. 151.

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as in China (317 gigajoules per capita in the US compared to 25 gigajoules per capita in China). Yet, the rate of growth in energy consumption in Asia is staggering. In South Korea there was a 325% change in the twenty-year period between 1973 and 1993 in per capita energy consumption. In China there was a 110% change and in Malaysia a 206% change during this same period.4 China is now the largest energy consumer in Asia. The dramatic growth in energy demand in China will have serious environmental consequences in the future. To meet the growing demand for energy, China plans to expand the use of its abundant reserves of low-quality brown coal. China is already heavily dependent upon coal to meet its energy needs. In Beijing, for example, virtually all electric power generation is based on coal combustion. Coal accounts for about 70 percent of all energy used in this city.3 This is about the same proportion as that used nationally. Pollution released from factories is estimated to result in $12 billion in direct economic loss as a result of damage to crops and farmland.6 Another study suggested that the economic loss resulting from environmental pollution was equivalent to 4% of China's gross national product (GNP).7 Growing energy consumption in China is linked to environmental problems at the regional and global levels as well. As a result of China's heavy dependence on poor quality coal, China is among the world's largest emitters of sulphur dioxides, a precursor to acid rain. Acid rain is both a domestic problem for China and a trans-boundary environmental problem affecting Japan and Korea. Air pollution in China also is related to concerns about global climate change. Per capita emissions of greenhouse gases in China are still well below levels in Japan and in particular, the United States, but total emissions already place China third behind the United States and the European Union.8 Moreover, by 2010, China and 4

Ibid., p. 287. Statistics cited in "Air Pollution in the World's Megacities", op. cit., p. 9. b The Bureau of National Affairs, Inc. International Environmental Reporter (Washington, D.C.), April 16, 1997, p. 384. ' Xia Guang, "An Estimate of the Economic Consequences of Environmental Pollution in China," in Vaclav Smil and Mao Yushi, co-ordinators and Jonathan 5

Schwartz, manuscript editor, Environmental Scarcities, State Capacity, and Civil Violence: The Economic Costs of China's Environmental Degradation (American Academy of Arts and

Sciences and University College, University of Toronto, 1998), p. 55. 8

Vaclav Smil, China's Environmental Crisis: An Inquiry into the Limits of National

Development (Armonk, NY: M.E. Sharpe, 1993).

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India are likely to produce more than half of total world emissions of carbon dioxide. To meet its energy demands China is also developing other sources of energy. The Three Gorges Dam that is being built to control the flow of the Yangtze River in China is the world's largest dam project. The dam is expected to provide China with large amounts of hydroelectric power. Environmentalists, however, are concerned about the tremendous environmental disruption it will cause. Taiwan fears that the dam will contribute to the pollution of the Yangtze River and thus, also of the East China Sea.9 Nuclear energy is another option that is attracting growing attention in China and elsewhere in the region. Japan, which is heavily dependent on energy imports, is concerned about its energy security and the impact that China's growing energy demands will have on its own access to energy sources. In part to enhance energy security, but also to meet commitments Japan made at the 1997 Conference of the Parties to the Framework Convention on Climate Change (the Kyoto Conference), the Japanese government has announced plans to build an additional twenty nuclear power facilities. South Korea is also expanding its nuclear energy programme. Japan and the United States are exploring ways to co-operate with China in building nuclear power facilities in China and have agreed to help North Korea develop civilian nuclear energy capabilities. Nuclear safety issues have yet to be addressed at the regional level, however, and thus, pose an important challenge for the region.10 Deforestation is another serious problem threatening different regions in Asia. The tropical forests of Southeast Asia are second only to Brazil in terms of their importance. The vast tracks of tropical forests that once covered the Philippines are now largely gone. Tropical deforestation also is progressing rapidly in Indonesia, Thailand, Malaysia and most recently, Papua New Guinea." There are many 9

Elizabeth Economy, "China and East Asia" in Robert S. Chen, W. Christopher

Lenhardt, and Kara F. Alkire, eds., Consequences of Environmental Change-Political, Economic

Social (University Centre, MI: Consortium for International Earth Science Information Network, 1998), p. 66. 10 See Katsura Fujiike, "Nuclear Power Development and Regional Security in Northeast Asia: The Emerging ASIATOM, PACIFICATOM and PACATOM Concepts," in Miranda A. Schreurs and Dennis Pirages, eds., Ecological Security in Northeast Asia (Seoul: Yonsei University Press, 1998). 11 On the relationship between Japan and Southeast Asian deforestation see Peter Dauvergne, Shadows in the Forest: Japan and the Politics of Timber in Southeast Asia

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reasons for this deforestation. They include traditional slash and burn agriculture, in which small plots are cut and burned for subsistence agricultural purposes; the cutting of forests for fuel wood; and logging to clear land for development and the export of logs. Japan is the largest consumer of logs from Southeast Asia. Tropical deforestation is of concern internationally because of what it means for the major loss of biological diversity. By some estimates the tropical forests account for as much as 90% of the biological diversity of the planet. It also is tied to the global climate change issue because a loss in forest cover means a loss of carbon dioxide sinks since forests absorb and store carbon dioxide. The Russian Far East may be the next area to experience rapid deforestation, as that region becomes increasingly accessible to Japan and other large consumers of timber. The end of the Cold War is likely to lead both to further development of Siberia as well as its environmental exploitation.'2 Population growth and agricultural and industrial development threaten biological diversity in Asia. There already has been a widescale loss of wildlife species in Asia, including many that are endemic to the region. Today 11% of China's, 12% of South Korea's, 13% of Indonesia's, 17% of Australia's, 17% of Japan's, and 33% of New Zealand's known mammals are threatened with extinction.13 Similar alarming trends warn of wide scale loss of birds. The actual extent of plant, insect and marine species loss could be much worse than these statistics suggest, but data remains inadequate. Water pollution is also a serious concern. Population growth and industrial activities have placed great stress on water resources. The availability of clean water is a growing concern for the region. 7% of China's urban population and 11 % of its rural population do not have access to safe drinking water. In Vietnam, the comparable figures are much worse. Almost half of urban dwellers and 68% of the rural population do not have access to safe drinking water. Furthermore, sanitation services in many developing countries in Asia are very limited. Only 6% of China's and 39% of Indonesia's rural (Cambridge, MA: MIT Press) and Francois Nectoux and Yoichi Kuroda, Timber from the Southseas (World Wildlife Fund, 1989). 12 Akira Iriye, "International Co-operation for the Sustainable Development of the Russian Far East," Aprenet On-Line Library, (www.nautilus.org/aprenet/library/ regional/susdevRus.html). 13 The World Resources Institute, op. cit, p. 265.

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population have access to sanitation services.14 Industrial pollution and agricultural run off have polluted many major rivers. Marine pollution from oil spills and coastal development and marine resource depletion from over-fishing are other major problems confronting the region.

THE ENVIRONMENT AS A SECURITY ISSUE IN ASIA

If regional pollution problems and resource disputes go unresolved, they have the potential to strain inter-state relations. There already have been numerous instances of resource related disputes that have heightened tensions among states in the Asian region. Most common have been fishing related disputes. In the summer of 1997, for example, Japanese authorities seized four Korean fishing ships, which Japan argued had violated their territorial waters. Korea vehemently rejected the argument made by Japan and claimed instead that the waters were international and that Japan was unilaterally trying to change its territorial boundaries. Disputes have also arisen between Russia and Japan in relation to fishing grounds off the disputed Northern Territories (Kuril Islands). Fishing disputes are also common in Southeast Asia. Perhaps the most serious resource-related disputes in the region have been over the ownership of the potentially oil rich Spratly Islands. These islands are claimed by China and five Southeast Asian nations. There have been numerous military skirmishes in the area that are intrinsically linked to resource concerns. Pollution problems have become matters of regional politics. One example is the tropical forest fires in Indonesia that were probably started by slash-and-burn agricultural practices. These fires burned for months because of a delayed monsoon season. They caused severe smog problems not only in Indonesia, but as far away as in the Philippines, Singapore, and Malaysia in the summer and fall of 1997. Air pollution was suddenly a major regional problem and diplomatic matter. While such resource issues and pollution problems have the potential to strain relations among states in Asia, there is another way to look at the environmental challenges that face the region. The The World Resources Institute, op. cit., p. 153.

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environment is proving to be an issue area around which co-operative problem solving is possible. States in the region are beginning to address regional pollution problems. Slowly networks linking actors among the states of East and Southeast Asia are being built. These early initiatives could help Asia to move towards sustainable development and improved regional relations in the long run.

DOMESTIC ENVIRONMENTAL INSTITUTION BUILDING

Resolving the environmental problems that confront the states of East and Southeast Asia will require not only greater attention to pollution control and environmental protection at the domestic level, but also co-operation and policy co-ordination among states at the regional level. Without commitment to co-operate in problem solving, the region's seas will become more polluted, acid rain will become an increasingly severe problem, greenhouse gas emissions will soar, and species loss is likely to accelerate. The challenge is great. It will be exceedingly difficult for Asia to develop quickly effective regional institutions for environmental protection. There is tremendous diversity in the region. Japan, Singapore, Australia, New Zealand, Taiwan, and Malaysia are relatively wealthy countries. Thailand, Indonesia, and South Korea were all recognised as Asian tigers, but now are struggling to recover from the financial crisis that has crippled their economies. China is still a developing economy even though some regions have shown tremendous economic growth and rising income levels. Some countries in South and Southeast Asia are still struggling to feed their populations. This economic diversity makes it difficult to achieve consensus on priorities. At the political level, the region includes relatively old democracies (e.g. Australia, New Zealand, and Japan), relatively new democracies (South Korea, Taiwan, and Russia), authoritarian states (Indonesia, Malaysia, Thailand, Singapore), communist countries (China), and totalitarian states (North Korea). These political differences make regional policy co-ordination far more difficult than it is among European countries where there are relatively similar political systems. Moreover, pollution-control efforts within all but a handful of states, most notably Singapore, Japan, Australia, and New Zealand have been very limited. In the one party-dominant and authoritarian political systems of the region, close ties formed among politi-

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cians, bureaucrats, and industry. These networks tended to result in policy decisions that favoured industrial development over environmental protection. Moreover, because in most of the states of Southeast and East Asia non-governmental organisations (NGOs) are small and poorly funded and environment agencies and ministries tend to be weak, there were few voices that could speak out and challenge policy decisions that harmed the environment. Today, this is changing to some extent as environmental awareness increases throughout Asia. Still, there are only limited financial resources in the developing states of the region, and this raises important questions about who will pay the costs and provide the technological know-how for environmental clean-up and pollution control. China, India, and Malaysia have frequently demanded Northern assistance in paying the costs of addressing global environmental issues which they claim have been largely caused by the more industrialised countries of the world. Japan, which is perceived both as a country of Asia and a member of the club of wealthy Western states, has been under considerable pressure to finance pollution control efforts in Asia. Environmental monitoring is only just beginning and scientific research remains limited. There are few trained engineers and specialists with the know-how to operate and maintain sophisticated pollution control equipment, to conduct environmental impact assessments, or to monitor environmental data. The greatest hope for environmental preservation in Asia may be that environmental norms are slowly changing. Since the late 1980s and into the 1990s environmental protection has received much greater attention. In the 1990s, Japan made environmental protection one of the pillars of its foreign policy, greatly expanded environmental official development assistance programmes, and established many new environmental laws and institutions.15 China's leaders are starting to recognise that pollution control and in particular, energy efficiency improvements must be made if economic growth is to continue. In China, the government formally promulgated an environmental protection law that established basic principles to protect the environment and a legal network for environmental protection in 1989. Since this time numerous new environmental laws, regulations, lD

See Miranda A. Schreurs, "Domestic Institutions, International Agendas, and Global Environmental Protection in Japan and Germany" Ph.D. Dissertation, (Ann Arbor: University of Michigan, 1996).

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and guidelines have been established and there have also been important organisational changes.16 Environmental protection has become a more salient political issue in Taiwan and South Korea, which have both experienced democratisation in the period since 1987. In South Korea in 1990 the Environment Administration that was set up at sub-cabinet level in 1980 was elevated to the status of an Environment Agency. In 1994, it was elevated to the status of an Environment Ministry.17 Also in Southeast Asia, environmental activism is growing. There are several reasons for these changes. The growing severity of pollution problems has forced many states in the region to take environmental protection more seriously. Pollution problems are threatening human health and affecting economic development. To some extent these changes also may be linked to political liberalisation. For years, voices critical of the ruling powers in Taiwan and South Korea, for example, found few avenues to express their opposition. Since the late 1980s, however, growing democratisation has made political dissent possible. Opposition voices now challenge the governments in South Korea and Taiwan for their neglect of serious pollution problems that stemmed from rapid industrialisation. Democratic Progressive Party candidates in Taiwan that raised environmental issues in their campaigns have done well in local and national elections.18 Another important factor is that growing wealth in the region means that people are turning their attention to quality of life concerns. There has been a dramatic rise in the number of environmental groups working in Asia. Compared with Europe or North America, the numbers are still small, but compared with the situation in the 1980s, the changes are striking. In Japan beginning in the late 1980s numerous environmental groups with a regional and international focus began to form. There were many environmental citizens' movements in Japan prior to this time but most focused simply on local or at most national environmental problems. While 1(1 Elizabeth Economy, "Chinese Policy-Making and Global Climate Change: Two-Front Diplomacy and the International Community," in Miranda A. Schreurs

and Elizabeth C. Economy, The Internationalisation of Environmental Protection (Cambridge:

Cambridge University Press, 1997), pp. 1-18. " See Norman R. Eder, Poisoned Prosperity: Development, Modernization, and the Environment in South Korea (Armonk, NY: M.E. Sharpe, 1996). 18 A video which includes an informative discussion of environmental problems and initiatives in Taiwan is Jun Takashima, Shunya Hirano, Nobuko Akiyama, producers, "Taiwan" (New York: Ambrose Video Pub., 1991).

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still small in terms of membership size and financial resources, the more internationally-focused groups that have started to form in the last decade are becoming increasingly effective in their campaign strategies. The Japan Tropical Action Network, for example, has been a major voice in regional efforts to protect Asia's tropical rain forests and to reduce Japan's strong appetite for tropical hardwoods.19 Kiko Forum, a network of environmental groups, is actively campaigning on climate change issues. Elsewhere in Asia, environmental groups are also popping up. In Korea, the newly formed Korean Federation for Environmental Movement (KFEM), which boasted 36,000 members in 1997, has campaigned on a number of environmental issues domestically. They condemned Taiwan's plan to ship 200,000 barrels of radioactive waste to the Democratic People's Republic of Korea.20 In Malaysia, NGOs that have campaigned against logging have not faired well but others that work more closely with bureaucrats have influenced new environmental legislation.21 Also in China, there are signs of growing environmental activism. Finally, heightened international attention to the environment has placed pressure on countries in the region to take environmental protection issues more seriously. International concern about tropical deforestation in Southeast Asia led to international campaigns and boycotts by NGOs, designed to pressure Japan and Southeast Asian nations to promote sustainable logging. The United Nations Conference on Environment and Development in 1992 and the Fourth Meeting of the Parties to the Conference of the Parties to the Framework Convention on Climate Change in 1997 helped to heighten environmental awareness in the region. International negotiations on stratospheric ozone depletion, climate change, and international trade in endangered species have been important factors contributing to changes in environmental norms in the region. Today, most nations in Southeast and East Asia are parties to the Convention on International Trade in Endangered Species, the Montreal Protocol on 19 Miranda A. Schreurs, "Conservation, Development, and State Sovereignty: Japan and the Tropical Forests of Southeast Asia" in Sohail Hashmi, ed., State Sovereignty: Change and Persistence in International Relations (University Park: Pennsylvania State Press, 1997). 20 KFEM NEWS, March 1997. 21 Bernard Eccleston and David Potter, "Environmental NGOs and Different Political Contexts in South-east Asia: Malaysia, Indonesia, and Vietnam," in Michael J.G. Parnwell and Raymond L. Bryant, Environmental Change in South-East Asia: People, Politics, and Sustainable Development (New York: Routledge, 1996), pp. 49-66.

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Substances that Deplete the Ozone Layer, the Framework Convention on Climate Change, and the Convention on Biological Diversity.22 Participation in these international environmental agreements requires the formulation of domestic environmental laws and the build-up of environmental management capacities.

REGIONAL ECONOMIC CO-OPERATION AND ENVIRONMENTAL PROTECTION

The political opening of China beginning in the late 1970s and the Chinese leadership's decision to turn the economy into a "socialist market economy" were very important factors leading to greater Asian economic interdependence. From the onset of the Korean War until the early 1970s trade between China and the United States and its allies, with the exception of Japan, was virtually non-existent. In the case of Japan, in the 1950s and 1960s there was some trade with China. In fact, by the late 1960s, Japan had even become China's largest trade partner. Still, the extent of that trade was very limited. Dramatic growth in trade and investment in China only occurred after diplomatic relations between China and the United States and then between China and Japan were established in the 1970s. Bilateral trade between Japan and China doubled between 1972 and 1973 and nearly tripled in the next five years.23 Since this time, relations between China and the West and among China and its Asian neighbours have improved significantly.24 There was tremendous growth in intra-regional trade and investment in Asia as first Japan, then South Korea, Taiwan, Singapore, and Hong Kong, followed by Indonesia, Malaysia, and Thailand, and more recently China, experienced import-substituting industrialisation and exportoriented economic growth.

22 A useful web site for information on international environmental agreements is http://sedac.ciesin.org/pidb/pidb-home.html. 23 Akira Iriye, China and Japan in the Global Setting (Cambridge: Harvard University Press, 1992), pp. 103-135. 24 For a discussion of China's changing attitude toward foreign assistance, see Jonathan D. Pollack, "China and the Global Strategic Balance," in Harry Harding, ed., China's Foreign Relations in the 1980s (New Haven and London: Yale University Press, 1984).

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The two main institutions that were created to promote economic co-operation in Asia are the Association of Southeast Asian Nations (ASEAN) and the Asia Pacific Economic Co-operation forum (APEC).2" ASEAN was established in 1967 as an effort among scholars and officials to promote dialogue in a region characterised by ethnic and cultural diversity and security tensions. The immediate factor behind ASEAN's creation was the Vietnam War and the desire to find means to constructively engage countries of the region in dialogue. Member states include Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Over time this group focused increasing attention on issues of economic and security co-operation. In 1989 leaders of Pan-Asian states met in Canberra, Australia to discuss possibilities for Asia-Pacific economic co-operation on a much wider scale than existed within ASEAN. Out of this meeting was born the Asian Pacific Economic Co-operation forum (APEC). Members include the six ASEAN states plus Australia, Canada, Chile, China, Hong Kong, Japan, Mexico, New Zealand, Papua New Guinea, South Korea, Taiwan, and the United States. Importantly, while both ASEAN and APEC have increasingly become concerned with issues of economic co-operation, they also have started to discuss non-economic issues, such as the environment. Some of the earliest signs of environmental co-operation in Asia grew out of these economic bodies.26 In 1981, for example, ASEAN had its first regional programme on Environmental Education and Training, the Marine Environment and Environmental Management. In 1987 a review of this environment programme was conducted and after the 1992 United Nations Conference on Environment and Development, at the initiation of Malaysia, an ASEAN Strategic Plan on the Environment was established. The plan calls for regional cooperation in addressing issues like biodiversity conservation, the promotion of sustainable use, and development of a system for the promotion of environmentally sound technologies. The forest fires in Indonesia prompted ASEAN members to reach the Indonesia Haze Resolution in 1997, in which they agreed to prevent a recurrence of another haze disaster like that caused by the forest fires in Indonesia amid the 1997 drought. Also in 1997 the first ASEAN State of the 25

Dilip K. Das, The Asia-Pacific Economy (New York: St. Martin's Press, Inc., 1996). Lyuba Zarsky, "Heading for the Doldrums? APEC and the Environment," Connectivity: Asia-Pacific Trade, Environment and Development Monitor, September 10, Vol. 1, No. 10, (www.nautilus.org/trade/monitor/apec/index.html). 2()

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Environment Report was produced. While ASEAN environmental declarations have been criticised by some as being mere platitudes, these activities suggest there is growing environmental awareness in the region.27 Within the much younger APEC forum, there also have been moves to address environmental problems. APEC had its first meeting of Environment Ministers in 1994 and adopted a series of environmental action programmes two years later. These focus on the questions of sustainable cities, clean production and technology, and the sustainable use of the marine environment.28 In October 1995, a three-day conference on environmental technology co-operation of the APEC was held in Nagoya, Japan and in June 1997 a regional action programme for the environment was agreed upon in Toronto.29 Given that environmental protection has been such a low priority area in the economic development of many states in Asia, it is important that there is growing dialogue within these primarily economic fora. Whether or not these environmental initiatives will have much impact on the policies of APEC member states remains to be seen. At present, environmental protection does not yet appear to be a top priority. In the case of APEC, it appears to be primarily at the initiative of the wealthier countries within the group that environmental issues have been placed on the agenda and therefore, risks being perceived as a "developed state" priority. Still, that environmental problems are being discussed at all in primarily economic regimes is encouraging.

MULTILATERAL INSTITUTIONS AND ENVIRONMENTAL PROTECTION IN ASIA

Multilateral institutions also are playing a more visible role in promoting regional approaches to environmental co-operation in Asia than they did in the past. The Economic and Social Commission 27 James Clad and Aurora Siy, "Security Implications of Southeast Asia's Environmental Problems," in Robert S. Chen, W. Christopher Lenhardt, and Kara F.

Allure, eds., Consequences of Environmental Change-Political, Economic Social (University

Centre, MI: Consortium for International Earth Science Information Network, 1998), pp. 116-119. 28 Jacob Park, "APEC and ASEAN: The Future of Asian Environmental Regionalism", Vol. 6, No. 3, Environmental Politics, 1997. 29 Lyuba Zarsky, "Heading for the Doldrums?" op. cit., p. 1.

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for Asia and the Pacific (ESCAP) is an example of a United Nations' body that was initially created to promote economic integration but now also addresses environmental issues. Upon its formation, ESCAP's mandate was to foster regional economic development and co-operation in the Asia Pacific region. In response to the 1972 United Nations Conference on the Human Environment, however, ESCAP also began to include environmental issues in its work. Initially interest in environmental issues was limited. In 1973 ESCAP prepared an Asian Plan of Action on the Human Environment, but it was not until 1978 that the commission created an Environmental Coordinating Unit in its Secretariat. Since this time, environmental issues have slowly gained more attention. Beginning in 1982, ESCAP started ministerial level conferences on the environment. The first ministerial conference focused on the entire Pacific region. Another ministerial conference was held for Asia in 1985 and a third for Asia and the Pacific in 1990. The 1990 Ministerial-level Conference on Environment and Development in Asia and the Pacific, which was held in Bangkok, dealt with formulating a Regional Strategy on Environmentally Sound and Sustainable Development in Asia and the Pacific and development of Asia-Pacific input to the UNCED (United Nations Conference on Environment and Development). A post-UNCED follow-up meeting was held in Kuala Lumpur in February 1993 to review initiatives taken toward implementation of Agenda 21 in the region under the Regional Strategy and to develop a Framework of Regional Action for Sustainable Development in the Asia Pacific Region. In 1995, at the Third Ministerial Conference on Environment and Development in Asia and the Pacific a Regional Action programme for Environmentally Sound and Sustainable Development, 1996-2000 was adopted. ESCAP has produced a State of Environment Report in the Asia Pacific region, is developing a database on the State of the Environment and has a project on the development of environmentally sound and sustainable development indicators. ESCAP is also involved in projects dealing with pollution abatement, climate change, sustainable energy development and management, protection of water quality, and several other areas. In order to improve the institutional capacity for implementing sustainable development, a regional network of environment and economic policy research institutes is being established at the national level. Other similar networks include the Regional Network of Research and Training Centres on Desertification Control in Asia and the Pacific. In addition, ESCAP has organised

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workshops and seminars on atmospheric pollution, land degradation, toxic chemicals, hazardous wastes, industrial pollution, protection of freshwater, the marine environment, and fragile ecosystems.30 Other international bodies are also starting to play more visible roles in promoting environmental protection in Asia. The World Bank and the Asia Development Bank which traditionally have been objects of criticism for the roles they played in promoting environmentally destructive development are now becoming more sensitive to environmental issues. The World Bank now funds numerous pollution control projects in China. As of 1995, the World Bank was involved in ten pollution control or environment projects in China, including the Chongqing Industrial Pollution Project, the Huai River Basin Pollution Control Project, and the Hubei Urban Environment Project.31 The World Bank and the Asia Development Bank have also sponsored development of the RAINS-Asia model, a computer model that assesses acid deposition in 23 countries in Asia.32 There is now considerable international involvement in China's environmental protection. By one estimate, in 1996, the Chinese government allocated $360 million for environmental protection programmes. All but $80 million of this was financed by international organisations and foreign aid.33

Bl-LATERAL AND TRI-LATERAL ENVIRONMENTAL CO-OPERATION

Much of the aid for environmental protection and energy efficiency improvements still comes in the form of bilateral aid. Japan and the United States are the two most important donor states involved in regional co-operation initiatives in Asia. As the richest country in the region, Japan is playing an increasingly visible role in efforts to 30 See Mohammad Aslam Khan, "Regional Co-operation for Environmental Governance in the Asia-Pacific Region," in James E. Nickum and Judy R. Nishioka, eds., Environmental Governance in the Pacific Century (Honolulu: East-West Centre, 1995), pp. 125-139. 31 World Bank, Current World Bank Project Information Documents on Industrial Pollution Related Projects in China, (www.worldbank.org/nipr/china/pids/index.htm). 32 David G. Streets, "Energy and Acid Rain Projections for Northeast Asia," Energy Security and Environment in Northeast Asia (Nautilus of America/The Nautilus Institute, 1997), (www.nautilus.org/esena/papers/streets.html). 33 The Bureau of National Affairs, Inc., International Environment Reporter (Washington, D.C.), December 11, 1996, p. 1119.

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enhance the status of environmental protection initiatives in the Asian region. There are several reasons for Japan's interest in promoting environmental protection in the region. Environmental norms in Japan have changed and there is growing awareness of regional and global environmental problems. At the political level, there has been a search to define a new role for Japan into the twenty-first century.34 Because of constitutional restrictions on Japan's use of the military, Japan has had to find other ways to take on a "leadership" role. Official development assistance and environmental protection, therefore, are now two areas in which Japan has focused considerable resources in recent years. Japan is also concerned about the consequences of development in China because of trans-boundary pollution problems. Much of Japan's environmental aid, therefore, is targeted at Asia. Japan now plays an important role in financial transfers for energy efficiency improvements and environmental protection. In 1992, the Japanese Government announced a new ODA Charter (Official Development Assistance). This Charter emphasised environmental conservation as an important tenant of aid decisions and targeted Asia as the primary area to benefit from Japan's growing aid budget.33 While still heavily criticised for ODA projects that have done more harm than good to the environment in Asia, there has been a sharp rise in Japanese aid for environmental projects since the late 1980s.36 Japanese involvement in environmental ODA to Asia, and in particular to China, stems in part from the enormity of the pollution problems in the region and their potential impact on Japan. Acid rain is a particularly important issue for Japanese-Sino relations in the environment and energy realms. In 1991, the Japanese Ministry of International Trade and Industry (MITI) established a new form 34

On the question of Japan's role in the world community see Kenneth B. Pyle,

The Japanese Question: Power and Purpose in a New Era, 2nd Edition (Washington, D.C.:

The AEI Press, 1996). There are many books that criticise Japan for the limited role it has played in addressing global problems. See for example, Gavan McCormick, The Emptiness of Japanese Affluence (Armonk, NY: M.E. Sharpe, 1996). 35

Government of Japan, ODA Charter. Criticism of Japanese ODA on environmental grounds abounds. See for example, Owen Cameron, "Japan and Southeast Asia's Environment," in Michael J.G. 3b

Parnwell and Raymond L. Bryant, Environmental Change in South-East Asia: People, Politics and Sustainable Development (New York: Routledge, 1996) and David Potter, Japan's Foreign Aid to Thailand and to the Philippines (New York: St. Martin's Press, 1996).

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of official development assistance, the Green Aid Plan. The Green Aid Plan was begun as a way to spur environmental technology transfers to Asia. Initial recipients of funds from the Green Aid Plan included China, Indonesia, and Thailand where environmental centres have been built. Plans were announced during the 1996 AsiaPacific Economic Co-operation meeting held in Nagoya, Japan to expand the Green Aid Plan to other Asian countries, including India. Under the Green Aid Plan, research is being conducted into the development of desulphurisation technologies for Chinese power plants, improvements in energy efficiency in iron works and industrial boilers, and the promotion of clean coal technologies. Japan is also assisting Chinese steel plants to install new systems for recycling heat emitted during steel production and adopt a system for adjusting the moisture of coal. Another important component of the Green Aid Plan is an emphasis on combining financial transfers with technology transfers and technical assistance. MITI trains technicians from China and Southeast Asia each year in the use of environmental equipment. The ministry also dispatches environmental advisers to Asian countries to implement technology transfers.37 The Environment Agency of Japan has established an acid rain monitoring network in Asia. There have also been efforts to enhance bilateral co-operation among environment agencies. In July 1993, the Korea-Japan Agreement on Environmental Co-operation was signed in Seoul. There are now various research initiatives between Korea's National Institute of Environmental Research and Japan's National Institute for Environmental Studies. The Environment Agency of Japan was instrumental in initiating the Environmental Congress for Asia and the Pacific (Eco Asia). The first Eco Asia meeting was held in 1991. At the second Eco Asia Conference in the summer of 1993, participants agreed to formulate an Environmental Perspective of Asia and the Pacific to the Year 2025. The United States also has interests in promoting environmental protection in the Asian region. On the economic level, the United States sees a potential market in Asia for pollution control technologies and the export of nuclear technology. On the security level, 37

Foreign Broadcast Information Service, Production Group, "Japan: Foreign Aid for Environmental Markets," FB PN 93^005, January 6, 1993 and International Environmental Reporter, September 6, 1995 (Washington, D.C.: The Bureau of National Affairs).

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the Clinton administration has sought to repair the deteriorated relations between the US and China since the 1989 Tiananmen Square massacre through a policy of "constructive engagement". The US government has sought to reinstitutionalise the relationship through dialogue on a number of subjects, prominent among them the environment. In February 1997, for example, Vice President Al Gore travelled to China and environmental protection was a primary issue on his agenda.38 Also of interest is that over the course of the 1990s, there have been numerous efforts to enhance US-Japanese co-operation on energy and environmental issues in order to address problems in Asia and elsewhere in the world. In April 1995, for example, at the US-Japan Environmental Executive Leadership Conference, agreement was reached to increase technological co-operation on global warming and ozone layer depletion with Asian countries. Participants also agreed to promote US "Energy Star" eco-labeling programmes globally. Under the US-Japan Common Agenda, a declaration committing these two countries to co-operate in addressing a number of global problem areas, several initiatives at environmental protection in the Asian region have been initiated. As a component of this programme, the United States and Japan pledged close to $40 million in support for an Indonesian Biodiversity Conservation programme. Government and private sector participants to the US-Japan Environmental Executive Leadership Conference held in April 1995 also discussed a number of Asian issues. The two countries agreed to organise environmental technology co-operation seminars in Thailand and Vietnam.

NETWORK BUILDING

Among the most important signs of growing regional co-operation are the environmental networks that are emerging among scientists, academics, non-governmental organisations, and even politicians. The climate change negotiations have concentrated considerable attention on Asia because it is this region of the world that in the future is 38

David Shambaugh, "The United States and China: Co-operation or Confrontation?" Current History Vol. 96, No. 611, pp. 241-245.

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likely to produce the largest amount of greenhouse gases. This has resulted in co-operative efforts among Japanese, Korean, and Chinese scientists to develop models to assess the impact of economic growth and energy consumption in the region on the future of the environment and human health.39 Asian NGOs have also expanded their contacts among each other creating a growing regional network. Information flow among NGOs in the region can be critical for obtaining accurate information about levels of pollution and environmental degradation, developing strategies of action, and developing public awareness and policy campaigns that require international action to be successful. Other efforts at addressing environmental problems through enhanced dialogue are emerging within the region as well. There is now, for example, an Asia-Pacific Parliamentarians Conference on Environment and Development (APPCED), which includes parliamentarians from 15 countries. APPCED is modelled on the international Global Leaders for a Balanced Environment (GLOBE) that brings together political leaders with a concern for the environment to exchange information and to build international coalitions. The APPCED had its fifth meeting in Seoul, Korea in the summer of 1997. These networks are still young but they have tremendous potential for increasing dialogue among bureaucrats, politicians, scientists, and citizens on issues that are critical to the future health of the region. Once the telecommunications revolution takes a firmer hold in Asia, this networking is likely to accelerate. Global environmental conferences also provide opportunities for regional actors to meet each other and discuss environmental priorities and co-operative projects.

ENVIRONMENTAL AND RESOURCE REGIMES IN EAST AND SOUTHEAST ASIA

There are extremely few formal environmental or resource regimes in East and Southeast Asia. Most of the agreements that do exist deal with fisheries. Russia and Japan, for example, have had fisheries 39 One model is being developed under the direction of Tsuneyuki Morita at the National Institute for Environmental Studies in Japan.

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agreements for over eighty years. While bilateral agreements exist, there are few multilateral agreements. Recent multilateral agreements include the agreement to establish the Asia Pacific Fishery Commission and the agreement to establish a Network of Aquaculture Centres in Asia and the Pacific. There is also now a Convention Establishing a Marine Scientific Organisation for the North Pacific Region (PICES). Other regimes that have recently been established include the Plant Protection Agreement for the Asia and Pacific Region; a Protocol for the Prevention of Pollution of the South Pacific Region by Dumping; and a South Pacific Nuclear Free Zone Treaty. ASEAN has formulated, but its members have not all yet ratified, an Agreement on the Conservation of Nature and Natural Resources. Participation in international environmental agreements among Asian countries still tends to be either at the global level or at the bilateral level. The difficulty of coming to consensus on environmental priorities and policy responses among the diverse states of Asia does not bode well for the future of multilateral environmental law in this region. Instead, environmental protection is more likely to move forward through more informal co-operative mechanisms that provide greater flexibility among member states. There may well develop an Asian form of environmental co-operation that is less dependent on legal codes and agreements than is true in the West.

ASIAN ENVIRONMENTAL CO-OPERATION IN COMPARATIVE PERSPECTIVE

Compared to the situation within the European Union, efforts at solving regional environmental protection initiatives are still in a nascent stage in Asia. There is little codification of regional environmental law in Asia as exists in Europe, although a few initiatives have been made. There is still considerable resistance in the region to the establishment of regional environmental agreements. Instead, there is what one might call a "loose" environmental co-operation that is emerging in the region. This "loose" co-operation may be all that is possible because of the political, economic, and social differences that exist among the nations in the region and because of the historical animosities that still colour bilateral and multilateral relations. Also important are the varied perspectives on environmental issues that exist among nations in the region. Still, there are some parallels in

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the Asian case with the process of environmental institution building that occurred in Europe. The European Union is the embodiment of forty years of European institution building. In the European Case, institution-building efforts began in 1957 with the Treaty of Rome and the establishment of the European Economic Community (EEC). Only slowly did the scope of the EEC expand to include non-economic issues. In the early days of the European Community (EC) there was a strong assumption that liberalisation within a common market would lead to economies of scale and economic growth from which the greatest number of Community citizens would benefit. In effect, the idea was that an essentially liberal economic policy would be the best social policy as well. Moreover, because the early days of the EC were associated with high levels of growth, there was little pressure to enlarge the social aspects of the EC's work. Parallels can be seen in Asia's efforts to establish economic co-operation regimes. In the late 1960s, arguments began within Europe that the drive for economic integration required a more forceful social policy that could be articulated at the Community level.40 Initially, the primary impetus to introduce environmental protection was economic. Environmental protection was incorporated into EC directives in the early 1970s because differences in the environmental laws of the European states were seen as potential barriers to trade. There was also growing environmental awareness at the domestic and international levels. The first United Nations Conference on the Human Environment held in Stockholm in 1972 and growing environmental awareness prompted changes in environmental laws in many European countries as well as the formation of the first EC Environmental Action programme in 1973. This resembles recent efforts in Asia to formulate region-wide environment plans. The oil shock of 1973 temporarily dampened the drive to further environmental policy within Europe. The emergence of acid rain problems within Europe in the late 1970s and early 1980s, however, helped to push forward EC environmental institution building and legislation. Particularly important was the transformation of Germany's position on many environmental issues. The threat acid rain posed to German forests heightened environmental awareness in that state. 40 Mark Wise and Richard Gibb, Single Market to Single Europe (New York: Longman Scientific and Technical, 1993).

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Also important was the formation of Green Parties. Pressures mounted within the EC to create common environmental standards within the member states in order to deal with regional environmental problems. This stage has not been reached in Asia. In 1987, the EC gained competence over environmental protection matters when the Treaty of Rome was amended by the Single European Act. With the formation of the Single European Act, the EC gained new powers to negotiate internationally on environmental matters and to formulate environmental laws that supersede those of member states. In 1993, the Maastricht Treaty pushed this institution-building process yet further forward when member states agreed to work towards greater political and monetary union and established the European Union. There are both important parallels and differences between experiences in Europe and in Asia. In Europe the establishment of regional environmental agreements and EC environmental law has been a slow and painful process. In Asia, efforts to promote regional environmental co-operation are much younger than in Europe. It is likely to take many more years before Asia goes beyond the kind of loose regionalism that is now emerging in the region. Interestingly, in both Europe and Asia economic co-operation was promoted to reduce the potential for conflict among neighbouring states. The European Coal and Steel Community was formed in part to decrease the potential for conflict in Europe by integrating the economies of former enemies. This body eventually expanded into a much larger institution promoting economic co-operation and integration and later environmental and other social issues. Parallels exist with the formation of ASEAN. ASEAN was formed in part out of a desire to find a way to improve relations among states in the Southeast Asian region. These early efforts to find common ground for interstate negotiations are now slowly moving to incorporate new agendas, like the environment. Another similarity between the European and Asian cases is that value changes at the domestic level were critical to environmental policy change both at the domestic and the regional levels. In Europe this occurred around the 1972 Stockholm Conference. In many parts of Asia, this did not occur until much later. The 1992 UNCED was a major impetus for heightened awareness of the global nature of many environmental problems in Asia. Also, critical to the process of environmental institution building in Europe was the leadership of powerful states. In the case of the

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European Union, Germany and the Netherlands often took on environmental leadership roles. It was not until Germany became greener domestically that European environmental co-operation on a large number of issues progressed significantly. In Asia's case, Japan and the United States have played an important role promoting bilateral assistance for environmental protection in Asia. Compared with the European case, the process of regional dialogue in Asia is still very young. It only began in the 1980s with initial scientific exchanges and limited inter-state dialogue. Since the 1990s, the pace of network building has grown substantially. There has been a virtual explosion of activity in the region at least when compared to the situation a decade ago. There are now growing networks among non-governmental organisations, scientists, and environment agencies. Financial and technology transfer mechanisms are being established and environmental management capacity is being built up in areas where it was non-existent or very weak. These changes do not necessarily mean, however, that Asia will walk the path of European environmental institution building. This is unlikely given the major differences in the political institutions of the Asian states and the gross economic disparities that exist among them. Developing states in Asia have also taken strong positions in international environmental negotiations. Malaysia, China, Indonesia, and India see themselves as representatives of the developing world. They challenge "northern environmentalism" as a kind of environmental colonialism. They have pushed hard in international debates for the right to develop and the right to financial and technological assistance for environmental protection. Within Asia, therefore, there are still great differences among states regarding environmental priorities and means for solving problems. It is therefore not surprising that there still are very few international environmental agreements in Asia. Instead, an Asian form of loose environmental co-operation is likely to continue well into the future. This loose co-operation will focus on establishing stronger networks among governments and nongovernmental actors in the region and promoting common understanding of what the goals and priorities of action should be. There is still much that can be done to foster these co-operative mechanisms. This is an area where both Europe and North America can contribute significantly.

THE CHINESE ECONOMIC DEVELOPMENT AND SECURITY INTERESTS: IMPLICATIONS FOR EUROPE1 RADHA SINHA*

The 10 Successful Chinese2 The first type is a dignitary. When trouble comes there's sanctuary.

The sixth type is an entrepreneur. All earnings and losses his to endure.

The second type is public servant. Travels around in search of merriment.

The seventh type is a propagandist. Gluts his maw at all the banquets.

The third type rents a business. Eating, drinking, whoring, gambling—all in the expenses.

The eighth type is a famous painter. Draws crabs and shrimps and grows the richer.

The fourth type is a landlord Cheating, duping, queering, frauding—and on the side a bawd.

The ninth type wears a police helmet. Eats from the plaintiff and from the defendant.

The fifth type is a famous singer. Ticket sales & wealth beyond measure.

The 10 th is the rest of the population. We study Lei Feng and make revolution.

INTRODUCTION

In a recent article,3 the Economist on the basis of what it calls a "geopolitical detective work," comes to the conclusion that by the year 2030 1

The author is grateful to Professors Robert Ballon and Kurt Radtke for his comments on an earlier draft of this paper. The author is also thankful to Mr. Juan Pardinas and Ms. Guadalupe Mandoca for their help with the preparation of this paper. * Radha Sinha retired from his chair of International Economics at Sophia University in March 1999. He had previously held a professorship of Political Economy and the Chairmanship of the Centre of Development Economics at Glasgow University. His major contributions have been in the areas of poverty and food, income distribution and trade relations between developing and developed countries. His publications include Japans Options for the 1980s, TheChinese Agricultural Economy (edited with R. Barker), Japan and World Depression: Then and Mow (edited, with R. Dore). 2 This piece of doggerel was translated by the Far Eastern Economic Review from the pages of a magazine left in a Shenyang train station. It has been earning laughs for years at the expense of the Chinese privileged few. Far Eastern Economic Review, January 15, 1998, 49. 3 The Economist, "The Next Balance of Power: A Geopolitical Detective Story" January 3rd (London, 1998), 17-9.

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America is unlikely to remain "the only superpower" and will most certainly be joined by China, even though it may not be able to match the electronics of the America's military command-andcontrol system. Europe, independent of the United States, would have a much lower probability of emerging as a superpower; so would be the case with Japan and even less so with Russia. In reaching these conclusions, The Economist asks four questions: i) A global military force includes a nuclear armoury of intercontinental range, large enough or well-protected enough to be tolerably sure of surviving a surprise attack by another nuclear power. But it also has to include an expeditionary force of at least half-adozen divisions of infantrymen and tanks and guns which can be swiftly sent to distant parts of the world, and guarded and supplied while it is there. ii) the country in question needs to have a government capable of running a vigorous foreign policy. This is a government that can clear-mindedly decide what it wants to do, and then bring to bear the means of getting it done—including, if necessary, the use of the global military force. iii) whether the country's people want a muscular foreign policy. They may want it for reasons of ideology, because they believe their country stands for some splendid idea that other countries should be helped to share of. Or they want it for one of those motives of blood—of race, nation, tribe—that make "us" feel that "they" need to be shown what's what. Either way, a country whose people are willing to march out into the world, and if necessary die there, is a likelier candidate for great-power rank than one whose people do not feel that way; . . . iv) whether the country concerned also has some solid practical reason for getting involved in what goes on outside its frontiers. There may be something out there it badly needs: oil and gas for its expanding economy, or food for its growing population, at nonextortionate prices (and sometimes, may be, at a special discount). There may be something it wants to prevent: a threat to the sealanes through which pass its vital exports and imports, or a challenge to the existence of some valued ally.4 Certainly, the Chinese economic growth since a decade and a half has been significantly higher than those of the richest countries of 4

Ibid., 17.

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the world.5 (Table 1) It is not unusual for a country to develop at a rapid rate in its early stages of development. For instance, in the 1950s and 1960s, the rates of growth of real gross national product in Japan was around 10 per cent per annum.6 In the 1960s, in the seven out of ten years, the Japanese growth rate was higher than 10 per cent and in six, it ranged between 12 and 15 per cent. Similarly, the Republic of Korea and Taiwan experienced rates of growth of 8 to 10 per cent in the 1970s and 1980s. Thus, the Chinese rates of growth are certainly impressive but not particularly exceptional. It is also certain that such rates cannot be sustained over a long period of time in future. What ought to be the projected rate of growth is, in fact, anybody's guess. Much would depend on the successful continuation of the social and political stability within the country and a favourable international environment.7 In both respects, the future, as always, is unpredictable. With the recent currency crisis in Southeast Asia8 and the recession in Japan, China's economic future has become much more unpredictable. Dai Xianglong, governor of the People's Bank of China conceded that as a result of the crisis, the inflow of direct foreign investment is likely to fall from $45 billion to $30 and exports may also fall significantly. Yet, he suggested that China would meet its growth target of 8 per cent by a substantial increase in government expenditure on infrastructure projects.9 However, many analysts believe that the official growth targets are rather optimistic.10 As the matter stands at the moment, it is difficult to speculate on the Chinese rates of economic growth. Currently, the future of Chinese exports depends on how quickly the Southeast Asian countries and Japan recover; and to what extent the US and the European economies are affected by the Asian crisis.

' The Chinese official estimates of growth rates are widely reported to be overstated but the extent of the over statement is a matter of guess. Besides, the Chinese concepts of "net material product" which is equivalent to Gross Domestic product (GDP) minus some services, and accumulation (in conventional jargon, capital formation) differ from those conventionally used by the UN system and therefore may not be directly comparable. See Dwight H. Perkins, "China's Future: Economic and Social Development Scenarios for the Twenty-first Century" in OECD, China in the 21st Century: Long-term Global Implications, (Paris, 1996), 36 (Notes 1 and 2). () Ministry of Foreign Affairs, The Economic Development of Japan for 100 Years (Tokyo,

1967), 2. 7 Perkins (OECD, 1996), op. at., 21-36. 8 This term in this paper includes South Korea. 9 South China Morning Post (Internet edition), March 8, 1998. 10 The Economist, June 13, 1998, 22.

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The future growth rate will also depend on whether the economic reforms of the public sector industries within China can be implemented smoothly without domestic turmoil as a result of rising unemployment. Some of these issues are taken up below. Much of the high growth rates in China after 1978 resulted from the acceleration of agricultural output and the production of small scale industries in the wake of economic reforms introduced in 1978 and thereafter.'' The growth rate of agricultural output had already begun to slow down in mid-1980s and the pace of the change in agricultural technology since then has also been relatively slow.12 Barring substantial increases in tariff or non-tariff barriers in the OECD countries, the labour-intensive small scale industries may possibly do well. Arguably, this is unlikely in the face of the slow down of exports to the Southeast Asian countries and Japan at a time when highly depreciated Southeast Asian currencies are making the exports of these countries more competitive to the Chinese products in the export markets. The Chinese leadership has decided, at least for the present, not to devalue the yuan with a view to avoid competitive devaluation in the region, but this hurts the Chinese exports.13 Even assuming that the labour-intensive small scale sector can retain its present share in the world market, this sector amounts only to 15 per cent of the gross domestic product against 21 per cent for agriculture and 22 per cent for large scale manufacturing, mainly run by state-owned enterprises. Reforming the state-owned enterprises has so far been intractable and only a modest beginning has been made.14 Admittedly, many of these state-owned enterprises have not been running at a profit, and thereby not meeting the "sole" crite11 Christopher Findlay, Will Martin and Andrew Watson, Policy Reform, Economic Growth and China's Agriculture, OECD (Paris, 1993), 16-7. 12 Justin Yifu Lin, Jikun Huang and Scott Rozelle, "China's Food Economy: Past Performance and Future Trends" in (OECD, 1996), op. cit., 71-93. 13 South China Morning Post (Internet edition), March 9, 1998. If the yuan is devalued, it may give rise to another chain of competitive devaluation by the Southeast Asian countries. On the face of it China may not need to devalue. China has a large domestic market and its growth rate does not depend mainly on exports. Besides, the yuan is not convertible on capital account so it may not be easily pressured by speculators. Its foreign reserves are huge. Inflow of direct foreign investment will certainly be substantially lowered but it will not dry up. With a reasonably good credit-rating it can also borrow from the abroad. All in all, there is no immediate risk of the yuan being devalued. See The Economist, June 13, 1998, 22—3. 14 As many as 100,000 industrial firms employing no less than 100 million state employees are facing restructuring. See South China Morning Post (Internet edition), December 1, 1997.

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Table 1: Annual Average Growth Rate of Per Capita Real Gross Domestic Product at Market Prices (In percentage) Country or Region China

Japan USA

1970-80

1980-90

1990-94

3.6 3.1 1.7

8.2

11.4

3.5

1.0 1.4

Europe* France Germany Italy Netherlands

2.4 2.6 2.6

UK

1.9

3.3

2.1

2.1 2.2 1.7 2.2 2.3 1.7 3.0

0.5 0.2 0.8 0.5 0.9 0.6

Source: U N C T A D , Handbook of International Trade and Development Statistics, 1995 (Geneva,

1997), Table 6.2, 286-93. * Only Developed Market Economies.

rion of economic "efficiency" espoused by the neo-classical economists.11 Obviously, the present Chinese elite intends to make the state-owned enterprises profit-oriented but there are some serious problems. These enterprises not only provide housing, health care and pensions but in some cases have even their courts and prisons. Clearly, if market-type reforms are introduced these services will have to be provided by the state, at least until such time that "the market" for housing, health services and pensions develops in China. It is conceivable, however, that foreign firms are allowed to enter and operate in these sectors. It is almost certain that China would be pressurised by the richer countries, particularly the United States, to open its service sectors as soon as China becomes a member of the World Trade Organisation. It may even be a precondition for membership.

'' The conventional wisdom that suggests that state enterprises are inherently more "inefficient" than private enterprises is not necessarily correct. Baumol, a leading American economist, has shown that "The case of large enterprises (as opposed to small scale ones), is quite different. Here the efficiency advantages of private enterprises, apparently, often disappears. One can easily find cases in which a public sector firm seems much more efficient than its private counterpart, as well as cases where the reverse is true." See William J. Baumol, Public and Private Enterprise in a Mixed Economy, Macmillan (London, 1980), 21. Studies by the United Nations Conference on Trade and development (UNCTAD) and the United Nations Development programme (UNDP) show that that not all public enterprises in developing countries lose money nor are these less efficient than private enterprises. See Radha Sinha, "Economic Reforms in Developing countries: Some conceptual Issues," World Development, Vol. 23, no. 4, April 1995, 557-575.

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The privatisation of housing, health and pensions will inevitably increase the prices of such services while, for fear of inflation, the efforts will be made to contain the rise in wages. Even if these services are not privatised—the entry of private enterprise in such sectors except perhaps housing has had mixed results in developed countries—the state would have to raise taxes to fund these services. All this will come at a time when many state-owned enterprises will be forced to undertake massive retrenchment of labour, totalling up to 15 million.16 Already, up to a hundred million "floating" workers, have no fixed jobs. Such workers migrate from city to city in search of temporary low paid work, often on construction sites, living in shanty towns or on the streets.17 Many more will be added to this rank. According to Zhou Lukuan, one of the directors at the Labour and Personnel Bureau at the People's University in Beijing, the unemployment rate in China may be as high as one fifth of the total population or nearly 250 million.18 In a similar estimate, Feng Lanrui, a leading Chinese economist, predicts that the jobless in China may even reach 28 per cent by the end of this century.19 Under the circumstances, even those who are lucky to get regular jobs in small scale industries have to work under appalling conditions. "In many areas, twelve- to fifteen hour workdays are common and low wages are universal; living conditions are primitive, often in unhygienic factory dormitories; overtime work is usually mandatory; many workers are young teenagers and, along with female labourers, are pitilessly victimised by owners and managers; working conditions are hazardous, resulting in many thousands of deaths in industrial accidents and fires; and workers are often preyed upon by greedy bureaucrats demanding payment of newly invented fees."20 Already, "there are many reports from China of labour unrest as workers organise, sometimes violently, to resist low pay and deteriorating conditions, particularly poor safety."21 Recently, the delegates 16 This number is suggested by Feng Lanrui, a leading Chinese economist. See South China Morning Post, March 16, 1998. " Maurice Meisner, The Deng Xiao Ping Era: An Inquiry into the Fate of Chinese Socialism 1978-1994, Hill and Wang (New York, 1996), 494. 18 Far Eastern Economic Review, January 15, 1998, 46. 19 Feng Lanrui (1998) op. at. 20 Meisner (1996), op. cit. 504. As many as 10,000 "incidents" of workers unrest were reported in 1993. Han Dongfan's China Labour Bulletin (Hong Kong, 1993) quoted in Meisner (1996), op. cit., 489n. 21 Vincent Cable, "The Outlook for Labour-intensive Manufacturing in China" in OECD (1996), op. cit., 45.

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to the National People's Congress held in March 1998, reported that in Heilongjiang pensioners were blocking the roads in protest against economic hardships. The mayors of several coal mining centres also reported to the Congress that that the miners were blocking the railways to protest against late payments of salaries, pensions and other welfare payments.22 Economic reforms in China have also led to increasing inequality between people, between rural and urban areas as well as between regions. Although the Gini-Coefficient23 at 0.42 does not indicate a high degree of inequality at the national level, but the ten per cent of the households belonging to the lower ends of income scale in 1995 received only 2.2 per cent of total income of the country, while the ten per cent households at the upper end of the income scale received 31 per cent.24 This would mean an income differential of 1:14, implying that the people in the highest income brackets in China received fourteen times the average income of the people in the poorest income brackets. This shows a considerable inequality. For instance, in India this differential is only around 1:8; but in Brazil it is 1:73. According to the Human Development Report, 1997, in 1990 the Human Poverty Index (HPI)2° value for the interior regions, at 44 percent against 18 per cent for the coastal regions, roughly indicates that an average Chinese in the interior of China was at least two and half times more vulnerable to poverty than people in the coastal regions.26 Meisner's vivid description of such inequities shows the likely scenario that might become commonplace in China in a not too distant future.27 Meisner writes: "Wrenching images (eerily reminiscent 22

South China Morning Post, March 10, 1998. The Gini-coefficient is an approximate measure of inequality which ranges between 0 and 1. Near I, the inequality is higher. Another approximate measure of inequality is to calculate the ratio between the average incomes of the five or ten percent of the households at the upper end of the income scale and the five or ten percent of the households at the lowest end of the income scale. 24 The World Bank, World Development Report, 1997, Oxford University Press for the World Bank (New York, 1997), Table 5, 222. 2j The HPI is an index of poverty based on the percentage of people expected to die before the age of 40, the percentage of adults who are literate, and overall economic provisioning in terms of the percentage of people without excess to health services and safe water and the percentage of underweight children under five. See UNDP, Human Development Report, 1997, Oxford University Press for the UNDP (New York, 1997), 14. 26 Ibid., 50. 27 The Chinese government is not totally unaware of the increasing poverty and inequality in China. In 1994 it formulated a 8-7 Poverty Reduction programme 23

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of Guomindang China) of great wealth and abject poverty have become commonplace in the reports of journalists and travellers in the 1990s. The great cities, from Canton to Shanghai to Beijing, are home to exclusive boutiques and expensive night-clubs where the nouveaux riche ostentatiously display themselves where, at the same time, growing armies of beggars and prostitutes walk the streets."28 Much of the recent economic development has taken place in the coastal regions and in the special economic zones. In these areas wages have gone up; this is already attracting labour from other parts of China. In some coastal cities and special economic zones there are restrictions on the inflow of labour from other parts of the country. With the disappearance of the rural communes, the societal provision of education, health and the social safety-net for the old age and infirmity have totally collapsed, and the proposed official alternative schemes of health insurance, have been suspended for reasons of financial austerity. All this, together with the growing disparity of incomes between urban and the rural areas and among people within the rural areas themselves, has led to a phenomenal increase in peasant involvement in criminal activities directed mainly against state property.29 All this does not auger well for peace and stability in China, and consequently, a continued high rate of economic growth. Growing inequality between the fast-growing regions and the others, means that the fast-growing regions accumulate resources that they may not be willing to share with those left far behind. In such a situation, the central government is left with only the coercive powers of the state with the possible use of the army, which even if successful, may be ultimately divisive and threaten the integrity of the country. Growing inequality beyond a certain point is not only socially divisive, it also breeds socially undesirable activities and particularly crime as a result of growing alienation of the underclass. What has come to be known as the "Brazilianisation"—denoting a society with too many poor with too few rich—may not be good for a rapid economic development in future as the demand for luxuries by the rich is limited and the saturation reaches rather quickly. For the lack of which aims at eliminating absolute poverty of 80 million people by the year 2000. In the slogan 8-7, 8 stands for 80 million and 7 for the seven year period between year 1994 and 2000. Ibid., 50. 28 Meisner (1996), op. cit., 499. 29 Ibid., 506-7.

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purchasing power, the slack cannot be taken up by the masses, who may not even be able to buy enough of necessities.30 Besides, much of the luxury goods may not be produced domestically and therefore will not have multiplier effects either for income or for employment. Even if some of such fashion goods, such as the luxury cars are produced domestically, their production would be largely capitalintensive and will not add much to the domestic employment. Technological gains from such luxury enterprises will largely depend on the negotiating skills of the Chinese bureaucrats or the entrepreneurs and the outcome cannot be easily predicted. The over-production in the luxury sector is already being experienced in China.31 It is well-known that one of the main reasons for the rapid economic growth of Japan, Taiwan and South Korea was their respective post-war land reforms which created egalitarian societies in these countries. This meant that after the food demand was met, any increase in income was spent on consumer goods, thus providing a large domestic market for consumer goods. As late as 1994, 91 per cent of the Japanese GDP was absorbed domestically. In South Korea the figure for domestic absorption was nearly three quarters and for Taiwan, almost half. In the early stages of economic development in the post-1949 China also, the domestic consumers were the main users of domestic agricultural and industrial outputs. Even currently, the domestic absorption of merchandise in China accounts for 83 per cent of total production. However, with increasing unemployment and inequality, the mass market will rise only slowly, while the luxury market might reach saturation. This will increase Chinese dependence on exports much more. Chinese manufactures, particularly, the labour-intensive exports face severe import restrictions in most richer countries, the resistance to entry is likely to increase with increasing volume of such exports as well as with the increasing size of the Chinese trade surplus.32 With the recent massive devaluation 30 The Far Eastern Economic Review (January 15, 1998), p. 44 quotes a self-employed garment sales-women saying "Local people have so little consuming power that I have to sell my clothes for little mark-up." 51 China is already experiencing excess capacity in the luxury sector. For instance, in 1997 the air-conditioner producers produced only 6 million units—only a fraction of the production capacity—but sold only 5 million.—Far Eastern Economic Review, January 15, 1998, 45. 32 China's trade balance at the end of June, 1998 (latest 12 months) stood at $45 billion and the foreign exchange reserve at $140.9 billion. See The Economist, July 18, 1998, 106.

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of the currencies in the Southeast Asian countries, Chinese exports to Japan and Southeast Asia have collapsed; but the exports to the United states and Europe have held up. However, there has been a 20 per cent increase in exports to Australia, which is virtually a new market for Chinese exports.33 The expansion of the domestic market in China may also slow down, not only because of the slow growth of purchasing power as a result of retrenchment of the labour from state enterprises and elsewhere and the rather low or negligible wage increases paid by the private enterprises. Loss of welfare benefits will also reduce the real incomes of the consumers. The inadequacies of physical infrastructure (roads, railways, electricity and so on), already acute, will further act as impediments to the expansion of trade between the coastal regions and the interior of the country. Given time and resources, infrastructure can be improved but a country as big as China will require a considerable investment in the expansion of both physical and social infrastructure. The need for the latter will increase with the increasing privatisation as well as the increasing population. The Chinese gross domestic investment at 40 per cent (gross domestic savings being 42 per cent) of the gross domestic product (GDP) is already too high; any further increase will cut drastically into domestic consumption which might lead to further discontent.34 This means that for the strengthening of the infrastructure, China may ultimately have to depend on foreign capital. As Cable suggests, "China is acquiring a reputation as a difficult country in which to invest: a large proportion of investors are losing money; the transport system is poor for both internal and external distribution; the legal system is often seen as alien and biased; corruption is on an epic scale—in league tables complied by businessmen, China is close to the top along with Indonesia, India, Russia and Nigeria; and there is little transparency in rules and procedures."35 The overseas Chinese who have been the main investors in the labour-intensive industries in China, having lost a considerable part of their assets in the Southeast Asian crisis, may not any more possess either the will or the capacity to invest heavily in China

33 34

The economist, July 18, 1998, 25. The World Development Report, 1997, op. cit., Table 13, 238. Of course with a

rapid rise in the GDP, the absolute amount available will still be large even if the rate of domestic savings and investment remain at the present rate. 35

Cable (1996), op. cit., 46.

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let alone in its infrastructure.36 One must also remember that while in the early stages of development, the incremental capital/output ratio (ICOR) is relatively low both in agriculture and industries; with economic development, progressively, the ICOR increases both in agriculture and industry. This simply means that even with the same rate of capital formation, the rate of growth in China may become smaller and smaller. Given the increasing political unrest, whether the present pace of capital formation can be sustained is difficult to foresee. China may also suffer from the shortage of trained personnel, many of the young men and women who have been sent abroad for training, have not returned. Who can blame them: if "being rich" is what leadership has emphasised, staying abroad, particularly of the brightest, is inevitable. At this stage of development, or even in the foreseeable future, China cannot afford to pay salaries that are available in the US market. All this suggests that China is likely to face serious decline in its long-term growth rates. The Chinese growth rate of nearly 14 per cent in 1993 is expected to be down to 8 per cent per annum in 1998 and around 7.7 per cent in 1999.37 It is highly unlikely that a rate of growth of this magnitude can be sustained for the next two or three decades. China may be lucky to achieve a 4 to 5 per cent rate of growth, which comes nearer to Perkins' scenario 2 or to The Economist's 5-6 per cent a year.38 These rates may not even be enough to catch up39 with the countries of the European Union, let alone Japan or the United States. Besides, the magnitude of unemployment and inequality and the level of inefficiency and corruption in the bureaucracy and in administration of justice might generate such a massive discontent that much of the time of the * Chinese officials recognise that the reduction in the inflow of foreign capital is resulting from the Southeast Asian crisis. Other reasons stated are the saturation of the domestic market, particularly in consumer goods and real estate. They however hope that the shortfall caused by the Southeast Asian crisis will be compensated by the inflow from Europe and America. See South China Adorning Post: China Business Review, (Internet edition), April 9, 1998. 3/ Far Eastern Economic Review, January 15, 1998, 46. 38 Perkins (OECD, 1996), 34; The Economist, January 3, 1998, 18. With the economic crisis in Southeast Asia and Japan, two of the largest markets for the Chinese products, even these rates (4-6 per cent) may turn out to be optimistic. 39 The term "catch up" is often used in terms of per capita income. Based on Purchasing Power Parity (PPP), which takes into account the relative purchasing powers of the currencies, China is already ahead of most developed country in terms of the their respective gross domestic products. See also "Kontseptsiya natsional'noi bezopasnosti Rossiiskoi Federatsii", Rossiiskaya Gazeta, 26 December 1997, pp. 4-5.

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Chinese elite will be devoted to solving the worsening domestic crisis. With the growing discontent both nationally and regionally, the Chinese military may have increasingly to be involved domestically. This may be more so if rebellions in minority areas such as Xinjiang intensify. Under the circumstances, the Chinese leadership will be extremely reluctant to get involved in foreign adventures, which might bring them into conflict with the United States or even Russia. This does not rule out some show of power in island disputes or in border skirmishes with India in support of Pakistan if there is an open war between India and Pakistan. On the other hand, the Chinese leadership may not contemplate a naval blockade of the sea-lanes— except perhaps the Formosa Strait, and that too very reluctantly, following an extreme provocation from Taiwan. They are vital to the West or Japan for their trade or for the imports of fuel for two reasons. Firstly, China does not have the naval or the air power for a sustained blockade, as this might require air-support.40 At present, China is rather weak in this respect. Secondly, such a blockade, being against international law, brings China face to face against the combined might of the West and Japan. Any backing down would be domestically humiliating for the Chinese leadership. In the present author's judgement, the Chinese leadership is not prepared to take such precipitous actions.

CATCHING U P IN ECONOMIC TERMS

On the issue of "catching up" with the West or Japan over the next 30 odd years, the answer, by its very nature, is subjective and highly conjectural. The current situation with respect to both the per capita income and the total gross domestic product is given in Table 2. Clearly, both in terms of total gross domestic product and the per capita domestic product, China is far behind the United States, Japan and the major European market economy countries. Assuming that its per capita domestic product grows by 5 per cent per year until 2030, it might reach roughly $1800.41 By this time, even at a very 40 John Wilson Lewis and Xue Litai, China's Strategic Seapower: The Politics of Force Modernisation in the Nuclear Age, Stanford University Press (Stanford, 1994), 227. 41 It might be of some interest to note that on the basis of Purchasing Power Parity Basis, the GDP per head is estimated at $3000 and on this calculation, China is considered to be the third richest country after the United States and Japan.

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reduced rate of population growth of nearly 0.5 per cent per year the total population of China in 2030 will be around 1521 million.42 This would mean that the Chinese gross domestic product in 2030 may be around $2,756 billion, which is 36 per cent of EU, 41 per cent of the US and 60 per cent of Japan's total gross domestic product in 1994. One must remember that, by then, China will have added another 310 million people i.e., substantially more than the current total populations of the United States and Canada put together. This, together with the present estimated surplus or the already unemployed population of over 240 million, China will have to provide employment, particularly industrial employment to over 550 million people by the year 2030. This number is a little more than twice the total current industrial employment in all the developed market economies. In 1994, the total gross domestic product of all the developed market economies was $20,083 billion and the gross domestic investment was around 21 per cent. Thus, the total gross domestic investment of all the developed market economies put together amounted to $4217 billion, or 50 per cent more than the estimated total gross domestic product of China in 2030. Clearly, China will not be able to provide industrial employment to all its surplus population, a significant part of the surplus of 550 million or thereabouts will end up in the "informal sector", many suffering from disguised unemployment. Arguably, if the Chinese are desirous Other estimates put it as low as $1000 to $1200. See Cable (OECD, 1996, 44). See also N. Lardy, China in the World Economy, Cambridge University Press (Cambridge, 1994) and Vincent Cable, China and India: Economic Reform and Global Integration. Royal

Institute of International Affairs (London, 1995). Such differences arise because of the arbitrariness in selecting domestic prices of non-traded goods. Besides, much of the data regarding agricultural output, particularly for self-consumption as well the output of small scale industries, forestry products, small scale fishing etc., is not very reliable in any developing country. As stated above the Chinese method of estimating the growth rate of gross domestic product overstates the situation. There is also a political reason for doing so. The cadres and those who have benefited from the economic reforms may be overstating the success, with the aim to convince the leadership of the success of the reform. This was done before, for instance, in the early years of the Great Leap. Foreign scholars, who were highly critical of the prereform situation also take a soft line now because many of them are ideologically in favour of the market-oriented reforms. It is also well-known that PPP measures do not operate well for the GDP as a whole because it contains numerous nontraded items which are not comparable among countries. 42 It has been assumed that the current rate of 1.1 per cent will come down to nearly 0.6 per cent per annum during the first decade of the next century, to 0.5 during the second decade and 0.4 during the third decade. Obviously, these figures are somewhat speculative but not too unrealistic.

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of projecting their military might abroad, it may be possible for China to strengthen its nuclear armament and missile programmes in spite of the Comprehensive Test Ban Treaty (CBTB) because the treaty does not prohibit sub-critical tests and computer simulations. This will certainly require diverting a disproportionate share of available capital to the defence sector. Not unlike the Soviet Union, such a policy might cut into expenditure on consumer goods and welfare expenditures and become increasingly more socially divisive. Besides, the present-day military sector requires highly sophisticated computers and electronic devices, lasers and new materials, and consequently, a highly sophisticated industrial sector which works in tandem with the military enterprises. In the present author's view, China, in the next two or three decades may not be able to build-up an advanced industrial capacity to support a major expansion of increasingly sophisticated weapon systems. Under the circumstances, Chinese military capability will be mainly of a defensive nature. Table 2: Total and Per Capita Gross Domestic Product, 1994 (In US dollars) Country or Region China Japan USA Europe* France Germany Italy Netherlands UK

Total (in Billion US dollars) 508 4,590 6,650 7,730 1,328 2,046 1,017 334 1,020

Per Capita (in US dollars) 420 36,775 25,514 20,221 23,006 25,173 17,807 21,712 17,550

Source: U N C T A D , Handbook of International Trade and Development Statistics, 1995, Geneva,

1997, Table 6.1, 281-5. * Only Developed Market Economies.

THE STATE OF THE CHINESE ARMED FORCES

There are commentators, however, who see the inevitability of war between China and the United States in the foreseeable future. Impressed by the double digit growth rates over the last two decades, two journalists assert that "The People's Republic of China, the world's most populous country, and the United States, its most pow-

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erful, have become global rivals, countries whose relations are tense, whose interests are in conflict, and who face tougher, more dangerous times ahead." In the view of these two journalists "the looming conflict between the two countries could even lead to military hostilities."43 Similarly, Samuel Huntington has argued that the new emerging world order after the disintegration of the Soviet Union will be dominated by clash of civilisations.44 There is also the view that "Economic development will make China more assertive and less co-operative with its neighbours. China's domestic characteristics make it comparatively likely to use force to achieve its political goals, and an economically powerful China may provoke military build up by Japan, plunging Asia into a new cold war."41 According to this view, Japan cannot become a hegemon in the region because of the instability of the Japanese economic strength and the weaknesses of Japan's armed forces.46 Therefore, if and when the United States reduce their presence in Asia, China would take over the mantle of the hegemon. To begin with, it is unlikely that the United States will be running down its military presence in the region to the extent that there will be a need for a new hegemon.47 This view also suffers from some serious misconceptions regarding the strengths and weaknesses of Japan and China.

43 Richard Bernstein and Ross H. Munro, The Coming Conflict with China, Alfred A. Knoff (New York, 1997), 3~4. 44 Samuel Huntington, The Clash of Civilizations and the Remaking of World Order, Simon & Schuster (New York, 1996); see also Samuel Huntington, "The Clash of Civilizations" Foreign Affairs 72, no. 3 (summer). 43 Denny Roy, "Hegemon on the Horizon?" in Michael E. Brown, Sean M. Lynn-Jones and Steven E. Miller, East Asian Security, MIT Press (Cambridge, 1996), 114. 4(1 Ibid., 114. 4/ This one can see from the East Asian Strategy Review of 1994, produced by the Department of Defence under the leadership of the then Assistant Secretary Joseph Nye. The Report clearly states "United States interests in Asia have been remarkably consistent over the past two centuries: peace and security; commercial access to the region; freedom of navigation; and prevention of the rise of any hegemonic power or coalition. Recent trends, particularly the increasing economic importance of Asia and political and securities uncertainties in the region in the wake of the Cold War, have clarified United States' interests in the region. Recent events have also highlighted the importance of our military presence in Asia to United States operations around the globe.—Department of Defence, Office of International Security Affairs, UnitedStatesSecurity Strategy for the East Asia-Pacific region (Washington DC, 1995) 5.

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Countries

USA Russia

Japan France Germany UK China Taiwan Korea

Total Per Capita Ratio to Number of (in billion (in US $) GDP Regulars US $) (in %) in Army (in 1000) 278.7 106.9 44.6 42.7 34.8 33.9 27.7 11.1 13.2

Number of Regulars in Navy (in 1000)

Number of Regulars in Air force (in 1000)

1,074

4.3

525

614

409

718 356 739 428 583 23 524 294

9.6 1.0 3.3

670 151 241 234 116

200 44 64

2,200 240

260

330 45 89 75 70 470 68 53

2.0 3.4 5.6 5.0 3.6

520

29 51 68 60

Souurce: Keizai Koho Centre, Japan 1997: An International Comparison, Tables 8-13

and 10-19 (Tokyo, 1997), 90, 111. The U.S. Arms Control and Disarmament Agency estimates Chinese military expenditures for 1975 at $65 billion against Japan's $50 billion. See World Military Expenditures and Arms Transfers, 1996, U.S.

Arms Control and Disarmament Agency (Washington DC, 1997), 3. The estimates for China consist of forces, weapons, programmes and activities, but the reports points out the difficulties of estimating the exchange rates between dollar and yuan, based on PPP estimates for 1981, then the GNP deflators are used to estimate the values for 1994. {ibid., 188).

Admittedly, the yen had then been depreciating relatively rapidly because of the structural weaknesses of Japan. Structural reforms take some time and the Japanese government is taking steps to bring about the needed reforms. In the meantime, the recession is raising the rate of unemployment in the country creating a risk of some social unrest, but nothing like China.48 However, the depreciating yen is helping the export sector leading to an increasing trade surplus both with the United States and the European Union (EU).49 Naturally, this situation cannot last long and both the USA and the EU will have to take collective action to correct the misalignment of the currencies. Unless such a collective action is taken, the massive depreciation of yen will not only destabilise Japan, but will also deepen the crisis in Southeast Asia. China may also be forced to 48

Yet, one must remember that Japan's official unemployment rate is around 4 per cent (unofficial estimates may put it around may be 6 per cent); it is certainly much less divisive than nearly a quarter of the population in China. Besides, distribution of income is much more equal than the figure for China. 49 Japan's total trade balance as of May, 1998 (for the last twelve months) is reported at $115.9, against a total trade deficit for the United States of $208.9 billions, Japan's foreign exchange reserve in May, 1998 was $205.8 billion, against $59.7 for the U.S.A. and Germany $79.9 billion. See The Economist, July 18, 1998, 105.

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devalue its own currency, thus deepening the Asian crisis all the more. This must, ultimately, have serious implications for both the USA, and the EU. Barring this short-term crisis, the Japanese economy has been much stronger than the Chinese and probably will remain so. As to the relative size of the Chinese vis-a-vis the Japanese economy, in 1995, the total gross domestic product of Japan was 7.3 times that of China, while the per capita income was as much as 64 times as big.10 As the projections of gross domestic product and GDP per capita suggest, even with much higher income growth, China in the year 2030 will have a total gross domestic product as well as a per capita income much lower than those for Japan in 1994.3' Because of its high total GDP), even at a lower rate of gross fixed capital formation, Japan's annual fixed capital formation is currently as much as seven times that of China. To this must be added the technological sophistication of Japanese industries, both civilian and military. Lack of domestic sources of raw materials and fuel is certainly a weakness for Japan but by diversifying the sources internationally, it has acquired a reasonable security of supply. In terms of total and per capita military expenditure too, Japan is spending much more than China (Table 3). In terms of percentages, the Japanese expenditure at one per cent is somewhat deceptive. On OECD criterion it may be as high as 2 to 3 per cent. China has a large size of the regular armed forces in addition to the militia but the sheer numbers which were justifiable in people's war are no more so. The larger the size, the lower would be the sophistication in training and equipment. The Chinese government has come to understand this, particularly during the Gulf War, in which the United States used very sophisticated weapons with fewer soldiers. The Chinese government has already decided to drastically reduce the number of regulars in ''° Even in PPP terms, Japan's per capita was as much as 7.5 times that of China. Given that the Chinese population is ten time bigger than that of Japan, in terms of PPP in 1995 China might have possibly overtaken Japan. This is based on the World Bank estimates of China Per capita income in PPP at $2920. See World Development Report, 1997, 214-5. See also Ushat Maichurin/N. Poroskov, Krasnaya £vezda, 5 November 1997, p. 1, for the other estimates of Chinese PPP and the limitations of this concept. Please also note that the data in Table 2 are based on UNCTAD estimates. These may some times be different from the estimates by the World Bank either because of the difference in methodology or the classifications of countries etc. 51 Please note that these projections are based on the information available in Table 2, based on the UNCTAD data.

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the armed forces. Besides, the sheer number may be deceptive in the Chinese case because a significant part of the armed forces are engaged in economic production and selling on the market. It is mainly the nuclear weapons and the inter-continental and the medium range missiles which are the main strength of the Chinese armed forces. In addition to some ICBMs, China possesses about 100 intermediate-range ballistic missiles and some 120 medium-range bombers; some new intermediate-range missiles are also being deployed. It is also developing new types of ICBMs and SLBMs and possibly some short-range missiles.52 In the Chinese Navy there are 970 ships including 90 submarines but most of the ships are obsolete and small.33 Modernisation is in process. China has nearly 5,150 combat aircraft but most of these are of the older generation. China has, in recent years, developed new types of fighters and is trying to develop inflight refuelling capacity.'4 As compared to the Chinese defence forces, the Japanese forces are much smaller in size but in their training and sophistication they are unmatched in Asia. Besides, the Japanese industry can produce domestically most of the military hardware and precision instruments. "Japan is no more than one generation behind the United States in aircraft production . . . . in certain technologies such as electronics miniaturisation—useful in advanced avionics— and fire control systems, Japan is ahead of the United States. Another area where Japan is at least keeping abreast of the U.S. is hypersonic technologies."50 It can come as no surprise that Japan can "manufacture nuclear devices, if it chose to do so. Since it already has a reprocessing plant, Japan's civilian reactors have the potential to produce weapon-grade plutonium in a relatively short period of time."06 It has also bought quite a substantial amount of weapongrade reprocessed plutonium from the West. This reduces the time required for the production of nuclear weapons if the political decision was made to do so. The public aversion to nuclear weapons continues, but not as much it was some years ago. Japan already has rockets and rocket fuel which solves the problem of delivery of 3i

Defence Agency of Japan, White Paper on Defence of Japan, 1997 (Tokyo, 1997), 52. Translated by The Japan Times. 53 Ibid., 53n. 54 Ibid., 53. 35 George Friedman & Meredith Lebard, The Coming War with Japan, St. Martin's Press (New York, 1991), 373. 56 Ibid., 353.

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nuclear weapons if the decision is made to produce them. Japan's space programme is also progressing. Therefore, in terms of power projection it may not be easy for China to overtake Japan. A rapid rate of growth alone, even if continued over several decades, is not enough for power projection; advanced technology and a sophisticated industrial system and a continued domestic peace are also necessary. As seen above, none of these conditions are currently present in China, nor is it certain that these might be available even over the next two or three decades. China increasingly needs advanced technology from Japan and other richer countries, and therefore, an environment conducive to world peace and not confrontation will suit China better. The Chinese leaders understand this quite well. The windfall gains that China reaped from the disintegration of the Soviet Union was, at best, a one time gain. Even those Soviet scientists who came to work in China for lack of job opportunities in their own country may not continue for long in China because the research environment may not necessarily be right. It is a common experience that bright young men and women from developing countries who are trained abroad, cannot continue to work at home either because of bureaucratic interference, the need for conforming or sheer inadequacy of material rewards. In this context, normalisation of relations between China and the United States provides China with several benefits. It was for this reason that President Clinton was received with a great deal of warmth by the Chinese leadership. Firstly, the United States can give China a permanent MostFavoured—Nation (MFN) status;37 currently it is renewed every year. Secondly, the U.S. government may support the entry of China into the World Trade Organisation (WTO); and finally, China could buy from the United States some of the dual-use advanced technology, but how far it can go is not easy to speculate. One must remember that sale of dual-use technology to China has its critics too. The recent exports of satellites to China has come under serious criticisms.08 " Recently, republican leadership have changed the term "most favoured nation" into "normal trade relations" or NTR in short. The new term has been included in the IRS reform bill which is going to the President for his signature. Some people feel that it might make trade negotiation with Congress easier but only time will tell, whether it makes life easier for trade negotiations with China. Washington Post (internet edition), July 21, 1998. 58 As one might remember, in the wake of the Tiananmen Square incident the U.S. Congress had passed the Foreign Relations Authorisation Acts of 1990 and 1991 suspending the licensing of exports of certain items to China which also

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Nevertheless, increasing contacts between Chinese and foreign politicians and the bureaucrats and military personnel will also militate against confrontational policies. Coming face to face, they will begin to understand each other and prevent a crisis situation from worsening. Many Chinese trained abroad or those who develop interests—career, business or financial—in a market economy, may find any kind of confrontation with Japan and with the United States and European countries prejudicial to their own as well as China's interests and they will therefore try to avoid confrontational politics unless they are pushed around too much on one issue or another. This new breed of the Chinese elite may even have forgotten the "sense of humiliation" that their parents and grand parents had suffered at the hand of Japan or the European colonial powers and the United States. Mostly born after the Cultural Revolution, they would be less impressed with ideology and may not be too worried about growing inequities so long it does not threaten the political stability of the country. It can, therefore, be argued that for the next few decades, contrary to the views of The Economist, as well as other doom-soothsayers, the Chinese elite will not be interested in projecting their military power abroad even if they develop the physical capacity to do so. As suggested earlier, this may not preclude disputes around the ownership of the islands in the China Sea or the un-demarcated borders between neighbouring countries. For instance, China had short wars with India and the Soviet Union on border questions. China has disagreement with several East and included some defence equipment included in the U.S. munitions lists. The Acts had also prohibited U.S. commercial satellites to be launched on Chinese rockets. The President was given a waiver if he thought that a particular transaction was in the national interest. Since 1993 the President had issued 11 such waivers for U.S.-China space projects. Recently, one of the projects, the Space Systems/Loral (SS/L) Chinasat 8 has become a matter of great dispute between the President and the Congress. See The New York Times (Internet edition), May 23, 1998. Unfortunately, the Chinese rocket crashed after 22 seconds of the lift off in February 1996. The Chinese scientists had found out the cause but on the insistence of the insurance company, the Chinese authorities had to obtain a second opinion. They wrote to Wah Lim, a Senior vice president and engineer of a unit of Loral Space and communications. Lim replied in a rather cordial manner promising help to improve the quality of the Chinese rockets. Essentially, this was a business letter because many of Loral's satellites are launched in China. But as the New York Times pointed out: "So the Loral documents underscore the risks of the Clinton administration's policy of promoting the transfer of sophisticated U.S. technology to countries like China at the same time as trying to prevent that technology from being used for military purposes." See The New York Times (Internet edition), June 6, 1998. Top intelligence and security officials are divided over whether in telling the Chinese

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Southeast Asian countries regarding the disputed islands. Most countries in the East and Southeast Asia are situated in close proximity and it is therefore natural that their exclusive economic zones— potentially rich with minerals fuel and fish—often overlap. It is not only China, but some of the other countries in the region as well that have territorial disputes. For instance, Japan has a dispute with China with regard to Senkaku Islands, which the Chinese call Diaoyutai. Both China, Japan and Vietnam claim the Spratly Islands. Parts of the Spratly Islands are also claimed by Malaysia, the Philippines and Brunei. In 1988 both China and Vietnam had an armed clash. The Republic of Korea contests the ownership of Tokto Islands (Takeshima for the Japanese) with Japan. There is a dispute regarding Mischief Reef between China and the Philippines. None of these disputes are likely to involve foreign powers.59 The countries in the region are attempting to find a peaceful solution to these disputes. In July 1992, the ASEAN Foreign Ministers adopted an "ASEAN Declaration on the South China Sea" advocating a peaceful solution of the Spratly Islands dispute. China and Vietnam have also agreed to have a peaceful solution of the dispute. In 1995, the Bangkok Summit Declaration, once again reiterated the policy of seeking peaceful solutions. Efforts are also being made through the ASEAN Region Forum (ARF)—a forum for multilateral dialogue, which now meets annually to discuss security issues—to find peaceful solutions.60 The recent testing of nuclear devices by both India and Pakistan, though not being signatories of the Comprehensive Test Ban Treaty (CTBT), have undermined the treaty and China has indicated that if these two countries, particularly India does not put a stop to the testing and sign the treaty "unconditionally", China may once again begin testing its nuclear devices. In any case, as indicated above the CTBT does not restrict the five nuclear powers,

why the rocket had failed, the two satellite manufacturers, the Loral Space Communications and the Hughes Electronics had harmed U.S. security. See also Paul Richter, "U.S. national security sacrificed for profit," Los Angeles Times, reproduced in The Japan Times, July 23, 1998. 59 However, as Radtke points out in this volume, under the revised Japan-U.S. Security Guidelines Japan's security interests may extend up to the Middle East, the Korean Peninsula, Taiwan and thereby the disputed islands. In the present author's view, this is an encirclement of China, and China sees the revisions to the Japan-US security treaty in a similar light. Yet, both China and Japan are in no mood to enter into a military confrontation; and the U.S. would also avoid a possible nuclear confrontation with China. 60 Department of Defence (Tokyo, 1997), op. cit., 57-61.

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which includes China, in sub-critical nuclear testing or advancing nuclear capability by computer simulation. In the mean time, negotiations between the nuclear powers and India and Pakistan are progressing and it is highly likely that mutually acceptable solutions will be found.

EUROPEAN ECONOMIC INTERESTS

If this all leads to a military build-up beyond China's domestic requirements—depending on the large size of the country, its common land borders with as many as twelve countries, including some politically not too stable, and a large coast line—and if China takes up a confrontational posture, this may have consequences for the Asian economies, the newly emerging Islamic states61 in the north and also for Japan and the United States, which have large trade and investments stakes in the region. In 1994, exports from North America to Asia and imports from Asia to North America amounted to 37 per cent each. In the case of Japan, exports to Asia amounted to 43 per cent and imports from Asia amounted to 41 per cent. As against this, Western Europe exported only 10 per cent of its exports to Asia and nearly 12 per cent of its imports came from Asia. Both United States and Japan have invested in terms of direct foreign investment (DFI) much more in Asian countries than Western Eurofal "The PRC policy that accords special privileges to the recently recognised Hui [a Muslim minority in China] along the Southeast coast and encourages their interaction with foreign Muslim governments has had a significant impact on their ethnic identity. Fujian provincial and local municipal publications proudly proclaim Quanzhou as the site of the 3rd most important Islamic holy grave and the 5th most important mosque in the world. Religious and government representatives from over 30 Muslim nations were escorted to Muslim sites in Quanzhou as part of a state-sponsored delegation in the spring 1986." Dru C. Gladney, Muslim ChineseEthnic Nationalism in thePeople's Republic, Harvard University Press (Cambridge, 1996), 284. As a result of such contacts foreign governments have provided financial assistance for various activities. For instance, the Kuwaiti Government subsidised the construction of the Xiamen International Airport as well as a large hydroelectric dam project along the Min river outside Fuzhou. Trade between the Third World Muslim states has also increased. (Ibid., 284.) On the other hand, in some minority areas such as the Xinjiang Uigur autonomous region, discontent with the Chinese rule has led to several rebellions even before the Communist take-over of China. More recently, in a 1990 rebellion in Xinjiang forced the Chinese government to bring in tens of thousands of soldiers. In February 1997, the town of Yining near Kazakhstan has been placed under curfew and has been sealed off from Xinjiang, and many casualties have been reported.—Guardian Weekly, February 16, 1997, 3.

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pean countries have done. The European DFI in Asia ranges between 3 to 5 per cent for Italy, France, Germany and the UK. As against this the US direct foreign investment in Asia is around 7 per cent of its total investment abroad, and for Japan nearly 16 per cent. Thus neither for trade share nor for foreign investment is Asia important for European countries. Not much of raw materials or fuel for European countries passes through the Asian sea lanes. France has some colonial possession in the Pacific Islands and it might like to keep in touch with these islands for which the sea lanes may have some importance. However, with repeated nuclear tests in some of these islands France has lost a lot of credibility with these islands. It is highly unlikely that China will attempt to restrict the French freedom to use some of the Asian sea lanes which China can control. China has occasionally complained to the French government regarding the sale of armaments to Taiwan, but France has also been one of the major armament supplier to China as well. So, the Chinese relationship will remain reasonably cordial with France. Clearly, developments in Asia do not have many security implications for European countries, except in a very broad general sense. A major war in Asia may have world-wide implications; so it may have some implications for European countries, too, particularly in terms of increased prices of food, scarce raw materials and fuels or in terms of a nuclear fall-out if ever India and Pakistan went for a nuclear war. It is almost inconceivable that in such an eventuality China will use its nuclear capability to help Pakistan because it would be too risky; it might bring in Russia in support of India. The security implications for Europe may arise also as a result of Europe being an ally of the United States which has a military presence in Asia and it (the United States) may persuade or compel European countries to take part in a limited war in Asia to give it a global significance as in the case of the Gulf War. Unfortunately, while the Europeans would like to have an independent security policy, they do not agree on the nature of such a policy or how it can be implemented. The Maastricht Treaty does provide for an independent European Security and Defence Identity (ESDI), primarily through the Western European Union (WEU).62 Initially, the idea of Europe having an independent security arrangement was seen with suspicion by the United States which was Patricia Chilton, Otfried Nassauer, Dan Plesch and Jamie Patten (Whitaker),

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anxious to maintain the North Atlantic Treaty Organisation (NATO) in Europe because of the primacy of the United States in this organisation. On the other hand, NATO, primarily to keep initiative in its own hands, formed a North Atlantic Co-operation Council (NACC) to meet some of the security concerns of the Eastern European countries before they were allowed to join the NATO as members. NATO, in an attempt to accommodate some of the aspirations of the Europeans, issued a "strategic new concept" which allowed for autonomous European security arrangements under the overall security environment being provided by NATO. Later, at the NATO Ministerial Meeting in December 1993, the US Defence Secretary stated that the United States welcomed the emergence of the ESDI that "complements NATO and contributes to strengthening the European pillar within the alliance."63 The current situation is that wide range of multinational forces, many of which will be answerable to the WEU will be available to take part in out-of-area operations under the NATO command in support of the UN or Conference on Security and Co-operation in Europe (CSCE) missions. Thus, NATO has remained the predominant security organisation in Europe with out-of-the area peace-keeping as one of its main roles. NATO will be acting as an agent of the Security Council in peace-keeping but given the predominant role of the United States in the Security Council as well as in NATO, it is possible that the UN will be used by the United States for the advancement of its own national goals and may willy-nilly drag the Europeans into war; though even the Americans may not have an appetite for a war with China, which might possibly turn nuclear. Besides, NATO peace-keeping doctrines do not give the same importance to impartiality that the UN has given in the past. Even the British and Canadian military army leaderships are worried about the NATO military doctrines. Charles Dobbie of the British Army's doctrine and training headquarters argues that: "The idea, therefore, that [in] post Cold War there is a new middle ground of military operations lying on a linear spectrum somewhere between peacekeeping and peace enforcement seems not only specious historically, but dangerously destabilising doctrinally. Such a perception blurs NATO,

Peacekeeping And The United Nations, British American Security Information

Council and Berlin Information Centre for Transatlantic Security, Report 94.1 (Berlin, 1994), 11. A significant part of this section in this paper is based on this report. 63 Ibid., 1 1 .

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recognition and application of the crucial impartiality divide." He regards "as intellectually flaccid the idea that peacekeeping and peace enforcement are differentiated only by the degree of force being used." He is particularly concerned that "considerations such as popular support, negotiations, mediation and conciliation will matter less and that traditional peacekeeping would fade in favour of a 'a doctrine more oriented towards warfighting.'"64 It is sad that the European efforts towards WEU are virtually symbolic. They have only 120 people at their headquarters against thousands of diplomats and officials working at NATO headquarters. As Martin Woollacott recently pointed out, the Europeans have hardly a common policy on most of the matters vitally concerning them. A look around at the main areas of policy is illustrative. Notoriously, in Bosnia, the US had to take the lead in negotiating the Dayton agreement and then enforcing it. Even now Britain and France insist that the US must stay on militarily after next summer, threatening to withdraw their own troops if there are no Americans on the ground. There are technical reasons for this, in that European military strength, both in terms of sophisticated equipment and availability of soldiers, is less than it seems and not what it should be. But beyond that, there is little evidence that there is any clear European strategy for the future of the states of former Yugoslavia. Leave that to the Americans. In other words, Europe needs the US more politically than militarily in the Balkans. In the Middle East, "European" policy is a mess. There is some coherence on the Israeli-Palestinian question, but none on Iraq, not a great deal on Iran, and much contention beneath the surface on Turkey. Commercial rivalry underlies some of these differences. Others date back to the colonial times. But, here, too, US policy performs the function, for Europeans, of allowing different states to take up a range of positions while knowing that ultimately responsibility for the stability of the area lies with Washington . . . European states do not fear a common foreign and security policy so much as having to concede leadership to other European states. Better be led by the US, they seem usually to conclude, than to defer to other Europeans. Even France prefers to defer directly to the Americans rather than to give in to London or Bonn when

Lt. Colonel Charles Dobbie quoted in Chilton et al. (Berlin, 1994), op. cit. 36-7.

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they take a US line. And even France, the most consistent advocate of European policies, fails to offer any full solution to Europe's lack of certain kind of military capacity. It finds it politically impossible to spend the large additional amounts needed to give it, or Europe, a really effective military arm.65 It is rather a sad comment on the state of autonomous European security. It is sad for the world too. Since Europe has not yet been able to evolve a unified foreign policy, the future of the post-Cold war world lies in the hands of a country which sees most international issues in terms of white or black and forgets that much of the world's affairs are often acted out in grey zones. The US world view, together with the pre-eminence of its military technology often creates a potential risk of catastrophic wars in areas other than Europe and North America. One such area of conflict involves the future relations between China and Taiwan. There is a considerable support in the United States for Taiwan, particularly among conservative politicians. Taiwan's popularity among these people has increased since Taiwan has begun to democratise its political system. In fact, on many occasions the Presidents have found themselves in conflict with Congress on China policy. One such occasion was the recent visit of President Clinton to China, which on balance, ought to be considered a success but Congress thought it otherwise. In his visit to China, President Clinton categorically stated that "we don't support independence for Taiwan or two Chinas or one Taiwan and one China." He further stated, "We don't believe that Taiwan should be a member in any organisation for which statehood is required."66 This statement did not go well with the Congress and the US Senate adopted a resolution by 92 votes to nil reaffirming America's "long-standing commitment to Taiwan and the people of Taiwan." This was a non-binding resolution urging the President to seek an assurance from China that it will not use force against Taiwan. The resolution also reaffirmed the 1979 Taiwan Relations Act assuring Taiwan of supplying arms.67 The Senate resolution has now been supported by the House of Representatives by a 390—1 majority. Both Houses of the Congress fa5

Martin Woollacott, "Europe Still Clings to Uncle Sam's Coat-tails", Guardian Weekly, December 21, 1997, 12. bb

bl

Los Angeles Times: Special reports (Internet edition), June 30, 1998.

Richard Halloran, 'Clinton's China policy shift rattles region' The Nikkei Weekly, July 20, 1998 see also South China Morning Post (Internet edition), July 12, 1998.

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have basically reiterated the 1979 Taiwan Relations Act that the islands future "will be determined by peaceful means, with the consent of the people of Taiwan."68 Essentially, there has been not much change in the U.S.-Taiwan policy; but as we shall see later, internal shifts of power in Taiwan towards the indigenous Taiwanese has made the leadership in Taiwan increasing vocal in favour of independence. This has created some problems with American policymakers, but it is difficult to see the United States Government supporting statehood for Taiwan. Even the Shanghai Communique issued during President Nixon's visit stated clearly: "The United States acknowledges that all China on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China. The United States Government does not challenge that position. It affirms its interest in a peaceful settlement of the Taiwan question by the Chinese themselves. With this prospect in mind, it affirms the ultimate objective of the withdrawal of all U.S. forces and military installations from Taiwan. In the meantime, it will progressively reduce its forces and military installations on Taiwan as the tension in the area diminishes."69 Again in 1978 the Carter Administration affirmed that "there was but one China and that Taiwan was a part of China;" It further stated that the United States "would also recognise the P.R.C. as the sole government of China." It also assured China that the United States would end diplomatic relations with Taiwan and would end the Mutual Defence Treaty with one year's notice. However, the United States would continue to sell defensive military weapons and would maintain trade and cultural relation "through a, technically speaking, non-governmental American Institute of Taiwan." The Carter Administration hoped that P.R.C. relations with Taiwan would be handled peacefully. The Chinese did not give any formal pledge that they would not use force.70 68

The Japan Times, July 22. 1998. Quoted in Ezra F. Vogel, "Introduction: How can the United States and China Pursue Common Interests and manage Difference" in Ezra F. Vogel (Ed.), Living 09

with China: U.S. China Relations in the Twenty-first century, W.W. Norton & Company

(New York, 1997), 22. /0

Gaddis Smith, Morality, Reason & Power: American Diplomacy in the Carter Years

(Second Printing), Hill and Wang (New York, 1987), 89. See also Stephen E. Ambrose, Rise to Globalism: American Foreign Policy Since 1938 (Fourth Revised edition), Viking

Penguine Inc. (New York, 1985), 310. It is important to note that the UN had voted on October 25, 1971 to admit the People's Republic of China and to oust

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In the meantime, the domestic equation in Taiwan has begun to change. With the coming of democracy, the Taiwanese, who had always resented the political dominance of the mainlanders who had fled to Taiwan and controlled the Kuomindang (KMT) and the military, began to gain influence. When Lee Teng-hui, a local Taiwanese, became president, he also began to promote the Taiwanese to the leadership ranks. The KMT welcomed such moves because such actions broadened its appeal among the indigenous Taiwanese; at the same time it could reduce the influence of the Democratic Progressive Party (DPP) which is in opposition, and has always been in favour of Taiwanese independence from the P.R.C. The Government of Taiwan under Lee Teng-hui began to assert that Taiwan (or the Republic of China on Taiwan) would not accept a subsidiary role to the PRC and began to compete with the PRC for international recognition.71 According to Oksenberg, Taiwanese efforts to democratise—in contrast with the event of the Tiananmen massacre, made American policies tilt towards Taiwan so much so that in 1992 the U.S. Government sold F-16 aircraft which "certainly violated the spirit and possibly the letter of the U.S.-PRC 1982 agreement on arms sales to Taiwan."72 China's missile tests near Taiwan, on the eve of the first direct presidential election in Taiwan, were certainly a tactical error by China and were seen in Taiwan and elsewhere as an intimidation of Taiwan to influence the presidential election.73 The White House called the test provocative and reckless, and sent two battle groups to the region.74 Congress openly supported Taiwan's moves to get greater international recognition independent of the PRC, and this included membership of the United Nations as well.73

Formosa against the will of the U.S. government. The vote in favour was 75 against 35. George Bush, the then US delegate to the UN called it "a moment of infamy" while the British delegate, Sir Colin Crowe, voting for the resolution said: "It represented the return to reality. It was the right result." See Derrick Mercer (ed.), Chronicle of the 20th Century, Chronicle (London, 1988), 1037. 71 Michel Oksenberg, "Taiwan, Tibet and Hong Kong in Sino-American Relations," in Vogel (1997), op. cit. 71. 72 Ibid., 72. 73 In his contribution to this volume Radtke points out that during this crisis the older generation suffered considerable loss of face and influence because of these rash actions, which was rectified by the party leadership. n Ibid., 72. 13 Ibid., 72. It may be noted that this was certainly against the accepted view in the United Nations that Taiwan was a province of China. But it is well-known that the US Congress holds a rather low opinion of the United Nations.

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It was possibly in this context that on July 18, 1996 the European Parliament adopted a resolution on Taiwan's admission to the United Nations and other international agencies. Subsequently, a new budget line was created in the 1997 budget by the European Parliament providing the Commission with the framework for the establishment of a EU-Taiwan co-operation agreement, including the opening of an EU office in Taipei. In the answer given by Sir Leon Britton, on behalf of the Commission, it was indicated that the Commission does maintain commercial links consistent with the absence of diplomatic recognition. Contacts are also maintained in areas of scientific, technological and European studies in order to promote inter-university co-operation between the Community and Taiwanese universities. Contacts are also being maintained in the current negotiations on WTO accession.76 The unification of China has been an emotional issue with the Chinese leadership. They have gone a long way to appease Hong Kong, Macao and Taiwan. The principle of "one country—two systems" gives a great deal of autonomy to each of these territories. Recently, a senior Taiwan-affairs official of the Chinese Communist Party wrote in an official publication that the negotiations could begin on an equal status, and that China was prepared to give up its insistence that Taiwan had to join the negotiations as a province of China. Taiwan has also been calling for resumption of talks but analysts do not believe that Taiwan is keen do so at present.77 However, trade relations between the two countries have been continuing. China has provided red-carpet treatment to foreign investors from East and Southeast Asia. By 1993, Taiwan was the fourth largest investor in PRC with a total equity investment of US $4 billion.78 Trade between the PRC and Taiwan is also increasing. If these commercial relations continue to grow, relations between the two countries may also improve. Because of the importance of Taiwan in the world economy and global trade it may be possible to develop an acceptable formula by which China might be persuaded to accept the admission of 76

Questions from the European Parliament, Written Question P-1432/97 by Olivier Dupuis (ARE) to the Commission, http://europa.eu.int/search97/cgi/s97. " Washington Post Foreign Service (Internet edition), January 21, 1998. 78 Radha Sinha "Sino-American Relations: An Asian Perspective" in Y.Y. Kueh (Ed.) The Political economy of Sino-American Relations: A Greater China Perspective, Hong

Kong University Press (Hong Kong, 1997), Table 12.5, 264.

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Taiwan in the World Bank and the International Monetary Fund, and both China and Taiwan in the World Trade Organisation. Such a formula was found for the admission of Taiwan into the Asian Development Bank.79 The question of sovereignty and the entry of Taiwan into the United Nations is altogether a different matter. The question of entry into the United Nations will certainly be vetoed by China; and Taiwan cannot collect two thirds of the votes in the General Assembly necessary to override the veto. It is also certain that the PRC will not accede to the question of sovereignty; in such a situation Taiwan may decide to declare unilateral independence. If this happens, China may use force. Whether in such a situation the United States will come to Taiwan's rescue is not to be taken as for granted. While Taiwan has supporters in important places in the United States, with the increasing wealth and the size of the market, and its strategic importance, China, by now, also has considerable leverage in the United States.80 On the other hand, if Taiwan waited for a little while and saw how Hong Kong and Macao fare within China, it may have a better basis for deciding its future action. In so far as China is concerned, it sees the use of force against Taiwan only as a matter of last resort. It needs Western technology and access to their markets. It also needs Western capital, after the Southeast Asian financial crisis, much more than ever before. Under the circumstances, it will not like to precipitate an action which might lead to Western and Japanese economic sanctions, let alone a war with the United States. Besides, an invasion of Taiwan by China, even it were successful, will not only alienate Taiwan but also the other neighbouring countries in Asia.

CHINESE ECONOMIC DEVELOPMENT AND PRESSURE ON WORLD RESOURCES

The risk of a major war with China in which Europe is likely to be drawn is rather small. However, one can foresee a growing competition for food, fuel and natural resources, particularly if the Chinese growth rate is rapid. There are various estimates regarding the future 79

Oksenberg (1997), op. cit, 74-75. Harry Harding, China's Second Revolution: Reform After Mao, Brooking Institution (Washington D.C., 1987), 262. 80

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trends of imports of food grains into China resulting from the increasing population, rise in income and changing food habits in favour of animal products such as meat and poultry. An OECD study estimates an annual net import of up to 43 million metric tons by the year 2020.81 This volume of imports may not have a significant impact on the food grain market. The authors project a decline in world grain prices. On the other hand, the authors feel, that if appropriate agricultural policies were not undertaken within China, it may have to import 100 million metric tons of grain.82 The Chinese leadership will not find it politically convenient to depend on such a large import of grains. This does reduce their freedom of action, particularly because much of the surplus food can only be obtained from the United States or its allies. On the other hand, purely in market terms, by increasing grain prices internationally imports of this magnitude may have stimulating affect both in Europe and America where there is considerable unused potential and the governments are paying their farmers for not cultivating a part of their land. This must reduce the risk of a global scarcity of food. As a result of rapid economic development China has already become a major importer of oil in spite of its large coal resources. China in 1994 produced as much as 2.9 million barrels of crude per day. The production is likely to rise to slightly over 3 million barrels per day by the end of the year 2000. By then consumption will increase to 4 billion barrels per day. Thus, China is likely to become a major importer of oil.83 Much of China's imports now come from the Middle East. This, obviously, comes into conflict with the interests of the Europeans and the United States. The price rise of oil as a result of the Chinese entry in the oil market as a substantial importer may be a cause of concern for Europe as well as the United States. The increase in price of oil, however, would have a positive impact on the off-shore production in many countries.84 In the short-run, however, the price of oil and therefore industrial cost of production in the West and Japan might increase with some risk of inflation. On the other hand, in the coming years, western 81

Lin et al (OECD, 1996), op. cit., 84. Ibid., 85. Robert Priddle, (OECD, 1996), op. cit., 118. 84 Angang Hu (see his contribution to this volume) suggests that China's deficits may be much larger. His estimates are not directly comparable to the OECD as he uses different measures; but he also expects that the price may not rise sharply since the investment in oil will result in increased production. 8i

83

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companies will have an increasing scope for prospecting and the production of oil in Siberia, Central Asian Republics, as well as in China. China may not have abundant oil resources, yet it has both on-shore and off-shore reserves, but off-shore drilling has not been very successful. China is giving drilling rights to foreign companies and is hoping that its imports do not increase too much. China has also been developing friendly relationships with Iran and other Islamic countries. It is also trying to develop trade links with Central Asian Republics, some of which are rich in oil. With some of these republics entering world markets, as well as the likely normalisation of US relations with Iran, which may not be too far off, and with Iraq eventually, the supply situation may ease in the world oil market. Currently, there is some excess capacity on the world market for oil and the Chinese demand will not be excessively high. Besides, with the Asian currency crisis and the Japanese recession, the demand for oil on the world market is likely to fall in the short-run. Therefore, one cannot see Europe having major conflicts with China over oil. China has a huge potential for hydro-electricity which it is trying to develop further. Besides, the United States has now agreed to give China nuclear technology for electricity generation. China might also receive gas from the Central Asian Republics, Siberia and possibly Pakistan. Attempts by the Central Asian Republics to revive the Silk Road and run pipelines along this route can help China as well. China is clearly aware of both the transport and the environmental implications of the use of coal and is attempting to develop hydroelectricity and nuclear energy. It is ironic that the Americans and Europeans point fingers at China for worsening the global warming. China has certainly to do its best to improve environmental conditions for its own people, but the situation has to be seen in its proper perspective. With only 5 per cent of the world population, the United States is responsible for 25 per cent of CO2 emissions; Europe with 9 per cent of world population accounts for 20 per cent of the emissions; while China with 22 per cent of the world population is responsible for only 14 per cent of the emissions. The United States, thus, emits 8 times more CO2 than China and Europe 3.5 times. Clearly, the Chinese record on the emission of green house gases is not as bad as that of the United States and Europe. If the Chinese rate of growth accelerates and it does not reduce the use of coal in out-of-date furnaces, the environmental pollution in China will get worse. In this respect, the nuclear technology provided by

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the United States may improve the situation but problems with nuclear safety may arise. China certainly needs an aggressive policy to protect its environment in order to reduce human suffering within China, and not only to assuage foreign criticisms. On none of the major items such as food and fuel is the Chinese entry into the world market for these products likely to hurt Europe. China can be a major purchaser of advanced technology and armament; this will, in fact, help the European countries. It is ironic that the largest exporters of armament are critical of China's sale of military equipment to Iran or Pakistan, the very same countries which were, at one time, being heavily armed by the United States as well as by the European countries.85 Unfortunately, the very same nations are selectively against developing countries attempting to develop weapons for their own selfdefence. Obviously, the professed concern of the major powers relates to the proliferation of nuclear, chemical and biological weapons which might threaten world peace. However, one cannot rule out the fact that such moves on their part is also intended to perpetuate their monopoly in sophisticated weapons. The problem, of course is that both the Europeans and the Americans are worried about China passing on nuclear technology to the "rogue"86 countries, and China allegedly passed some such technologies to Pakistan and possibly Iran. China may have to curb such temptations as a signatory of the Comprehensive Test Ban 85

Ninety per cent of the deliveries come from only four countries, the United States, the United Kingdom, France and Russia; the United States alone accounting for nearly half of the total deliveries. Sustaining a national defence industry and allowing for the upgrading of the advance weapons systems have been the avowed aim of both the United Kingdom and France for nearly four decades; Russia adopted a similar policy in 1992 and the United States in 1995 (IISS, 1996), 280-81. The advantage of arms trade goes much beyond the defence sectors. In an electronic age the distinction between defence and civilian production is getting ever narrower, and the arms-exporting countries have heavily subsidised industries, such as aerospace, electronics and supercomputers with considerable commercial spin-off (Porter 1990), 305. 8b Whether a country is "rogue" has to be decided by some firm international rules and not by the unilateral decisions of one country which has not been consistent in its own approach. Iran may be a good case. While the Shah's secret service was running wild in Iran liquidating any one who was calling for the democratisation of Iran, the U.S. kept silent about it almost until the Shah was overthrown. Much the same happened in the Philippines before President Marcos was overthrown. These countries were never listed as rogue countries. It was in defiance of this arbitrariness as well as Libya's support in the Anti-Apartheid movement that President Mandela went to Libya, a "rogue" country by American definition.

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Treaty, but the nuclear tests by India and Pakistan have raised legitimate doubts about the enforcement of such a treaty.

CONCLUSION

In conclusion one must stress that Chinese economic development, even if it continues to be rapid, will have few security implications for Europe, either in terms of military or economic security. One cannot rule out Japanese, European (and possibly the Russian) involvement in the US policy of containment of China but unless something goes seriously wrong, one cannot expect a major war between China and the United States, possibly not even on Taiwan. In the present author's view, Chinese domestic issues, particularly those resulting from the economic reform (i.e. unemployment, inequality, discontent, etc.), will keep China busy domestically for the foreseeable future. It cannot afford a military adventure abroad. Because of the growing inequality and unemployment within China and the recent financial crisis in the East and the Southeast Asian countries, China's growth rate will slow down considerably and will not put pressures on world grain and energy markets so as to create serious problems for Europe. Thus, neither in terms of military security nor in terms of shortage of essential commodities, does Europe need to worry about Chinese economic development. China is more an opportunity than a challenge, and certainly not a military challenge. It may perfectly be justifiable to pressurise China on human rights and fairness to its minorities, but it would certainly be inappropriate for Europe to take sides in the fratricidal conflict between China and Taiwan.

Bibliography Amrose, Stephen E., Rise of Globalism: American Foreign Policy Since 1938, Viking

Penguine Inc. (New York, 1985). Bernstein, Richard and Ross H. Munro, The Coming Conflict with China, Alfred A. Knoff(New York, 1997). Chilton, Patricia, Otfried Nassauer, Dan Plesch and Jamie Patten (Whitaker), NATO, Peacekeeping And The United Nations, British American Security Information Council and Berlin Information Centre for Transatlantic Security, Report 94.1 (Berlin, 1994) (mimeo).

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Cable, Vincent, China and India: Economic Reform and Global Integration. Royal Institute of International Affairs (London, 1995). "The Outlook for Labour-intensive Manufacturing in China," in OECD (1996) China in the 21st Century: Long-term Global Implications, (Paris, 1996). Economist, The, "The Next Balance of Power: A Geopolitical Detective Story," January 3rd (London, 1998). Defence Agency of Japan, White Paper on Defence of Japan, 1997 (Tokyo, 1997). (Translated by The Japan Times). Dru C. Gladney, Muslim Chinese: EthnicNationalism in the People's Republic, Harvard University Press (Cambridge, 1996). Finddlay, Christopher. Will Martin, and Andrew Watson, Policy Reform, Economic Growth and China's Agriculture, OECD (Paris, 1993). Friedman, George & Meredith Lebard, The Coming War with Japan, St. Martin's Press (New York, 1991). Harding, Harry, China's Second revolution: Reform AfterMao, The Brookings Institution, (Washington D.C., 1987) Huntington, Samuel, The Clashof Civilisations and the Remaking of World Order, Simon & Schuster (New York, 1996). Institute of International Strategic Studies (IISS), International Arms Trade. 1995-96 (London, 1996). Kueh, Y.Y. (Ed.), The Political Economy of the Sino-American Relations: A Greater China Perspective, Hong Kong University Press (Hong Kong, 1997). Lardy, N., China in the World Economy, Cambridge University Press (Cambridge, 1994). Lewis, John Wilson and Xue Litai, China's Strategic Seapower, Stanford University Press (Stanford, 1994). Lin, Justin Yifu, Jikun Huang and Scott Rozelle, "China's Food Economy: Past Performance and Future Trend," in OECD, China in the 21st Century: Long-term Global Implications (Paris, 1996). Meisner, Maurice, The Deng Xiao Ping Era: An Inquiryinto the fate of Chinese Socialism 1978-1994, Hill and Wang (New York, 1996). Oksenberg, Michel, "Taiwan, Tibet and Hong Kong in the Sino-American Relations" in Vogel, Ezra F., (Ed.) Living with China: U.S. China Relations in the Twenty-first Century, W.W. Norton & Company (New York, 1997). Perkins, Dwight H., "China's Future: Economic and Social Development Scenarios for the Twenty-first Century" in OECD, China in the 21st Century: Long-term Global Implications (Paris, 1996). Porter, Michael E., The Competitive Edge of Nations, The Free Press (New York, 1990). Roy, Denny, "Hegemon on the Horizon?," in Michael E. Brown, Scan M. LynnJones and Miller, Steven E., East Asian Security, MIT Press (Cambridge, 1996). Sinha, Radha, "Sino-American Relations: An Asian Perspective," in Kueh, Y.Y. (Ed.), The Political Economy of theSino-American Relations: A Greater China Perspective, Hong Kong University Press (Hong Kong, 1997). Smith, Gaddiss, Morality, Reason & Power: American Diplomacy in the Carter Years, Hill and Wang (New York, 1986). Vogel, Ezra F., (Ed.) Livingwith China: U.S. China Relations in the Twenty-first Century, W.W. Norton & Company (New York, 1997). Woollacott, Martin, "Europe still clings to Uncle Sam's coat-tails", Guardian Weekly, December 21, 1997.

CHINA'S STRATEGY FOR THE INTERNATIONALISATION OF ENERGY SUPPLIES AND ASIA'S INTERNATIONAL ENVIRONMENT HAMA KATSUHIKO*

1

THE CHANGE OF DIRECTION TOWARDS A STRATEGY OF INTERNATIONALISATION OF ENERGY SUPPLIES

China's energy production and the composition of its sources

China is a coal superpower. In 1995 China's energy production amounted to the standard coal conversion equivalent of 1290 million tons. Coal was the main source of energy with a share of 75.3%, while oil, natural gas and hydroelectric power accounted for respectively 16.6%, 1.9%, and 6.2% of the total. A main feature of China's energy is its high self-sufficiency rate, with imports constituting only 1.6% of total energy consumption. This pattern of energy production and consumption, in which selfsufficiency is based on the largest possible development of its own resources, was forced on China through the harsh environment of the Cold War. During the reform decade of the eighties, when China opened itself up to the outside world, it realised high growth rates under conditions of severe restrictions concerning its raw materials and energy supplies. As a result, the economy achieved an average growth rate of nine percent during the eighties, with energy production growing at four to five percent, and an energy production elasticity of 0.5 average (energy production elasticity = energy production growth rate/economic growth rate). * Hama Katsuhiko is Professor in the Department of Foreign Languages and Foreign Studies of Soka University, Tokyo. His main research areas are China's economic and political reforms, and the strategic importance of the Euro-Asian Landbridge for the international environment in the 21st century. His main publications are Too Shoohei jidai no chuugoku keizai (China's Economy in the Deng Xiaoping Era), Aki Shobo, Tokyo, 1987, and Chuugoku—Too Shoohei no kindaika senryaku

(China—Deng Xiaoping's Strategy for Modernization), Institute of Developing Economies, Tokyo, 1995.

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As China entered the nineties, problems concerning the massive consumption of coal increased. The main problems were that transport from north-eastern and north-western production areas to the main consumer regions along China's coastal areas became difficult, while there was an increase in the severity of environmental pollution and a rise in the general awareness of the need for environmental protection. At this stage, a rapid increase of energy imports took place and the consumption of clean forms of energy such as oil and natural gas grew accordingly, with the coastal industrial cities forming the main consumers of this clean energy.

The formulation of the ninth five-year plan and constraints for energy supplies

According to the statistics of crude oil and oil products, China became a net importer for the first time in 1993, with a net import of 9.81 million tons. Looking at oil production since the eighties, the figures show a significant rise compared to the seventies with stagnation in the eighties at 100 million tons, but in the ten years since the latter half of the eighties it reached a plateau of 150 million tons in 1995. The main effort in political decision making was the establishment in 1982 of the China National Offshore Oil Company (CNOOC). More than one hundred development contracts were concluded with foreign oil companies concerning China's offshore areas. In fifteen years more than three billion dollars were invested in exploration and development, and more than two hundred exploratory wells were drilled. In 1996 the oil production in offshore wells amounted to 9.5 percent of the total oil production of 115 million tons. In the eighth five-year plan during the first half of the nineties, China adopted an oil strategy called, "stable production in the East and development in the West". Beginning in 1993 the development of oil fields in the Tarim Basin was opened to foreign companies, and foreign oil companies participated in this "Western Exploration." In 1996 the oil production in the whole of West China was 16.1 million tons, amounting to 10.2 percent of total oil production. The goals of the ninth five-year plan (for the period 1996-2000) were set 1993, and it set goals for the year 2000 with the requirements of the economy of 2010 in mind. Assuming an economy for

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the year 2010 on the basis of a continuous annual growth of seven to eight percent, the deepening problems in the area of energy and food became obvious. Among such projections, a report published in 1992 by the National Analytical Unit of the Chinese Academy of Sciences under the title "Development and Saving" attracted particular attention. It produced a critical analysis of the situation in energy and food supplies, and appealed for the formation of a national economic system based on the preservation of energy. These projections compelled the government to place the strengthening of agriculture at the top of the agenda of national economic development, as well as a shift to a policy of agricultural protectionism. In the area of oil production, where the relationship between demand and supply was most critical, the plan considered the connection between production and consumption with an eye towards 2010. The plan confirmed that the trend towards a weakening of oil production in the east was inevitable, that the exploration of offshore oil fields had reached their top plateau and that the exploration of the Tarim Basin would not advance as expected. In December 1993 the Research Section of the State Council and the China National Oil and Natural Gas Company (CNPC) studied the problems by holding high level seminars and, in that process, the direction towards a gradual internationalisation of energy supplies gradually took shape.1

An overview of the strategy for the internationalisation of energy supplies

The main strategy for oil production in the ninth five-year plan was the continuing strategy of the "stabilisation of East Chinese production, and the development of West Chinese production," and the "parallel production of oil and natural gas." In addition, a new strategy appeared in the ninth five-year plan which argued that "two kinds of energy sources, two kinds of financial resources, and two kinds of markets" should be used to promote the exploration and development of oil and natural gas fields in China and abroad, leading to an world-wide apportionment of oil and natural gas.2 1

See the report The development strategy and the situation of our national oil industry (Oil

Industry Publishers, 1994). 2 Announced in Zhou Yongkang's report in China's Energy, no. 3 (1996).

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In the beginning, it was anticipated that China would move towards energy development in the Middle East, in Siberia and in eastern Russia, and there was a positive appreciation of the economic rationale in favour of the import of oil and natural gas in the coastal development belt in China's Southeast. As a consequence, joint venture oil refineries were constructed for refining oil imported from the Middle East, and there were plans concerning the import of natural gas (LNG) from Indonesia. In this chapter I will describe specifically, with regard to the fields of development and transport of oil and energy abroad, in what kind of projects China participated during the period of its internationalisation of energy supplies strategy.

2

T H E BEGINNING OF THE STRATEGY OF DIVERSIFICATION OF ENERGY SUPPLIES

Lively Participation in the exploration of oil fields

In 1994 the CNPC bought and developed the one hundred-year-old Tarara oil field in Peru. At that time, this old oil field had an annual production of 80,000 tons. Thanks to three years of efforts by China's oil technicians the extraction rate rose significantly to an annual level of 320,000 tons. At one particular oil well a daily production of 3000 barrels was achieved. A report, according to a Peruvian paper, described it as the "greatest news of Peruvian oil circles in this century".3 On 6 September 1994 the CNOOC bought 32.58% of the shares of the Indonesian Malacca Oil Field and gained shares in its production. In the following year, the CNOOC acquired an additional 6.93% of the shares, becoming the largest shareholder. In the three years from 1994 until 1996 China obtained 400,000 tons of crude, and thus amortised its investments towards the end of 1996.4 In 1995, it was decided to develop oil resources in a joint investment venture with the Sudanese government, a Canadian company, and the Malaysian State Company. China holds 40% of the shares, and takes responsibility for the operational company. In 1997, the See the article by Zhu and Li, People's Daily, 6 October 1997. People's Daily, 1 April 1997.

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CNOOC sent a staff to Guinea, and explored the possibility of prospecting for oil fields in Guinea in co-operation with the Oil Majors of Europe and the United States.5 In the eighth five-year plan of the period 1991-1995, the CNPC concluded five agreements with foreign companies. It obtained development rights of two old oil fields in two mining areas in Peru, and another risk exploration area in Papua New Guinea. It acquired an exploratory development area in Sudan, and participated in development enterprises in Canada and Thailand.6 Towards the end of 1996, China successfully bid for two oil fields out of a possible fifteen in Venezuela, in competition with 130 oil companies from all over the world. This tendency was further strengthened in 1997. Apart from activities in Kazakhstan and Siberia's natural gas pipeline described below, 1997 looks as follows. On 4 June 1997 China and Iraq signed an agreement for the development of the Ahadab oil field with an estimated potential of one billion barrels. Overall investments are US$1260 million, with an anticipated annual income of US$10 billion over a period of twenty-two years. The CNPC takes part in the development under an arrangement of production sharing, and this agreement will come into force when the UN sanctions on Iraq are lifted. During his visit to China the Chairman of Iraq's Parliament, Hamaji, discussed on 5 January 1998 the expansion and development of the Ahadab oil field concerning the agreement that had been signed in June of the previous year. The CNPC also entered into negotiations concerning the Alfaya oil field with estimated reserves of 5,000 million barrels of oil.7 On 14 October 1997, the Iranian Advisor Hoseini declared at the World Oil Conference held in Peking, that China and Iran would enter into negotiations on the development of oil fields in the near future.8

See Lee Shuqing's article in China's Energy, no. 9 (1996). See Zhou Yongkang's report in China's Energy, no. 3 (1996). JVihon keizai shinbun, 5 June 1997, evening ed. and 6 January 1998, evening ed. Sankei shinbun, 16 October 1997.

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Export of oil technology and experts

Beginning in 1994 the GNOOC put its specialised engineering units on the international market. In the United Arab Emirates it acquired the right to undertake framework construction of offshore oil platforms and in Japan it acquired the drilling-well construction of an offshore oil field.9 The CNPC concluded sixty-six agreements in the five years of the eighth five-year plan concerning construction abroad. The value of these contracts reached US$790 million. Most recently it concluded another agreement with Kuwait concerning the construction of an oil pipeline and two tank and delivery stations, for which it became the sole engineering party, with a contract value of US$400 million. Through the export of oil technology and equipment China earned more than US$63 million. The expansion of recent exports happened quite rapidly.

Energy development co-operation with neighbouring countries Kazakhstan

At the beginning of 1996, at the request of the Kazakhstan Oil Company, the CNOOC sent a group of specialists who became advisors for the opening up of coastal areas.10 In 1997 China concluded a series of large-scale contracts concerning the development of oil in Kazakhstan, as well as the construction of pipelines. On 4 June 1997 the China Oil Company bought sixty percent of the shares of the Akchubinskmunei Gas Company in Kazakhstan. Its total value was US$5,300 million and a reserve capacity of no less than 150 million tons." On 4 August 1997 Kazakhstan announced that the CNPC had acquired, through a successful bid, the sole negotiation rights for the development of the second largest oil field in that country. This field is already ten years old and has proven reserves of more than 132

People's Daily, 1 April 1997. People's Daily, 1 April 1997. Economy Daily, 26 September 1997.

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million tons, which will last until the year 2018. The contract includes the construction of a 2,500 kilometre pipeline from Kazakhstan to China, and an oil pipeline of 200 km via Turkmenistan into Iran, requiring an investment of a total of US$1,200 million.12 On 24 September 1997 President Nazarbayev and Prime Minister Li Peng, during a visit to Kazakhstan, signed a comprehensive agreement for oil exploration with a total value of US$9.5 billion between the CNPC and the government of Kazakhstan. This comprises all of the above mentioned contracts, with a time limit of seven and a half years for the construction of the pipeline to China: total value US$3.5 billion.13 The construction of gas pipelines from

Russia

During his visit to China on 27 June 1997, the Russian Prime Minister Chernomyrdin signed six memoranda of agreement, amongst which a project for the construction of a pipeline for the transport of natural gas from Siberia to China. On 10 November 1997, during his visit to China, President Yeltsin signed a joint statement with Jiang Zemin which also referred to joint gas projects and it appeared that a basic agreement had been reached. The Russian first Vice-Prime Minister and concurrently Fuel Energy Minister Nemtsov held discussions with Vice-Prime Minister Li Lanqing and Zhou Yongkang, chairman of the CNPC, and reached basic agreement on the common development of the Kobikchenskoe field in East Siberia and the construction of a pipeline from that field to countries in East Asia, first of all China. According to explanations by the Russians, Russia planned to deliver twenty billion cubic meters of natural gas annually to China during a period of thirty years, for which Russian-made pipeline equipment would be supplied. The investments for this project are estimated to reach between US$7 and US$12 billion.14 The governments of Japan and South Korea have also informally expressed their intention to buy ten billion cubic meters of natural gas respectively.10 12 Mhon Keizai Shinbun, 5 August 1997, evening ed. and Sankei Shinbun, 6 August 1997, evening ed. 13 Mihon Keizai Shinbun, 25 September 1997, evening ed. and Sankei Shinbun, 30 September 1997 evening ed. 14 Mhon Keizai Shinbun, 11 November 1997. 15 Mhon Keizai Shinbun, 21 October 1997.

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On 23 and 24 December 1997, the first five-nation conference on the exploration of the Irkutsk gas fields was held in Moscow. Participants in the Conference were representatives of a Japanese oil corporation, Korea's Gas Corporation, the Russian Fuel Energy Ministry, China's CNPC, and the Mongolian Fuel, Geology and Mining Ministry. A memorandum was signed on the twenty-fifth.16 In this way a beginning was made for the substantial development exploration of the Irkutsk natural gas fields.

The construction of refineries for imported oil

The network of oil refineries along the south-eastern seaboard of China relied mainly on supplies of Daqing oil and, since Chinese crude is low in sulphur content, there are no refineries that can handle yellow crude with a high sulphur content from the Middle East. For this reason there is a need to construct a large-scale refinery in the near future; currently China has chosen to import oil products refined at the refineries in Singapore and elsewhere that have excess capacity. Due to this situation, it was decided that the Fukien Oil Refining Company in Meizhou Bay in Fukien Province should undertake the processing of imported oil through the improvement and expansion of its equipment. The refining capacity of this factory, whose construction had commenced in 1990 and was completed in 1993, consisted of 2.5 million tons of crude from the domestic Shengli Oil field. In the summer of 1997 refining capacity was increased to 4.5 million tons by making use of the regular stop of production for inspection purposes and adding the capacity to process foreign oil. Both Exxon and the National Oil Company of Saudi Arabia are collaborating on the advancement of this project. When the project is completed in 2003, the factory will have a refining capacity of 12 million tons and the facilities of an integrated kombinat. A memorandum for co-operation was signed in the Great Hall of the People on 13 October 1997.17 It has been argued that China reacts cautiously towards proposals of projects for similar refineries by foreign oil majors.

Sankei Shinbun, 24 December 1997. See the report of Xie Guoming in People's Daily, 21 December 1997.

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In the face of Western economic restrictions against Myanmar, China has consistently pursued close relations based on its independent policies towards Myanmar. In October 1997 Vice-Prime Minister Wu Bangguo visited Myanmar, and made a low interest loan of between US$200 million and US$250 million available for a planned dam construction. Also in October, it was reported that approval had been given for oil development by China's state enterprises. In Myanmar an oil storage base close to the capital Rangoon was completed in 1993, with an interest free Chinese loan and a total construction cost of US$49 million. This route delivers oil from the Indian Ocean via Myanmar into China's Yunnan province.18

THE INFLUENCE OF CHINA ON THE INTERNATIONAL ENVIRONMENT IN ASIA

The influence on the current international environment The problem of energy security for China

The increased necessity for large-scale oil imports derives from the development of China's economy, and has also been made possible by the expansion of China's exports and the acquisition of foreign exchange. However, the question is what would be a safe level of imports for China's energy needs. It is estimated that China's net import of oil will be between 45 and 50 million tons in the year 2000 while in 2010 it will reach 100 to 125 million tons. According to Hu Angang, however, far from being a problem for energy security, the large-scale import of oil has a rather positive significance. Firstly, there will be no change in the high rate of supplies from China's own sources in energy consumption. In 1996 the energy selfsufficiency rate was 96%. The rate of oil in China's total energy consumption was 17% and occupies no more than 4% of this total even if one quarter is imported. This enables China to maintain a

Asahi Shinbun, 13 November 1997.

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self-sufficiency rate of more than 90%. America protects its own national resources by importing foreign oil and gathers relative profit in this way—China should take note of this procedure. Assuming that oil will occupy a share of 23% of the total energy consumption in 2010, and a foreign dependence of 35%, the foreign dependence of total energy needs created by oil imports reaches 8%. Secondly, the reliability of energy imports is mainly dependent on China's export capability and acquisition of foreign exchange which should not be an issue. It is good economics to export labour intensive products since China possesses a comparative advantage and import oil since China has a comparatively low advantage; there is no need to aim for complete self-sufficiency if that means paying too a high price for it. Thirdly, the development of international energy resources can reduce the risk inherent in oil imports. By setting up joint ventures or ventures carried by China alone in other countries, in particular in the Middle East, it will be possible to attract investments from counterpart countries, and in exceptional periods it will be possible to have certain supplies delivered solely to the China market.19 Current results of the change in energy supply strategy

In the development of energy resources along the Chinese seaboard since the 1980s, China concluded venture exploration agreements with foreign oil companies in designated fields in the East China Sea and the South China Sea. Production in 1996 reached 15 million tons of crude which is 9.5% of the total. The development of natural gas was carried out in the Yaicheng gas field off Hainan Island and the Pinghu gas field in the East China Sea. It is expected that the production of offshore gas fields will reach six to eight billion cubic meters in 2000 and more than fifteen billion cubic meters in 2010. Large scale exploration in inshore areas off the seaboard along the East and South China coast has already come to an end which raises the question: what kind of problems will the development of the areas surrounding the Senkaku islands in the East China Sea and the Nansha islands in the South China Sea cause in the future?

19

Hu Angang, Liaowang, no. 9 (1997).

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Recently, it has become generally accepted that there are no geological formations containing oil and gas in the central part of the Nansha islands but there are considerable prospects in the surrounding areas. By moving into the world-wide development of oil and gas resources there is now a lower priority for development of oil and gas in the vicinity of the Senkaku and the Nansha islands and this, in turn, created a situation favourable to confidence building and the reduction of tensions. The multi-faceted influence of development co-operation with neighbouring countries The issue of Kazakhstan

In 1997 China gained development rights in two areas; the Akchubinsk oil field and the Uzensk oil field which is considered to be the second largest oil field in Kazakhstan. The largest is the Tengis oil field which is already under development by Chevron. China's bid succeeded in competition with American and European oil majors for the development of the Uzensk oil field and has now become a complete development programme including the construction of pipelines towards China and Iran. At the time when bidding took place, there were joint military exercises in Southern Kazakhstan combining forces from eight countries, in which American forces participated for the first time. In November 1997 the Kazakh President Nazarbayev visited the United States and this, undoubtedly, demonstrates clearly that Kazakhstan is trying to create a balance of power versus Russia by deepening relations with China and America. One may say that participation in this development project at the level of a total of US$9.5 billion constitutes quite a bold strategic engagement. In addition, one may cite the influence of China's participation in this development versus the independence movement in the autonomous region of Xinjiang as having a significant effect now. Traditionally, there has been a large Soviet influence on the so-called East Turkestan independence movement of the Kazakh people living in the Kazakh Republic of the Soviet Union. This movement has encountered considerable difficulties due to the President's broadening of the engagement with China.

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The impact of a gas pipeline from East Siberia

It has become apparent that there is a considerable need for natural gas supplies from Russia as a source of clean energy to replace coal but only if it is financially feasible. There has been a long history of the deterioration of relations between communist China and the Soviet Union including antagonism, confrontation and territorial conflicts for the last 150 years. In order to overcome the issues causing instability between them, both countries sought a basis for mutual co-operation and understanding. In 1997, China and Russia succeeded in overcoming these obstacles by moving towards the goal of establishing a strategic partnership that would reach into the twenty-first century. This is a significant breakthrough for the international environment, with future consequences that are not yet clear for either country or, for that matter, other countries in the region. China, Russia, and also Mongolia, South Korea and Japan are participating together in the East Siberia Natural Gas Pipeline Project and, in December 1997, the first business meeting of these five countries was held in Moscow. A series of such conferences by itself fosters confidence and through this project a multilateral system of dialogue might evolve which would be a positive development for East Asia. The issue of sea lane security

In 1997, Japan imported more than 200 million tons of oil (crude oil and oil products) and relies for more than eighty percent of this import on crude oil from the Middle East. This much import requires that two 200,000 ton tankers enter Japanese ports daily which amounts to eight hundred ships plying their routes between the Middle East and Japan. The distance between the Middle East and Japan is 12,000 km.20 The estimated annual import of 100 million tons by China in 2010 implies that eighty percent of it will be imported from the Middle East which means that, each day, one 200,000 ton tanker will enter harbour; approximately four hundred ships will ply the route between China and the Middle East. This, in turn, means that China will share sea-lanes with America, Japan and other Asian countries. Ebata Kensuke, Nihon no anzen hosho, Kodansha gendai shinsho (1997).

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In that case, it is clear that Chinese navy units will not only need to protect Chinese oil transports but it will also raise the questions: how to settle the issues concerning joint navigational security and what kind of institutions are needed for joint consultation?

Influence on Asian Security

Four main points deriving from the China energy issue will influence Asian security in 2010. 1) The rise of dependence on oil from the Middle East: This also includes the sale of Chinese weapons to countries in the Middle East and the supply of nuclear energy technology. 2) Rising concerns towards China's maritime interest and the expansion of military capabilities: This includes concerns over military intimidation through the construction by China of a blue water navy including aircraft carriers needed to secure sea lanes, sovereignty in the South and East China seas and the further development of resources. 3) The existence of an environmental problem as a non-military threat: This includes accidents in nuclear power stations and the issue of acid rain. 4) The potential of a slowdown in the Chinese economy through constraints of energy supplies: Through the deepening of mutual economic interdependence with Asia such a slowdown may bring about negative effects on the economies of all of Asia caused by financial instability. This also includes the outflow of refugees in the case of an overall economic crisis.21 In this chapter I asserted that China has made a substantial start towards the internationalisation of energy supplies, in particular oil and natural gas. With regard to the above mentioned four problematic issues I should like to draw your attention to several new tendencies. 1) The development of oil and natural gas in the states of Central Asia formerly belonging to the Soviet Union has attracted the attention of the global oil industry community. This means that China's range of options towards the Middle East problem has thus increased,

Kayahara Ikuo ed., Chugoku enerugi- senryaku Asahi shobo, chapter 7 (1996).

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and the forces pushing oil prices upwards have weakened through the expansion of oil and gas supplies. 2) For the mid-term future the global diversification of China's energy supplies has contributed to a lowering of the urgency of development of oil and gas in the East China Sea and the South China Sea. It has now become possible for China to react towards problematic issues in these areas without being under severe pressure. Furthermore, if China perceives the issue of sea lanes as a common global issue, it may give rise to a careful estimate of the high costs involved in the construction of a blue water navy. 3) The import of natural gas from East Siberia to the regions of Peking and Tianjin will greatly promote China's efforts towards the issue of environmental pollution. The construction of this pipeline also has benefits in the area of environmental security for all neighbouring countries. 4) At the moment, investment in construction in China is stagnating and the relative excess of energy supplies has even become an issue. China now faces basic economic issues such as the reform of state enterprises and the consolidation of unsound capital assets. When reforms and the promotion of structural adjustments solve these problems and lead to an increase in production capability and export capability, these will become the bases for the expansion of energy imports. The development of oil and the construction of pipelines that require huge amounts of capital will form a task for foreign investments.

THE RECENT ASIAN CURRENCY CRISIS AND ITS IMPLICATIONS FOR THE "REGIONAL NEW ORDER" IN THE ASIA PACIFIC To TERUHIKO [TWU]*

I. DEFINING THE PROBLEM

On 2 July 1997 the Thai currency (baht) was shifted from its fixed exchange rate against the US dollar onto the currency market. This move sparked a chain-like reaction, sending the major ASEAN currencies into confusion and crisis. That crisis led to crashes in stock markets and now, although two and a half years have passed, the Indonesian economy is still in a deep crisis, with severe political, social and economic effects. There are signs of revival in South Korea and Thailand, while Malaysia has been successful in struggling along without exposing itself overly to IMF pressures. In its early stages the crisis spread rapidly to the Newly Industrialised Economies (NIEs), in particular South Korea, where the won's drastic fall reached critical proportions. It is clear that post-Cold War Asia has been undergoing a geopolitical shift of tectonic proportions. The meaning of this ASEAN-NIES currency "confusion" or crisis and its impact on the direction of the construction of the "new order" is certainly a major issue. I hope that this chapter provides some partial effort towards addressing these issues. The structure is as follows. Firstly, I would like to propose a definition of the character and structure of this

* To Teruhiko is Professor in the Faculty of Economics, Nagoya University. His current areas of research are the development of East Asian economies, regional integration in Asia, the regional economy linked to Chinese businesses, and the concept of a united currency for Asia. His main publications are: Mhon teikokushugika noTaiwan (Taiwan under Japanese Imperialism), Tokyo UP, 1975; NICS (in Japanese, Kodansha, Tokyo, 1988 [Gendai shinsho]; Tooyoo shihonshugi (Far Eastern Capitalism), Kodansha, Tokyo, 1990 [Gendai shinsho]; Taiwan kara ajia no subete ga mieru (From Taiwan the Whole of Asia may be Understood), Jiji Tsushinsha, Tokyo, 1995; Honkon, Taiwan, Dai Chuugoku (Hong Kong, Taiwan, Greater China), Jiji Tsushinsha, Tokyo, 1997.

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currency crisis as it relates to the objective of my paper (Section II). Secondly, I will turn to China's market which has remained a strong one. I want to closely examine the significance of the change in status of the Hong Kong dollar as it relates to Hong Kong's return to China and in terms of China's financial commitment to the world market (Section III). Finally, I would like to comment on Japan's place in the area of Asian currency markets. Although this paper covers the period until the end of 1997 I am fairly convinced that its major points are still valid today.

II. CHARACTERISTICS AND STRUCTURE OF THE "CURRENCY CRISIS"

Questioning Currency Policies in the Era of Direct Investment: A Lack in Current Economic Research

Firstly, at the beginning of the 1990s the nations of the Asia-Pacific region shifted from being founded on trade (export dependent) to a direct investment base (export capital). The fact that the NIEs developed as the major investors in these countries is itself a clear indicator of that phenomenon. NIEs have been concurrently recipients and exporters of capital, but the latter aspect has grown strongest, transforming them into straight exporters of capital. Meanwhile, the ASEAN-Four (Indonesia, Malaysia, The Philippines, and Thailand), while not completely uninvolved in capital export, took in far more than they paid out, making them primarily importers of foreign capital. Compared to the ASEAN-Four, China's situation is remarkable, receiving foreign investment on an even larger scale.1 According to graph one, as of 1995, the NIEs recorded 41.2 billion dollars (28.7%) towards the total APEC, 36.8% of the total 112.2 billion dollars. This makes them the top investor, higher than America's 23.2 billion dollars (28.7%) and Japan's 24.4 billion (21.8%).

1

According to the Asia Development Bank, the NAC (NIEs, ASEAN and China) recorded totals of 145.9 billion dollars of direct investment in the period 1986-1993. When we look at the flow of direct investment, until 1990 the NIEs, and in 1991 ASEAN and since 1992 China have occupied the top position, and competitive development between countries has threatened this position. In this connection, their relative importance appears in percentages as NIEs 32.2%, ASEAN 28.9%, and China 38.2%. ADB Asian Development Outlook 1993, 17, and 1995, 1996, 17.

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As these figures suggest, the Asia-Pacific region has quickly moved into a period of direct investment. With this point in mind I would like to point out the peculiarities and importance of the current currency crisis. One of these is that currency stability became a theme of foreign policy. During the period of reliance on international trade when the aim was to export, the main policies which involved freeing imports, lowering customs, and abolishing trade barriers were considered the most important kind of trade policy. Once we reached the era of direct investment (export capital), however, keeping the exchange rates stable was central; currency policy became the core of foreign economic policy. With foreign investment under the US dollar system (the IMF system) support of the dollar was presupposed, and it was only possible to maintain the price of one's own currency as it was linked to the US dollar through the foreign exchange market. The freedom and stability of the exchange rate was a basic condition of foreign investment. Instability in the exchange rates would directly lower the value of overseas investments and the foundation of the investments themselves would be lost. The importance of currency policy lies with this point. A second point that can be made, based on the above analysis, is that direct investment raised the rate of exports. In short, through direct investment, foreign provisions for foreign factory and equipment costs along with intermediary and raw materials are usually procured from their home country, resulting in a rise in exports from their own country. This is a demonstration of what is known as the investment-export correlation. The dramatic rise in NIEs exports to ASEAN demonstrates this (Table 1). While NIEs exports to Japan and America fell from 47.4% to 30.1% in the last ten years (19861995), NIEs exports to ASEAN rose from 23.0% to 30.5%, a rise of 6.5%. Because of the effect of investments on exports, currency stability also becomes an essential condition for the expansion of trade. How much can regional co-operation do in the event of a currency crisis? IMF financial assistance reaches the first section of most newspaper articles on this matter, but the IMF's funds are not unlimited and its financing is not unconditional. In some sense, the current Asian currency crisis raises a challenge to the IMF and leads to a tough test for the IMF of its own financial strength.2 Also, this IMF funds, basically, come from member investments. In July 1997, they stood

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is only the provision of dollars as foreign currency, temporarily compensating for the difference between international income and expenditures, and that in itself does not ensure the stability of the dollar system. This currency crisis confronts the countries of Asia with the question of how to form a stable regional currency system. This is no doubt an issue that must be considered as these countries look towards the period of direct investment in the 21st century. Unfortunately, even if the field of economics recognises the Asian currency crisis as a serious problem, its "solutions" (policy theories) are, so far, merely empty ones. Some clear examples of this lack of solutions are poor policies causing a vicious circle of currency devaluation and stock market crashes. The IMF's "conditional" "cooperative financing" (in the form of emergency aid) is really an ineffective measure against international financial problems. First of all, each country's (national economy's) foreign economic policy has to be researched. The main requirements are research on trade (customs, taxes and tariffs) and currency (exchange) policies but it is the latter where research is falling farthest behind. The current Asian currency crisis has exposed this weakness.

The Theoretical Structure of the Currency crisis—Differences between ASEAN and the NIEs

When we consider the structure of the "new order" in the Asia Pacific area, a priority must be placed on the question of within what structure and according to what logic the currency crisis in ASEAN and NIEs has developed. Without a grasp of that structure an understanding of the "new order" is unlikely. Throughout the current currency crisis, the differences in structure between ASEAN and NIEs became clear. In the case of the former, the cause was the crash of the Thai baht whose influence spread throughout the major ASEAN nations as a whole. Meanwhile, as we can see in the case of the won in South Korea, to oversimplify a bit, the primary causes of its fall originated within the nation itself. The crisis did not spread to the other NIEs. This difference can be seen as reflecting at approximately 145.0 billion SDR (SDR1 = US$1.35862). IMF Survey September 1997, 6^21. Moreover, the base of financing for the members is limited in principle to five times of each country's quota.

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the overall difference in position in international economics (the world market) between ASEAN and the NIEs. Firstly, we must ask why the ASEAN currency crisis originated with the Thai baht. Next is the question of why the crisis spread suddenly to all the major ASEAN nations as a group. In the case of the former (Thailand), the focus will probably be its geopolitical position within ASEAN. In the case of the latter, the answer is no doubt connected to the position of ASEAN itself within the world market; in other words, its economic structure that focuses on taking in foreign investment and exporting. While a major cause of the fall of the Thai baht was the large trade deficit (17.2 billion dollars, 30.9% of exports, 1996 international income and expenditures as a base), the main trigger was probably the upheaval in Cambodia (the eruption of conflict on 17 June 1997). The coup d'etat by the second prime minister Hun Sen left no choice but to delay Cambodia's entry into ASEAN; therefore the ASEAN-9 nation system remained the same in July 1997 as when it was instituted. The country that bore the main brunt of this damage, aside from Cambodia itself, was Thailand, mainly because the baht had been smuggled onto the Cambodian (and also Laotian and Vietnamese) markets which was where their major profits had been. Therefore, the upheaval in Cambodia and delay of its entry into ASEAN did the most damage to Thailand. The fall of the baht demonstrates that fact. Since the wave of dramatic falls in currency values struck other major ASEAN nations (Malaysia, Indonesia, Philippines) the Thai baht cannot be considered as the only factor. If we consider ASEAN as a whole, it is true that there are many fundamental problems in the foreign investment/export based economic structure. At the same time, we can not ignore the difficult situation for ASEAN in the international environment of the post-Cold War. One aspect is competition with a surging China. In 1992 ASEAN first reached a higher level of introduction of foreign capital than China and, since that time, has not recovered from that situation.3 In terms of exports, China reached a higher level of 74-77% (1994— 1996) than ASEAN's 69-72% (1989-1993). It is also certainly true that China's devaluation of its currency (46.9%, 1994) sooner or 3 Information according to the IMF Direction of Trade Statistics Quarterly, September 1997, and from the Economic Enterprise Planning Agency, Foreign Investigation Division, Foreign Economic Division December 1997.

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later pushed ASEAN into an even more difficult position. Meanwhile, ASEAN cannot escape the pressure from APEC to open markets. In 1994 APEC formulated the "Bogor Declaration", under which developed nations agreed by 2010 and developing nations by 2020 to achieve "free trade and investment." ASEAN was already following a programme to attain "regional free trade" by 2008 (Singapore Declaration of January 1992). However, the Fourth ASEAN Free Trade Area (AFTA) Conference of October 1993 put ASEAN in the predicament of having the enforcement pushed forward to 2003 and further moving up the completion of AFTA to 2002 as adopted by the ASEAN summit at Hanoi in December 1998.4 Finally, the life span of the ASEAN "regional market" was extended from twelve to seventeen years, but that was a premature market liberalisation for ASEAN, equivalent to a pre-defined punishment term from APEC, permitting them to arrive at that point independently by 2020. The 30th anniversary of ASEAN has come, but the area is being shaken by a rare currency crisis. The breakdown of the ten country system (due to the conflict in Cambodia), China's advance and gain in strength, and the pressure on APEC to liberalise, together caused the breakdown of the complicated post-Cold War environment and ASEAN's national resilience was damaged.5 Even when the end of the era of the high yen was forecast while the currencies of the NIEs were strong (May 1995), it was a hard blow for ASEAN to see the shadow side of the introduction of foreign capital. In contrast, since the NIEs currency crisis was a warning for what lay in store for Korea, this can serve to demonstrate how one's own country's reproduction structure and its links with direct foreign investment should develop. In short, Koreas structure of reproduction is "long, thick, heavy, big," which basically depends upon "inflation and debt," and the capital for this foreign investment has a debt pattern of "debt following lending." Normally, they must pay long term (direct) investment capital which has a trade surplus, but Korea only had a meagre four year trade surplus (1986-1989, totalling 19.2 billion dollars) and the seven years after that (1990 to 1996) a deficit of 58.2 billion dollars was recorded. In spite of this, foreign +

Yamakage, ASEAN Power, Tokyo: Tokyo University Press, 1997, 196-201. We may divide future foreign and domestic threats and challenges into five categories, ideology, politics, economics, culture and military. Umetsu Kazuro and To Teruhiko, eds. Current East Asian Economics (Tokyo, 1983), 76. 5

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investment continued forcefully (between 2.0-2.7 billion dollars a year) and Korea only covered part of the influx of long and short term capital from foreign countries. In comparison to the NIEs member country Taiwan, Korea's trade surplus with China was weak.6 Investment with China perhaps was not effective enough in producing an export surplus. For that reason, trade with the US reached a deficit in 1991 and at the same time expanded (11.64 billion dollars in 1996). There was no foreign profit source (export markets) to cover that change, leading to the 1996 trade deficit with China of 15.68 billion dollars and 12.1% of total exports could only follow the same course. At the same time, Taiwan produced excellent results. That is to say, in the circulation of trade, a trade surplus with China (23.79 billion dollars and 20.5% of total exports) exceeds the trade deficit with Japan (13.83 billion dollars and 11.9% of total exports). In other words, the increase of Taiwan's trade surplus with China is equivalent to the decline of the trade surplus with the US. The point of transition was 1992, and it is needless to say that Taiwan's capital made inroads into the Chinese mainland.7 All in all, with the decline of the US markets for NIEs countries and in particular Korea and Taiwan (the deficit which does not reduce the trade surplus), the progress of trade and investment in Chinese markets which was the result of gains in foreign capital, raised the point of how well they can cover their losses in their trade deficit with Japan. The NIEs countries create a balance of trade by trading with Japan and China. As explained above, the Asian currency crisis falls under a different framework with ASEAN countries than with NIEs countries. That is, looking at the structure of the "new order" in the Asian Pacific region, it means that ASEAN and NIEs countries occupy different 6

When we look at the change in the balance of trade with China after 1990, there were four years of deficit (1990-1993) and two years of surplus 1994-1995 (totalling 24.8 billion dollars). 1996 recorded a deficit (1.7 billion dollars), and the first eight months of 1997 saw a surplus (21.3 billion dollars). National Statistic Office, Major Statistics of Korean Economy, 1996; IMF, Direction of Trade Statistics Quarterly,

September 1997, Ministry of Finance and Economy, Economic Bulletin November 1997. 7 Regarding Taiwan's investments on the Chinese mainland, Taiwan invested (on an authorised base) 87.7 billion dollars (to September 1997), and China reported actual investments to the tune of 155.4 billion dollars. Committee on Economic Investment, The Monthly Report on the Total Investment in China [Beijing], September 1997.

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positions. Unless we emphasise this point, we will be unable to develop the concept of a "new order." This should be underlined strongly.

III. THE "ROBUSTNESS" OF CHINA'S YUAN AND ITS IMPLICATIONS

Hong Kong's Position

There is a new discovery in the current currency crisis: China is not someone else's affair. Needless to say, following Hong Kong's reversion to China on 1 July 1997 the situation has changed completely. The Hong Kong government (the Special Administrative Office) promised to give one billion dollars in IMF relief aid for the baht (the same as China). The fact that China and Hong Kong were committed to IMF financial support was an unprecedented fact in the history of the international financial market.8 Moreover, in regard to the 23 October 1997 speculation of the Hong Kong dollar, the Hong Kong government reported that amounts reaching eight billion dollars of foreign capital will be invested in the defence of the Hong Kong dollar.9 For the Chinese and the Hong Kong governments the crash of the baht which led to the speculation of the Hong Kong dollar emphasised the importance of the participation in China's economic "revolution and liberalisation" in which it committed itself to the international financial markets. That is to say, the current exchange rate of the Hong Kong dollar against the US dollar (US$1.00 = HK$7.8, fixed 17 October 1983) does not take into account the current situation of the Hong Kong economy. Even for the Chinese economy, there was a connection with global markets, and this time the "defence" of the Hong Kong dollar indicates that the maintenance of a fixed rate is one type of "sacred ground" or an inviolable command. Simply put, there must be an awareness of the fact that those costs as they stand are used for protecting this "sacred ground." As 8 Oh An, "China's Financial Crisis," in Chinese Monthly [Hong Kong], September 1997, 30-31. 9 Capitalist Capital [Hong Kong], December 1997, 56. According to China's highest authority, 152 billion dollars were invested. Nikkei Shinbun [Japan], 29 November 1997.

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TO TERUHIKO

I already mentioned, the "financial assistance" of the IMF and the investment of one's own foreign capital reserves are one type of this protection. Depending on the increase of short-term interest, the crash of the stock markets and the reduction of mutual credit could be halted. In particular, in the latter, the loss of value was high. In the case of Hong Kong, the 4 October 1997 stock crash lost twentyfive percent of its value—a reduction of 700 billion Hong Kong dollars was recorded. Moreover, in all of Southeast Asia, stock assets had a loss in value of 400 billion dollars between January and November 1997.10 At any rate, for China, Hong Kong became the gateway to the world's markets and in that sense, the Hong Kong dollar provided a place for the Chinese yuan. The trust and acceptance of the Hong Kong dollar would be a forward looking barometer which would register the trust and the acceptance of the Chinese economy while moving away from being the indicator of the performance of Hong Kong's economy. Even here, Hong Kong is important with its commitment to the Chinese market as a NIEs country. Here we are able to confirm the fact that it has a different framework from that of ASEAN countries.

The "Robustness" of China's Yuan

When we turn our attention to China, the "robustness" of China's yuan (with a high stable rate against the US dollar) in the middle of this currency crisis is striking. The question "why does China's yuan have this 'bullish tone'"? recalls a singular admiration. Since the beginning of the 1990s, China has continued to have a trade surplus (between 1990 and 1996, excluding 1993, it totalled 43.33 billion dollars). Fundamentally, with developing countries or socialist countries, such as Indonesia which adopts a policy of openness to foreign countries, it is common sense that if they do not have valuable natural resources (like petroleum), they will always run a trade deficit. Almost all developing countries have an export structure that depends upon primary products. If that is true, then why does China have a trade surplus? Capitalist Capital, ibid.

THE REGENT ASIAN CURRENCY CRISIS

217

According to The Peoples Daily (15 January 1997, overseas edition), an organ of the Chinese Communist Party, there are two reasons for this surplus. The first was China's delay in joining the World Trade Organisation, and the second is the embargo on exporting high tech equipment to China. The former produced a delay in the pace of liberalising imports to China and the latter was the difficulty of importing indispensable high tech equipment into China. In any event, China's trade surplus can only be said to be the result of external events. Those are the pros and cons, in any case. It is not certain how long China's trade surplus will continue, but the rationalisation of state-run enterprises is advancing, and the Chinese regard the import of high tech equipment from foreign countries to be indispensable, so there is a strong possibility that there will be a shift to a trade deficit. In that sense, it is possible that the lag in the rationalisation of state-run enterprises (investment in facilities) will prolong the trade surplus. How long will China's renminbi be able to continue this "bullish tone"? Perhaps the moment of truth will dawn when the rationalisation of state-run enterprises is basically complete I wonder whether China's middle and long-term exports will be able to continue after the fall in value of the NIEs and ASEAN currencies. The export growth rate from 1991-1996 recorded a yearly average of sixteen percent and was eleventh in the world.11 Since the 1979 "revolution and liberalisation" policy until the end of 1996, the introduction of foreign investment totalled 174.9 billion dollars, and foreign loans which were used totalled 240.2 billion dollars.12 The possibility of the yuan's "bullish tone" continuing is high due to the use of foreign capital mentioned above and the trade surplus. Despite the yuan's bullish tone, we need to pay attention to the increase in exports and the future fluctuation in the flow of foreign capital (in particular China's capital). We must also pay attention to this connection also with regard to the fluctuations of the Hong Kong dollar.

The People's Daily [overseas edition], 20 December 1997. The People's Daily, 10 December 1997 and 21 December 1997.

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TO TERUHIKO

IV. JAPANS POSITION AND CHANGE IN ASIA'S CURRENCY MARKETS

The Adjustment of the Weak Yen

In the Asia-Pacific region, Japan is clearly the leading exporter among the developed countries and the origin of much of the world's technology. These points comprise the following two conditions: The first is the maintenance of the strong yen, and the other is being in a strong position in negotiations with the NIEs. These two conditions are starting to be less stable. The geopolitical symbol of the postCold War new order is perhaps expressed through this fact. The yen reached its highest level in April 1995 with US$1.00 equalling ¥79. We can recognise links between the yen's movement and the economic position of the NAC (NIEs, ASEAN, and China). In other words, economic growth in NAC countries is connected with the yen/dollar rate, and direct investment in NAC countries is connected with the strong yen. Thus, direct investment in NAC plays a connective role between the movement of the yen and economic growth in NAC. The weak yen was the main cause of the decline in Asian economic growth. When we look at Asia from the point of view of Europe's markets, the weak yen greatly affects the neighbouring countries' affluence. Exports are the reason that we see full employment domestically in Japan. This contributed to the acceleration of the Asian currency unrest, and before long, it poses challenges to Japan's investments in Asia. In contrast, NIEs currency problems paralyse the role that Japan plays as an intermediary with China and ASEAN countries and with NIEs. The crash of the Korean won directly supports this point. Korea has a trade settlement structure of deficit with Japan and surplus with Asia (while Taiwan has a deficit with Japan and a surplus with China and Hong Kong), and Korea has been able to manage economic growth under these conditions. The fall of the won basically paralysed this structure of circulation and it became difficult for Korea to continue playing an intermediary role. The result is that there will be unavoidable changes in this triangular structure. As long as the Chinese yuan's robustness continues, we can anticipate that it will play a definite moderating role. Basically, Japan's economy is itself in recovery and the only the road to recovery is

THE REGENT ASIAN CURRENCY CRISIS

219

the resurrection of the strong yen. In that sense, Japan's obligation to the Asian Pacific region is the recovery of the Japanese economy.

The View of Asia's "Currency World"

We do not expect a stable transition when we look at the mid- to long-range future, except for the strong yen which is under the umbrella of the American dollar. Recently, in face of the introduction of the Euro, a unified currency for Europe, some questions have arisen as to the continued dominance of the US dollar in world market. If the Euro would turn into a strong currency this will eventually have an important impact on Asia's currency system. In past years we noticed the movements in Japan which holds the highest rank in foreign capital reserves (225.6 billion dollars, September 1997), in China (134.1 billion dollars), in Hong Kong (96.5 billion dollars), in Taiwan (82.9 billion), and in Singapore (80.2 billion dollars). In particular the movement of the three Chinas (China, Hong Kong, and Taiwan totalling 313.5 billion dollars) definitely stands out. Regarding this point, there is deep interest in China's position. China anticipates that the Euro will be successful or that it will have "a soft landing" with the European financial authorities.13 There is no doubt that Japan anticipates the establishment of the Euro in the Asian yen markets. The Euro will probably be competition for the yen. In any event, the rapid economic advance of China seems inevitable. Currently, China is beginning to take the road of "financial superpower" and the Chinese network, which has a commanding position over the process of distribution in Asia, is spreading throughout the entire region. Japan ought to shore up its strong yen as soon as it can. The global currency system

A global currency does not just rely on the manufacturing strength of its home base (the US economy). Military strength is a necessary corollary. One should also not overlook the importance of the theoretical and philosophical underpinnings of a global currency. For Financial Times, 13 October 1997.

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TO TERUHIKO

example, in the era of the Pax Britannica, Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations (1776) and David Ricardo's On the Principle of Political Economy and Taxation (1817) sup-

ported the establishment of the position of the British pound as a world currency. In the post-war era of Pax Americana, the IMF and GATT's philosophy of "free, non-discriminatory, and multilateralist (the Bretton Woods Agreement), along with anti-communism, was a necessary ingredient in elevating the dollar to its status of dominance. In the post-Cold War transition, "human rights" replaced anti-communism, and this was accompanied by American dollar diplomacy. The supremacy of the neo-classical market economy was in vogue, and the era of the dollar system continued.14 If a regional currency system becomes necessary for Asia, how should Japan endeavour to create its political, philosophical and theoretical foundation? In China's traditional world view, for instance, ideas about a non-military world order (wangdao) oppose those of an order built on military power (badao), but there is also the concept of an order that is not imposed from above (datong). If Japan is to succeed in establishing its own philosophy if order this must be one appealing to China and other Asian countries as well—this will actually co-determine whether such a "new regional order" will be feasible.15

14 The title of the World Bank's World Development 1995 which advocates "From planned economy to market economy" is suggestive. 15 I would like to refer to some other of my publications on this subject: "The Geopolitics of the Yen, Dollar, and the Yuan—the Undercurrents of Asia's Currency Crisis," Japan Echo, Vol. 24, No. 5 (December 1997), 12-14; and "Seeking Commonalties between the World of the Yen and China" in The 5th Report of the Japanese German Economic Group, Economic Regionalism: Europe and Asia, The Japanese German Economic Group Tokyo, Bulletin No. 19 (October 1997), 40-51.

THE RECENT ASIAN CURRENCY CRISIS

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Table 1: Asia NIEs Export Destination by countries/region (1992-1995) in % With U.S. 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

27.6 32.8 35.4 34.8 37.2 35.1 31.2 29.9 27.0 24.5 24.2 23.3 22.5 20.8

with

Japan 10.5 9.5 10.1 10 10.2 11.5 12.4 12.5 11.3 10.5 9.3 8.8 8.9

9.5

with Europe

with ASEAN

within the NIEs Region

9.8

13.0 13.0

8.9 8.3 8.7 8.9 9.0 9.6

9.2 8.4 8 9.2 10.4 10.5 10.3 11.3 11.1 10.3 9.6 8.9 9.1

9.4

7.6 6.5 6.4 6.7 7.7 8.6

9.2 8.5 8.7

10.9 11.2

10.8 11.4 12.5 13.7 14.3 14.8 15.2 16.0

Source: Economic Planning Agency, Economic Statistics Data on Overseas Countries, October

1997 ("Kaigai keizai de-ta").

Table 2: Japanese Direct Investment in Asia with Asia and Europe (1989-96) (in US million $; since 1993, the yearly average of the Yen exchange rate to the US$ has been used to calculate the figures) 1989

1990

1991

1992

1993

1994

1995

1996 %

NIE's S.Korea Taiwan Hong Kong Singapore ASEAN Indonesia Malaysia Philippine Thailand China NIE's+ ASEAN+ China United States Europe Total

4,900 606 494

1,898 1,902 2,782 631 673

202 1,276 438 8,120

3,355 284 446

1,785

2,203 260 405 925

1,922 225 292 735

Compare with Last Year %

2,419 245 292 1,238

2,865

3,236

3,540

400 278

449 455

416

1,133

1,147

1,054 3,888 1,759

1,185 4,138 1,605

742 668 719

575

1,115 4,951 2,416 572 1,404 2,512 11,003

5.2 22.9

19.7 50.5 -0.6 -22 13.2 -43.9 -7.2

840

613

670

644

3,242 1,105 725 258 1,154

3,063 1,193 880 203

3,197 1,676

2,398

704 160 657

813 800 207 578

1,691 6,508

2,565 9,318

717 1,240 4,478 11,852

521 1,488

560

7.4 0.9 1.1

3.1 2.3 10.3 5

1.2 1.2

9.4

-7.4 14.5 29.7 5.9

349

807 579

6,946

5,865

1,070 6,189

32,540

26,128

18,026

13,819

14,725

17,331

22,649

22,015

45.8

-2.8

14,808 67,540

14,291 56,911

9,371 41,584

7,061 34,138

7,940 36,025

6,230 41,051

8,586 51,392

7,376 48,041

15.4

-14.1 -6.5

2.9

100

Source: Ministry of Treasury, The situation of Japan's Outward and Inward Direct Investment, 1997, Tokyo 1997 ("Taigai

oyobi tainai chokusetsu toshi jokyo").

NO NO

JAPAN AND THE REGION

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REGIONAL ORDER IN THE ASIA PACIFIC, JAPAN AND UN SECURITY COUNCIL REFORM** REINHARD DRIFTE*

INTRODUCTION

A less analysed aspect of the emerging new regional order and multilateralism in the Asia Pacific is the interaction of the states in the region within the framework of the United Nations which can give some indications of the extent of regional co-operation and cohesion. There are 49 countries which are grouped in the regional group of "Asian & Pacific countries" in the United Nations (UN), ranging from the countries in the Middle East to the Pacific Ocean's micro states. This compares with 33 for Latin America and Caribbean states, 26 for West European and others, 53 for Africa, and 20 for Eastern European states. This Asian bloc is of relevance for the election of member states to various seats on UN committees, including the non-permanent seats on the UN Security Council. Since a kind of multipolarity emerged in Asia much earlier than in the rest of the world thanks to the Sino-Soviet rift in the 1960s, multilateral security in the region only had a chance with the end of the East-West confrontation. The UN Transitional Authority in ** This chapter is based on the author's forthcoming book "Japan's quest for a permanent UN Security seat. A question of pride orjustice?" (Macmillan/Iwanami Shoten 1999).

The research was made possible by the Japan Foundation, the Konishi Foundation, the Japan Foundation Endowment Committee and URENCO Inc. * Professor Reinhard F.W. Drifte holds the Chair of Japanese Studies in the Department of Politics, University of Newcastle upon Tyne. His fields of research are Japan's foreign and security policies, relations between the European Union with East Asia, and security issues in Northeast Asia. His main publications are Japan's Foreign Policy in the 1990s: From economic superpower to what power? (Macmillan/St.

Anthony's College, London/Oxford 1996; Kindai Bungeisha, Tokyo 1998/Paperback Macmillan 1998 Japan's foreign policy for the 21st century; Japan's Rise to International Responsibilities: The case of arms control, Athlone Press, London, 1990; Arms Production in Japan. The military use of civilian technology, Boulder, Colorado, Westview Press, 1986; Europe & Japan. Changing relationships since 1945, eds. Reinhard Drifte and Gordon Daniels, Paul Norbury Publishers, 1986; The Security Factor in Japan's Foreign Policy,

1945-1952, Saltire Press, 1983.

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REINHARD DRIFTE

Cambodia (UNTAC) is the foremost example of an UN peacekeeping operation (PKO) which also opened a new regional role for Japan, Asia's economic and increasingly so, political superpower.1 With the growing role of the UN Security Council in global and regional security as well as Japan's ambition to play a role in the Council which is more appropriate to its political and economic position, it is therefore useful to look at Japan's developing multilateral security policy pertaining to the UN. The regional reaction to this policy and notably Japan's candidature for a permanent Security Council seat can serve as an indicator of regional co-operation. It is, in the first place, thanks to the support by the Asian bloc in the UN that Japan has already been elected eight times as a non-permanent member of the Security Council, the last period being 1997-98. The following chapter concludes that Japan's ambitions are nurtured more by status thinking and recognition for economic contributions to multilateralism, rather than a clear concept of multilateralism based on domestic consensus or input in terms of initiatives, concepts or personnel. In addition, its impact on Asian cohesion and the formation of a stable regional order is ambivalent due to the continuity of a strong US-focused bilateralism, and its inability to come to terms with its historical legacy. Another factor which is not included in this chapter is the question about the sustainability of Japan's national and regional economic policies.

THE UN AND THE "ASIAN BLOC"

Since both North and South Korea joined the UN in 1991, all of the Asian states are now members of the UN. Even before their membership in the UN itself, South and North Korea had already been members of several UN organisations like the Food and Agricultural Organisation (FAO) or the World Health Organisation (WHO). At a world system level, membership in the UN and its many international organisations contributes to the global integration of the Asian states which distinguish themselves by their great 1

On Japan's rise to political superpowerhood see the author's Japan's Foreign Policy

in the 1990s: From economic superpower to what power? (Macmillan/St. Anthony's College,

London/Oxford 1996; Kindai Bungeisha, Tokyo 1998/Paperback Macmillan 1998 Japan's foreign policy for the 21st century.

REGIONAL ORDER IN THE ASIA PACIFIC

227

variety of political, economic and cultural development. At the regional level, membership in the "Asian bloc" demands the achievement of regional consensus for elections to various UN committees although other political groupings like ASEAN, the ASEAN Regional Forum, and even APEC probably are much more important for regional cohesion in this very fragmented part of the world. Most Asian states belong to the Non Aligned Movement (NAM), a group with distinct opinions within the UN. The composition of the "Asian bloc" in the UN is, of course, very different from what is normally associated with the Asia Pacific region, and this caveat has to be taken into consideration when weighing the conclusions of this paper. When speaking here of the Asia Pacific I refer to this conventional idea of the Asia Pacific, except in cases where I refer to the "Asia Bloc" as a voting bloc in the UN. In a region where the concept of comprehensive security is mainly understood as economic security and national resilience, and since economic development is the preponderant concern of most Asian states, the UN, with its many development oriented organisations, is playing an important role.2 Despite the economic success of a considerable number of Southeast and Northeast Asian states, most Asian states still have considerable economic problems and the various UN organisations devoted to economic and social development are playing an indispensable role in helping these states. The Asian economic crisis that began in the summer 1997 could only reinforce this situation. Multilateral security in the Asia-Pacific today refers mostly to the ASEAN Regional Forum and a whole array of more or less informal and unofficial fora which bring regional leaders together. The UN's role in the "hard security" of Asia has considerably diminished since the Korean War and most of the present PKOs are not taking place in Asia, with the notable exception of the United Nations Transitional Authority in Cambodia (UNTAC) in 1993-94.3 This was the most expensive and comprehensive peace-keeping operation of the UN so far. It was generally welcomed by the Asian states which saw for the first time, not only the sending of Japanese 2 On the concept of "national resilience" see Amitav Acharya, The Association of Southeast Asian Nations: "Security Community" or "Defence Community"?, in Pacific Affairs, Summer 1991, pp. 159-178. 3 For an account see T. Findlay, Cambodia: The legacy and lessons of UNTAC (Oxford University Press: Oxford 1995.

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REINHARD DRIFTE

Self Defence Forces abroad for a PKO, but also the first Chinese participation in PKOs.4 Although the Southeast Asian countries were initially very suspicious of the first dispatch abroad of Japanese soldiers since the Pacific War, the Japanese side finally won applause for its personnel as well as considerable financial contribution. The Chinese side is still very suspicious of PKOs, but it has now moved from opposing it to tolerating it, and in this single case, even supporting it. The impact of this experience on the cohesion of Asia should, therefore, not be underestimated. Another recent UN involvement in Asian security has been the good offices of the UN in Afghanistan to bring the warring factions around the table for peace talks. So far these endeavours have failed because of the intransigence of the Taliban. The UN has also failed to end the Indian-Pakistan conflict about Kashmir but, here again, it is the lack of political will of the two countries directly involved, rather than the UN, which is to be blamed. India pointedly refuses any internationalisation of the conflict. After the nuclear test explosions of India and then Pakistan, Japan has been trying through various multilateral fora like the G-8, the Security Council and international conferences to make both countries join the Nuclear NonProliferation Treaty (NPT) and the Comprehensive Nuclear Test Ban Treaty (CTBT) with no conditions attached and to participate in the negotiations for a Fissile Material Cut-off Convention. In the case of the Korean peninsula the UN intervened in the security of the Korean peninsula when North Korea launched an attack against South Korea in 1950. This UN intervention was only feasible under the conditions of the Cold War and the domination of the UN by the US at that time. Despite the international expedition force under US command, the role of foreign military apart from the US military on the Korean peninsula, has virtually disappeared. Despite the urgency of the situation, the UN is playing no role in reducing tensions on the Korean peninsula, and all recent moves such as the Korean Peninsula Development Organisation (KEDO) or the quadrilateral talks between North Korea, South

4

Leitenberg, Milton, "The participation of Japanese military forces in United Nations peacekeeping operations," in Asian Perspective vol. 20 no. 1 Spring 1996, pp. 5-50. Fravel, M. Taylor, "China's attitude towards UN PKOs since 1989," Asian Survey vol. XXXVI no. 11 November 1997, pp. 1102-1121.

REGIONAL ORDER IN THE ASIA PACIFIC

229

Korea, China and the US are all at the initiative of the US and outside of the UN framework.3 However, the presence of North Korean diplomats in New York as representatives of their country at the UN has facilitated talks between the US and North Korea in the absence of diplomatic or, for that matter, any other relations between the two countries. The same applies to the communication between the two Korean states and between Japan and North Korea. The UN has been playing an important role in bringing arms control issues to the Asian region. All countries of the Asia Pacific region are now members of the Nuclear Non-Proliferation Treaty, the Biological Weapons Convention, and apart from Taiwan and North Korea, have signed the Chemical Weapons Convention. The Asian participation in the United Nations Register of Conventional Arms (UNROCA), which was initiated by the EU and Japan, is quite high.6 The UN is also sponsoring the UN Regional Centre for Peace & Disarmament in Asia (the so-called Kathmandu Process).7 This is the only regular meeting which also includes North Korean participants. One of the most important contributions to regional cohesion and Asia's comprehensive security by the UN is probably supporting in various ways the integration of the People's Republic of China (PRC). The UN is useful in providing multilateral aid to China to develop economically and socially and to integrate the growing Chinese economy into the regional and global framework. The adherence of the PRC to the World Trade Organisation (WTO) will be a major step in maintaining regional stability. The United Nations Development Programme (UNDP) has initiated and is supporting the Tumen River programme which involves North and South Korea, China, Mongolia and Russia.8 Despite its slow progress and diverging interests of 3 For a discussion of KEDO and the European involvement see Reinhard Drifte, The EU's stake in KEDO, Briefing Papers no. 96/1, European Institute for Asian Studies, Brussels, June 1996, 13 p. () Malcolm Chalmers, "The debate on a regional arms register in Southeast Asia," The Pacific Review vol. 10 no. 1 1997, pp. 104-123. For a Japanese account of UNROCA see Mitsuro Donowaki, "The Register- A continuous building process," Disarmament vol. 17 no. 1 1994. 7 For the proceedings of the conference in 1996 see "Kathmandu Process" Priority

issues on the current disarmament agenda: Global and regional concerns, 1996 Part 1 and 2

(New York: United Nations). 8 Kim Ick-Soo, "TRADP: A mini-model for Northeast Asian economic

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REINHARD DRIFTE

the nations around the river delta, the development of an active economic zone in the Tumen River area at large is a venture which is important for the integration of North Korea into the world economy, thus helping to reduce tensions in a region to be known as one of the last remaining flash points of the Cold War era. China has embraced the project wholeheartedly whereas Japanese business, which is indispensable for a real breakthrough in the development of the area, is so far very reluctant. A similar project supported by the UN is the development of the Mekong River delta which involves all of the states around the Mekong. Attempts by a very small minority of UN members to support the re-admission of Taiwan as a member state of the UN have raised the ire of the PRC but have absolutely no chance of finding any substantive support, at least, from Asian member states. However, the issue will continue to be on the agenda. For example in December 1997 the Senegalese parliament agreed to support Taiwan's request for re-admission to the UN as part of a co-operation accord signed by the two countries.9 On the other hand, the PRC will not allow the UN to intervene in any way in the issue of Chinese reunification, and it is only with great reluctance that they are willing to admit regional discussions on the competing territorial demands concerning parts of the South China Sea. Both issues, however, could have a very serious impact on Asian regional security.

UN SECURITY COUNCIL REFORM

The end of the East-West confrontation offered new opportunities for multilateralism and this had an immediate positive effect on the ability of the UN, and in particular the Security Council, to contribute to the maintenance of peace and international security. But with the greater consensus among the P5 (permanent members of the Security Council) and loss of pressure from the East-West confrontation came also renewed demands from the UN member states to reform the UN in general, and the Security Council in particuco-operation?," in: Yoo, Jang-Hee & Lee, Chang-Jae, eds. Northeast Asian economic co-operation. Progress in conceptualisation and in practice(Korean Institute for International

Economic Policy, Seoul 1994), pp. 129-30. 9 Senegal to push for Taiwan to be admitted to UN again, Agence France-Presse, Dakar 11 December 1997.

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231

lar, to abolish the remnants of the Cold War as exemplified by the composition and working practices of the Security Council. The new importance and effectiveness of the Council can be gauged from a few quantitative and qualitative measurements. From 1988 to 1993, the number of formal Council meetings rose from 60 to 171, while the number of "consultations of the whole" (where most business is conducted) rose from 20 to 253. The Council is now virtually in daily session. In 1989 there were 20 resolutions, while in 1993 there were 93; in the same period, the number of statements by Council presidents rose from 17 to 94.10 In 1996 there were 117 formal meetings, 57 resolutions were adopted, and 49 statements issued." Between June 1996 and June 1997 there were 115 formal meetings, 52 resolutions adopted and 54 presidential statements issued. The unanimity of all Council members increased significantly: There were 72 unanimous resolutions out of 119 between 1980 and 1985, and 68 out of 79 between 1986 and mid 1990. Between 1986 and mid-1990 the permanent members voted together on 68 and the non-aligned voted together on all 79.12 The use of the veto has also dramatically declined. Between 1991 and 1997, the US used the veto 5 times, Russia twice, and China once.13 As mentioned before, Asian regional stability has been one of the main beneficiaries of this UN rebound as demonstrated by the role of the UN in ending the war in Cambodia. However, the new activism relies mainly on the Security Council and, notably, on US leadership. This has raised fears with many developing countries about UN interference in their domestic affairs, particularly security affairs which are still the most guarded sanctuary of the sovereign state-based international system. Moreover, with the end of the East-West confrontation and the loss of influence by the US and Russia, the vestiges of great power influence in the UN have come under attack. The actual working procedure of the UN 10 James Paul, Security Council "Reform: Arguments about the Future of the United Nations System," revised, February, 1995. Website of Global Policy Organisation, http:www.globpolicy.org. 11 Laurenti, Jeffrey. Reforming the Security Council: What American interests? (United Nations Association of the United States of America, New York 1997), p. 9 fn 20. 12 Morphet, Sally. "The influence of states and groups of states on and in the Security Council and General Assembly, 1980-94" in Review of International Studies, vol. 21 no. 4 October 1995, p. 447. 13 Laurenti, Jeffrey. Reforming the Security Council: What American interests? (United Nations Association of the United States of America, New York 1997), p. 7.

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appeals to the majority of Asian countries which prefer open multilateralism, co-operative security, soft institution building and consensus building. The new activism of the Security Council has made the working procedures of this important UN organ even more secretive than before. The Council is the most visible but also least transparent body in the UN system with its profoundly "undemocratic" composition and working mode. The present permanent members of the Council have a combined population of about 1.8 billion people, leaving two-thirds of the world's population without representation in the permanent category. At the same time the Council is at the centre of many of the world-wide expectations in the UN's contribution to international peace and stability. The increasing demands for peace-keeping and peace-making commitments depend on the willingness and participation of the permanent Security Council members. Criticism of the undemocratic nature of the Security Council comes not only from the developing world, but also many Western developed countries, many of whom provide the bulk of finances and/or troop contingents for PKOs. Reform of the Security Council has been on the agenda of the UN for a long time, and is actually laid down in Article 109 of the UN Charter. In 1965 the non-permanent membership of the Security Council was enlarged from six to ten, leaving the number of the permanent Security Council members (P5) at the same number. From the late 1960s until the mid-1970s, a committee of the UN General Assembly discussed, without conclusion, the reform i.e. enlargement of the Security Council. Only with the end of the Cold War did it become possible to realistically expect greater support for any changes in the Security Council. In December 1992 India introduced a draft resolution co-sponsored among others by Japan, which was passed by consensus, inviting all countries to provide opinions on Council reform by 30 June 1993.14 Russett summarises the more than 100 responses to the General Assembly's request in December 1992 on Security Council reform in the following way:

14

UN A/RES/47/62 11 December 1992. Shinyo Takahiro. Shin Kokuren ron.

Kokusai heiwa no tame no Kokuren to Nihon no yakuwari (A new view of the UN. A U N

for peace and Japan's role) (Osaka Daigaku Shuppankai, Osaka 1995), p. 50.

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(1) to make the Security Council more representative of the UN membership; (2) to achieve greater international status for certain states or their representatives; (3) to augment the powers of the countries of the Southern Hemisphere; and (4) to lessen, through expansion of the Council, the perceived monopoly of power by the present permanent members. 15 Since January 1994 the "Open Ended Working Group on the Question of Equitable Representation and Increase in the Membership of the Security Council and other Matters Related to the Security Council" has been attempting, without success, to find a consensus on the reform of the Security Council. During the General Assembly period 1996-97, Ambassador Razali Ismail from Malaysia was chairman of these working groups in his role as President of the General Assembly. He was a most active and involved chairman who presented in September 1997 a report on Security Council reform which could have been adopted by a majority. Unfortunately, a very vocal group of ten countries, led by Italy, caused the postponement of reform by mobilising a majority which does not see much benefit in a reform of the Security Council. The main issues of contention were whether enlargement should include permanent or only non-permanent members, what to do about the veto right and which countries should be representing their region as new permanent Security Council members. The cautious attitude of the P5 did not help. The US has been the most vocal country among the P5. It first only argued for Japan and Germany to become permanent Security Council members, and only in the summer 1997 also showed willingness to admit countries from the Third World as permanent members. But it is doubtful whether the US would agree to this latter category receiving the veto right. It proved also damaging to Security Council reform that the US wanted to limit enlargement to at most 20 or 21 states, thus reducing considerably the benefit of U N reform to most member states.

lj Russett, Bruce, ed. The once and future Security Council (Macmillan: Houndmills 1997), p. 154.

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Despite the active role of several Asian countries in pushing for UN Security Council reform, the Asian member states have not shown a consistent attitude towards the various aspects of UN reform. Within the Non-Aligned Movement to which most belong there are differences of opinion, particularly about Security Council reform. Opinions vary notably about the future of the veto right and about how to represent Asia in the Security Council. This should come as no surprise, given the diversity within Asia, let alone within the official "Asian bloc". Pakistan would never accept India as a representative of Asia, and India and Indonesia, also candidates for an Asian permanent seat, would never agree on a rotational seat for Asia.

ASIA AND JAPAN'S BID FOR PERMANENT SECURITY COUNCIL MEMBERSHIP

Japan has been one of the most active countries in pushing for UN Security Council reform because of its long-standing wish to become a permanent Security Council member. Although Asia is represented on the Council by China, Japan's economy is eight times as big as that of China and its global political and economic influence reaches much further. Within the UN, China has been rather passive, and it is fundamentally suspicious of PKOs although it has refrained so far from casting a veto.16 In recognition of Japan's regional importance, the Asian bloc elected Japan altogether eight times as nonpermanent member which is only paralleled by Brazil. Japan's quest for a permanent Security Council seat goes back to the end of the 1960s when former Foreign Minister Aichi suggested indirectly (but directly in background press briefings) in the traditional speech by the foreign minister to the General Assembly in September 1969 and 1970 that Japan deserves such a seat now because of its economic power, its contribution to the UN budget and its non-nuclear status. Since then, the Ministry of Foreign Affairs has consistently had a group of people working on achieving this aim. While it was clear that during the Cold War the Soviet Union would never agree to Japan becoming a permanent Security Council 1(1 On China's UN policy see Kim, Samuel S. "China as a great power," in Current History vol. 96 no. 611 September 1997, pp. 246-251.

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member because it would only have doubled America's veto power and influence, Japanese bureaucrats worked arduously to keep the issue alive through their active participation in a UN committee involved in revision of the UN Charter and through seeking election as a non-permanent Security Council member. What helped Japan in becoming a non-permanent member so often has been the direct use of its position as the world's largest aid donor to which many UN member states have been very sensitive. In the Asian region Japan is, in addition to its role as aid donor, appreciated as a very influential advocate of many Asian issues which it has been bringing to the attention of the Western countries thanks to its membership in international fora such as the G-7 (now G-8) economic summit meetings. In addition Japan's assessed contribution to the UN budget places Japan second to the US with 15.65 per cent of the UN's total budget (approx. US$166.7 million) compared with 25 per cent (US$312 million) for the US in 1997. From 1998 to 2000, Japan's share will increase from 17.98 per cent to 20.57 per cent while the US share will remain capped at 25 per cent. However, Japan's multilateral diplomacy is still underdeveloped despite the country's important role in multilateral development aid. The absence of any dramatic event on the scale of the fall of the wall in Germany and the close reliance on the US (the latter feeling strengthened in its self-confidence after the victory of the allied forces over Iraq), account, among other factors, for Japan being slow in adapting to the post Cold War era. The domestic turbulence which began 1993 frustrated the development of a new foreign policy and in particular, a new multilateral diplomacy. Apart from the UN and the G-8, Japan has also not had the experience of working out multilateral diplomacy in a setting like NATO, or in a regional and supranational organisation such as the European Union. Its inability and unwillingness to come to terms with its historical legacy in East Asia prevents it from taking a leading role in Asia which should reach far beyond economic interactions and economic role model. Where it tried to play a larger role, such as in the case of the ending of the Cambodian war or the creation of a regional economic organisation in Asia, the historic legacy, the reliance on the Japanese-American relationship and the absence of a multilateral framework in the region put severe constraints on Japan. This deficiency in multilateral diplomacy is recognised in Japan but change occurs very slowly because of the current domestic

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political upheaval and the end of the bubble economy since 1990. Instead, we find Japan's leaders applying a minimalist and gradual adaptation to the need for a bit more multilateralism and somewhat less reliance on the bilateral relationship with the US, while skilfully deploying soft power in both areas simultaneously. Rather than including the quest for a permanent Security Council seat with a comprehensive foreign policy, the bid tends to dominate Japan's multilateral agenda for its own sake. In addition, public debate and political leadership on the future of Japan's multilateral diplomacy in general and permanent Council membership in particular has been very poor. Instead of clarifying what Japan would do as a permanent Security Council member, the proponents of permanent Security Council membership mostly raised issues of prestige, Japan's financial contribution to the UN budget, multilateral development aid and access to more and timely information. Many Japanese, even some conservative politicians, equate permanent membership in the Security Council with greater Japanese involvement in peace-keeping operations which they oppose to varying degrees. The reasons for that are the growing interventionist attitude of the Security Council as reflected in the rise of peacekeeping operations since 1989, international pressure on Japan to shoulder more of the international burden (which led to the passing of the International Peace Co-operation law in June 1992) and the failure of the Japanese political system since 1946 (debate on the new Constitution) to clarify the compatibility between the Japanese Constitution (notably the Preamble and Article 9) and the UN Charter, i.e. Japan's commitment to support the peace maintaining activities of the UN (UN Charter Article 43). Against this background, the Ministry of Foreign Affairs has been criticised for not having stimulated or allowed sufficient debate on this issue but instead trying to use the domestic political upheaval after 1993 to push through its agenda of permanent membership without regard to domestic opinion. As a result, the general attitude of the political leadership and public opinion seems to be that Japan should wait for a wave of growing calls of invitation from other UN member states and, once enough such calls had been made, accept to enter the Security Council. In response to this situation, political leaders have made statements about Japan's candidature which are interpreted abroad as half-hearted proposals to achieve permanent Security Council mem-

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bership, while Japan's diplomats try to create a wave of international support to convince public opinion rather than explain the rationale of the bid. Asian attitudes towards Japan's bid for a permanent Security Council seat are mixed. Most of the Southeast Asian countries support the bid officially, but it would be difficult to get the agreement of the P5 to most of their demands on other elements of Security Council reform such as the abolition of the veto right or enlargement beyond 21 seats which is vehemently opposed by the US. In July 1997 the ASEAN Foreign Ministers said in their declaration that they are in favour of reform of the Security Council, but that also members from developing countries should be eligible for membership, new members should have the same rights as old Security Council members, the veto right should be limited with a view to its ultimate abolition and the situation of the Security Council should be regularly reviewed.17 Apart from the issue of Japan's bid, there are irreconcilable differences among the Asian countries as to who should represent Asia as a new permanent Security Council member, and whether such a seat should be permanent to one country or permanent but rotated among the Asian member states. India, Pakistan and Indonesia have all shown interest in a permanent Security Council seat, complicating Asian co-operation. Most Southeast Asian countries also consider a fully-fledged contribution to PKOs as a qualification for a permanent Security Council seat. So far Japan's contribution is limited to logistical support of UN PKOs. In August 1994 Malaysian leader Mahathir expressed support for Japan's candidature, but added that Japan must fulfil all the roles which are expected from the permanent members.18 Negative Asian attitudes are linked to Japan's unrepentant attitude towards its past, distrust about Japan's future intentions as a peaceful neighbour and a concern about a further strengthening of the undemocratic nature of the Security Council by admitting yet another Western industrialised country.19 The countries known to be opposed to Japan's ambition are the two Korean states and China. China has so far avoided any official 17 "Ampori no kaikaku shiji o seimei e" (A declaration of support for the reform of the Security Council) Asahi Shimbun (evening edition) 25 July 1997, full text in Asahi Shimbun 26 July 1997. 18 JVihon no ronten '96 (Japan's discussion points '96) (Bungei Shunju: Tokyo 1995) p. 207. 19 See e.g. the critical editorial in the Far Eastern Economic Review 29 May 1997 p. 5.

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statement on the matter.20 It has also been very vague and noncommittal on other aspects of Security Council reform, trying to please the critical Third World countries with general references to the need of fair representation of these countries.21 China will oppose any strengthening of Japanese leadership role in Asia. Moreover, it is concerned about the closer Japanese-American security relationship since the Hashimoto-Clinton statement in April 1996. This led to the revision of the Defence Guidelines and a great ambiguity whether or not Japan would help the US in case of a confrontation over Taiwan and/or territorial conflicts in the South China Sea.22 The two Korean states have been most open in their opposition to Japan's bid. In the case of North Korea a clear link is made with Japan's unrepentant attitude towards its past.23 The South Korean UN ambassador has publicly declared his opposition whereas the official position is less radical; only opposing Japan getting the veto right if there is a consensus in admitting Japan.24 Under president Kim Dae-Jung, South Korea's attitude has become more positive. South Korea is also member of the "Carlson Group" (a UN reform study group established by the former Swedish prime minister Carlson) which opposes the enlargement of the Security Council with permanent members.

CONCLUSIONS

The role of the UN in the comprehensive security of the Asian states is considerable because the UN is most active in the social and eco20 See e.g. the interview with the Chinese ambassador to Tokyo, Asahi Evening News 15 October 1997. Also "Kokuren kaikaku to Nihon" (Japan and UN reform) (UN reform and Japan), Mainichi Shimbun 8 August 1997. 21 "Do The Permanent Members Really Want Reform?" A Speech by Ambassador Kausikan of Singapore presented on May 5, 1997 in the "Open Ended Working Group on the Question of Equitable Representation on and Increase in the Membership of the Security Council and other Matters Related to the Security Council". 22 For an official version of these changes see The National Institute for Defence Studies, ed., East Asian Strategic Review 1997-98, Tokyo 1998, pp. 53ff. 23 See e.g. DPRK opposes Japan to be a permanent member of the UNSC, People's Daily 14 February 1997. 24 Reform of the Security Council, by Ambassador. Park Soo Kil, Joongang Ilbo 19 September 1997. Also "Kokuren kaikaku to Nihon" (UN reform and Japan), Mainichi Shimbun 8 August 1997.

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nomic development of the Third World to which most Asian countries belong. However, in terms of "hard" security, the UN's role has very much diminished due to the end of US domination of the UN and the diversity of the region. The most important contribution of the UN to the region's "hard" security can be said to lie with its role in arms control, involving Asian countries as well, and the supportive role in the endeavour to integrate China into politics at a regional as well as global level. The Asian countries recognise that Japan has become very important to the UN, and its role in ending the war in Cambodia, including its first PKO mission, has opened a new door to Japanese multi-lateral security co-operation in the region. However, Japan has still not developed a convincing concept of multilateral diplomacy. Its foreign and security policy is still more focused on US-centred bilateralism. Against this background, Japan's quest for a permanent Security Council seat is dominated by considerations about its status and reward for financial contributions to multilateral organisations and development aid, rather than imbuing such a new position with a comprehensive multilateral concept based on domestic consensus. Moreover, Japan's bid for permanent Security Council membership as well as contribution to Asian co-operation is hampered by its inability and unwillingness to squarely face its historical legacy and its lack of domestic consensus on security policy which would allow a full-fledged contribution to PKOs. Despite strong support of the Asian bloc and many other UN member states in general for Japan's election to a non-permanent seat on the Security Council, reasons mostly not related to Japan's qualification as a permanent member have prevented an enlargement of the Security Council. Attitudes towards Japan's bid for a permanent Security Council seat differ, with support strongest among the Southeast Asian nations, and weakest among the countries in Northeast Asia. In the absence of a general consensus on UN Security Council reform for the foreseeable future, the "Asian bloc" will have to content itself with being represented solely by China on a permanent level, while this country is, paradoxically, at the heart of the region's concern about the future and the one least interested in Security Council reform.

2ND ORDER CYBERNETICS AND "COMPREHENSIVE SECURITY": CONTRIBUTIONS FROM CONTEMPORARY SYSTEMS THEORY MICHAEL SGHILTZ*

"Draw a distinction." George Spencer-Brown.1

Introduction: preliminary methodological remarks

If one has the courage to inquire into a definition of "comprehensive security", if one wonders what exactly we are talking about, or what "comprehensive security" actually "is", one will soon be confronted by a striking glut of definitions. This was not different at the January 1998 Conference on Comprehensive Security at which this paper was presented. On the one hand, the concept seems to have gained in paradigmatic value: for security studies, "comprehensive security" can be a useful tool to discover aspects of security otherwise hidden from view and analysis. Second, comprehensive security can be the object of a more descriptive inquiry: Japanese security policy may be presented as a case study to provide an illustration for Niklas Luhmann's theoretical approach towards systems research; this is the main thrust of may paper. In that context, comprehensive security can be interpreted as a self-description of security policy. One may of course approach the issue from different angles. For Reinhard Drifte, "comprehensive security" is a kind of policy produced by Japanese "fuzzy politics". Interestingly, conceptualisations of and discussions concerning comprehensive security are not limited to the field of security studies in the strict sense. For economists, it delivers novel questions regarding economic policy; and an investigation * Michael Schiltz is a Doctoral Candidate and researcher in the Department of Oriental and Slavonic Studies at the University of Leuven. His area of research is the application of sociological systems theory to Japanese society, politics and international relations. He has published on "Technonationalism and its Need for SelfObservation" and "Blueprint for an Autologic Epistemology: Niklas Luhmann." 1 Spencer-Brown, George. 1994. Laws of Form. Portland, p. 3.

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of the institutional design of such policy is a valid scientific enterprise. Clearly, pluriformity is the name of the problem. As the concept "comprehensive security" has turned into a kind of catch-all term, its applicability becomes highly problematic, since there are no generally accepted definitions for the term. Inspired by paradoxicality we are led to take exactly this problem of definability as the starting point for our considerations. It will not do to just to present another definition, and wait until a consensus concerning the definition of the term evolves. The question of cognition. In the face of this bothersome situation my paper attempts to break out of this impasse; I intend to move the discussion to a higher, more abstract, more rarefied level, already suggested by the title of this paper. I intend to study how post-war Japanese security policy (in which the term "comprehensive security" took root) "observes". The Japanese post-war security system describes itself as comprehensive security, and thus provides its own key to an understanding of the character of Japanese security. In other words, my approach is not so much occupied with prescriptive (paradigmatic) questions, but with questions of a cognitive nature: I will inquire into the way (the "code") by which the security system observes, and ask how those observations can be subjected to external analysis. Observing how a system observes, one makes observations at a different level, performing a second-order observation. The term "secondorder cybernetics' in the title of my paper is a reference to this approach. The construciivist turn. A second remark concerns contributions from contemporary systems theory. Above I implied the existence of a security system. Inferring something obviously entails that we recognise a "something" as a system, a unity of elements connected linked to each other (not every observer necessarily agrees with this approach). Our ability to observe a system is dependent on the central distinction (Leitdifferenz) of the environment "surrounding" our system. Systems theory literally cuts the world up into system and environment; it cleaves the world in a way different from other theories.2 Political realism, for instance, observes the world in terms of "gain of national power/decrease of national power"; Graham Allison's analyses are guided by the distinction between "bureaucratic stumbling 2 This is the subject of Jokisch investigation. See: Jokisch, Rodrigo. 1996. Logik der Distinktionen: ^ur Protologik einer Theorie der Gesellschaft. Opladen: Westdeutscher Verlag. Esp. pp. 302-380.

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block and rational policy". Much of the literature on strategic culture has taken the dichotomy "cultural values versus strategic rationality" as their primary starting point for observations. Here I confine myself to the theory of autopoietic, self-referential social systems presented by Niklas Luhmann.3 Please note that this emphasises that systems theory itself cleaves the world (it simply follows SpencerBrown's injunction "Draw a distinction" and draws a distinction between system and environment). The world according to systems theory (and this is valid for other theories as well) is no more than a corollary of the act of drawing distinctions. Systems theory furthermore accepts that any observation is a product of the pattern of distinction used as the basic starting point. This approach is commonly called constructivism. Systems theory "constructs" the world in terms of system and environment, and goes on to assume that systems exist.4 This constructivist methodology that was developed in the "hard sciences" (cognitive biology, Spencer-Brown's calculus of indications) seldom finds entry into analyses of national security. Comparison with other theories. Closely intertwined with the above aspect is a third one. Because it tends to ask questions of a cognitive kind the systems theory's analytical toolkit is ready to observe other second order observations (theories of comprehensive security, self-descriptions of the security policy) as well. I will therefore regularly refer to other observers of the policy, and thereby try to extend the range of investigation. Theory of complexity—complexity of theory. A last preliminary remark

concerns the complexity of ideas presented here. Above I already warned the reader of the abstract and rarefied level of my discussion. Rarefied air may cause headaches—and unfortunately this also applies to rarefied theory. It is readily acknowledged that this does 3 For a very elaborate discussion of the "theory of self-referential, autopoietic social systems", I refer to Luhmann himself. See: Luhmann, Niklas. 1995. Social Systems (originally published in German in 1984 as Soziale System: Grundrifi einer allgemeinen Theorie, Frankfurt: Suhrkamp Verlag). Stanford: Stanford University Press. For a very dense summary of this 627 p. magnum opus, see: Luhmann, Niklas. 1986. "The Autopoiesis of Social Systems." In Felix Geyer and Johannes Van Der Zouwen

(eds.), Sociocybernetic Paradoxes: Observation,

Control and Evolution

of Self-Steering

Systems.

London: Sage Publications. 4 Luhmann, Niklas. 1995. Social Systems (originally published in German as Soziale Systeme: Grundrifi einer allgemeinen Theorie). Stanford: Stanford University Press. P. 12: "The following considerations assume that there are systems. Thus they do not begin with epistemological doubt. They also do not advocate 'purely analytical relevance' for systems theory."

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not facilitate the reading of this paper. In order to describe complex social phenomena complex theories may be necessary. A byproduct of the complexity is to be found in internal consistency. This framework appears to the author as a highly satisfactory alternative to the fuzziness of many other conceptualisations found in the cognitive sciences, the science of non-linearity, theory of communication, theory of evolution and others. For practical reasons I felt obliged to divide the paper into two parts. In the first part, I briefly outline the frame of Luhmann's theory of social systems. In the second part I present a discussion of the relevance of his theory for the study of Japan's comprehensive security.

PART ONE: BASIC ASSUMPTIONS

Autopoiesis

For the sake of consistency, it seems a wise idea to start with addressing the first basal pillar of Luhmann's theory: autopoiesis, or selfproduction. Autopoietic systems, then, are "systems that are defined as unities, as networks of productions of components, that recursively, through their interactions, generate and realise the networks that produces them and constitute, in the space in which they exist, the boundaries of the network as components that participate in the realisation of the network."5 The explanatory potential of the concept is limited. Autopoiesis is, following the above definition, conceived simply as an invariant principle (Prinzip) of reproduction of all systems—

including the observer(s) of those systems him/herself. When talking about autopoietic systems, I will thus refer to systems of which all 3 Maturana, Humberto. 1981. "Autopoiesis." In Milan Zeleny (ed.), Autopoiesis: A Theory of Living Organisation. New York: North Holland. P. 21. Italics mine. Important: Maturana, Humberto. 1980. Autopoiesis and Cognition. Boston: Reidel. For a discussion of the state of affairs in this new debate: Mingers, John. 1995. Self-Producing Systems: Implications and Applications of Autopoiesis. New York. Originally, the concept of "autopoiesis" was invented by the Chilean biologists Maturana and Varela to define "life"; the application of the concept in the social sciences is not without its critics, however. See e.g. Zolo, Danilo. 1992. "The Epistemological Status of the Theory of Autopoiesis and its application in the Social Sciences." In Gunther Teubner and Alberto Febbrajo, State, Law and the Economy as Autopoietic Systems: Regulation and Autonomy in a Mew Perspective. Milano: Giuffre.

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that functions as a unit of the system—elements, processes, boundaries, structures, and the unity of the system—is held together by the system itself. Autopoietic systems are, in other words, fully autonomous concerning their operations. This does obviously not entail the claim that systems exist in a "vacuum", or that the environment (Umwelt) of systems plays a lesser, or even no role at all. Rather the opposite is the case: autopoiesis is the indication of the fundamental— and necessary!—difference between system and environment. It elucidates the principle by which the system can distinguish itself from its environment.6

At the same time, it expresses an intrinsic vagueness (Unbestimmtheit) regarding this system's activity, an activity that is constrained only by the systems" structures.7 The notion autopoiesis refers to this circumstance. Talking about a post-war Japanese security system, then, entails talking about a system that originated in the immediate post war period. It produces and reproduces itself in all of its operations, such as policy decisions concerning Self Defence Force (SDF) missions, regular publications of the White Paper etc. Although the obvious theoretical consequences that originate from the introduction of "autopoiesis" can hardly be overestimated, Luhmann's theory cannot be said to rest exclusively on this pillar. Explaining autopoiesis I stressed that autopoiesis is the method by which the system executes the operation of distinguishing itself from the environment.

Thus, autopoiesis highlights the operation of distinguishing itself. Returning to Maturana's formulation, the reader will immediately understand this operational characteristic of autopoiesis—as described in the definition presented in italics. Hence the Greek term: oeuxoTCOvnaiq, or selfproduction. This definition does not explain to us what exactly constitutes the identity of the system, or what the (stable) unity of the system means. Therefore I will have to introduce another concept, with a b

In Luhmann's words: "Autopoiesis should not be taken to mean production of a certain "something" [Gestalt]. Central is the management of making a difference between system and environment." Luhmann, Niklas. 1997. Die Gesellschaft der Gesellschqft. Frankfurt am Main: Suhrkamp Verlag. P. 66. (trans, by author) ' Hereby I indicate at once the place of "structure" in Luhmann's theory, i.e.: constraining (constraining meaning: enabling) the possibilities of connectability (Anschlufijahigkeit) of operations. The notion of "structure" is thus driven away from its overarching position in so many theories (e.g. "structuralism"!). The reason for this curtailment is to be found in the striking lack of attention structuralism pays to the dynamics of change, evolution. Structuralists have trouble denning how structures can "generate" something, produce an event (and thereby create evolution)! For an extensive treatment, see: Luhmann, Niklas. 1995. Social Systems. Pp. 278-356: "Structure and Time".

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status comparable to autopoiesis8 This concept will highlight the other side of the same coin: rather than the operational aspect, the concept will express the observation-related side. Self-reference9 In order to enable an ongoing re-production of the system (or, from the viewpoint of the system's elements, the production of the system's elements), Luhmann emphasises that systems establish self-contact; they develop relations with themselves and differentiate those from their relations with the environment, and other systems in the environment. It is self-reference that constitutes the unity that the system claims. Self-referentiality thereby clearly appears as a circular reasoning: in producing its own unity, the system uses its own operations. This is why I define the system's unity as characterised by self-reference. Because the system uses its own operations to constitute the unity as defined by itself—"independent of the cut of observation by others"10— the system refers, in such operation, to itself. Applied to a discussion of Japanese security policy, the Gulf War provides a good example. The 1991 (non)decision of the Japanese government concerning its contribution to the gulf coalition beyond a financial contribution does not stand by itself. It has to be perceived as part of the system of Japanese security which in turn provided the incentive for a Peace Keeping Operation (PKO) bill in parliament, which obtained its meaning only because it refers to the context of the system's past and future. At the end of the day it had brought the system to a new stage, from which further operations were to be carried on. In the preceding discussion I repeatedly stressed the dynamic character of Luhmann's system concept. Self-reference by means of autopoiesis, 8 For Stefan Rossbach, this second pillar is the real centre point of the theory: "Yet "self-production" or "self-reproduction" is not the theme around which the theory of autopoiesis is formed. [. . .] Indeed, it seems much more appropriate to mark "self-reference" as the central concept of the theory. For it is self-reference which defines, or, more appropriately, which is the unity of the system." Rossbach, Stefan. Op. cit. Pp. 5-6. I do not agree, for reasons explained above: autopoiesis and self-reference are, in my view, conceived of as two sides of the same coin. 9 Just as the concept "autopoiesis", "self-reference" was not invented by Luhmann. The cyberneticians Heinz von Foerster, Ashby and Yovits, Zopf introduced the concept in their works on self-organisation. 10 Luhmann, Niklas. 1995. Social Systems. P. 33.

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autopoietic reproduction, has additional distinct implications for the way I conceive the problem of continuous reproduction of the system. In earlier ("static") systems theory, that problem was defined as lying in the conditions under which a system could safely secure repetitions of its actions, its repeatability. When the debate shifts from self-

organisation to autopoiesis, the problem changes as well. It does not lie in repeatability anymore, but in connectivity (Anschluflfahigkeit). Autopoietic systems must make sure that further operations connect with earlier achievements; hence, they must ensure that the possibility for continuation will not be broken off when executing an operation. In other words, the system must constantly enable further alternatives from which to select. Here the concept of the system's structure(s) enters the discussion. When reproducing itself there is only a limited number of possible alternatives; a preselection is called for, since not doing so would make the choice impossibly complex. It is structures that fulfil the function of constraining possibilities of connectivity. "Constraining" (the possibilities for selection) thus assumes the rather surprising meaning of "enabling" (the reproduction of the system). Without constraints on connectability ("est modus in rebus"), a system would very soon cease to exist. An important consequence of Luhmann's conceptualisation of structures is, in other words, the second rank importance that is attributed to it. Structures do not determine anymore (compare: "structurally determined"), but function as m e r e marks showing different ways that can be walked, varying options out of

which one can choose. Defence policy making in post-war Japan for instance largely functions within the limits of a structural constraint such as Article Nine of the Constitution. Many observers agree that for the Japanese public Article Nine (the "renunciation of war") is more or less identical with the meaning of democracy itself. As such, it is repeatedly invoked in the defence debate; consequently, a revision of the famous article is not likely in the foreseeable future.

System and environment

When blending the ideas of autopoiesis and self reference, the central paradigm of contemporary systems theory unfolds: the unity of the difference between system and environment, or System und Umwelt. A somewhat surprising idea: systems theory does, in other words, not deal with systems, but with the difference between a system and its

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environment. As a natural consequence, the following discussion does not treat systems as "entities" in the ontological sense of the word. I will have to rely on an instrumentarium of differences, of distinctions. The shift from systems theory dealing with entities to systems theory dealing with distinctions is based on the seminal work Laws of Form of the mathematician George Spencer Brown." Forms are no longer to be understood as "entities" (Gestalten), but as borderlines, marking a difference between one "object" (?) and "the rest". Forms are "delineated from" the rest, they show distinctions, Unterschiede.12 A form (= the side of the distinction that is indicated) thus always carries with it the other side. How could something, indeed, be an "identity", when it is not different from "something else"? Hence, there is no such thing as a Ding an Sich; something can only be identical to itself because of its making a difference. Or in more paradoxical terms: something can only be an identity as the other side of the other side. In this context, system boundaries take on a crucial importance. Similar to the children's joke that says that the function of the cowhide is to prevent the cow from falling apart, system boundaries have the crucial function of delineating the system from everything else. Without such boundaries, the system would simply decompose and dissolve in its environment. This has important consequences for our understanding of Japan's security policies. In view of the importance of boundaries I argue, those policies should not be understood as pacifist, or low-profile. The security system can only be as it is by processing the difference between low-profile and high profile; "non-military" and "military", as I will designate it in Part II. The aforementioned conceptualisation of a system's form is, however, still much more complex than one would imagine at first sight. The inherent complexity as such obliges us to explore the theme a little deeper. A form has, in my view, to be viewed as the result of an operation, namely the operation of drawing a distinction and indicating one side of the distinction {Unterscheiden undBezeichnen). The operation as a whole can be understood as well as observation—observing being defined surprisingly broad.13 When observing, indeed, one 11 Spencer Brown, George. 1979. Laws of Form. New York: Dutton. His calculus of indications was recognised by the cyberneticians Heinz von Foerster as being of monumental value for various disciplines. 12 Luhmann, Niklas. 1997. Die Gesellschaft der Gesellschaft. P. 60. 13 In Luhmann's words: "One should in now way be misled to think only about processes of consciousness, i.e. psychic systems. The concept is used here in a highly

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necessarily delineates an object from the rest—and thus executes the aforementioned operation. One can, thereby, not sufficiently stress the necessary unity of such operation. When observing (indicating) something, one has to delineate it (drawing a distinction) from the rest. But the opposite is equally true: when drawing a distinction, one has to indicate one side of the distinction as well: why would one otherwise draw a distinction at all!? This insight reveals that form and observation are necessarily one: without observation, no form. And

here my view of self-reference as an "observational aspect" returns; selfreferential, autopoietic systems are observing systems, as they distinguish between the relations with themselves and the relations with the environment.^ M y inter-

est lies exactly in the way systems observe. At that point, one enters through the gate of second order cybernetics. Once entered the gate, one merely observes the observations of other observers. It is the tool which lies at the core of Luhmann's systems theory; and it is our apparatus for submitting a discussion of Japan's security policy. My methodology and epistemology can indeed be deduced from concepts such as autopoiesis and self-reference. Convinced that every operation of a (social) system is the result of system-internal steering processes, I have to explore ("observe") its Leitdifferenz at the core of every information processing (operating)—a Leitdifferenz that is ultimately invisible to itself. Therefore, the conceptual apparatus reflects the differenceoriented view of reality. In order to observe the Leitdifferenz of systems, I will have to introduce a distinction as a form, a meta-form: "system-and-environment" . . . and in turn, such observations are accompanied by an inherent blind spot.

Meaning

The next theme to be addressed is meaning}3 Previously, I have hinted at the fact that we distinguish several types of systems. Clearly, this abstract way, and without reference to the material substrate, the infrastructure, or processes enabling the act of observing. Observing simply means (and we will use it as such): distinguishing and indicating." Ibid. P. 69. (trans, by the author) 14 This idea prompted Heinz von Foerster the idea to give one of his works the title Observing Systems; a title that has the obvious double meaning of observing systems and observing systems. Noted as well by Dirk Baecker in von Foerster, Heinz. 1996. Wissen und Gewissen: Versuch einer Briicke (edited by Siegfried Schmidt). Frankfurt am Main: Suhrkamp Verlag. P. 18. 10 Obviously, Niklas Luhmann was not the first to attempt a discussion of mean-

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should not be taken as implying an ontological classification of types of autopoietic reproduction; it is a mere scheme of observation, to distinguish among living systems, psychic systems, and social systems.16 Psychic and social systems, then, have evolved together, and this common evolution has led to a common achievement: "meaning". In all their operations, I argue, they are equipped with and use meaning. With Luhmann, I will not attempt a definition of meaning, "because the question [for a definition] already presupposes that the questioner knows what it is about."17 Similarly, denying meaning can only be done in a meaningful way. What I will do is describe it in a phenomenological way. Meaning then appears as redundancy, as a surplus of reference to other possibilities. Something stands in the fore

(= is actualised), and seems to be surrounded by references to "everything else" (the virtual): through every actuality, the whole world is accessible. What meaning does, in other words, is supplying every actual state with a wealth of references. In a slightly different way, one could as well think of the mechanism of Uberschufiproduktion und Reduktion (producing a "too much" which is self-selectively reduced): the Uberschufi "serves the function of a guarantee. One can afford mistakes, because all possibilities are not yet exhausted. One can return to the starting point and choose another path."18 From here it follows that security policies can be changed; strategic options can be redefined. But it would be a far from satisfying discussion of meaning if we would simply stop here. There is one aspect of meaning that is so fundamental, that we could impossibly forsake entering it; that aspect is the inherent, basal restlessness of meaning: something is said, and one expects a discussion enfolds . . . Hence, psychic and social systems should be understood as being marked by such basal unrest.

ing. We think, among others, of: Deleuze, Gilles. 1969. La Logique du Sens. Paris: Ed. du Minuit. Quine, Willard van Orkham. 1993 (revised edition). The Pursuit of Truth. Cambridge & London: Harvard University Press. Pp. 37-59. Luhmann is, in his discussion of meaning, primordially indebted to Edmund Husserl. See for instance: Husserl, Edmund. 1948. Erfahrung und Urteil: Untersuchungen zur Geneatogie der Logik.

Hamburg: Claassen und Goverts. 1() See, for instance: Luhmann, Niklas. 1995. Social Systems. Pp. Iff. Our scheme of observation is a mere tool for conceptual abstraction. Nothing impedes us, for instance, to compare psychic and social systems, and assert that they are similar in processing complexity and self-reference as meaning. 17 Ibid. P. 60. 18 Ibid. P. 60.

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The explanation for this, Luhmann argues, can be found in the fact that meaning uses differences for connective information processing. What differs when "actualising" a meaning, is not only the "actuality". With every processing, the meaning-constitutive difference between "actuality" and "potentiality" is re-installed, renewed. Consequently, every

actualisation of meaning is accompanied with a new horizon of possibilities: "The instability of meaning resides in the untenability of its core of actuality; the ability to restabilize is provided by the fact that everything actual has meaning only within a horizon of possibilities indicated along with. And to have meaning means that one of the possibilities that could be connected up can and must be selected as the next actuality." . . . "Meaning is the unity of actualisation and virtualisation, of re-actualisation and re-virtualisation, as a self-propelling process (which can be conditioned by systems)."19 Comprehensive security can for instance suddenly be seen in a different light; an originally pacifist policy turns out to embody a formidable economic advantage; and a low-profile policy can be politically exploited . . . Again, Japanese security policy proves to be a good example, as we can observe a considerable shift in bias. Originally—among others because of the disaster of militarism—the policy bore a heavy pacifist, anti-militarist hallmark: The protest against the U.S.-Japan security treaties (1951/1960), for instance, or the non-nuclear principles (hikaku sangensoku) are exemplary. But in the course of time, economic arguments (e.g. the debate concerning indigenisation, kokusankd) tended to grow in importance; ultimately, this led to the FS-X controversy of the late eighties.

Psychic and social systems

In the above discussion, I have described meaning as the mode of self-referential reproduction of psychic and social systems. I furthermore designated meaning as being a common achievement of those systems. But although the words "common achievement" thereby obviously indicate that both psychic and social systems process meaning must not be taken to imply that we do not clearly distinguish between psychic and social systems. Not at all: I will even posit the much overlooked, possibly surprising claim that social systems exist sepa19

Ibid. P. 65.

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rately (getrennt) from psychic systems. In other words, it is communication that procures/produces communication, and not consciousness. Consequently, in the following pages psychic systems (consciousnesses) will be treated as part of the environment of social systems.

Obviously, this cannot be taken to imply a simple separation of psychic and social systems. Social systems simply presuppose a plurality of psychic systems: without consciousnesses, no communication. At this stage of the discussion, I must import one of the most difficult notions of the theory. I argue that, although all systems are autopoietic, self-referential (i.e. closed in all their operations), some of them are still structurally dependent on others. I will designate this notion as "structural coupling"—as a corollary to "autopoietic closure".20 One speaks in this context as well of Emergenz'- systems (e.g. psychic systems) can make their complexity available for a higher level of systems formation {in casu social systems). One should be careful not to suppose causality between the two kinds of systems. Not: first psychic systems, and then social systems (as this would imply a difference in time). [And similar: psychic systems do not function as "input" for social systems.] When structurally coupled, psychic and social systems exist simultaneously (gleichzeitig), and with each and every instant, the coupling must be renewed. By this, I mean "daB die rekursiven Netzwerke, mit deren Hilfe der Operationen, aus denen diese Systeme bestehen, reproduziert und identifiziert werden, verschieden sind und nicht iiberlappen.".21 In other words, psychic and social systems operate simultaneously, and eventually share Ereignisse ("information" is information both to the psychic and the social system!), but at no time the psychic systems that are the foundation of the social system melt together—of which their location "in the skull" is an indication. Psychic systems remain intransparent to each other. Communicative understanding is therefore different from psychic understanding: 20

In this context Luhmann speaks as well of interpenetration, a term he borrowed from Talcott Parsons. I prefer the term "structural coupling" here, however. In that way it is possible to indicate a distinction between operations and structures; and for that distinction Luhmann reserved a separate chapter in Social Systems. Important: Luhmann, Niklas. 1995. Social Systems. Pp. 210-254: "Interpenetration", and Pp. 278-356: "Structure and Time". I furthermore feel it is necessary not to understress the importance of structural coupling. As is so often (inevitably) the case when drawing a distinction (in this case the distinction autopoietic closure/structural coupling), the tendency to ignore one side may be strong. Obviously and understandably, "autopoietic closure" has received far more attention than "structural coupling". 21 Luhmann, Niklas. 1990. Die Wissenschaft der Gesellschaft. P. 37.

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"[m]an versteht nur, weil man nicht durchschauen kann."22 Consequently, I must not look for a "mind-set" ("strategic culture!") of policy-makers; observing communications suffices.23 Luhmann justifies and clarifies this rather surprising viewpoint by a new conceptualisation according to which communication is viewed as the (necessary) unity of three selections, namely information, utterance, and understanding. Information (information), as the first pillar of my conceptualisation, must be selected out of a possible repertoire. I have already mentioned this concept in our discussion of meaning; here, some additive remarks will do. Returning to my discussion of meaning, then, information obviously is selected out of the referential horizon that is co-represented with every meaning. The new selection is in turn accompanied by its own referential horizon out of which is to be selected and so on. Utterance (Mitteilung, distinct from information!) can be defined as the indication of information. Obviously, it does not suffice that information is selected; it has to be expressed, to be uttered as well. And last—but not least—we should turn our attention to the third ingredient: the understanding (Verstehen, including misunderstanding). Ultimately, it is this third ingredient that makes the communication to what it is: "Communication is made possible, so to speak, from behind, contrary to the temporal course of the process."24 Ego understands (interprets) the information uttered by Alter, and thereby contributes crucially to the communicative process. In fact, it is the understanding part that makes the information into what it is, what it comes to mean in the process. It is worthwhile mentioning the notion of "radically temporalised systems" here. Such systems, I argue, consist of evanescent events; every event has only 22

Ibid. P. 26. Peter Katzenstein as well stresses the necessity to specify culture in a way that it is amenable to empirical analysis; "cultural norms", which lie at the core of his discussion of Japanese security policy, are defined as transcending the mere mental sphere of a "mindset", "ideas" etc. "In contrast to ideas, norms make not only cognitive but also behavioural claims on individuals", Katzenstein argues—thereby turning norms into a "social thing". See furthermore: "Norms have direct effects by defining collectively shared standards of appropriate behaviour that validate social identities. [. . .] They are prefabricated action channels that establish links between the values individuals hold and the problems they seek to solve." Katzenstein, Peter J. 1996. Cultural Norms and National Security: Police and Military in Post-war Japan. Ithaca and London: Cornell University Press. P. 19. On the analytical problems of the concept of a "strategic culture" as a mind-set, see: Rosen, Stephen Peter. 1995. "Military Effectiveness: Why Society Matters." In International Security, Vol. 19, No. 4, Spring. Pp. 13ff. 24 Luhmann, Niklas. 1995. Social Systems. P. 143. 23

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meaning insofar it connects up to and enables further connectivity (the so-called Anschlufifdhigkeit). Social systems clearly fulfil this condition of "basal restlessness". And similarly the basal self-reference of communication can be understood: by referring to what it is not (i.e. earlier and further communication), a communication unit "constitutes itself". Consequently, a security policy can in no way be characterised by continuity (as "strategic culture" suggests); it is, on the contrary, extremely lively, with meaningful communications connecting up to each other, constantly referring to different meaningful possibilities.

Binary codes & programmes

I can now close the above basic remarks, and move into a realm that is much closer to my discussion of "comprehensive security", constituting the topic of my paper. Indeed, the above remarks are valid for all social systems. Still, highly complex systems as science and religion are different in nature from e.g. an interaction. For complex social systems, I argue, a "theme" is not sufficient when trying to gain in recursivity. Complex social systems then develop a "binary code" for a focused self-observation.20 "True/false" in science and "transcendent/immanent" in religion are clear examples hereof; in Part II, I will introduce non-military/military as another one. Such binary codes structure the information for a system in a very specific manner. For systems possessing a binary code, all information comes to be seen in the light of it; in science, for instance, all information is either classified as true or false. As such, binary codes are—hinting at the terminology of Gregory Bateson—"the difference that make all the difference".26 Obviously, the function of a binary code is located exactly in its totalitarian effect. When all information comes to be seen in the light of a specific binary code, a qualitatively different scheme of observation is excluded: one procures an effect of exclusion {Ausschliefiungsejfekt). 25 "Coding is the most technically useful and successful form for the differentiation of function systems." Luhmann, Niklas. 1986. Okologische Kommunikation. Opladen. P. 85. (trans, by the author) 2(1 One can speak in this context as well of a canalisation (Engfiihrung) of the information. See: Willke, H. 1987. "Strategieen der Intervention in autonome Systeme." In Dirk Baecker et al. (eds.), Theorie als Passion. Frankfurt am Main: Suhrkamp Verlag. P. 339.

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More concretely, we can depict the two-sided form that is a binary code by using the notation of George Spencer Brown's Formenkalkiil.21 The binary code true/false, for instance, can then be adequately expressed as "true-false". The "true"-value, at the concave side of the form, thereby represents the connective side {anschluJJfdhige Seite). This is not to say that only at this side communications connect up; scientific communication can as well claim the falsehood of a theory . . . However, the connective side is the side at which in connection to a "true" information a lot of other information appears "within sight"; in other words, the probability of further true information is enhanced. The reflection-value (Reflexionswert) is the outer side of the form. The sole function hereof is the indication of a "mistake", and consequently its sublimation. The two-sided form of the binary code is indeed asymmetrized: obviously, the connective side is preferred over the reflection value. This in turn has its specific advantages: the crossing from the one side to the other side is considerably facilitated. When residing at the connective "positive" side, a crossing to the "negative" reflection value is facilitated, because one knows one does not have to reside there forever. There is, on the other hand, a thorny consequence of the totalitarian nature of binary codes. For them, simply every information is classified according to the binary scheme: for instance, everything can be treated as "true" or "false", but they cannot for themselves decide what information is e.g. to be treated as "true" respectively "false". The code must, in other words, be programmed—by the system. Simply corollary (not subordinate) to the code are thus "programmes", dealing exactly with the question what to do with what information. While the binary code treats every information as fundamentally contingent, programmes develop rules on the endowment of code values (e.g. "true" or "false"). Note furthermore that, without programmes, a system possessing a binary code would not be able to deal with the complexity the binary code itself has built up. Indeed, in order to enable system differentiation, the binary code duplicates the reality that the system deals with; on the other hand, it is the task of the programme to reduce the complexity arousing out of exactly this duplication. 27 See Spencer-Brown, George. 1997. Gesetze der Form (originally published in English as Laws of Form). Liibeck: Bohmeier Verlag. Compare moreover Gotthard Giinther's "many-valued logic" (mehrwertigen Logik): Gotthard, Giinther. 1976^1980.

Beitrdge zur Grundlegung einer operationsfdhigen Dialektik (3 volumes). Hamburg: Meiner.

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One should be aware of the fact that codes and programmes are corollary, i.e. that they are each other's complement. While the code procures the system's closure, programmes open it up by introducing external factors into the system. Returning to my example of the social system "science", scientific programmes (e.g. systems theory) indicate which "data" are to be taken into account when discussing Japanese communication.28 Furthermore, via the programmes the excluded third can be reintroduced within the system. Science can for instance relate its pursuit of truth to economic rentability (literature on the 2nd World War!). Note however that such reintroduction can only occur under the conditions of the system, i.e. compatible with the system-internal structures of information processing (in casu true/false).29 A last remark concerns the origination of the concept in m a c h i n e theory. Programmes can change; systems can re programme them-

selves. One can, in other words, also trace semantic evolution in this programme change. The binary code cannot be changed: a change of the system code inevitably implies a different system. In this way, we are capable of combining two aspects that seem fundamentally incompatible. On the one hand, the binary code expresses the continuity of a system's "essence": non-military/military did not change throughout the post-war period, and if it had, that would have implied system's failure. But continuity of the binary code does not deny the potential of change, shifts, or evolution (variation/selection). This is, however, contained in the system's programme ming (Defence Policy Outline, Defence Build-up Plans, Three Non-nuclear Principles etc.).

Self-descriptions

A last remark concern self-descriptions. Some systems, when growing complex enough, can indeed develop the ability to discover themselves in their meaning world, be reflexive: they develop self-descriptions, and eventually supply themselves with a body of literature on their

2R

See for instance: Fuchs, Peter. 1994. Die Umschrift—Zjvei kommunikationstheoretis-

che Studien. Frankfurt am Main: Suhrkamp Verlag. Ch. 2: 'Japanische Kommunikation". Even a quick read will reveal the sharp differences in focus of attention between a systems theoretical and any other approach. 29 In a similar light do we regard the presence of arguments concerning technological progress and economic rentability in the discussion on comprehensive security.

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"identity". Nihonjinron is one example of a societal self-description highlighting "alien-ness" (of the Japanese in contrast with the outside world).30 Asian Values is another. However, function systems as well can develop such self-descriptions: The media can describe themselves as the "consciousness of society", for instance. And, as I will argue in the second part of this paper, Japan's national security policy could among others develop the self-descriptions of jishu-bdei (self defence) and sogo anzenhosho (comprehensive security). It is helpful to remember here what has been said about observation. I argued for instance that observation is an indispensable characteristic of autopoietic, self-referential systems. In order to accomplish their self-reference, systems have to execute a continuous self-observation, in order to decide which elements belong to the system, and which belong to systems in the environment of the system. Binary codes enable, as a two sided form, an even more intense self-observation of systems" operations, enable a highly efficient information structuring and thereby enhance survival capabilities. Ultimately, highly complex systems then can develop self-descriptions, and find a direction therein. Self-descriptions embody an observation-specific problem, however. Let us recall that an observation is the operation of drawing a distinction and indicating one side of the distinction. In order to gain information, I concluded, the operation uses a blind spot: one can only indicate one side of the distinction, and thereby loses the distinction. Observation is, in other words, a paradoxical operation: one performs an operation which cannot be observed in the act of the observation: "An observation uses its distinction as a blind spot. It can see no more than what can be seen by the distinction. It cannot see what it cannot see."31 What then is the fate of a selfobservation? Exactly: failure! Every system's attempt to observe (including: to describe) the operation of the observation simultaneously with the observation is doomed to be frustrated. A very special instance of self-descriptions are the self-descriptions developed by functionally differentiated systems, i.e. systems possess30 Interesting in this context: Fuchs, Peter. 1995. Die Umschrift—£wei kommunikationstheoretische Studien. Frankfurt am Main: Suhrkamp Verlag. Ch. 2: 'Japanische Kommunikation." Shimaguni konjo and Nippon seishin are particularly renown examples of nihonjinron-related societal self-descriptions. 31 Luhmann, Niklas. 1991. Die Wissenschaft der Geselhchaft. P. 85. Trans, by the author.

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ing a system-specific binary code. In an attempt to found their identity—their identity being the binary code—, this operation implies the employment of the binary code in order to justify the code; that being a consequence of the totalitarian nature of the code. Concretely, science is confronted by the question whether the distinction "true/false" is either true or false.32 Reflections of the law system (i.e. the socalled philosophy of law) produce a more precarious and more thorny tautology: "Is the distinction just/unjust either just or unjust?" And in the case of the Japanese post-war security policy, the system will have to determine whether its Leitdifferenz is in itself non-military, rather than military (paving the way for remilitarization). The paradox is painfully clear: a persistent reluctance to increased burdensharing for instance, might very well jeopardise the U.S. security commitment vis-a-vis Japan, possibly resulting in autonomous defence, and a far heavier defence build-up. However, Luhmann argues, the tautology turns out to be a productive one. It ignites a series of strategies in order to "de-paradoxicalise" the system's existence. The history of reflection on law can for instance be understood as "the history of interventions concerning the de-tautologisation and deparadoxicalisation of law."33

PART II: "NON-MILITARY SECURITY" AS A SOCIAL SYSTEM

Formation of the System

Fully aware of what has been set in my above explanation, we can now move on to the discussion of the post-war Japanese defence policy: a policy that I obviously define as a social system. Regarding the formation of this "system", one might think of highly various instances. Richard J. Samuels, for example, views the 32

On the nature of the paradox that is produced in this way, see: Esposito, Elena. 1981. "Paradoxien als Unterscheidungen von Unterscheidungen." In Gumbrecht, Hans Ulrich, Pfeiffer, Karl Ludwig, and Chytraeus-Auerbach, Irene, eds., Paradoxien, Dissonanzen, Zjisammenbriiche. Frankfurt am Main: Suhrkamp Verlag. Pp. 35-57. 33 Luhmann has thoroughly elaborated this point. See, among others: Luhmann, Niklas. 1988. "The Third Question: The Creative Use of Paradoxes in Law and Legal History." In Journal of Law and Society, Vol. 15, 1988. Pp. 153-165. And especially: Luhmann, Niklas. 1993. Das Recht der Gesellschaft. Frankfurt am Main: Suhrkamp Verlag.

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roots of contemporary Japan's security policy ("tech-nationalism") as dating back to the first half of the 19th century—the so-called bakumatsu period.34 A systems theoretical framework, however, cannot be satisfied by such conceptualisation—typical of a culture approach. Equipped with the notion of radically temporalized systems possessing a binary code, I prefer the immediate period after World War II as the sole instance that can be treated as a candidate for the system's formation. In systems theoretical terms: the immediate period after the Cold War can be understood as a bifurcation point at which several possible directions are indicated. One may or may not, then, agree with the thesis that the ideological constellation in post-war Japan was highly volatile, while every political group had radically different ideas on Japan's future.31 Important for our discussion is the fact that the whole political spectrum shared a negative view of the military.36 The right idealists on the one hand felt that the military had plunged the country in an unwinnable war. Leftist idealists were even more critical on this score: they viewed the military as a threat to democracy, as "feudalistic and exploitative".37 Highly instructive in this context are the 1951 Dulles talks concerning Japan's re-armament. As stated, the ideological constellation at the time shared a fundamental aversion against the military: "[T]he majority of Japanese [. . .] felt victimised by their own military for having dragged them into a war that rationally could only end in tragedy, and for conducting that war without regard for the suffering that was inflicted on the Japanese people."38 I will therefore pinpoint the Dulles-Yoshida negotiations of January and February 1951 as the concrete consolidation of the post-war Japanese security "system"; they are, in other words regarded as the first instant of the recursivity the system needs to establish. Umetsu Hiroyuki's account of these talks, for instance, repeatedly stresses the recalcitrance of the Japanese 34

Samuels, Richard J. 1994. "Rich Nation, Strong Army": National Security and the Technological Transformation of Japan. Ithaca and London: Cornell University Press. Samuels, Richard J. 1991. "Reinventing Security: Japan since Meiji." In Daedalus 120, No. 4, Fall. Pp. 47-68. 35 See, among others: Berger, Thomas U. 1993. "From Sword to Chrysanthemum: Japan's Culture of Anti-militarism." In International Security, Vol. 17, No. 4, Spring. P. 137. Mochizuki, Mike. 1983/1984. "Japan's Search for Strategy." In International Security, Vol. 8, No. 3, Winter. Pp. 152-189. 36 Dower, John. 1979. EmpireandAftermath: Yoshida Shigeru and theJapanese Experience. Massachusetts: Harvard University Press. 37 Berger, Thomas U. 1993. Op. cit. P. 138. 38 Ibid. P. 136.

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government (in casu prime minister Yoshida) to commit itself to remilitarization.39 The aim of the U.S. mission at the time was twofold. First, the U.S. wanted the Japanese government to accept the stationing of U.S. troops in post-treaty Japan. The second aim was exactly to have the Japanese to enter a military alliance with the United States, and consequently re-establish Japanese military forces. Yoshida was however aware (overconfident?) of the importance of Japan in the Cold War U.S. strategy, and used this leverage in the difficult negotiations on re-armament. Arguments formulated against the revitalisation of the Japanese military were manifold: on the one hand, it was argued that re-armament would result in a resurgent militarism. At an other instant, militarisation was explained as being a heavy burden on Japan's slow economic recovery.40 Obviously, one can question the "truth" of these arguments. However, for our discussion, that question is out of the question. What matters empirically is that arguments against militarisation were selected as information to be uttered.

It is furthermore not clear to us in which way it would be possible simply to presuppose a separation, a disconnection of strategic discourse and operational strategy.41 A first impetus for the formation of what I would like to call the Japanese post-war "non-military security system" is the often-mentioned and probably world famous "pacifist Constitution", more specifically Article 9.42 As James R. Van de Velde notes, "the meaning of Article Nine is largely, if not entirely, a function of the Japanese 39

Umetsu Hiroyuki. 1995. "Dulles's Second Visit to Japan: The Tokyo Talks of 1951." In Journal of Northeast Asian Studies, Vol. 14, No. 4, Winter. See for example, P. 59: "[The United States] failed in having Japan accept a U.S. Plan for the revitalisation of Japanese power because of the Japanese government's reservation about rearmament." 40 Ibid. P. 65. 41 Johnston, Alastair Iain. 1995. "Thinking about Strategic Culture." In International Security, Vol. 19, No. 4. P. 40: "It is not clear [. . .] whether we should expect the strategic discourse to influence behaviour. Instrumentality implies that decision-making elites can rise above [. . .] constraints which they manipulate." See furthermore: Holland, Edwin P. 1985. "Leadership and Power." In Gardner Lindsay and Elliott Aronson (eds.), Handbook of Social Psychology, vol. 2. New York: Addison Wesley. Pp. 485-537. 42 Art. 9 reads: (1) Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes. (2) In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognised.

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political mood and is not at all a legal issue. The origins of the Article and the evolution of its interpretation reveal that Japanese defence policy remains a function of Diet resolutions and leadership choices and is not constrained by the supposed limits the article poses on national policy."43 This proves to be an important point; the question on constitutionality/unconstitutionality evidently belongs to the legal system, and can thus be not mixed up with a treatment of a defence policy.44 I will therefore limit myself here to an account of the political importance of the famous Article. I may then first point at the undeniably anti-militarist, pacifist climate of the immediate after war period in which the constitution took shape. Not yet under the strain of the coming Cold War, neither the Japanese side nor the Allied Forces favoured an arms build-up, and neither side foresaw it for the future. This is, in turn, an explication of the—however ambiguous43—terminology of Article 9: "the Japanese forever renounce war as a sovereign right of the nation", "land, sea, and air forces, as well as other war potential, will never be maintained" (italics by the author). The origin of the article is rather clouded. MacArthur states in his memoirs that it was Shidehara Kijuro, Prime Minister at the time, who suggested to him to insert it in the Constitution. The later Prime Minister Yoshida on the other hand, felt it was MacArthur who suggested it to Shidehara, who was enthusiastic about it. Takayanagi Kenzo later confirmed MacArthur's view of the matter; for him, Article 9 should be viewed as having its origin "in Tokyo, not 43

Van de Velde, James R. 1987. "Article Nine of the Post-war Japanese Constitution: Codified Ambiguity." In Journal of Northeast Asian Studies, Vol. 6, No. 1, Spring. P. 26. 44 This will, however, not withhold us from a future discussion of legal issues on Japanese defence. Obviously, such discussion will have to be treated in a radically different manner. In such case, the (conflictual) relation between two systems will lie at the core. Concretely, this implies a discussion of the way two systems perceive each other, and how an achievement in one system is translated in the other system. A legal system can (and it did!), for instance, decide that the maintenance of a defence force is unconstitutional. How this finds its way into a defence policy is a different matter! 45 Van de Velde rightly points at the baffling paradox that is included in "the right of belligerency" that is not recognised. Does such right exist at all? See furthermore Maehara Mitsuo. 1951. "Renunciation of Belligerency." In Kokusai Ho Gaiko ^asshi, Vol. 51, No. 2, January. Pp. 4ff. In the second place, Van de Velde argues, "Article Nine is in fact legally bizarre. "Belligerency" is a relational term involving two nations. An "orthodox" constitution addresses issues which are coterminous with the authority of the state. Relational issues are usually policy issues. The Article transforms what is a policy issue (when and how to defend the state) into a constitutional question." Van de Velde, P. 31.

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in Washington."46 In the course of the search for a proper wording, several drafts were submitted.47 Matsumoto Joji, leader of the Committee established to revise the Constitution, and some members wrote two drafts, both excluding any mention of military forces. Later MacArthur himself submitted a draft, which came to be amended "slightly but significantly":48 whereas MacArthur's draft stated that Japan would renounce war "even for preserving its own security", this was absent in a later draft, drawn up by Whitney. Ultimately, a final version of Article Nine was promulgated on November 3, 1946, and was characterised by its—currently still prevailing—"codified ambiguity".49 As stated above, Article Nine is "largely, if not entirely, a function of the Japanese political mood" (cf. supra). In the light of our systems theoretical framework, then, the formulation of Article Nine (or, if you want, the "pacifist Constitution") comes to be seen as a first instant in which a non-military approach is hinted at. As such, it functions as a signboard, showing several possible ways to walk. The afore-

mentioned Dulles-Yoshida talks take on the meaning of the consolidation of the system; in other words, the talks and the resulting security treaty (1951) mark the recursivity of the communication, the for-

mation of the system. In this context, it is worthwhile remembering what I have said about communication in the above "Basic Assumptions" (cf. supra). Communication was then defined as a unity of three selections, namely information, utterance and understanding. Importantly, I

stressed the radically temporalized nature of the communicative process. Radically temporalized systems, I argued, are characterised by "basal self-reference". Elements of radically temporalized systems only refer to themselves indirectly, i.e. they have a meaning only in connecting up to other elements and enabling further connectivity. Communication in concreto was said to be made possible "from behind". "A" communication is what it is because of the way it is "understood". In the case of Japan's defence policy: Article Nine came to mean what it is because of the recursivity that was developed in the 1951 40

Takayanagi Kenzo. 1968. "Some Reminiscences of Japan's Commission on the Constitution." In Dan Fenno Henderson (eds.), The Constitution ofJapan: Its First Twenty Years 1947-1967. Seattle: University of Washington Press. 47 For a history of Article Nine and the several drafts concerned, see: Van de Velde, James R. 1987. Op. at. Pp. 27-29. 48

49

Ibid. P. 29.

Van de Velde's term.

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security treaty talks that followed it. It gained its meaning out of the way

the interpretation was "processed".

How it works: binary codes and programmes

Consequently, the formation of the Japanese post-war security system will be described as follows. The system was formed by centring around a specific theme—"non-military security". As a complex social system, it furthermore developed the binary code, the Leitdifferenz non-military/military. The binary code—as we know from the above discussion—organises a structured observation of the system's operations and self-descriptions in that it is a two-sided form {^wei-SeitenForm) and thus creates "excluded thirds". The crossing from one side to the other is enabled, made easier because of it, and thus excludes a qualitatively different scheme of observation. With the terminology of George Spencer Brown's Formenkalkiil, I will then express the system's form as: Non-military—Military. Obviously, "non-military" functions as the inside (Innenseite) of the form; at once, it is the side to which further communications connect up, die anschlufijdhige Seite. More down-toearth, this simply means that at the "non-military" side, further information and further communication is considered probable. In still other words, "non-military" is the preferred side; the two-sided form is asymmetrized. At this side, it is "business as usual". The outer side (the "military" side), on the other hand, is the Reflexionswert. However complementary to the inner side, its only function is the highlighting of a mistake, and thus its sublimation. When residing at the "military side", one is politely but urgently asked to return to the "non-military side".00 Non-military-Military (abbreviated as NM-M) as a binary code serves as a wringer communication is put through. But as we know, binary codes cannot decide what is to be treated as non-military or military: simply everything can be the object of communication using NM-M as Leitdifferenz. A necessary corollary of the binary code are 50 Long range bombers are an exquisite example hereof. When processed by the binary code, they are easily allotted the tag "military". In turn, this spurs a crossing to the non-military side, and a continuation of non-military communication.

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"programmes". We add a further distinction, and distinguish between hetero-referential and auto-referential programmes. Scientific theories, for instance, are hetero-referential, in that they refer to the environment. Scientific methods on the other hand are auto-referential: they oblige the system to execute a kind of 2nd order self-observation, and refer directly to the difference between "true" and "false". I would like to introduce a similar distinction when discussing the programmes of Japan's nonmilitary security system. On the one hand, then, we have the "theories" that embody the Fremdreferenz, the openness of the system: the Defence Build-up Plans, the Mid-Term Defence Build-up Plans are obvious illustrations hereof. They comprise among others specifications of force structure, force capability, arms procurement, budgetary questions etc. The Basic Policy of National Defence (1957), the National Defence programme Outline (1976 and 1996), Defence Guidelines (1978 and 1997) on the other hand, are of a different kind. Similar to procedures, they safeguard the closure of the system, as they concern the conditions on guaranteeing and implementing a difference between the two sides of the binary code; they can do so inasmuch they beacon the policy trajectory. The subtle distinction is expressed properly by the following quote of Kubo Takuya: "What has to be thoroughly researched into, is not 'budget' and 'equipment'. The problem is a defence concept, a defence philosophy. In case those things are not

properly arranged, there will be no popular support for the way the money and taxes are spent. [. . .] Ultimately, I think it is a problem of a framework."51 (italics by the author) I feel the above conceptualisation solves an enigmatic instant in the history of Japan's post-war defence policy: Nakasone's Fourth Defence Build-up Plan (Tqji boeiryoku seibi keikaku)?2 and the accompanying system's self-description of "autonomous defence" (jishu-bdei).33 51

1972. "Zadankai—shinkyokumen ni tatsu Nihon no anzenhosho." In Kokubo, Vol. 21, No. 1, January. Pp. 32~33. Quoted as well in Hirose Katsuya. 1989. Op. cit. P. 154. 12 This "Fourth Defence Build-up Plan" also came to be known as "New Defence Build-up Plan" [Shinboeiryoku seibikeikaku), as if it was aware of its nature. Provided this communication would have gained a clear following-up in later communication, it would have represented a "break with tradition" indeed! The system might have observed itself as a paradox, and eventually might have dissolved. :>! An extensive treatment of the Fourth Defence Build-up Plan, and the political turmoil it caused, can be found in: Hirose Katsuya. 1989. Kanryo to Gunjin: Bunmin tosei no Genkai. Tokyo: Iwanami Shoten. Especially pp. 137-154: "Nakasone Yojibo to Naikyoku". A brief English introduction to the National Defence programme

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The Outline of the proposal of the Fourth Defence Build-up Plan (abbreviated as: Nakasone Outline) argued that former plans had aimed for an "exclusively defensive defence" (senshu boei) posture, thereby basing themselves largely on long-term perspectives. Nakasone sought to replace this allegedly obsolete thinking with the idea of "autonomous defence". Jishu boei should thereby not be taken as identical to the pre-war ideas of autonomy; U.S.—Japan security agreements would still be valid, but were conceived of more or less as the NATO structure. However, the Defence Build-up Plan obviously mistakenly looked for connectivity at the wrong side of the binary code.04 Hence, the system had to re-arrange itself, put itself "to order" as quickly as possible (or decompose). Almost immediately thereafter, the famous KB-note {Kibanteki Boeiryoku) circulated; Kubo Takuya projected the concept of "basic defence capability" (kibanteki boeiryoku), which later evolved into "peacetime defence capability" (heiwaji no boeiryoku). Under Defence Agency Chief Sakata the important National Defence programme Outline (Boei keikaku no Taiko) was formulated; . . . and the rather aggressive self-description of jishu-boei-ron was significantly transformed into the low-profile dakkyoi-ron (threat removal).53 The whole incident proves furthermore a unnegatable case when considering the overarching and subtle importance of communication. As Hirose Katsuya so fortunately explains, one cannot underestimate the similarities between Nakasone's jishu-boei and Kubo's defence thinking, centring around the concept of kibanteki boeiryoku.56 Indeed, both lineages had the primary aim of justifying a considerable defence build-up:07 "Concerning [. . .] the concrete defence build-up aims, Kubo Outline can be found in: Holland, Harrison M. 1988. Managing Defence: Japan's Dilemma. Lanham and London: University Press of America. Pp. 21-23. 54 Consider for instance newspaper reviews of the Nakasone Outline: "In no way admissible." Asahi Shimbun, October 22, 1970. Interestingly, a lot of critique expressed the idea that "autonomous defence" tended to replace the "Basic Policy of National Defence" {Kokubo no Kihon hoshin) of 1957. 5) Unfortunately, an exhaustive treatment of this highly illustrative instance of Japan's post-war defence policy falls without the scope of this paper. As the incident can rightfully be seen as a moment in which the system is confronted with its paradoxical identity, the history of coping with the paradox is short but very dense. Only after a successful engagement could "business as usual" go on. We will later attempt to explore the full contents of the Nakasone gaiyo for the system. Such discussion can, however, best be conducted under the heading of "Binary code and programmes of the post-war Japan's defence policy". 56 Hirose Katsuya. 1989. Op. cit. Pp. 144ff. 57 Hirose Katsuya refers in this context to: Tajima Ryokai. 1971. "Dai yoji boeiryoku seibi keikaku no haikei to sono mondaiten." In Kokubo, Vol. 20, No. 9,

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tried hard to flawlessly explain the contents of the Nakasone plan with the concept of a basic defence capability."08 Obviously, this cannot be taken to imply a sublimation of the difference between the Nakasone plan and Kubo's concept. As Hirose underscores, that difference is to be found on a symbolic, philosophical—systemic?— level. What Kubo realised, indeed, was a factual quietening of critique, gaining broad support concerning the defence policy. He did this, as he himself once explained, by the establishment of a policy framework, a defence "philosophy". Systems theory self-confidently adds that Kubo profoundly understood the code of the system. He fixed the connectivity, after which "usual" communication could go on.

Self-descriptions

Last but not least, I must address the highly interesting self-descriptions the system has supplied itself with—the self-descriptions of a policy in the country of self-descriptions, as it were. And it will be instructive to research into the way the paradox embodied in every self-description is dealt with, how it was (or: is) covered up. The first self-description to be tackled is one already encountered: Nakasone's jishu-boei, accompanying his Fourth Defence Build-up Plan. We remember what has been said about the binary code of the system: NMM, with NM being the connective side, and stress furthermore that this binary code is of a totalising nature in regard to the operations of the system. It is the difference that is at the core of all information processing in the system, including the self-descriptions the system produces. Hence, every self-description incorporates an unavoidable paradox: the self-description being a product of the system's code, it is an example of the system's attempt to found the code by means of the code. Together with every self-description, the system must thus produce a "de-tautologization" or "de-paradoxicalisation", to cover up the necessary arbitrariness of a self-description. One can then easily imagine the turmoil jishu-boei caused for Japan's defence policy; not only did the self-description struggle with the August. Pp. 35 51. According to Hirose, Tajima Ryokai is a penname which Kubo used to stress the similarities between the 4th Build-up programme proposal and the concept of "basic defence capability". 58 Hirose Katsuya. 1989. Op. cit. P. 150.

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paradox, it furthermore looked for connectivity at the reflection value of the code. One clearly feels the problematical nature of jishu-bdei in its justification: the White Book of 1970 referred to the earlier policy as a passive defence concept {shokyokuteki na boeikoso) and as "tarifri hongan", a Buddhist word expressing the mercy expected from the United States. The Nakasone proposal furthermore described the geopolitical situation as in extreme flux; still, large-scale conflicts were "almost unthinkable". Only limited conflicts were deemed foreseeable, and the "efficient defence capability" would have to be maintained exactly in order to discourage an invasion.59 As we know, the system quickly fixed connectivity of the code and replaced the former self-description with the dakkyoi-ron. And in turn, this self-description too had to cope with its arbitrariness. Kubo argued for instance that Japan differed considerably from foreign countries (!) in that it didn't had to cope with a direct threat; exactly because of the detente, Japan would have to establish a "smallest scale defence capability" (saisho gendo no boeiryoku): a "basic defence capability" or a "peacetime defence capability", as it came to be called afterwards.60 Interestingly, one sometimes invokes "national character" to justify the pacifist nature of the policy. Concerning the acquisition of nuclear weapons, for instance, Nakanishi argues that "if the Europeans excel in the game of strategic positive rationalism, the Japanese certainly are not poor players in the arena of political-strategic dialectics—what we call the software (as opposed to the hardware) approach."61 And one rare commentator uses a subtle nihonjinron tinge.62 Okazaki Hisahiko argues for instance that, because of the way the notion of conflict has been circumscribed in Japan, one may argue that Japan was "dragged" into the Second World War.63

59

Ibid. P. 140. Notice here the fact that the Nakasone as well as the Kubo self-description execute the de-paradoxicalisation by referring to the "same" international situation; still, the idea of detente served different purposes in the respective self-descriptions. 1)1 Nakanishi Terumasa. 1977. "U.S. Nuclear Policy and Japan." In Washington Quarterly, Vol. 10, No. 1, Winter. P. 88. ()2 Obviously, at this point the (originally innocent) self-description equips itself with some normative venom. fa3 Okazaki Hisahiko. 1983. Senryakuteki kangaekata to wa nanika. Tokyo: Chuko shinsho. Mentioned as well in Berger, Thomas U. Op. cit. P. 145. Obviously, the opposite arguments (i.e. arguments in favour of rearmament) exist as well: Ishihara Shintaro and Morita Akio. 1989. "No" to ieru Mhon. Tokyo: Kobunsha. Eto Jun. <)0

1987. Nichibei senso wa owatte inai. Tokyo: Nesco.

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One has to wait until the eighties, however, to come across a stable self-description of "comprehensive security", mentioned first in a Nomura research report in the early 1980's and still en vogue at the end of the 20th century. This self-description proved to possess a powerful potential for de-paradoxicalisation, not in the least because it "both countered and reinforced some of the arguments of the new military 'realists'."64—while it is still often used to refer merely to "economic security"!65 Without becoming an official government policy, "comprehensive security" significantly influenced the domestic debate on national security.66 It provided among others a rationale for the use of non-military language of Japan's security policy, an aspect that has unfortunately remained heavily underdeveloped in observations of the policy.6' Non-military language can indeed be found on every level of the policy. In the case of arms procurement, for instance, the Defence Agency prefers to talk of "special vehicles" instead of tanks; in order to avoid aggressive connotations on the political level, on the other hand, a defence strategy is called "policy" or "outline". Undeniably, "comprehensive security" "was also useful for those who wanted a rationale to keep defence spending under control, a useful shield, that is, against growing American pressure for increased military spending."68 The self-description, originally arisen out of a dilemma, a paradox, ultimately turned out to be exploitable . . ,69 And 64 Katzenstein, Peter J., and Okawara Nobuo. 1993. Japan's National Security: Policy, Norms and Structures. Ithaca and London: Cornell University Press. P. 105. 63 Sato Hideo. 1989. Taigai seisaku. Tokyo: Tokyo Daigaku Shuppankai. P. 167. 66 See among others: Chapman, J.W.M., Drifte, Reinhard and Gow, I.T.M. 1982. Japan's Quest for Comprehensive Security. New York: St. Martin's. Akaha Tsuneo. 1987. "The Political Economy of Japanese Security Policy." Paper prepared for delivery at the Conference on the Role of Small and Medium Powers in the International Alliance System, Acadia University, Wolfville, Nova Scotia, October 18~21. Idem. 1990. "Comprehensive Security as an Alternative to Military Security in the PostHegemonic World: The Japanese Model and Its Applicability in East Asia." Paper prepared for delivery at the 1990 International Studies Association Convention, Washington D.C., April 10-14. Idem. 1991. 'Japan's Comprehensive Security Policy: A New East Asian Environment." In Asian Survey, Vol. 31, No. 4, April. Pp. 324-340. Katzenstein, Peter. 1993. Op. cit. P. 105. b/ Glen Hook's work is a rare example of a treatment of the "politics of nam-

ing"; Hook, Glen. 1990. Language and Politics: The Security Discourse in Japan and the

United States. Tokyo: Kuroshio Shuppan. 68 Katzenstein, Peter J. 1993. Op. cit. P. 106. b9 I can't think of an example that is more appropriate than the FS-X negotiations. These negotiations (lasting from the end of the '70s until the late '80s and '90s) were a chaotic web of misunderstandings and became a topic of intense scholarly debate in the '90s. See: Green, Michael. 1995. Arming Japan: Defence Production,

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it has definitely opened up a whole new range of national security options. Treating technological progress at the core of national security, for example, enabled a fully fledged integration of civilian and defence economies, compatible with the so-called "dual-use paradigm".70 Consequently, as a well-tried tool for managing the system's paradoxical existence and as the horn of plenty security options, the self-description "comprehensive security" may remain an attractor for a considerable time to come. I have often wondered why the self-descriptions of Japan's security policy are so varied and, above all, so numerous. I assume now that—again—Nakasone's proposal for the Fourth Defence Build-up programme is responsible for this. The system became, as it were, aware of its paradoxical nature and started to experiment with self-observation and self-description. Versatility and abundance are the result. This is however not to proclaim the "end of history": Ozawa Ichiro and Ishihara Shintaro each showed in a radically different manner that the last word about Japan's security policy has not yet been said.

Conclusion

The above reflections obviously cannot pretend to be the scholarly icing on the cake concerning Japan's defence policy. I did furthermore not enter into a discussion of some characteristic aspects of the policy, such as the evolution of the interpretation of Article 9, for instance, or the organisation of defence production, with the drive for "indigenization" (kokusankd). Such discussions would do perfectly as illustrations of the relation between Japan's "security system" and systems in its environment, respectively the legal system and the economy. I did furthermore not present a treatment of the "evolution" of the policy, an aspect that can be considered central in systems theory. My conclusion should therefore be a sobering one. What I tried to submit here, are the mere foundations of an framework, Alliance Politics and the Post-war Search for Autonomy. Columbia University Press. Pp. 108-124. Samuels, Richard J. 1994. "RichNation, Strong Army": National Security and the Technological Transformation ofJapan. Ithaca and London: Cornell University Press. A very good and extensive treatment: Lorell, Mark. 1996. Troubled Partnership: A History of U.S.-Japan Collaboration on the FS-X Fighter. New Brunswick and London: Transaction Publishers. 70 For an extensive and highly interesting account, see: Samuels, Richard J. 1994. Op. cit.

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a "protologic"71 so to speak, for the study of the policy. Its merit lies exactly in the fact that it laid the foundations. Amidst the growing tendency in the Security Studies to include sociological theory72 and the "new sciences"73 into their framework, Luhmann's systems theory is one possibility to comprehensively discuss comprehensive security. "Observe the observer" is thereby the guiding dictum. Applied carefully, it will prove that the overly neglected "cybernetic view" is a truly powerful analytical tool. I feel furthermore that a systems theoretical framework is not merely "one possible approach towards discussing policy". With its specific toolkit of concepts and distinctions, the framework highlights some aspects of the policy that remain hidden from, for instance, a culturalist approach. Examples are the following, although they need to be further elaborated. First, systems theory does have something very specific to say about "protest", i.e. communication representing a break with the system specific code. And secondly, I argue, one may project some kind of "continuity" into the policy (a binary code), while avoiding the pitfall of determinism (therefore the notions of programmes and reprogramming were introduced). However self-confident concerning the explanatory potential of 2nd order cybernetics and Luhmann's systems theory however, I will have to conclude the discussion here. If my arguments have spurred theoretical speculation that entails the reformulating of existing explanations, or a radical rethinking of existing debate, I regard my task accomplished.

" Comparable in this context, but concerning a theory of society: Jokisch, Rodrigo. 1997. Logik der Distinktionen: 2jxr Protologik einer Theorie der Gesellschaft. Opladen:

Westdeutscher Verlag. rl Peter J. Katzenstein, 1997, in Social Studies Japan, November. /3 A rather lonely example hereof: Alberts, David S., and Czerwinsky, Thomas J. (eds.). 1997. Complexity, Global Politics, and National Security. Washington D.C.: Na-

tional Defence University. Or on the Internet: http://www.mnsinc.com/cbassfrd/ CWZHOME/CWZBASE.htm

THE IMPACT OF JAPANESE DIRECT INVESTMENT ON REGIONAL STABILITY. SOME CONSEQUENCES OF THE EXPANSION OF JAPANESE NETWORKS IN SOUTHEAST ASIA FOR COMPREHENSIVE SECURITY ROGIER BUSSER*

INTRODUCTION

The main concern of this paper is to discuss the consequences of growing Japanese foreign direct investment (FDI) for the development of Japanese comprehensive security-policy. Economic security is an inseparable element of comprehensive security, and the impact of both private sector economic activities and governmental economic diplomacy are treated as two sides of the same coin. It will be argued that the large amounts of Japanese private investments in the ASEAN countries since 1986 have linked the Southeast Asian economies more closely to the Japanese economy. Subsequently, the growing presence of Japanese investment capital, production facilities and business communities is influencing economic and social development patterns throughout Southeast Asia. Some Japanese actors obviously attempt to have Japan play a role model in Southeast Asian development. In general, reactions to and perceptions of growing Japanese investment and its consequences seem at first sight rather positive, but scepticism on the Japanese role model and fears of a further strengthening of Japanese economic influence can also be detected among Southeast Asians. There are clear indications that Southeast Asians governments and private sector actors attempt to counterbalance Japanese influence in the region, also showing interest for a larger European role. This does not necessarily mean that Japanese economic diplomacy in Southeast Asia has failed or that comprehensive security-policy did not have its merits vis-a-vis Southeast Asia. * Dr. Rogier Busser is Lecturer in the Department of Japanese Studies, Leiden University, The Netherlands. His main areas of research are Japanese business networks and Japan's economic relations with South East Asia. His main publication is Changes in Organisation and Behaviour of Japanese Enterprises in Thailand: Japanese Direct

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The concept of comprehensive security (sogo anzen hosho), as formulated in 1980 by a Study Group appointed by Prime Minister Ohira, called for Japan to use a blend of economic, political and military tools to maintain its security.1 The economic tools do not solely consist of government aid, but include activities of the private sector as well. In this paper foreign direct investment by Japanese enterprises in Southeast Asian economies is perceived as contributing to comprehensive security. Coinciding with the Nakasone governments, which developed the contours of comprehensive security, and later the Takeshita government, Japanese investment in Southeast Asia started to grow at a rapid pace as consequence of the Endaka. Although there is no causal connection between the development of the Japanese concept of comprehensive security and the rise in importance of foreign direct investment, both developments mutually reinforced each others legitimacy. In general, private sector direct foreign investment and ODA are not seen by the Japanese economic bureaucracy as two completely different things. As is the case in other ODA donor countries, also the Japanese government attempts to favour Japanese enterprises when extending loans and assistance to foreign (developing) countries. In addition, the economic bureaucracy often attempts to link the relative small amounts ODA to FDI. As the private sector investments are at much higher levels, connecting ODA to FDI may also cause a multiplier effect of the ODA and thus positively support the economic benefits of ODA. In particular because the ODA budgets were raised at an extremely fast pace in the late 1980's there was quite a considerable public debate in Japan about the pro's and con's of extending growing ODA funds. This forced policy makers to monitor closely the effectiveness and consequences of ODA. Linking ODA to private sector investment was one of the tools to increase the effectiveness of the ODA and counter public criticism. During the second half of the 1980's, the Japanese government and the private sector did not necessarily have the same agenda. However, the Endaka forced many enterprises to step up foreign direct investment and transfer production from Japan to other parts of Asia. Meanwhile, the Japanese economic bureaucracy was doubtful as of how to react to this development. On the one hand fearful of the political reactions at home to a hollowing out of the domestic Investment and the Formation of Networks in the Automotive and Electronics Industry, Leiden,

1999 [dissertation]. 1 Sudo 1991, p. 33.

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economy, the economic bureaucrats did not openly grant much support for the growing investments of the private sector. On the other hand economic bureaucrats knew the inevitability of the transfer abroad of additional production processes. They anticipated that growing foreign investment would support their concept of a comprehensive security-policy. Parallel to the ever growing amounts of Japanese Official Development Assistance to Asian countries, private sector investment also started to grow vigorously after 1987. This led Japanese bureaucrats to take into account the possibility of a reoccurrence of anti-Japanese sentiments that had developed in the 1970's in Southeast Asia. Initially the strong anti-Japanese upheavals in the early and mid 1970's in Southeast Asia were interpreted as being due to the influx of Japanese capital. After the visit of prime minister Tanaka Kakuei to Bangkok in January 1974 that had to be shortcut, the then minister of MITI Nakasone Yasuhiro was sent on a fact finding mission on the reasons for the outburst of anti-Japanese feelings. The behaviour of Tanaka during his visit was generally perceived as arrogant, also displaying unfamiliarity with Southeast Asian affairs. Nakasone reported that the image held by Southeast Asians of the Japanese communities in Southeast Asia was rather negative and that Japan should attempt to improve its image. Despite the long history of Japanese investment in Southeast Asia many Japanese enterprises faced difficulties when they switched their operations from producing for local markets to producing for world markets after 1985. With many small and medium sized Japanese enterprises coming to Southeast Asia, Japanese final manufacturers and trading enterprises created new (production) networks. Local suppliers were incorporated into these networks. Faced with difficulties in dealing with circumstances at locations overseas (local suppliers, financing of investments and in trading among the networks in Asia) the Japanese government became increasingly proactive in assisting the private sector to make foreign investments of the private sector into a success. Governmental, semi-governmental organisations such as the Export-Import Bank of Japan, JETRO and the Japan Small Business Corporation have all supported foreign private sector investment. It is often said that Japanese direct foreign investment has made the Southeast Asian and Japanese economies increasingly interdependent,2 but in fact this interdependence is rather asymmetrical, 2 Tokunaga, S. Ed. Japan's Foreign Investment and Asian Interdependence, Tokyo: University of Tokyo Press, 1992.

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giving Japan a large leverage over its economic partners. The economic integration of ASEAN has been speeded up by Japanese investment, but has not rectified the existing imbalances. Japanese private sector investors and governmental organisations have attempted to solve numerous problems they encountered in Southeast Asia by establishing and creating institutions modelled on Japanese institutions. Japanese private sector investment has created Japanese dominated production networks throughout Southeast Asia. Being the largest investor and a major trading partner, playing a role model has consequences for the development of Japanese comprehensive security. On the other hand, the Southeast Asian nations attempt vigorously to counterbalance Japanese influence as much as possible by creating economic interdependency with other countries than Japan.

The place and role of economic security in the Japanese concept of comprehensive security

The idea of having a comprehensive security concept giving direction to the Japanese security-policy was an important means in the hands of both politicians and certain bureaucrats seeking a larger role for Japan on the stage of international politics. On the other hand, the military bureaucracy in Japan was apprehensive of implementing a comprehensive security-policy because it could hamper the growth of military expenditure and give a stimulus to a larger role for (economic) diplomacy. Those in the ruling Liberal Diplomatic Party (LDP) that were seeking a larger role for Japan in the international community favoured the idea of developing a comprehensive security-policy for the following three reasons: Firstly, to strengthen the position of Japan in the international community. Secondly, to please the US by taking on a greater international responsibility and thirdly to appeal, in a positive manner, to the feelings of a Japanese electorate that favoured a larger, non-military, role for Japan in the international community. The long standing wish of important groups of Japanese politicians and bureaucrats to conquer a seat in the security council of the United Nations could also be served by developing this concept of comprehensive security. Bureaucrats in the economic bureaucracy related ministries and agencies were in general in favour of the comprehensive security-policy concept because it gave them an opportunity to expand their role

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while breaking the growth of the power of the military bureaucracy. The growing importance of ODA was an important tool for the economic bureaucracy because they controlled important parts of the institutions that were engaged in extending ODA.3 Coincidentally, hand in hand with the growing popularity of a comprehensive security-policy, the Endaka took off in 1986. The sharp increase of the value of the yen vis-a-vis the currencies of the US and some other major trading partners made it difficult for numerous Japanese exporters to continue production in Japan. Therefore the Endaka caused large increases in Japanese private sector direct foreign investment. An important percentage of foreign investments went to Southeast Asia. It is of importance to keep in mind that flows of private foreign direct investment (and portfolio investment) are constantly at much higher levels than ODA funds. A clear example of this linkage between comprehensive security and ODA can be seen in the Japanese efforts to develop the Mekong Basin. Ozawa writes in his book on reform in Japan: "We must provide aid with regional security as our aim. For example, Japan can contribute to multilateral efforts to develop the Mekong river so that the five countries along the river, China, Laos, Thailand, Cambodia, and Vietnam can use the river effectively".4 There has been a debate on the question to what extent Japan actually has succeeded in linking ODA and the concept of Comprehensive Security. Shinohara has suggested that more research is needed to come up with a quantitative analysis of this linkage.5 During the second half of the 1980's, the agenda's of the Japanese government and the private sector did not necessarily coincide. However, the Endaka forced many enterprises to step up foreign direct investment and transfer production from Japan to other parts of Asia. Meanwhile, the Japanese economic bureaucracy hesitated reacting to this development. Concerned about domestic political reactions to a hollowing out of the economy, Japan's economic bureaucrats did not wish to display open support for the growing investments of the private sector. On the other hand, economic

3 Barnett, R.W. Beyond War, Japan's Concept of Comprehensive National Security, Washington: Pergamon, 1984, p. 96. 4 Ozawa, Ichiro Blueprint for a New Japan, The Rethinking of a Nation, Tokyo: Kodansha, 1994, p. 143. 5 See Barnett (1984), p. 93.

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bureaucrats knew the inevitability of the transfer abroad of further production processes. Moreover, growing foreign investment would support the comprehensive security-policy. Certain Japanese bureaucrats in the Foreign Ministry were aware that both in the case of Thailand, as well as in the case of Indonesia, the ultimate roots and causes for the outbursts of violence in 1974 were to be sought in local political turmoil. In this view Japan had merely functioned as a scapegoat. But, given the fact that Japanese presence in Southeast Asia had been rather small in the 1970's as compared to the situation in the late 1980's, the Foreign Ministry was closely monitoring the developments in Southeast Asia in order not to be taken by surprise for a second time. The Ministry ran annual surveys on Southeast Asian perceptions of Japan. In co-operation with the Ministry of Education, more Southeast Asian students were invited to come to study in Japan. This happened by directly extending more scholarships to students from these countries, but also by extending more loans for educational purposes to the Southeast Asian governments. In this latter way the Southeast Asian governments were more or less fully independent in the choice of the students. Of course, one can think of numerous other ways used by Japanese governmental organisations to positively influence the perception that Southeast Asians do have of Japan. Also, on the private sector level numerous actors were actively engaged in upgrading the image of Japan. In January 1974 young Indonesian rioters set the Toyota Astra Motors factory on fire. Although a direct link is hard to establish it is striking that 10 years later the Toyota foundation extended most of its scholarships to Asians, and sponsored a translation series of Southeast Asian literature into Japanese. More needs to be done though—of the work of the most important modern Indonesian writer, Pramoedja Ananta Toer, only one title has so far been translated into Japanese. No wonder that numerous Southeast Asians feel that Japan is little interested in anything but Southeast Asian's labour and markets. Meanwhile Japanese bureaucrats in the Ministry of International Trade and Industry were active in supporting Japanese interests in Southeast Asia after private sector investment was stepped up following on the Endaka. The growing ODA related funds were channelled into Southeast Asia through the OECF and other agencies dealing with ODA. Here we take a closer look into the way the OECF operates by looking at their activities towards Thailand.

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(OECF)6

Although this paper does not intend to discuss the relation between Japanese development assistance to Southeast Asia and private sector investment in full detail, some attention is paid to the close links between the Export-Import Bank of Japan, the Japanese Overseas Economic Co-operation Fund (OECF) and private sector interests. The OECF is a governmental financial institution established to promote Japan's economic co-operation with developing countries through the provision of loans on concessionary terms. Usually, this type of loan is referred to as Official Development Assistance (ODA). The division of labour between the OECF and the Export-Import Bank of Japan (discussed below) is not always transparent, but the following two criteria are useful in distinguishing the activities of the OECF: a) For direct loans to foreign countries, the OECF handles all the loans falling in the ODA category. These are defined as loans with a grant element of 25% or higher, b) The Export-Import Bank takes care of loans with a grant element of less than 25%. In the case of overseas investment credits for Japanese corporations, "In principle the Export-Import Bank is responsible for financing overseas investment by Japanese corporations. The OECF may, however, extend loans for investment in the agricultural, forestry, fishing and mining sectors or for pre-investment studies and experimental projects, when it is deemed difficult for the Export-Import Bank to extend such loans".7 The close links between the OECF, the ExportImport Bank and the interests of Japanese private enterprises can be illustrated by the example of the development of the Thai Eastern Seaboard Project. The first study on the establishment of a deep sea harbour east of Bangkok was carried out as far back as 1968, but the first serious steps to develop the area were taken in 1981 following the recommendations of a study group named the "Committee on the Development of Basic Industry on the Eastern Seaboard". The stimulus for the establishment of this committee was the discovery, from

6 This section draws on my dissertation Changes in Organisation and Behaviour of Japanese Enterprises in Thailand: Japanese Direct Investment and the Formation of Networks in the Automotive and Electronics Industry, Leiden, 1999. 7 Export-Import Bank of Japan, The Export-Import Bank of Japan: Role and Function, Tokyo: 1992.

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1973 onwards, of large amounts of gas in the Gulf of Siam. The report of the study group argued for the establishment of an Eastern Seaboard Committee and urged the National Economic and Social Development Board to commission Coopers and Lybrand Associates to develop a master plan, to be financed, partly, by foreign loans.8 The first Japanese involvement with the Eastern Seaboard Project was a feasibility study carried out by the Japanese International Co-operation Agency (JICA). After the first feasibility studies by JICA, the OECF offered its first yen loans to the Thai government to develop the area. Of particular importance were the loans to construct a port at Laem Chabang, one of the centres of the Eastern Seaboard Project. Since the first loans of 1982, the OECF has extended many loans for the infrastructural development of the project. Japanese consultancy enterprises, construction enterprises and general trading companies have all benefited from these loans and gained contracts to take part in the construction of the Eastern Seaboard Project.9 In addition to JICA which provided aid at the planning stage and the OECF which extended yen loans, the Export-Import Bank has also been active in several ways in the further development of the project. In the first place, the Bank has assisted Japanese enterprises to start operations in the area by providing buyers' credits to Thai investors that form joint ventures with Japanese enterprises or that purchase capital goods from Japan.10 Secondly, a number of fully Japanese owned enterprises that obtained leases after the first industrial estates in the Eastern Seaboard area were completed, received loans from bank consortia in which the Export-Import Bank of Japan played a role." The broadening and deepening of production networks by Japanese final assemblers in Southeast Asia linked a number of Southeast 8

Unger 1991. For more information on the involvement of Japanese construction companies in the Eastern Seaboard project see Y. Murai, Nippon no ODA, Tokyo: Gakuyo Shobo, 1992, pp. 158-161 and 179-181. 10 Two examples of this type of buyer's credits extended by the Japanese Export-Import Bank are a buyer's credit for the procurement of a combined cycle power plant, ordered by the Electricity Generating Authority of Thailand (EGAT) in early 1995 and delivered by Mitsui, and a buyer's credit for the construction of a ethylene plant at Map Ta Put, ordered by Rayong Olefins Co., Ltd. in 1996 and delivered by a consortium of Mitsui and Toyo Engineering Corporation. 11 Interview with H. Takaoka, Representative Office in Bangkok of the ExportImport Bank of Japan. Date of Interview: January 21, 1994. 9

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Asian enterprises to Japanese enterprises. This formed a vehicle for spreading Japanese management techniques among Southeast Asian enterprises. It also implied technology transfer processes from Japanese enterprises to Southeast Asian enterprises.12 A clear example of the way in which Japanese governmental organisations supported these processes is to be found in the case of the development of a system for small and medium sized enterprises (SME's) in Malaysia. In Malaysia Japanese governmental officials experienced the weak position of local SME's as a hindrance to economic development. The Malaysian government was of course open to Japanese recommendations on economic development, as illustrated by its "Look East" policy. As in Japan, the Malaysians decided to establish several SME organisations under the guidance of the Malaysian Ministry of International Trade and Industry. In 1996, the new set-up was completed with the establishment of the Small Business Development Bureau (SBDB) and the Small and Medium Sized Industries Development Corporation (SMSIDC). These organisations were established with Japanese financial and organisational support. Faced with difficulties in dealing in overseas environment—local suppliers, financing of investments and trading among the networks in Asia—the Japanese government became increasingly proactive in assisting the private sector to make foreign investments of the private sector into a success. Below I will introduce two semi-governmental organisations, the Export-Import Bank of Japan and JETRO that have clearly supported foreign private sector investments, in order to describe the growing role of these bureaucratic organisations in supporting economic security. In general one would expect that after the Endaka of 1986 Japanese enterprises did not face many difficulties in financing their overseas investments, in particular not in Southeast Asia, because the Southeast Asian currencies were pegged closely to the US dollar, and it was precisely vis-a-vis this currency that the yen gained most. However, quite a number of Japanese enterprises called upon the Japanese Export-Import Bank for the financing of overseas investments in Southeast Asia.

12

Yamashita, S. Ed. Transfer of Japanese Technology and Management to the ASEAN

Countries, Tokyo: University of Tokyo Press, 1991.

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THE JAPANESE EXPORT-IMPORT BANK13

The Export-Import Bank of Japan is a governmental financial institution established in 1950 under the Export-Import Bank of Japan Law (Law No. 268). According to this law, the Bank is a Tokushu Ginko (semi-governmental or chartered bank), one of the many categories in the Tokushu Hojin groups (Semi-governmental Corporations). The main objective of the Bank is to facilitate Japan's economic interaction with foreign countries through the provision of a wide range of financial services to supplement and encourage financing by commercial banks and other financial institutions in Japan, mainly in the areas of plant and ship exports, development and imports into Japan of natural resources, imports of manufactured goods, overseas investment and the direction of funds for international co-operation.14 The main tool used to pursue these objectives is the provision of several types of loans to domestic (Japanese) corporations and to foreign governments and corporations. The loans to domestic corporations can be divided into four categories: Al Supplier credits, provided to Japanese enterprises for their exports of plants, ships, aircraft and vehicles as well as for related equipment and machinery. A2 Technical service credits, for exports of technical services. A3 Import credits, provided for import of resources and manufactured goods which are deemed essential to the development of the Japanese economy. A4 Overseas investment credits, extended to Japanese enterprises for their overseas investment activities or for their overseas projects. The A4 type of credits is important to the argument of my paper, because these are often used to assist Japanese enterprises that invest in Southeast Asia. In fact, overseas investment credits are divided into five subcategories by the Export-Import Bank. These are:

li

This section draws on my dissertation Changes in Organisation and Behaviour of Japanese Enterprises in Thailand (see above). Very few studies have concentrated on the role of the Japan Export-Import Bank in facilitating Japanese Foreign Direct investment. Although reflecting upon the trading facilities offered by the Japan Export-Import Bank, Johnson (1978), Nakamura (1986) and Aoki and Patrick (1994) do not discuss the role the bank plays in stimulating Japanese Foreign Direct Investment. 14 Export-Import Bank, The Export-Import Bank: Role and Function, Tokyo: 1994.

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A4.1 Credits to Japanese corporations for their equity participation in foreign companies. A4.2 Credits to Japanese corporations for their loans to foreign governments or corporations to provide them with long term funds for ventures operating outside Japan. A condition for these credits is that foreign corporations have business relations with Japanese corporations. A4.3 Credits to Japanese corporations to be extended as loans to foreign governments for their equity participation in foreign corporations in which the Japanese corporation has equity shares. A4.4 Credits to Japanese corporations for their equity participation in corporations established in Japan for the sole purpose of making overseas investments in the first three forms (A4.1/3). A4.5 Credits to Japanese corporations to provide them with funds required for projects operating abroad. These are also classified as overseas investment credits. The importance of the Export-Import Bank to the post war economic development of Japan is well known. In the first period after the establishment of the Bank, its main activity was promoting Japanese exports by providing export credits. During the 1950's, over 75% of the resources of the Bank were spent on this task. One of the most frequently used methods was providing mortgages on ships. This meant that ships scheduled to be exported were accepted as collateral by the Bank.15 During the 1960's, export credits remained the main business of the Bank and the shipbuilding sector its biggest customer. In line with the development of the Japanese economy, loans for the development of natural resources increased sharply in the 1960's. Moreover, the outstanding balance increased 13 fold from 94 billion yen in 1959 to 1,314 billion yen in 1969. The 1970's saw a further marked increase in the activities of the Bank and the balance outstanding tripled to 4,986 billion yen in 1979. Export credits accounted for just over half of the activities. While the share of the shipbuilding industry dropped sharply in the 1970's, the share of loans for natural resources development increased from 33.5 billion yen in 1969 to 316 billion yen in 1979. It was only during the 1980's that loans for overseas manufacturing investment became an important activity of the Bank. Since the Endaka, the amount and share of loans 15

Export-Import Bank of Japan, The Course: Forty Years of the Export-Import Bank of Japan, Tokyo: 1992.

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to overseas manufacturing investments has grown extremely rapidly. From 1986 to 1987, the amount of loans grew by over 1000% and tripled again in the next three years to more than 721 billion yen in 1990. This amounted to nearly 50% of all the loans issued by the Bank in 1990. In the 1992 fiscal year, the Export-Import Bank issued loans and made equity investments worth 1,915,9 billion yen, equalling 16.1 billion US$. (exchange rate 1 US$ = 118.5 yen). In 1992, 15% was spent on export loans, 14% on import loans, 31% on untied loans and 39% or 6.4 billion US$ on overseas investment loans. Between 1992 and 1995, the importance of untied loans increased while that of import and export loans declined. The share of overseas investment loans remained at high levels. A relatively large percentage of the total loans is directed towards Asia. There was a marked increase in the Asian share in the period 1988 1992. In the 1992 fiscal year, 38% of new loans and equity investment by the bank were channelled into Asia, compared to only 25% in the 1988 fiscal year. Of the total outstanding loans and equity investment of the Bank, 34% is invested in Asia, followed by the U.S. with 23%. The Bank does not provide data on the distribution among Asian countries nor does it publish any data on its customers. In Southeast Asia, the Bank has three offices, in Djakarta, Manila and Bangkok. It also has offices in Beijing and New Delhi. As well as Thailand, the office in Bangkok covers Malaysia, Singapore, Vietnam, Laos and Cambodia. For the last two countries, the Bank had not provided funds for any projects by early 1994. It was, however, involved in an international consortium that provided an interim loan to the Vietnamese government. This loan enabled Vietnam to pay off an old debt to the IMF and qualify for new IMF loans. From the above, it is clear that the Japanese Export-Import Bank has supported the shift of Japanese manufacturing enterprises to Asia since the Endaka. The type of Japanese enterprises that are the customers of the Bank and the reasons why these customers chose to borrow from the Export-Import Bank instead of negotiating a loan with a local overseas bank or a regular Japanese Bank are, however, not so easy to establish. The answer to this second question may be related to the way in which the Export-Import Bank obtains its funding. The Bank was, for a very long period, able to provide cheaper interest rates to its customers because its capital came from the Japanese Post Office Insurance and Annuity Special Account. This situation has now changed but, because other conditions attached to

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loans are, in general, better than conditions offered by commercial banks, the Export-Import Bank remains an important source of funding for Japanese enterprises abroad. In particular, the fact that the Bank offers loans against fixed interest rates, while commercial banks only provide floating rates, makes the Bank attractive to customers. However, it should be noted, that the Japanese Export-Import Bank cannot, by itself, provide 100% of a loan: the loans must always be extended by a consortium of banks. The Bank does not provide any data on its customers. But, from an interview with one of its officials, it became clear that in 1994 it had over 300 Japanese customers and was financing more than 500 projects in Thailand.16 The fact that the number of customers is much smaller than the number of loans is because one customer may have more than one loan. It also appeared that an important number of customers belong to the category of small and medium sized enterprises. This is in line with the notion that the biggest Japanese manufacturing investors in Thailand have sufficient funding to finance their own investments and can often do without banks. It could also be interpreted to mean that the position of large Japanese investors vis-d-vis their home bank is so strong that the home bank is obliged to provide cheaper loans than the Export-Import Bank. When a Japanese medium sized enterprise intends to make investments in Thailand, its application for a loan from the Export-Import Bank is often formulated in close co-operation with a Japanese commercial bank, normally the home banker of the manufacturing enterprise in Japan. At the overseas location, the Export-Import Bank and the local office of the Japanese commercial bank form a consortium, which sometimes includes a third (Thai) party and/or a Japanese customer of the new Japanese investor, to provide the Japanese manufacturing enterprise with funds to make the investment. This pattern indicates two important things. In the first place, financial linkages, as is often the case in horizontal keiretsu within Japan, continue to function in overseas investments. Here I present one example of this pattern. A supplier of Toyota is asked by Toyota to establish a production facility in Thailand. The enterprise seeks a loan from the Long Term Credit Bank of Japan, which is close to the Toyota group in Japan. In a consortium formed by the Bangkok office of the Japanese Export-Import Bank, Toyota 16 Interview with H. Takaoka, Representative Office in Bangkok of the ExportImport Bank of Japan. Date of interview: January 21, 1994.

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Thailand and the Bangkok office of the Long Term Credit Bank of Japan, a loan is provided to the supplier of Toyota. The loan is provided against a low interest rate and this is for three reasons: 1) Toyota helps the supplier by extending a cheap loan, 2) The Long Term Credit Bank settles for a low interest rate because it is close to Toyota in Japan, 3) the Export-Import Bank guarantees a fixed interest rate and, therefore, makes the loan very attractive. Secondly, the pattern shows that the Japanese government, by means of loans extended by the Export-Import Bank, supports the transplant of horizontal keiretsu forms abroad. The OECD has established extensive guidelines and regulations for the use of export and import credits by export-import banks, but there are no clear regulations for the financing of overseas investment activities of governmental financial institutions. For this reason, it is suggested that the precise role and function of the Japanese Export-Import Bank in facilitating Japanese overseas investment merit attention in future research.17

Japan External Trade Organization (JETRO)

The founding of the organisation which is now named JETRO was the result of a rather confusing process that started in the early 1950's. In 1951, a group of entrepreneurs from the Kansai region gathered around Sugi Michisuke (the chairman of the Osaka Chamber of Commerce) and Akama Bunzo (mayor of Osaka) to establish an organisation to provide Japanese exporters with information on overseas markets.18 Funding for the organisation came from some prefectural governments and from a number of private individuals. In 1954, the Ministry of International Trade and Industry (MITI) thought it better to take over the organisation and gradually increased its share in the funding. Consequently, the influence of the MITI increased and, finally, in 1958, by means of the Japan External Trade Organisation Law, JETRO became a public corporation, with all its funding coming from the central government.

'' This section draws on my dissertation Changes in Organization and behaviour of Japanese Enterprises in Thailand. 18 Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy,

1975, Tokyo: Charles E. Tuttle, 1986. p. 231.

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At first, the major task of JETRO was to increase the growth rate of Japanese exports by assisting the private sector to expand to foreign markets. This task consisted, among other things, of organising trade fairs, promoting Japanese products by issuing publications for possible foreign customers and counselling Japanese enterprises on export strategies. For these purposes, a network of overseas offices was established. Gradually, these overseas offices became agents that, on the one hand, assisted Japanese enterprises in expanding exports and, on the other, developed close contacts with relevant local bureaucrats and private sector organisations. Consequently, from the period in the 1980's when trade relations with several major trading partners deteriorated, JETRO became increasingly involved in the expansion of Japanese imports. In the second half of the 1980's, as Japanese exports were partly replaced by overseas production, JETRO also came to play an important role in facilitating foreign investment in Japanese enterprises. The overseas offices of JETRO are an important asset to the organisation. There are 75 of these located in all five continents. In East Asia, JETRO has eleven overseas offices; in Seoul, Dairen, Beijing and Shanghai, Hong Kong, Hanoi, Bangkok, Manila, Kuala Lumpur, Singapore and Jakarta. The costs of the overseas operation were equal to over 20% of the budget of JETRO in 1994. In the same year, JETRO employed 600 people in Japan and 700 in its overseas offices. In Japan, one of JETRO's major tasks is to provide, in the first instance, its members and, to a lesser extent, non-members with information on export markets, sources of imports and investment opportunities. To this end, JETRO publishes an annual white book on foreign trade and investment. This white book was, until 1984, called the White Book on Overseas Markets but, in 1985, was renamed the White Book on World and Japanese Overseas Investment. In addition, JETRO publishes many specialised magazines and papers on very diverse subjects. JETRO publishes booklets on the investment regulations of foreign countries, on trade opportunities and many statistical series. Although the above mentioned activities are of great importance, it became clear from my field research in Southeast Asia that offices of JETRO in the region spend a great deal of their time counselling Japanese enterprise representatives that come to visit Southeast Asian countries to look at investment opportunities. In many cases, JETRO sets the agenda for the visiting rep-

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resentatives, makes appointments with local (government) organisations like Boards of Investment and accompanies potential investors on their visits to industrial locations. Assisting Japanese companies that are already operating in ASEAN countries is also one of the key tasks of the JETRO office. An example of this is the publication of a guide book on labour relations in Thailand which JETRO undertook after several labour conflicts had arisen in Japanese enterprises in Thailand in the early 1990's. The 300 page guide, published in 1995, aims to instruct Japanese enterprises in how to deal with labour related problems in Thailand. It is often said that Japanese direct foreign investment has made the Southeast Asian and Japanese economy increasingly interdependent, but in fact this interdependence is rather asymmetrical. Moreover the economic integration of ASEAN has been speeded up by Japanese investment, but has not made the interdependency more balanced. In the ASEAN integration processes Japanese private sector investors and governmental organisations have attempted to solve numerous problems they encountered in Southeast Asia by establishing and creating institutions that resemble Japanese institutions. After the ASEAN economies had changed their policies from import substitution led to more outward looking, export oriented in the early 1980's and the Endaka had speeded up the relocation of Japanese export industries, the intra-ASEAN tariff structure became a growing point of concern for Japanese investors. The reason is related to Japanese industrial organisational structures. In most sub-sectors of the manufacturing sector, but in particular in both the automotive and electronics sectors, Japanese manufacturers produce relative little parts in-house and procure relative high levels from outside. Thus, in case a final assembler starts assembling abroad, this enterprise will need to purchase the needed parts and components from suppliers. Local suppliers were often lacking or quality standards set by the Japanese customers were not met. Therefore, final assemblers deemed it necessary that their Japanese parts suppliers would also accompany them to produce in the countries in which they assembled their automotive products or electronics. But this posed problems to the suppliers because they need much higher levels of economies of scale as final assemblers do. In general suppliers could not profitably operate production facilities serving only local markets in Southeast Asian countries. Thus, understandably, Japanese enterprises in Southeast

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Asia were much in favour of integrating the economies of the ASEAN countries.19 The high tariffs for intra-ASEAN trade of finished products, intermediate products, parts and components made it difficult for Japanese manufacturers to import parts from Japan. Japanese enterprises were pushing ASEAN governments to proceed with lowering intra-ASEAN tariffs and making regulations that would allow foreign as well as ASEAN firms to trade products among ASEAN countries without paying (full) import taxes. On the one hand hopeful that electronics and automotive industries might take off in the ASEAN countries and on the other hand fearing a pull-out of Japanese investment, ASEAN governments agreed to several schemes that enabled (also) foreign enterprises to shift components and final products between several manufacturing bases in ASEAN. But the actual execution of the Brand to Brand Complementary Scheme and later the development of the ASEAN Industrial Co-operation20 also indicate that ASEAN does not automatically gives in to requests of Japanese industries. Japanese private sector investment has created Japanese dominated production networks in Southeast Asia. While shaping the institutions that form and support the networks, Japanese institutions were often taken as an example. The consequences of this process for the development of Japanese comprehensive security are not unambiguous; Japan is, at least to a certain extent, capable of being a role model for development in Southeast Asia. On the other hand, Southeast Asian nations attempt vigorously to counterbalance Japanese influence as much as possible by creating economic interdependence with countries other than Japan. One example is the development of the automobile sector in Malaysia. The most pro-Japanese development policy that is to be found in Southeast Asia is of course that of Malaysia. For a number of political reasons prime minister Mahathir proclaimed his "Look East Policy". One important and very tangible highlight of this "Look East Policy" was the joint venture between the Japanese car manufacturer Mitsubishi Motors and a Malaysian state owned enterprise for the production of automobiles.21 In this 19 Busser "Some Views of Foreign Investors in Thailand on the Development of the ASEAN Free Trade Area", Thailand Development and Research Institute,

Working Paper TDRI, Bangkok, 1994. 20 "Indonesia Urges New Alliances," in Bangkok Post, July 30, 1997. 21 Jomo 1994.

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way the Malaysians hoped to raise a technology base within the country from which it could establish an independent and indigenous automobile industry. But during the project of this Japanese Malaysian co-operation many problems arose, and the Malaysian side decided to develop a second car, in another market segment with a non-Japanese enterprise.

CONCLUSION

Japanese foreign direct investment in the Southeast Asian economies has created numerous Japanese dominated networks in Southeast Asia. This is primarily a consequence of the way horizontal and vertical keiretsu relations function within Japan. But over the years, numerous local actors have also come to play important roles in these networks. The general impression of Japanese investment in and economic interaction with Southeast Asia is one of growing interdependence. But in this paper it is argued that interdependence between Japanese and Southeast Asian actors in these networks is asymmetrical at the micro-level as well as at the macro-level. An important objective of Japanese economic diplomacy has been the attempt (since 1980) to stimulate stability in Southeast Asia by extending loans and creating a favourable environment for further economic development. In this environment, private Japanese enterprises have been able to develop favourably. Despite the growing role for Japanese enterprises in Southeast Asia since 1985, this has not resulted in anti-Japanese feelings as was the case in the 1970's. But nevertheless, attempts by Southeast Asian governments and private sector enterprises to diversify indicate that they react to what they regard as an Japanese economic over-presence, and thus attempt to counterbalance this influence by looking for contacts and models other than from Japan. Subsequently, it can be said that, at least in this respect, chances for European enterprises in Asia are promising. Secondly, Europeans might take a closer look at the way Japanese governmental and semi-governmental organisations support the Japanese private sector in Southeast Asia with loans, information and other forms of support. Moreover, the close relation between Japanese ODA, non-ODA low interest loans extended by the Export-Import Bank and private sector investment might be a reason for EU institutions to see if European enterprises are excluded or left behind.

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Bibliography Aoki, M. and Patrick, H. (eds.) The Japanese Main Bank System, Oxford: Oxford University Press, 1994. Barnett, R.W. Beyond War, Japan's Concept of Comprehensive National Security, Washington: Pergamon, 1984. R. Busser, "Some Views of Foreign Investors in Thailand on the Development of the ASEAN Free Trade Area", Thailand Development and Research Institute {Working Paper TDRI), Bangkok, 1994. , Changes in Organisation and Behaviour ofJapanese Enterprises in Thailand: Japanese Foreign Direct Investment and theFormation of Networks in the Automotive and Electronics Industry, Leiden, 1999. (dissertation) Dunning, J.H. The Globalisation of Business, London: Routledge, 1993. Export-Import Bank of Japan, The Export-Import Bank of Japan: Role and Function, Tokyo, 1992. Imai, K. Naibu Soshiki no Keizaigaku, Tokyo: Toyo Shinposha, 1982. Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy 1925-1975, Tokyo: Charles E. Tuttle, 1986. Jomo, K.S. "The Proton Saga, Malaysian Car, Mitsubishi Gain" in Jomo, K.S. (ed.) Japan and Malaysian Development, In the Shadow of the Rising Sun, London: Routledge, 1994. Kawabe, N. "Review of Japanese Style Management," in Yamashita, S. (ed.) Transfer of Japanese Technology and Management to the ASEAN Countries, Tokyo: University of Tokyo Press, 1991. Y. Murai, Nippon no ODA, Tokyo: Gakuyo Shobo, 1992. Nakamura, T. Showa Keizai Shi, Tokyo: Iwanami Shoten, 1986. Nakatani, S. Bo-daresu Ekonomi-: Sakoku Nihon e no Keisho, Tokyo: Nihon Keizai Shinbunsha, 1987. Pasuk Pongpaichit, The New Wave ofJapanese Investment in ASEAN, Singapore: ISEAS, 1990. Sudo, S. Southeast Asia inJapanese Security-policy, Singapore: ISEAS, 1991. Tokunaga, S. Japan's Foreign Direct Investment and AsianEconomic Interdependence, Tokyo: University of Tokyo Press, 1992.

OKINAWA: AN APORIA IN THE SECURITY OF THE ASIAN PACIFIC REGION IGARASHI AKIO*

The Okinawan Islands are called the "Key Stone" of the United States' strategy for Asia; it is well known that the islands are covered with many military bases. From the end of 1997 to the present (beginning of 1998), the residents of Nago, one of the main cities in the northern part of Okinawa, have been divided by confrontations and chaos. The origin of this disorder is the Japanese and US governments' decision on April 12, 1996 to return Futenma Marine Corps Air Station to Okinawa Prefecture. Futenma Air Station is located in the heart of the city of Ginowan and is surrounded by a crowded residential area of approximately 10,000 households. When helicopters take off and land there, they exceed the normal decibel level for human comfort and the residents who live in the surrounding areas have continued to fear possible disastrous consequences in the case of a serious accident for many years. Because the base remains in the centre of the city, it is very difficult to engage in efficient urban planning. Soon after the cold war, Okinawa Prefecture insisted that these bases be returned to them. As I will discuss further on, due to the September 1995 rape of a young girl that galvanised Okinawa public debate, Prime Minister Hashimoto Ryutaro proposed to President Clinton returning Futenma—regarded as a necessary first step in reconciliation efforts—in a February 1996 meeting in Santa Monica, California, and in spite of Hashimoto's, as well as the Japanese government's pessimistic forecast, the plan was accepted. The United States had also perceived that "the Okinawa Crisis" was serious.

* Dr. Igarashi Akio is Professor in the Faculty of Law, Rikkyo University, Tokyo. His research focuses on Japanese politics, electoral politics, globalization and security policies in Asia. He has published a/o Meiji ishin no shisoo ("Ideas and ideologies of the Meiji Restoration"), Tokyo, 1996; Tanaka Kakuei rong-guddobai ("The long farewell of Tanaka Kakuei"), Tokyo, Ushio shuppansha, 1995; Shin-Ajia no doratna ("The Drama of New Asia"), Tokyo, Ushio shuppansha, 1995.

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However, at the same time, the US military requested that in exchange for Futenma another base be built in Okinawa Prefecture. Faced with strong opposition by residents residing in various proposed areas, the government abandoned several sites, and the coast of Camp Schwab off the eastern coast of Nago was eventually selected. The Japanese government's proposal for a floating heliport, which was considered as a last resort after noise pollution and danger levels were factored in, was explained as being a 1500m x 600m giant box (there were two plans, one anchored by posts in the seabed and the other by a breakwater floating on the water). In any event, the realisation of either one of these plans symbolised that the US military in Okinawa had been literally pushed into the ocean. The Okinawa residents' reaction to the proposed base was ferocious. From the outset, the mayor of Nago, Higa Tetsuya, announced his intention to oppose the construction of the floating heliport and city council twice unilaterally rejected the construction. The Japanese government, however, wanted to obtain the co-operation by Okinawa Prefecture for this plan, which it regarded as the successful result of US-Japanese negotiations concerning security and base issues, and strongly intervened using regional economic assistance as a trump card. The government together with the ruling party exerted pressure on the mayor and other interest groups, suggesting that they accept the base construction in order to receive compensation or "collateral" from the government. The construction industry in Nago and the surrounding areas eagerly anticipated the construction of the base. From this point on, the mayor's stance changed. In response to the change in position, the anti-heliport faction resorted to a local referendum in order to block the construction. Approximately 20,000 signatures were gathered from the 38,000 eligible voters of Nago; members of the City Council could not ignore the number of signatures, and so regulations for a local referendum were established. On December 21, 1997, the anti-heliport supporters won the Nago City referendum (the fifth local referendum to be held in Japan overall). Several days later, however, Mayor Higa, who went to Tokyo to meet with Prime Minister Hashimoto, declared that he accepted the construction of the military bases as "national profit is local profit," but at the same time he announced his intention to resign, saying "I feel responsible [for the citizen's of Nago] having become divided into two factions. My resignation will avoid a confrontation." On the contrary, the mayor's words resulted in plans for a mayoral election, dividing the citizens of Nago once again, and in the result-

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ing election, a candidate who was supported by the pro-heliport faction defeated the candidate supported by the anti-heliport faction— this outcome was due, in part, to factors unrelated to the heliport issue. The result of the referendum—that stressed the dispute concerning the construction of the heliport and the exasperating inability to get rid of this problem—sank the Nago city government further into a quagmire. There is an economic gap between Okinawan Prefecture and the Japanese mainland. Particularly in the northern part where Nago is located, economic development has been slow. This meant that there was a certain appeal in the argument that Nago should "accept the base in exchange for economic assistance". In general, institutions that do not want liabilities such as bases in their region coerce weaker areas into accepting them. From Japan's defeat in World War II to its reversion to Japanese sovereignty in 1972, Okinawa was the "Key Stone" to the US's global strategy. While under US military administration Okinawa had no power to make any decisions. Following the reversion to Japan after the end of the Cold War and even now, that position has not changed. In this sense, the events of Nago are contemporary Okinawan history writ large.

1. NATIONAL SECURITY "ENDANGERS" OKINAWA'S

The start of the construction of US military bases during the Pacific War in Okinawa was April 1, 1945 when the US military landed in Yomitan and Chatan in the middle of the main island of Okinawa. The Battle of Okinawa which was extremely bloody to the point of being called the "Typhoon of Steel", and claimed the lives of 200,000 people (among them 120,000 Okinawan civilians). At the same time, the US military had built many bases in order to attack the Japanese mainland. After the end of the Pacific War as well as during the Cold War, Okinawa's importance grew as a military base to keep an eye on the Chinese mainland, the Korean peninsula and the Taiwan Straits. The US military further requisitioned land. The armed soldiers took to the field to requisition land and even destroyed resident's houses with bulldozers. Houses were burned in Naha, Ginowan, Yomitan and on Iejima, and there were instances of entire villages being obliged to move. At the end of World War Two, Okinawa was placed under the supervision of the US military, but the US military made no compensation regarding the requisitioning of land

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for bases. In 1951, the residents began a signature campaign to demand that the military pay for land appropriation. The military responded with a twenty-year contract which paid approximately one yen for one tsubo (3.3 square meters) of land per year (in that year, a pack of cigarettes was 10 yen, 600g of white rice was 44 yen, 53 sen). Just as the military appeared to adopt this proposal, land owners refused the contract. The landowner's dispute over the US military's land requisition developed into a "struggle involving the entire island" in 1954. After US Congressional Representatives visited Okinawa, they sued the Congressional Subcommittee on Military Affairs. Negotiations took place with the US government and in 1965 a resolution was finally reached. During this time, the Okinawan government was administered by US military personnel, and it was said that military priorities meant that "self-government was a myth" for Okinawa (Paul Carroway, a high level commissioner). When the Vietnam War began, US marines stationed in Okinawa were deployed as ground forces and B52 Bombers were moved from Guam to Kadena Air Base from which they would depart for air raids in Vietnam. The meaning of the phrase "Key Stone" deepened for Okinawa, which carried the burden of supplying, training, communications, repairs, and recreation for the soldiers. Concomitant with that role—the policy of military priority for the US—the army either ignored or made little of the rights of the residents of Okinawa and many incidents occurred. The soldiers were responsible for murders, assaults, and traffic accidents. For the residents of Okinawa their home frequently resembled a battlefield. These crimes and incidents led to many unsettled compensation claims from the victims. Moreover, poison gases such as sarin and mustard gas were stored on Okinawa and there were, furthermore, threats of jet fuel leaking into the ground water. Live ammunition drills wreaked havoc on the natural environment. Anger was mounting and on December 20, 1970, an accident caused by an American soldier, and the subsequent handling of the incident, caused tempers to explode into what became known as the "Koza Riot." That same night an MP car and several military vehicles were burned one after another, filling the skies with flames, and the main street near Kadena Air Base came under riot conditions. Incidents around the bases, accidents, and the US military's ignoring of human rights spurred a "reversion" movement under the Peace Constitution to secure human rights for the residents of Okinawa.

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The movement, which had at its centre the "Committee for Okinawa's return to the Homeland" formed by the participation of many different political and civilian groups, developed against the background of the widening Vietnam War. Demands increased for the right to selfgovernment and the adjustment of the gap with the Japanese mainland, and anti-war and anti-base movements broadened. In spite of great expectations with which the reversion to the mainland was greeted by the residents of Okinawa, its status was "the same as the mainland" in name only, and large areas for military bases were now taken over by the Japanese government under the "public land provisional use law."1 Using Okinawa's bases as its advance base during the Vietnam War since the 1970s, the US army widened the range of its military activities from the Indian Ocean to the Middle East. During the Gulf War, the Third Marine Expeditionary Force headquartered in Okinawa was mobilised. After the Cold War, in spite of the reduction in the number of bases in Europe, a different fate awaited Okinawa whose reduction of military bases in the period from the reversion Japan to the present remained at 4,135 hectares— a 14% reduction. At the same time, the reversion rate of bases on the Japanese mainland reached 58.8%. Starting with the marine artillery base at the foot of Mount Fuji, US military bases at Tachikawa (Tokyo), Ashiya (Fukuoka), Itatsuke (Fukuoka), and Camp Asaka (Saitama) were transferred one after another to Okinawa. The US military bases on the Japanese mainland shifted the burden to Okinawa. The Okinawan's expectations of the promise of "treatment equal to that of the mainland" at the time of reversion was completely betrayed. Sealing the fate of "Okinawa as base" was the "consolation budget." Based on the 24 articles of the "regional co-operative security agreement" of the US-Japan Security Treaty, the expenses of US personnel coming to Japan are entirely borne by the United States. Due to American economic difficulties and the fall of the dollar, the US personnel administration in Japan became concerned about the level of the salaries of the Japanese nationals employed on the bases, which had become more expensive than those of their own personnel. Since the Japanese government assumed a part of the labour costs totalling 6.2 billion yen in 1978, it continued to pay the US contributions to the cost of maintaining the bases. Because 1

Okinawa-ken Churyugun yochi no ima—mukashi [Troop land use past and present] 1996; Okinawa-ken Okinawa kara no messeeji [Message from Okinawa].

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there are no legal grounds for this expenditure, Kanemaru Shin, a powerful member of the Liberal Democratic Party and then head of the Defence Agency, justified it on the grounds of "sympathy," (this was the origin of the name of this particular payment). Subsequently, there were demands by the military for expanding contributions to the costs for the construction of facilities like barracks and runways, the entire amount of heating and electricity costs, telephone service costs, and labour costs; by 1996 these costs had reached 273.4 billion yen. Including appropriate amounts for the rental of national land overall costs amounted to 640.7 billion yen, of which Japan has assumed 70% of the costs of the US military in Japan, and this amount is still being raised. The "economic superpower" pays for its security with cash by depending upon the US military, and the US government depends upon Japanese cash to maintain the front-line of its military strategy in the Asia Pacific: as a consequence, it seems, Okinawa's bases have become a permanent institution. At the same time, by locating most of the bases in a remote southern region, the Japanese government has said, in effect, that most of the nation's citizens do not have to think about their own security. Many Japanese citizens want to keep the invisible costs for their "safety" at a distance. They are either not aware of the reality of the security arrangement, or choose to turn a blind eye to the situation. Here, leaders in the government and the ruling party are no exception. Currently, there are 28,531 soldiers and civilian employees stationed in Okinawa (including 16,600 Marines) and 23,757 members of their families. The US military facilities on Okinawa take up 244,473 thousand square meters of land which is 11% of the land in Okinawa Prefecture. More than 90% of the population lives on the main island of Okinawa where bases occupy approximately 20% of the island. When one looks at Japan as a whole, 75% of US military special facilities and districts occupying no more than 0.6% of Japanese territory are unusually concentrated in Okinawa. The base in Kadena occupies 82.2% of that town, the base in Kin occupies 59.7% of the town, the one in Chatan 56.5% of the town, and the base in Ginowan occupies 51.5% of the town. Additionally, more than 30% of the land of the towns of Yomitan, Azuma, Ie and 2

Okinawa-ken somubu chiji koshitsu Okinawa ken no beigun oyobi jieitai kiji (Junket

shiryoshu) [Okinawa Prefecture's U.S. Military Bases and Self Defence Forces Bases (Collected Data)], 1996. Kuniyoshi Nagahiro, "Okinawa no Gunji Kichi—Yaruta

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Onna, Okinawa City, and the city of Ginowan are occupied by US military bases.2 One American journalist has said, "Rather than there being bases in Okinawa, Okinawa is in the middle of a base." The national security of Japan and the security arrangement between Japan and the US results in endangering Okinawa and causing it to bring sacrifices.

OKINAWA'S PROTEST THREATENS SECURITY

A swell of citizen protest has risen once more under the slogan "Okinawa is endangered". On September 4, 1995, an elementary school girl returning from shopping was abducted and raped by three US Marines. The Okinawan Prefeetural police requested that the US military investigators turn over the perpetrators, but the military refused to release them, basing themselves on the US-Japan Regional Security Agreement. The Prefeetural Assembly unanimously adopted a resolution of protest, and one after another group across the prefecture held protest meetings. On September 28, Governor Ota Masahide of Okinawa announced in the Prefeetural Assembly that he refused to sign by proxy the act authorising the enforced use of land, supported by many citizens of Okinawa.3 Soon afterwards there was an incident on October 18, when a F15 fighter from Kadena Air Base 18th Tactical Combat Flight Squadron crashed 90 kilometres off the southern part of Itoman, Kiyamisaki. Previously, when demanding the handing over of perpetrators or making restitution to victims, the US-Japan Regional Security Agreement blocked the requests from the citizens of Okinawa. When accidents and incidents caused by the US military were handled officially, the Japanese government paid compensation. In the case taisei hokai igo no senryakuteki ichizuke" [Okinawa Military in Japan—Its strategic role after the breakdown of the Yalta System], in Ota Masahide sensei taikankinen jigyokai hen, Okinawa o kangaeru. [Reflecting on Okinawa] (Okinawa, 1990). 3 Because of this, Japan is deadlocked by the formalities of the forcible use of the land by the U.S. military in regard to the landowners. The result is in May, 1997 they were not able to reach a settlement and there was a situation in which the use law expired and there was no legal rule for some of the important bases. Governor Ota and the Executive Group made a step towards this decision to support mounting public opposition to the U.S. bases arising from this situation. Ota Masahide Dairi shomei kyohi no riyu [The reason I refused to sign by proxy] (Tokyo: Hitonaru Shobo, 1996).

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of handling the matter outside official channels, incidents were dealt with among the people involved as a "private matter." However, since 80% of US military personnel are younger than 20, with little ability to pay compensation, and likely to be transferred to another base outside Japan within six months or a year, litigation with soldiers is very difficult. In general, these are cases where Japanese citizens feel forced to accept whatever is offered. That is one reason why brutal criminals who de facto have received the protection of the military for a long time, do not cease their activities. In addition, in spite of the strong desire of citizens on Okinawa to have the US-Japan Regional Security Agreement re-examined, the message did not reach Tokyo. The Foreign Ministry continued to maintain the stance that "it was not convenient to pursue an investigation." Even after the rape of the young girl, the Foreign Ministry confirmed that "it is not necessary to review the Regional Security Agreement" with the US Embassy. Faced with rising public dissent, however, the Foreign Ministry and the US Embassy changed their stance and announced that they were at long last reconsidering the procedure. Following the rape of a woman by American soldiers in Korea in May 1995, Korean citizen movements which demanded a re-examination of the US-Korean Regional Security Agreements became more active, inspired by the movements in Okinawa. This forced the Korean and American governments which were concerned about anti-American sentiment growing among the Koreans to undertake a re-examination of the Regional Security Agreement.4 Moreover, in December 1997, at the Periodic Security Review conducted between Korea and the US in Washington, it was decided that the training field in Ton Du Jyong would be returned to Korea. The area of this training field occupies 14.5% of US military base holdings in Korea. On October 21, "The Conference to Censure the Rape of a Young Girl and Implement the Resolution of the Citizens' Demand to Reexamine the Regional Security Agreement" was opened in Mashiki Park in the city of Ginowan. According to the promoters, the num+

Okinawa Times Okinawa kara: Beikoku kichi mondai dokyumento [From Okinawa:

Documents on the U.S. Military Base Problems], (Tokyo, Asahi Bunko: 1997). Even now, in the event which arises when there is an accident with U.S. military personnel, the defendant who cannot be imprisoned and receives a suspended sentence is discharged and sent home, and because he cannot be contacted, it takes a half a year to resolve the court situation. At the public trial, the defendant does not even have to appear. Asahi Shinbun 7 January, 1998 evening edition, "Mado" [Window]. Kyodo Wire Service, 9 December, 1997.

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ber of participants reached 85,000 people (the prefectural police station recorded 58,000 people). Regarding the rape incident, Governor Ota said, "I want to apologise for the fact that as the administrator in charge, I could not protect the young girl's dignity," and lowered his head to his audience. He explained why he refused to sign the existing agreement by proxy: "I want to transmit the dreams to the youth who bear the burden of the next generation." He told the people of his resolve to reduce and remove the US military bases. Speakers from every walk of life, including high school students continued on the same theme, and finally Mayor Oyadomari of Naha read the appeal of the conference about "Okinawa's Spirit and the Construction of Peace without Arms." This consisted of four demands which were adopted by the Conference: enforce discipline among the US soldiers and eradicate criminality; apologies to the victims and full compensation; a re-examination of the Regional Security Agreement; the reduction and removal of the bases. Neither before or after the reversion of Okinawa had there been a gathering of such a vast number of citizens on Okinawa. On the same day, there were protest rallies by 3,000 people on the island of Miyako and in Yaeyama. On the Japanese mainland protest rallies were started by Okinawans who had settled there. In every prefecture in Japan there were solidarity movements both large and small.5 Public resistance to the Japanese and US governments concerning the existence of the US military bases which had been at the root of this incident had peaked at the All Prefecture Resolution Conference. Tokuchi Masahiro, the leader of Rengo [the Japan Trade Union Confederation] of Okinawa, expressed his view concerning the interpretation of this wave of protests. "I think that we want to continue along the Resolution of the Conference of All Prefectures, putting an end to the Cold War, which could be the turning point now that we are celebrating the 50th anniversary of the end of the War when the US's established its East Asian strategy according to which Okinawa was devised as a complex of military bases. Now we must continue to struggle, and 5 Okinawa Times Publishing Company Okinawa kara: beigun Kichi mondai no dokyumento [From Okinawa: the U.S. Military Base Problem Documents], (Tokyo: Asahi Bunko, 1997).

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we have an excellent chance to reach our goals. However, we cannot continue with one-sided movements like we have had up to now. On the other hand, we cannot endlessly repeat large scale meetings. The Resolution of the Conference of All Prefectures changed things, providing a fresh image, and I think that its heightening of the participants' awareness was a high-point of the Conference." Mr. Tokuchi advocated a local Okinawan referendum for the continuation of these Conferences.6 According to Mr. Tokuchi, the proposal for the local referendum would be approved by the committee meeting of Rengo Okinawa in January 1996. Next, signatures were gathered from one in every fifty eligible voters for the regulations of the 74 articles of the local autonomy law. The contents of the referendum included two points from the four points adopted by the All Prefectural Resolution Conference listed above: First, a re-examination of the Regional Security Agreement and second, the reduction and removal of the bases. Governor Ota, who received the request for the enactment of regulations for the local referendum for Rengo Okinawa, added his opinion that "the citizens of the prefecture themselves have clearly declared their intention of participating directly in the prefectural administration as sovereigns. The citizens have expressed their individual sovereign will, which shows the prefectural government that they agree with the basic principles," and proposed the "regulations for a local referendum" to the Prefectural Assembly. In the Prefectural Assembly the opposition New Frontier Party gave its approval and, thus, the proposed regulations received sufficient support, although the Liberal Democratic Party was against the idea of a referendum arguing that this went against parliamentary democracy. In general, the LDP boycotts local referenda, and attempts to reduce voter turnout. Another reason for the lower voter turnout was that landowners who receive seventy billion yen a year from the military for use of their land abstain from voting. They clearly did not participate in the prefectural election to support the reduction and removal of bases as many other voters did. This explains that there is a low voter turnout in the municipalities where there are bases with people in commerce and industry who are tied into the base economy or who 6

Interview on October 25, 1996 with Mr. Tokuchi of Rengo of Naha.

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work on the base. In order to stimulate participation in the referendum, political parties, labour unions and approximately 300 citizens movements gathered on August 2 to organise a "Co-operative Meeting to Promote the Citizen's Referendum." When the association "Rengo Okinawa" conducted a survey on the day before the referendum, it showed that over 90% of eligible voters knew the referendum was going to be held. The voter turnout for the referendum held on September 8 was 59.53%. The number of votes in favour of reducing and removing the bases was 482,538, which exceeded the number of votes which Governor Ota received in his last gubernatorial election, namely 330,601. This demonstrates that the issue goes beyond attachment to particular political parties. The total number of votes in favour was 89.08%; 53.04% of eligible voters took part in the referendum. When he announced the successful outcome of the referendum in front of the TV cameras and the foreign and domestic reporters who filled the wide press area, Governor Ota explained: "We cannot allow the weak to be victims. From the point of view of human dignity and democracy we will not permit it." The ultimate goal of the prefectural referendum was to announce to Japan and the rest of the world the will of the residents of Okinawa to have a reduction in the number of bases, but the governor's speech also revealed the thinking on which was the referendum rested. On the Japanese mainland, the Okinawan prefectural referendum and the referendum about whether or not to construct a nuclear reactor held in Maki-machi, Niigata Prefecture inspired the holding of other referenda. Mitake-cho in Gifu Prefecture, Kobayashi-shi in Miyazaki Prefecture, Yoshinaga-cho in Okayama Prefecture held referenda about the creation of facilities for industrial waste disposal, and there are plans for referenda about the construction of nuclear power plants. Local referenda are becoming commonplace, as plans for the construction of dangerous facilities in outlying places are made—these plans are usually justified as important from the point of view of "national interest." Government and industry prevail upon the leaders and assemblies of those areas to approve these plans, but residents can block those plans by bringing action with a referendum through direct democratic process, for the future protection of those areas. These actions make the residents increasingly aware of their own ability to achieve something. Government and industry establish such plans for poorer areas in faraway places by using the lure of

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economic inducements, but groups opposing such plans command a large number of followers. Even in the Okinawa referendum, large numbers of citizens chose "a base free Okinawa" over subsidies and money from the bases. During every year that he has been governor of Okinawa Prefecture Governor Ota has taken the lead in visiting the US, and has developed an "autonomous diplomacy" in which he negotiated with the US government for the reduction and removal of bases. People in charge of the base issue in the prefectural government, municipal leaders of areas where there are bases such as Yomitan, Kin, and Kadena visited the US, without relying on the Foreign Ministry. They requested the advice of former US Ambassador to Japan, Mike Mansfield about how to resolve problems, and they also tried to directly contact the US Secretary of State, the Secretary of Defence, Chief of the Navy, members of Congress and various diplomats. They wanted to explain the current situation of the US bases on Okinawa and look at the possibility of reducing the bases. Moreover, they invited several officials to come to Okinawa where they could hear and see for themselves the realities of the base situation. They also took out full page advertisements in The New York Times and The Washington Post to educate the American public about the problem of the bases. Governor Ota is himself is an expert on contemporary Okinawa and its diplomacy with the US. He has done research at several American universities, which helps him to conduct this "diplomacy" autonomously. Governor Ota's arguments are based on concrete data, and gradually people in important positions started to listen to him. In particular after the rape incident, members of Congress in the US, and members of the cabinet realised that there was an "Okinawa Crisis", and they decided to take seriously Governor Ota's arguments. Moreover, in the course of negotiations in the US, it turned out that the Japanese government did not regard the problems with Okinawa as a basic concern. Ultimately, this was the motive that led to Governor Ota to refuse to sign by proxy. Originally this meant that the local authority engaged in diplomacy, an important part of the exercise of sovereignty in a modern state. When we consider the current situation in which Okinawa has been placed, neither the central government nor the Foreign Ministry were in a position to formally prohibit these activities, and there was nothing else to do but give their tacit approval. Even with the rape

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of the young girl, the US reaction was swift, compared to that of the Japanese government, since it was concerned about the impact on the US-Japan security agreement.7 Even in this case, "outside pressure" (gaiatsu) was required in order to resolve the base problem. Now there are concepts for the future of the Okinawan region such as "An Action programme to Oppose the Bases" and "The Concept of Forming An International City." Regarding the former, the US government has a plan that aims at returning all forty of the US bases in stages by 2015, and the Okinawan's are looking for a similar programme from the Japanese government.8 I will explain the fundamental principles and goals of the latter below. "Facing the twenty-first century, Okinawa's spirit points to the ideas of 'symbiosis' and 'peace' as important and our prefecture's plan for 'independence' as a principle. Rather than the promotion of a multi-faceted exchange with the special qualities of our history, culture, and nature, we aim at the formation of an area which contributes to continuous development and peace in the Asian Pacific region along with plan to develop independently our prefecture." The concept of the formation of Okinawa as an international city which is based on these basic principles and goals contains the following proposals: "technological Co-operation and international exchange," "development of new cities," "transportation and distribution networks," "peace exchanges," "resorts," "industrial technology exchanges," "a city built around an airport," "development of agricultural research," "a city in symphony with nature," "environmental protection and technology," "island development technology exchange," and "environmental protection and cultural exchange" after the bases are removed.9 There are two major criticisms of this vision. One is, how can these ideas be used to fill the gap when the income from the bases dries up? The second point is that it is too optimistic to think that Okinawa can take advantage of East Asian economic

' Interview with Mr. Miyagi Etsujiro, Chief of Okinawa Public Writings on October 24, 1996. Same day interview with Mr. Takaya Asamitsu Naha City Deputy Mayor. 8 Okinawa-ken Kichi henken Akushion Puroguramu [An Action programme for the Return of Bases], January 1996. 9 Okinawa-ken Kokusai Toshi Keisei Koso; nijuujisseiki ni muketa Okinawa no gurando dezain [Structure for an International City; the Design for Okinawa Facing the 21st Century]. November, 1996.

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development.10 To Okinawans, Taiwanese investments in Subic Bay after the withdrawal of US forces looked encouraging.

3. THERE IS A NEED FOR A COMPREHENSIVE SECURITY DISCUSSION INCLUDING THE BASE PROBLEMS

The East Asian-Pacific Strategy Report announced in February 1995 set

forth the general strategy of the US toward the post-Cold War Asia Pacific region. This strategy was called the "Nye Initiative" after Joseph Nye who designed it. It reconfirmed that the United States would not reduce the number of troops below the approximately 100,000 which are already stationed in the Asian Pacific region, and the US announced that they were committed to maintain this number of troops for the security of this region. The Japanese government approved this new proposal from the US encountering hardly any opposition during the April 1996 Japan-US Summit Conference. As a consequence, the scope of the US-Japan Security System expanded, and in addition, both governments agreed to a redefinition of the US-Japan Security System which strengthened Japan's Cooperation with US military activities. Both the Nye Initiative and the redefinition of the US-Japan Security System presuppose, in particular, the continuing existence of US bases in Okinawa as an essential condition. We cannot think of strategies for Okinawa's future without Okinawa's bases which contribute to Okinawa's economy and ensure the presence of a high quality labour force, also due to Okinawa's distant geographical location, and the high contribution to the economy of the so-called "consolation budget." However, local support for Okinawa's bases declined steeply. One reason was the September 1995 rape of a young girl. This incident raised the wrath of the people of Okinawa who exploded in anger and took advantage of this incident to put pressure on the government. As a result, both the Japanese and the American governments decided that Futenma Air Station was to be "returned in its entirety in five to seven years."11 10 Makino Hirotaka, Saiko Okinawa keizai [Rethinking Okinawan Economic], 1996; Okinawa Times Company. 11 After the Nago Referendum, Governor Ota who went to Tokyo petitioned the Prime Minister by saying he "demands a reduction in U.S. military from the Japanese government" and received the reply, "we cannot do that." Asahi Shinbun 27 December 1997.

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The Okinawan citizen's anger and dissatisfaction concerning the US bases was huge. As previously mentioned, the citizens of Okinawa announced their intention to seek the reduction and removal of the bases through a referendum and a plan was enacted to return all the bases by the year 2015. One cannot easily deny this fact. At the time of the construction of Narita Airport, it appeared that it was impossible to prevent violent activities from occurring in front of the TV cameras. During the Nago mayoral election, Governor Ota took an antiheliport stance and announced that he himself was not going to support the faction in favour of the construction of a heliport construction faction. Of course, there was no guarantee that the pro-heliport faction and the government would not put pressure on the new mayor to implement the construction. After all, they had just secured a foothold by electing a mayor supported by their pro-heliport faction. However, as soon as those political manoeuvrings become apparent, the citizens of Nago City will be reminded of their majority antiheliport vote in the previous referendum. There is no need to point out that the construction of the heliport is practically impossible. It will also be very difficult to integrate the heliport with Kadena Air Base. The Japanese government believes that it is politically impossible to move the heliport to the mainland. One result of the end of the Cold War is the weakening of the force and authority of the nation-state and its national policies. In contrast, the strengthening of grassroots movements has become a world-wide trend which has reached Asia. Another result of these movements shows that without military bases security cannot be achieved. Mike Mochizuki of the Brookings Institute insists that by changing the location of the marine bases functionally within the Asia Pacific region, there will be no need to station US Marines in Okinawa.12 It seems that the US government understood the situation concerning "the Okinawa Crisis" more quickly and has more ideas about the future of Okinawa than the Japanese government. Regarding this situation in Japanese society, there are two groups which emerged in the Cold War era: the first is a conservative group which insists that the Japan-US Security Treaty is indispensable for Japanese security, and the second is a "kakushin" (reformist) group

12

Mike M. Mochizuki, ed. Toward a True Alliance—Restructuring U.S.-Japan Security Relations (Washington DC: The Brookings Institute, 1997).

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(in this case, a Left wing faction including the Japan Socialist Party) which denounces the treaties as "military alliances co-operating with American imperialism", and links this with memories of the war. These two groups fought each other fiercely and their discussion developed into a stalemate to the degree that they were unable to talk to each other about Japanese security in a concrete and practical fashion. After the Cold War, even the JSP recognised that there has been little discussion about the Japan-US Security Treaty. The main reason for this is that Japanese society depends on the US for its security, and so in fact requires bases on the mainland such as Yokosuka, Iwakuni, and Sasebo, and particularly on Okinawa where most of the bases are concentrated. This kind of situation means that Japanese society does not carry its burden in a fair and equal way. One may even argue that Okinawa is "a colony inside Japan." Still, it is not healthy for a democratic country to entrust matters of security to a foreign country, and small groups of bureaucrats and the military at home. It is as a result of this situation that Okinawa has to house the majority of US bases.13 When we think about the post Cold War situation and the aversion to the military in present day Japanese society, the concept of comprehensive security is very suggestive because it is an idea that goes beyond purely military conceptions of security, military alone. It also stimulates public discussion of security issues.

13

Sakamoto Yoshikazu Sotaika no Jidai [The Era of Relativization]. (Tokyo: Iwanami Shoten, 1997).

KOREA AND THE REGION

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COMPREHENSIVE SECURITY AND REGIONAL NUCLEAR CO-OPERATION IN EAST ASIA: THE CASE OF SOUTH KOREA HAHNKYU PARK*

I. INTRODUCTION

With the end of the Cold War, many countries in the world are beginning to pay more attention to the concept of comprehensive security. Comprehensive security can be defined as protecting the peoples' life not only from the traditional form of military threat but also from various other forms of threats such as hunger, poverty, environmental disaster, scarcity of energy, etc. Due to the dying out (lessening) of ideological conflicts world-wide, military security interests are no longer the predominant factors that dictate international relations in the post-Cold War era. Most states have placed more emphasis on non-military-security interests rather than on traditional military-security interests regarding national security. Among major non-military security concerns, energy security has been the central issue among East Asian countries since the two oil crises of 1973 and 1978. The oil crises clearly showed the vulnerability of these countries to the foreign supply of energy. East Asian countries such as Japan, South Korea, and Taiwan have scarce energy resources to fuel their economies. Consequently, these countries have heavily relied (and still rely) on imported energy, especially, imported oil. Even China, which has relatively abundant fossil fuels, has recently been facing a challenge to secure energy resources to feed its rapid economic growth. To enhance energy security after the oil crises, East Asian countries have sought to reduce their dependence on oil through the development and introduction of alternative energy sources. In particular, nuclear energy has been a priority as a principal oil substitute among these countries. These countries * Hahnkyu Park is Professor at the Center for International Studies at Yonsei University, Seoul, ROK.

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believe that nuclear energy would provide cheaper energy on a stable basis and, therefore, contribute to the enhancement of energy security. Japan, South Korea, China, and Taiwan have achieved an impressive economic growth during the past two decades.1 Due to rapid economic growth in this part of the world, these countries have made vigorous efforts to develop nuclear energy programmes to meet rapidly increasing demands of electricity. By 2010 nuclear energy capacity in Asia is expected to increase to about 127 GWe, exceeding North America (about 108 GWe) and about equal to Western Europe (about 129 GWe), as shown in Table 1. The Asian share in the world nuclear capacity will increase to almost 30% by that time. Eighty percent of the growth of nuclear capacity in the world during this period (70 GWe out of 93 GWe) is expected to occur in Asia. Most of such growth comes from Japan, South Korea, and China.2 Table 1: Nuclear Energy programmes in the Asia-Pacific Region (Unit: GWe) 1995

Japan South Korea Taiwan China India Others Asia Total N. America W. Europe E. Europe Others World Total

39.7 8.2 4.9 2.1 1.7 0.1 56.7 (16.5%) 115.9 123.5 43.7 4.6 344.4 (100%)

2000 42.9 13.7 5.1 2.1 3.3 0.1 67.8 (18.3%) 115.9 129.3 52.2 4.6

369.8 (100%)

2005

2010

54.0 18.7

66.5 22.1

7.7

25.0 3.8 1.4 90.9 (22.5%) 116.6 128.5 62.1 6.7 404.8 (100%)

7.7

25.0 3.8 1.4 126.5 (28.9%) 107.6 129.1 66.2 7.7

437.1 (100%)

Source: Tatsujiro Suzuki, "Lessons from EURATOM for Possible Regional Nuclear Co-operation in the Asia-Pacific Region (ASIATOM)," in Michael Stankiewicz ed., Energy and Security in Northeast Asia, IGCC Policy Paper #24, August, 1996, p. 37. 1 During the period of 1980—1993, the economy of Japan became the second largest in the world. At the same time, China achieved about 9.3 percent of annual economic growth, South Korea 7.8 percent, and Taiwan 7.4 percent. These East Asian countries showed strong economic growth in this period if one considers that the average annual economic growth rate of the word was only 2 percent. See the

World Bank, World Development Report 1997: The State in a Changing World (New York

and Oxford: Oxford University, 1997), pp. 234-5. 2 Tatsujiro Suzuki, "Lessons from EURATOM for Possible Regional Nuclear Co-operation in the Asia-Pacific Region (ASIATOM)," in Michael Stankiewicz ed., Energy and Security in Northeast Asia, IGCC Policy Paper #24, August 1996, p. 37.

THE CASE OF SOUTH KOREA

309

However, active nuclear activities in East Asian countries could provide a potential source of conflict in the region in the future.3 The nuclear energy option raises controversial issues among regional countries, including the issues of nuclear safety, nuclear waste management, and nuclear proliferation. Nuclear activities in one country tend to have an adverse impact on other countries. For example, improper management of nuclear waste in one country and transnational transportation of nuclear waste and spent fuel bring about conflicts among regional states from the environmental perspective. At the same time, because there are possible links between the civilian use of plutonium and the potential for nuclear proliferation, an active nuclear fuel cycle programme in one country also raises serious concerns among neighbouring countries over the nuclear proliferation risks. The growing recognition that the nuclear energy issue will present serious challenges to both regional and global security has led many scholars and policy makers to advocate an establishment of a nuclear co-operation framework in the region. Consequently, a number of proposals for regional nuclear co-operation have been put forward in recent years. These proposals mainly suggest that the creation of a regional nuclear co-operation organisation is an important and necessary tool for effectively managing nuclear-related problems in the region. This paper seeks to re-evaluate the concept of comprehensive security in the light of regional nuclear co-operation in East Asia in the post-Cold War period. In the following section, I will illuminate possible issues of conflict among regional countries concerning nuclear energy. The possible issues of conflict, the issues of reprocessing, nuclear waste management, and nuclear safety will be examined. The third section will examine various proposals for regional nuclear cooperation in East Asia and it will discuss several possible areas of regional co-operation included in these proposals. In the fourth section, I will examine the concept of regional nuclear co-operation and its implication for South Korea. The pros and cons of regional nuclear co-operation will be examined in this section from the South Korean perspective. In conclusion, I will discuss the prospects for the formation of a regional nuclear co-operation framework in East Asia.

3

Kent E. Calder, Pacific Defence: Arms, Energy, and America's Future in Asia (New

York: William Morrow and Company, Inc., 1996), pp. 62-82.

310

HAHNKYU PARK II. NUCLEAR ENERGY AS A POSSIBLE SOURCE OF CONFLICT

The rapid expansion of nuclear production in East Asia is likely to provide a source of conflict among the regional states. Nuclear energy, though pursued as a cheap, reliable energy source, is closely related to non-proliferation and environmental issues. Nuclear technology for peaceful uses can also be used to make nuclear bombs. In particular, spent fuel reprocessing and civilian use of plutonium are considered as "sensitive" nuclear activities that can be also used to produce weapon-usable materials. Therefore, increasing nuclear activities without proper safeguards and control will contribute to international proliferation risks. At the same time, nuclear energy produces radioactive nuclear waste and spent fuel that could endanger human life and the environment. Consequently, the issue of nuclear waste/spent fuel management will be likely to result in conflicts among all the countries of East Asia. There are three possible issues that could bring about international disputes in the region with regard to nuclear activities: (1) Reprocessing and the civilian use of plutonium, (2) nuclear waste management, and (3) nuclear safety. In fact, there have been some controversies surrounding these issues among East Asian countries in recent years.

Reprocessing and Civilian Use of Plutonium

Reprocessing describes the process used to recover plutonium from spent fuel generated from conventional nuclear reactors such as lightwater reactors. The recovered plutonium is then used as a fuel in a fast breeder reactor (FBR) which theoretically produces more plutonium than it consumes.4 Enthusiastic nuclear technicians and engineers are ardent advocates for a complete nuclear fuel cycle, which assumes that the reprocessing and breeder reactor would provide an ultimate solution to the energy problem in the world. 4

The breeder reactor, which uses a mixed oxide fuel of plutonium and uranium, is designed to produce two nuclear processes simultaneously. Plutonium (Pu-239) is used in the breeder reactor to produce energy, while at the same time unreacted uranium (U-238) is transformed into new plutonium (i.e., breeding). The reactor theoretically uses uranium resources sixty times more efficiently than conventional reactors.

THE CASE OF SOUTH KOREA

31 1

In reality, however, breeder reactor technology has proved to be difficult to master and too expensive for practical use. Entering the 1990s, many nuclear advanced countries such as Britain, France and Germany have retreated from nuclear fuel cycle programmes because of various political, economic, and technical reasons. As mentioned earlier, reprocessing has serious proliferation risks since it produces plutonium, a material that can be used to make nuclear weapons. In contrast to the international trend of withdrawing from nuclear fuel cycle programmes, East Asian countries are still interested in developing nuclear fuel cycle programmes, including reprocessing and the fast breeder reactor, for reasons of energy security. For example, Japan is now the only country in the world that pursues an active nuclear fuel cycle programme since the late 1960s, Japan has developed the nuclear fuel cycle programme as the mainstay of its long-term nuclear energy development plan. Japan has an experimental reprocessing plant at Tokai-mura and is now building a large-scale commercial reprocessing plant at Rokkasho-mura. If the Rokkasho reprocessing plant is completed, Japan will produce about five tons of plutonium each year. Japan is also committed to the development of fast breeder reactors. In 1977, Japan started operations in its first breeder reactor named "Joyo." After developing this the experimental breeder reactor, Japan also completed the construction of the prototype breeder "Monju" in 1994. The pace of development of nuclear fuel cycle programmes in Japan has slowed down recently due to several developments, which includes a sodium leakage accident in the Monju fast breeder reactor in December 1995. The accident forced Japan to shut down the Monju breeder reactor for a prolonged time. International controversy over the shipment of plutonium from France to Japan in 1992-3 also delayed the development of nuclear fuel cycle programmes in Japan. In January 1996, the Japanese electricity industry, which has been in charge of the construction of the Rokkasho reprocessing plant, also announced a considerable delay in the construction of the plant that was mainly due to rising overrun costs. The primary concern of Japan's nuclear programme is the buildup of plutonium stockpiles. According to the long-term project announced by Japan's Atomic Energy Commission (JAEC) in June 1994, Japan's consumption of plutonium by 2010 is supposed to be five tons annually, including 800 kg by Monju and 700 kg by a planned

312

HAHNKYU PARK

(yet to be built) demonstration breeder reactor.3 The JAEC projection is designed to balance plutonium supply and demand. However, if the Monju breeder reactor is out of service for a prolonged period and the construction of the planned demonstration breeder is substantially delayed, it could result in a massive accumulation of excess plutonium. The stockpiles of surplus plutonium not only violate Japan's self-claimed principle of not possessing excessive plutonium but will also raise concerns among other Asian countries about Japan's use of plutonium.6 The Tokyo-based Citizens' Nuclear Information Centre estimates that by 2010 shipments from Britain and France, coupled with production at Tokai and Rokkasho, will produce at least a surplus of 55 tons, as shown in Table 2.7 Jinzaburo Takagi, director of the Centre, says that Japan will become the world's number one plutonium country by the early 21 st century, if the current plutonium programmes continue. Table 2: Japan's Balance of Plutonium Supply and Demand (1994-2010) (Unit: ton) 1994 Long-Term Plan (AEC) Supply Tokai Reprocessing plant Rokkasho Reprocessing plant Overseas (France and Britain) Total Demand ATR

Takagi Jinzaburo

30 70-80

5 40 30 75

20-25

10

50-55 70-80

20

40-50

FBR

LWRs Total

10

Source: Takagi Jinzaburo, Purutoniumu no Subete (All about Plutonium) (Tokyo: Genshiryoku Shiryo Johoshitsu, 1994), p. 69.

South Korea has a major nuclear energy programme. As of the end of 1997, there were 12 commercial reactors operating in South Korea 5

Atoms in Japan (May 24, 1994), p. 7. Jor-Shan Choi, "An East Asian Regional Compact for the Peaceful Use of Nuclear Energy," prepared for Energy Workshop of Northeast Asia Co-operation Dialogue V, Seoul, Korea, September 11-12, 1996. 7 Takagi Jinzaburo, Purutoniumu no Subete (All about Plutonium) (Tokyo: Genshiryoku Shiryo Johoshitsu, 1994), p. 69. ()

THE CASE OF SOUTH KOREA

313

with an aggregate capacity of about 10 GWe. Nuclear power comprises about 36 percent of total electricity generation. According to the long-term plan announced by the South Korean government in 1997, South Korea will have 27 nuclear power plants in 2010 with a capacity of about 21 GWe. By that time, about 46 percent of total electricity generation will be nuclear. South Korea's nuclear programme, however, will face a serious challenge in the near future. It has, so far, accumulated spent fuel in storage facilities adjacent to nuclear power plants. The capacities of these storage facilities are approaching their limits and will be reached in approximately in the next five years. By then South Korea has to decide whether to reprocess spent fuel. However, it is technically and politically impossible for South Korea to reprocess without prior consent from the United States under the nuclear co-operation agreement between these two countries. In 1991, South Korea also signed a denuclearization agreement with North Korea to abandon any reprocessing and uranium enrichment on the Korean peninsula.8 Domestically, the South Korean government has difficulty finding waste storage/disposal sites because it is faced with an increasing antinuclear movement among residents living near the plant sites. The problem of public acceptance of the nuclear programme has intensified due to the increasing democratisation of Korea during recent years. For example, the Korean government had to abandon its plan to build a storage facility for nuclear waste in Kurop-to, a small island in the Yellow Sea (West Sea in Korea), due to strong opposition from local residents. To deal with the storage problem, South Korea may consider reprocessing spent fuel or commissioning reprocessing internationally. However, the United States is very reluctant to allow any form of reprocessing to South Korea. On the other hand, South Korea is not happy about the United States' two-tier Non-Proliferation policy, i.e., allowing Japan to reprocess US-supplied fuel, but not South Korea. South Korea is likely to ask the US for reprocessing in the near future, and maybe even make an outright request for the same treatment that Japan receives.9 8

The formal name of the agreement between the two Koreas is the North-South Joint Declaration on the Denuclearization of the Korean Peninsula. The inter-Korea agreement was concluded in 1991. 9 Jor-Shan Choi, op cit.

314

HAHNKYU PARK

North Korea appeared to take a course of direct confrontation with the international community when it defied IAEA demands for full and unrestricted access to its nuclear facilities and announced its withdrawal from the Nuclear Non-Proliferation Treaty (NPT) in 1993. At that time, North Korea had a 5 MWe gas-cooled, graphitemoderated experimental reactor, which was able to produce weaponsgrade plutonium. In addition, it completed and commissioned a large reprocessing plant. After a series of negotiations between the United States and North Korea, the Framework Agreement was concluded between both countries in October 1994. Under the Framework Agreement, North Korea agreed to freeze and ultimately dismantle the graphite-moderator reactor and its related facilities while it would acquire two 1,000 MWe light-water reactors from the Korean Peninsula Energy Development Organisation (KEDO). China, as a nuclear weapons state, has military reprocessing facilities. Recently, China planned to considerably expand its civilian nuclear capacity to meet the increasing demands for electricity due to its high economic growth. It is reported that China has a plan to build a large commercial reprocessing plant in Lanzhou. The issue of plutonium reprocessing and the civilian use of plutonium should be dealt with in the regional framework since the civilian use of plutonium in one state tends to cause apprehensions among other states over proliferation risks. Through a regional co-operation framework, related countries could and should be able to develop common mechanisms to protect, store, and reduce plutonium stockpiles in the region. It would be beneficial to have regular dialogue among regional states on their nuclear fuel cycle activities so that questions could be raised and unnecessary suspicions avoided.10

Nuclear Waste Management

Nuclear waste management can be another source of regional conflict regarding the nuclear issue. The nuclear waste problem is especially significant in East Asia. It has been reported that storage facilities in South Korea and Taiwan will be approaching their limits within 10 Edward Fei, "Nuclear Energy and Fuel Cycle Issues in East Asia," in Michael Stankiewicz ed., Energy and Security in Northeast Asia, IGCC Policy Paper #24, August 1996, p. 23.

THE CASE OF SOUTH KOREA

315

a few years, and Japan is also expected to face the same problem soon." Taiwan's recent decision to transport nuclear waste to North Korea is a good example that illustrates how serious the storage problem of nuclear waste will be in the region. In January 1997, the Taiwan Power Company (Taipower), a state-owned monopoly electric power company in Taiwan, announced that it had signed a contract with North Korea to transport 60,000 barrels of low-level radioactive nuclear waste to North Korea over two years. This announcement aroused strong opposition from South Korea. The South Korean government protested that "such an action on the part of Taiwan will cause serious contamination of the Korean Peninsula" because North Korea does not maintain effective technology and sufficient storage facilities for nuclear waste.12 The South Korean government also warned that transportation of a massive amount of nuclear waste through the Yellow Sea would deal a catastrophic blow to the environment of the entire region as well as the Korean Peninsula in case of an accident.13 This case clearly showed that the nuclear waste problem has the potential to become a serious concern in the region. South Korea argued that the Taiwan-North Korea agreement violated international practice regarding nuclear waste management i.e. the waste-producing country should treat its hazardous waste within its own territory.14 However, there is no international law regulating transnational movement of nuclear waste. Neither North Korea nor Taiwan are members of the IAEA that adopted the Code of Practice on the International Transboundary Movement of Radioactive Waste of 1990. At the same time, the South Korean government has no effective means to block the shipment of nuclear waste from Taiwan to North Korea. Under such circumstances, Taiwan's Atomic Energy Council gave its approval to Taipower for the shipment of nuclear waste to North Korea. Taiwan's decision to transport nuclear waste to North Korea resulted from its own nuclear waste storage problem. The lack of space for nuclear waste storage has become a serious problem for the entire 11 Satoshi Isaka, "Experts Call for Asian Nuclear Pact," Nikkei Weekly, February 20, 1995, p. 4. 12 Ministry of Foreign Affairs, the Republic of Korea, "Taiwan's Attempt to Transfer Nuclear Waste to North Korea," (February 3, 1997). 13 Ibid. 14 Ibid.

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HAHNKYU PARK

region. Consequently, if the nuclear waste problem is not solved properly in the foreseeable future, similar problems regarding nuclear waste will occur repeatedly in this region. Regional co-operation is needed to resolve the nuclear waste problem in East Asia.

Nuclear Safety

A nuclear accident with a large release of radioactive material could affect many people in East Asia. A nuclear accident with the magnitude of the Chernobyl nuclear accident would kill thousands of people and scatter radioactive fallout all over the region covering China, Japan, North and South Korea, and the Philippines.10 Therefore, nuclear safety measures within a country are a legitimate international concern if the consequences of an accident can affect other countries.16 East Asian countries have plans to rapidly increase nuclear energy capacity to meet their energy needs. Some Southeast Asia countries such as Indonesia and Malaysia also have announced plans to develop nuclear power in the early 21st century. However, there are concerns that some nuclear power plants might be installed in countries that do not have enough experience and technology to maintain these facilities safely. While each country has its own safety standards, surrounding countries want to be reassured that nuclear power plants in neighbouring countries operate safely. To alleviate concerns about nuclear safety in the region, countries can exchange information on safety issues through a regional cooperative framework. In addition to exchanging information on nuclear safety, they can also discuss the issue of technology transfer related to nuclear safety. The key question is whether countries will be able to pursue peaceful nuclear programmes safely without creating regional conflicts and misunderstanding between them.

15 The Chernobyl accident contaminated hundreds of thousands of square kilometres and caused up to 500,000 premature deaths. It had a force of 0.3 kilotons; the Hiroshima bomb was 12 kilotons. 16 Fei, op cit, p. 24.

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317

III. VARIOUS PROPOSALS FOR NUCLEAR GO-OPERATION IN EAST ASIA

To cope with various problems regarding nuclear activities in East Asia, many nuclear experts and policy makers have recently raised the issue of establishing a regional nuclear co-operation organisation in East Asia. In contrast to the European Atomic Community (EURATOM), there has been no such framework for regional co-operation to co-ordinate nuclear activities in East Asia. The nuclear programmes of East Asian countries have proceeded independently mainly on the basis of bilateral nuclear energy co-operation agreements between the United States and Japan, the United States and South Korea, and the United States and Taiwan. Recently, many nuclear experts and scholars have made various proposals for regional nuclear co-operation in East Asia. The most frequently discussed concept so far is "ASIATOM" or "PACIFICATOM," depending on the scope of membership.17 Tatsujiro Suzuki recently completed an excellent work on the comprehensive review of twelve different ASIATOM proposals.18 According to Suzuki's analysis, there are significant differences in the emphasis of possible areas of co-operation among various proposals, as shown in Table 3. The differences and common characteristics of these proposals can be summarised as follows:19 Almost all proposals address nuclear safety and spent fuel/waste management as important issues for regional co-operation. Most Japanese emphasise co-operation in the peaceful use of nuclear power and other countries emphasise co-operation in non-proliferation. A step by step approach is preferred by most proposals, including flexibility in membership. 1; The membership issue has been a politically sensitive issue concerning which countries should be included as members of a regional nuclear co-operation organisation. In many ASIATOM proposals, member countries include Japan, North and South Korea, China, Taiwan, the United States, and Russia while PACIFICATOM proposals tend to be more inclusive in its membership to the extent that they also include Australia and Canada as members. 18 Tatsujiro Suzuki, "International Implications of Proposed "Asiatom" Concepts— Comparative Assessment of Various Proposals," prepared for the "Japan-Korea Dialogue on Nuclear Co-operation in Asia, organised by the Japan Council on Nuclear Energy and Disarmament, Seoul, February 20, 1997. 19 Ibid.

Table 3: Comparison of Various Proposals for ASIATOM Concept CD

Proposals

ASIATOM (Kaneko) PACIFICATOM (Kano) Ryukichi Imai (Japan) Atsuyuki Suzuki (Japan) Kunio Uematsu (Japan) PACATOM (Manning) William Dirks (USA) Jor-San Choi (USA) Y.M. Choi (S. Korea) J. Carlson (Australia)

Area of Co-operation Safety

Public Industry Spent Fuel Waste Regional Pu NonNuclear Relations Co-operation Management Manage- Safeguards Manage- proliferation Disarmament ment ment Export Control

X X

X X

X

X X

X X

X X

X

X (enrich)

X

X

(X)

X

X (R&D)

X X

(X) X

X

X

X

X

X

X

X

X

X

X

X

(X)

(X)

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X X

X (R&D)

X

X

X

Source: Reproduction from Tatsujiro Suzuki, "International Implications of Proposed 'Asiatom' Concepts—Comparative Assessment of Various Proposals," prepared for the "Japan-Korea Dialogue on Nuclear Co-operation in Asia, organised by the Japan Council on Nuclear Energy and Disarmament, Seoul, February 20, 1997.

THE CASE OF SOUTH KOREA

319

A regional nuclear fuel cycle concept can be a potential area of co-operation or a source of conflict depending on the emphasis of the programmes. Based on the above findings, we can conclude that nuclear safety is the most probable area for co-operation in East Asia since most of the proposals for regional nuclear co-operation agree to deal with the safety issue through a regional framework. Given the rapid development of nuclear energy in the region, the safety issue should be addressed as the most important priority. There is another important area of co-operation that can be achieved relatively easily. Many people agree that the issue of spent fuel and radioactive waste management will become a serious concern among regional countries because of the lack of space for storage in the region. However, this issue needs to be approached carefully since the spent fuel and waste management issue can generate potential conflicts among concerned members with regards to problems, risks, and value perceptions, of spent fuel.20 Prevention of nuclear proliferation risks can be another important area of co-operation to be approached very carefully. However, there exists a subtle difference among possible members on this regional safeguard issue. Some countries do not want additional safeguard measures to be applied to their nuclear programmes, while others see potential benefits in regional safeguards system. There still needs to be more multilateral dialogues among concerned members to narrow this gap toward the regional safeguard issue. Finally, there exists significant disagreement on the issue of regional nuclear fuel cycle. This disagreement mainly results from different perspectives regarding reprocessing and the civilian use of plutonium. Some countries want to close a domestic nuclear fuel cycle for reasons of energy security. Consequently, it does not seem to be easy to establish a regional nuclear fuel cycle system in the foreseeable future.

20

Ibid.

320

HAHNKYU PARK IV.

SOUTH KOREA AND REGIONAL NUCLEAR COOPERATION IN EAST ASIA

In many proposals for an East Asian nuclear co-operation organisation, South Korea is expected to play an important role in establishing a regional nuclear co-operation framework. Considering its active nuclear programme and its geopolitical position in the region, South Korea also has a vested interest in the emerging concept of a regional nuclear co-operation system. It has recently faced many problems hindering the development of its own nuclear power programme. First, lack of storage space for spent fuel and nuclear waste is becoming a serious concern for South Korea. Spent fuel has been accumulated in cooling ponds adjacent to reactors or at special facilities within the plants. According to Joo-bo Hong, general manager at the nuclear power department of the Korea Electric Power Company, these facilities will be used up by 2006.21 In a matter of a few years, South Korea should decide whether to reprocess its spent fuel or dispose of it directly. A number of nuclear experts and scholars in South Korea are beginning to pay growing attention to the idea of a regional nuclear co-operation regime to solve problems concerning nuclear energy. However, the South Korean government has been reluctant to give its active support to the idea of regional co-operation since there are both pros and cons to this idea from the South Korean point of view. The pros and cons in the ASIATOM concept on the part of South Korea can be summarised as follows: Pros

First, through a regional framework, South Korea can enhance its role in creating a more stable safety environment in the region. In doing so, South Korea could co-operate with other regional countries in such areas as research and development on nuclear safety technology and safety training. Second, a regional nuclear co-operation framework would promote transparency of nuclear programmes in South Korea and in other regional countries by allowing co-ordinated inspection of nuclear fuel cycle facilities between member countries. Through the regional framework, South Korea could lessen the proliferation concerns by the US and other regional countries. 21 Satoshi Isaka, "Energy Experts promote Asian Nuclear Network," The Nikkei Weekly (April 28, 1997).

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321

Finally, if regional storage facilities of spent fuel and nuclear waste are established through the regional framework agreement, South Korea can resolve its problems of spent-fuel storage and waste disposal. Cons

First, a regional nuclear co-operation framework could hinder the development of independent nuclear fuel cycle programme in South Korea. Especially, the division of labour in nuclear activities in the region would tie the hands of a future government in Seoul if South Korea needed to close a domestic nuclear fuel cycle in the future.22 Second, a regional framework could generate new constraints in the nuclear relationship between the United States and South Korea if the US thinks that a regional framework might encourage reprocessing in East Asia. Because of security instability on the Korean Peninsula, the US government is not likely to allow South Korea to reprocess its spent fuel even through the regional framework. However, the US policy to discriminate between Japan and other states in East Asia will meet a serious challenge from South Korea when, early in the next century, South Korea's nuclear programme reaches a size large enough to justify reprocessing. Finally, a regional safeguards system could provide more constraints on the peaceful use of nuclear power in South Korea. South Korea's nuclear programme has been under full-scale IAEA safeguards. Consequently, South Korea does not want additional regulations on its nuclear programme. Instead of full-scale regional safeguards, however, South Korea can consider such regional arrangements as mutual inspection of nuclear facilities and information exchange regarding operations in those facilities, which complement IAEA safeguards. Because of the mixed feature of the regional co-operation framework, South Korea is very cautious in approaching the issue of an East Asian nuclear co-operation organisation. To achieve the goal of a regional framework, South Korea is likely to adopt an incremental 22 Hiroshi Murata, vice chairman of the Japan Atomic Industrial Forum (JAIF), proposed a regional division of labour in nuclear fuel cycle activities in East Asia at the JAIF annual meeting in April 1997. His plans called for regional countries to take on different tasks to complete the nuclear fuel cycle. The cycle would start at an enrichment centre in Australia, move to a fuel-fabrication centre in South Korea or Indonesia and end at a reprocessing site in China. Spent-fuel storage and high-level radioactive waste disposal facilities would also be built in China. Satoshi Isaka, "Energy Experts promote Asian Nuclear Network," The Nikkei Weekly (April 28, 1997).

322

HAHNKYU PARK

approach by starting with the non-controversial issue of nuclear safety, then move on gradually to more sensitive issues of waste disposal and nuclear fuel cycle system. In 1997, on behalf of the Korean government, Soon-Heung Chang, commissioner of the Nuclear Safety Commission of Korea, officially made a proposal for the establishment of Asia Nuclear Safety Consultation Organisation (ANSCO). The South Korean proposal states that the goal of attaining a high level of nuclear safety cannot be achieved without multilateral co-operation in the region although ultimate responsibility of nuclear safety rests with individual countries. According to the proposal, the areas of co-operation through the ANSCO cover: (1) safety of nuclear installations, (2) nuclear emergency, (3) nuclear liability, and (4) radioactive waste management.23 The idea of ANSCO is not the first of its kind. In November 1996, Japanese Prime Minister Ryutaro Hashimoto took the initiative in proposing and hosting the "Tokyo Conference on Nuclear Safety in Asia." It is safe to say that there is a shared recognition of the necessity to establish a regional cooperation system in the field of nuclear safety among regional states. Such co-operation on the safety issue may provide an important step for exploring concrete ways of achieving full-fledged regional nuclear co-operation in East Asia.

VI. CONCLUSION

Securing a stable supply of energy resources is the basis for sustained economic growth and the welfare of the people. Rapid economic growth and increasing energy needs are the main factors which have induced East Asian countries to opt for nuclear power. As a result, these Asian countries in recent years have made vigorous efforts to develop nuclear power to enhance energy security. On the other hand, such a rapid development of nuclear energy in East Asia has raised new problems and concerns among regional countries. The issues of spent fuel storage and waste disposal have an important bearing on regional environmental security. At the same time, plutonium reprocessing and the civilian use of plutonium 23

Soon-Heung Chang, "A Proposal by the Republic of Korea for Establishment of the Asia Nuclear Safety Consultation Organisation (ANSCO)," undated, Seoul, Korea.

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323

have caused nuclear proliferation concerns in the region. As long as these issues are not resolved quickly and properly, nuclear power cannot be a major stable energy source for these countries. Consequently, the lingering problems related to nuclear activities have significant implications for energy security in each country as well as for the entire region. An East Asian nuclear co-operation organisation is expected to play an important role in solving these problems. It may provide a forum for the exchange of views and information regarding nuclear safety, nuclear waste management, and nuclear non-proliferation between member countries. More importantly, a regional framework can provide confidence-building concerning and a better understanding of one another's nuclear programme. The idea of an East Asian nuclear co-operation organisation such as ASIATOM and PACIFICATOM is still in the premature stage. Multilateral and bilateral dialogues and conferences among regional countries should be held more frequently in order to find common interests and goals for the realisation of a regional co-operation framework. For example, Japan's Atomic Energy Commission has held annual conferences on nuclear co-operation in Asia since the early 1990s. The annual meeting of the Japan Atomic Industrial Forum is also a good arena for exchanging views and ideas between nuclear experts, scholars and officials in the region. In August 1997, the Council for Security and Co-operation in Asia and Pacific (CSCAP), an international non-governmental organisation for security cooperation in the region, decided that it would examine the creation of region-wide nuclear co-operation which would enhance nuclear safety and help reduce the risks of nuclear proliferation. These efforts may serve an initial but important step towards the establishment of a regional nuclear co-operation framework in East Asia.

Selected Bibliography Calder, Kent E. Pacific Defence: Arms, Energy, and America's Future in Asia. New York:

William Morrow and Company, Inc., 1996. Choi, Jor-Shan. "An East Asian Regional Compact for the Peaceful Use of Nuclear Energy," prepared for the Energy Workshop of Northeast Asia Co-operation Dialogue V, Seoul, Korea, September 11-12, 1996. Fei, Edward. "Nuclear Energy and Fuel Cycle Issues in East Asia." in Michael Stankiewicz ed. Energy and Security in Northeast Asia. IGCC Policy Paper #24, August 1996.

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Isaka, Satoshi. "Experts Call for Asian Nuclear Pact." Nikkei Weekly, February 20, 1995. Kaneko, Kumao. "Nuclear Energy and Asian Security in the 21st Century: A Proposal for "ASIATOM," prepared for the 'Japan-Korea Dialogue on Nuclear Co-operation in Asia," Seoul, February 20, 1997. Ministry of Foreign Affairs, Republic of Korea. "Taiwan's Attempt to Transfer Nuclear Waste to North Korea." February 3, 1997. Speier, Richard H. and Brian Chow. "Asiatom: Proposals, Alternatives and Next Steps." Rand Policy Paper, DRU-1367-DOE, July 1996. Suzuki, Atsuyuki. "A Proposal on International Collaboration with Nuclear Power Development in East Asia," prepared for Energy Workshop of Northeast Asia Co-operation Dialogue V, Seoul, Korea, September 11-12, 1996. Suzuki, Tatsujiro. "International Implications of Proposed "Asiatom" Concepts— Comparative Assessment of Various Proposals," prepared for the "Japan-Korea Dialogue on Nuclear Co-operation in Asia", organised by the Japan Council on Nuclear Energy and Disarmament, Seoul, February 20, 1997. . "Lessons from EURATOM for Possible Regional Nuclear Co-operation in the Asia-Pacific Region (ASIATOM)." in Michael Stankiewicz ed. Energy and Security in Northeast Asia. IGCC Policy Paper #24, August 1996. Takagi, Jinzaburo. Purutoniumu no Subete (All about Plutonium). Tokyo: Genshiryoku Shiryo Johoshitsu, 1994. World Bank. World Development Report 1997: The State in a Changing World. New York

and Oxford: Oxford University, 1997.

FAREWELL TO A MODEL? GERMAN EXPERIENCES WITH UNIFICATION AND ITS IMPLICATIONS FOR KOREAN STRATEGIES MANFRED POHL*

Economic facts speak a clear language: there can be no doubt that as a state, as well as a former model of self-reliant development, North Korea is already doomed. Any direct confrontation with South Korean economic and political challenges would inevitably result—or so everybody believes—in a sudden collapse and demise of both North Korea's political and social systems. The economy obviously already is in agony and the people are starving.1 The latter facts can be seen by anybody who has visited the country. This author had the chance to visit North Korea in 1989 as a member of a German business delegation and even then the general impression of everyday life was rather depressing, although the food situation was much better than it is today. Apart from visiting the country, the author had various opportunities to talk to North Korean functionaries, due to the fact that the Democratic People's Republic of Korea (DPRK) has kept its former embassy in East Berlin, in the former German Democratic Republic (GDR), open. It has been transformed into the Bureau for the Protection of the Interests of the DPRK under the diplomatic * Manfred Pohl is Professor at Hamburg University. He specialises in current developments in Northeast Asia. Among his recent publications: Jahrbuch Japan 1996/97—Politik und Wirtschaft, Hamburg: Institut fur Asienkunde 1997; Ldnderbericht

Japan, (ed. together with H J. Mayer), Bundeszentrale fur politische Bildung, October 1998. 1 Toshimitsu Shigemura, "What Is Happening in North Korea today?" Foreign Press Centre, Japan, June 1996; Shigemura takes a different position. He argues that in 1996 through international help and partly through domestic production the supply gap of grain was much smaller than generally assumed. North Korean grain production in 1995 was estimated at 2.0 million tons which in turn would have meant a shortfall of ca. another 2.0 million tons; relief supplies from various international organisations and countries like China, Japan and South Korea were approximately 1.8 million tons, so starvation could not be based on insufficient supplies; the true reason probably lies with the very difficult transport situation; big cities can get at least part of the necessary supplies; however a part of the peasant population in the countryside is apparently starving.

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umbrella of the embassy of the People's Republic of China. Germany also has a representative in Pyongyang operating under the protective power of the embassy of Sweden. Members of the North Korean Bureau regularly visit the Hamburg Institute of Asian Affairs which is loosely connected with the German Foreign Ministry (and of which the author is a fellow) to have informal talks, mostly on economic relations; the last high ranking visitor was the deputy foreign minister of the DPRK in March 1997. The North Korean leadership—from Kim Il-sung to his son Kim Jong-il—seems to be living in a pipe dream. For the most part, ordinary people are cut off from outside information. Even if they own a radio or a television set they cannot listen to outside broadcasts or watch non-North Korean television. But the elite—party cadres, the military and party technocrats—are fairly well informed about what is going on in the world: they have, for example, access to Japanese broadcasts, German magazines and American papers, although it seems that sometimes that they are unable to put this information into proper perspective. Those of the North Korean elite who do have contacts with the outside world appear to be quite sophisticated. This author has talked to North Korean diplomats and economists on a regular basis since Germany "inherited" the former North Korean embassy after unification. While representatives of the North Korean government pay lip service (quite convincingly so) to the late "great and beloved leader, comrade Kim Il-sung" or the "dear leader, comrade general Kim Jong-il" and their juche (selfreliant development) Utopia, they quite openly admit to the many difficulties the DPRK is facing today. After the collapse of the East European form of Socialism, particularly the Soviet type, and the open-door policy of their Chinese neighbour, North Korea was left out in the cold. All of a sudden the heavily protected North Korean economy was at least partly exposed to the rules of international trade, such as hard currency transfers and demands for a minimum of quality standards. As representatives of German companies operating in the DPRK can testify, North Korean partners are quite willing to adjust and produce fairly high quality textiles, for instance. Encouraged by these very limited successes and obviously impressed by exceedingly good results of the Chinese Special Economic Zones (SEZ), North Korea now aims at establishing a SEZ of its own in the delta of the Tumen River near the borders with Russia and China at Rajin and Sonbong. This plan has received very favourable responses internationally: In September 1996 investment deals with

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North Korea in the planned SEZ reached US$ 282 million, among which were a five-star hotel, a motor-cycle plant, prefabricated housing and improvement of telecommunication systems. Investors came from Hong Kong, China, Thailand and various overseas Korean groups.2

IRRATIONAL NUCLEAR ADVENTURISM AND STARVING PEOPLE? PRESSURE WILL NOT WORK

How then was it possible that the DPRK leadership triggered an international upheaval concerning its alleged nuclear armament programme? North Koreans in Germany have a ready explanation: it was the Americans who used photos taken from spy satellites to (falsely) accuse North Korea of producing plutonium and launching a military programme to build a bomb. In talks with this author North Koreans used highly contradictory arguments: - The DPRK never had the intention to build a bomb but then the South Koreans already are working on a military nuclear programme—and have done so since the mid-seventies. - Japan has "all [the] parts" for a bomb of its own. For this argument they used British information disclosed, among others, by the Hong Kong South China Morning Post} - The IAEA is merely a willing tool in the hands of the USA; the DPRK would never bow to the demands for special inspections of its nuclear research facilities, since those demands "originated in Washington and not in Vienna." In the past, the nuclear question has been made far too much a focal point by South Korea and the US on the one hand, and Japan on the other. Even if the North had been hoarding plutonium with the intention to use it for the construction of nuclear weapons, it remains highly doubtful that North Korea would have been technically able to miniaturise the plutonium load to put it in a nuclear warhead that could be installed on top of the (in)famous Rodong 1 rocket which seems to sell so well in Middle Eastern states. There are reports that the North Korean nuclear programme was not halted after the Geneva agreement of 1989. During the session of the Supreme People's Assembly in 1998 observers expected Kim Jong-il to finally be elected 2 3

The Japan Times, 16 September 1996. South China Morning Post, 25 May 1996.

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as state president. Instead, the post was scrapped and the younger Kim was only nominated to the highest office in the DPRK. Obviously the title of State President is to be reserved exclusively for his father. No living person (even his son) will ever earn this title and position. Even if he does not earn this role, there can be no doubt that in fact Kim Jong-il does seem to control the levers of power. He is chairman of the military commission of the Korea Worker's Party (KWP), he is secretary general of the ruling party and all media praise him as the great leader, a cliche that used to be reserved for his father. However, many signs seem to indicate that Kim junior has had to pay a price for this: the military has all but taken over the country. Always a power of its own the army has, in fact, established a form of military rule which is only partly concealed by the pretence of party rule. The vast military-economic complex, which has grown into an economic giant completely separated from the civilian economy, is absorbing most of the national resources, and provides the military elite with much cherished privileges. Kim Jong-il is very much aware of the imposing position of the military. He does his best to spoil them: between 1992, when Kim junior became supreme commander of the North Korean armed forces, and 1997 he promoted more than nine hundred officers to the rank of general or higher—all privileges included. After having lived on top of a vast nuclear arsenal (and still living next door to French and British nukes), this author has always argued that instead of clobbering the North Korean leadership—and thereby confirming its aggressive xenophobia—a soft approach would be more appropriate. North Korea's leadership is intensely nationalistic, which translates into Anti-Americanism, although the DPRK leadership has worked eagerly to get diplomatic recognition from Washington. In an interview with the North Korean Deputy Foreign Minister in March 1994 the diplomat stressed four points: 1. The people of the DPRK are very proud and would never give in to outside pressure. 2. South Korean President Kim Young Sam at that time had "insulted" the DPRK, because he did not send a message of condolence after the death of Kim Il-Sung. Therefore he would not have been a welcome dialogue partner. (One might add that President Kim Dae-jung was obviously a much more uncomfortable partner, because his "sunshine-policy" or Nordpolitik was constantly forcing the North's hand with over-aggressive offers to start a constructive dialogue.)

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3. Before any talks between South and North Korea can start the South has to abolish its security laws. 4. With regard to the role of the US in the Northeast Pacific he said: "Washington is not really interested in assisting the Koreas to unify, but would rather keep the peninsula divided and maintain troops in South Korea to use as a lever against China and Japan".4 The present desperate shortage of food, which forced the North Korean leadership to beg for outside help, has created a situation in which North Korean leaders are probably more prepared to enter into dialogue than ever before with her arch-enemies—the US, Japan and South Korea—who are also more inclined to do so. China probably has to play a role as intermediator, for the Chinese leadership holds the key to any sort of cautious openness on the North Korean side. The South Korean government fervently believes that China will never allow North Korea to collapse, but would rather send substantial help when and if the DPRK reaches a critical point.3 To involve China makes it easier for the North Korean leadership to sit down at the negotiation table and overcome its anxious attitude of autistic-like rejection of any offer for talks. North Korean representatives who have had talks with German counterparts have always stressed that they would never bow to outside pressure (see above), so any offer of, for example, food help to the North Koreans has to be free from conditions in order to let the DPRK leadership keep face. It is in the best interest of South Korea to help and, thereby, keep the North on its feet for the time being, because a sudden collapse of the Northern system would put an enormous strain both on the social and economic structure of its Southern neighbour.6 South Korean President Kim Young Sam has only limited options in approaching the North Koreans. On the one hand, Pyongyang in the past simply refused to talk to their Southern neighbour. On the other hand, the US has taken all the initiatives, to such a degree 4

Interview in Hamburg, 27 March 1997. The New Korea Party Lawmaker Hwang Byug-tai who is a former ambassador to China, The Korea Herald, 22 November 1996. () A model calculation based on the German model done by the Dresden Bank estimates that if unification happens around the year 2000 and if the North Korean income level would be raised to 60% of the Southern level, South Korea would have to transfer US$ 240 billion, more than half the country's annual GDP. "Putting Korea Together Again," The Economist, 10 May 1997, p. 84. 5

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that the impression given was that South Korea was often pointedly left out of the dialogue with the North, especially during the Geneva talks. To breathe life into and to intensify intra-Korean dialogue would mean that South Korea gets the chance to act more independently. This however would imply that South Korea has some "carrots" to dangle before the North Koreans, and that Kim Jong-il and his power elite are actually prepared to enter into direct talks with the South. Any offer of substantial help to the North and more flexibility on the side of the South Korean leadership to allow South Korean companies to freely enter into business relations with North Korean partners would lead to a more relaxed attitude on the North Korean side. However, South Korea's presidents have mostly shown an hard-line attitude towards relations with the North. Most recently South Korean companies were blocked from attending a seminar on direct investment in the North Korean SEZ on the Tumen River. South Korean students who have advocated more contacts with North Korea are still treated like criminals.7 In the "stick-and-carrot" approach the US provides some carrots. It would be very attractive for the DPRK to get a diplomatic facelift such as a permanent representative office of the US in Pyongyang. South Korea could offer more than food aid, for instance economic aid, which could be camouflaged as "trade under preferential conditions," since it could be very risky for the North Korean leadership to admit to its people that economic aid is necessary. For the time being a policy of boycott vis-a-vis North Korea will not work for two reasons: Firstly, a country like the DPRK, whose people are already used to starving and whose economy has by now run on continuously shrinking capacity and rapidly declining efficiency, can not be effectively impaired by economic sanctions. Secondly, as was shown by many other boycott measures in recent history (e.g. in the former Yugoslavia), such measures never work effectively: In the case of North Korea, China would certainly sabotage boycott measures for "old time's sake."

7

Cf. Johan Galtung and Dietrich Fischer, "Proposal for Korean Reunification,"

The Korea Herald, 4 February 1997.

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GERMAN UNIFICATION: NOT A MODEL, BUT STILL A FEW LESSONS TO LEARN

The first and foremost lesson Koreans can learn from the German unification is how not to do it. Unification in Germany has certainly not been a planned and orchestrated process. It was an historic development which, from the beginning, was marked by a dynamism of its own. In the GDR a corrupt power elite, totally isolated from both the people and economic reality, presided over a state which was already bankrupt long before the actual collapse in 1989/90. This system was finally toppled by a mass movement which quickly moved from the slogan "we are the people!" to the slogan "we are one people!" demanding national unification. It has been said many times that German unification was the result of a sudden collapse of the German Democratic Republic (GDR) but this is a misleading perception: the demise of the GDR was only a full stop to a very long sentence, starting with the "Ostpolitik" of Chancellor Willy Brandt. On various levels, different kinds of political, social and economic organisations of West Germany had established contacts to GDR mass organisations and individual politicians in the East. The GDR leadership undoubtedly had been convinced that it was merely "using useful idiots" to further its cause. The fact however was that the GDR was embraced—and then smothered by this embrace. The events of 1989/90 thus only marked the peak of a development which had begun long before with the West German "Ostpolitik" and which nowadays is echoed by South Korea's "Nordpolitik." The patient West German approach to intensify relations with the GDR probably is the only lesson that could be learned by the South Korean leadership. Former West Germany paid a high political price for improved contacts with the East: the GDR was recognised as an independent state (i.e., the so-called "Hallstein doctrine" was abandoned) and the GDR was allowed to gain an international reputation as a democratic socialist state. To many observers, for example in Japan, the GDR even appeared to be the "better Germany." West Germany, however, insisted on one important principle vis-a-vis the European Union, namely that intra-German trade was not international, but domestic trade. A gradual process of Korean unification is highly desirable. In fact it is the only way to unification on the Korean peninsula. Yet this author is not entirely sure that it can be easily achieved. The German

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example has clearly shown that events may gain a dynamism of their own, propelling the actors forward who are unable to control the process. However there are strong indicators that both the North Korean leadership (at least the so-called "technocrats") and the South Korean top decision-makers are working hard for a "gradual solution." However the question remains whether the North Korean leadership is still able to act freely. The recent defection of chief ideological thinker and member of the Central Committee of the Korean Workers Party, Hwang Jang-yop, in China was seen as a sign that an intense power struggle is going on in North Korea. The military seems to fight the civilian technocrats. This is my conclusion from the fact that when the generals paid respect to the late Kim II Sung, they did it separately from civilian leaders on 15 August 1996.8 International organisations and individual neighbouring states, as well as the USA and European countries, especially Germany, have supported these efforts. Contrary to the totally erratic and irresponsible attitude of North Korea regarding the nuclear question in the past, there are now signs indicating that North Korea is indeed trying to follow the "gradual model" of unification which it has always insisted it would do. Slowly, with great difficulty and many setbacks, some communication channels have been set up between the governments in South and North Korea. The present desperate food situation in the North certainly helped in this respect, although North Korea is still quite unwilling to talk. Thus the "talks" between the two Koreas are far from the interactions that had been set in motion between the two Germanys long before unification—however, a beginning has been made. Talks between high-ranking American and North Korean officials were held in Beijing, Pyongyang and the US. According to unconfirmed reports the US government might be prepared to open diplomatic relations with North Korea if the government in Pyongyang agrees to lend its full co-operation concerning the nuclear question and takes a more flexible attitude vis-a-vis the South. Any move in the direction of diplomatic ties must of course have Seoul's blessing.

8

"North Korea is like an airplane without a pilot," Kazuhiko Araki, Modern Korea Institute, Tokyo, The Nikkei Weekly, 17 February 1997; for the separate visits of civilians and generals at the Kim II Sung's "shrine" cf. Vantage Point, vol. XIX, no. 9. September 1996, p. 23.

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As was the case in Germany, the core of a gradual unification process is always business activities. Businessmen obviously find it easier to talk profits rather than politics and thereby further opening up channels of communication and thus contributing to a relaxation of tensions. The German unification model might be called an "absorption model" based on unique and never to be repeated historical circumstances. It should also be kept in mind that the former GDR was never really a sovereign state; the Soviet Union had the last word at all times on political decisions and it was only after Moscow decided not to interfere with the move towards unification that the GDR regime broke down and unification took place. In the case of North Korea there is no such "big brother," not even China is in a position to influence Pyongyang. In the case of Germany one part of a divided nation, i.e., the richer and more successful one, absorbed the other part. In effect German unification was paid for solely by West Germany, and the financial burden of unification will weigh heavily on the country for many years to come. This will certainly have a major impact on Germany's ability to comply with the socalled "Maastricht conditions" of the European Monetary Union. Korea could very well avoid such pressures by using the strong elements of their common Northern and Southern cultural, historical and ethnic heritage. Here the Korean nation has a much better starting point than the Germans. While Germany only became a nation state in the late nineteenth century by unifying rather reluctant feudal states under Prussian dominance, Korea has been a national entity for many centuries. There are two very different scenarios concerning a very rapid, uncontrolled unification through a collapse of the North. Critical observers predict that millions of people will be on the move towards the South once the Northern regime has broken down. Others say that the South Korean government will manage to control mass migration and disorder. But how? A chilling answer: by sending in the army to seal the border between North and South. This would certainly endanger all achievements of democratic developments during both the Roh Tae-woo and the Kim Young Sam presidency. Is it really worth the price? There is no practical alternative to gradual unification in Korea.

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MANFRED POHL LAYING THE GROUNDWORK FOR UNIFICATION—PREREQUISITES IN THE SOUTH

After President Kim Young Sam took office in 1993 he faced several very difficult problems. The successful solution to all or most of these problems is a precondition for managing any conceivable form of unification process. The fact that South Korea has not yet fully overcome its basically authoritarian structure might turn out to be a blessing in disguise, since it would certainly make it much easier to bring the Northern and Southern systems together. Any form of unification process will have to pass through a transitory period of strong authoritarian centralism. The South Korean government, i.e., the President, will have to tackle these problems to lay the groundwork for unification: 1. Moving slowly closer to a totally unpredictable North Korea in order to coax the hostile neighbour into closer co-operation, without clamouring loudly for an early unification (under South Korean conditions). This, of course, remains the topmost point on South Korea's political agenda. Recent aggressive acts by the North (e.g., the intrusion of a spy-submarine into the South's territorial waters) have made the South Korean government more cautious but have not changed the agenda. 2. A continuous drive for domestic political reforms, above all the relentless efforts to wipe out rampant corruption both in the civil service and in the military. The recent arrest of President Kim's son for alleged corruption has been a depressing setback to such efforts, but was also underlined by the fact that the President is prepared to act against a member of his own family, a major signal in a still mainly Confucian society. 3. Reorganisation of the traditional power structure in order to fight vested interests. The creation of a sound organisational base for himself will enable President Kim to lay the groundwork for his successor. He will certainly select this successor himself and make sure that the people will elect him. One of the most important measures Kim will have to take is to transform the ruling New Korea Party into a smoothly operating political organisation by overcoming latent factionalism. 4. Coming to terms with the "coup-like beginnings" of its own recent history, an heirloom that President Kim Young Sam had to accept, however reluctantly, because it was handed to him by his

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predecessor Roh Tae-woo. Kim, however, managed to successfully distance himself from his two predecessors by allowing them to be prosecuted for high treason and graft. The trials against Roh and Chun were certainly revolutionary events. 5. Overcoming unfair income distribution, particularly through revitalising the huge small and medium enterprise sector and slimming the huge conglomerates (chaebol). President Kim has no choice but to gradually open up domestic markets, since the country has now become a member of the illustrious club of OECD member states. Protectionist politics are still very much at work, which is probably the single most disadvantageous or even disastrous "fallout" of following the Japanese model of development strategies. 6. Finally, the vast sector of the underground economy, which is estimated at about thirty-five trillion won, needs to be cleared up. One of the most difficult problems of Korean political culture as a whole has to be overcome: regionalism as a basis for the distribution of power within the institutional framework of the (South) Korean administration. A rapid unification would add enormously to the still lingering resentment between e.g. Cholla province and Kyongsang province. For the last thirty years South Korea was ruled by military men and/or politicians hailing mostly from the Kyongsang province of South Korea. A unified peninsula would greatly increase the responsibility of this region (which has also in earlier centuries always dominated the rest of the country). Riding a wave of generally favourable public opinion, President Kim Young Sam has been able to challenge even his most formidable adversary: the military. Critics have accused Kim of making too much use of his popular drive against corruption and for political reforms as a whole. They claimed that his actions lacked a sound "philosophy" and therefore also lacked an operational system. But the strong traditional forces, which used to block any efforts towards democratisation, such as the military cliques, the bureaucrats and the chaebol, are still a force to be reckoned with in the political and administrative set-up led by Kim Young Sam.9

9

Kim Chang-kuk, "Uprooting Corruption: A Vital Task," Korea Focus, vol. 5, no. 1, Jan./Feb. 1997, pp. 14-21.

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MANFRED POHL KOREAN UNIFICATION: ONLY A GRADUAL PROCESS WILL BRING SUCCESS

The Korean unification process suffered some very alarming setbacks in 1993 and 1994. Talks began again only after the food situation in North Korea had become desperate. Despite suffering from unfavourable conditions, the North is still rigid and inflexible when it comes to political moves to ease relations with South Korea both in the political and economic field. The reason for this inflexibility seems to be quite obvious. The North Korean leadership has also learned its lesson from the German unification process: if a socialist regime moves too close to a successful capitalist one, the result may well be its own destruction by absorption into the successful system. However, I dare to predict that both Koreas will find themselves in some sort of unified national "body" well within a ten-yearperiod, after all the setbacks have been overcome. Kim II Sung's nuclear poker play, which has been continued for some time by his son, has paid off well for the North. The DPRK will get two light-water reactors, paid for by the Korea Energy Development Organisation (KEDO). Meanwhile the West will deliver 500,000 tons of crude oil per year to bridge the energy gap until both reactors start operation. Through negotiations with the US, North Korea has been upgraded internationally. But, even so, the DPRK remains a sort of pariah state which makes the DPRK even more inflexible vis-a-vis South Korea. North Korea makes skilful use of the loss of South Korea's foreign policy decision-making sovereignty because the US has monopolised negotiations with North Korea during the past five to eight years. Undoubtedly these advantages for North Korea have been outweighed by the recent disastrous developments in feeding the North Korean population. Presently the North is in a disadvantageous position and has to move away from ideologically fixed principles, i.e., the ideology of juche, or the idea of "self-propelled development." However, looking back to 1993 and 1994 North Korea has also been able to manifest itself positively in other ways: After the desperate shortage of electric power which led to a nearly complete breakdown of production, the Kim-Jong-il regime has been greatly stabilised as a result of the Geneva agreement. However the stopgap measures to provide North Korea with energy have failed to keep up the food distribution system. Starvation in North Korea

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is at least partly the result of the regime's inability to deliver provisions from those regions which still produce grains to those areas which have suffered under the huge flooding during the past three years. Calculated brinkmanship has also given new life to the "Golden Triangle" concept (a rather unfortunate label). The North Korean leadership has put this forward as an indigenous model of a Special Economic Zone/Export Processing Zone, where foreign companies might establish joint ventures to make use of cheap North Korean labour and natural resources. The Golden Triangle is to be built near the delta of Tumen River, using the ports of Rajin and Sonbong. From the point of view of North Korean ideology, the idea of creating a Special Economic Zone entails the high risk of being forced to open the country to the "evil influences" of anti-socialist ideas and "spiritual pollution." The North Korean leadership might like to think that a Special Economic Zone could be completely isolated against anti-regime ideas trickling out of the enclave and into North Korean society as a whole. It is easy to predict that a point of no return would soon be reached, where the regime would no longer be able to control the clandestine influx of "subversive" ideas— the alternative offered by capitalism and its lure. It is true that both North and South Korea have had discussions on some kind of commonwealth model of economical co-operation (and to a certain degree also political co-operation) during a transitory period of mutual "rapprochement." Until 1993/94 there seemed to be no doubt that South Korea would be able to set the pace, because North Korea's economy went from bad to worse year after year. The nuclear gamble obviously turned the tables for some time, but due to the obvious failure in feeding its people the North Korean power elite has completely lost this advantage. At the same time, this has confronted South Korea with a number of new and totally unexpected problems before and after unification: 1. For the time being South Korea will have to shoulder part of the burden to feed its northern neighbour—without trying to link its help to political conditions from the North. The Pyongyang leadership seems quite prepared to make the people suffer, if only they do not have to admit that the juche ideology failed. The present situation of dire need in the North will not suffice to make them give in. 2. One huge priority, concerning the task of unification, is the orderly dissolution of the KWP. The dissolution of the lower echelons of

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the KWP will probably strip high-ranking functionaries and military leadership of their privileges. Dissolution of Northern mass organisations alone does not form the biggest obstacle. The most difficult problem is to offer a framework to integrate KWP cadres and members into the organisational structure of participatory democracy, Southern style, in a united Korea. Political parties in the South, as well as other politically active mass organisations, will have to face the task of absorbing and "re-educating" former KWP members. Only a gradual process of unification will make it possible to dissolve the armed forces of North Korea; a first step could be the use of the Northern model of "working soldiers" to increase the number of units that do construction work and, at the same, time reduce the number of combat units. The North already has a vast number of working soldiers who have been engaged in many and varied construction projects like the construction of the gigantic "Mayday Stadium" in Pyongyang, or huge dam projects. A simple and quick dissolution of the North Korean people's army would create tremendous social problems, since the Korean labour market (even after unification) will be unable to absorb literally millions of suddenly jobless soldiers from the North.

A UNIFIED KOREA: A CHALLENGE TO OTHER ASIAN COUNTRIES?

Unification can only work after years of close economic co-operation between the two parts of a divided country. The lesson from German experience: unification can only work after a fairly long period of close economic ties between the two Parts of a divided country. All German governments since 1972 have tried to instrumentalize economic interaction to further the concept of "friendly neighbourliness" and to remove the obstacles which were predominately erected by the socialist side. To put it more cynically: the West paid cash for good relations even to the degree of bailing out political prisoners by paying ransom money (in fact, this was a fixed amount in the GDR budget). After unification it became obvious that the years of economic co-operation had not helped in creating a competitive industrial structure in the GDR. Most companies were hopelessly antiquated. Even after rigorous streamlining they would have never been able to compete internationally. Although Western economists and businessmen kept a close watch on the East German economy,

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they were fooled by GDR propaganda. The East German economy turned out to be much more run down than anybody had expected. In fact, apart from some showpieces of East German industry, most plants had simply to be dismantled. Transfer costs were (and still are) enormous. However, in the case of North Korea nobody can have the slightest doubt about the catastrophic industrial (or general economic) situation. Even if South Korea managed to reduce the costs of unification the financial burden would be so great that a unified Korea would more than likely be forced to become a competitor for those Asian countries which depend on cheap labour rather than challenge the other NIEs or even Japan. Even if South Korean conglomerates invest in high-level industrial production, it will take at least five to ten years to make this production internationally competitive. Additional problems are: lack of capital, a labour force trained on different (largely obsolete) machinery, a lack of managerial personnel on the middle and lower level and a different work style. Of course, all these deficiencies can be overcome, but that will take time. It is imaginable that—unlike Germany—South Korea will take drastic measures such as limiting or even blocking free movement from the North to the South, and that it will invest in cheap labour production and exploit the North's potential for manpower and natural resources. This would result in an "interior colonisation process" which would lead to increased resentment in the North but would postpone the necessity to pour money into the North. It is highly doubtful whether South Korea would be able to raise the necessary transferable capital through increased taxes and additional levies. The tax raising potential of the South Korean government cannot compare with that of the German state, but even there the levies (like the "Solidaritaetszuschlag" or solidarity tax) have met with increasing opposition from the general population in the West. There can be no doubt that a unified Korea will quickly assert itself as one of the leading powers in Northeast Asia. The ultimate common factor shared by both the North and South alike is a deeprooted aversion towards Japan. The government of a unified Korea would disfavour Japan. The government of a unified Korea would certainly be able to instrumentalize this aversion into some slogan like "let's work hard together to beat the Japanese!" and galvanise both parts of the population into a united force of competition. The archenemy Japan is not the only common denominator of Korea's

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traditional heritage. During a unification process both Koreas could well make use of an uninterrupted cultural history, of which all Koreans are fiercely proud. Although North Korea no longer uses Chinese characters in its publications, the hangul-writing system is common to both Koreas. The North can perhaps fall back on an elite that was Chinese-trained, while the South is already working on reducing the use of Sino-Korean characters. "Confucian" values are still much revered in both South and North Korea, which can for example be seen in the fact that Kim Jong-il carefully observed the traditional periods of mourning for his father. A new nationalism that helps the two Koreas to move closer together, combining anti-Japanese sentiments with a good deal of general xenophobia, will form a common base for a "unified nationalism." At the moment the South Korean government should go out of its way to help stabilise the domestic situation in the North and aid the North's leadership in feeding its people. A sudden collapse of the North Korean system would lead to a development that would compare to the German experience. The South would have to completely finance both a run-down system and the unification which would certainly be much more than the South could manage. Peaceful coexistence and the medium-term goal of creating a "commonwealth" between the two Koreas is the only way to a smooth unification process. Beware the German example!

CHINA AND THE REGION

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CHINESE ENERGY STRATEGY FOR THE 21ST CENTURY: PRODUCTION, CONSUMPTION, TRADE AND SECURITY ANGANG HU*

I. CHARACTERISTICS OF ENERGY RESOURCES IN CHINA

China, the most populated country in the world, is also one of its largest energy producers and consumers. According to statistics, in 1992 the total output of energy production was 1.073 billion tons of standard coal and the total energy consumption was 1.092 billion tons of standard coal. This accounted respectively for 9.3% and 10% of the world total, which ranked China third behind the US and Russia. In 1994, the coal production in China ranked first, making up 27.8% of the world total. The total electricity generation volume in China occupied the second place in the world, while oil production ranked fifth which amounted to 7.7% and 5.9% of the world total. Population size only explains part of the large energy consumption. The most important factor is the sustained rapid economic growth that resulted in continuous growth of the total GDP of China. According to the estimates by the International Energy Agency (IEA) in 1983, the total GDP of China constituted up to two percent of the world total GDP by the market exchange rate method; and in 1993 the * Dr. Hu Angang is Research Fellow in the Chinese Study Department, Research Center for Eco-Environmental Sciences of the Chinese Academy of Sciences. His main areas of research are sustainable development strategies for China; economic development, the environment, and China's energy supply. Among his more recent major publications are: Shaoguang Wang and Angang Hu eds., A Study of China State Capacity, Shenyang, Liaoning People's Press, 1993 (Overseas Chinese Edition, Oxford University Press, Hong Kong, 1994; "Strengthening central Government's Leading Role Amid China's Transition to Market Economy", Chinese Economic Studies, Vol. 28, No.

30 (May-June 1995) and No. 4 (July-August); Angang Hu, Challenge to China, Taibei, Xinxinwen Co., 1995; On Ten New Relations for China Going to the 21st Century, Haerbin,

Heilongjiang, Education Press, 1995; The Next Step for China, Sichuan People's Press, 1995; Angang Hu, et al., Natural Disaster and Economic Development in China, Wuhan,

Hubei Sciences and Technological Press, 1996; Angang Hu, Shaoguang Wang and Xiaoguang Kan, A Study of Regional Disparity in China, Shenyang, Liaoning People's

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proportion increased to three percent.1 However, according to the Purchasing Power Parity (PPP) method, the proportion of the Chinese GDP of the world total GDP was six percent in 1983 and nine percent in 1993. Second, China is rich in coal and hydropower resources. Based on the information from the World Bank, the total Chinese coal reserve accounts for 10.97% of the world total reserve, while the reserve in the US is about 23.04% of the world total reserve. However, the hydropower reserve in China amounts to 13.22% of the world total as compared to only 2.58% in the US. This means that China has a comparative advantage in coal production and export as well as in hydropower domestic production. From the point of view of environmental protection and pollution reduction, the former is "dirty energy" which is not renewable, while the latter is a clean resource which could be regenerated. However, in present China the coal consumption constitutes seventy-five percent of the total energy consumption, while the hydropower consumption accounts to less than five percent of the total energy consumption. Therefore, in the future, China should make a greater effort in developing hydropower generation in order to increase its share of the total energy consumption. Third, China is still an "oil-poor" and "gas-poor" country, given its limited share of oil and natural gas reserves compared to the total world reserves and based upon its population. According to World Bank statistics, the total crude oil reserve and the natural gas reserve in China only make up respectively 2.43% and 1.2% of the world total. Daqing in Heilongjiang Province, one of the major oil fields in the eastern part of China, has been producing over fifty million tons of crude oil annually for the past twenty-one years and has now entered its mid- and late excavation period.2 At present, China has not found another oil field that could compete with Daqing. After 2000, an oil and gas crisis due to supply shortage might occur in China. This proves that the situation of being an oil-poor and gas-poor country is difficult to improve upon in view of its population and total GDP scales. China has no comparative advantage in oil and gas producPress, 1996; Research of Group for National Condition Analysis of Chinese Academy of Sciences, Agriculture and Development, Shenyang, Liaoning People's Press, 1997; Research of Group for National Condition Analysis of Chinese Academy of Sciences, Employment and Development, Shenyang, Liaoning People's Press, 1998. 1 IEA, 1996. World Energy Outlook: 1996 Edition. 2 Li Pen, 1997. "China's Energy policies", Beijing, Xinhua News Agency, May 28.

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tion and export, but a greater comparative advantage in energy imports which require large amounts of foreign reserve. Fourth, the per capita energy reserve and consumption in China is much lower than the world average per capita. Regarding the per capita reserves of some major resources, the raw coal reserve is 45% of the world average, the hydro-power reserve is 55% of the world average, the crude oil reserve is 11% of the world average, while the natural gas reserve is only 5% of the world average. Based on statistics, in 1980 the per capita energy consumption in China was only 30% of the world average, although in 1994 it had increased to 46% of the world average. However, in the same year, the energy consumption in the US was 5.46 times higher than the world average. In sum, China is a "small country" from the per capita energy reserve and consumption point of view. The conditions described above will be important constraints on the economic development in China's future. Such constrains determine that the energy development and market strategy in the twentyfirst century should be diverted from the traditional one of "highly self-reliant and self-sufficient" to the new one of "basically self-sufficient with active imports and promotion of trade".

II. CHARACTERISTICS OF ECONOMIC GROWTH IN CHINA

The characteristics of economic growth will determine the trend of energy demand in China in the twenty-first century. First, the Chinese economy has maintained a sustained and rapid growth. Starting in 1980, China entered a period of economic takeoff with sustained high growth which might last until 2020. According to the statistics provided by China's National Bureau of Statistics, based on constant prices, the annual average growth rate for the national income was six percent from 1952 to 1980. Based on World Bank estimates, the average annual GDP increase rates for China were 5.8% during the period 1970-1980, 8.9% during the period 1980-1990 and 11.9% during the period 1990-1995. On the other hand, the world's GDP average annual growth rates were 3.1% during the period 1980-1990 and 1.8% during the period 1990-1994. Obviously, the Chinese economic growth rate was much higher than the world average growth rate for the corresponding period. As a matter of fact, China is one of the fastest growing economies in the world. Rapid

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economic growth has stimulated the growth of energy consumption: the annual average increase rates for national total energy consumption were 5.0% during the period 1980 to 1990 and 5.7% during the period 1990 to 1995, both of which were higher than the world's average increase rate, which was 1%.3 In the foreseeable future the Chinese economy will maintain a trend of fast growth. According to the predictions of the Research Group for China Study of the Chinese Academy of Sciences, the annual national GDP average growth rates will be 9.3% during the period 1995-2000, 8.0% during the period 2000-2010, 7.0% during the period 2010-2020 and 6.3% during the period 2020-2030. Based on the 1990 constant price, the total GDP in 2020 will increase by ten times that of 1990, which means that the total Chinese GDP will be greater than the total GDP of the US, thus, China will be the largest economy in the world. Furthermore, in 2030, the total GDP in mainland China will increase to 19 times that of 1990. Such growth will double the consumption of all kinds of energy. China will become the second largest energy consumer in the world and will play a decisive role in the world's energy consumption and trade. Second, the per capita income has improved quickly. According to China's National Bureau of Statistics, based on the 1980 constant price, the annual average per capita GDP increase rate was 8.6% during the period 1980-1995 which implied that the per capita GDP in 1995 was 3.4 times that of 1980. With the increase of per capita GDP, the consumption level of all residents continues to grow.4 Based on the constant price, the average annual growth rate of per capita consumption for all residents was 7.4% during the same period of time. As a result, household durable consumer goods have been popular and the demand has increased steadily. During the period 1986—1994 annual average increase rates for household refrigerators, colour televisions and tape recorders were respectively 20.4%, 16.3% and 22.1% which contributed to the rapid increase in per capita energy consumption.5

3 World Bank, 1996. World Development Report 1996, New York, Oxford University Press. + The State Statistical Bureau of the People's Republic of China. China Statistical

Yearbook 1996, pp. 280. 0

The State Statistical Bureau of the People's Republic of China. China Statistical

Yearbook 1996, pp. 23.

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Third, the average annual residential energy consumption per capita also increased rapidly. During the period 1983-1994, the increase rate was 1.77%; the coal consumption per capita has experienced fluctuations. The highest growth rate among various forms of energy consumption was 16.62% for electricity consumption, while the increase rates for gas and liquefied petroleum gas consumption per capita were 13.94% and 16.44% respectively. Compared to 1980, the total residential energy consumption for all residents has increased by 60.8% in 1994 but coal consumption had only increased by 12.7%. On the other hand, liquefied petroleum consumption, natural gas consumption, gasified coal consumption, heat consumption, and electricity consumption have increased by 795%, 900%, 442.9%, 1206% and 725.7% respectively. The above evidence shows that the residential energy consumption structure has changed dramatically. Predictably, the continuous increase of living standards for urban and rural residents will lead to an increase in residential electricity, gasified coal and liquefied petroleum consumption, and this will put enormous pressure on energy production in the future.

III.

THE CONTRADICTIONS BETWEEN ENERGY SUPPLY AND DEMAND

1. Total energy consumption has increased rapidly. According to the predictions of the IEA, in 2010 the total primary energy consumption in China will reach 1460 Mtoe (Million tons of oil equivalent), up 99.7% from 1993. The average annual increase rate will be 4.2%. Similarly, compared to the level of 1993, solid energy consumption will be 1017 Mtoe, up 81.9%; oil consumption will be 329 Mtoe, up 128.5%; natural gas consumption will be 54 Mtoe, up 285.7%; nuclear power consumption will be 18 Mtoe, hydro-power consumption will be 42 Mtoe, up 223%; and electricity consumption will be 213 Mtoe, up 176.6%. According to the predictions of the Research Group for China Study of the Chinese Academy of Sciences, in 2020 the total energy consumption will be 2.8 billion tons of standard coal, which will be 2.17 times that of 1997. The average annual increase rate during the period 1995-2020 will be 3.15%. During the same period, total raw coal consumption, crude oil consumption, natural gas consumption, and electric power consumption will amount to 2.4 billion tons, 4.35 million tons, 142 billion square meters, and 4800 billion kilowatt-hour respectively. Furthermore, the respective

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average annual increase rates of the above are expected to be 2.51%, 4.35%, 8.64%, and 6.44%. In the following twenty-five years, the total GDP will be ten times that of 1990 and the total energy consumption will increase three to four times. The consumption demand for crude oil, natural gas and electric power is, in particular, expected to increase four to nine times faster. The elasticity of GDP growth for energy consumption is notably low. During the period 1980-1990, the elasticity was only 0.525. The elasticity will probably decrease to 0.403 which means that if the GDP is increased by one percent, the total energy consumption only increases by 0.403%. In other words, based on constant prices, unit GDP energy consumption will be reduced substantially, and energy saving efficiency will be improved dramatically. 2. Coal consumption as a proportion of the total energy consumption is excessively high, while the proportion of oil and natural gas consumption is extremely low. Compared to other developed countries such as the US, Japan, the UK and France where the respective proportions of coal consumption in the total energy consumption are 27.4%, 23.6%, 32.3% and 10.6%, China, with a percentage of 75%, is the country with the highest coal consumption in the world. This is also one important reason why China is known as the second worst country regarding the emission of pollution. In 1994, although the total energy consumption in China was only 38.8% of that of the US, its emission of carbon dioxide amounted to 54.7% of that of the US. In other words, the carbon dioxide emission per unit energy consumption in China is forty percent higher than that of the US. On the other hand, there has been a downward trend in the proportion of oil and natural gas consumption, from 20.8% in 1980 to 17.3% in 1995. Such an irrational energy consumption structure is a product of the traditional energy strategy of "self-reliance and self-sufficiency" and over-regulation by the government. For an extensive period, the mainstream view and policies in China have been that energy import, especially oil and natural gas imports, were a serious threat to national economic security. As a result, China even became a net exporter of energy and oil. In 1980, the net export of energy of China accounted for 4% of the total energy consumption, and declined to one percent in 1994. However, in the same period, other developing and developed countries that wanted energy and oil were taking advantage of the world energy market and increased their energy import.

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3. It is inevitable that oil and natural gas imports must substantially increase. In the following decade oil demand is going to be enormously higher than oil supply on the domestic market. As an "oil resource-poor" country, China has been a net exporter of oil. In 1980, the export ratio was as high as 21.3% of total production and in 1985 the export ratio reached a peak of 36.3%. Although China turned into a net oil importer in 1993, the net import ratio is only 4.5% of the total oil consumption. During the period 1980 to 1990, the oil market in China was basically a balanced market. The average annual increase rates for oil consumption and supply are 2.8% and 2.7% respectively. However, during the period 1990-1995, the average annual increase rate for oil consumption increased to 6.4%, while the average annual increase rate for oil production was reduced to 1.5%. Such evidence makes clear that China has come to a turning point where its demand for oil is going to be enormous (the same as other industrialised countries and regions). According to the latest estimates of the IEA, the net import ratio of oil in China will be as high as 21.6% by 2000 and it will increase to 41% in 2010.6 Based on my research, given the trend of the period 1990 to 1995, the import rate will be around 25% by 2000 and will increase to more than 40% by 2020 which is almost the same level as that of the US in the 1990s. The forecasts indicate that China will reduce crude oil export and sharply increase import and become a new prime oil importer in the future, which will have important impacts on the world oil production and trade. If the rise of oil import is predictable or at a gradual pace, the oil price will not rise sharply since the world oil industry will increase investment and production accordingly. This is good news for many multinational oil corporations, as well as a good chance for many oil producing and exporting countries.

IV.

OPTIONS FOR CHINA'S ENERGY STRATEGY IN THE 21ST CENTURY

Five factors should be taken into account to determine China's energy strategy in the 21st century: (1) the basic conditions of energy resources in China; (2) the energy demands to satisfy economic growth in the IEA, 1996. World Energy Outlook 1996 Edition.

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future; (3) the full utilisation of the international market and the comparative advantages of China in energy resources; (4) the assurance of energy safety to reduce the shocks brought by an emergency energy shortage; (5) policies for energy conservation that improve energy efficiency and pollution reduction. Adopting the strategy of diversified energy consumption

Diversified, highly efficient and flexible sources of energy provision are the keys to guarantee a stable long-term energy supply.7 The diversity index of energy consumption can usually be used to reflect the energy consumption structure of a country or region. The index is the aggregate of the square of various energy consumption weight. Where only one form of energy was used, the index is 1.0; where two or more than two were used, the index will be larger than 1.0. A larger index means a more diversified structure of energy consumption and a stronger ability to handle emergencies or shocks. China's diversity index is one of the smallest in the world. In 1995 the figure was 1.677, even lower than in 1980 (1.764). The index in the US in 1988 was 3.027, in Japan 2.502, in the UK 3.098, in Canada 3.420 and in the former Soviet Union 3.080, which are all higher than that of China. To fundamentally solve environmental pollution problems, i.e. to control the emission of pollution, it has to adopt the strategy of converting the current energy structure to a diversified structure, reducing the reliance on coal consumption from the current seventy-five percent to a future fifty percent of the total energy consumption. At the same time, it has to sharply increase the use of oil, gas and hydro-power consumption, so that the energy diversity index increases from 1.697 to 2.8 which equals the level of France and Germany. This strategy should also try to minimise the negative impact on the environment. In a recent special report on China's environmental issues, the World Bank also suggested that China adopt a strategy of diversified energy structures based on energy safety and the costs of various energy sources.8 Adopting "basically relying on home production and promoting exchange of energy" as the new energy trade policy

Since coal is a resource intensive and labour intensive product in which China has obviously comparative advantages in both proIEA, 1996. World Energy Outlook 1996 Edition. World Bank, 1997. China's Environmental Issues.

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duction and export, China should promote an increase in coal exports to the international market. The total coal production by labour intensive Village and Township Enterprises (VTE) reached 611 million tons, accounting for 47% of the national total.9 These enterprises absorb large amounts of the local surplus labour force and make full use of small and scattered coal resources, while sharing these characteristics: small investment, quick in operations and a high ratio of input and output. The coal and related products export in 1994 amounted to US$1.05 billion which was 5.75% of the total world share. The comparative advantage index of 1.941 indicates that China has a strong capacity for competition in the international coal market. In the future, China should make great efforts to promote coal exporting. The near, medium and long term export targets are 5%, 10% and 20% of the total coal production, and the shares of the world coal export market will reach 10%, 20% and 25%. In 2020, China will be the largest coal producer and exporter in the world. Adjusting the traditional oil strategy of "self-reliance and exporting for foreign cash"

Oil strategy is one of the country's development strategies. The oil strategy target should serve the development needs of the country and should meet the demands of China's sustained high-speed growth in the future. Meanwhile, we should also take notice of the fact that without new discoveries of large-scale oil and gas fields, the existing domestic oil resources and production cannot satisfy the above-mentioned target. Based on the basic conditions of a large population and relatively poor oil and gas resources in China and facing the long-term tendency that oil consumption heavily exceeds oil supply under the more open international market environments, China's oil strategy in the twenty-first century should be "developing two resources (both domestic and international resources) and making full use of two markets (both domestic and international markets)". This is an active and open strategy based on the comparative advantages for both export and import. The crux of this oil strategy is in accordance with the comparative advantages and disadvantages on an international scale. China, with its various resources such as labour, natural resources (especially oil and natural gas resources), capital and technology, should choose the development strategy which 9

Li Pen, 1997. "China's Energy policies", Beijing, Xinhua News Agency, May 28.

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can maximise benefits for the whole country (and not just for some sectors). "Development and investment of two resources" means increasing domestic resources, and developing domestic oil reserves. As a populous, large country with unbalanced development, it is impossible for China to import all its oil from abroad. Moreover, developing the domestic oil industry can make significant contributions to addressing the question of the employment of millions of workers in the oil industry and the development of industrial cities. Developing home oil reserves can reach both of the targets of oil supply and employment. In the meantime, we should use the opportunities brought about by economic globalisation by participating in the development of an international oil reserve, especially in the Middle East, so that China can have a new and relatively stable oil provider. This is a fundamental strategic measure to protect the country's economic safety. The slogan "making full use of two markets" means "basic self-reliance and actively importing." For the most part, China itself will provide oil for domestic consumption, while actively importing to meet the shortfall. Premier Li Peng mentioned in the article "China's Energy Policy" of May 29, 1997 that developing the oil industry means utilising two resources and two markets. In June 1997, the China Petroleum and Gas Corporation made large investments abroad, and signed four contracts amounting to US$6 billion. The oil and gas reserves in China are very low compared to the world total which is disadvantageous to oil and gas exports, but China has a comparative advantage in importing. However, China has not made full use of this comparative advantage. In 1994, China's petroleum imports revealed a comparative advantage ratio of 0.3285 and imports accounted for 0.90% of the world imports total. For natural gas, these two figures were 0.2988 and 0.82% respectively. China should increase its petroleum imports, causing its net import rate to increase from the present 5% to 15% in the near term, 30% in the medium term and 40% in the long term. The import rate of natural gas should also increase. China is still a highly energy self-sufficient country despite the sharp rise in oil imports. This is because the amount of oil consumption is a small part of the total energy consumption. Even though imports are continuously growing, the net import rate is still below ten percent which is lower than in many developing countries with a large population and developed countries. Compared

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with these countries, China has a large potential for importing energy. Some reasons include: (1) The average export growth rate of China stays ahead of the world because of its strong purchasing power. (2) Gas imports that accounted for only six percent of the whole import volume could be largely increased. Under these circumstances, the issue of energy safety will not be a serious problem. In the future, as it is becoming a large oil importer, China needs to strengthen the construction of oil infrastructures such as ports, oil storage facilities, set up effective oil and gas reserve systems and take efficient measures to address the oil shortage so as to be able to take flexible and prompt reaction in case of any emergencies. China is going to actively take part in the exploring and developing of overseas oil and gas resources, contracting external engineering and labour services, and establishing stable export and import oil markets to provide a long-term stable oil and gas supply. Developing clean renewable energy—hydropower

The use and development of environmentally friendly energy resources should be encouraged. Priority should be given to renewable energy development such as hydropower. During the ninth five-year period, thermal power investment accounts for seventy-five percent of the total power investment, and only twenty-five percent of the investment goes to hydropower generation. The ratio is not in line with the policy of "balanced development of thermal and hydro-power generation," and it also shows that China has not fully utilised its abundant hydropower resources (as I stated previously, China's hydropower resources accounts for 13.22% of the world total). Keys to developing hydropower are: (1) Establishing a reasonable electricity price policy, i.e. the same network price for both thermal and hydropower, so that its obligations could be covered and rolling investment could also be achieved. (2) Eliminating market entry constraints, encouraging foreign companies investing in hydropower constructions as a joint venture, or with full ownership. Since the electricity generated by the foreign owned stations would be sold to the distribution network which is still under Chinese control, it is not necessary to limit foreign equity investment. (3) Encouraging locals to construct small hydropower stations, using decentralised management systems, sticking to the policy of "self-construction, self-utilisation and self-management." The State Electricity Corporation should grant support and services in network connections.

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Restructuring industries and sharply decreasing the energy intensity in industrial sectors

By international standards, the energy consumption weight of Chinese industrial sectors is relatively high. In 1985, the weight of energy consumed in the industrial sector amounted to 65.4% of the total of all energy consumed, of which 53.3% was used by heavy industry. In 1991, these two figures were 68.8% and 55.2%. This indicates that industrial sectors, especially heavy industries, consumed a high percentage of all energy. In developed countries, the industrial sectors' energy intensity including heavy industries is relatively low, while energy consumption in the third sector is much higher. The iron and steel sector, chemical sector, non-ferrous metal sector and paper-making sector together account for fifty percent of the total energy consumption, which is twenty percent higher than that of the industrialised countries. The industrial structure in China is an energy intensive sector. The restructuring target is towards labourintensive and energy-saving sectors, i.e. changing from the iron and steel sector, chemical sector, non-ferrous metal and paper-making sector to light industry, textile, electronics and machinery sectors. Of all sectors, the industrial sector, especially heavy industries, can make the greatest contribution to reducing the national energy intensity. Freeing energy prices and making full use of the market mechanism

To free energy prices is the key to the effective operation of the energy market and energy efficiency. It is standard to use the ratio of domestic energy prices and marginal prices to reflect the twist of the energy price system. If the ratio is higher than 1, that means the price of the products is higher than its shadow price; if the ratio is lower than 1, that means that this is a subsidised product, in other words, the price encourages people to waste energy and develop energy intensive industries. A World Bank study shows that China's energy price is not the same as that of the international market, which is lower than that in the US. Of the oil price 70% is planned, the average price is 16 to 24% lower than the international price. On the other hand, the cost of oil is higher. For instance, the gasoline price is 104% to 125% higher, and diesel is 84% to 96% higher. The gas price is fully controlled. According to the data from Kosmo's study in 1989, China was the largest energy subsidiser of all developing countries: the total amount was US$5.4 billion which was 20% of the total export and 82% of energy export. The ratio of the electricity price and supply marginal cost was 0.58. If the price were determined by marginal

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cost, 42% could be saved. The government's energy subsidy policy encouraged people to abuse energy and to develop energy intensive industries. These counter-productive subsidies are not sustainable. There exists in China great potential for energy conservation and an increased utilisation rate; the key is to let the market determine the energy price. Firstly, according to market principles, the price should be determined by marginal cost so that the ratio of energy price and marginal cost is 1. Secondly, based on international market practice, promoting the transition of the energy pricing system to the international pricing system and decentralising oil and gas price controls produces a ratio of the domestic oil price and marginal cost 1, thereby reducing the ratio of petroleum products price and marginal cost to 1. Thirdly, the subsidies to the coal sector should be gradually eliminated, while the consumption subsidies of coal, gasoline, gas and electricity should be diminished. Fourthly, the relocation of energy industries and energy-intensive sectors from eastern areas to central and western areas should be facilitated, so that the country has a reasonable division of labour with an appropriate scale of production. Levying environmental pollution tax on unwashed coal

Market failure should be corrected so that the price includes all environmental costs. The environmental costs resulting from the production and consumption of energy should be taken into account. At present, eighty percent of coal is unwashed, and the emission of carbon dioxide, sulphur and dust are much higher compared to other countries, which is the major reason China is the second largest carbon dioxide-emitting country in the world. So we propose to levy an environmental pollution tax according to the amount of carbon dioxide, sulphur and dust in various areas. The tax should be a local tax which will encourage the local governments to control pollution and discourage the use of low-efficiency coal. The target is to reduce the unwashed coal from the present eighty percent to fifty percent. Export of unwashed coal should be prohibited to prevent pollution in other countries.

V. CONCLUSION

China might develop into the most important importer of crude oil and natural gas in the world. Hence, China has to readjust its traditional energy strategy of "high self-reliance and self-sufficiency,"

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and make a great effort to develop and invest in both domestic and international energy resources, as well as to utilise both domestic and international energy markets. China should export the more abundant and labour-intensive coal and import the less resourceful and capital-intensive crude oil and natural gas based on the principle of the comparative advantage. China should encourage domestic entrepreneurs to invest in oil fields and oil processing bases abroad and try to attract foreign business to develop domestic oil and natural gas resources by reducing the barriers of entering the market in order to ensure a stable and diversified energy supply to support a sustainable economic growth in the twenty-first century.

STUDY REPORT ON THE AMERICAN SITUATION IN 1997-1998 FACTORS AFFECTING MEDIUM AND LONG TERM SINO-US RELATIONS WANG XIAODONG*

The three major events of 1997 that had the most far-reaching influence on Sino-US relations were: the stable return of Hong Kong to Chinese sovereignty, the calling of the fifteenth National Congress of the Communist Party of China (CPC); and the state visit to America of President Jiang Zemin. The development of these events has basically clarified the fundamental orientation in China's post-Deng Xiaoping domestic and diplomatic affairs, removing misgivings of America and other countries over uncertainties about future developments in China. These events led to a new era of more constructive and better mutual understanding between China and America. It can be said that 1997 marked an important turning point in Sino-US relations since the end of the 1980s. By and large, developments in China indicate that China seeks to be more closely integrated into the global economic system for the sake of her own development. Not wishing to play the part of challenger, China accepts the existing international order in the political arena— this has been her original orientation for many years. There was misunderstanding and distrust by America and certain other countries on this score before. China has deepened her own understanding of America, which enables her to view America in an all-round manner. On the other hand, for its part America demonstrates a basic orientation indicating that it is ready to regard China as a responsible nation, with whom the country will set up co-operative working relations or so-called constructive strategic partner relations, and not regard China as an enemy. Since the end of the Cold War America had regarded its relationship with China more or less along the lines * Wang Xiaodong is researcher and commentator on Sino-US relations, based in Beijing.

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of Cold War thinking. The development of the relationship of the two countries in 1997 indicates that America has taken a constructive step forward. Such a step is in all likelihood not reversible. In this sense the year 1997 and particularly, the state visit to America by President Jiang Zemin, marked the beginning of a new era, in which old misunderstandings are basically removed and original contradictions are dealt with on a realistic basis. The People's Daily editorial of 5 November 1997 said that the state visit by President Jiang Zemin to America in answer to an invitation marked an important historic moment at the turn of the century. President Jiang and American leading personnel discussed the framework and aim of the future development in Sino-US relations from the point of view of long-term strategy, and reached an important common understanding. This marks a new stage in the development of the two countries.

BASIC CONDITIONS THAT SHAPE SINO-US RELATIONS

It can be anticipated that dramatic tension or deterioration due to misunderstanding will be reduced in the relations between the two countries in the years to come. What is left will be mainly substantial and long running issues. In Sino-US relations two important basic facts will not change or will be difficult to change in the foreseeable future. These two basic facts constitute the basic conditions that impose restrictions on Sino-US relations. Firstly, China is an emerging great power. A topic on which American strategy experts will argue for a long time is: how long will China be able to keep such fast economic growth as at present, and whether or not she actually is capable or willing to transform its economic force into military might and, if so, when. Yet, China is already a great power today, and unless something big unexpectedly happens she will continue to grow in strength—this is a judgement which few will want to dispute. The problem remains: how to look at the rise of China. To look at it from a purely ideological angle today lacks convincing power. Coming into the main stream is the geopolitical angle, which looks at the emergence of a great power as invariably producing an impact on the stability of the existing international order. This is a common understanding reached by American strategy experts. On specific tactics there are two opposing views in America. One group thinks that seen from an historic perspective the com-

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petition between two great powers is almost always solved at the end of the day by war. There are few exceptions to this rule. Thus it is necessary for America to use its superior military power to rally all peripheral states in the diplomatic field to build a containment circle to curb China's ambitions, and economically prevent China from using economic and trade co-operation to obtain high technology so as to slow down China's development. Those who hold this view are known as the containment group. Another view is that the emergence of China is an inevitable event that has to be faced. Rather than containing China it is better to make China enter into the global political and economic system before she becomes strong enough to become an autonomous system, in order to ensure that she will become a responsible and valuable co-operative partner. This view maintains that this is of benefit to China as well. China will thus be willing to adjust and enter the existing international system. People holding this view are known as the engagement group. Viewing the practical American policy toward China the engagement group has always held the upper hand by a small margin. Developments in 1997 seem to underline that the engagement group has a stronger position. This is conditional upon the Chinese side showing willingness to enter into the existing international system, and endeavouring to remove remaining misunderstandings. Secondly, China's political system differs from that of America. What should be stressed here is that unlike during the Cold War period China is not regarded as an ideological threat by America. What concerns America is the practical political operational mechanism. So her concern about differences between the political systems of the two countries is not entirely tantamount to Cold War thinking. From the point of view of practical state interest most Americans think non-western democratic states do not have transparency and lack continuity. Thus in dealing with such states uncertainty and danger will be so much greater. From the moral viewpoint even more Americans think that Western democracy is the ideology on which the nation called the United States of America was founded. It is also the common ideal of the whole of mankind. America has the obligation and capability to realise this ideal across the globe by paying a certain price. The difference between China and America in political system does not mean that the two countries cannot cooperate, but this difference is truly very basic and important. The first argument does not only apply to Sino-US relations only. For

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example, India is also an emerging great country, with ambitions no less than China's as she seeks to influence regional and even international affairs. However, the point is unique in the relations between America and other great powers. It can be said that after the big changes in the former Soviet Union and the Eastern European countries, almost all countries capable of exerting influence or playing a role in exerting potential influence have generally adopted Western democracy at least in form. China is the only exception. It is precisely on account of this basic fact that America looks at China in a unique manner. Suppose China had also adopted the form of Western democracy the U.S. would focus more on how to benefit from China's fast economic growth, instead of regarding it as a threat. The above mentioned two basic facts are a framework that will continue to put restrictions on Sino-US relations in the foreseeable future. The major significance in the development of relations in 1997 lies here: unnecessary misunderstandings and enmities outside this framework have been removed, but the framework itself has not changed. More specifically, in so far as the relationship between the two countries is concerned, misunderstandings and enmity will be greatly reduced while understanding and co-operation will be greatly promoted. This is the overall tendency in the world after the Cold War. Compared with relations between America and other great powers, it cannot be denied that Sino-US relations are, relatively speaking, fraught with apprehension and caution on both sides which remain apart, if not hostile to each other. A Harvard University professor who talked to the author about the guidelines on American-Japanese defence co-operation, said that the new guidelines are not aimed at China, but they do have an aim. What he meant is that they pinpoint China. Even though China is not regarded as an open enemy, at least she must be regarded as an object to be restrained as part of America's defensive strategy. This, in the long run, is the basic clue to America's China policy. What needs to be stressed here is that in the foreseeable future contradictions between America and Japan, America and Russia or America and Europe will not exceed those between America and China. There were anti-Japanese sentiments at one time towards the end of the 1980s and the beginning of the 1990s. However, they merely reflected jealousy on the part of some Americans concerning Japanese economic achievements. This could not have influenced relations at the level of the strategic alliance between America and Japan. Though at times there is still friction

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between America and Japan over trade issues, and competition for influence in the Asian region, the anti-Japan clamour is basically a thing of the past. The misgivings between America and Russia derive mainly from three factors: firstly the shadow of fear, secondly a hangover from the Cold War, and thirdly Russia still possesses military might and suffers from domestic political instability. The first two factors are disappearing as time goes by. As for the last factor, America somehow always regards Russia as a nation practising Western democracy. In particular when talking about strategy against China, American strategy experts always put Russia in the position of an ally, even though they regard Russia as an extremely unreliable ally compared with Europe and Japan. The friction between America and Europe as a matter of course does not affect the strategic alliance relations built on common interest, common sense of value and even a common racial basis. In all the relations mentioned above no such basic conditions obtain in Sino-US relations, especially the obstacles that are caused by the second basic fact.

AMERICAN ASSESSMENTS OF CHINA'S INTENTIONS AND MIGHT, AND CHINA'S IMAGE AMONG THE AMERICAN PUBLIC

American assessments of China's intentions and might, and the image of China among the American public are easily subject to change. Looking at the history of Sino-US relations these two aspects display considerable variation over time. This is exactly an area calling for improvement of understanding and removal of misunderstanding by the two sides. Concerning the existing Chinese regime it is commonly held in postCold War America that there appears to exist an ideological vacuum in China. In order to gain legitimacy in the eyes of the Chinese public and as part of the domestic power struggle, the Chinese Government must arouse nationalistic feelings among the Chinese people. In that view, nationalism is fostered as an official new ideology. Thus China will adopt an active posture on the global stage. This evaluation of Chinese Government intentions leads many Americans, including strategy experts and journalists, to depict in an exaggerated way Chinese public displays of national feelings that are normal and on the whole not stronger than those of other societies. At the same time, the relatively high economic growth rate of China and East Asia

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compared to that of other regions has aroused worries among many Americans. They are worried that East Asia and in particular China, whose political system, culture and even race differs so greatly from the American one, will gain a level of power that will be hard for America to control. This assessment of China's intentions and might constitutes the basis of the so-called China threat. The so-called threat from China, plus the moralistic view of the American public regarding China, have reduced the American image of China to a very low profile since the end of the 1980s. According to the American magazine Newsweek of 27 January 1997, when asked in a poll what would be the greatest danger to world peace, 32% of the respondents said it was terrorism, 26% said international crimes and drug gangs, 15% said racial hatred, 13% said China, 4% said Russia and 1% said the North Korean Democratic Republic. Thus terrorism, international crimes and drug gangs, and racial hatred were ranked as the top three threats. This reflects a basic trend in which there is a reduction of tension in international relations, while issues of a non-state nature become more pronounced. Yet among the nations regarded as a threat China surged into first position. The same magazine reported on 27 October 1997 that in a poll conducted from 4-11 September 1997 particularly on Sino-US relations, 46% of the respondents said China was a serious issue, 32% said China was not a serious issue, 14% said China was an enemy, and 8% said didn't know. About 37% of the respondents said they didn't agree with Clinton's China policy while 37% agreed; 26% said they didn't know. Public opinion towards China improved to a certain degree in 1997, in particular before and after the state visit to America by President Jiang Zemin. Mistaken or exaggerated evaluations of China have lost power to convince or influence American public opinion, at least for the time being. As for the intentions of the Chinese Government, the political development within China proves that such an evaluation is nothing but a myth. The fifteenth National Congress of the CPC affirmed Deng Xiaoping's line of deepening reform and opening up with economic construction at its core. This orientation of China's basic development negates the necessity and possibility of China adopting nationalism as the official ideology. It may be said that this development conveys a message to America and the world to the effect that the Chinese Government wishes for a peaceful international environment, and that China is willing to fully enter the global economic system and politically accept an international order

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more or less dominated by America. On the other hand, more American academics and journalists think that China is now in a transitional stage in ideological and political reorganisation. It is not likely that China will launch any effective ideological mobilisation. Thence she is incapable of adopting a nationalistic and "forging-ahead" posture. On China's might the American government and a considerable number of researchers in important private institutes for strategic studies believe that China's present military power cannot pose a threat to America. It does not even constitute a genuine threat to her neighbours. At the same time, it is not realistic to suppose that China will keep up its fast economic growth in the long term. As Henry Kissinger said in an article in Newsweek magazine of 10 November 1997: "This is a supposition without precedence. It is mainly the mass media and over cautious scholars about Chinese economic development and modernisation of her national defence who have fabricated the myth that China has excessive strength and will overtake America in the first few decades of the 21 st century. Yet public opinion is easily swayed by the influence of ever changing current affairs". The spread of the financial crisis in Asia in 1997 revealed the weakness of Asia, attempting an unlimited expansion of her economy while still at a low technological level—the Chinese economy obviously possesses the same hidden danger. In contrast, the American economy has continued strong growth led by the high tech sector in recent years. The American public's worry about the prospect of America being overtaken by China or other Asian countries, including Japan, has eased considerably. As a matter of course, due to the existence of the above mentioned two basic arguments, America still remains highly vigilant over the expansion of Chinese strength. The American Heritage Foundation issued a report on 5 November 1997 that said caution should be exercised over American friends, especially Russia and Israel, who may help China strengthen her military might. The author of the report thinks that the threat posed by China to America and her Asian neighbours is far from being a minimal one. He advocates that America should launch an open diplomatic offensive to stop American allies selling arms to China. As stated above, China's image is very low among the American public. By and large, the American government, whether Democratic or Republican, hopes to maintain normal and non-antagonistic relations with China. The American corporate community very much

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hopes that good relations will be maintained between the two countries, in order to extend business activities. The American public focuses more on issues of morality and value such as human rights. The American public understanding of China is basically derived from the mass media that tends to cover China in a negative way. In the more recent period the American media have somewhat improved their portrayal of China. There are roughly two reasons for this. One is attributable to the general improvement of Sino-US relations. The other reason is probably a perceived need to readjust reporting on China in the face of exaggerated past negative coverage that was unjustifiably removed from the facts. For instance, American mass media made a grossly exaggerated bleak forecast of Hong Kong's prospects after the return of the island to Chinese sovereignty. After Hong Kong's return, facts proved that the forecast had been a overmisrepresentation. On the whole, however, the image of China is still negative. In more recent times the new topic for criticism is Tibet. Three movies on Tibet are either being shown or scheduled to be shown to the public in America. The general impression of China by the American public is possibly not very accurate, but is by no means without influence. The negative impression is effectively manifested in the split over America's China policy between Congress and Administration. The divergence between Congress and the Administration shows the struggle between the Democratic and Republican parties, on the one hand. On the other, it can not be denied that Congress represents American public opinion much more accurately. Prior to, and after President Jiang Zemin's visit to America, the attitude of the American Congress towards China remained rather severe and stern. During the visit there were nine motions pending examination which opposed the Clinton Administration's so-called "carrot only China policy". On 5 November 1997, as President Jiang left America, the American Lower House passed a motion to delay the examination of the launching of the Sino-US nuclear co-operation agreement by an overwhelming vote of 394 to 29. The agreement was signed during the visit. The American Congress passed a bill to add US$2,200,000 in order to monitor human rights within China with a vote of 416 to 5. Another motion was passed in order to strengthen the ban on imports of Chinese goods made by prisoners by a vote of 419 to 2. Apart from these motions the American government appointed the so-called special co-ordinator of Tibetan affairs. This seems to be in response to American public

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opinion. To top it all, the American public opinion's negative impression of China can be utilised by special interest groups. It must be stressed that in 1997 several aspects mentioned above showed an improvement. Yet it can hardly be claimed that they have changed the basic picture. It is entirely possible that changes in the opposite direction might occur in the future.

SINO-US ECONOMIC AND TRADE RELATIONS

In post-Cold War international relations, economic and trade cooperation usually becomes the most important tie between nations. America is China's second largest trade partner, whereas China is America's fourth largest trade partner. As buyer the position of China moves into lower place, occupying the fifteenth position. Hong Kong takes the eleventh place. According to Chinese statistics Customs export to America from China in 1996 amounted to US$26,685,490,000 or 17.7% of China's total export to all countries and regions. American Customs import from China reached US$16,155,240,000, which is 11.6% of total American import. The figures of the American Commerce Department differ by a wide margin from Chinese figures, due to different ways of calculation. In 1996 American exports to China (alongside delivery) amounted to US$11,993,000,000 or 1.9% of total exports. The import quota (Customs) from China reached US$51,513, 000,000 or 6.5% of total imports. America is the second largest investor in China. Up to the end of June 1997 the total American investment in China consisted of 23,000 projects. The negotiated sum exceeds US$368 billion. From the statistics given above it can be seen that America is an extremely important export market for China, a supplier of goods and an investor of considerable importance. In comparison, China is a supplier of goods of considerable importance to America, but as a market China occupies a far less important position. In Sino-US trade, the American deficit is a very obvious issue. China ranks second, next to Japan among those nations which are the cause of the American trade imbalance. American analysts and journalists think that this places America at a disadvantage. Some even think that had she not focused so much attention on human rights and other moral issues but instead on the trade deficit, America might had adopted an even sterner attitude towards China. Yet according to an analysis of data published by the American State

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Department in support of its move to maintain most favoured nation status for China, the rapid growth of imports from China was mainly due to the substitution of imports from other developing nations, and not at the expense of American domestic output. At the same time imports from China cut the costs of basic consumer goods, enabling American manufacturers to lower cost and enhance their competitive power in international markets by the use of partly finished goods from China to make finished products. From the point of view of American exports, fast growth of American exports to China far exceeds export growth to other regions of the world, according to an analysis of data issued by the State Department. Following China's economic growth the Chinese demand for high quality American capital equipment will increase more and more. America should continue to wait for this rising demand. As a market for American goods, China at present does not occupy the most prominent position, yet American exports to China have provided America with 170,000 job opportunities, according to data released by the State Department. Their earnings have risen by thirteen to sixteen percent, compared with jobs that are unrelated to exports. From the viewpoint of economic interest Americans certainly can make money from developing US-Sino trade. Some American strategy experts maintain that US-Sino trade should be considered in the context of strategy and not the market. They think that even though America cannot prevent China from rising to the position of a great power, at least she can put a rein on the speed with which China becomes a great power. American trade policy that helps to accelerate this process is short-sighted and contrary to American strategic interest. Viewed from this angle America should likewise reduce the trade balance, now in favour of China. America should strictly control the flow of important advanced technology into China, as China does not have hard currency reserves to import high technology. If those views become policy, prospects for trade between the two countries will be severely curtailed. However, there are at least two aspects that should be considered. Firstly, due to the rapid progress of science and technology today, it is difficult for anybody to anticipate future developments and to distinguish which technologies are important and which are not. In particular, judgements of state bureaucracies on such matters have been consistently proven wrong by developments in science and technology. Secondly, so long as China pursues a peaceful diplomatic line and

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enables to convince most Americans of this, it will be difficult for anyone to convince the American entrepreneur community and even the American public that they should give up their clear and reliable interest derived from developing trade co-operation with China, for the sake of unreliable strategic considerations. It will be even harder to convince American allies by such arguments. This is apparent from the annual review by the American Congress to grant mostfavoured nation status to China. The review is conducted each year, and each year obstacles stand in the way. Yet in the end the Congress always passes it. From the economic viewpoint the American market is crucial to the development of the Chinese economy. Should this market ever be closed to China, China's economic development will in all likelihood be greatly hindered. This point is seen by everyone in China who is concerned with problems in this sphere. For many years China has dealt with all sorts of demands on trade raised by America with an extremely co-operative attitude, in order to enable as many American interest groups as possible to gain profit from trade with China. This attitude is not likely to change in the future. As China is determined to join the World Trade Organisation and cut her tariffs, trade liberalisation will be an inevitable trend in China from now on. Although cutting tariff is likely to hit some Chinese enterprises in the embryonic stage of development in certain areas, it will enable Chinese consumers to enjoy American high tech products and Chinese producers to understand American high tech products at an early date. The U.S. plays a crucial role in China's accession to the WTO. During President Jiang's visit leaders of both countries expressed the hope in a joint communique for speeding up the process of China joining the WTO. President Clinton said America will do all it can to enable China to join the WTO as soon as possible. The Chinese minister for external economic co-operation, Wu Yi and the American trade representative Barshefsky held a meeting in Vancouver on 21 November 1997, in which they held important discussions on China's entry into the WTO. Both parties believe that China's recent package proposal on an interim phase in the transition to a market economy has laid the foundation for negotiations on concluding bilateral market negotiations on the issue. Wu Yi said she hoped that the discussions she and Barshefsky had will be of help to make the wishes of leaders of both countries become reality. Barshefsky said that progress had been made by leaders of both countries on trade negotiation.

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America particularly praised the decision by China to speed up the agreement on information technology products. The American side is willing to make endeavour together with China to accelerate the negotiations on China's entry into the WTO. Apart from economic considerations in general, China certainly wishes to obtain American new science and high technology through economic trade co-operation with America. This point should not be avoided, nor should it be abandoned. Qian Qichen, Vice-Premier of the State Council and Foreign Minister, pointed out in a speech on 22 November 1997 at the ninth Ministerial level meeting of the Asia Pacific Economic Co-operation forum (APEC) that at the turn of the century a new science and technological revolution is coming, which will bring unprecedented economic growth and prosperity, but which also has the potential to widen the gap in the level of development among existing member countries. This is a big opportunity and challenge to every member of the international community. Therefore China supports Malaysia, the host nation in the next year in the strengthening of scientific and technical co-operation and promoting development as one of the priorities in the work of APEC for the coming year. China, he said, is willing to strive with other members achievement greater co-operation in this area. To what extent America is willing to transfer technology to China is an important yardstick for measuring whether America regards China as an enemy, or as a partner in co-operation. If America regards China as a partner in co-operation, then there is the question to what extent she is prepared to regard her as a partner. Certainly some Americans are doing all they can to obstruct China from getting American high tech expertise, pursuing their ideas concerning the external strategic environment. But as stated above, even if rather unfavourable conditions would occur today with its fast development of science and technology, China will have plenty of room for freedom of action. The problem is that the way China's domestic economy operates, and the level of her scientific and technical development are not advantageous for accepting American high technology, so that China is unable to fully utilise present opportunities. How to effectively and appropriately use China's favourable trade balance with America and to combine the reduction of trade balance with obtaining American high technology is an important subject in Sino-US trade in the future. It involves diplomacy, foreign trade and a domestic economic structural reform in China.

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All in all, Sino-US trade relations have hastened the improvement of state relations of China with America. Trade relations are a tie of friendship between the peoples of the two countries. Furthermore, the American entrepreneur community that maintains close trade relations with China has all along been a big promoter of US-Sino relations. The same is true for China.

SINO-US SECURITY CO-OPERATION AND OTHER SPHERES OF CO-OPERATION

Prior to the state visit to America by President Jiang, President Clinton in answer to an invitation from the American Asian Society and US-Sino Education Fund made a speech titled "China and the State Interest" over radio and television. President Clinton proposed six spheres of co-operation between America and China: Promoting world peace, prosperity and stability, preserving peace and stability in Asia region, preventing proliferation of nuclear weapons and other weapons of mass destruction, opposing drugs smuggle and hitting out at transnational crimes, establishing a free, just, fair and open world trade system and investment environment, and environmental protection. President Jiang made a speech at Harvard University on 1 November 1997 on "promoting mutual understanding and strengthening friendly co-operation". President Jiang stated that China and America should share common interest and shoulder common responsibility on many major issues concerning human survival and development, such as preserving world peace and security, preventing the proliferation of weapons of mass destruction, protecting environment for human survival and hitting out at international crime. In these spheres of co-operation, security co-operation obviously occupies an important position. China and America are both beneficiaries of a peaceful world environment. For her part China can obtain almost anything needed for her development from the present world free trade environment, which is preconditioned by world peace. From the moral viewpoint world peace is necessary to the happiness of mankind. From the viewpoint of interest the aim of war is a predatory grab of resources. At least in the foreseeable future free trade can basically solve the problem of distributing resources at a price much lower than the cost of war. Both America and China occupy relatively advantageous positions in the way the distribution of resources

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is organised. Thus, China and America truly and to a great extent have a common interest in maintaining world peace and security. If there are points of divergence they should be put aside to be solved in the distant future, hard to predict at present. Although many Americans still regard China as the main thorny security issue, President Clinton in his speech on 24 October 1997 affirmed positively that China has provided co-operation in the field of security. He said that as a member of the UN Security Council China provided co-operation on the issues of Cambodia, Gulf War and Haiti. In relaxing tension on the Korean Peninsula China also plays an important role. Clinton thinks that the demand for reliable and effective energy supply will make China a stabilising force in the area from the Persian Gulf to the Caspian Sea. He said that America wants China to be a strong force in promoting security and co-operation in Asia in the prevention of the proliferation of weapons of mass destruction. He gave a positive assessment on Chinese cooperation, despite his statement that China still maintains troublesome relations with regard to the supply of weapons to other countries. However, due to the distrust between the two countries, their cooperation in security up to now is far from adequate. When it comes to US global military strategy or regional security arrangements, China is placed more in the position of a target to be defended against, rather than being a partner to co-operate with (with the exception of a few cases). As for co-operation, what America means most of all is that China should not make trouble. In the foreseeable future US-Sino security co-operation will not go beyond the limitations imposed by two above mentioned basic facts. Up to the present day the policy makers in America should at least have a more realistic judgement of Chinese intentions. It is not impossible for the two countries to work out more positive co-operation on security issues. America should consider the following two arguments. Firstly, should America always place China outside the realm of co-operation in her security arrangements or make China the target to be defended against, then China will naturally be left with no sense of security. She will have to seek another way out for herself. This will not be to the advantage of America nor of benefit to the stabilisation of the global situation. Secondly, as China shares a common interest with America in maintaining world peace and security, she must be sincere to make a greater contribution to world peace. Consequently, to work out positive co-operation with China

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will greatly strengthen forces for the maintenance of peace and security. For her part China feels unhappy about American security arrangements, such as the new guidelines on US-Japan defence cooperation. This is only natural. Apart from being unhappy and protesting, what China should do is to make as much effort as possible to involve herself in various American security arrangements in a suitable manner. She should make her voice heard on as many occasions as possible, raise realistic proposals and actively participate in peace-keeping activities whenever conditions are fulfilled. China will continue to pursue her independent course in national defence, and seek balance in the polarity of forces as her unshakeable basic security strategy, of course in line with actual conditions of Sino-US relations and taking into account possible developments in the foreseeable future. The state visit by President Jiang Zemin to America has provided a fresh start for co-operation in the security sphere between the two countries. During the visit a joint communique was issued on 29 October 1997 which stipulated that as great powers in the Asia Pacific region, China and America are willing to strengthen co-operation to jointly face various kinds of challenges and to make active contributions in order to promote stability and prosperity in the region. Both sides believe that maintaining peace and stability on the Korean Peninsula is of crucial importance. Both sides will press ahead with the establishment of lasting peace on the peninsula through conferences by four sides and will continue to negotiate over the issue. Both sides stressed on keeping peace and stability on such important regions as the Middle East, the Gulf and South Asia in conformity with the common interest of both countries. Following the development of global integration and the new technological revolution, some problems of a non-state nature have come to the fore such as transnational organised crime, drugs smuggle, counterfeiting, illegal emigration or immigration, and illegal money laundry. Both sides explored and studied setting up effective mechanisms and strengthening co-operation in these matters to the benefit of both. Secondly, there is the question of legal exchange and cooperation. This mainly deals with the increase of joint research and visits by legal experts of both countries, holding lectures, forums, training judges, prosecutors and lawyers of both countries, sharing of legal education, legal study and information data, and co-operation in preventing corruption, carrying out arbitration, and commercial laws. Both sides reached an excellent common understanding

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and discussed the setting up of offices by lawyers in each other's country. Thirdly, the possibility of an extradition arrangement and signing a legal assistance treaty was discussed. Both sides entered into negotiation, showing a certain amount of sincerity. In the event treaties were not yet in place both sides expressed the willingness to get mutual assistance in specific cases under way. Go-operation was to be worked out on the basis of equality, mutual benefit and mutual respect for each other's legal system. Xiao Yang expressed optimism over the prospect of co-operation in the legal sphere by the two countries. Protecting the environment for the survival of the human race is also a problem requiring the co-operation of governments of various countries. On this issue a wide gap exists all along between developing and developed nations. On the one hand, developing nations must conscientiously solve problems of environmental pollution in the course of development for the sake of their own survival. On the other hand, developed nations put the blame for environmental pollution on the shoulder of developing countries. They use this as a reason to demand that developing countries slow down the speed of development. This demand can hardly be accepted. A similar split on this issue occurred between China and America. According to an investigation by the International Energy Resources Organisation on the amount of carbon dioxide released in the world in 1995, America occupies the first place in emitting carbon dioxide. China is in second place. However, from a per capita viewpoint America emits 19.88 tons whereas China emits only 2.51 tons. The emission per capita by America is thus eight times greater than China's. This does not mean that China should not concern herself with the issue of environmental protection. Actually the problem is of crucial importance to China for her sustainable development in the future. China adopts a positive attitude as she seeks co-operation in this field. In solving the problem of global environmental pollution, the key to international co-operation lies in developed nations transferring technology for environmental protection to developing nations as quickly as possible, without compensation or at low cost. Chinese premier Li Peng and American Vice-President Gore jointly sponsored a forum on Chinese-American environment and development at the Great Hall of the People in Beijing on 25 March 1997. They both spoke on the occasion. Premier Li Peng in his speech outlined four principles on joint co-operation in environment and development: mutual

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respect, seeking common ground and reserving differences; equality and mutual benefit and mutually complementing each other's advantage; learning experiences and expanding co-operation; and focusing attention on the future with feet planted on the present. It can be anticipated that there will be more substantial development in SinoUS co-operation in this field from now on. On 29 October 1997 the Sino-US joint communique reaffirmed the importance of cooperation on the extensive environmental issue.

SOME MAJOR DIFFERENCES

Taiwan is a sensitive issue in Sino-US relations. The Chinese side stressed in the joint communique of 29 October 1997 that Taiwan is the most important and sensitive key issue. The key to the healthy and stable development of Sino-US relations is to abide by the principles contained in the three Sino-US joint communiques, and an appropriate handling of the problem. The American side reaffirmed its one-China policy and adherence to the principles of the three joint communiques. On this issue 1997 was a relatively quiet year, without the tension occasioned by the visit of Lee Teng-hui to America and military exercises held by China in the Taiwan Strait in 1995, which focused attention on Sino-US relations. In the foreseeable future the maintenance of the present situation is in line with American interests. At the same time it is not possible that China will break the existing tranquil situation of her own accord. The real test comes when Taiwan takes initiatives in an attempt to change the present position. The Chinese Government has reiterated time and again that Taiwan is an inseparable part of China. She will take necessary measures to protect the integrity of her territorial sovereignty. She will not commit herself to abandoning the use of force. To the American side Taiwan is an important link in her arrangement in the security of the Asia-Pacific region. Taiwan can certainly become America's advantageous tool in containing China. Secondly, America has huge economic interests in Taiwan. Taiwan's high technology is highly and closely combined with that of China. Taiwan is a market that brings highly lucrative profit to American arms manufacturers and exporters. Apart from this, American public opinion highly supports the so-called democratic regime of Taiwan. In the event of a real military conflict between both sides of the Taiwan Strait, a

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rather strong political force in America will demand America to carry out her obligation to protect Taiwan in accordance with the bill on relations with Taiwan. We can not suppose at present any means that will solve the split between China and America in case such a situation really occurs. What is important is that even during moments of crisis Sino-US relations should not be completely guided by the actions of the Taiwan regime. Human rights represents another important divergence of opinion between the two countries. The joint communique of 29 October 1997 says that both countries agree that the World Human Rights Declaration and other international human rights documents play a positive role in exercising human rights. They reaffirmed that both sides endeavour to protect human rights and basic freedom. Notwithstanding the fact that both sides have not overcome their differences on the issue, they agreed to hold dialogues on a government and nongovernment level based on the spirit of equality and mutual respect. Both countries agreed to hold discussions on the structure and role of a non-governmental human rights forum. President Jiang Zemin and President Bill Clinton held a joint press conference. On the question of human rights President Jiang said the world we live in is rich and varied. The concepts of democracy, human rights and freedom are relative, specific and determined by specific conditions of different countries. On the question of human rights, discussions should be held on the basis of non-interference in the internal affairs of other countries. At the joint press conference President Clinton made a rather lengthy speech. He said that there are fundamental differences, especially concerning human rights and religious freedom. America will press forward to continue the discussion until one day when there is full room for debate, dissident and freedom to worship as part of the fabric of a truly free China. The President said that human rights originated in the European Enlightenment. They are now enshrined in the World Human Rights Declaration. It is a birthright not only of Americans or Europeans but also of people everywhere. He said that they understand China's own experience and that the challenge she faces makes her put stability in an important position. They appreciate China has greater freedom from want, freedom to choose one's occupation and widely-held local elections, which further human rights. "But we believe China will be more prosperous and stable as she embraces more fully her own people's political aspiration as she does

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the economic aspirations of her people". He added that in the Information Age the true wealth of nations lies in the ability of the people to create, communicate and innovate. The full development of these resources requires people who feel free to speak, to publish, to associate, and to worship without fear of reprisal. It is precisely the extraordinary human resources that will raise China to her rightful destiny of leadership and widely held prosperity in the 21st century. From the joint communique and the speeches of the two leaders at the joint press conference it can be seen that the differences on human rights between the two countries will continue, but there is no danger of obstacles that will cause crises. We have reason even to believe that exchanges on human rights of both countries will further expand. However, when some Americans make use of human rights issues out of ulterior motives—political or geopolitical, they will arouse popular dissatisfaction among the Chinese people.

CONCLUSION

The year 1997 saw important progress made in Sino-US relations. It may be said that both sides have done all they can or are prepared to do so to improve relations in the short term in the diplomatic and technological fields. From the long term, strategic, and basic angle, China will have to do two things. One, under the prerequisite of keeping society basically stable she must push forward the build-up of democracy and the legal framework to further strengthen cohesion domestically and improve her image externally. Two, China must press ahead with sufficient progress in economic and technological spheres to strengthen her comprehensive national strength. This way China will have a stronger foothold whether for friendship, co-operation or even confrontation. It must be stressed that China has obtained fast growth in the economic sphere, but has not as yet made comparable progress in the technical field. It is this second point that constitutes the basic buttress to enable a nation to stand on her own feet among nations of the world in the twenty-first century.

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SOUTHEAST ASIA AND THE REGION

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THE SOUTHEAST ASIAN APPROACH TOWARDS THE SOUTH CHINA SEA. CONFLICT RESOLUTION FROM A COMPREHENSIVE SECURITY PERSPECTIVE RAYMOND FEDDEMA*

The waning of the Cold War has not only left its marks on the changing security relations on a global scale. It has also confronted many scholars working on security issues with the inadequacy of their conceptual framework to analyse the complexity of security. For a long time bi-polarity left its mark on security studies and dominated its discourse. Security was all too often reduced to geo-political and military issues and only viewed within the framework of East-West confrontation. Divergent approaches based on different perspectives on international relations were mostly ignored due to the preoccupation with the parameters set by the prevailing orthodoxy of the Cold War. Beginning in the 1960s, interesting developments in the field of security studies took place outside the above-mentioned framework. In Asia, for example, Japanese politicians and scholars developed a more sophisticated analytical apparatus to determine a variety of security related issues and to relate them to each other in a rather unconventional way. These issues did not relate to each other in an a priori hierarchy but together they constituted a complex set of security issues whose components varied in importance—as time would tell. According to these Japanese scholars and politicians, the elements of which this security complex is composed are more often determined by and directly related to internal and/or regional concerns rather than bearing upon global security issues.1 * Dr. Raymond Feddema is senior lecturer in International Relations at the University of Amsterdam. His main field of research are the political economies of Southeast and East Asian countries in relation to their particular political cultures and their links to the global economy. 1 Japan has not been the only Asian country which escaped in an early stage from the limited Western approach toward security. In India, for example, discussions on the conceptualisation of security went in similar directions as the Japanese discussions. The need to broaden the concept of security has been expressed since the early 1970s by Indian scholars and politicians. See for example K. Subrahmanyam,

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Southeast Asia was turned into one of the major battlefields during the Cold War and subsequently the discourse on security issues in that part of the world was dominated by the prevailing Western paradigms. Nevertheless countries in that region made early attempts to approach some of their security related problems in a way quite different from the West. The methods of conflict management within Southeast Asia developed in a particular way. The basic elements of the Southeast Asian approach are currently still used in dealing with security issues. After an historical introduction of the development of security issues in Southeast Asia, the focus will be on security problems related to the South China Sea. The contending parties in the conflicts on the South China Sea are aware of the fact that the resolution of conflicts will take time due to their complex nature. Most of them opt for a step by step solution to each problem separately through multilateral negotiations. In this approach to conflict management the avoidance of confrontation between conflicting parties is the single most important aim. They very seldom turn to any set timetable to force a solution during this process. This article will conclude with an analysis of the ways in which the countries around the South China Sea try to solve their conflicts.

SECURED INSECURITIES IN SOUTHEAST ASIA

Most of the states in Southeast Asia can be labelled as 'colonial constructs' and came into existence constructed by colonial powers during the past hundred years. Only Thailand (formerly Siam) that had not been colonised by Western powers and Vietnam, colonised by the French for eighty years had ever been regarded as nation states. After gaining independence, the other states were faced with the often-painful process of nation building. Ethnic and religious diversity were the main obstacles to completing this process successfully. Territories had been conquered by colonial powers and made into colonies without regard to ethnic or religious composition. Colonial powers often made use of these differences within their colonies by playing one group against another, the well-known divide-and-rule Bangladesh and India's Security. Dehra Dun, 1972, and U.S. Bajpai (ed.), India's Security. New Delhi, 1983.

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strategy. Such is the inheritance with which the newly formed states are still struggling.2 Today most of the countries in Southeast Asia are still in the grip of the same fundamental problems they encountered just after they gained independence: political instability, a fragile economic structure and a far from accomplished process of nation-building. Numerous territorial disputes among newly established states were another negative inheritance from colonialism. All of the countries within Southeast Asia are engaged in one or more disputes with their neighbours. Their fragile internal security and the special place some of the countries in the region had chosen as a participant at the Conference of Non-aligned Movement in Bandung in 1955, put them in a vulnerable position in the international arena.3 But although the political differences between Southeast Asian countries seemed difficult to overcome, they did not result in open confrontation between states within the region.4 The establishment of a platform to discuss regional conflicts has significantly contributed to de-escalate them. Some of the newly independent states in Southeast Asia felt a strong need to organise themselves into a regional organisation in order to foster their relations. After several failed attempts in the late 1950's and the first half of the 1960's, the Association of Southeast Asian Nations (ASEAN) was established. Its initial members, Indonesia, Malaysia, Thailand, the Philippines and Singapore had been involved in earlier attempts to co-operate on a regional level. In the early days of its existence, ASEAN was seen as a product of the Cold War by other states in Southeast Asia. After the Vietnam War contacts were built cautiously between Vietnam and ASEAN. But mutual suspicion, anti-communist fears and improving relations between Thailand

2 Indonesia under Dutch colonial rule is a good example of this policy: Over 200 sultanates came formally under Dutch rule by signing the so-called "short declaration" only during the first decade of the twentieth century, but their mutual relationship and that with the other parts of the archipelago remained as distant as before. Instead of cultural integration Indonesia is now one of the best examples of an ethnical and religious divided country confronted with a failed nation-building process. 3 One of the founding fathers of the Non-Aligned Movement was the Indonesian president Sukarno. Other member-countries in Southeast Asia were the Democratic Republic of Vietnam, Cambodia and Burma. 4 The only exception formed Indonesia with its konfrontasi politik against Malaysia initiated in 1963, which resulted in armed attacks by some Indonesian volunteers on the coasts of Malaya proper in 1964-5, and the confrontations between Vietnam and Cambodia during the rule of the Khmer Rouge between 1975 and 1979.

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and the People's Republic of China prevented a rapprochement between the two. The bilateral contacts between Indonesia and Vietnam intensified and deepened, despite ASEAN's hesitations and the strong anti-communist stand of the Suharto government. Originally established in 1967 as an organisation for economic and cultural co-operation, ASEAN proved to be more successful in the establishment of a platform to discuss regional security.3 Although territorial disputes among its members have not been resolved, the risks of an outbreak of armed conflict have been minimised. The ASEAN Declaration of 1967 states that the member-states "are determined to ensure their stability and security from external interference in any form or manifestation"6 In its initial stage, it was not clear whether they mean by 'external interference' that of nonASEAN members, ASEAN countries among each other, or both. By now we know that they were most worried by possible interference in each other internal affairs. But ever since the Bangkok Declaration Indonesia has also expressed great concern about possible interference from great powers in Southeast Asian and its own affairs. In the initial stage of ASEAN, other member-countries were not so willing to exclude great power access to the region as long as it served their military and geo-political security interests. Malaysia and Singapore relied upon the protection of Great Britain until that country decided in 1968 unilaterally to withdraw their military presence from the region. The Philippines and Thailand relied for their security partly on the United States with which they signed bilateral defence treaties. They 3 The relative trade figures among the original five members of ASEAN (Indonesia, Thailand, Malaysia, the Philippines and Singapore) have not substantially changed over the past three decades. The intra-ASEAN trade counted for 17.1% of the total ASEAN international trade in 1970 and 18.3% in 1992. For an overview of the (failed) attempts to step up intra-ASEAN trade, see ASEAN Economic Co-operation. Transition and Transformation. ASEAN Secretariat. Singapore, 1997, pp. 43-88. Almost ten years after ASEAN was established, the heads of state of the member-countries held their first summit in Indonesia. During the Bali Summit in 1976, the heads of state of the ASEAN concluded the Treaty of Amity and Co-operation in which they stipulated the intention "to intensify economic co-operation and adopt appropriate regional strategies for economic development and mutual assistance". The admission of other Southeast Asian countries to ASEAN was foreseen in the (near) future and should enhance economic co-operation. Although the organisation succeeded to get almost all Southeast Asian countries on board after the admission of Brunei (1984), Vietnam (1995), and Burma and Laos (1997), the awareness of the failed economic integration left its mark on the celebration of ASEAN's 30th anniversary. For a critical analysis of the proposed measures to enhance economic integration within ASEAN during the coming decade: G. Tan, ASEAN Economic

Development and Co-operation. Singapore, 1996, pp. 139-169. 6

The ASEAN Declaration, Bangkok, August 8, 1967. Preamble.

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also provided military support to the United States in their war with Vietnam, Laos and Cambodia. And on a multilateral base, they were part of the South-East Asia Treaty Organisation (SEATO)7 But SEATO never played a similar role like NATO as a transatlantic security organisation. It hardly functioned at the end of the 1960s and was finally disbanded in June 1977. There remains only one regional military organisation whose members are bound to consult each other in time of war: the Five Power Defence Arrangement, founded in 1971.8 The reduced presence of great powers in the region allowed ASEAN members to develop new plans for an alternative defence structure to enhance the security in Southeast Asia. As a first step foreign ministers of the ASEAN solemnly stated in a joint declaration in 1971 that they would set up a Zone of Peace, Freedom and Neutrality (ZOPFAN), free from any form or manner of interference by outside powers in their region.9 During the first summit of ASEAN's heads of government, held in February 1976 on Bali, ZOPFAN was officially adopted as an integrated part of Southeast Asia's security policy and included in the at that occasion agreed Declaration of ASEAN Concord. In the wake of the United States' defeat in Indochina, the ASEAN Concord was mainly directed towards enhancing security and stability in the region. It was aimed at: 1) the limitation and finally the elimination of subversion which threatened and destabilised their governments by strengthening national and ASEAN resilience; 2) the promotion of the harmonisation of views in order to strengthen the political stability. In case it would be desirable and possible, ASEAN countries could take common action to enhance stability of the region; and 3) the establishment of ZOPFAN.10 7 The SEATO was established in February 1955 in Bangkok as an institutional expression of the South-East Asia Collective Defence Treaty concluded in the Manila Pact in September 1954. Besides Thailand and the Philippines, the United States, Great Britain, Pakistan, Australia and New Zealand were members of the organisation. R Members of the Five Power Defence Arrangements are Malaysia, Singapore, Australia, New Zealand, and the United Kingdom. 9 On the initiative of Malaysia, representatives of the ASEAN members had convened in Kuala Lumpur in November 1971 to discuss Malaysian proposals to neutralise Southeast Asia. According to the Malaysians a neutral Southeast Asia should be guarantied by three great powers: the United States, the Soviet Union, and the People's Republic of China. But Indonesia strongly opposed the idea that powers from outside the region would supervise and safeguard Southeast Asian security arrangements. 10 ASEAN Secretariat, 10 Years ASEAN. Djakarta, 1978. pp. 111-112.

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It stated explicitly the pursuit of some kind of neutrality. But it turned out that ZOPFAN was at best a goal to be reached in the long run. All ASEAN members could agree to that concept because it did not affect existing security arrangements of the signatories. It expressed only in fairly general terms a common ASEAN vision on the future security relationship with non-ASEAN members. The principle of neutrality, one of the cornerstones of ZOPFAN has been violated during the 1980's by the actions of ASEAN in the Cambodian conflict as will be later demonstrated.11 ASEAN actually distanced itself from the ZOPFAN ideas with the waning of the Cold War. Only a merely symbolic move had been made in December 1995 when the leaders of the ASEAN signed the Southeast Asia Nuclear Weapons Free Zone Treaty. This did not have a great impact because all signatories knew in advance that all of the declared nuclear powers had no intention to agree with it neither then nor in the near future.12 During as well as after the Cold War neither forces from within the ASEAN nor external ones have been successful to bestow aspects of a defence pact on the association. But some ASEAN members found it difficult to break with their old allies from outside the region. The ambivalent position of some ASEAN members toward great power influence on regional security problems is best demonstrated in the Cambodian case.

T H E CAMBODIAN CONFLICT AS A TEST CASE OF

A S E A N CONFLICT MANAGEMENT

None of the ASEAN members greeted the take-over of power in Cambodia in 1975 enthusiastically. They all shared the fear of a 11 Attempts to revitalise ZOPFAN during the 1980s failed because the necessary conditions were not met. Most ASEAN members lacked a sufficient level of domestic political security, a prerequisite for a successful implementation of ZOPFAN. For a more detailed analysis: J. Saravanamuttu, "ASEAN Security for the 1980s: The Case for a Revitalised ZOPFAN", in: Contemporary Southeast Asia, Vol. 6, no. 2, Sept. 1984, pp. 186-196. 12 The United States was the strongest opponent of the Southeast Asian Nuclear Weapons Free Zone. They regarded it as a challenge to the presence of a superpower and therefore detrimental to regional security and stability. They also considered it as a first step of regional powers towards a hegemonic position in the region.

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possible spread of revolutionary movements to their own territory with the exception of Indonesia. But that country, together with the just united Vietnam, feared the growth of Chinese influence in the region most. Cambodia under the Khmer Rouge had relied on China, and was considered by some ASEAN members as well as Vietnam as a possible stronghold from which the Chinese could enhance their power in the region. The ousting of the Khmer Rouge in 1978 by the Vietnamese army and the replacement of Pol Pot and his followers by a pro-Vietnamese government provoked strong reactions from Western powers as well as China. With Vietnam as a common enemy, the United States and China mobilised the international community to take actions against Vietnam and the new Cambodian state council led by president Heng Samrin. The "Cambodian question" was born. The "Cambodian question" has been an important stumbling block in the 1980's for the improvement of relations between the states of Indochina and ASEAN members. The Cold War as well as the Sino-Vietnamese conflict prevented a quick solution of the Cambodian problem. China's position can be explained by its continuing support of the Khmer Rouge since the early 1970s. The ousting of the Khmer Rouge in December 1978 by the Vietnamese army deprived China of a stronghold in Southeast Asia and resulted in an even more hostile attitude from China toward Vietnam.13 The reactions on the ousting of the Khmer Rouge by Western governments were mixed. Although they all condemned the Vietnamese action, some governments preferred for the time being a Cambodia ruled by a pro-Vietnamese government to a continuation of the Khmer Rouge regime. The United States, still recovering from their defeat in the Vietnam War, not only condemned the Vietnamese action but played a negative role in early attempts by Japan and Australia to settle the problem peacefully. In co-operation with China, the United States wished to drag Vietnam into a protracted war to let the country bleed, and they blocked a peaceful settlement successfully. The Khmer Rouge became their political and military partner in the formation of a Cambodian resistance coalition. At that stage, the ASEAN was used by the United States li In reaction to the Vietnamese military action in Cambodia, Chinese troops invaded the north of Vietnam in mid-February 1979 but they were forced to withdraw one month later suffering heavy losses. For the China policy on Cambodia in the 1970s and the development of the Sino-Vietnamese dispute on Cambodia,

see: Nayan Chanda, Brother Enemy: The War after the War. San Diego, 1986.

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in their strategy versus Cambodia. First there was the ASEAN initiative in 1981 to organise a United Nations-sponsored International Conference on Kampuchea—as Cambodia had been renamed by the Khmer Rouge—which ended with the adoption of the "Declaration on Kampuchea".14 One year later Thailand, Malaysia and Singapore played an important role during the 34th Session of the General Assembly in opposing an Indian proposal to leave the Cambodian seat vacant.10 Several months later the three played an important role in the formation of the Coalition Government of Democratic Kampuchea16 which was formalised in June 1982 in the Malaysian capital Kuala Lumpur. The way Western powers supported by China and the ASEAN handled the "Cambodian question" prevented a quick solution of the "Cambodian question" and resulted in the occupation of the Cambodian seat in the UN by a resistance coalition dominated by the Khmer Rouge until 1991. The handling of the problems concerning Cambodia in the 1980's is relevant in the context of the approach to conflict management and settlement in Southeast Asia. While Thailand, often supported by Singapore and in some cases also Malaysia, still operated more in a Cold War style of confrontation, Indonesia manoeuvred with extreme caution and often resorted to silent diplomacy to reach a peaceful settlement of a given conflict. It did so outside the frame14

This "Declaration on Kampuchea" called for a comprehensive political settlement through negotiations. According to the ASEAN, all Cambodian factions should be disarmed and an interim administration be established pending free elections. For an overview of the main points of the "Declaration on Kampuchea", see: J. Saravanamuttu, "The Asean Perspective and Role in the Cambodian Peace Process", in: R. Amer, J. Saravanamuttu and P. Wallensteen, Cambodian Conflict 1979-1991: From Intervention to Resolution. Penang, 1996, pp. 41-2. 15 For an overview of ASEAN's position in the UN on the "Cambodian Question": J. Saravanamuttu, "The ASEAN Perspective and Role in the Cambodian Peace Process", in: R. Amer, J. Saravanamuttu and P. Wallensteen, The Cambodian Conflict 1979-1991: From Intervention to Resolution. Penang/Uppsala, 1996. "' Together with the United States, China and some Western European countries, the ASEAN forged a coalition between Cambodian opposition groups who had fought each other for a long time: Prince Norodom Sihanouk who represented the "Front uni national pour un Cambodge independant, neutre, pacifique et cooperatif" (FUNCINPEC), Khieu Samphan, the former president of Democratic Kampuchea as Cambodia was called under the Khmer Rouge regime, and the Khmer People's Liberation Front represented by the former conservative premier Son San. Three years after the Khmer Rouge were driven from power Prince Sihanouk was "strongly advised" to ally with the butchers of five of his children. He consented and formally led the coalition for eight years.

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work of ASEAN because that organisation continued to function all too compliantly within the canons of the Cold War. Notwithstanding its strong anti-communist policies at home, the Indonesian government maintained good relations with Vietnam. Bilateral consultations between Djakarta and Hanoi on the one hand and the on-going discussions with the other ASEAN members and the resistance against the Hun Sen government in Cambodia resulted in a series of informal meetings, known as "the Jakarta Informal Meetings" which proved to lead to a breakthrough in solving the "Cambodian question". The way Indonesia handled the problem became a model for the ASEAN to approach and manage conflicts which at first seemed hard to solve peacefully. After a first informal stage, the Indonesian government as mediator brought with varying success the contending parties, i.e. the Indochinese states, all ASEAN members, the Hun Sen government and the three Cambodian resistance groups who formed the Coalition Government of Democratic Kampuchea together to seek solutions for the problems.17 Thailand, until then one of the main opponents of rapprochement, made a political U-turn in 1988 when the government of Chatichai Choonhavan declared it would from then on pursue a more friendly and flexible policy towards the neighbouring Indochinese countries, using the phrase "turning the Indochinese battlefields into markets". As the contending parties continued to meet informally in 1989 and 1990, it was clear that the ASEAN approach to end the conflict made slow progress. It looked as if it was too slow for the international community which had been involved in the informal meetings since all parties involved met in Paris on July 30, 1989 together with the permanent members of the United Nations Security Council, a representative of the UN Secretary General, and India, Zimbabwe (as representative of the non-aligned nations), Australia and Canada. After a month they came up with a "blueprint for peace" which acknowledged a legitimate role of the UN in the peace process. While ASEAN members and other Southeast Asian parties in the conflict expressed their satisfaction with the progress made in the Paris talks, Western governments and analysts were more sceptical about a plan which 17

In the process of negotiations, Sihanouk and the Khmer Rouge proved to be the most capricious and unreliable participants.

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contained good intentions but did not or hardly touch upon the real questions at stake such as international supervision of troop withdrawal by Vietnam and the possible composition of a future Cambodian (coalition) government. What started as an Indonesian initiative, later supported by the ASEAN, had been taken over by the international community in order to speed up the process and to iron out the good intentions made in the August 1989 plan.18 The way the ASEAN and its members individually dealt with the "Cambodian question" in the 1980's made two things clear: First of all, ASEAN as an organisation demonstrated its limited abilities to reach consensus in a regional conflict and to act upon unanimous taken political decisions. More than once the Indonesian minister of Foreign Affairs Ali Alatas aired a dissenting opinion on the Cambodian question a few weeks after discussing the problem with his colleagues within ASEAN. Secondly, ASEAN tried to follow its own particular way of managing a conflict in the region, but was severely hindered in solving the problems due to the prevalence of the Cold War ideology which dominated international relations at that time. Another determinant of security policies in Southeast Asia was the position of China in the region. During the Cold War most countries in the region perceived China as a threat to their security not only because the country is populous, powerful and was governed by communists, but also because of the economic powerful Chinese minorities living within Southeast Asia. In earlier days, they were considered as a potential fifth column who could be used by China for the spread of communism. Nowadays, the Chinese minorities are envied for their economic position and their well-being. Their power is related to their strong economic position in the region although some differentiation should be made based on the regions in China they originate from.19 18 For an overview of the evolution in the Cambodian peace process: R. Amer, "The United Nations' Peace Plan for Cambodia: From Confrontation to Consensus", in: Interdisciplinary Peace Research, Vol. 3, no. 2, October/November 1991, pp. 3-27. For the period of the direct United Nations involvement in Cambodia, see: Sorpong Peou, Conflict Neutralization in the Cambodian War. From Battlefield to Ballot-Box. Oxford, 1997. 19 A good analysis of the linguistic and regional origins of the Chinese in Southeast Asia is presented by the East Asia Analytical Unit of the Department of Foreign Affairs and Trade of Australia in Overseas Chinese Business Networks in Asia, Canberra, 1995.

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By now China is not anymore the country to be feared for its export of revolution and communism, but its growing economic importance and military power combined with its aspirations to achieve a leading role in Asia. Its territorial claims on substantial parts of Southeast Asia, specially the whole South China Sea, contributed to the continuous fear of China by Southeast Asian countries. These fears were fuelled by the fact that until recently China's aspirations went together with a total rejection of any commitment to join multilateral platforms to discuss problems of the region. China preferred to discuss territorial disputes bi-laterally and has shown great hesitations to become engaged in multilateral organisations.

T H E SOUTH CHINA SEA AND COMPREHENSIVE SECURITY

Disputes concerning the sovereignty over the islands in the South China Sea continued for the past thirty years. Six neighbouring states claim parts or the whole of the South China Sea as their territory: China and Taiwan the whole, Vietnam, the Philippines, Malaysia and Brunei parts of it. During the Vietnam War the disputed area was considered a side show. All attention had been focused on the war in Indochina and the occupation of the Paracel Islands by South Vietnam during that war had been opposed by China as well as by North Vietnam. The latter again protested against the Chinese occupation of the Paracel Islands in 1974, claiming all of the islands as Vietnamese territory. After the war, more countries surrounding the South China Sea made explicit claims to islands in the South China Sea. Most claims were made through diplomatic channels but in 1988 serious military confrontations between China and Vietnam suddenly changed the scene. By that time the intensity of conflicts in the South China Sea had strengthened. With the collapse of the Soviet Union and the development of "market socialism" i.e. some kind of capitalism in China, most states in Southeast Asia lost their common unifying denominator: the containment of communism. As a result, unresolved disputes—domestic as well as international—sprang up and took a position on centre stage. In such a situation states are inclined to focus on international disputes and demand national unity in order to divert attention from domestic conflicts.

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The conflicting parties were all aware of the importance of the area in relation to their own future development. And although the main focus in the dispute remained on the question of sovereignty, all claimants were aware of the implications for their security at large. They understood that not only traditional military and geopolitical concerns were at stake here. Other security aspects played an important role in the conflict, and will have to be solved in one or another way in the coming decade. Among them are food security, energy security, environmental security, and communication security. This growing awareness of the complexity of the matter forced the claimants to review their often traditional concept of security. A wide range of security issues should be related to each other, and they were confronted with the difficult task to evaluate constantly the separate security issues which all together constitute the security complex. In this situation a fixed set of priorities can not be maintained and greater flexibility is demanded from all parties involved. Looking at the four above mentioned security issues in relation to the dispute over the South China Sea it should be noted that all of them have domestic as well as international dimensions and therefore can not be treated as isolated national issues. They all should be analysed in a national as well as in an international context. For the countries surrounding the South China Sea food security is directly connected with their claims on (parts of) the sea. Around eight percent of global fishing takes place in that sea and fish is a basic ingredient in the daily meals of millions of people in Southeast and East Asia. The Philippines, Vietnam and China consider the protection of their fishing fleet important to the extent that they have protected fishermen from their nationality with military force against attacks by others. Their navies have clashed in the recent past over this issue and they take regularly foreign fishermen as prisoners when caught fishing in disputed waters. It is not surprising that these countries defend their fishing rights by all means because fish constitute an important proportion of the diet, and their demographic growth is among the highest in the region. Safeguarding their exclusive rights to fish parts of the South China Sea involves more than only food security: hundreds of thousands fishermen earn a living from it and they want their investments and employment secured. Countries boarding the South China Sea have developed huge industries specialised in tuna and shrimp which can be easily filleted, frozen and

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canned for export to global markets.20 Some of the countries derive a substantial part of their hard currency earnings from seafood exports. They see their livelihood and exports not only threatened by other claimants from within the region but also by technological highly advanced fishing factories from South Korea and Japan. The conflicts over the demarcation of areas with exclusive fishing rights have been further complicated by the introduction of a new concept: the exclusive economic zone (EEZ). The Third United Nations Conference on the Law of the Sea (UNCLOS III),21 held in 1982, decided to establish the EEZs. The Second United Nations Conference on the Law of the Sea in 1960 could not come to an agreement on specific limits for the territorial sea and fishery zones. Thereafter many states conceded exclusive fishery zones of twelve nautical miles. The EEZ concept is a compromise between the defenders of the 200 nautical miles territorial seas and those states who were in favour of the maintenance of the traditional freedom of high seas and only claimed a 200 nautical miles resource jurisdiction zone. The EEZ is defined as a "special legal regime" without further specification.22 The ambiguity of the text of UNCLOS III and especially the lack of a clear definition of the EEZ has been a major source of conflict over resource jurisdiction in general and fishery rights and exploration and exploitation of mineral resources in particular ever since. A second important security issue in the South China Sea is the struggle for the exploration and exploitation of mineral resources. Large quantities of oil and natural gas have been detected under the South China Sea. The estimated reserves are such that they could cover a substantial part of the growing energy demands of the claiming countries during the coming decades.25 All claiming parties in the conflict are in a stage of rapid economic development. The 20

Among the world fishing zones ranked by the FAO, the South China Sea ranks number one for the catch of tuna, and number two for shrimps. 21 The final text of the 1982 United Nations Convention on the Law of the Sea, published in New York in 1983, will be referred to as UNCLOS III. 22 UNCLOS III, Article 55. 'n The total oil and natural gas reserves under the South China Sea remain a subject for speculation. But the 43 billion dollar contract signed between the Indonesian government and the American oil company Exxon for the exploitation of the natural gas in the area surrounding of Natuna, a not contested island in the South China Sea, and the vivid interest of companies to sign similar contracts in contested parts of the sea, indicate the importance in terms of energy resources of the area. For an overview of the mineral resources in the South China Sea: Workman,

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Asian crisis might have slowed down the pace of economic development in most of the claiming countries but when growth resumes in the future they certainly will be confronted with higher energy demands. They have to develop an energy policy to sustain their (economic) development in the long run. Energy supply should be secured and therefore energy security will get a more prominent place on their security agenda. Among the claiming countries China is most advanced in its development of an energy policy for the coming decades. It has made projections of predicted energy demands, differentiated by energy sources, until 2050.24 Gas and oil will already take a larger share in China's energy consumption in the coming decade. While stable production of key oil fields in the east of China can not be guaranteed for the coming decade, the country is looking for new possible sources because since 1993 China has been a net oil and gas importing country. The oil reserves in the west of China look very promising, but in the short run exploitation is unlikely due to geological difficulties, harsh climatic conditions, a lack of financial means for the necessary investments, and the current low energy prices. The last two reasons stand together with China's lack of expertise in off-shore exploration and exploitation and the political uncertainties as obstacles for large scale activities in the South China Sea. China like all the other claiming countries can not develop off-shore exploration and exploitation activities without the help of foreign companies. They lack the technology and know-how needed for it. Although the prospects for exploitation are good, the oil companies are reluctant to engage in contested territory. They are worried about the political and juridical implications when they sign contracts for exploration and possible exploitation in disputed areas. Nevertheless Western and Japanese companies are active in the South China Sea: many contracts have been signed, exploration is going on in large parts of the sea and they negotiate on new concessions, specially with China and Vietnam. D.R., "The South China Sea Basin, its Mineral Resources and their Exploitation", in: R.D. Hill (ed.), Fishing in Troubled Water. Hong Kong, 1991. pp. 9-20. 24 Based on different models, experts predict that coal, at present by far the biggest energy source in China, will be in 2050 still supply about 50% of China's primary energy. Zhou Fengqi, Study of clean coal technology in China. Study for the China Energy Research Society, 1994, cited by: Ni Weidou and Nien Dak Sze, "Energy Supply and development in China", in: M.B. McElroy, C.P. Nielsen and P. Lydon (eds.), Energizing China. Reconciling Environmental Protection and Economic Growth,

Cambridge, Mass., 1998, p. 77.

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With the involvement of Western and Japanese multinationals, the South China Sea dispute is not a regional dispute anymore. While in the case of fishing rights only Japan and South Korea are real contesting parties in the dispute, where oil and gas are involved, powerful multinationals with backing from Western governments play a role and give the dispute a global dimension. The claiming countries are well aware of this situation and try to strengthen their claims by persuading companies to sign up with them in contested areas. The companies on their part move cautiously because they feel like walking in a minefield. A good example was the opening-up of Vietnam for American companies. The exploration and exploitation of mineral deposits in the South China Sea entered a new stage after the lifting of the American embargo against Vietnam by president Clinton in 1994. From then on American oil companies as well as American banks were allowed to enter into joint ventures with Petrovietnam.20 Although Vietnam invited the Americans to invest in off-shore activities, they are reluctant because it could harm their relations with China. In collaboration with oil companies China started in the late 1980s to conduct surveys on possible oil and gas reserves. In 1989 they published the first results of their surveys of the Spratly Islands. According to these surveys the surrounding sea-floor contains some hundred billion barrels of oil and 25 billion cubic metres of gas.26 In their search to secure their growing energy demands countries around the South China Sea have good reasons to hold on firmly to their claims, involving large resources within their claimed territories.2' A third security issue directly related to the South China Sea is the preservation and management of the environment. One of the lessons from history is that during a phase of rapid industrialisation 2

' Until 1994 the United States government forbade American companies to do business with Vietnam. The Norwegian seismic research company Nopec for example tried in 1993 in vain to engage American oil companies financially in their planned deep-water surveys nearby the Crestone concession. Valencia. MJ., "Spratly Solution Still at Sea", in: The Pacific Review, Vol. 6, no. 2, 1993, p. 15. 2I> J.W. Garver. ''China's Push Through the South China Sea: The Interaction of Bureaucratic and National Interests", in: China Quarterly, no. 132, December 1992, p. 1015. If these figures are correct, the area of Spratly Islands contains oil reserves comparable to those of Kuwait. 11 Some clear examples on how claimants try to involve third parties to establish their claims is given by Koichi Sato, "The Japan Card", Far Eastern Economic Review, April 13, 1995, p. 32.

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and growth, environmental preservation and protection are nonissues. Only when economic development causes so much damage that it is life threatening for the middle classes and elites, are measures taken to check negative environmental effects, even when this will slow down economic growth. In almost all countries, developed as well as developing, the actions of environmental groups warning against damaging effects of human actions on nature can expect negative responses from governments. In most cases public awareness is limited and popular support is not a matter-of-course. States are even counteracting by labelling the protest as "running against national interests" or even "unpatriotic". Discussions about the environmental protection in the countries directly involved contain all the above mentioned ingredients. For almost the entire population of the area potential environmental degradation of the South China Sea is a non-issue. Only a few officials and scholars are aware of the environmental time bomb and try to alert the governments and the public about the consequences of their actions. Fishermen have already noticed that they have to venture out of their territorial waters because they can not catch enough on the traditional fishing grounds. Overfishing, water pollution and exploration of the seabed with explosives have destroyed parts of the ecosystem and disrupted migratory patters of fish. These development forced fishermen to leave their territorial waters and to take a double risk: with their often small boats, built for coastal fishing they have to face high seas in an area frequently struck by typhoons, and at the same time they take the risk of being captured (and often killed) by gunboats of other nations or by pirates.28 Some of the claiming states give active support to their fishermen to go beyond their territorial boundaries by subsidising the build-up of deep-sea fishing fleets. The issue of communication security in the South China Sea goes far beyond the confines of the Southeast Asian region. The possible threat to the free use of sea lanes within the South China is real since two parties in the dispute, China and Taiwan, claim sovereignty over all of the Spratly and Paracel Islands. In case one of the two could force their claim through and the whole area would become Chinese territory, this would have far reaching implications, not just for the countries in the region but on a global 28

China, Vietnam, the Philippines, Malaysia and Thailand frequently contact each other on the release of seized fishing boats and imprisoned or killed fishermen.

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level. Seventy percent of all imports to and exports from Japan and South Korea passes through that area. In that case China could control most of the international trade from East and Southeast Asia. The implications would extend far beyond the region with serious consequences for South Asia, the Middle East, Africa and Europe. Communication security for the South China Sea seems to be well regulated in the navigational regimes described in the United Nations Convention on the Law of the Sea (UNCLOS), adopted at the Geneva convention in 1958. That convention has been modified during the 1960 and 1982 United Nations Conferences on the Law of the Sea. The right of freedom of navigation on the high seas has been confirmed by UNCLOS III. But there are nevertheless two important issues which may cause conflicts on communication in the South China Sea. The first one concerns the status of the South China Sea. China and Taiwan consider that sea as an archipelago, constituted by the Spratly Islands and the Paracel Islands. The second is the "right of innocent passage" which applies to the territorial sea of a coastal state. It gives foreign ships the right of innocent passage through that part of the sea. But these concepts as defined in UNCLOS III have only complicated the situation in the South China Sea due to their ambiguous nature.29 Based on a closer look at the four above mentioned security issues, some conclusions can be drawn: firstly, all four are in one or another way related with each other; secondly, all are connected with the possibilities of rapid economic growth in the claiming countries; thirdly, all possess global dimensions apart from regional ones. This makes the chances to find a comprehensive solution highly unlikely. The claiming states seem to be aware of this problem and are on all levels engaged in the development of mechanisms to manage the conflicts.

CONFLICT MANAGEMENT AND COMPREHENSIVE SECURITY

All claiming states around the South China Sea are aware of the complexity of the conflicts. The chance of success of straightforward diplomatic talks on the South China Sea conflicts were limited. Due 29 Their nature is ambiguous because it defines on the one hand to some extent the right of freedom of navigation, but on the other hand coastal as well as

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to the complexity Indonesia took the initiative in January 1990 to sponsor a workshop on these conflicts in Bali. As a result of this first meeting, officials and academics of all ASEAN members, China, Taiwan, Vietnam and Laos attended a second workshop on this issue held in 1991 in Bandung. The second workshop resulted in the Manila Declaration, unanimous accepted and issued by the ASEAN foreign ministers in 1992 which urged all claimants to reject the use of force along with the principles of the ASEAN Treaty of Amity and Co-operation. The foreign ministers called on the contending parties to start discussions on all disputed claims and to make efforts in the direction of joint exploration and management of maritime resources. The ASEAN foreign ministers acknowledged implicitly that all claimants have their own security agenda and set priorities which differ not only from one state to another, but also vary within one state as well as among the conflicting parties. Starting negotiations by first establishing a set of priorities would invite failure. Nowadays most states refuse to narrow down security to military and geo-political issues. For quite some time a number of Asian countries try to develop more sophisticated approaches toward security. They consider security as a highly complex matter and this should be reflected in newly developed security concepts. Because they want concepts which are of practical use, these concepts should be comprehensive, i.e. inclusive and not exclude what they consider important security issues. A comprehensive security approach might be argued to lack theoretical rigour but has the advantage to encompass a more complete, interrelated set of security issues. There is a consensus among most Asian countries that different security regimes exist. In their search for modes of conflict management, researchers and governments are confronted with the major question how to interrelate the different security issues and to construct an apparatus for analysis. On the one hand the awareness among security analysts and politicians is growing that priorities change continuously and that it is therefore not realistic to present a fixed hierarchy in security issues. On the other hand, many analysts are not comfortable without a predetermined order at hand and archipelago states have the right to enact their own laws on vessels passing through their territorial sea or archipelago waters. Referring to the protection of their own security, they can (temporarily) suspend "innocent passage".

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with a security concept which contains so many different elements. However compelled by past analytical failures and an ever stronger demand to approach the issues in a pragmatic and realistic manner, an increasing number of scholars are engaged in new security debates and feel a strong need to use a comprehensive approach to analyse security problems. Within Southeast Asia, conflicts about the South China Sea play a vital role in determining their mutual relationship. The ASEAN members are aware that they better engage China on a multilateral base when discussing their conflicting claims. But at the same time some of them try to deal with China bilaterally.30 The Treaty of Amity and Co-operation (TAC) which was signed dur-

ing the Bali Summit in 1976 did not provide the proper framework to solve the disputes on the South China Sea. While ASEAN members did establish a solid base of understanding of how they could manage inter-state relations in general and their disputes in particular among each other, there was no provision for relations and conflict management with non-member states. Therefore the heads of state of the ASEAN decided on their Third Summit Meeting in Manila on December 1987 to amend TAC by making the following provision in Article 1 of the protocol: "States outside Southeast Asia may also accede to this Treaty by the consent of all States in Southeast Asia which are signatories to this Treaty and Brunei

30

The Philippines for example tried to negotiate bilaterally with China on some territorial disputes a few weeks after the ASEAN decided in July 1995 to deal with China on South China Sea issues only on a multilateral level. Their bilateral negotiations resulted in the establishment of some confidence-building measures. Both countries agreed to abide by a code of conduct in the Spratlys to reject the use of force and the Philippine government believed to have created a rather safe security framework with China. At the same time the Philippines indicated that in case China would violate the code of conduct, the international community would be called in for support. During the two years after their bilateral agreement, the Philippines learned that the bilateral way only resulted in a power-play from the Chinese. Based on the violations of the agreement by Chinese vessels, the Philippine minister of foreign affairs Domingo Siazon abrogated the bilateral agreement in 1997 after Chinese violations by declaring that the South China Sea "is not only a matter between China and the Philippines, but China and the rest of its neighbors". He stressed that the South China Sea is not just a regional affair but that it also involved countries such as Japan, South Korea and the United States (FBISEAS-97-120). The Philippine government agreed a similar code of conduct with Vietnam in 1995. That agreement has not been violated and led even to the establishment of some bilateral working groups on security related issues such as the preservation of marine life.

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Darussalam."31 On the same occasion, a second amendment was made on the composition of the High Council. According to Article 14 of the TAC, representatives of the signatories had a place in the High Council which would deal with potential threats to regional peace and harmony and take cognisance of existing disputes. An amendment was made to Article 14 to include non-signatories in the High Council in case they were one of the parties in a dispute by stating: "However, this article [Article 14] shall apply to any of the States outside Southeast Asia which have acceded to the Treaty only in cases where the state is directly involved in the dispute to be settled through the regional processes."32 At the 31st ASEAN Ministerial Meeting in Manila in July 1998 a second protocol was adopted to amend Article 18 of the TAC. The TAC would be open for accession by non-Southeast Asian states, but only with the consent of all Southeast Asian signatories. This was an invitation to other countries to join Southeast Asian nations in their way to manage conflicts. The amendments can be considered as a direct invitation to China to join the ASEAN approach to conflict management. A cornerstone in ASEAN's way to handle disputes is the management of inter-state conflicts through peaceful means. Compared with the confrontational approach of ASEAN toward the Cambodia conflict at the end of the 1970s and the first half of the 1980s, the Southeast Asian states choose in the early 1990s for constructive engagement to manage conflicts.33 The policy of constructive engagement is the outcome of a process which started with the end of the dominant influence of the great powers in the region and the rapid economic development of Southeast Asia. The region was confronted with the growing power of China and had to formulate an answer which would not confront China. 31 Viraphol, S. and W. Pfenning (eds.), ASEAN-UN Co-operation in Preventive Diplomacy. Bangkok, 1995, p. 277. 32 Ibid. p. 278. With the wording of this amendment, the Southeast Asian countries prevented outsiders to interfere in intra-regional conflicts. 33 A good example of this change is the attitude of the ASEAN toward the military regime in Burma. After three years of isolation of that regime, ASEAN decided in 1991 to constructive engagement. The ASEAN members continued to oppose the regime but considered a critical constructive dialogue with the Burmese military as a more effective policy to solve their problems with the regime. This change of policy has not been well understood in the West. The admission of Vietnam (1995) and Burma and Laos (1997) as members of ASEAN should also be partly understood as a result of their policy of constructive engagement.

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At the same time it should be made clear that the region would not accept China as a new hegemon in Southeast Asia. A policy of confrontation would be detrimental to the region in general and economic growth in particular. The upgrading of the Chinese army, one of the four modernisations introduced by Deng Xiaoping in 1979, was perceived as a threat to the security of the region by neighbouring countries. It was one of the motives for Southeast Asian states to speed up arms sales which resulted in an arms race starting in the late 1980s. The budgets for defence spending of the ASEAN members showed a remarkable increase during the first half of the 1990s.34 At the same time ASEAN started its first attempts to engage China by inviting their powerful neighbour for multilateral forums to discuss matters of mutual interest. This policy of engagement was supported by the United States. Like all Southeast Asian countries, American economic relations with China grew rapidly in the 1990s and that made the United States all the more eager to better relations with that country. However, for Southeast Asia security issues were the principal motif to engage China while the American government was more interested in economic priorities. All Southeast Asian countries remained focused on the position of the United States vis-a-vis China because it is the sole (military) superpower and the security of some of the is even guarantied by the Americans through bilateral defence treaties. In their attempts to engage China, ASEAN and the United States followed the same strategy: multilateralism. According to both, China had to be incorporated in the international system through its admission and participation in multilateral organisations. The question how constrained China considers itself by the international system is crucial in the process of engaging the country.35 If China wants to become member of international organisations, it implies it will accept and comply with the ruling of these organisations. A similar problem involves China's view on international law. The other claimants on the South China Sea have no reason to believe 3i One of the effects of the Asian crisis is the cancellation of arms sales by Southeast Asian countries. Sales on the biggest arms exhibition ever held in Southeast Asia in Bangkok late 1997 were not up to the expectations. And Malaysia and Thailand called of negotiations with the military industry and tried (in the case of Thailand) to resell F-16 fighters. 3j The debates on China's admission to the World Trade Organisation which is already going on for years, is partly concentrating on this question.

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that China has changed its position vis-d-vis international law since the theoretical debates in China on that subject in the second half of the 1950s. International law has been and is still considered by China as a set of self-serving principles of international relations, as expressed by Zhu Liru: "If this instrument [international law] is useful to our country, to the socialist cause or to the cause of people of the world, we will use it. However, if this instrument is disadvantageous to these causes, we will not use it and should create a new instrument to replace it."36 Despite China's reluctance to comply with international arrangements, most security assessments about Southeast Asia conclude that multilateralism will prevail in the future, and most analysts agree upon positive developments with regard to security in Southeast Asia in the long-term future. Multilateralism has become more prominent in the last decade in the Asia-Pacific in the economic field. The establishment of the Asia-Pacific Economic Co-operation (APEC) in 1989 and the East Asian Economic Caucus (EAEC),37 an exclusive Asian organisation for economic co-operation/8 were the first steps to promote economic co-operation after the founding of ASEAN. In the field of security, co-operation on a multilateral base started in 1994 at the initiative of ASEAN. The main objective of the organisation is to create a platform for a multilateral security dialogue for the Asia-Pacific. The ARF is unique because it is the only regional oriented security framework in the world in which Japan, China, India, Russia, the United States, and all major European powers (through the European Union observer status) are represented besides almost all other East and all Southeast Asian nations. One explanation for this unique situation is the view of the ASEAN that 36 Zhu Liru, "Refuting Chen Tiquang's Absurd Theory of International Law", in: Renmin Ribao, Sept. 18, 1957, p. 3, as quoted by S.S. Kim, "China's International Organisation Behaviour", in T.W. Robinson and D. Shambaugh (eds.), Chinese Foreign

Policy. Theory and Practice. Oxford, 1994, p. 404.

" The main objective of APEC is the liberalisation of trade between the countries surrounding the Pacific. 38 The EAEC was endorsed at a meeting of economic ministers of East and Southeast Asian countries in October 1991 after ten months of deliberations among these countries about an earlier proposal of the Malaysian prime minister Dr. Mahatir Mohamad to establish an East Asian Economic Grouping. The exclusiveness of the last did some countries hesitate because it could be regarded as a hostile act against the United States and, to a lesser extent the European Union. After another year of discussions, the heads of state of almost all East and Southeast Asian countries decided that EACE would function as a caucus within APEC.

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regional uncertainties and insecurity should be addressed by regional forces and leadership but under the aegis of external powers. China and Japan are placed in a difficult position. When a multilateral order is defined as "rules of conduct that are commonly applicable to countries, as opposed to discriminating among them, based on situational exigencies and particularistic preference"39 it is extremely difficult for China and Japan to comply with multilateralism due to its inclusive and non-discriminatory character. For (regional) superpowers it is always difficult to comply with rulings which are considered as running against their own interests. The United States is the best example of this and China and Japan are no exceptions to this rule.40 It can be seen as a success for ASEAN to engage regional as well as global actors with rather different and sometimes even conflicting perspectives on Asian security issues through ARF. But the position of the ARF has still to be determined. Evans and Grant correctly cast some doubts on the outcome when they conclude: "It is an open question whether, over time, the ASEAN Regional Forum will in fact evolve into an institution closely resembling the European CSCE model—let alone some more far-reaching collective security arrangements along the lines of NATO or the WEU. The latter aspiration still seems very far-fetched, given the history and extraordinary diversity of the Asia-Pacific region, but the former is much less so."41 With regard to some security threats, there exists a consensus among Asian countries on their problematic character. The recognition of the endangered environment is the most fully developed of these issues.42 All claiming countries around the South China Sea are in 39 Definition from Ruggie, J.G., "Third Try at World Order: America and Multilateralism after the Cold War", in: Political Science Quarterly, 109, 4, Fall 1994, p. 556. 40 In the case of the United States, their attitude toward some of the ruling of the International Court of Justice and the ruling of the General Assembly of the United Nations can be mentioned. 41 Evans, G. & B. Grant, Australia's Foreign Relations in the World of the 1990s. Second edition. Melbourne, 1995, p. 118 42 Numerous articles and books has been published on the relationship between economic growth and its impact on the environment. See for example: T. Panayotou, Empirical Tests and Policy Analysis of Environmental Degradation at Dijferent States of Economic Development. Report prepared for the International Labour Office, December 1992. On possible scenarios to achieve sustainable economic growth with regard to Asia: C. Brandon and R. Ramankutty, "Toward an Environmental Strategy for Asia", World Bank Discussion Paper, no. 224, Washington, D.C., 1993. Financing is most times regarded as the biggest stumbling block for sound environmental policies: Asian Development Bank, Financing Environmentally Sound Development. Manila, 1994;

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a stage of (rapid) economic development and are aware of the threats to environmental security when they do not reach binding agreements and obey their rules. The economic development and the resulting pollution in and around the East China Sea and the Yellow Sea are horrifying examples of environmental mismanagement. Without a multilateral approach and an international strong binding environmental regime, countries can not cope with this threat. But negotiations on such a pressing issue are extremely slow and often result in weak compromises. To tackle other security issues on a multilateral level has proven much more difficult. This is the result of different interests, differences in priority and the fear of regional powers to be submitted to the ruling of multilateral arrangements which can turn out to be adverse to their own particular policies. During the past ten years ASEAN has been successful in the establishment of some multilateral bodies which can serve as instruments for enhancing security in the region. The ARF is the best example of this policy. At the same time the ASEAN has succeeded in creating an atmosphere in which the tendency toward multilateralism prevails but which, at the same, leaves time and enough room for bilateral arrangements in fields where multilateralism is (not yet) suitable to discuss disputes. The other great achievement of the ASEAN is the way in which conflicting issues are dealt with. Disputes have to be discussed in a non-confrontational way in order to leave all parties enough room to manoeuvre in the direction of a solution. Solutions can not be pressed or forced upon contending parties according to this mechanism. The results of this approach to conflict management might look meagre to Western observers but the art of avoiding conflicts taking on a violent character deserve to be highly valued in the postCold War period.

I. Serageldin and A. Sfeir-Younis (eds.), Effective Financing of Environmentally Sustainable

Development. Environmentally Sustainable Development Series, no. 10. World Bank, Washington, D.C., 1996; Li Jingwen and Gong Feihong, "Environment and Chinese Economic Growth", in: Researches on Quantitative and Technical Economics, no. 1, 1994.

VIETNAM AND THE REGION

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VIETNAM'S NEW CONCEPT OF SECURITY IN THE CONTEXT OF DOI-MOI NGUYEN VU TUNG*

A Vietnamese high-ranking politician and diplomat has remarked that with the Sixth National Congress of the Communist Party of Vietnam (CPV) held in 1986, the leadership in Hanoi "began a process of reshaping its world view and re-examining the country's reality" in order to face the challenges of a world in which the rules of the game were quite different from the country's practices, perceptions and experiences.1 About six years after that, in a speech given at the Third CPV Central Committee Plenary Conference held in June 1992, the then CPV General Secretary Do Muoi said that "a fundamental shift in thoughts and practices" in foreign policy had been made, thus helping to complete the search for a grand strategy for the country's developments in all fields.2 A question is, therefore, posed: how was Vietnam's concept of security formed in the above-mentioned process? Another question is also worth studying: what are the major guidelines for the country's policy in order to reflect its new thoughts about security? This chapter will make an effort to answer these questions from an international relations perspective, trying to see how Vietnam establishes links between security and economic developments as well as those between security and foreign relations. The chapter, therefore, * Professor Nguyen Vu Tung is researcher at the Institute of International Relations, Hanoi, Lang Thuong, Aongda. He has published a/o. 77 Conversations between Chinese and Foreign Leaders on the Wars in Indochina, 1964-1977, Nguyen Vu Tung, Odd

Arne Westad, Chen Jian, Stein Tonneson, James G. Hershberg, eds., Cold War International History Project Working Paper No. 22. Washington: Woodrow Wilson Center, 1998. 1 Nguyen Di Nien, "The World Is Changing: How About Us?" (The Gioi Dang Thay Doi, Con Chung Ta) in Vietnam Foreign Ministry, Integrating Into the World and Preserving Our National Identity, (Hoi Nhap Quoc Te Va Giu Vung Ban Sac),

(Hanoi: National Politics Publishing House, 1995), p. 33. 2 Do Muoi is quoted in Nguyen Manh Cam, "On The Way To Implement The Foreign Policy With New Directions," (Tren Duong Trien Khai Chinh Sach Doi Ngoai Theo Dinh Huong Moi) in Integrating Into the World and Preserving Our National Identity, p. 160.

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will be confined to discussing the Vietnamese concept of comprehensive security from the angle of international politics and diplomacy, which could affect its national external security. An integral part of comprehensive security, namely internal security, will be discussed in passing since it will not be a focus in my arguments. More than two years ago, I touched upon this topic in a short paper presented at the Conference on Concepts of Comprehensive Security and Co-operative Security organised by the CSCAP Working Group on Security Concepts in August, 1995 in Kuala Lumpur.3 By that time, concepts of security developed in Vietnam became clearer to those wishing to understand Hanoi's perspective in this regard. Since the Eighth National Congress was held in 1996, civilian and military groups, as well as both the elite and the people at large have accepted these concepts more broadly in Vietnam. At the same time, new elements have been added to these concepts as the process of Doi-Moi (renovation) continues, and especially as the current economic crisis affects the Asia-Pacific region. By studying major documents of the CPV and several writings by Vietnamese leaders on the theme, this paper also aims to update the evolution of the concept of security in the light of new developments in Vietnam in the context of the Doi-Moi reforms.

DEVELOPING A CONCEPT OF SECURITY AND ITS MEANS

From the second half of the 1980s, with the renovation (perestroikd) process starting in the former Soviet Union, with the consequent rapprochement between the United States and the Soviet Union and between the Soviet Union and China, as well as with the need for reforms becoming stronger in Vietnam, Hanoi began a review of major economic and foreign policies. Considering that changes in major powers' policies represented a golden opportunity for Vietnam to pursue the goals of peace and independence, extended foreign relations and development which were set since its foundation in 1945, Hanoi quickly shifted its overall perception and particularly 3 Nguyen Vu Tung, "An Initial Analysis of Vietnam's Concept of Security," in Mohamed Jawhar Hassan and Thangam Ramnath (Eds.) Conceptualising Asia-Pacific Security (Kuala Lumpur: Institute of Strategic and International Studies ISIS Malaysia, 1996), pp 55-59. 4 See Vu Khoan "The School Of Vietnamese Diplomacy" (Truong Phai Ngoai Giao Viet Nam), in Integrating Into the World and Preserving Our National Identity, p. 432.

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that of security.4 The discussion began with a review of Vietnam's economic and social problems since the unification of 1975 as well as solutions to them; and as a natural side effect, Hanoi also went through a re-examination of its worldview. Gareth Porter has correctly observed that trying to re-enter the world and to find a place in the global division of labour became the main theme for the discussions among leaders in Hanoi at that time.3 The fast pace of regional and global changes toward the end of the Cold War and relaxation of global tension, as well as unprecedented developments in the global economy toward regional and global economic integration also helped quicken the outcomes from these discussions. A general consensus was reached in the Sixth Party Congress in mid-December 1986: while upholding the two strategic tasks of national construction and defence, Vietnam should start a process of economic reforms, accepting non-state sectors in the economy, and participate in the global division of labour. In this context, documents of the Sixth Congress on the one hand attached importance to consolidating the all-sided co-operation with the Soviet Union and considering it as a monolith in Vietnam's foreign policy. Yet, on the other hand, they also stressed the process of the "internationalisation of the forces of production" that led to an "inevitable demand for economic co-operation" and peaceful coexistence between different systems.6 This new policy had important implications for Vietnam's economic and foreign policies, which in turn reflected changes in Hanoi's perceptions as far as security is concerned. It seems that geo-economics had become another source of input to the leadership's thinking. As a result, Vietnam apparently gradually reduced its commitment to one big power, and at the same time became more inclined to see interdependence in a positive way. It thus can be said that the process of reshaping the worldview began in mid-1980s, more or less coinciding with perestroika that took place in the Soviet Union in 1986, further consolidated by the collapse of the Soviet Union in 1991. It took about a year and a half, however, before the CPV could further elaborate the concepts of security in the new national and global context. The thirteenth CPV Politburo Resolution adopted ' See Gareth Porter "The Transformation of Vietnam's World-View: From Two Camps to Interdependence," Contemporary Southeast Asia, Vol. 12, No. 1 (June 1990), pp. 1-19. (> Documents of the Sixth CPV National Congress, (Hanoi: Su That [Truth] Publishing House, 1986), pp. 34-35.

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on 20 May 1988, for the first time revealed the contents of a new concept, namely comprehensive security. "National comprehensive security", as it was termed according to the Resolution, will be enhanced by the combination of three factors: a strong economy, an appropriate defence capability and by expanding international cooperation.7 A major shift from the traditional thinking of security was thus realised. Influenced by experiences gained in the long history of defending the country from foreign invasion, the way to think about enhancing national security, according to a Vietnamese General, was mainly in terms of conducting war and taking military measures, such as building the people's armed forces and armies.8 The new approach to security represented a more balanced view. It tacitly recognised that military strength and limited external relations could not effectively ensure the country's security. Thus, it introduced the "comprehensive view" of security, and attached a diminished importance to the role of military strength by placing it second to the overall economic strength.9 In that context, the following argument has been officially accepted: it holds that "the global economic race is now replacing the arms race on the global scale and economic [strength] is becoming the decisive factor in the comprehensive strength of every country".10 The collapse of the Soviet Union in December 1991 heralded a new era for the world as a whole and for Vietnam in particular. "Life without the Soviet Union" on the one hand created a shock for those who were accustomed to relying on outside assistance. Yet, on the other hand, it was a chance for Vietnam to really depart from the mentality of being dependent on one big power for national construction and defence, and to adopt a foreign policy of multilateral' An excellent analysis on this issue has been offered by Ogasawara Takauki, "Vietnam's Security Policy in the Post-Cambodia Period: Diplomatic Dimension," in Dao Huy Ngoc and Matsunaga Nobuo (eds.) Asia-Pacific and Vietnam-Japan Relations (Hanoi: Institute for International Relations, 1994), pp. 107-108. 8 See Gen. Pham Quang Can, "Strengthening National Defence And Security And Defending The Socialist Republic" (Cung Co Quoc Phong Va An Ninh, Bao Ve Vung Chac To Quoc Xa Hoi Chu Nghia), in Tran Nham (ed.) There Is Such A Country Of Vietnam: Renovation And Development (Co Mot Viet Nam Nhu The: Doi Moi Va Phat Trien) (Hanoi: National Politics Publishing House, 1996), p. 322. 9 Ogasawara Takauki, p. 108. 10 See Tran Quang Co's article first appeared in December 1992, "The World After The Cold War And Asia-Pacific" (The Gioi Sau Chien Tranh Lanh Va Chau A-Thai Binh Duong), reprinted in Integrating Into the Worldand Preserving Our National Identity, p. 131.

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ising and diversifying its external relations. Again, it is worth noting that earlier, in June 1991, the Seventh National CPV Congress had asserted that "Vietnam wants to be a friend of all other countries in the world community", thus making a breakthrough in its world view, now characterised by the absence of a particular external enemy." The Second and Third CPV Central Committee Plenary Conferences, which took place during the first year following the Seventh Congress and discussed foreign policy issues, developed another idea of security, namely that of "mutual security". If the concept of 'comprehensive security' laid an emphasis on national capabilities, then "mutual security" attached great significance to the international context of its national security. The Resolution of the Third Conference pointed out that Vietnam should do more to expand, diversify and multilateralise its foreign relations. The new orientation might come from a greater need to find new partners to fill the vacuum in Vietnam's foreign relations created by the collapse of the Soviet Union and the absence of other former friendly socialist regimes in Eastern Europe. It was first and foremost based on the recognition of what Hanoi considered 'new and prevailing trends' in international life. These trends include priority for economic developments, diversification of external relations and an increase in regional co-operation, leading to an improvement in international co-operation between and among countries in the world regardless of differences in political and economic systems.12 Against that background, Ogasawara has correctly argued that Hanoi came to assert that the security of a country depended not only on its national strength, but also on the international and regional systems to which the country belongs.13 Therefore, improvements of the country's external relations would play an equally important role, together with that played by its economic capabilities in building national comprehensive strength. In other " Documents of the Seventh CPV National Congress, (Hanoi: Su That [Truth] Publishing

House, 1991), pp. 36-37. This perception was more consolidated in Vietnam's latest constitution adopted 1992 which mentioned no specific external enemy and asserted that "The Socialist Republic of Vietnam pursues a policy of peace, friendship and expanded international relations and co-operation with all countries in the world, irrespective of their political and social system, on the basis of respect for each other's independence, sovereignty and territorial integrity, non-interference in each other's internal affairs, equality and mutual benefits." See Article 14, the 1992 Constitution of Vietnam, (Hanoi: Su That, 1992). 12 Tran Quang Co, "The World After The Cold War And Asia-Pacific", pp. 131-133. 13 Ogasawara Takauki, p. 108.

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words, the role played by Vietnam's diplomacy—which has been claimed to have the tradition of "combining national strength with that of the era", i.e. combining all the forces of the country with the main trends of the world in order to have a comprehensive strength, in the words of a Vietnamese senior official and diplomat14—became superior to the diminished role played by military means.15 Hanoi has also defined the relationship between developing its economic strength and by promoting its external relations. In an important article on policy Tran Quang Co wrote: Recognising clearly that economic weakness is the possible source of disadvantages in political, military, social fields and international relations, our Party is determined to lead the country out of poverty and backwardness as soon as possible, thus considering the task of economic developments the top priority . . . In this period of historic significance, everything must be serving the goal of economic development.16 The highest goal set by Hanoi, therefore, is to develop the country's economy—the most important element of national strength. To this end, its foreign policy has two tasks. First, it has to create favourable external conditions for economic developments at home by normalising relations with major powers, especially with China and the United States, and promoting relations with neighbouring countries in the Asia-Pacific region. Second, it has to seek possible opportunities to expand foreign economic relations. Since global relaxation of tension has made the first task possible, the second task became more salient. Nguyen Manh Cam thus said, "foreign economic policy is now the basic content of our present foreign policy".17 In the same context, another Vietnamese senior official and diplomat also spoke of the relationship between security, development and influence in the country's external activities. The security objective of a country's foreign policy, according to him, includes the defence of its national sovereignty and security as well as territorial integrity, while the development objective involves making full use of interna14

See Vu Khoan "The School Of Vietnamese Diplomacy", p. 430. Ogasawara Takauki, p. 108. Tran Quang Co, "The Way Ahead" (Chang Duong Phia Truoc), in Integrating Into the World and Preserving Our National Identity, pp. 194-95. 17 Nguyen Manh Cam, "On the Way to Implement the Foreign Policy with New Directions," p. 166. 18 Vu Khoan, "Security, Development and Influence in International Relations" (An ninh, Phat trien va Anh huong trong Hoat dong doi ngoai), in Integrating Into 15

l(>

the World and Preserving Our National Identity, p. 205.

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41 1

tional conditions conducive to developing the country and improving its foreign posture.18 With the impact of the scientific and technological revolution and with the internationalisation of economic life, he argues, the thought of self-reliance has proven outdated and has been replaced by those of the diversification of foreign relations and the exploitation of economic comparative advantages and market expansion. This should improve the possibility of ensuring an "optimal position in international relations," and better preserving independence and sovereignty. Promotion of the country's international relations, politically and economically, therefore, plays a more important role as compared with the role of force in the defence of national security.19 At the same time, promoting the country's political and economic international relations directly serves developmental objectives, as this may enhance predictability and stability in its relations with other countries, and Vietnam could seek more economic partners and broaden the markets for the country's exports. By placing the country in the mainstream of the world affairs, and by joining the world "its foreign policy can enhance its international posture and influence its internal weakness".20 In short, the overall objective of national economic development became the highest goal for Vietnam and opened, expanded and diversified foreign political and economic policies. They have served as indispensable tools for enhancing national strength and capabilities which, together with an adequate armed force, help ensure its security. Vietnamese Foreign Minister Nguyen Manh Cam, therefore, pointed out: "The new external posture of Vietnam has to be fostered by its new strength and its appropriate behaviour internationally together with its geo-political potential".21 It is also very important to study perspectives on security held by the military. It has emerged that the establishment has also revised thinking on security. Because of historical circumstances and experiences, the People's Armed Forces have always been placed under the leadership of the Party. This means that when the latter initiated the process of comprehensive reforms, accepting new concepts and adopting new methods, the former followed and did likewise. Acknowledging that non-military means are now being used in the struggle for national independence, and that Vietnam could no longer 19

20

Ibid., pp. 208-209.

Ibid., pp. 211-212. Nguyen Manh Cam, "On The Way To Implement The Foreign Policy With New Directions," p. 169. 21

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enjoy material and technological assistance from the socialist bloc, a general consensus has been reached within military circles to the effect that the "multi-sectoral commodity economy with market mechanism, state management and socialist orientations"—a tacit recognition of the market economy—now becomes a new economic and social basis for national defence and security.22 The argument went on to assert that in order to have an adequate strength to defend the country, [we should focus] first and foremost on economic, scientific and technological developments, [and also] on political stability, social equality and progress, as well as on the construction of the national defence capabilities and the people's armed forces sufficient strength . . . . [thus] the strategy for national defence and security must be an overall and comprehensive one, combining national defence and security with promotion of international relations and economic developments.23 There is a distinction between the tasks of national security and national defence. While the former involves ensuring political and social stability, the latter includes the construction of a deterrence capability against foreign invasions. Carrying out these two tasks together with promotion of international relations, the Vietnamese leadership hoped to create stable internal and external conditions conducive for economic development. In fact, as it was observed, Vietnam's military strategy has undergone several important adjustments. The focus has been shifted from preparations for a "regional war" and a "multi-sided war of sabotage" towards responding to "peaceful evolution". The size of the armed forces has been reduced, while the 'quality of the regular forces' has been enhanced. In the 1990s, a phased large demobilisation of armed forces took place. At the same time, the number of military enterprises and businesses rose, as the armed forces now have a new task of participating in the course of national modernisation and industrialisation. To summarise the discussions on national defence and security, the new Defence Minister wrote Thinking on national defence, which customarily emphasised military means, preparing for big-scale wars, and building up the armed forces, has shifted to a more comprehensive view. This new perspective lays, on the one hand, an emphasis on the task of defending the country 22 Gen. Pham Quang Can, "Strengthening National Defence And Security And Defending The Socialist Republic", pp. 317-319. 23 Ibid., p. 324.

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in peace time, and on the other hand on combining national defence and security with foreign relations, economic developments.24 Thus we can say that Vietnam has reached a national consensus on the revised concept of security. National security and defence are now seen in a broader context. The former emphasis on building military strength, and reliance on one military big power, as well as adopting an inflexible approach to international relations has been replaced by an emphasis on an all-round approach that focuses on building economic strength by carrying out a friendly-to-all foreign policy abroad, and enhancing social and political stability at home. The Eighth GPV National Congress held in 1996, therefore, continued to consider peace, independence and development as the top priorities for Vietnam into the year of 2020.25 There are also other elements of this comprehensive approach to security. As it has been discussed before, Hanoi's approach to security now rests on economic developments which can be achieved by an expanded and diversified foreign policy, political and social stability, and armed forces at a minimum level. Cultural, traditional, human and other factors have also been referred to. Documents of the Eighth Congress already mentioned the task of "making the full use of every source" to develop the economy. Greater emphasis on "internal strength, however, has been voiced in the most recent discussion within the Party. The Fourth CPV Central Committee Plenary Conference held in December 1997 made it clear that experiences of successes and failures of many countries have proven that if a country wishes to achieve economic developments, it first and foremost must make the fullest use of internalfactors ofstrength that include its human resources, geographical conditions, natural resources, the nation's intelligence as well as its historical and cultural traditions. Effective economic co-operation with foreign countries can only be achieved by making the best use of internal factors of strength.26

24 Gen. Pham Van Tra, "Build Up And Make The Revolutionary People's Army Standardised, Well-Trained And Gradually-Modernised In The Period Of Accelerating Industrialisation And Modernisation" (Xay Dung Quan Doi Nhan Dan Cach Mang Chinh Quy, Tinh Nhue, Tung Buoc Hien Dai Hoa Trong Thoi Ky Day Manh Cong Nghiep Hoa, Hien Dai Hoa), Tap chi Cong San (Review of Communism), December, 1997, p. 14. 2:1

Documents of the Eighth CPV National Congress, (Hanoi: Su That [Truth] Publishing

House, 1996). 2b Text of the Conference Resolution in Nhan Dan (People's Daily) 25 December 1997.

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Several reasons account for this new emphasis. Firstly, Vietnam's international co-operation has been expanded to a great extent, but lacked domestic resources to sustain this enlarged co-operation and to make it really effective. In this context it has been argued that foreign policy was moving too fast, thus creating new problems for the country's international economic co-operation to keep up the pace. For instance, economic domestic conditions are still not sufficient for Vietnam to adopt a too liberal economic policy, especially as far as participation in several regional tax-reduction schemes is concerned. Secondly, the on-going economic crisis in East Asia has alerted Hanoi that the strategy of considering economic development as a prime goal could pose new problems to national social and political stability. In other words, both underdevelopment and development can be very challenging. The case of many Southeast Asian economies showed the dangers of being highly dependent on foreign investments while having weak economic management and institutions. At the same time, social and political changes in the neighbouring countries affected by the crisis also alarmed Hanoi of the negative side of regional and global economic integration and its impacts to national stability. In fact, there has been reason to be concerned. Though less affected by the crisis, potential causes for future economic turmoil have been observed in the Vietnamese economy. They include ineffective macro-economic management, increasing gaps in the level of economic development among different regions and sectors, and an extravagant mode of consumption. Besides several cases at the provincial and district levels have shown that political and social stability have been threatened as a result of insufficient participation of people in the process of all-sided renovation. Therefore a call was made for more focus on self-reliance, i.e. on internal factors. Yet, the greater emphasis on self-reliance does not mean the avoidance of further integration to the region and the world. Instead, it is seen as a serious effort aimed at building and strengthening the domestic base for better integration into the region and the world. The Conference in December 1997, therefore, confirmed that Vietnam would continue its course of comprehensive reforms. With that affirmation, there is no dramatic change in the "grand strategy" for economic developments of the country. It also means that Hanoi's concept of comprehensive security is kept intact, considering national modernisation and industrialisation the foundation of the enhancement of its security, and considering promotion of external co-operation

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together with exploitation of all internal sources the keys for success of economic developments. This takes into account both positive and negative aspects of economic integration as well as interaction with the rest of the world. With that, one can say that a more balanced view on security has been provided.

CONCEPT OF THREATS

Developing new concepts of security always implies the way the leadership perceives threats to its state.27 The next question, therefore, is: what kind of challenges does Vietnam perceive, and how are they reflected in the discussions by its elite on economic and foreign policies. Joseph Nye once said that "security is like oxygen—you tend not to notice it until you begin to lose it, but once that occurs there is nothing else that you will think about".28 This seemed to be the case for Vietnam when the Cold War ended with the collapse of the Soviet Union and the communist bloc. Since the early 1980s Vietnam was facing "the threat of being politically isolated and economically encircled".29 With the Cambodian issue not yet solved, the Soviet Union and other socialist countries in Eastern Europe focusing on domestic reforms, then ceasing to exist, while relations with the United States and China had not yet been normalised, small wonder that as we move into the 1990s Hanoi felt all the more threatened by an intensified state of isolation from the rest of the world. This anxiety was real for various reasons. Ideologically, Vietnam's policies and practices were based on its membership of the socialist bloc, and Vietnam's commitment to the socialist ideology had deep roots. Therefore, some in Hanoi felt disoriented and thought that Vietnam was left alone to face the attack of the West, headed by the US, on the remaining socialist countries. Indeed, at that time almost all sources of economic assistance and sources of credits dried up, 21 See David A. Baldwin, "The Concept of Security," Review of International Studies, Vol. 23, (1997), pp. 5-26. 2R Josef S. Nye, Jr., "East Asian Security: The Case for Deep Engagement," Foreign Affairs July/August 1995, p. 91. 29 Tran Quang Co, "The World Situation And The Opportunity For Our Country," (Cue Dien The Gioi Va Van Nuoc), Integrating Into the World and Preserving Our National Identity, p. 101.

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and markets for Vietnam's exports and imports shrank considerably. Moreover, military protection and supplies from the Soviet bloc dried up, while Vietnam did not have normal and necessary international relations with other countries. In response to that threat, the Seventh Congress in June 1991 began a reorientation of its foreign policy aimed at multilateralisation and diversification of the country's foreign relations. About six months after the collapse of the Soviet Union, at the Third CPV Central Committee, Hanoi gave this policy a more specific content: solution to the Cambodia problem, participation of regional co-operation, normalisation of relations with the US and China, expansion of relations with other countries and enhancement of relations with important international organisations and institutions. Favourable external conditions, i.e. the relaxation of global tension based on the ease of the ideological competition and the need for Vietnam's integration into the rest of the world for economic and strategic reasons were the main factors that helped the country to successfully carry out its new foreign policy. It turned out that Vietnam had seized the right moment to improve its posture in the region and the world. The collapse of socialist regimes in Europe ironically gave impetus to the further development of Vietnam's international relations. The Eighth Party Congress thus claimed that Vietnam had "strongly developed its external relations with the rest of the world, getting out of a state of isolation and blockade and actively participating in the international life". To date, Vietnam has established diplomatic relations with 163 countries and maintains normal relations with all big powers of the world; it is also a member of many regional and international organisations, especially ASEAN and APEC. Vietnam maintains economic relations with more than 120 countries, enjoyed about US$32 billion dollars of FDI by 54 countries and territories, and US$8.7 billion dollars of Official Development Aid (ODA) by major donors that include both countries and the world's financial organisations.30 Efforts at promoting the country's external relations, therefore, reveal one of the basic features of its security policy: with the long-time allies no longer in existince, it tried to find more friends, and by so doing, reduced the possibility of having external enemies. In other words, the more intense its participation in international life, the safer it feels.31 Certainly, this reflects 30

Documents of the Eighth CPV National Congress, (Hanoi: Su That [Truth] Publishing

House, 1996). 31 Nguyen Vu Tung, "An Initial Analysis of Vietnam's Concept of Security,"

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Hanoi's view of the linkage between foreign relations and security. Yet, if seen in the context of the current crisis in Asia, some in Vietnam would argue that the more the country participates in international life, the more it is exposed to negative developments taking place elsewhere, thus making internal developments less predictable and more unstable. No one, however, questions the open-door policy. Besides the tangible benefits of participation, the thought of not being left out has made Vietnam feel at ease. The thirteenth CPV Politburo Resolution adopted in 1988 said, among others: "Economic backwardness and political isolation will pose a big threat to Vietnam's security and independence".32 The improved external relations have eased the threat of isolation. This means that for the first time in the modern history of Vietnam, threats to its national security from outside are not perceived as dominantly as they were in the past. Greater emphasis is now being laid improving its external relations by creating external conditions conducive for national construction and exploiting external sources for economic developments. Therefore, there has been a shift in threat perception. Hanoi now tries to address another threat, namely the the threat of "poverty". Tran Quang Co said: "The present enemies of Vietnam are poverty and backwardness. . . Friends of Vietnam are all the ones who are ready to co-operate and to assist Vietnam in the fight against poverty and backwardness".33 The roots of this perception of threat can be traced to the first days of the Republic. Ho Chi Minh, the founder of the Democratic Republic of Vietnam, said in 1945: After we have gained freedom and independence, if our people still continue to die of hunger and cold, this freedom and independence will become meaningless. The people will understand the value of independence and freedom only when they are free from wants.34 p. 58. Yet, if seen in the context of the current crisis in Asia, some in Vietnam could argue that the more the country participates in the international life, the more it is exposed to negative developments taking place elsewhere, thus making internal developments less predictable and more unstable. i2 The analysis below is mainly based on my paper read at the Conference on Concepts of Comprehensive Security and Co-operative Security organised by the CSCAP Working Group on Security Concepts in August, 1995 in Kuala Lumpur. See Nguyen Vu Tung, "An Initial Analysis of Vietnam's Concept of Security," pp. 56-59. 33 Tran Quang Co, "The World After The Cold War And Asia-Pacific", p. 108. 34 Ho Chi Minh, "A Letter to People's Committees of All Provinces, Districts and Villages," (Thu gui Uy ban Nhan Dan Cac Tinh, Huyen va Lang) carried in Cuu

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Yet, due to its historical experiences, Vietnam had to spend its resources on the cause of national independence and unification and could not focus on national construction. Once national independence and reunification were achieved, and when external threats eased, the Vietnamese people came to realise the greater need for a better life, especially when comparing their living standards to that of its neighbouring countries. After the Cold War ended, the Vietnamese leadership and people realised hat without economic development the hard-won national independence could not be firmly preserved, and peace and stability in the country would endure. That is, poverty and backwardness breed insecurity. This new perception has been more than once expressed in terms of 'the threat of economically lagging behind other countries in the region and the world'. This threat perception deserves several layers of analysis. Firstly, the process of economic development—after all—is the essence of the process of building national strength. A sustainable economic growth and a strong economy greatly contribute to building overall national strength, thus representing decisive factors to ensure Vietnam's security and independence. The linkage between security, international relations and economic development has been seen by leaders in Hanoi as follows: a low level of economic development does not afford a strong national defence and an improved international posture.30 Secondly, lack of economic development as well as failure to manage the process of development will lead to internal instability. Observing some cases of failures in economic development elsewhere, Hanoi came to a greater understanding that Realities in many countries have shown that the threat to a state's sovereignty and security as well as its territorial integrity lies within its borders. They have also shown that in many cases, even in the absence of foreign invasions, sovereignty and security were challenged, territories were divided . . . due to failures of economic, cultural, religious and ethnic policies . . . The backward levels of developments can erode the people's confidence, cause many serious social problems and inevitably threats to security, public order and even the existence of the regime.36 The task of achieving economic development is very difficult, seen Quoc Daily of October 17, 1945. The Complete Works of Ho Chi Minh (Ho Chi Minh Toan Tap) (Hanoi: The National Politics Publishing House, 1995), p. 56. :to Vu Khoan, "Security, Development And Influence In International Relations", p. 210. 36 Ibid., pp. 209-210.

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Vietnam's lack of skilled human resources and a legal and infrastructure base, as well lacking efficient policies to make use of its comparative advantages to effectively compete with many regional states that have already achieved higher levels of economic development. These signify the fact that for several decades to come, Vietnam will be much preoccupied with its problems at home, building a strong economy together with a prosperous civil society. In this context, the Sixth National Congress of the Communist Party of Vietnam (CPV) laid an emphasis on the course of renovation, especially on the shift to a market-oriented economy, and considered that its highest priority. "The long-term strategy for socio-economic developments for Vietnam into the year 2020" was subsequently worked out and reiterated by the Seventh and the Eighth Congress. There is another domestic aspect to this threat. The process of nation building involves the task of building consensus among the Vietnamese people. The reason for it is simple. In this new and peaceful age, when society is opening up, the need to participate in society, when new interest groups emerge, consensus building becomes the order of the day. Besides, as is the case with other ASEAN states, economic development itself poses new problems. In the short run, managing a society in transition requires much energy and resources. In the long run, great and profound changes will take place in a more developed and opened society. The process that Vietnam is going through has not been experienced before. This process is, of course, time-consuming and painstaking. Twenty years after unification the process has just begun. That is to say, internal problems are and will be the focus of attention for Vietnam. Thirdly, Hanoi also perceived the existence of an external threat, they way it saw fierce economic competition as a possible source of conflict between and among nations, especially in the context of the current crisis. Viewing the need for (re)gaining economic growth now prevails in strategies and policies of all countries, Hanoi on the one hand acknowledged the trend toward more co-operation. On the other hand, however, it considered that the more this need became urgent, "the fiercer the competition for market and economic partners would be", and asserted that "in the time of war, there was only one enemy; but in economic competition, all are potential enemies".37 From this 37

Vu Khoan, "Security, Development And Influence In International Relations", p. 211.

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perspective, poor starting conditions for improving economic development in Vietnam mean that the threat of never catching up with its neighbours is a real one. As an overall target set forth by the Vietnamese leadership, by the year 2000, Vietnam's Gross National Product (GNP) per capita should be doubled, amounting to US$500. Even if that is achieved, however, Vietnam will surely still be one among poorest countries in the region and in the world. If the thirteenth CPV Politburo Resolution considered economic backwardness and political isolation a big threat to Vietnam's security and independence, the Mid-term CPV National Congress held in January 1994 resulted in Hanoi updating and introducing a new list of four threats. The list includes poverty and lagging behind other states economically, corruption and inefficient bureaucracy, peaceful evolution, and complex developments in the Asia-Pacific region. Corruption and an inefficient bureaucracy have also been considered a

dual threat as the former breeds discontent among the population, while the latter has clearly become a big obstacle to economic development. Both have great consequences for internal stability. Hanoi also sees a link between failure to achieve economic development and internal security and the threat of interference posed by external countries, or in Vu Khoan's words, a combination of internal and external threats at the same time.38 In this context another threat is perceived by Hanoi, namely that of peaceful evolution, a term used to describe attempts by the West to interfere in the domestic affairs of the country. Therefore, Hanoi stressed both the need for deeper integration with the rest of the world and resistance to losing its identity. It stressed both "co-operation and struggle" with regard to foreign relations. Yet, Hanoi also acknowledges that peaceful evolution is not as dangerous as the threat of poverty. This can be dealt with by economic development as well as by the promotion of cultural and traditional values. In addition, there is the common belief that as the country gets stronger, it will have more resources to resist possible pressures exerted by foreign countries. Thus, the challenge posed by poverty, corruption and inefficient bureaucracy became more salient. It seems that the current economic crisis with social and political repercussions in the neighbouring countries helps to strengthen this interpretation. For many in Vietnam the most dangerous out38

Ibid., p. 209.

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comes of the crisis have been interference of international monetary and financial institutions, ranging from foreign mutual funds to the International Monetary Fund, to the policy-making process of many regional countries, the contagion effects from the economies in crisis and the fiercer competition economies wishing to get out of the crisis by looking after themselves first. The overall effect has led Vietnam to believe that the country may lose the grip on forming and conducting its own strategy for development as well as controlling developments inside the country. In that context, the above-mentioned call for internal strength to face external threats of interference now have both political and economic implications. It seems that the expression "complex developments in the AsiaPacific region" used by Hanoi refers to possible challenges to regional peace and stability as another threat. It is not difficult to see why Vietnam is concerned with regional peace and stability even though it can feel safer by maintaining good relations with almost all countries in the world. Firstly, the success of its new and overall policy for reforms largely depends on a very important condition, i.e. stability, both internal and external. At home, consensus has been reached on the importance attached to stability, especially political stability; and in fact, internal stability in Vietnam for the last several years proved to have contributed to the achievements in economic and social fields. At the same time, when Vietnam's integration with the regional and international communities gathers speed, its stability is closely related to that of the region and of the world to a greater extent. Secondly, even though there is now peace and stability in the region, there are still threats to regional peace and stability. As observed by many in Vietnam, there are three categories of threats which may originate from: (1) territorial disputes, (2) spill-over effects of crisis, including economic, political, environmental ones that have their origin in neigbouring countries, and (3) uncertainties in the relations among great powers. If the above-mentioned potential dangers develop unchecked, they will certainly lead to regional insecurity, which in turn will endanger economic successes of many countries in the region, including Vietnam. As many have argued, territorial disputes seem to combine all kinds of conflicts between and among parties concerned. Vietnam is still involved in both bilateral and multilateral conflicting territorial claims. Some territorial disputes between Vietnam and several other member states of ASEAN have been settled satisfactorily. Yet,

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others remain, especially the dispute over the Spratly Islands. From national and regional perspectives, territorial disputes are closely related to the question of sovereignty and independence in an environment where nationalism is on the rise in the region.39 This makes territorial disputes a sensitive issue in the national agenda, and "compromises" over territories may seem impossible at least for the foreseeable future. Thus, the threat to security posed by threat to territorial integrity seems a permanent one, and the drive to develop economic and military capabilities to address this kind of threat seems to lead towards a regional "security dilemma". Spill-over effects of the on-going economic crisis threatens the prosperity of the regional states, and reveals the instability of the globalised market, as well as new challenges posed by increasing interdependence. It is widely acknowledged that the ongoing crisis has been in part initiated by mistakes in many regional states' macroeconomic policies unable to show flexibility in the face of fundamental changes in the regional and global political and economic situation, and was also due to weak institutions, especially financial ones. Yet, the pace at w7hich the crisis spread to the other regional countries and other regions indicates instability in the global economy. What has happened reflects the lack of a regulating body above the national level with regard to international financial and stock markets whose integration is proceeding with increasing speed. Instability in the regional and global economy, therefore, is perceived to be a source of threat to Vietnam, which is increasingly concerned over beggar-thy-neighbour policies. This is closely related to Hanoi's talk of a global order. Tran Quang Co has, for example, raised several questions about this: Will the 1990s be a respite for major powers before a hegemonic struggle among them or a prelude for an era of peace and developments for the mankind? Will the world economic and political order be the one of equality, justice and mutual benefits for all or the one imposed by a "closed club" of big powers?40

39 See, for example, Kenneth B. Pyle, "Old New Orders And The Future Of Japan And The United States In Asia," in IHJ Bulletin, A Bi-annual Publication of The International House of Japan, Vol. 17, No. 2, Summer 1997. 40 Tran Quang Co, "The World Situation and The Opportunity for Our Country," p. 97.

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The notion of world order reflects Hanoi's perception of a profound danger that Vietnam, as a small country placed in a strategically important geographic location, once again will be drawn into the big powers' games as a result of their failure to respect Vietnamese independence. Since relations between and among the major powers of the world are still in a stage of flux, this situation gives rise to uncertainties in response to which Vietnam can not entirely devote its resources to economic development and the welfare of its people. As instability breeds insecurity, this situation also makes existing and emerging disputes, especially those involve conflicting claims over territories, more complicated, thus enabling old-aged suspicions as well as political, cultural and religious differences to grow. This thinking has been largely influenced by the country's historical experiences in which the pursuit of hegemony has led to negative impacts on its political independence and economic development.

CONCLUSION

For the first time in its modern history, internal and external conditions are favourable for Vietnam to focus on the process of nation building. Vietnamese nationalism has been consolidated with its national independence and unification, and now the country seeks to strengthen it with policies that support economic, political reforms and promotion of international relations. These policies have become the key factors for the country to achieve the goal of "a prosperous population, a strong country, and a civil society" which now serves as the rallying-point for the leadership and the Vietnamese people. From this perspective, a realist/neorealist approach to security may be a suitable tool to explain the country's concepts of security and threats. Making full use of all domestic resources and expanding foreign relations for building national capabilities, first and foremost economic strength, seems to be the way Vietnam seeks to address threats to its security posed by the state of poverty and underdevelopment domestically and by the absence of an established order regionally and globally. In other words, Vietnam's new concept of security has become a comprehensive one, taking into account both internal and external aspects, balancing both independence and interdependence, and attaching importance to all economic, military and other means.

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Greater emphasis has been laid on overcoming poverty and underdevelopment, which present the biggest threat to Vietnam. Thus, the security perception is domestically oriented, which has important and long-term implications for the country's foreign policy. The more Vietnam is occupied with building its own capabilities, the more it needs to enjoy friendly relations and effective co-operation with the rest of the world.

THE EUROPEAN APPROACH TOWARDS REGIONAL COMPREHENSIVE SECURITY

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EUROPEAN VIEWS ON COMPREHENSIVE SECURITY KEES HOMAN*

1. INTRODUCTION

In the political environment in Europe after the end of the Cold War the long-term objective should be to establish a comprehensive, indivisible and co-operative security regime.1 The concept of this regime was developed by the Organisation of Security and Co-operation in Europe (OSCE). Since the concept of security has changed fundamentally in recent years, the foundations of past strategy—based on the preparation for military confrontation—have become obsolete for meeting the challenges Europe faces ahead. Comprehensive security based on co-operative security can be considered as the most desirable and adequate concept for an European security regime. It seems that Europe is the best testing place for co-operative security. In no other region of the world has more progress been made toward mutual regulation of military capabilities and operations. I will deal here with the concept of comprehensive, indivisible and co-operative security in general and the activities of the OSCE in the field of conflict prevention and arms control in particular.

The Challenges of Change Revisited

Since the crumbling of the communist regime in Europe, the challenges to security in Europe have changed. We will have to adjust * Major General (ret.) Kees Homan RNLMC retired from the Dutch armed forces on 1 October 1998. His last position was Commandant of the Netherlands Defence College. He is now a senior research fellow at the Netherlands Institute of International Relations Clingendael in The Hague, and he is a member of the OSCE Working Group of the Netherlands Helsinki Committee (NHC). He is the author of numerous articles in political and military journals and daily newspaper on issues of peace, security and defence. 1 See Ashton B. Carter, William J. Perry and John D. Steinbruner, A New Concept of Co-operative Security, Washington DC: The Brookings Institution, 1992; and Janne

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to greater uncertainty regarding time and place of tension and/or conflict and we will have to anticipate that the causes of conflict may become more complex and will consist of a larger variety than in the past. At present the following challenges to European security can be considered as the most important: a) Conflicts are increasingly changing in character. The change in character from international conflict to internal conflict has influenced the thinking about the concept of sovereignty and the right of the Security Council of the United Nations to intervene in a conflict. The changing concept of sovereignty has become visible in the acceptance by the participating states of their mutual involvement in each other's internal affairs within the framework of the OSCE. b) Actors are different and multifaceted. They are far more difficult to identify than previously. Since conflicts tend to be more often of an internal character, non-governmental actors play a prominent role. Conflicts often involve ethnic minorities or sub-national groups as we have seen in Kosovo recently. We can also see a more prominent role for national or international non-governmental actors on the side of those trying to defuse tension and prevent conflicts. c) Approaches to security have changed from an exclusively politicomilitary state-to-state affair to a comprehensive concept. Security, or the lack thereof, has a much broader basis than political-military power. The internal character of many conflicts has made us aware that the political-military power play between state-actors is responsible for only a small part of the conflicts we are presently facing. Many other facilitating conditions determine the power relations between the actors. These include, inter alia, the distribution of wealth and property rights, the attitude of majority vis-a-vis minority groups and the extent to which democratic rights are guaranteed and human rights are respected. These various aspects can, under certain circumstances, easily lead to growing tension and possibly to conflict. Conversely, changes for the better in these aspects can contribute to the delusion of tensions and the prevention of conflicts.

E. Nolan (ed.). Global Engagement. Co-operation and Security in the 21st Century. Washington

DC: The Brooking Institution. 1994.

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Comprehensive, Indivisible and Co-operative Security as a Response

The Organisation on Security and Co-operation in Europe (OSCE) has responded to the challenges to security in Europe by developing the concept of comprehensive, indivisible and co-operative security. The OSCE was created in the early 1970s.2 Under the name of the Conference on Security and Co-operation in Europe (CSCE), it was called upon to serve as a multilateral forum for dialogue and negotiation between East and West. On the 1st of August 1975 in Helsinki, the Heads of State or Government of the thirty-five participating states signed the Helsinki Final Act of the CSCE. This Act established basic principles for behaviour among the participating states towards their citizens. The Helsinki Final Act laid the basis for further development of the CSCE process. The document is not a treaty, but a politically binding agreement. It is divided into three main parts, or "baskets", concerning: 1) Questions relating to security in Europe; 2) Co-operation in the field of economics, science and technology, and the environment and; 3) Co-operation in humanitarian and other fields. The document called for regular follow-up meetings to review the implementation of CSCE agreements, to set new standards and norms, to expand co-operation and to maintain political dialogue. At these meetings of Heads of State or Government of OSCE participating states priorities are set and orientation is provided at the highest political level. At the 1994 Budapest Summit, the then 52 Heads of State or Government from CSCE participant states renamed CSCE the Organisation for Security and Co-operation in Europe. The priorities of the OSCE today are: to consolidate common values and build civil societies; to prevent local conflicts, restore stability and bring peace to wartorn areas; and to overcome real and perceived security deficits and to avoid the creation of new divisions by promoting a co-operative system of security.

2

OSCE Handbook, Vienna: Secretariat OSCE, 1996, pp. 5-10.

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KEES HOMAN The Concept

The concept of comprehensive, indivisible and co-operative security to which the OSCE adheres makes it unique among the Euro-Atlantic security organisations, since most of these security organisations focus exclusively on the political-military dimension of security.3 Contrary to these organisations, the OSCE presumes a direct relationship between peace, stability and wealth on the one hand and the development of democratic institutions, the rule of law, respect for human rights and the rights of minority groups and development of a market economy on the other hand. This presumption is embodied in the OSCE's concept of comprehensive security. The indivisibility of this comprehensive security concept implies that an increase in security for some participating states should not be detrimental to the security of other states. Security in the OSCE area should not be a zero-sum game. Instead, security should be an asset of equality among the members of participating states. The security-interests of the participating states may differ according to their individual security-requirements, yet the retention of their individual security is inextricably interrelated. The interrelationship of individual security-interests and—requirements is expressed in the co-operative aspect of the OSCE's concept of security. Whereas comprehensive security denotes a conceptual approach to security, co-operative security could be defined as the method, which facilitates achievement of the objective of comprehensive security. Co-operative security is aimed at the prevention of security threats rather than at preparations to counter them. Furthermore, co-operative security is designed to prevent aggression, rather than deterring it. In general, a system of co-operative security implies general acceptance of (binding) commitments limiting military capabilities and actions.4 Instead of mistrust, deterrence and enforcement, a cooperative security regime rests on: 3 See Netherlands Helsinki Committee, A Focus on the Future: Using an Enhanced Conference on Security and Co-operation in Europe, Utrecht, December 1995; and Ibid. Complementarity and Co-operation: the OSCE as part of a European Security Model for the 21st Century, Utrecht, November 1996. 4 SIPRI, Final Report of the Independent Working Group on "A future security agenda for Europe", Stockholm, October 1996.

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confidence based on openness, transparency and predictability; co-operation and reassurance; and legitimacy, which depends on the acceptance by members that the military constraints of the regime in fact substantially ensure their security. This facilitates a system of security in which military constraints substantially ensure security and which directs international involvement, with the consent of the parties concerned, to a conflict between two or more participating states or within a participating state. In practice, co-operative security in Europe has relied, inter alia, on an increasingly sophisticated and intrusive set of confidence—and security-building measures (CSBMs) and an increasing transparency through the implementation of the Conventional Forces in Europe (CFE)-treaty provisions. In other words: co-operative security replaces preparations to counter threats with the prevention of such threats in the first place and replaces the deterring of aggression with actions to make preparation for it more difficult. The concept of co-operative security differs from the idea of collective security as much as preventive medicine differs from acute care. Co-operative security is designed to ensure that organised aggression cannot start or be prosecuted on any large scale. On the other hand, collective security is an arrangement for deterring aggression through military preparation and defeating it, if it occurs. However, the one strategy does not preclude the other and both are, in fact, mutually reinforcing. A fully developed co-operative security framework would include provisions for collective security as a residual guarantee to its members in the event of aggression. Examples of co-operative security arrangements are: the establishment of strict controls and security measures for nuclear forces, building on agreements of the recent past; a regime for the conversion of defence industries whose excess capacity could lead to unwarranted global weapons proliferation and thus threaten international stability; co-operative agreements regulating the size and composition of forces to emphasise configurations and also to restrict the flow of dangerous technologies; articulation of an internationally supported concept of effective and legitimate intervention, in which the use of force is always multilateral and used only as a last resort; and

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the promotion of transparency and mutual interest as the basis for monitoring agreed upon constraints, including those on the diffusion of advanced technologies. In fact, the contributions of the Conventional Forces in Europe (CFE) accords that are most relevant at present are the advances in transparency. But European co-operative security has also relied on increasingly sophisticated and intrusive CSBMs. Another important contribution towards a co-operative security regime in Europe should be the co-operative limitation of arms production and sales. Arms industry consolidation and internalisation have significant implications for co-operative security. The opportunity for arms industry downsizing should be seized at this critical juncture of budgetary constraints in the Post Cold War environment in order to maximise standardisation of equipment, training and military planning. Furthermore, enhanced internalisation in the arms sector could facilitate harmonisation in the development of new arms export control regimes. Eventually, the new provisions could then gradually be spread eastward to incorporate other states in Eastern Europe and the CIS. There should also be an immediate effort to increase transparency and information sharing and to establish either an arms register or a continuous European-wide monitoring system of arms production plans and the specifics of sales and licensing abroad.

2. CO-OPERATIVE SECURITY AND CONFLICT-PREVENTION IN EUROPE

Conflict prevention has become a key concept in the discussion of Europe's new security and peace organisation. The OSCE established a Conflict Prevention Centre in November 1990 whose work was supplemented in December 1992 by the High Commissioner on National Minorities.1 The concept is not new; in his Agenda for ' The OSCE created the post of High Commissioner on National Minorities (HCNM) to respond, at the earliest possible stage, to ethnic tensions that have the potential to develop into a conflict within the OSCE region. The HCNM functions as an instrument to identify—and promote the early resolution of—ethnic tensions that might endanger peace, stability, or relations between OSCE participant states. Former Netherlands Minister Max van der Stoel was appointed the first High Commissioner in December 1992. The Budapest Ministerial Council (December 1995) extended Mr. van der Stoel's mandate for another three years.

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Peace, a blueprint for the United Nations, Secretary-General Boutros Boutros-Ghali gave conflict prevention top priority. The Organisation of African Unity also adopted at its Cairo meeting in December 1993 a mechanism for handling impending conflicts.

The Concept

The concept of "conflict prevention" refers to two types of efforts: those which prevent behaviour defined as undesirable; those which attempt to confine conflict behaviour within clearly defined limits of permissible activity. Older terms such as preventive diplomacy, crisis-prevention or deterrent diplomacy all refer to the same phenomenon.

Conflict Prevention, Early Warning and Preventive Policy

The OSCE, also referred to as the Helsinki process after the city where the famous Final Act was signed, is only one of a number of security organisations active in Europe, most of which are much stronger in terms of money, hard military options or other means. Nevertheless, the OSCE has a substantial role to play in addition to those of other bodies. Of all security organisations, it seems best placed to engage in conflict prevention and crisis management in a wider sense, meaning not only the immediate prevention of violent conflict but also the process of long-term peace building. Indeed, one could say that in this way the OSCE gains meaning as a community of purpose.

Short-term and Long-term Conflict Prevention

In the light of OSCE's comprehensive approach to security, conflict prevention is an affair of multiple dimensions and involving various time frames. It is therefore useful to distinguish between short—and long-term conflict prevention. Short-term conflict prevention aims at the prevention or containment of an immediate development towards escalation. This preventive action may also involve heading off or immediately correcting flagrant violations of human rights commitments

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and violations, which may cause an immediate escalation of tensions. In the military sphere, timely information about activities contributes to dispelling rumours which increase tensions and/or helps to rule out aggressive options. The durable prevention of conflict in Europe, however, also requires a long-term perspective. It involves building a viable democracy and its institutions, creating confidence between the government and the population, structuring the protection and promotion of human rights, eliminating all forms of gender or racial discrimination and respecting minorities. However, many new democracies have discovered problems in reconciling group rights and individual freedom with political stability. Durable prevention of conflict also requires the peaceful transition from a rigid state-commanded economic order to a flexible marketoriented system which increases prosperity while paying regard to social justice. As we can see in Europe, such a transition is not painless, and we should try to limit the pain created by such a transition to as little as possible and not let it lead to dangerous tensions. In some post-Communist countries, violence, corruption and predatory behaviour associated with emergent Mafia formations jeopardise democratic reforms and generate nostalgia for authoritarian rule. At the international level, building long-term peace also requires the development and maintenance of stable interstate relations, e.g. with kin-states, including continued international arms control and the ongoing use and improvement of regimes of military transparency. These short-term and long-term aspects of conflict prevention should be seen as part of an integrated strategy and indeed in practice they can hardly be separated.

Early Warning and Preventive Diplomacy

It is particularly in the framework of short-term conflict prevention that early warning and preventive diplomacy need to play their crucial roles. These key concepts are not defined, at least in OSCE documents. Nevertheless, based on High Commissioner experience we can make some assumptions. Early warning should provide the relevant OSCE bodies with information about escalating developments, be they slow and gradual or quick and sudden, far enough in advance in order for them to react timely and effectively. If possible, this early warning notification should leave OSCE decision-making struc-

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tures with enough time to employ preventive diplomacy and other non-coercive and non-military preventive measures. As far as preventive diplomacy is concerned, it should contain particular disputes and threats and prevent them from escalating into armed conflict. If possible it should try to resolve those disputes. The actual and definite resolution of the problems may be too much of a task for preventive diplomacy alone. In most cases, longer-term efforts will be needed. One should distinguish between early and late preventive diplomacy. "Early preventive diplomacy" attempts to resolve disputes well before eruption into armed conflict appears likely. The objective of early preventive diplomacy is to encourage and support efforts by the contending parties to seek accommodation. "Late preventive diplomacy" is to persuade parties to abstain from violence when eruptions seem imminent. Obviously the OSCE's prime task, and certainly that of the High Commissioner, should be to engage in the earliest possible preventive diplomacy so that we never need to resort to an early warning of imminent conflict, let alone have to engage in conflict management. This understanding is clearly reflected in the Helsinki Document of 1992 which emphasises conflict prevention at the earliest possible stage. In concept, the distinction between early warning and preventive diplomacy should be clear: early warning has the function to provide the information on the basis of which preventive diplomacy can take place. In practice this distinction is often blurred as activities have characteristics of both. It may be that the mandate of an instrument combines both elements, as is the case with the High Commissioner. In general, early warning and preventive diplomacy should be seen as a continuum of activities. The central question is of course what happens if the OSCE early warning system does produce a warning, whatever form it may take. Early warning and preventive diplomacy by OSCE instruments can only be as effective as the political response of the participating states. The participating states must be prepared to give concrete political and material support to these conflict prevention efforts.

OSCE Organs and Instruments for Conflict Prevention

Given its comprehensive approach to security, it is necessary that the OSCE has at its disposal instruments corresponding to the various

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security dimensions. As many OSCE bodies, instruments and procedures can indeed be considered to include conflict prevention aspects, most of the OSCE's area of activity seems to be up to the task. The full body of participating states plays a crucial role. Overarching, the comprehensive political discussions by the Senior Council and the Permanent Council6 are an essential means of guiding the process, making adjustments where necessary. The Permanent Council in Vienna is the most important OSCE conflict prevention body. In the terms of the Budapest Document of December 1994: "The Permanent Council will be the regular body for political consultation and decision-making". In this framework, the Permanent Council carries primary responsibility for early warning and preventive action through the discussions which take place in that framework and the decisions taken there. The Senior Council is not intended to engage in regular short-term conflict prevention and crisis management. With respect to long-term conflict prevention, how?ever, it has a crucial role to play: "The Senior Council will meet in Prague twice a year, at the minimum. An additional meeting will be held before the Ministerial Council Meeting. It will discuss and set forth policy and broad budgetary guidelines (and) will also be convened as the Economic Forum". If high-level consultations are needed at very short notice, the Senior Council could still be convened through the implementation of the so-called emergency mechanism. When meeting as the so-called Economic Forum, the Senior Council can continue to give political stimulus to the dialogue on the transition to and development of free-market economies as an essential contribution to the building of democracy. The Chairman-in-Office is responsible, on behalf of the participating states, for the co-ordination of and consultation with other

h The Senior Council is responsible for the overview, management and co-ordination of OSCE activities. It discusses and sets forth policy and broad budgetary guidelines. The OSCE participating states are encouraged to be represented at the level of political directors from capitals or at a corresponding level. The Senior Council meets at least twice a year in Prague and once a year as the Economic Forum. The Permanent Council, which is based in Vienna, is responsible for the day-to-day operational tasks of the OSCE under a representative of the Chairmanin-Office. Its members, permanent representatives of the OSCE participant states, meet weekly at the Hofburg Congress Centre. The Permanent Council is the regular body for political consultation and decision-making and takes decisions on all issues pertinent to the OSCE. It can also be convened for emergency purposes.

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international bodies, primarily the United Nations and the Council of Europe. Supported by the Secretary-general, the Chairman-inOffice is not only charged with preparing and chairing the meetings of the OSCE bodies but he or she can also undertake preventive diplomatic activities in the field, in the first place by travelling to areas of tension personally or by sending so-called Personal Representatives. In addition, there are many other possibilities for the OSCE to become active in conflict prevention. The various possibilities the participating states have to despatch "ad hoc missions" are very useful. "Long-term missions in the field", more often than not have an explicit prevention component in their mandates. They are logistically supported by the Conflict Prevention Centre (CPC) in Vienna.

Food for Thought

When we speak about the place of the OSCE and its relationship with the NATO, the EU and the Council of Europe, we should keep several things in mind. One buzzword in this regard is "complementarity": there is no need and there are no resources to duplicate the efforts of other international bodies. If concurrent activities do take place, they should reinforce each other. The other buzzword, then, is "interlocking institutions". If the international organisations work together, each will be able to contribute its particular "comparative advantages" to the combination. The question obviously is how to make them interlock instead of "interblock". Regular consultations both at the political and the working level are necessary, as well as, a commitment to transparency with regard to activities and structures. If need be, the Chairman-in-Office and Secretary General should be requested to come to an agreement with relevant international organisations. The relationship between the OSCE and other international bodies could of course vary and develop over time; it is important to remain flexible in this regard.

A Focus on Conflict Prevention?

The OSCE has at its disposal a number of characteristics and assets, which make it wrell placed to engage in conflict prevention. It is also

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important to realise that no other international body is engaged in comprehensive conflict prevention in Europe. Thematically, it is the OSGE's comprehensive approach which is essential in allowing for a broad approach in problematic situations. Institutionally relevant is the co-ordinating and initiating role, under the Chairman-in-OfBce, of the Permanent Council as the regular body for political consultation and decision-making with a thematically broad agenda. It carries primary responsibility for early warning and preventive action. OSCE conflict prevention can be considered a "soft" field of activity, since almost exclusively non-coercive means are employed. Cooperative implementation of commitments, programmes and measures is the key to the OSCE way of doing things. For this, the consensus rule would seem to be adequate. If there is one lesson we can draw from previous OSCE experience, then it is that we should only be ambitious within a realistically defined framework. A focus on conflict prevention sets an objective which is ambitious enough in itself but very well suited to the particular "comparative advantages" which the OSCE possesses. Such a focus does not require a wholesale institutional restructuring of the OSCE or a desperate establishment of new bodies, nor incisive changes in decision-making procedures. Why should the OSCE consider exercising "harder" options? For one thing, conflict prevention can be necessary at higher levels of the escalation ladder. Crisis management is also part of the OSCE's tasks. It is not defined in OSCE documents, but can be considered as conflict prevention in a crisis situation in the very last phases of escalation towards violence. The means to be employed will have to answer to requirements of urgency and high political investments, and perhaps even more substantial input is needed such as; emergency aid programmes, preventive deployment or peacekeeping operations. We are then entering into the realm of "hard" options and moving on to situations in which the consensus rule may stand in the way of timely and effective decision-making. OSCE options for conflict prevention and/or peace preservation should therefore encompass the entire range short of coercive measures to provide the OSCE with the necessary flexibility. Additionally, it will give the OSCE a higher visibility and credibility in the eyes of the public, which up until now perceives the OSCE as a weak-bodied organisation composed of all talk and no action.

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Thematic Aspects

Thematically, it is the OSCE's comprehensive approach, which is essential. In the long term, conflict prevention involves building a viable democracy and its institutions, creating confidence between the government and the population, structuring the protection and promotion of human rights, eliminating all forms of discrimination and respecting minorities. It also requires the peaceful transition from a rigid state-commanded economic order to a flexible and humanoriented system, which increases prosperity while paying due regard to social justice. In addition, building long-term peace involves continued international arms control and using and enhancing the regimes of military transparency. Thus investing in building the peace and preventing conflict in Europe requires a long-term perspective. However, these long-term aspects cannot be separated from shortterm conflict prevention. Efforts at laying the groundwork for a real democracy are in vain if in the meantime tensions escalate into a bloody civil war or an international conflict. Short-term conflict prevention aims at the prevention or containment of immediate escalation towards violence.

Institutional Aspects

Given the OSCE's comprehensive approach to security, many OSCE instruments can be considered to have early warning aspects. In the military sphere there are the traditional confidence—and securitybuilding measures and the agreements on conventional arms reduction, both entailing a detailed and sophisticated verification regime. Furthermore, OSCE states have at their disposal the procedural options for discussing at short notice so-called unusual military activities or military activities of a hazardous nature. More generally applicable are such OSCE tools as the emergency mechanism adopted in Berlin in 1991 and various procedures for the peaceful settlement of disputes. Well known are the more specific human dimension mechanism and the various options contained therein. Moving from the procedural to the more institutional side, we should give due attention to the important work done by the missions in the field. Increasingly, the mandates of field missions cover a broad range of issues—a development that can only be applauded and encouraged. Specifically

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for the human dimension, there is the Office for Democratic Institutions and Human Rights (ODIHIR) which, through its human dimension activities, is actively contributing to the long-term prevention of conflict. Finally, there is the already mentioned OSCE High Commissioner on National Minorities (HCNM) whose establishment in 1992 fits into the increased emphasis which the OSCE states placed on conflict prevention and crisis management. The HCNM has a two-fold mission: to contain and de-escalate tensions involving national minority issues which have the potential to develop into a violent conflict and to alert the OSCE whenever tensions develop to a level at which containment by the High Commissioner is no longer possible. The present High Commissioner is clearly satisfied with his mandate. He has not embraced suggestions that his recommendations should be upgraded to binding conclusions or that states should be obliged to report regularly on the implementation of his recommendations. At the present stage, amending the HCNM is not necessary. However, the Budapest decision to enhance his resources is most welcome. In a presentation to the relevant Working group in Budapest, the High Commissioner requested a modest increase in his support staff, a small budget for newspapers and literature, and a link-up to the OSCE communications network.

3. Co-OPERATIVE SECURITY AND ARMS CONTROL

Arms control is another essential element of co-operative security. It is fair to say that, for the greater part, arms control, in the classical sense, has become obsolete. The classic arms control concept was that security and stability could be achieved through formal negotiated agreements, primarily, between the United States and the former Soviet Union. The objective of these agreements was to provide greater security at lower levels of forces and budgets. The emphasis on the numbers game in the East-West context has led to the misunderstanding that arms control is always about reductions in the number of weapons, the size of the armed forces or the elimination of complete classes of weapons. However, this is only part of the picture. In the process of arms control, stability should be the overriding concern. In the post Cold War era the central idea in arms control should be emphasised—the contribution it can make to security and stability or the confinement of conflicts, whether this is done

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by reductions, limitations or co-operative and unilateral measures.' The arms control regime in Europe is based on four cornerstones, namely the CFE-Treaty, CSBMs, the Open Skies Treaty and the overarching Framework for Arms Control.

Conventional Forces in Europe

(CFE)-Treaty

The Conventional Forces in Europe (CFE)-Treaty is a legacy of the Cold War which I consider an important building block for an European co-operative security regime." The Treaty was originally signed by NATO countries and by the then members of the Warsaw Treaty Organisation as a result of twenty months of negotiation at the Conference on European Security and Co-operation on 19 November 1990 in Paris. The aim was to establish lower arms levels than before the crumbling of communism in Eastern Europe. The agreement determined for the existing two military blocs the quantity of conventional arms within five categories: main battle tanks, armoured personnel carriers, artillery pieces, combat aircraft and attack helicopters. As a result of changes concerning the status of certain countries that signed the agreement and the relationship between the states both during the negotiations and during the implementation process, the basic concept of the agreement has been slightly modified. By the November 17, 1995 deadline for full implementation, more than 58,000 "treaty limited equipment" (TLE) had been destroyed.'1 At the Lisbon Summit of the OSCE on 2 and 3 December 1996, the parties to the CFE-Treaty adopted a document on the scope and parameters for negotiations on a revision of this treaty. The broadening of the existing CFE regime seems to me to be an obvious first step in this revision. It seems worthwhile to attempt to expand the CFE treaty regime, with its critical limits and verification provisions, to the non-CFE members of the OSCE. The optimal solution would be adaptation and adoption of the full CFE measures: ' Jeffrey A. Larsen & Gregory J. Rattray (eds.), Arms Control Toward the 21st Century, Boulder and London: Lynne Reinner Publishers, 1996. i! Jeffrey D. McCausland, Conventional Arms Control and European Security, Adelphi Paper 301, The International Institute for Strategic Studies, London 1996. !) IISS Strategic Comments, "NATO enlargement and the CFE Treaty", Vol. 3. No. 2, March' 1997, pp. 1-2.

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limits in terms of national ceilings, constraints on transfer and force generation, and the full programme of monitoring, inspection, and verification. Another set of actions falls within the OSCE's Forum for Security Co-operation charge to harmonise all arms control arrangements. Of clear advantage to the smaller states, but also to the Russian sceptics, would be an integration and consolidation of the regular inspection and reporting requirements of the CFE, the CSBMs and Open Skies when it enters into force. However, while there is little argument about the CFE-Treaty's important contribution to European security, its future is uncertain at this moment. Still, the CFE-Treaty is likely to be one of the main means to reduce Russia's concerns with NATO enlargement. The Treaty can be revised to contribute not only to the resolution of this issue, but also to emphasise the importance of a more co-operative approach to security.

Confidence and Security Building Measures

(CSBMs)

The OSCE has also proven to be an important framework for the agreement of Confidence and Security Building Measures (CSBMs).10 CSBMs are usually seen as soft security arrangements regulating interstate behaviour, in contrast with hard security agreements such as Nato's mutual assistance guarantee. One may wonder whether this is a very helpful approach. Particularly in the post-Cold War era it seems more fruitful to place CSBMs on a continuum, ranging from unilateral declarations to military co-operation. CSBMs can provide reassurance by reducing uncertainties and increasing predictability and create security by constraining opportunities for exerting pressure through military activity and by military co-operation. What are the most important achievements in the European area? Clearly the Helsinki Final Act has been the starting point. The declaratory part of the document, which theoretically should be less important than the inspection regime, has exerted far greater influence. Particularly the principle of nonviolation of borders by force (which strictly speaking is a political, not a military CSBM) has been of great importance, not only to stabilise the situation between West and East Germany at the time but 10

Marie-France Desjardins, Rethinking Confidence-Building Measures, Adelphi Paper

307, The International Institute for Strategic Studies, London, December 1996.

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also once the communist world started to crumble, the Warsaw Pact was dissolved and the USSR fell apart. It is right to say that, apart from the nuclear arms limitation agreements, the Helsinki Final Act has been the most important European CSBM of the Cold War era. From 1989 onwards the OSCE has been able to develop more sophisticated CSBMs. The Vienna Document was updated for the last time in 1994 and contains a rich catalogue of measures including information exchange on military forces, doctrines and strategic planning, exchange of annual calendars, notification of military activities, on site inspections of military bases and facilities, constraining provisions concerning military activities beyond certain levels and consultation regarding unusual military activities. Hence the Vienna Document includes various levels of confidence and security building: transparency measures (information exchange, observation, inspection) are followed by constraint measures (limitation of military activities beyond certain levels). The consultations about unusual military activities take a somewhat exceptional position: on the one hand they can be seen as transparency measures, on the other hand they can lead to conflict prevention efforts. The issue most often raised nowadays, however, is the wish for regional CSBMs. Some examples of regional CSBMs are more frequent or lower limits for notifications and inspections between neighbouring countries. In this respect the implementation of article V of annex IB of the Dayton agreement, which consists of CSBMs for the former Yugoslavia, might be important for future developments.

Open Skies

A last important arms control agreement is the Open Skies Treaty. This treaty was signed at Helsinki on the 24th of March 1992." It obliges the parties to submit their territories to short-notice unarmed surveillance flights. The area of application stretches from Vancouver, Canada, eastwards to Vladivostok, Russia, and represents the most widely ranging international effort to date to promote openness and transparency in military forces and activities. All NATO countries " Stefanie Bailer, The Treaty on Open Skies, in: SIPRI Yearbook 1995: Armaments, Disarmament and International Security, Oxford: Oxford University Press, 1995, pp. 821-825.

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and former Warsaw Pact countries are state parties. It is the first treaty developed within the OSCE context that extends confidence building measures to the North American continent and beyond the Urals. In essence, the Open Skies Treaty is a confidence and security building measure. It is legally binding and it is of unlimited duration. All territory is accessible for aerial observation and observation flights can only be restricted for legitimate reasons of flight safety. Because Russia has still to ratify it, the treaty has not yet entered into force. Treaties, after they have been signed, generally must be ratified by the governments before they take effect. At present, 24 of the 27 states have done so. The holdouts are Russia, Belo Russia and the Ukraine. The Ukraine is expected to ratify the treaty in the not too distant future. The Ukrainian administration has put the treaty forward twice for ratification but could not get the required two-thirds majority in Parliament. One major concern for them is resources. Russia is another case altogether. The Duma has not been enthralled by the treaty. Also, they link everything these days to NATO enlargement and president Yeltsin may well have other things on his mind at the moment. It is any body's guess when the Duma will take it seriously.

A Framework for Arms Control

Finally, the Framework for Arms Control which was adopted at the Lisbon Summit on the 2nd and 3rd of December 1996, considers interlocking and mutually reinforcing arms control agreements as the logical consequence of the principle of the indivisibility of security. Drawing on past experience, the OSCE participating states have developed the following principles, to serve as a guide for future negotiations:12 Sufficiency. Arms control regimes should contain measures designed to ensure that each participating State will maintain only such military capabilities as are commensurate with legitimate individual or collective security needs, and will not attempt to impose military domination over any other participating State; 12

Lisbon Document 1996, A Framework for Arms Control, FSC. Dec/8/96.

EUROPEAN VIEWS ON COMPREHENSIVE SECURITY

445

Transparency through information exchange. A key element of an effective arms control regime is provision for complete, accurate and timely exchange of relevant information, including the size, structure, location and military doctrine of military forces, as well as their activities; Verification. The measures adopted should be combined, when appropriate, with verification that is commensurate with their substance and significance. This could include verification sufficiently intrusive to permit an assessment of information exchanged and of the implementation of agreed upon measures subject to verification, thereby enhancing confidence; Limitation on forces. Limitations and, where necessary, reductions are an important element in the continuing search for security and stability at lower levels of forces. Other constraining provisions on armed forces and security building measures continue to be significant elements in the quest for stability.

CONCLUSION

What is the status of the OSCE at this moment? The last important event in the OSCE was the Summit Meeting in Lisbon on the 2nd and 3rd of December 1996 which adopted a "Lisbon Document 1996". The document includes the Lisbon Declaration on a Common and Comprehensive Security Model for Europe for the Twentyfirst Century, a Framework for Arms Control and a text under the title "Development of the Agenda of the Forum for Security Cooperation". The main results of the summit are related to arms control: the agreement to start negotiations on the revision of the CFETreaty and a new arms control agenda for the following years, the above mentioned "A Framework for Arms Control". The two years of discussion within the OSCE about a "Security Model for the 21st Century" which should have been consecrated at the Lisbon Summit, ended however in an anti-climax. The only result was a few long, but vague titles for papers such as: "The Lisbon Declaration on a Common and Comprehensive Security Model for Europe for the Twenty-first Century". The only concrete agreement was the decision to continue negotiations aimed at "considering" whether a Charter on European Security should be developed "which can serve the needs of our peoples in the new century".

446

KEES HOMAN

After the two rather fruitless years of discussions since the Budapest Summit, it is hardly likely that this agreement will result in anything substantial in the foreseeable future. Still, because much has been achieved, the question arises: "What might be the next steps in the evolution of the European security regime?" The broadening of the existing CFE-CSBM regimes seems to be an obvious first step. It seems worthwhile to attempt to expand the CFE treaty regime, with its critical limits and verification provisions, to the non-CFE members of the OSCE. The optimal solution would be the adaptation and adoption of the full CFE measures: limits in terms of national ceilings, constraints on transfer and force generation, and the full programme of monitoring, inspection, and verification. In conclusion: As I mentioned before, in the political environment in Europe after the end of the Cold War, the long-term objective should be to establish a comprehensive, indivisible and co-operative security regime. Although a lot of progress has been made, what is lacking at present is the political will to make real substantial steps toward a European co-operative security regime. Yet there is every reason to support and to extend the present co-operative security regime in Europe. Implementation and further development of the CFE Treaty and CSBMs are essential. The Framework for Arms Control, which was adopted at the Lisbon Summit in December 1996, can play a leading role in forging a common understanding of the current and likely future military security challenges, devising measures and approaches appropriate to specific problems arising from regional tensions and instabilities while ensuring complementarity between regional and OSCE-wide approaches. All states involved must take robust action that reflects the belief that the benefits of co-operative security continue to outweigh the risks. In short: synergy and harmony should be promoted between the institutions who are dealing with the different dimensions of security.

INDEX

ABC-weapons, 67 ABM-treaty, China and Russia, 109 absorption model for Korean unification, 336 acid rain, 136, 156 ADB, 54 Afghanistan, 228 Agenda for Peace, 433 aggression, acts of, 31 Agreement on the Conservation of Nature and Natural Resources, 155 Ahadab oil field, 198 aid and environmental protection, 150 Green Aid Plan, MITI, 152 air pollution, 137 Akama Bunzo, 283 Akchubinsk oil field, 204 Akchubinskmunei, 199 Alfaya oil field, 198 alliances, 21 Allison, Graham, 241 American decline, 26 American Heritage PYmndation, 363 ANSCO (Asia Nuclear Safety Consultation Organisation), 322 anthrax, 117, 119 anti-communism, 220 antinuclear movement, South Korea, 313 APEC, 25, 32, 50, 147, 213, 368, 400, 416 meeting on environment 1994, 148 APPCED (Asia-Pacific Parliamentarians Conference on Environment and Development), 154 Arab-Israeli War in 1973, 92 Arbatov, Aleksei, 79 on START-II, 81 ARF, 50, 179, 400 ASEAN Regional Forum, 32 Armageddon, 118 arms modernisation, 24 competition in East Asia, 68 control, 440 control regime and China, 106 control regimes, 444 industry, 432

ARPC, 209 Article 9 of the Japanese Constitution, 34, 236, 246 origin, 260 Arzamas-16, 73 Asahara, leader of Aum Shinrikyo, 115 ASEAN, 32, 50, 55, 147, 157, 227, 270, 381, 416 programmes on environment, 147 regional market, 213 ASEAN Declaration of 1967, 382 ASEAN Declaration on the South China Sea, 179 ASEAN Free Trade Area Conference Fourth Conference 1993, 213 ASEAN Industrial Co-operation, 286 ASEAN-9 nation system, 212 ASEAN-Four, 209 Asia Development Bank, 150 Asia Pacific Fishery Commission, 155 Asian & Pacific countries in the UN, 225 Asian crisis, 41, 161, 168, 227, 363, 422 and trade surplus, 213 historical context, 63 Asian Currency Crisis, 208 Asian Monetary Fund (AMF), 54 Asian values, 37, 256 Asia-Pacific Economic Co-operation meeting 1996, Green Aid Plan, 152 ASIATOM, 127, 317 Aum-Shinrikyo, 8, 70, 91, 114, 115, 118, 120, 121 and Australia, 385 authority, political, 46 autopoietic, 242 badao, 220

bakumatsu period, 258 Bali Workshop on South China Sea, 396 Balkan, 50 Bandung Conference, 381 Bandung Workshop on South China Sea, 396 Bangkok Declaration, 382 Bangkok Summit Declaration 1995, 179

448 Baranovichi, 73 Barents Sea, 85 Barshefsky, Charlene, 367 Bateson, Gregory, 253 Belarus, 67, 72 Belo Russia, 444 Berlin Wall, 57 bilateral alliance arrangements, 52 Binary codes, 253 binary principle, 48 biodiversity, 136, 146 Biological Weapons Convention, 229 bioterrorism, 121 bi-polarity, 379 Blair, Bruce, 76 BMD (Ballistic Missile Defence), 111 Bogor Declaration, 213 Bosnia, 183 Botulism, 117 Boutros Boutros-Ghali, 433 brain drain, China, 177 brain drain of nuclear experts, 89 Brand to Brand Complementary Scheme, 286 Brandt, Willy, 331 Brazilianisation of China, 166 breeder reactor, Joyo, 311 Bretton Woods Agreement, 220 Briton, Sir Leon, 187 Brookings Institute, 303 Budapest Document of December 1994, 436 Budapest Summit of the CSCE, 429 Bush, George, 92 Butler, Lee, 67 caesium, 120 calculus of indications, 242 Cambodia and currency crisis, 212 Cambodian conflict, 384 Cambodian war, 235 Camp Schwab, 290 Canada, 48, 197, 387 capital markets, 41 capitalism, 21 "speculation" as spiritual basis, 59 crony, 30 Indonesian monarchical capitalism, 45 Korean state capitalism, 45 laissez-faire, 24 carbon dioxide, 140, 348, 372 Carlson Group, 238 Carroway, Paul, 292

INDEX

Carter's China policy, 185 CBTB, 172 CFE (Conventional Forces in Europe Treaty), 431, 441 Ch'ongjin, 94 chaebol, 27, 335

Chang, Soon-Heung, 322 Chatan, 291 Chatichai Choonhavan, 387 Chechen terrorist attack 1995, 120 Cheget, 76

Chekov, 76 Chelyabinsk-70, 73 Chemical Weapons Convention, 229 cheque-book diplomacy, 123 Chernobyl, 84, 316 Chernomyrdin, 200 Chevron, 204 China accession to WTO, 367 American image of, 363 and global economic system, 357 as challenger, 357 as emerging great power, 358 as ideological challenge, 64 as ideological threat, 359 as market for US, 365 as nationalistic, 60 as receiver of direct investment, 209 as rising power, 52 as superpower, 23 bilateral relations with Russia, 101 as coal superpower, 194 coal and hydropowrer resources, 344 coal resources, 189 containment of, 359 crime, China, 166 delay in joining WTO, 217 economic development, 159 economic growth, 345 elite, 178 " energy demands and South China Sea, 392 energy resources and production, 194 energy security, 202 energy strategy, 349 energy supplies, 194 energy supply and demand, 347 engagement of, 359 engagement policies towards, 64 environmental pollution tax on unwashed coal, 355 goods made by prisoners, 364 human rights, 364

449

INDEX

hydropower, 353 in competition with ASEAN, 212 influence on North Korea, 333 market mechanism in energy markets, 354 military strength, 176 nationalism, 362 Ninth Five-year plan, 195 nuclear forces, 101 nuclear strategy, 105 oil strategy', 351 Most Favoured Nation status, 366 policies of containment against, 56 prospects for economic growth, 363 reforms, 63 restructuring industries, 354 security interests, 159 socialist market economy, 63 strategy7 of diversified energy consumption, 350 threat to national economic security, 348 US assessments, 361 Village and Township Enterprises, 351 China and Russia's Strategic Partnership 1997, 205 China and Taiwan relations, 184 China and Vietnam, confrontation 1988, 389 China Petroleum and Gas Corporation, 352 China State Electricity Corporation, 353 China threat, 362 China-US joint communique, 371 China-US economic and trade relations, 365 China-US relations, 357 Chinese economic development and pressure on world resources, 188 Chinese energy strategy, 343 Cholla province, 335 Chongqing Industrial Pollution Project, 150 Chun, Dohwan, 335 CIA: nuclear arms estimates, 72 CIS, 432 Citizens' Nuclear Information Centre, 312 civil societies, 429 civil society in Vietnam, 423 clash of civilisations, 173 Clausewitz, 105

clean energy, China, 195 climate change, 136 Clinton directive for US nuclear forces, 66 speech "China and the State Interest", 369 visit to China, 184 visit to China, 64 Clinton-Hashimoto Joint Declaration of April 1996, 35 Clinton-Hashimoto talks, 289 CNOOC (China National Offshore Oil Company), 195 CNPC (China National Oil and Natural Gas Company), 196 coal, 138 cognitive biology. 242 Cold War, 22 thinking, 359 colonial constructs in Southeast Asia, 380 colonial possessions of France, 181 colonialism, 23, 60, 134, 158, 381 mission civihsatrice, 62

Western, 24 command and control system (C2), 102 command, control, communication and intelligence facilities, 73 command-and-control (US), 160 commercial reactors, South Korea, 312 communism, Chinese, 37 comprehensive security, 48 and ODA, 274 and regional nuclear co-operation, 307 and South China Sea. 379 definitions, 227, 240, 271, 307, 427 during Ohira cabinet, 49 indivisibility of, 430 sogo anzen hosho, 256 Vietnamese concept, 408 comprehensive war, 50 Conference on European Security and Co-operation, 441 conflict management, Organisation of African Unity, 433 Conflict Prevention, 437, 46 Conflict Prevention Centre, OSCE, 432 Confucian society, South Korea, 334 "Confucian" values in the two Koreas, 340 conscription system, 45 constructivism, 241

450

INDEX

containment, Soviet Union, 126 Convention on Biological Diversity, 146 Convention on International Trade in Endangered Species, 145 conversion of defence industries, 431 co-operative security, 430, 440 co-operative security regime, 427 Coopers and Lybrand Associates, 277 corruption China, Indonesia, India, Russia, Nigeria, 168 South Korea, 334 Vietnam, 420 Council of Europe, 437 Cox-report, 112 CPC (Communist Party of China), 357 CPC (Conflict Prevention Centre), 437 crises and global restructuring, 51 regional, 46 CSBM (Confidence- and Security-Building Measures), 69, 129, 431, 441, 442 CSCAP, 51, 323, 406 CSCE (Conference on Security and Co-operation in Europe), 182, 401, 429 CTBT, 179, 191, 228 Cuban Missile Crisis, 21 Cultural Revolution, 178 culture, Asian, 24 currency policies and direct investment, 209 currency crisis, 210 Dai Xianglong, 161 Daqing, 344 Daqing oil, 201 datong, 220

Dayton agreement, 183, 443 Declaration of ASEAN Concord, 383 deforestation, 136 democracy, 246, 359, 434 Asian, 24 liberal, 24 parliamentary, 43 democratic ideals, 58 democratic rights, 428 democratisation, 21, 144 Denisov, Valeri L, 92 denuclearisation, 67 detargeting of all strategic missiles, 79 detente, 266

detente in Europe, 49 DFI (Direct Foreign Investments), Europe, US, Japan compared, 180 Diaoyu lieyu (Senkaku Islands), 51, 203 Diaoyutai (Senkaku Islands), 179 division of labour in security and international relations, 57 Dnepropetrovsk, 73 Do Muoi, 405 Dobbie, Charles, 182 Doi-Moi, 405 dollar, 35 dollar system, 210 Dongfeng-31, 107 Dongfeng-41, 107 DPP (Democratic Progressive Party), 186 Drifte, Reinhard, 240 dual purposed weapon systems, 101 dual-use advanced technology, acquisition by China, 177 dual-use paradigm, 268 Dulles-Yoshida negotiations, 258 Duma, 444 EAEC (East Asian Economic Caucus), 33, 400 Mahathir's proposal, 54 early warning, 434 early-warning capability, 108 East Asian Crisis (1997), 24 East Asian-Pacific Strategy Report, 302 East China Sea, 203 East Siberia, 205 East Siberia Natural Gas Pipeline Project, 205 East Timor, 50 East Turkestan independence movement, 204 Eastern Europe, 432 ebola, 117 EC Environmental Action Programme, 156 Eco Asia, 152 economists, 45 economy, planned, 21 ecosystem, 31, 150, 394 EEC (European Economy Community), 156 EEZ, 391 egalitarian societies, Japan, Taiwan, South Korea, 167 Egypt, 92

INDEX

elites, globalised, 43 Endaka, 271 endangered species, 136 energy consumption per capita, 137 energy demand, 69 and South China Sea, 391 energy security, 307 China, 202' energy supplies, 307 internationalisation of, 206 engagement, constructive, 398 Environment Agency, Japan, 152 Environment Programme, UN, 137 Environmental Congress for Asia and the Pacific, 152 environmental co-operation, 150 environmental institution building, 142 environmental mismanagement, East China Sea and Yellow Sea, 402 Environmental network building, 153 environmental norms, 143 environmental pollution, 372 environmental problems, 28 environmental protection regional, 146 environmental regime, 30, 136 environmental security, 34, 48, 49, 57, 68, 70, 71, 74, 76, 79, 81, 86, 91, 92, 93, 94, 96, 97, 100, 101, 102, 104, 105, 107, 108, 109, 112, 121, 123, 126, 130, 132, 134, 135, 139, 141, 148, 150, 173, 179, 181, 225, 227, 231, 232, 233, 234, 235, 236, 237, 238, 239, 252, 257, 258, 259, 267, 269, 274, 288, 297, 303, 308, 314, 379, 384, 406, 408, 411, 412, 415, 416, 417, 418, 419, 427, 430, 441, 443 ESCAP (Economic and Social Commission for Asia and the Pacific), 149 ESDI (European Security and Defence Identity), 181 EU (European Community), 28 leadership, 47 model for ASEAN, 32 Eurasia, 56 structural differences, 44 EURATOM, 317 Euro, 28 impact on Asia's currency system, 219 in Asian yen markets, 219 Euro-Atlantic security organisations, 430

451

Europe, 22 and nation state, 47 social policy, 156 European Coal and Steel Community, 134, 157 European Community, 28, 134, 156 European Economic Community, 134 European economic interests, 180 European Enlightenment, 374 European enterprises in Asia, 287 European integration, 43 European Monetary Union, 333 European Parliament, 28 European process of integration, 43 European security, 184, 427 European Union, 46, 48, 63, 134, 138, 155, 156, 157, 158, 169, 174, 181, 225^ 235, 331, 400 EU-Taiwan co-operation agreement, 187 Evans and Grant, 401 exchange rates, yen, dollar, 174 Export-Import Bank of Japan, 272 Exxon, 201 FAO (Food and Agricultural Organisation), 226 fascism, 64 FBR (fast breeder reactor), 121, 310 FDI in Vietnam, 416 Felgengauer, Pavel, 80 Feng Lanrui, 164 financial markets, transparency, 58 fisheries, depleted, 136 fisheries agreements, Russia and Japan, 155 fishing related disputes, 141 Fissile Material Cut-off Convention, 228 flexible response, China, 105 foreign policy and currency stability, 209 forest fires, 141 Framework Agreement between US and North Korea, 314 Framework Convention on Climate Change, 146 Framework for Arms Control, 441, 444 France, 183 as colonial power in Southeast Asia, 380 French Revolution, 45 Frog artillery rockets, 93

452

INDEX

FS-X controversy, 250 fuel-cycle, 129 multilateral centre, 129 fuels and pollution, 137 Fukien Oil Refining, 201 Fukuyama, Francis, 37 Futenma Marine Corps Air Station, 289 G-7, 235 G-8, 228, 235 GATT, 220 GDR (German Democratic Republic), 331 Geneva agreement on Korea, 336 Geneva agreement of 1989, 327 Geneva Convention in 1958, 395 geo-economics, 407 Georgia, 90 German unification, 325 Germany, 183 and environment, 156 embassy in North Korea, 326 fall of the wall, 235 leadership, 57 moral burden, 44 West and East, 442 Ghauri-missile, 96 Gini-Coefficient, 165 Ginowan, 289 glamost, 77

global currency system, 219 global economic system and China, 357 global market access, 62 global order and justice, 27 Green, 28 global restructuring, 62 global system, conceptualisation, 61 global warming and China, 190 globalisation of economies and spread of technologies, 70 globalised economy, 58 GLOBE (Global Leaders for a Balanced Environment), 154 Golden Triangle, Korea, 337 Goodpaster. Andrew J., 67 Gore, Al, 153, 372 governance, international, 52 GPS (Global Positioning System), 108 Gramsci, 27 grassroots movements, 303 Great Britain, 183

defence role in Southeast Asia, 382 Greater East Asia Co-Prosperity Sphere, 35 Green Parties, Germany, 157 Greenspan, Alan, 59 Guam, 94,' 292 Guidelines, revisions of Guidelines in Japan, 52 Guinea, 198 Gulf of Siam, gas discovery, 277 Gulf War, 44, 52, 128, 175, 235, 293 Guomindang, 186 Hainan Island, 203 Hallstein doctrine, 331 Hamaji, 198 Hamburg Institute of Asian Affairs, 326 Hashimoto, Ryutaro, 322 Hashimoto-Clinton statement in April 1996, 238 Hawaii, 94 HCNM (High Commissioner on National Minorities), 440 hegemon, regional, 26 hegemonic stability, 46 hegemony cultural, 24 Gramscian, 25 US, 42, 62 Heilongjiang, 165, 344 Helsinki Document of 1992, 435 Helsinki Final Act, 442 of the CSCE, 429 Heng Samrin, 385 HEU, 83, 87 hierarchy in Asia, 51 Higa Tetsuya, 290 Hirose Katsuya, 264 Hiroshima and Nagasaki, 85 historians, 45 Ho Chi Minh, 417 Hong, Joo-bo Hong, 320 Hong Kong, 188 and Asian crisis, 215 return to Chinese sovereignty, 357 wrong forecasts for, 364 Hoseini, 198 Hu Angang, 202 Huai River Basin Pollution Control Project, 150 Hubei Urban Environment Project, 150 Human Development Report, 165

INDEX

Human Poverty Index, 165 human rights, 220, 428. 433 Hun Sen, 212 Huntington, Samuel, 173 Hwang Jang-yop, 332 hydroelectric power China, 194 IAEA, 314, 321, 327 opposition by North Korea to inspections, 92 IAEA agreements 1992, 92 ICBM, 66 ICOR (incremental capital/output ratio), 169 ideologies, Asian, 24 ideology in post war Japan, 258 IEA, 343 Iejima, 291 IMF, 3L 54, 57, 220 and Asian crisis, 215 International Monetary Fund, 25, 421 predictions, 42 IMF system, 210 imperial overstretch, 34 imperialism, 134 Western, 24 India. 40, 47, 67, 113. 139, 170, 181, 232, 386, 400 as emerging great country, 360 China policy, 55 China's war with, 178 Indian-Pakistan conflict, Kashmir, 228 India-Pakistan nuclear arms race, 70 Indonesian Biodiversity Conservation Programme, 153 Information Age, 375 infrastructure, China, 168 insurgencies, 21 integration in Asia Pacific, 50 international community, 388 International Conference on Kampuchea, 386 International Court of Justice, 67 International Energy Resources Organisation, 372 international law, China's view, 399 international order, dominated by US, 363 International Political Economy, 61 international relations, system of, 45 International Science and Technology Centre (ISTC), 90 international system, 22 in East Asia, 51

453

Internet and nuclear proliferation, 91 investment, excessive, in China, 168 investment-export correlation, 210 Iran, 95, 112, 183, 190, 191, 200, 204 and North Korea, 95 relations with Japan, 95 Iraq, 88, 112, 183, 198 IRBM, 102 Irkutsk gas fields, 201 Ishihara Shintaro, 268 Islamic countries, 190 Islamic states, 180 Ismail, Razali, 233 Ismailovo Park, 120 Israel, 67 Israeli-Palestinian question, 183 Italy, 233 JAEC (Japan Atomic Energy Commission), 311 Japan active nuclear fuel cycle programme, 311 anti-Japanese feelings, 272 Asia policy, 54 Basic Policy of National Defence 1957, 263 Defence Guidelines 1978 and 1997, 263 defence philosophy, 263 defence policies and principles, 255 direct investment and regional stability, 270 economic security, 270 Fourth Defence Build-up Plan, 263 gross domestic product, compare with China, 175 in the Security Council, 226 International Peace Co-operation law, 236 KB-note, 264 Kibanteki Boeiryoku, 264 moral burden, 44 multilateral diplomacy, 235 National Defence Programme Outline 1976 and 1996, 263 Networks in Southeast Asia, 270 New Defence Guidelines, 238 New Guidelines, 360 ODA, 271 pacifist constitution, 259 passive defence concept (shokyokuteki na boei koso), 266 PKO participation, 236

454

INDEX

production networks in Southeast Asia, 286 regional role, 226 transfer of management techniques, 278 transfer of technology processes, 278 US bases, 293, 304 Japan Atomic Energy Commission, 323 Japan Atomic Industrial Forum, 323 Japan Small Business Corporation, 272 Japan Socialist Party, 304 Japan Tropical Action Network, 145 Japan-China relations and environment, 151 Japanese Export-Import Bank, 279 Japan-US Summit Conference 1996, 302

JETRO, 272 history, 283 Jiang Zemin, speech at Harvard University, 369 Jiang Zemin 1996 visits to India, Pakistan, Nepal, 113 visit to the US in 1997, 357

JICA Japanese International Co-operation Agency, 277 jishu-boei, 256, 263 Jiulong-2, 107

Johnston, Alastair Iain, 105 Joyo, 311 juche, 336 Kadena Air Base, 292 Kanemaru Shin, 294 Kantor, 27 Kashmir, 228 Kathmandu Process, 229 Kazakh Republic of the Soviet Union, 204 Kazakhstan, 67, 72, 198 co-operation on oil with China, 204 Kazakhstan Oil Company, 199 Kazbek, 76

KEDO, 228, 314, 336 Korean Peninsula Energy Development Organisation, 97 keiretsu, 27, 287

Kennan, George, 64 Kennedy, Paul, 33 KFEM (Korean Federation for Environmental Movement), 145 Khmer Rouge, 385 Kiko Forum, 145

Kim Dae-Jung, 238, 328 Kim Il-Sung, 326 Kimjong-H, 97, 326 Kim Young Sam, 328, 333 Kissinger, Henry, 363 KMT (Kuomintang), 186 Kobikchenskoe, 200 Korea Four Party Peace Talks, 44 North and South joining UN, 226 Korea Electric Power Company, 320 Korea Worker's Party, 327 Korea-Japan Agreement on Environmental Co-operation, 152 Korean denuclearisation, Joint Declaration of the Denuclearization of the Korean Peninsula 1991, 92 Korean unification, 325 Korean War, 43, 134 Kosovo, 428 Koza Riot, 292 Krugman, Paul R., 64 Kubo Takuya, 263 Kuril Islands, 134 Kurop-to, 313 Kuwait, 199 KWP (Korea Worker's Party), 327 dissolution, 337 Kyongsang province, 335 Kyoto Conference, 145 1997, 31 Kyoto Conference 1997, 139 labour unrest, China, 164 Laem Chabang, 277 land reforms, Japan, Taiwan, South Korea, 167 Lanzhou, 314 laser arms, 118 late preventive diplomacy, 435 Latin America, 47 Latvia, 73 LDP, 273 leadership regional by Germany and Japan, 57 US, 59 Lee Teng-hui, 186 visit to US, 373 legal system, China, 168 Li Lanqing, 200 Li Peng, 352, 372 visit to Kazakhstan, 200 liberal conception of economic materialism, 31

INDEX

Liberal Paradigm, 36 Libya, 95 light-water reactors, 97 limited deterrence, China, 105 Lisbon Summit December 1996, 444 LNG (liquid natural gas), 197 Look East policy, 278, 286 LSD, 119 Luhmann, systems theory, 240 Lyaki, 73 Maastricht conditions, 333 Maastricht Treaty, 157, 181 Macao, 188 MacArthur, 260 MAD, 21 Mafia, 434 Mahathir, M., 54, 286 Mahathir, support for Japanese UNSC membership, 237 Malacca Oil Field, 197 Malaysian State Company, 197 Manila Declaration on South China Sea, 396 market democracy, 45 market economy, socialist market economy, 63 market mechanism, 44 market rationality, 58 marketisation, failing, 64 markets and justice, 59 freedom of speculation, 58 market-type reforms, 163 Matsumoto, 117 Matsumoto Jqji, 261 Maturana, 244 Mayak, 83 Mekong Basin development, 274 Mekong River delta development project, 230 mercantilism, 62 Mexico, 48 MFN (Most-Favoured Nation), 177 Mi-1 7 helicopter, 117 middle class, 29 middle classes, 46 Eastern Europe, Asia, Latin America, 57 Middle East, 197 European policy, 183 Mikhaylov, V., 72 militarism, 250 Japan, 123

455

military strength, China, 176 military-technological revolution, 26 MINATOM, 72, 82, 90 minorities China, 192 Chinese in Southeast Asia, 388 High Commissioner on National Minorities, 432 minority groups, 428 MIRV, 104 Mischief Reef, 179 missile tests, China near Taiwan, 186 missiles China, 176 Japan, 176 MITI, 275, 283 Green Aid Plan, 151 Mitsubishi Motors, 286 Mochizuki, Mike, 303 model the US as model, 63 models in politics and economics, 61 Mongolia, 205, 229 Mongolian Fuel, Geology and Mining Ministry, 201 Monju, 311 Montreal Protocol on Substances that Deplete the Ozone Layer, 146 Moody's, predictions, 42 MOX (Mixed Fuel Rods), 121 MTCR (Missile Technology Control Regime), 112 Mukatchevo, 73 multilateral dialogues, 51 multilateral diplomacy, Japan, 235 multilateral engagement of China, 397 multilateral negotiations, South China Sea, 380 multilateralisation, 416 multilateralism, 56, 230, 399 multinational corporations, 26 multipolarity in Asia, 225 multi-sided war of sabotage, Vietnam, 412 Murai, Hideo, member of Aum, 115 Murayama, Tomiichi, 116 Murmansk, 84 mustard gas, 292 Mutual Assured Destruction, 21 mutual security, Vietnam, 409 Mutually Assured Destruction MAD, 42 Mutually Assured Instability, 40

456

INDEX

MAI, 42 Myanmar, 202 NAC, 218 NACC (North Atlantic Co-operation Council), 182 Nago, 289 Nakanishi Terumasa, 266 Nakasone cabinets, 271 Nakasone Yasuhiro, 272 Fourth Defence Build-up Plan, 263 NAM (Non Aligned Movement), 227 Nansha islands, 203 Narita Airport, 303 nation building in Southeast Asia, 380 National Oil Company of Saudi Arabia, 201 nationalism, Korean, 340 nation-state abolition of, 47 weakening of, 303 nation-state system, 28 NATO, 7, 43. 44, 67, 72, 77, 82, 90, 110, 134, 181, 182, 183, 192, 235. 264, 383, 401, 437, 441, 442, 443, 444 military doctrines, 182 natural gas, China, 194 navigational security, 206 Nazarbayev, 200, 204 Nazarbayev, Nursultan, 73 Nemtsov, 200 neo-classical economists, 163 neo-classical market economy, 220 Nepal, 113 Nerlich, Uwe, 120 Network of Aquaculture Centres in Asia and the Pacific, 155 networks, 243 New Deal, 64 Newly Industrialising Economies, 22 NGO, 153 Nguyen Manh Cam, 410 NIEs, 22, 208 Nihonjinron, 256 Nixon visit to China, 185 Nodong-1, 93, 94, 95, 128 Nodong-2, 94 Non-Aligned Movement, 227 non-governmental actors, 428 non-governmental organisations, 143, 153, 158 non-linearity, 243 non-nuclear principles, Japan, 121, 250

non-nuclear status, South Korea, Japan, Taiwan, 91 non-nuclear weapon status, Japan, 121 non-proliferation policy, US, two-tier policy, 313 non-state issues, 362, 371 Nordpolitik, 328 North, countries of the rich, 22 North Korea, 88, 325 and nuclear brain drain, 88 attack on South Korea, 228 embassy in Germany, 326 food situation, 336 missile programmes, 92 NPT inspections, 97 nuclear ambitions, 91 nuclear policy, 314 plan to attack South Korea 1975, 92 rockets, 55 US-North Korea Principle Guidance on the Military Doctrine of the Russian Federation' in November 1993, 97 Norwegian missile, Russian alert, 77 Novaya Zemlya, 73 NPT, 228, 314 extension, 107 Japanese ratification, 121 North Korean membership, 92 North Korean withdrawal, 92 nuclear archipelago, 73 arms register, 131 arms race in South Asia, 96 control, triple key system, 76 co-operation, regional, 320 co-operation, 317 emergency search, US Energy Department, 120 energy and environment, 139 energy, civilian and military use, 70 energy programme. South Korea, 312 exports, control system China, 112 forces of China, 101 control and security measures, 431 fuel cycle, 309 fuel cycle programme, 311 initiatives 1991 in Korea, 92 material, theft of, 86 power, 69 principles, four n.p. of Japan, 127 proliferation, 66 reactors dumped in the sea, 85

INDEX

retaliation, 67 safety, 309 Nuclear Safety Commission of Korea, 322 nuclear strategy China, 105 ' Russia, Principle Guidance on the Military Doctrine of the Russian Federation' in November 1993, 79 US, 1997 and 1981, 66 nuclear submarine, sinking of, 85 technology, China, for electricity generation, 190 terrorism. 120 Nuclear Test Ban Treaty of 1963, Partial NPT, 125 nuclear test explosions, India and Pakistan, 228 threats North Korea against Japan 1996, 96 threshold states, 125 umbrella, US, 70 umbrella for Japan, 125 waste, 309 Code of Practice on the International Transboundary Movement of Radioactive Waste, 315 Taiwan, 100 Taiwanese shipment to North Korea, 145 waste management, 314 weapons. China, 176 command and control. 68 nuclear-free zone in Northeast Asia, 71 NVVFZ (Nuclear Weapon-Free Zones). 127 Nye Initiative. 302 Nye, Joseph, 302. 415 ODA and comprehensive security. 274 Japan. 271 to Vietnam, 416 ODA Charter. Japan 1992, 151 ODIHIR (Office for Democratic Institutions and Human Rights), 440 OECD, 162 OECF, 275 in Thailand, 276 Ogasawara. 409 Ohira, 271 Ohira cabinet. 49

457

oil, China, 194 oil crises of 1973 and 1978, 307 oil production in Central Asia, 190 oil resources, China, 189 oil shock of 1973, 156 Okazaki Hisahiko, 266 Okinawa and Vietnam War, 292 Battle of Okinawa, 291 Committee for Okinawa's return to the Homeland, 293 North Korean ability to strike, 94 rape of school girl by US Marines, 295 reversion to Japan, 291 role in defence strategy, 289 self-government, 292 Okinawa Crisis 1996, 289 Oksenberg, Michel, 186 Open Skies Treaty, 441, 443 order ecological, 23 globalist, 23 periphery-centre, 23 state-centric, realist paradigm, 23 Organisation of African Unity, conflict management, 433 OSCE (Organisation on Security and Co-operation in Europe). 134, 427, 429 Ostpolitik, 331 Ozawa Ichiro, 274 Ozawa Ichiro, 268 ozone depletion, 136 P5 (Permanent Members of the Security Council), 230 PACATOM. 127 PACIFICATOM, 317 pacifism, 247, 250 Japan, 121 Pakistan, 40, 47, 67, 95. 96. 112. 113. 170, 181. 190, 191 Papua New Guinea. 198 Paracel Islands, 389, 395 paradigm, dual-use, 268 paradigms of world order, 23 Patriot missile. 99 Pax Americana, 25. 220 Pax Britannica, 220

Pax Nipponica, 35 Pax Sinica, 35 Pax Sovietica. 25 peaceful evolution, 412. 420

458

INDEX

peace-keeping doctrines, 182 people's war, China, 105 Perimetr, 76

periphery, 21, 26 Periphery, East Asia, 23 Petrovietnam, 393 PICES (Convention Establishing a Marine Scientific Organisation for the North Pacific Region), 155 Pinghu gas field, 203 PKO, 226 Chinese participation, 234 Japanese participation, 227, 245 PLA (People's Liberation Army), 104, 41 Plant Protection Agreement for the Asia and Pacific Region, 155 plutonium, 83, 87 North Korea, 327 reprocessing and civilian use, 310 shipment from France to Japan, 311 weapon grade, 176 Pol Pot, 385 Polanyi, K., 64 political economy, 21 global, 26 pollution, 135 popular culture, 62 Porter, Gareth, 407 Post-Cold War, 22 postmodernist theory, 48 poverty, 57 fight against in Europe and Japan, 42 Human Poverty Index, 165 struggle against, 40 Pramoedja Ananta Toer, 275 preventive diplomacy, 434 Primorski Krai, 86 private, 62 privatisation, 45 China, 168 proliferation challenge of Soviet nuclear legacy, 71 dangerous technologies, 431 proliferation challenge, 71 proliferation network Pakistan-North Korea, 96 property rights, 428 Protocol for the Prevention of Pollution of the South Pacific Region by Dumping, 155 public, 62 Q-fever, 117 Qian, Qichen, 368

radioactive waste, 85 RAINS-Asia model, 150 Rajin, 326 Reagan, 66 realism, political, 241 Realist Paradigm, 33 realist theorists, 56 realist theory, 52 realist/neorealist, 423 regime, special legal regime (EEZ), 391 regional conflicts, 21 regional currency, 26 regional order in the Asia Pacific, 225 Regional Order and Great Powers, 35 regional war, preparation for, Vietnam, 412 regionalism and Korean unification, 335 register of nuclear arms, 131 religion, 32, 116, 253 religious sects, 115 Rengo, 297 Rengo Okinawa, 298 resource related disputes, 141 resources, competition for, 188 restructuring in Europe, 63 Rio Conference 1992, 31 Rodong 1, 327 rogue countries, 191 rogue states, 46, 87 Roh Tae-Woo, 333 Rokkasho-mura, 311 rural communes, China, 166 Russett, 232 Russia, 40, 197, 229, 400, 443 and START, 66 National Security Concept 1997, 80 nuclear brain drain, 89 peace treaty with Japan, 135 restructuring, 63 Russia's Strategic Nuclear Armed Forces, 71 Russia's Strategic Nuclear Forces, 75 Russian Far East, 140 Russian-Soviet empire, 43 Sakata, Japanese Defence Agency Chief, 264 Samuels, Richard J., 257 SANWFZT, 384 Sarin, 115, 117, 118, 119, 131, 292 Saryshagan, 73 satellites, export to China, 177 SBDB (Small Business Development Bureau), 278

INDEX

Scud-B, North Korea, Egypt, 92 Scud-C, 93 sea lane security, 205 sea lanes, 181, 170 SEANWFZ 1995 (South East Asian Nuclear Weapon Free Zone), 68, 33 SEATO, 21 secured insecurities, 380 security, non-military security. 262 Security Council, 25, 28, 230, 31 Brazilian membership, 234 Japanese membership, 273 membership for Japan and Germany, 233 Security Council reform, 225 ASEAN Foreign Ministers' declaration, 237 membership for India, Pakistan, Indonesia, 237 Open Ended Working Group on the Question of Equitable Representation . . ., 232 security regimes, 396 security treaties, US-Japan, 250 self-referential social systems, 242 self-reliance, Vietnam, 411 Senegal, 230 Senkaku islands (Diaoyu lieyu), 203 Senkaku Islands Diaoyu lieyu, 51 Diaoyutai, 179 Sevastopol, 73 Shahab missile, 98 Shanghai Communique, 185 Shengli Oil field, 201 Shidehara Kijuro, 260 Siberia, 197 ' Silk Road, 190 Singapore Declaration, 213 Sino-Soviet rift in the 1960s, 225 Sino-US nuclear co-operation agreement, 364 Skrunda, 73 SLBM, 66 SME (Small and medium sized enterprises), 278 Smith, Adam, 220 SMSIDC (Small and Medium Sized Industries Development Corporation), 278 socialism, 21 socialist bloc, aid to Vietnam, 412 Soman, 117 Sonbong, 326

459

Soros, George, 38, 58 South, countries of the poor, 22 South Africa, 67 South China Sea, 111, 178, 238, 389 and multinationals, 393 Asean Declaration on the South China Sea, 179 communication security, 394 conflict management, 395 environmental protection, 393 fishing, 390 food, energy, environmental, communication security and, 390 mineral resources, 391 Southeast Asian Approach, 379 South Korea, nuclear waste storage, 314 Southeast Asia arms race, 399 perceptions of Japan, 275 Southeast Asia Nuclear Weapons Free Zone Treaty, 384 Southeast Asian economies interdependence with Japan, 272 Southeast Asian Nuclear Weapon Free Zone, 33 sovereign power, 47 Soviet nuclear forces, 71 Soviet Union, 172 August-putsch 1991, 74 collapse, 22, 408, 40 collapse and nuclear button, 74 Special Economic Zone, North Korea, 337 special economic zones, China, 166 special economic zones, China and North Korea, 326 Spencer-Brown, George, 240 Spetsnaz, 117 SPNFZT, 155 SPNWFZ (South Pacific Nuclear Weapon Free Zone), 68 Spratly Islands, 134, 179, 393, 395. 422 START-I, 66 START-I and -II, 86 START-II, 66 START-III, 66, 72, 110 START-IV, 111 state, developmental, 24 state enterprises in China, 41 state-owned enterprises, China, 162 state-run enterprises, 217 states and their personality, 61

460

INDEX

Stockholm Conference, 157 strategic balance, global, 26 strategic culture, 242 Sudan, 197 Sugi Michisuke, 283 Suharto government, 382 sulphur dioxides, 138 sunshine-policy, 328 supercomputers, export to China, 111 sustainable development, 372 Sverdlovsk, 119 Sweden, 326 systemic predictability, 45 T-72, 117 Tabun, 117 TAC (Treaty of Amity and Co-operation), 397 Taepo Dong-2, 94 Taepo-dong-I, 94, 95 Taipovver, 315 Taiwan arms export to, 181 nuclear waste storage, 314 UN membership, 230 and China, relations overview, 184 crises 1995 and 1996, 52 issue, 373 missile crisis, 129 Taiwan Relations Act, 184 Taiwan Strait, military exercises 1995, 373 Taiwan's admission to the United Nations European Parliament resolution, 187 Takagi Jinzaburo, 312 Takayanagi Kenzo, 260 Takeshima (Tokto) Islands, 179 Takeshita cabinet, 271 Taliban, 228 Tanaka Kakuei, visit to Bangkok, 272 Tarara oil field, 197 tariki hongan, 266 Tarim Basin. 195 TBM, 128 tech-nationalism. 258 Tengis oil field, 204 territorial disputes, 134, 421 territorial issues, China, 179 terrorism, 114, 117. 119, 120 bioterrorism, 121 terrorist, 8. 70. 73. 87. 114, 115, 116. 117. 119, 120. 126, 131 terrorists, 73, 87 Thai Eastern Seaboard Project, 276

Thailand, 198 Theatre Missile Defence, 52 theory of communication, 243 theory of evolution, 243 threat concepts, 415 threats, definitions of, 57 Three Gorges Dam, 139 Tiananmen Incident, 40 Tiananmen Square massacre, 153, 186 Tibet in US China relations, 364 TLE (treaty limited equipment), 441 TMD, 101, 109. 128 Tokai-mura, 311 Tokto Islands (Takeshima), 179 Tokuchi Masahiro, 297 Tokushu Ginko, 279 Tokushu Hojin, 279 Tokyo Conference on Nuclear Safety in Asia, 322 Ton Du Jyong, 296 Toyota Astra Motors factor}'. 275 Tran Quang Co, 410, 417 transparency military, 434 of financial markets, 58 Treaty of Rarotonga 1985 SPNWFZ, 68 Treaty of Rome, 156 trilateralism, 58 truth serum, 119 Tu-16 'Badger', 102 Tu-22 'Backfire', 102 Tumen River, 326, 337 Tumen River programme, 229 Turkey, 183 Turkmenistan, 200 two Chinas, 1 34 Ukraine, 67. 72, 444 Umetsu Hiroyuki, 258 UN Charter, Article 43, 236 UN Regional Centre for Peace & Disarmament in Asia Kathmandu Process, 229 UNCED (United Nations Conference on Environment and Development), 157. 149 UNCLOS (United Nations Conference on the Law of the Sea). 395 UNCLOS III (Third United Nations Conference on the Law of the Sea:. 391 UNDP (United Nations Development Programme). 229

INDEX

unemployment and inequality, China, 169 China, 162 United Arab Emirates, 199 United Nations, 437 United Nations Conference on Environment and Development in 1992, 145 United Nations Conference on the Human Environment, 149, 156 United Nations Conferences on the Law of the Sea, 1960 and 1982, 395 United Nations Register of Conventional Arms, 229 UNROCA (United Nations Register of Conventional Arms), 229 UNTAC (UN Transitional Authority in Cambodia), 226, 227 uranium, 87, 118, 121, 310, 313 urbanisation, 137 US 1998 Trade Policy Agenda, 48 as market for China, 365 global strategy, 47 "Energy Star" eco-labeling programmes, 153 deficit in trade with China, 365 US Japan defence co-operation, 360 world view, 184 US-China relations, 357 US-Japan Environmental Executive Leadership Conference, 153 US-Japan Regional Security Agreement, 295 USSR, collapse, 443 Uzensk oil field, 204 values American, 24 Asian, 24 Confucian, 24 Van dc Velde, James R., 259 Vancouver, 443 Venezuela. 198 Vietnam concept of security, 405 unification, 407 Vietnam embargo, lifting of by US, 393 Vietnam War, 134, 147, 49 and Okinawa, 292 virtual arsenals, 78 Vladivostok. 443

461

VTE (Village and Township Enterprises), 351 Vu Khoan, 420 VX, 117 Waltz, Kenneth, 52 wangdao, 220

wars of independence, 134 Warsaw Pact, dissolution, 443 Warsaw Treaty Organisation, 441 WEU (Western European Union), 181. 401 Whitney, 261 WHO (World Health Organisation), 226 WMD (weapons of mass destruction), 46 Woollacott, Martin, 183 World Bank, 25, 31, 150 World Health Organisation, 137 World Human Rights Declaration in China-US joint communique, 374 World Oil Conference, 198 world order, 21, 22, 29 alternative, 28 competing paradigms, 29 International Organisation-centred. 28 liberal, 29 radical Green, 30 realist model, 29 UN-centred, 28 World War II, 134 WTO admission by China and Taiwan, 188 China's accession, 163, 177, 51 China's membership, 229 delay in China joining, 217 Taiwan accession, 60 Wu Bangguo, visit to Myanmar, 202 Wu Yi, 367 WW II, 258 Xinjiang, 204 Yaichcng gas field, 203 Yangtze River, 139 Yeltsin, 200, 444 Yeltsin and nuclear control, 74 yen adjustment of weak, 218 as regional currency, 26 Yerefeev, Oleg, 85

462 Yomitan, 291 Yongbyon, 98 Yoshida-Dulles negotiations, 258 Yuan (China), 215 yuan (Chinese currency), devaluation, 41 Yugoslavia, 183, 330, 443 Yunnan province, 202

INDEX Zangger Committee (NPT Exporters Committee), 113 Zhou Lukuan, 164 Zhou Yongkang, 200 Zhu Liru, 400 Zimbabwe, 387 ZOPFAN (Zone of Peace, Freedom and Neutrality), 383