Articles

Every Nation for Itself: Japan's Place in a G-Zero World

February 12, 2013

Speaker:
Ian Bremmer
, President, Eurasia Group

Presider:
Keiko Tsuyama
, freelance journalist

Ian Bremmer of Eurasia Group visited Japan Society on February 12, 2013 to talk about the new reality of life in a G-Zero world.

Dr. Bremmer urged a disciplined patience:

"Let me be clear, I don’t like the G-Zero world," he said. "I don’t think it’s a good place. I think it’s particularly problematic for Japan, and I think the Japanese intuitively know this."

"Clearly from an American perspective, a world where the United States got to call the shots, got to create the architecture, and people did what we want, that was a better world.... There are many in Washington and across America who would like to continue with that world—'Sign me up.' But I think it’s irresponsible for us to pretend."

Americans say they want China to join the G-20 "to help them become responsible stakeholders," to bear some of the burdens the U.S. has shouldered—global policeman, lender of last resort. Is this realistic? No.

"Let me be clear, the Chinese do not want to be responsible stakeholders. And I don’t blame them," he said.

"What the Chinese hear are two separate things, both of which are true. Number one, you want us to act like a rich country even though we’re a poor country. Number two, you also want us to participate as happy members of multilateral institutions that you have created the rules for."

Gordon Brown said of the G-20, "We have clothes, but no emperor," Dr. Bremmer noted.

A group of 20, even 20 friends planning dinner at a restaurant, is too big to coordinate in consensus fashion. The G-20's new arrivals are poor countries that "haven't been global for long. Most of them still aren't. They don't have the multinational corporations," the foreign services capabilities.

"We should stop talking about the BRICS. China’s economy is bigger than Brazil, Russia, India and South Africa all added together. So, if China doesn’t agree with us on most of this stuff, and they don’t for good reason, then you think you're going to get everybody else on board? Of course you’re not." Meanwhile the EU is preoccupied with the eurozone crisis, the UK with its economic problems, Japan with nuclear energy issues; Americans tell pollsters that foreign policy isn't a major issue in their lives.

"There are countries out there that want to do global governance," Canada, Singapore, Scandinavia, New Zealand. "If we had a G-20 composed of those countries, they would come up with great ideas. They would not do anything, because they are tiny, but they would come up with great ideas. The big countries don’t even want to come up with the great ideas."

Life in a G-Zero World
So in a G-Zero world, what are the options? "You can either pretend you still have global and stuff won’t work, or you can do less than global and actually start doing things. That is starting to happen," Dr. Bremmer said.

In trade, there is the Trans-Pacific Partnership, and possibly a trans-Atlantic partnership, which the British want "because if it happens it gives Cameron more ammunition to keep the Brits in euro."

"The hope would be that you grow it—you build it. It becomes successful and so compelling that over time the Chinese will see that starting to adapt their behaviors to accept integration, this big new thing, is worthwhile to them like it was for the WTO. But that is not possible today."

"This is what we are going to see on security issues," on climate, currency, the Internet, eventually "all of these issues of governance."

On the Internet, "if I were advising the Chinese government, I would tell them to keep Facebook out. Why? Because it’s an American company that has incredible control over data that is dangerous to you. Why wouldn’t you want a Chinese company with that kind of control over data? It’s too risky for you."

"It pains me to say that. I want to be able to tell the Chinese that moving to a free market much more quickly would be good for them. I don’t think that’s true."

Japan and the G-Zero Environment
In Dr. Bremmer's view, countries that can pivot to "take advantage of different models of integration all over the world" will be more able to succeed in the G-Zero environment. Thus Singapore, Kazakhstan and Turkey will do better than, say, Ukraine, which is "stuck with Russia."

Many countries in Asia can pivot, but "Japan can't. Japan does not get to choose between China and the U.S." Companies like Nissan "have learned that the downside implications of overexposure to China are very serious indeed."

Japan can however "do a small pivot": Develop economic relations with India, Southeast Asia; join TPP, a move that's "critical" for Japan in his view.

On military issues, "I think anything you do that looks tougher line security wise has the potential to set the Chinese off, and you don’t want that." Many countries in Southeast Asia have "large numbers of Chinese expatriates that dominate the business communities and the economies," but Japan does not. Moreover, "Japan has a critical alliance with the United States." Such factors make China's "willingness to engage in anti-Japanese nationalism... much greater."

"The Japanese themselves need to be seen as too big to fail. That is not the case. Increasingly the Chinese believe they don’t need the money from Japan. They don’t need the technology. They can get it from South Korea and Taiwan."

***

Keiko Tsuyama, freelance journalist and presider for the evening's program, began the Q&A:

In the 1980s Japan was the number one economic power, and then we became number two and now we are in third place. Can Japan hold onto third place as it stands now economically?

"No. But the U.S. can’t hold on to number one. We should be okay with that.... When China becomes the world’s largest economy, and it will soon, America will still be by far the largest economy with rule of law. That matters," Dr. Bremmer replied.

"It matters for investment. It matters for comfort. You can make billions of dollars in China, but you can’t buy clean air in Beijing. You can’t buy the right to walk around a place you can breathe. You can’t buy certainty that you’re going to live in a country that will respect your ability to have that money and to pass it on to your kids."

"Japan is a relatively small country population wise, and it’s getting smaller. But the Japanese are wealthy. It’s sustainable," with "the best infrastructure in the world." The longevity of Japan's people is greater than in any other major economy.

"We should not fetishize growth." Americans "talk about growth as if it is good in and of itself. Increasingly there are many in China who believe that that is true, but there are also many in China who believe that growth is less important than quality of life," he added.

"If you’re living as a middle-class Chinese in a major city, you want more accountability. You want to know that infant formula in the stores is not going to poison your kid. You can’t buy that."

What role can Japan take in the future, and what kind of influence can Japan have on other countries?

Japan's healthcare system "is dealing with issues that other countries will face in 10, 20, 30 years’ time," Dr. Bremmer said. Lower-level education "is radically better" in Japan than in the U.S. Japan's infrastructure, the ability to respond to a disaster like Fukushima, is exceptional.

One problem is that the Japanese "really don’t promote themselves on this stuff at all.... There are a million Chinese living in Africa. I think there are 8,000 Japanese." The Japanese need to "get out more," travel more, learn more languages, show other countries what they are doing, have their own counterparts to the World Economic Forum, the Boao Forum, the Clinton Global Initiative and TED.

I think we have to touch upon North Korea. What does the most recent nuclear test signify? It was relatively a smaller one than the past two missile tests.

"They have tested three times now. The first time it was shocking. It really surprised us. The second time a little less surprising. This time I’m not surprised. I’m really not."

What does trouble you about North Korea?

"The existence of North Korea troubles me. It is a totalitarian state. It troubles the Japanese too. I know this. It’s a totalitarian state. The people are starving," Dr. Bremmer said.

"The nukes are bad, but lots of countries have nukes that we don’t want to have nukes, and it hasn’t bothered us—Pakistan, India, Israel. There are lots of countries with nukes that we are not comfortable having nukes, but they have nukes. We’re okay with it. We’re clearly okay-ish with North Korea having nukes."

"The Israelis say that Iran poses an existential threat to them when the Israelis have like 200 nukes. Excuse me; there is no existential threat to Israel. I get that they need to say that, and it’s useful for them to say it, but there isn’t.... South Korea, there is actually an existential threat, and they don’t say it because it’s an existential threat, and it bugs them. It freaks them out. And of course we worry about this."

***

Audience members posed their questions:

If China and the U.S. start developing shale gas, and if both of them become self-sufficient in energy, what is the implication for the Middle East and Russia?

"Bad," Dr. Bremmer said.

"By the way it’s not an if. The U.S. is exploiting, and the Chinese will. It’s just a question of how long it takes them. I’m suggesting we help so that there is mutuality. But if we don’t help, they are going to get that technology. Cyber helps in that regard."

Middle Eastern countries have to diversify their economies, boost education, bring women into their economies. "I’m not saying they are going to do it. But sooner or later they have to. So, why not sooner?" he said.

"Russia is a very unique problem. Russia has become an energy state, and it shouldn’t be. These guys launched the first satellite, Sputnik. They had some of the best scientists in the world. And what happened to them? They are in Silicon Valley."

"Their governance is horrifying. The corruption is breathtaking. And we have seen breathtaking corruption. This is a country increasingly you can’t invest in outside of energy. How sad for Russia. You go to Russia, you go to supermarkets and you’re buying chicken from Denmark and cheese. They can’t stock their supermarkets with good food."

"Russia’s problems go deeper than shale. Russia has a Putin problem. They have got a government problem. They have got a bureaucracy problem. They have got a capital flight problem. They have got a human capital flight problem, and they aren’t fixing it, and I worry about that."

What do you see happening in Japan now that shows promise in terms of Japan's ability to compete effectively in the world?


"The thing that I see that has the most promise is just how much they are threatened and will be threatened by China’s rise," he said.

"The rise of China, not to where they are today—it’s not remotely as threatening to Japan as it will be in five years’ time or ten years’ time—will focus the mind of the Japanese... make them go out more internationally" and "make the tough decisions."

The interest of Japan's youth in entrepreneurship and globalization is a positive, as is "the ability of the Japanese to actually work together under conditions of adversity."

The failure to make progress in the treatment of women is not. "I’m surprised by that. I have called Japan the Saudi Arabia of the developed world in terms of the treatment of women. It’s shameful in the same way that America’s incapacity to deal with the rising gap between the rich and the poor is shameful. The treatment of women in Japan is shameful. It’s 50 percent of the population that you’re not unlocking the wealth of."

"I would not support a Japanese policy to radically open up immigration in a way that I would in other countries, because I just don’t think the Japanese society can handle it.... I like immigration, but, again, context matters. Immigration is a fantastic thing for the United States. I don’t think it would work in Japan."

—Katherine Hyde

Topics:  Business, Policy

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