Japan

The current process of Japanese domestic change has the potential to produce a Japan that will be more supportive of U.S. interests. In Japan, political realignment has depolarized the ideological conflict about defense policy and Japan's security relationship with the United States, and recent electoral reform could eventually cause elections to be contested more on the basis of policy than on client-centered politics. But in the near term, there is the danger of weak and unstable governments that will be unable to implement genuine reform in terms of both economic and foreign policy. Yen appreciation and structural recession are motivating Japan to reconsider developmental corporatism as the most effective way of promoting international economic competitiveness while minimizing the negative social effects of economic change at home. In East Asia, Japan is exporting the export-led model of development and thereby magnifying the trade pressures on the United States. If Japan were to fail, either by choice or indecision, to shift away from neomercantilist economic policies and business practices, there could be adverse political and economic consequences for the United States and, ultimately, damage to the U.S.-Japan security relationship.