[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                         JAPAN'S CHANGING ROLE

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ASIA, THE PACIFIC AND
                         THE GLOBAL ENVIRONMENT

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 25, 2009

                               __________

                           Serial No. 111-41

                               __________

        Printed for the use of the Committee on Foreign Affairs


 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                                 ______



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                      COMMITTEE ON FOREIGN AFFAIRS

                 HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York           ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American      CHRISTOPHER H. SMITH, New Jersey
    Samoa                            DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey          ELTON GALLEGLY, California
BRAD SHERMAN, California             DANA ROHRABACHER, California
ROBERT WEXLER, Florida               DONALD A. MANZULLO, Illinois
ELIOT L. ENGEL, New York             EDWARD R. ROYCE, California
BILL DELAHUNT, Massachusetts         RON PAUL, Texas
GREGORY W. MEEKS, New York           JEFF FLAKE, Arizona
DIANE E. WATSON, California          MIKE PENCE, Indiana
RUSS CARNAHAN, Missouri              JOE WILSON, South Carolina
ALBIO SIRES, New Jersey              JOHN BOOZMAN, Arkansas
GERALD E. CONNOLLY, Virginia         J. GRESHAM BARRETT, South Carolina
MICHAEL E. McMAHON, New York         CONNIE MACK, Florida
JOHN S. TANNER, Tennessee            JEFF FORTENBERRY, Nebraska
GENE GREEN, Texas                    MICHAEL T. McCAUL, Texas
LYNN WOOLSEY, California             TED POE, Texas
SHEILA JACKSON LEE, Texas            BOB INGLIS, South Carolina
BARBARA LEE, California              GUS BILIRAKIS, Florida
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
                   Richard J. Kessler, Staff Director
                Yleem Poblete, Republican Staff Director
                                 ------                                

      Subcommittee on Asia, the Pacific and the Global Environment

            ENI F.H. FALEOMAVAEGA, American Samoa, Chairman
GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
DIANE E. WATSON, California          BOB INGLIS, South Carolina
MIKE ROSS, Arkansas                  DANA ROHRABACHER, California
BRAD SHERMAN, California             EDWARD R. ROYCE, California
ELIOT L. ENGEL, New York             JEFF FLAKE, Arizona
GREGORY W. MEEKS, New York
               Lisa Williams, Subcommittee Staff Director
           Daniel Bob, Subcommittee Professional Staff Member
             Nien Su, Republican Professional Staff Member
                       Vili Lei, Staff Associate


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Joseph Nye, Jr., Ph.D., University Distinguished Service 
  Professor, Sultan of Oman Professor of International Relations, 
  Harvard University (former Dean of the John F. Kennedy School 
  of Government).................................................    11
Michael J. Green, Ph.D., Senior Adviser and Japan Chair, Center 
  for Strategic and International Studies, Associate Professor, 
  Georgetown University School of Foreign Service................    22
Kent Calder, Ph.D., Director, Edwin O. Reischauer Center for East 
  Asian Studies, Director, Japan Studies, Johns Hopkins 
  University.....................................................    30
Arthur J. Alexander, Ph.D., Adjunct Professor of Asian Studies 
  and Economics, Georgetown University (former President of the 
  Japan Economic Institute)......................................    48

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Eni F.H. Faleomavaega, a Representative in Congress 
  from American Samoa, and Chairman, Subcommittee on Asia, the 
  Pacific and the Global Environment: Prepared statement.........     5
Joseph Nye, Jr., Ph.D.: Prepared statement.......................    15
Michael J. Green, Ph.D.: Prepared statement......................    25
Kent Calder, Ph.D.: Prepared statement...........................    33
Arthur J. Alexander, Ph.D.: Prepared statement...................    51

                                APPENDIX

Hearing notice...................................................    90
Hearing minutes..................................................    91
The Honorable Donald A. Manzullo, a Representative in Congress 
  from the State of Illinois: Prepared statement.................    92


                         JAPAN'S CHANGING ROLE

                              ----------                              


                        THURSDAY, JUNE 25, 2009

              House of Representatives,    
              Subcommittee on Asia, the Pacific    
                            and the Global Environment,    
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:06 a.m. in 
room 2200, Rayburn House Office Building, Hon. Eni F. H. 
Faleomavaega (chairman of the subcommittee) presiding.
    Mr. Faleomavaega. The subcommittee hearing will come to 
order. This is the hearing by the House Foreign Affairs 
Subcommittee on Asia, the Pacific and the Global Environment. 
We are discussing today the subject of Japan's changing role 
not only in the region but as a global player in the Asia 
Pacific and certainly in other regions of the world as well.
    I will introduce our distinguished members of the panel, 
but before doing so I am going to have an opening statement. I 
know my distinguished ranking member, the gentleman from 
Illinois, Mr. Manzullo, will join us at a later time. But I 
will begin this hearing with my opening statement.
    Japan remains America's most important ally in the Asia 
Pacific region, currently is the world's second largest 
economy, and home to many of the world's best companies and 
most advanced technologies. The country's importance to the 
United States was underscored by Secretary of State Hillary 
Clinton when she made Tokyo her first overseas stop, and by 
President Obama when he accorded Prime Minister Aso the 
administration's first official visit by a foreign leader.
    During the Prime Minister's visit, and echoing earlier 
comments by Secretary Clinton at her confirmation, the 
President said, and I quote: ``The alliance that we have is the 
cornerstone of security in East Asia. It is one that my 
administration wants to strengthen.'' Despite such sentiments, 
however, Japan receives scant attention from the rest of the 
executive branch and Capitol Hill--perhaps with the exception 
of this subcommittee.
    To a degree, Japan's low profile can be viewed positively. 
After all, it was not so long ago that Japan repeatedly made 
the headlines for its so called unfair trade practices and its 
alleged threats to United States interests and economic 
preeminence. You might say also that at the time if we were not 
bashing the Japanese we were bashing the Chinese, probably 
because of our own shortcomings in our own economic 
development.
    There is a perception by some pundits and experts that 
Japan's role seems to have diminished regionally and globally. 
Japan's stagnant economy and politics--especially when 
contrasted with China's vibrant growth, growing confidence in 
the world stage and military modernization, in my view--
contribute greatly to this perception.
    Indeed, Beijing has become ever more central to Washington 
debates on key problems confronting this country, from the 
global financial crisis to climate change, and from North 
Korea's provocations to Pakistan's instability and the current 
crisis even in Darfur, Sudan.
    To address these and other issues, the Obama administration 
has announced it will hold its first Cabinet-level strategic 
and economic dialogue with China at the end of next month. S&ED 
is probably an acronym that we are going to be learning more 
about. As a successor to a Bush administration initiative, the 
S&ED will provide an ongoing channel for talks between 
officials at the highest levels, from President Obama and 
President Hu Jintao, Secretary of State Clinton and State 
Consular Dai, Treasury Secretary Geithner and Vice Premier 
Wang, to a host of other senior officials.
    The regularity of the S&ED and the high levels of its 
participants coupled with China's dynamism will keep the United 
States-China relationship in the forefront. Let me note here 
that sometime next month this subcommittee plans to hold a 
hearing on the S&ED. Japan's struggle to define its role 
reflects the real, immediate and consequential challenges it 
faces. Japan today is one of the world's oldest countries, with 
those over 65 years of age exceeding 21 percent of that 
country's population. It is estimated that by the year 2050 the 
number of elderly people in Japan will be well over 40 percent 
of that country's population.
    In response to its demographic and economic challenges, as 
well as other problems, Japan has been searching for answers. 
In 2003, for example, then Chief Cabinet Secretary and 
subsequently Prime Minister, Yasuo Fukuda, commissioned a major 
Japanese think tank to assess how the country should adjust to 
its decline to so called middle power status. Now, I have no 
doubt that Japan will remain a critical ally of the United 
States and an important global player despite the challenges 
she is now confronting.
    Of course, Japan can take some obvious steps to minimize 
its demographic problems. I suspect, however, that one such 
step--Tokyo opening itself to a large influx of immigrants--may 
never be an acceptable option. Another, promoting larger 
families, has been attempted, albeit modestly, by the 
government, but has achieved no discernable results. Providing 
women greater opportunities in the workplace would increase the 
country's labor force, but efforts to make the significant 
social changes necessary to have a real impact in this area 
have never gained requisite traction.
    A couple of other observations that may be worth noting are 
that the number of Japanese students studying in the United 
States declined from 45,000 in the 1994-95 academic year, to 
35,000 in the 2006-07 year, even as the numbers from other 
countries increased tremendously. For example, there are now 
more than 85,000 students studying here in the United States 
from India, 70,000 students from China, and some 70,000 also 
from South Korea.
    I might also note with interest that we have approximately 
500,000 foreign students studying here in American colleges and 
universities, probably the largest contingent of foreign 
students of any country in the world studying in our colleges 
and universities. I am glad that we are doing a lot better in 
the way that we have provided student visas so that students 
from all over the world will be welcome to come and study here 
in our universities.
    Security ties between Japan and the United States, of 
course, remain close, and they have been revitalized over the 
years partly as a result of the work of some of our witnesses 
today. In a welcome development, last month, Japan's ambassador 
to the United States offered the Government of Japan's first 
apology over the Bataan Death March.
    That is a significant development given the fact that 
during World War II, in 1942, some 68,000 Filipinos and some 
12,000 American soldiers were put on a forced march by Japanese 
soldiers, and tremendous amounts of brutalities and atrocities 
were committed against them. I was happy to learn that the 
ambassador of Japan made this formal apology in front of the 73 
survivors of the Bataan Death March in the ceremony.
    Meanwhile, prudence on the part of Tokyo and close 
cooperation with the United States are absolutely essential as 
Japan responds to North Korea's provocations and growing 
concerns over China's growing prominence economically as well 
as in terms of security.
    Yet in a major break from previous taboos, there are open 
discussions now in Japan about nuclear weapons. After the first 
North Korean nuclear test in 2006, some senior Japanese 
politicians, including the current Prime Minister by the way, 
called for a reconsideration of Japan's traditional policy of 
non-nuclear development. In other words, because of the 
problems in North Korea, there seems to be a threat to Japan's 
security and expressions of concern that perhaps maybe Japan 
needs to also develop a nuclear capability.
    Most observers in the United States believe our extended 
deterrence makes it highly unlikely that Tokyo will produce its 
own nuclear weapons. As the Congressional Research Service 
recently noted, Tokyo currently does not have ``the expertise 
in bomb design, reliable delivery vehicles, and an intelligence 
program to protect and conceal assets and sites for nuclear 
testing.'' My quote, however, is, ``it doesn't mean Japan 
doesn't have the capacity to produce nuclear weapons if it 
seeks to do so.'' And, of course, this will cause a complete 
shift in regional military strategic issues affecting the whole 
region in the Asia Pacific, especially toward China.
    South Korea, China and Russia are not nearly so sanguine, 
however. Last month, for example, the Chosun Ilbo, South 
Korea's largest daily newspaper, ran an editorial calling on 
Seoul to develop its own nuclear capability. Ostensibly, North 
Korea's nuclear tests prompted the editorial, but the clear 
subtext was concern over Japan's nuclear ambitions.
    On June 9th, Russia's Interfax News reported that a Russian 
Foreign Ministry source anonymously discussed North Korea's 
nuclear test and Japan's response. He said this: ``Naturally we 
are getting worried about a certain trend in Japan where there 
are increasingly loud voices calling for a building up of the 
country's own potential at an accelerated pace.'' Interfax 
noted that the official was referring specifically to nuclear 
weapons.
    And in a semi-monthly journal published under the auspices 
of the Chinese Ministry of Foreign Affairs, a featured article 
said, ``Some people believe that the Democratic People's 
Republic of Korea's possession of nukes will trigger a nuclear 
arms race with Japan and then the Republic of Korea following. 
If that is so, East Asia will become one of the regions most 
threatened with nuclear war.''
    Chinese, Russian and South Korean concerns about Japan's 
nuclear ambitions may well be overstated. But sometimes 
perceptions play a crucial role in policy decisions.
    In any case, the challenges Japan faces due to North 
Korea's provocations and the trajectory of its population and 
economy are clear and daunting. Japan has had a divided 
government since 2007, with the Democratic Party of Japan 
controlling the Upper House and the Liberal Democratic Party 
controlling the Lower House--thus requiring a two-thirds vote 
in the House of Representatives to override opposition by the 
House of Councillors on controversial pieces of legislation.
    Moreover, Japan's bureaucracy seems to have lost its way, 
and few, if any, politicians of either party have demonstrated 
any ability to successfully lead Japan in meeting current 
challenges.
    Nevertheless, Japan will likely hold general elections by 
this September. With the Aso Cabinet's approval rating at 20 
percent and published support for the DPJ, or the Democratic 
Party, ahead of the Liberal Party by 10-20 percent, depending 
on the pollster you talk to, the ruling party faces the real 
prospect of losing control of the government for only the 
second time in post-war history.
    How the DPJ might govern, especially on foreign policy 
remains an open question. DPJ's draft 2009 policy statement, 
which will form the basis for its campaign pledges, will 
include ``proposals that may give rise to friction between 
Japan and the United States. It calls for a drastic review of 
the Status of Forces Agreement and a withdrawal of the Maritime 
Self Defense Force from its mission in the Indian Ocean,'' 
according to the Asahi Shimbun.
    That said, predicting what policies the Democratic Party of 
Japan would actually implement if in power is particularly 
difficult since the Democratic Party's Diet members cover the 
spectrum from former socialists to former conservative LDP 
members.
    In previous periods of Japanese history, when faced with 
the enormous challenges of catching up with the West or 
rebuilding Japan's war-torn nation, Tokyo rose to the occasion 
by forging a durable consensus on how to respond. Forging 
consensus regarding the construction of a modern state or 
rebuilding after war, however, is likely far easier than 
reaching broad agreement on accommodating relative economic and 
real demographic declines.
    I believe the U.S.-Japan alliance should remain a pillar as 
strong as ever, and I sincerely hope that Japan will rise to 
the challenges it faces by drawing on the country's inherent 
strengths. Whether that is likely and how Japan can define its 
changing role are the subjects of today's hearing.
    [The prepared statement of Mr. Faleomavaega 
follows:]Faleomavaega statement--Note: Replaced with 
new version e-mailed 11/2/09 deg.











    Mr. Faleomavaega. I want to note with interest that we have 
a panel of some very distinguished scholars and former leaders 
who have worked in previous administrations, and at this time I 
would like to introduce our distinguished members of the panel. 
We have with us Dr. Joseph Nye, the university distinguished 
service professor and former dean of the Kennedy School of 
Government at Harvard University. He received his bachelor's 
degree summa cum laude from Princeton University in 1958, did 
postgraduate studies at Oxford University on a Rhodes 
Scholarship, and has a doctorate in political science from 
Harvard University.
    He joined the Harvard faculty in 1964, and last year, a 
poll of 2,700 international relations scholars listed him as 
one of the six most influential of the past 20 years, and the 
most influential in American foreign policy. It's a tremendous 
honor and opportunity for this subcommittee to host you, 
Professor Nye. He's an author of several books and has written 
well over 150 articles in just about every noted national 
magazine, and of course our national newspapers. He is a fellow 
in the American Academy of Arts and Sciences, the British 
Academy, American Academy of Diplomacy, and just a whole range 
of things. Welcome, Professor Nye.
    Michael Green is a senior advisor and holds the Japan chair 
at the Center for Strategic and International Studies, as well 
as being an associate professor of international relations at 
Georgetown University. He served as Special Assistant to the 
President for national security affairs and senior director for 
Asian affairs on the National Security Council from January 
2004 to December 2005.
    He joined the National Security Council in 2001 
specializing in Asian affairs, responsible for Japan, Korea, 
Australia and New Zealand. Assistant professor of Asian studies 
at Johns Hopkins University. Received his bachelor's degree 
from Kenyon College with highest honors, received his master's 
and doctorate from the Johns Hopkins University, and did 
graduate work at Tokyo University on a Fulbright, and a whole 
wealth of experience I must say.
    Mr. Calder currently is the director of the Edwin 
Reischauer Center for East Asian Studies at SAIS. Received his 
bachelor's degree with honors from the University of Utah, both 
his master's and doctorate from Harvard University. Expertise 
on Japan's domestic politics and Asia Pacific security 
relations, and Japan's political economy. Of course, he also 
published a lot, articles both in periodicals and newspapers, 
and also several books. Also was special advisor to the U.S. 
Ambassador to Japan, advisor to the Assistant Secretary for 
East Asian Affairs, including Korea. And I think I will stop at 
that.
    Arthur Alexander's experience includes 10 years as 
president of the Japan Economic Institute, specializing in 
Japanese economics. Was a staff member at the Rand Corporation, 
advisor and consultant to a wide range of industry and 
government clients, teaching in major universities, and 
publications in academic journals, magazines and newspapers. 
His most recent books on the Japanese economy include, ``In the 
Shadow of the Miracle and the Arc of Japan's Economic 
Development.''
    Dr. Alexander joined the Japan Economic Institute as 
president in 1990. He has conducted research directly for the 
American and Japanese Governments and the World Bank and 
private companies. Graduated from MIT, or the Massachusetts 
Institute of Technology, with a degree in engineering and 
industrial management. Had a stint with the U.S. Army. He then 
received his master's degree in economics from the London 
School of Economics and his doctorate from the Johns Hopkins 
University.
    Gentlemen, I really appreciate your presence, and I am sure 
that my colleagues will be joining me shortly. As you know we 
have had some very interesting votes in the past couple of 
days. We haven't reached 100 votes yet, but we will be getting 
there between now and tomorrow. But I would like to have our 
panel now offer their statements. And by the way, without 
objection, all of your statements will be made part of the 
record. So maybe we could start with Professor Nye.

 STATEMENT OF JOSEPH NYE, JR., PH.D., UNIVERSITY DISTINGUISHED 
 SERVICE PROFESSOR, SULTAN OF OMAN PROFESSOR OF INTERNATIONAL 
   RELATIONS, HARVARD UNIVERSITY (FORMER DEAN OF THE JOHN F. 
                 KENNEDY SCHOOL OF GOVERNMENT)

    Mr. Nye. Thank you, Mr. Chairman. As you know, next year 
marks the 50th anniversary of the U.S.-Japan security treaty 
that has been a central feature of stability in East Asia for 
half a century. And the current domestic political uncertainty 
and realignment in Japanese politics that you describe could 
last for several years and cause friction in the alliance.
    Indeed, some people might even ask if this could be the 
beginning of the end of the alliance. I think not. In fact if 
one looks back and compares the situation today with 15 years 
ago, the alliance is stronger rather than weaker. As you 
mentioned, in the early 1990s many Americans regarded Japan as 
an economic threat, many Japanese considered a United Nations 
rather than a United States-centered approach as an alternative 
to their national security. Some people in both countries saw 
the security alliance as a Cold War relic to be discarded.
    These trends were reversed by the Clinton administration's 
1995 East Asian Strategy Report, which invited China's 
participation in international affairs but hedged against 
uncertainty by reinforcing our alliance with Japan. In 1996, 
the Clinton-Hashimoto declaration stated that the U.S.-Japan 
security alliance was the foundation for stability that would 
allow growing prosperity in a post-Cold War East Asia. As I 
said when I was then serving in the Pentagon, we wish to see a 
stable triangle with good relations on all three sides between 
the United States, Japan, and China. But the triangle would not 
be equilateral because our relationship with Japan rested on 
alliance.
    That approach has continued on a bipartisan basis in the 
United States, and despite electoral maneuvering, polls show 
that it still has broad acceptance in Japan. Most close 
observers of the relationship agree that the U.S.-Japan 
alliance is in much better shape now than it was 15 years ago. 
Nonetheless, the alliance faces three major challenges in a new 
external environment that could create problems in the next few 
years.
    One is the violation by North Korea of its promises and its 
withdrawal from the nonproliferation treaty and now from the 
Six-Party Talks. Second is China's economic growth at over 10 
percent per year, slowing to 6 or 7 percent in the current 
crisis, but its even more rapid growth in military expenditures 
of nearly 17 percent a year. Third is the rise of new range of 
transnational threats to vital national interests such as 
climate change and pandemics.
    Let me describe briefly each of these in turn. North 
Korea's recent behavior has been clever, deceptive, and 
outrageous. It has violated its agreements, realizing that 
China, the country with the greatest potential leverage, is 
concerned about the potential collapse of North Korea regime 
and chaos on its borders. Call that the power of the weak. At 
the same time, Pyongyang realizes that the United States and 
Japan are not well placed to use force against it.
    Japan is concerned that it not be subject to nuclear 
blackmail from North Korea or China, and relies on the American 
extended nuclear deterrent. Ironically, Japan is internally 
torn between its desire to see a non-nuclear world, and thus 
its endorsement of that objective, and the concern of the 
defense experts that if the United States decreases its nuclear 
forces to parity with China the credibility of American 
extended deterrence will be weakened and Japan will suffer the 
consequences.
    It is a mistake, however, to believe that extended 
deterrence depends on parity in numbers of nuclear weapons. 
Rather, it depends on a combination of capability and 
credibility. During the Cold War, the United States was able to 
defend Berlin because our promise to do so was made credible by 
the high stakes, the NATO alliance, and the presence of 
American troops, that made the coupling of a Soviet attack from 
American casualties impossible.
    The best guarantee of American extended deterrence for 
Japan remains the presence of nearly 50,000 American troops, 
which Japan helps to maintain with generous host nation 
support. Credibility is also enhanced by joint projects like 
the development of regional ballistic missile defense. Equally 
important are American actions that show the high priority we 
give to the alliance and the guarantees that we will not engage 
in what Japan fears will be Japan passing in our relations with 
Asia. That is why it is so important that the Secretary of 
State Clinton's first trip, as you mentioned, was to Asia, and 
the first stop in Japan. It is also why it is mistaken to speak 
of a formal G2 with China rather than multilateral cooperation.
    The second point I want to address is the dramatic rise of 
the Chinese power. The Chinese economy has provided an 
important trade partner for Japan, but the concurrent growth of 
Chinese power makes Japan nervous. When we were renegotiating 
the U.S.-Japan security alliance in the 1990s, Japanese leaders 
would sometimes privately ask me if the United States would 
desert Japan in favor of China. I responded then, and continue 
to hold the belief today, that there is little prospect of such 
a reverse of alliances for at least two reasons. First, China 
poses a potential threat while Japan does not. Second, we share 
democratic values with Japan, and China is not a democracy.
    Moreover, China's internal evolution remains uncertain. 
While more Chinese are more free today than any time in their 
history, political evolution has failed to match economic 
progress, and China is far from free. Unlike India, China has 
not yet solved the problem of political participation. There is 
always a residual danger that China will slip into competitive 
nationalism in the face of domestic problems.
    At the same time, it is in the interest of the United 
States, Japan, and China that China's rise be peaceful and 
harmonious, in the words of Chinese leaders. That is why the 
strategy of integration plus a hedge against uncertainty makes 
sense for both the United States and Japan. In the words of 
Robert Zoellick, now World Bank President, it is in our 
interest to welcome the rise of China as a responsible 
stakeholder.
    If by some mishap, China does turn aggressive, we will find 
that Asia contains other countries, such as India, Australia, 
as well as Japan, that would balance its power. But it would be 
a mistake to turn to containment under current circumstances. 
As I have said over many years, if we treat China as an enemy, 
we guarantee enmity. Integration plus a hedge against 
uncertainty is a better approach. Indeed, there are strong 
grounds for the United States, Japan, and China to engage in 
areas of trilateral and other region cooperation.
    The third problem or challenge I want to address is the 
challenge of new sets of transnational problems such as health 
pandemics, terrorism, and outflows from failed states. But 
chief among these challenges is the damage that can be wreaked 
by global warming, where China has now surpassed the United 
States as the leader overall, but not per capita, as a producer 
of carbon dioxide. Fortunately, this is an area that plays to 
Japan's strengths.
    Some Japanese complain about the unequal nature of our 
alliance in the traditional security field because of the 
limits that Japan has accepted on the use of force. But in 
these new areas, Japan is a more equal partner. Japanese 
overseas development assistance in places ranging from Africa 
to Afghanistan, Japanese participation in global health 
projects, Japanese support of the United Nations, Japanese 
naval participation in anti-piracy operations, and Japanese 
research and development of more efficient uses of energy are 
all at the forefront in dealing with these new transnational 
challenges.
    In April, Prime Minister Taro Aso outlined three goals in 
what he called Japan's strategy--future. One, Japan should 
devote to use its technologies to lead the world in a low-
carbon emission revolution. Two, Japan should be a global 
partner in creating a society of vitality, good health, and 
longevity. And three, Japan should exercise its soft power. 
Others such as Asahi Shimbun editor Yoichi Funubashi have 
called for a strategy in which Japan becomes a global civilian 
power.
    Fortunately, these attitudes fit closely with the 
priorities that have been articulated by the Obama 
administration. In conclusion, it is important that the United 
States and Japan, the world's two largest economies, not turn 
inward at a time of crisis. Even though domestic political 
realignment in Japan may cause a period of minor frictions in 
the traditional security agenda, our common interest is 
overwhelming, and the alliance is likely to prosper unless we 
handle things very poorly.
    This will require greater patience and even closer 
consultation between Washington and Tokyo than in the past. On 
the new agenda there is enormous potential for an equal 
partnership working with others in the provision of global 
public goods that will be good for the United States, good for 
Japan, and good for the rest of the world. In short, I am 
optimistic about the future of the U.S.-Japan alliance. Thank 
you.
    [The prepared statement of Mr. Nye follows:]Joseph 
Nye deg.













    Mr. Faleomavaega. Thank you, Professor. Before we hear from 
Dr. Green, I would like to acknowledge the presence of one of 
our senior members of the Foreign Affairs Committee, my good 
friend, the gentleman from California, and I would like to ask 
him if he has an opening statement that he would like to make.
    Mr. Rohrabacher. Is this microphone on? I guess it is. I 
will make this very brief. I apologize for being late, two 
hearings at the same exact moment, one on Afghanistan, one on 
Japan, and so you can imagine that this is back and forth.
    Mr. Faleomavaega. Well, we appreciate your coming.
    Mr. Rohrabacher. I was down at the Afghan hearing. Let me 
just note that I lived in Japan as a young boy. I was 9 years 
old, I lived there with my father who was a Marine pilot, flew 
out of Ivukuni, and I traveled throughout Japan. And at that 
time Japan was just a poverty stricken country and people were 
basically living in the rubble of World War II, that was back 
in the mid-1950s. Japan has since built itself up into a world 
power again, as they were before the Second World War.
    And I think that none of us should ever ignore the fact 
that this was such a huge accomplishment for these people, to 
have taken a country that was totally destroyed in the mid-
1940s, and build an economy that is just a shining example of 
enterprise and productivity to the entire world. What 
unfortunately I think has happened, the Japanese while just 
absolutely committed to being friends with the United States 
and never going through this type of horrible war that they 
had, that the Japanese have become totally so committed that 
they have been taken for granted by the United States.
    Their prosperity has been taken for granted, and the fact 
that every time we get involved in a problem, although they are 
not providing military support, Japan is the number one country 
to back up the United States when we are engaged in different 
conflicts and different projects around the world. And over and 
over and over again the Japanese have stood with us, but yet I 
think decision makers in Washington take that for granted.
    Well, we shouldn't take that for granted and we should make 
sure the people of Japan and the Government of Japan knows that 
we deeply appreciate their friendship and that we admire them 
as a people for what they have done and the incredibly peaceful 
job they have done in rebuilding their country and building up 
a peaceful force in the world. Because when they get involved, 
they basically send aid. They send aid, I remember in Cambodia 
right after the Khmer Rouge were thrown out and during the time 
period when they had their first election, that was about 20 
years ago, the Japanese sent in $1 billion worth of aid to 
Cambodia. And it was tremendous.
    So with that said, one last note, I think any American 
strategy for the future has to be based on a partnership with 
Japan, and perhaps with India as well, and perhaps with Russia 
as well. And I would hope that we use our good offices to bring 
about a better relationship between Russia and Japan, which I 
would be very interested in hearing the opinions of the panel 
on that. So thank you, Mr. Chairman, I am looking forward to 
hearing the rest of the testimony.
    Mr. Faleomavaega. I thank the gentleman from California. I 
might also note with interest that I too have a tremendous love 
and affection for the Japanese people, I guess primarily 
because I have a relative who was a sumo wrestler in Japan. He 
wrestled under the name Konishiki. And you probably have heard 
of Konishiki. He only weighed 560 pounds and attained the 
second highest ranking as an ozeki. And of course I also knew 
other fellow Polynesian sumo wrestlers like Akebono, who became 
yokozuna, and also Musashimaru, who also became yokozuna.
    Unfortunately, they are not recruiting Polynesian sumo 
wrestlers now. They are going to Mongolia now to get sumo 
wrestlers. But I hope that maybe in the future we might have a 
change. I also want to note that growing up in Hawaii, I have a 
tremendous love for Japanese samurai movies. My favorite hero 
is Zatoichi, the blind swordsman who can kill 200 people all by 
himself. But I just wanted to note that.
    Mr. Rohrabacher. Mr. Chairman, if you would indulge me for 
one moment, I would have to admit that Godzilla is my favorite 
Japanese character, but it is more important than that in terms 
of the culture that we are talking about that I would like to 
brag about the many Japanese surfers that are surfing in 
California. We actually have more sushi chefs in California 
than they do in Japan, and they all come to my district, and 
they are sushi chefs at night, which we are grateful for, and 
they are surfers during the day.
    And they are great surfers I might add as well, Japanese 
surfers are terrific. So there are a lot of cultural ties that 
bind us together today. But of course our relationship again 
goes beyond appreciating that culture and appreciating these 
people and their hard work and their striving for excellence, 
which is something that I admire deeply. But it goes beyond 
that, it goes to the fact that they are incredibly important 
partners of the United States, partners that sometimes are 
taken for granted.
    Mr. Faleomavaega. I thank the gentleman from California. 
And in another note of interest, just last week a special 
ceremony was held in Japan for the retirement of the first 
foreign sumo wrestler to have had his own stable, the famous 
Hawaiian wrestler Takamiyama Daigoro, who just retired last 
week. I tried very hard to go to Japan and to pay my respects 
because he was the one who trained all these other Polynesian 
sumo wrestlers who followed him.
    Takamiyama's American name was Jesse Kuhaulua, a native of 
Hawaii, a fellow from Maui. But at any rate, I am sorry, I 
didn't mean to digress, but I just wanted to let the panel know 
we know something about Japan besides Aikido and Karate.
    Professor Green, please.

STATEMENT OF MICHAEL J. GREEN, PH.D., SENIOR ADVISER AND JAPAN 
    CHAIR, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES, 
 ASSOCIATE PROFESSOR, GEORGETOWN UNIVERSITY SCHOOL OF FOREIGN 
                            SERVICE

    Mr. Green. Thank you, Mr. Chairman. Thank you, Congressman 
Rohrabacher. I actually first discovered Japan as a small boy 
from my dad who went there as a Marine, and last week I took my 
2-year-old son for the first time to Japan, and we went to a 
sumo beya, and since we have been back he has been crouching 
around the house trying to wrestle the dogs. My wife and I are 
unsure now whether he is going to be a Marine, a professor, or 
a sumo wrestler when he grows up, maybe all three.
    I appreciate what Congressman Rohrabacher said about the 
importance of Japan, the impressive accomplishments of Japan. 
Polling data in the U.S. suggests the American public gets it. 
The most recent poll, about 2 weeks old, shows 80 percent of 
Americans say Japan is a reliable ally. That is right up there 
toward Australia, Britain, and much longer standing alliance 
relationships, and really quite remarkable considering that 20 
years ago those polls had the American public more afraid of 
Japan than of Soviet nuclear weapons. So we have come a long 
way in 20 years.
    And in Japan, 78 percent of the Japanese in a recent poll 
said that the alliance with us is important to them, which is 
the highest number in three decades. So the public gets it. I 
think they get it because of common values and interests, and 
they get it because the rise of Chinese power for both of us 
makes this alliance more important, not less important. One 
more reason I think we are in strong shape is because we have 
had bipartisan support and efforts to strengthen this alliance. 
Enormous credit should go to Joe Nye, who as Assistant 
Secretary in the mid-90s started this process of revitalizing 
the alliance.
    When I was in the Bush administration, 5 years in the NFC, 
we very self consciously modeled what we did on that start, and 
I am pleased to see that Secretary Clinton and the State 
Department are continuing that bipartisan tradition of 
strengthening the alliance at a time of uncertainty in the 
region. All of that said, there are a lot of voices out there 
arguing that Japan is a wasting asset, that perhaps we should 
stop asking so much of Japan, maybe Japan should just be a 
middle power, whatever that is.
    And I would argue this is not the time to be lowering our 
ambitions or dialing down our sense of the strategic importance 
of Japan, and in my brief comments I want to try to highlight 
some of the strengths that are apparent in Japan's world role, 
in spite of the many complications that the chairman talked 
about in economics, in security, and in what we might call soft 
power.
    In the economy, the numbers are dire. I expect Arthur 
Alexander will go through some of them. Exports in February 
were down almost 50 percent from the year before. GDP growth 
figures for the first quarter of 2008 were the worst in 35 
years, and Japan has a debt-to-GDP ratio of 170 percent. That 
is pretty bad news, and compared to where Japan was 10 or 20 
years ago, it is delicious headlines for the press to describe 
how the mighty have fallen.
    But I think you need to peel beneath that and look at some 
of the core strengths. For example, Toyota still has cash 
reserves of $34 billion, and that is after posting a loss. 
Their new Prius which went on sale last month has 180,000 
orders, that is 18 times what they originally projected for the 
first month. Sharp, which makes liquid crystal displays, opened 
a new factory, and in the midst of this recession they still 
can't keep up with all the demand. Robotics in Japan, the 
market is expected to grow to $30 billion by next year and to 
double every decade after that.
    So there are problems to be sure, but there are some real 
core strengths, especially in technology, that make Japan a 
valuable ally and player in the world. And the issue of debt is 
also important to put in perspective: $170 billion debt-to-GDP, 
we are heading in that direction ourselves, but in Japan's 
case, the vast majority of that is bond debt issued to the 
Japanese people. In terms of external debt, they rank much, 
much lower.
    On the security side, as the chairman noted, the diet is a 
mess, the political realignment process as Professor Nye said 
could take years, there is an election coming up this summer. I 
could spend 20 minutes spelling out for you the scenarios; we 
don't know what a Democratic Party would actually do, would it 
follow through on its pledges to have a review of our Status of 
Forces Agreement? I doubt it. But how they get out of those 
campaign pledges will be messy.
    Even if the LDP wins, they will lose the two thirds 
majority they have needed in the lower house to push bills 
through, so they are going to be on weak ice, and there is a 
very good chance we will need to have another election in a 
year to sort this all out. But if you look at what Japan is 
doing on the ground in security, there are some very impressive 
and unprecedented developments.
    In March, Japan stood up the first joint operational 
command under a three-star Air Force general to deal with 
potential incoming North Korean missiles. He had authority to 
shoot, he didn't have to go to the diet, t deg.he 
didn't have to go to the Prime Minister, first time ever. And 
then in April the Japanese set up the first joint operational 
command overseas, this time in Djibouti to assist with anti-
piracy operations.
    And just last week the diet passed a bill which allows the 
Japanese ships to fire on pirates, not only to protect their 
own ships but to protect third country ships, which close 
observers see as a very important step toward what we call 
collective defense, which would mean that Japan could actually 
do a lot more in a coalition with Australia or with us. And all 
of this is happening in spite of the confusion in the diet.
    Finally, there is a lot of discussion, and maybe we will 
get into it, about Japan's difficult problems on history, not 
only the Bataan Death March but issues with China, with Korea. 
It is difficult, there is no question about it, but it would be 
a mistake to argue that because of this Japan is isolated. The 
poll numbers are pretty clear, the BBC has surveyed people 
around the world every year for 3 years, and they have asked, 
What country do you respect the most in the world? Japan has 
come in first or tied for first every year.
    Recently there was a poll on the soft power, the Chicago 
Council on Global Affairs took Joe Nye's concept and found a 
way to measure in Asia, you know, how much influence countries 
have diplomatically, culturally, economically. We won, we came 
in first in every category, the United States, and Japan came 
in second across the region. So there are some real core 
sources of good will for Japan, not only around the world but 
in Asia, despite the difficulties over history.
    As a whole, what this says to me is, Don't underestimate 
Japan. Don't do what we did 20 years ago when we thought Japan 
would overtake the United States and become an enemy, don't now 
underestimate them. There are enormous potential sources of 
power and influence that will continue to make Japan an 
important partner. We need to take Japan seriously, we need to 
keep building our alliance and keep expectations high, because 
that is how we are going to continue building on the successes 
that began with Joe Nye and have continued for three 
generations. Thank you.
    [The prepared statement of Mr. Green 
follows:]Michael Green deg.











    Mr. Faleomavaega. Thank you. Dr. Calder.
    Mr. Calder. Thank you very much, Mr. Chairman. Your talk 
about Akebono really rang a bell. When I was working with 
Ambassador Foley we actually helped with arranging the details 
on his wedding, which was really quite something and occurred 
while I was in the Embassy.
    Mr. Faleomavaega. You mentioned Akebono, I was at 
Konishiki's marriage when he got married. And the entire 
country was watching this very unique wedding. I think the cake 
was bigger than this whole table you have got there.
    Mr. Calder. It was certainly big for Akebono too.
    Mr. Faleomavaega. Well, he was only 6 foot 8, weighed 450 
pounds, you know. So I know what you mean, Professor Calder.
    Mr. Calder. Those sumo weddings really are something. I 
should also say, Congressman Rohrabacher, what you were saying 
about Japan in the 1950s rang a bell. I was there briefly as a 
kid in the 1950s as well. My father had been in the Navy, not 
in the Marines, but I remember those days, and of course a lot 
of the bases around Japan also.
    Mr. Rohrabacher. That was when Kobe steak cost $1.50.
    Mr. Calder. There has been a little bit of change, hasn't 
there?

STATEMENT OF KENT CALDER, PH.D., DIRECTOR, EDWIN O. REISCHAUER 
 CENTER FOR EAST ASIAN STUDIES, DIRECTOR, JAPAN STUDIES, JOHNS 
                       HOPKINS UNIVERSITY

    Mr. Calder. I would like to just summarize my remarks in 
the interest of time, and highlight about five points relating 
to the politics, particularly that people haven't talked about 
as much. The first point, which really strikes me graphically 
in light of what you have said and what I remember, is that 
Japan is not static. To the contrary, it is changing, it is 
changing in policy terms and it is changing in political terms 
as well.
    On the policy side, to look to the bright side of some of 
that, I think we have to look at things like energy efficiency. 
And since the Oil Shocks of the 1970s Japan has increased its 
efficiency unit of GDP by about 30 percent, which is something 
of course that could well be very relevant to us today. In 
terms of defense responsibilities, Professor Nye and my 
colleague Mike Green have also alluded to this, but I think we 
have to remember the tremendous distance that we have come 
since the Nye initiatives of the 1990s, the guidelines, and 
then also after 2000 as well, after the 9/11 of course the way 
Japan responded.
    Today, I remember when I was a student one just really 
couldn't imagine the idea of Japan at the Straits of Malacca or 
any Japanese responsibilities. As you may remember in the early 
1980s there was a tremendous controversy about the 1,000-mile 
perimeter. And of course not only are they at the Straits of 
Malacca, the Marine Self Defense forces are in the Arabian Sea, 
U.N. peacekeepers on the Golan Heights. So there has been a 
very substantial change there.
    Japan, while changing already in policy terms, is also I 
would argue on the verge of potentially historic and 
transforming political change. As Mike suggested, of course 
there is a good deal that we can't really tell for sure, but 
Japan has to hold one general election by mid-October for which 
most polls assign a plurality to the largest opposition party 
at this point.
    Japan will also hold a second scheduled election around 
July 25th of next year for the Upper House, the House of 
Councillors, and many people predict there could well be a dual 
election, a double election, at that point. It may take several 
elections to sort this out, but the political scene potentially 
is dynamic as well. My assessment would be that, and I am sure 
we will get into this in the discussion, that political change 
and policy changes relating to it will be protracted. The 
sorting things out will take at least 1 year and possibly 
longer.
    Another point that hasn't been made that I think is 
crucial, it cuts perhaps in a slightly different direction than 
what we have heard, is that change is being driven in Japan by 
rather powerful global forces and also regional forces. Many of 
them in the economy, and Arthur Alexander I am sure will speak 
to this, but globally of course China and India are the big 
beneficiaries of globalization. The impact on Japan of 
globalization has been more mixed. Both of those countries, and 
Korea as well which has also been rising or in the same 
neighborhood, there are changing regional dynamics.
    The process of change regionally since 2006, Japan's trade 
with China has been larger than its trade with the United 
States. The economic context is in some ways shifting 
significantly, although one area where our ties of course 
remain very, very strong is technology, and of course as has 
been said on the security side as well. Now, this process of 
change I think will generate a new sort of policy process in 
Japan, probably more open and transparent yet also less 
predictable, and these things have policy implications that I 
think, obviously there is much that is uncertain, but I think 
need to be considered.
    Obviously we have to take crises as they come. Responses to 
financial crises won't wait, and responses to North Korea 
should not wait. And in many crises Japan's record has been 
good. On the economic side in '73, for example, the energy 
crisis, in several of the financial crises, since 9/11 in many 
respects on the security side. Of course there have been, even 
in the Gulf War they didn't change their security orientation 
sharply in terms of deployments, but they did contribute $13 
billion.
    Longer term, I think the imperative, flowing from what I 
have said about a protracted period of time, is a need to be 
attentive and patient with a relatively long time horizon. I 
wouldn't be overly optimistic. I wouldn't contradict much of 
what was just said about positive views on both sides. I do 
think the crucial point though is that globalization and the 
rise of alternatives, sharply different from the pattern that 
we had in the 1950s when Japan and the United States were 
basically alone as major powers in the Pacific and Korea was in 
turmoil and China was under embargo, the world is sharply 
different.
    There are different pulls, which will mean a more proactive 
and a more attentive sort of process. I think that probably 
means the symbolic element is important, cultural relations, 
more American centers, there is no NDFL for the Japanese 
language, as I understand it, now. We have it for Chinese and 
Korean but not Japanese. Mr. Chairman, you pointed out the 
decline of foreign study; it seems to me on both sides of the 
Pacific something has to be done about that.
    And then finally, in terms of functional cooperation in the 
areas that would balance the playing field that would create 
some degree of symmetry, energy efficiency, the environment, 
possibly mass transit, and certain areas of vocational 
education. There are many areas where we can share ideas, both 
at the public level, domestic policy dialogue, but also track 
two or track one and a half. So in conclusion, I think we have 
to see the potentially problematic element. We have to see that 
the U.S.-Japan relationship and Japan itself are changing, and 
that we have to be attentive in responding to that change. 
Thank you.
    [The prepared statement of Mr. Calder 
follows:]Kent Calder deg.































    Mr. Faleomavaega. Thank you, Dr. Calder.
    Dr. Alexander.

 STATEMENT OF ARTHUR J. ALEXANDER, PH.D., ADJUNCT PROFESSOR OF 
  ASIAN STUDIES AND ECONOMICS, GEORGETOWN UNIVERSITY (FORMER 
           PRESIDENT OF THE JAPAN ECONOMIC INSTITUTE)

    Mr. Alexander. Yes, batting clean up here, I think I am 
going to be actually supporting, reinforcing some of the points 
that have already been made. The first one is the point that 
Japan is a rich country. As a rich country, it possesses the 
habits, the institutions, the policies of successful nations, 
and these kinds of institutions that make countries rich do not 
vanish, they don't disappear.
    So what we can look at for Japan's economic future over the 
long run, abstracting away from what is going to happen the 
next quarter, is that Japan's economic future ranges from 1-2 
percent real growth of GDP per person. Now 1 percent growth 
would be a comparative failure, 2 percent, a considerable 
achievement. And this in general is the range that rich 
countries, including the U.S., operate within over the long 
term.
    From 2002 to 2008, Japan experienced its longest postwar 
expansion building on Chinese and other Asian demand: It wasn't 
just China. The share of exports and GDP rose to the highest 
level in Japan's entire postwar history, about 18 percent. 
However, contrary to many popular views in Japan as well as the 
United States, Japan's economy has not generally been driven by 
exports either in the post-World War II period or earlier. 
Actually quite the reverse is true. Imports rather than exports 
are associated with growth and productivity improvements. That 
is true in the United States as well.
    Last year high energy and materials prices, global 
financial turmoil, and collapsing exports plunged the economy 
into recession. It deepened in the first quarter of this year 
as real GDP fell over 15 percent in annual terms, the steepest 
decline since figures were first produced in 1955. However, in 
the last 4 months we are beginning to see a turnaround. Excess 
inventories are falling, manufacturing output is up, exports 
are turning around, consumer confidence is building, and we are 
even seeing household buying itself turning up in the latest 
data. So things are beginning to look good.
    When we turn to the demographic problems, the Japanese 
population is becoming older and smaller. Low fertility rates 
below the break-even level plus the longest life expectancy in 
the world mean that fewer babies are being born, older people 
are becoming a larger share of the population. Population 
actually peaked about 3 years ago. Current projections put the 
2040 numbers 15 percent below what we see today, going back to 
the level of Japan's population in 1973.
    Japan is not unique here. European nations experience 
almost the same sort of low fertility, but Japan is getting 
there first. Because of the shifting age structure, the working 
age population will fall about 1 percent annually over the next 
40 years. Two things can ameliorate the effects of a falling 
labor force. First, older people need not stop working at the 
age of 65. Actually, higher wages draw people back into the 
labor force. Just in the last 4 or 5 years, 0.5 million 
Japanese between the ages of 65 and 69 reentered the labor 
force because there was a demand for them. If we get labor 
shortages in the future, I expect the same thing will happen.
    The second thing has been mentioned, which affects the 
quality as well as the number of workers, is the better use of 
women. They make up a smaller share of the labor force than in 
many other advanced countries. The ratio of female to male 
wages is the lowest in the developed world. The proportion of 
females in management is 8 percent in Japan compared to 45 
percent in the United States. As I look around the room and 
look around Washington, I see there are probably more 
competent, intelligent, hard working Japanese women working 
here than in Tokyo. When half the labor force is underutilized, 
the potential for greater productivity gains is obvious.
    Turning to the regional effects of demographics, and I 
think this is my main message, demographics need not be 
destiny. Japan will remain the third or fourth largest economy 
for the foreseeable future. Although not growing as fast as its 
neighbors, it will retain the scale, the resources, the 
competencies, the capabilities to engage fully in regional and 
global areas. Even though more resources may be devoted to 
aging citizens in the future, Japan's role will be dependent 
more on its choices and preferences than on its absolute size 
or rate of increase.
    The size of an economy imposes only the roughest 
constraints on military or diplomatic efforts. Many countries 
punch well above their economic weight. Just think of North 
Korea or Israel. Economics by itself will not constrain Japan's 
future roles. Talking about United States and Japan economic 
and trade relations, as has been mentioned, when I testified I 
think in this very room 20 years ago, the hearings were on the 
Japanese threat. A few years later during the Clinton 
administration the trade representative could say, we negotiate 
and negotiate and nothing happens.
    Professor Nye helped end that period as we changed our 
relationship, but one of the things that we have seen over the 
past 15 years is that many of the industries that suffered 
directly from Japanese imports have adjusted to the intense 
competition either by getting smaller or becoming more 
competitive. Whether in steel, automobiles, machine tools, or 
other products, the challenges have faded into the past.
    In addition, Japan is no longer the only, or sometimes even 
the chief, protagonist. We have Korea, China, Russia, Brazil. 
Others have often taken the role that had been played by Japan 
in earlier decades. Japan is now the fourth largest source of 
American imports, behind Canada, Mexico, and China, accounting 
for less than half the flow from either Canada or China. Thus 
the salience of Japan in the eyes of business and political 
leaders is considerably reduced from earlier decades. The old 
animosities and emotions have been replaced by a more 
cooperative approach that we have already heard about. And I 
think the same thing as far as we can see is continuing under 
the current administration.
    I was asked to comment on Japan's role in addressing the 
global financial crisis. The first thing that is really 
remarkable is that Japanese financial institutions have 
suffered only mild losses. The losses from derivatives and 
subprime assets add up to only about $25 billion. This is 
minuscule compared to the losses we have seen in American and 
European financial institutions. Because of their lack of 
exposure, the financial authorities have not had to bail out 
Japanese banks, which have buttressed their capital by raising 
funds in financial markets.
    Japan has loaned the IMF an additional $100 billion from 
foreign exchange reserves to be used to make loans to emerging 
markets and other economies. In addition, Japan invested $2 
billion in the World Bank to help recapitalize banks in smaller 
emerging market economies. In cooperation with other countries 
and central banks, they provided currency swaps and other 
arrangements for countries that might face shortages of foreign 
exchange.
    And until last year, Japan was the largest holder of 
American Government assets. China has now taken over that role, 
but just barely. In recent months Japan has been acquiring 
American Government bonds and other securities at a $25-billion 
annual rate, about half the flow from 3 years ago when it was 
very heavy in the market for Fanny Mae and Freddy Mac assets, 
and that no longer is the case.
    What is going to be happening to its regional role? And 
what will the election do? We have already talked about the 
election. I think what we are likely to see, and I fully agree 
with my colleagues here, a new party would enter with support 
from different constituencies than the current web of political 
relations that have been built over half a century. Although 
the Democratic Party of Japan would feel bound to support its 
own backers, the important thing is they are different from the 
old gang.
    And I think we are likely to see more deregulation, more 
opening, more reform in many of the areas that have been tied 
to the Liberal Democratic Party. The other thing is that the 
ties to the bureaucracy in the ministries are likely to break 
down. This has been one of the major factors that has 
restrained change in Japan: The linkage between the Liberal 
Democratic Party and government officials. That will be 
changing as well.
    Can the DPJ bring new leadership? I may be sued here for 
practicing political science without a license, but when we 
look around Japan we see that there are plenty of reformers 
down at the local levels, at the prefecture levels. Prime 
Minister Koizumi demonstrated that we could have charismatic 
leadership in Japan. I don't think it is going to happen, as 
was said, in the short term. But enough change has occurred in 
political, economic institutions, and new people, that bold 
leadership can emerge from the confusion of a new party, new 
people, and new institutions. On the other hand, as economists 
like to say, no one has lost money by betting against the 
conservative nature of the Japanese people, at least not in the 
last 60 years. So the future is up for grabs. Thank you.
    [The prepared statement of Mr. Alexander 
follows:]Arthur Alexander deg.





































    Mr. Faleomavaega. Thank you, Dr. Alexander. I have just 
been handed a note that Professor Nye has to catch a flight. So 
if it is all right with our other three friends, Congressman 
Rohrabacher and I will want to focus on a couple of questions 
before Professor Nye has to leave for home. So my friend from 
California, first questions?
    Mr. Rohrabacher. Well, let me just ask this in terms of 
Japanese positioning, and this might be good for the whole 
panel however, with China versus the United States, I 
personally see China as America's greatest potential adversary. 
Potential, I mean they are a power we deal with now and perhaps 
even an enemy in the future. What do you see in terms of what 
is going on with Japan and China? Do you see that the United 
States, for example the Chinese just proclaimed a territorial 
limits in terms of their offshore territorial limits that seem 
to threaten Japan. And maybe you would like to comment on that, 
Dr. Nye?
    Mr. Nye. When we were looking at the future of East Asia 15 
years ago, the most important thing was the rise of China. And 
that raised a question which is, how should we deal with the 
rise of China? One school of thought said, deg. treat 
it as an enemy, try to contain it now. We decided to reject 
that on the grounds that that guaranteed that you would have an 
enemy.
    Mr. Rohrabacher. Right.
    Mr. Nye. On the other hand, if we invited China to 
participate, for example in the World Trade Organization and 
what Bob Zoellick called being a responsible stakeholder on a 
range of issues, you weren't guaranteed that China would always 
be a friend, but at least you kept open that possibility. So 
what you needed was a hedge against uncertainty. Even if 
today's generation of Chinese leaders may have good intentions, 
who knows in 10 or 20 years what the next generation will be.
    So the policy we designed was one in which we reaffirmed 
and reinforced the U.S.-Japan security treaty, so that in the 
three major powers of East Asia, United States, China, and 
Japan, we and Japan would be tightly tied as the two, China 
would be the one. That was the hedge against uncertainty. 
Subsequently, as Bill Emmott has pointed out in his recent 
book, The Rivals, if you look at the rise of Asia not just as 
the rise of China but also the rise of India, you find that 
there is a balance within Asia.
    And the important thing for us is not to contain China or 
to treat China as an enemy, but to hedge against the 
possibility that at some time in the future we would face what 
you described. And that policy, as Mike Green said, has worked 
on a bipartisan basis. It has good bipartisan support, and I 
think it is the right policy. It gives us the best options for 
a better future, and it also is good for Japan. Because if we 
have a problem thinking about the rise of Chinese power, Japan 
has it immediately, it is right next door.
    And that is why I think the U.S.-Japan alliance, despite 
the frictions that are bound to occur if we see this political 
change that my colleagues have been described, I think that is 
not going to threaten the alliance because it is so strongly in 
the interests of both Japan and the United States. So this is 
why I concluded my testimony by saying I am relatively 
optimistic, not just about the U.S.-Japan alliance, but about 
the potential for a stable East Asia, if we play our cards 
right.
    Mr. Rohrabacher. Well thank you very much for your 
insights. I have to say that bringing that into focus also with 
India I think is really an important understanding that we have 
to have if we are going to as you say chart our future, that 
hedge against the possible bad outcomes but at the same time 
charter a very positive future. Thank you very much.
    Mr. Faleomavaega. I just wanted to ask Professor Nye, there 
seems to be a correlation on our traditional deterrents closely 
tied to our nuclear capabilities, and I wanted to ask you and 
maybe even the other members of the panel, is deterrence still 
relevant today given the problems of nonproliferation? Or is 
there a double standard given that the way the nonproliferation 
concept has been employed has not been very successful?
    Mr. Nye. Well, having once worked on nonproliferation way 
back in the Carter administration, it is worth recalling that 
we are not doing quite as badly as the daily headlines would 
imply. John F. Kennedy expected there to be 25 countries with 
nuclear weapons by the 1970s. There are nine. That is better 
than was expected. So the nonproliferation regime, the treaties 
and so forth, have had some beneficial effect, though they are 
now severely challenged by both North Korea and Iran.
    I think the important thing to realize is that there is an 
inherent dilemma in nonproliferation, which is that as you 
approach zero nuclear weapons, things may become more unstable 
rather than more stable, because a little bit of cheating can 
go a long way, whereas when you have larger numbers the little 
bit of cheating probably doesn't matter as much. And this 
raises the following paradox, which is that part of the reason 
that there hasn't been more proliferation is because we have 
been able to extend guarantees of our nuclear umbrella over 
others.
    Japan obviously has the capacity to go nuclear if it so 
wished. It hasn't felt the need because we have extended 
deterrence. So the dilemma is that if we were to go too fast 
too hard too close to zero, we would bring nuclear extended 
deterrence into question. And I think that is why I said in my 
testimony, it is important to focus on the fact that extended 
deterrence rest very heavily on credibility, not just 
capability. In other words, the fact that there are 50,000 
American troops based in Japan is tremendously important just 
like the presence of American troops in Berlin allowed us to 
defend Berlin in the Cold War in situations when the Soviets 
had local superiority.
    So I think as we try to implement a policy to which we are 
committed under Article 6 of the nonproliferation treaty of 
reducing our arsenals and getting to lower numbers, we have to 
make sure that we do it in such a way that it doesn't call into 
question the credibility of our extended deterrence, because 
that paradoxically would actually increase rather than decrease 
proliferation.
    And that central dilemma is one which is going to require 
very close consultation between Washington and Tokyo. We should 
not be taking steps whether it is to deal with what I call the 
outrageous behavior of North Korea or whether it is to deal 
with the implementation of the long term desire to reduce the 
numbers of nuclear weapons, we should not be taking these 
without very close consultations with Tokyo.
    Mr. Rohrabacher. But, and Chairman if you would indulge me, 
the missile defense of course is playing an important in what 
you have just outlined. And the Japanese I think that you will 
agree have been tremendous partners with us in the development 
and even actually the deployment of a missile defense system.
    Mr. Nye. Absolutely. The joint cooperation we have in 
ballistic missile defense with Japan is an important part of 
our extended deterrence relationship.
    Mr. Faleomavaega. There is also the concern, at least the 
perception of the fact that the current administration, as with 
the Bush administration, wants to denuclearize North Korea. And 
of course this has serious implications toward Japan's own 
security. My question is, how do you denuclearize North Korea 
when it already has in its possession nuclear bombs?
    Mr. Nye. Well, I think the strategy that we need to take 
toward North Korea is to realize that this regime is not going 
to last forever. That is different from saying that we have a 
policy of regime change, I don't think we can change the 
regime. I think it will change with time. But we don't have to 
accept the legitimacy of the North Koreans having violated 
their nonproliferation treaty agreements and exploded two 
nuclear devices. And that means we hold open the prospect that 
over time there will be a non-nuclear Korean peninsula. We 
shouldn't give up that prospect just because the North Koreans 
have continually lied to us and violated their agreements.
    Mr. Faleomavaega. And I suppose the most serious question 
of all is what the Obama administration ultimately will have to 
do in making its decision if North Korea does continue not only 
to test its nuclear capability but even its missile testing 
program. It has come to the point where there has been a lot of 
rhetoric, but where do we stop and say enough is enough? And I 
suspect that we have to get some kind of a multilateral 
agreement, especially with principals like Russia, China and 
Japan to say that we are going to have to put a stop to this. 
Otherwise, I think we are not going to encourage North Korea 
even to do that. And it also has deep implications for Iran's 
efforts as well.
    Mr. Nye. Well, let me give you a quick answer but then turn 
to my colleagues on this since it is a very important point. I 
think the administration is right to have tried to maintain the 
multilateral framework. I doubt the North Koreans will come 
back to the Six-Party Talks, but having five parties talk about 
stability in northeast Asia is in itself valuable. Maintaining 
a framework where the North Koreans have to antagonize not just 
the United States but others is a point in our favor.
    In other words, if we think of this as a longer term 
process of keeping open the potential of a non-nuclear Korean 
peninsula, containing the North Korean threat is I think a 
valid objective. And from that perspective, we shouldn't accept 
any more of these false promises. We shouldn't negotiate 
bilaterally with the North Koreans for the sake of negotiating 
and get another scrap of paper which turns out to be worthless. 
We should in fact be using U.N. sanctions, which we have 
already got some progress on, and a five-party framework to try 
to contain the North Korea situation while waiting for 
political change inside North Korea. But I would be interested 
to see what my colleagues think.
    Mr. Faleomavaega. Please.
    Mr. Green. Mr. Chairman, we the United States did enormous 
damage to the credibility of our extended nuclear deterrent in 
Japan in the way we handled North Korea the last 2 years. I 
think the Obama administration has corrected course in an 
important way. We promised in 2003 publicly that we would not 
lift tariffs and sanctions on North Korea unless there was 
progress, and these were the exact words in a State Department 
and speeches by Secretary of State and others, we promised we 
would not lift tariffs and related sanctions on North Korea 
unless there was ``progress'' on the issue of Japanese 
abductees.
    And in October 2008, we unilaterally lifted those 
sanctions, there had been absolutely zero progress on 
abductees, and we did it in exchange for a verbal pledge from 
the North that they would verify what they had done. The 
reaction in Japan from left to right was incredibly negative. 
Extended nuclear deterrents as a matter of capability where I 
think every expert would agree we are in very strong shape with 
missile defense, with our other capabilities. As a matter of 
credibility, I think the North Koreans have no illusions about 
what we would do if they ever used weapons of mass destruction.
    But it is also about the credibility of our nuclear 
umbrella and the allies who depend on it. And we have a bit of 
digging out to do now. Because in the minds of I think many 
Japanese strategic thinkers, our word was questioned, are we 
really ready to stand up to North Korea? So we now have a 
credibility deficit in Japan that we need to be very careful 
about. I think Secretary Clinton has made the right moves 
initially. But how we structure the diplomacy with North Korea, 
whether or not our Japanese allies think we are watching their 
interests, coordinating with them, whether they think we are 
making too many concessions, those will all be critical.
    We have to be a bit careful about talking about 
containment. I agree with Joe Nye, there is a concern among 
many in Tokyo that our only concern is making sure that North 
Korean nuclear capabilities don't go to terrorists and that we 
would be very satisfied to just keep the nuclear weapons in 
North Korea. That is a very dangerous, it is not the U.S. 
policy, but it is a very dangerous line of thinking for us to 
allow. So we have a lot of work to do on this, and as I said I 
think the administration is off to the right start and I hope 
they keep it up.
    Mr. Nye. Could I just add, because Mike and I agree on most 
things, to make sure that my point was clear. I was not talking 
about containment pure and simple, I said containment while we 
kept open the prospect of denuclearizing the Korean peninsula.
    Mr. Faleomavaega. Professor Calder?
    Mr. Calder. If I might just add a couple of points. First 
of all, on the public diplomacy, the handling of these issues, 
we are talking about the strategic side of this, and I would 
agree totally with my colleagues on those points. But I think 
we also have to realize we are moving into an era now when 
security policy is probably going to be more politically 
salient than it has been. Of course we saw this on the 
abductees issue, and I agree with them on that. I think we have 
to have sensitivity on the abductees issue because this is so 
important to the Japanese public, and I think the Obama 
administration has been taking the right course.
    And the other question of architecture, five-party, I think 
it really is crucial. We should in some form continue those 
issues, reconstruction, possibly disarmament at some point, 
refugee related questions, there are many things looming as the 
Korean peninsula changes. One last thing, also minilateralism. 
The United States-Japan-Korea dialogue hasn't been mentioned, 
but it seems to me one thing that the Obama administration has 
done that is quite valuable is reviving a process that was 
quite vigorous under Secretary Perry in the last part of the 
Clinton years and in some points in Bush as well, namely the 
trilateral, down at Shangri La, Secretary Gates and Minister 
Hamata and the Koreans. This one I think needs to be revived, 
and we have particularly the North Korean issue gives us a 
chance to do that.
    Mr. Faleomavaega. Dr. Alexander, did you?
    Mr. Alexander. No.
    Mr. Faleomavaega. Professor Nye, you had indicated also 
these three basic concerns about the U.S.-Japan alliance. But 
don't you think there is ever a possibility that China could be 
part of a trilateral arrangement in that respect, even though 
China is not a democratic country at this point?
    Mr. Nye. Well, I think what we are going to see is 
potential for United States-China-Japan trilateral cooperation 
on a number of issues. I doubt security will be the primary 
one. Though notice that if you develop a five-party talks as a 
northeast Asia security dialogue, this would mean a general 
discussions and confidence building which would include China 
and Japan. But I was thinking more concretely of the issue of 
climate change. With Japan's pioneering work in energy 
efficiency, and China now becoming the superpower of CO2 
production, you can see a situation where the United States, 
Japan, and China would have a common interest in working 
together on increasing energy efficiency, particularly in the 
consumption of coal in China.
    China has enormous reliance on coal. It is a resource 
within their sovereign boundaries. It is also one of the 
dirtiest contributors. Chinese are often producing coal plants 
which are not at the latest level in terms of clean use of 
coal, sometimes this is affected even when the government 
prefers it by local issues of corruption and so forth.
    But a cooperative framework of United States, Japan, and 
China working on improving energy efficiency, with particular 
emphasis on coal, has a great deal of promise. So I think we 
are going to see a variable geometry in East Asia. It is not 
going to be a set of old 19th century alliances all on one 
dimension, we are going to see some areas where we will be 
competing and some where we will be cooperating.
    Mr. Faleomavaega. You had indicated earlier--I am sorry. We 
are also joined by another valued member of our subcommittee, 
Congressman Inglis. Did you wish to make an opening statement?
    Mr. Inglis. No, thank you.
    Mr. Faleomavaega. All right, I appreciate your coming.
    I like the way you use the phrase, Professor Nye, about 
integration plus a hedge, given the example that we have in our 
alliance with Japan and then with whatever other joint efforts 
that we make with countries like China. What is the total GDP 
that China now has as compared to the United States and with 
that of Japan? I think we have $15 trillion total GDP or 
something like that, with Japan right behind us.
    Mr. Nye. We should let Arthur Alexander give the definitive 
answer.
    Mr. Alexander. I do have a chart on that.
    Mr. Nye. But there is something worth noticing, before he 
gives the answer, be very wary about whether the numbers you 
see, whether from CIA or elsewhere, are purchasing power parity 
or are at current exchange rates. It makes a huge difference, 
and there is much to be suspected about the purchasing power 
parity comparisons. Any time you can change something 40 
percent with the click of a mouse, as the World Bank did for 
China's GDP 2 years ago measured in purchasing power parity, 
you know you had better look at additional measures.
    Mr. Faleomavaega. I might also raise another question.
    Mr. Alexander. Dispute that, sir.
    Mr. Faleomavaega. Our total defense expenditure now is well 
over $500 billion a year, and I don't know, somehow I keep 
getting this information that Japan is second only to the 
United States in terms of its budgetary allocations for its 
defense structure. Is that correct?
    Mr. Green. It depends on whether or not you count personnel 
costs and things like that.
    Mr. Faleomavaega. If you use the abacus or some other?
    Mr. Green. That is right, whether, yes. It is in the top 
five. But Japanese defense spending has not increased in 5 
years, it has been flat or even slightly decreasing. What you 
see instead as the budget remains flat is, the Japanese 
Government is trying to do more with what they have got, hence 
these anti-piracy operations, a new security agreement with 
Australia and with India, they are making new strategic 
partnerships.
    Mr. Faleomavaega. I am aware of the constitutional 
restrictions, but do you think at some point in time, because 
Japan is a democracy, should it also have offensive 
capabilities as far as its defense military structure is 
concerned? You know, if you want to be a permanent member of 
the Security Council, don't you think that maybe we also need 
Japan's assistance militarily, peacekeeping forces and other 
things being in the front line? I mean, it is very easy to 
build bridges and all that, but when your lives are on the 
line, then you really know if you are really giving assistance 
in that respect.
    Mr. Green. In the 1980s, during the Reagan administration, 
as the Soviets were building up their military power in the Far 
East, the United States and Japan made one of the first really 
important integrating and tightening exercises in our alliance. 
And we agreed that Japan would be the shield and the United 
States would be the spear. And that division of roles and 
missions has essentially held ever since.
    But you are seeing even this week debates in the diet in 
Japan about whether, maybe because of North Korea and China, 
Japan ought to have some counterstrike capability, whether it 
is missiles or jet fighters. I think we are going to see more 
of that, and as we look at managing alliance, we are going to 
have to decide on our side how we adjust our roles and missions 
as Japan takes a look at a dangerous neighborhood and thinks 
about perhaps having a slightly fuller kit of capabilities.
    Mr. Nye. I agree with Mike on that, but I also apologize to 
Arthur for having interrupted him. So he should get a chance to 
answer your prior question.
    Mr. Faleomavaega. There was also a perception, and as I 
recall there was a tremendous debate in the Philippines about 
whether we should continue to have our Navy in Subic Bay and 
also forces at Clark Air Force Base. And as I recall, this was 
one of the big debates in the Senate in the Philippines saying, 
hey, we don't want you here because your presence is really not 
to defend the Philippines but to defend Japan. Professor Nye, 
can you correct me on that if that sentiment was true?
    Mr. Nye. Well, again I will defer to my colleagues, but I 
think there is a particular relationship between the United 
States and the Philippines going back to colonial times which 
raised nationalist issues about American presence. And I think 
it became then a football within domestic Philippine politics. 
Fortunately, that is not the case with Japan. With Japan, while 
there are some complaints here and there about host nation 
support and their problems in Okinawa about who bears the 
burden of the noise and the congestion and so forth, by and 
large American troop presence is welcomed in Japan. So I think 
the analogy with the Philippines is quite different.
    Mr. Faleomavaega. There is also a perception that if there 
is a war, which is something that we are all trying to prevent 
here, let us say North Korea, and it is believed in some 
circles that if there is ever an attack, North Korea's initial 
attack will be toward Japan and not toward the United States. 
Is there any relevance or truth in that belief?
    Mr. Green. The North Koreans have somewhere around 200 
NoDong missiles which have the range to hit Japan.
    Mr. Faleomavaega. But they don't have the capability to put 
a nuclear weapon on that missile?
    Mr. Green. Probably not yet. And then----
    Mr. Rohrabacher. Yet being the operative word.
    Mr. Green. Yes, exactly. And then they have roughly 11,000 
missiles and artillery tubes aimed at South Korea. So it is a 
bad news story for Japan and South Korea, and of course for us 
because we have so many troops and civilian personnel in both 
countries.
    Mr. Faleomavaega. Professor Calder?
    Mr. Calder. If I might just add, one question on the 
Philippine analogy that you asked about.
    Mr. Faleomavaega. Well, it was not an analogy. This is what 
I understand was debated among the Senators.
    Mr. Calder. Yes. I would agree largely with what Professor 
Nye said. Historically if we look across the world, however, 
when there are regime changes, when there are major political 
shifts in a country where we have bases, there are major issues 
that arise subsequent to that. Sometimes those nations support 
it, sometimes it is Status of Forces Agreements, it could be 
base rentals. In the Philippine case of course it escalated 
into things that were larger in many ways, and ultimately of 
course toward our leaving. But I think one does have to at 
least realize that one has to think about those questions and 
be prepared for the political side as, if there are political 
shifts, some shifts in base relationships.
    Mr. Faleomavaega. So would you say, gentlemen, that there 
is consensus among our good friends here that we maintain the 
umbrella that we currently have with Japan strategically and 
militarily, and give absolute assurance that we will use 
nuclear weapons if necessary to defend Japan. We can all talk 
about hypotheticals, but maybe we shouldn't get into the 
hypotheticals, and instead be realistic.
    Mr. Nye. Well, that is our stated policy, and I believe it.
    Mr. Faleomavaega. Yes.
    Mr. Green. I may be an outlier, I would agree, yes 
maintain, but I think we may need to look at ways to enhance, 
this is a time in my view when we should be spending more on 
missile defense, not less. And I think we are going to have 
discussions in Tokyo about whether we need to rethink some of 
our nuclear doctrine. There are some quite responsible people 
in Japan asking whether Japan should now consider something 
like what we did in the 1980s in Europe when the Soviets 
deployed SS-20s and we put in our own capabilities. I am not 
sure that is the right answer in the case of Japan, but there 
are more and more questions in Japan about maybe how our force 
posture or force structure and doctrine look given the fact 
that the threat from their perspective, and they are right, is 
increasing.
    Mr. Faleomavaega. And I suppose in the minds of the 
Japanese people and their leaders, I guess as Professor Nye had 
alluded to earlier, can the U.S. be trusted when the chips are 
down? I think that is the bottom line question.
    Mr. Calder. Yes, I think that is right. But it is an 
interactive process. Here once again we come back to the 
importance of treating this alliance seriously, understanding 
what is happening on the ground in Japan, and responding to it. 
It isn't just something that happens automatically in terms of 
their political process.
    Mr. Faleomavaega. Professor Alexander, did you?
    Mr. Alexander. We could go back and answer the question on 
your----
    Mr. Faleomavaega. Yes, the GDP. Total U.S. GDP, I think it 
is $15 trillion, but I may be wrong.
    Mr. Alexander. Comparing GDPs across nations as Professor 
Nye says, there are a lot of problems because we measure things 
in different ways, yen, dollars, euros. The appropriate way to 
do it when you can get the numbers is through purchasing power 
parity, because that really tells you how much stuff you are 
producing, the volume of stuff. We price things out in each 
country's currencies and make these comparisons.
    The problem that Professor Nye alluded to with China is 
that we had very old prices that were something like 15 years 
old, and it took the World Bank and others several years to put 
together in a massive effort a new set of prices. As he said, 
overnight all of a sudden the Chinese economy looked a lot 
smaller. Yet that is the correct way to do it. It turns out 
that China became larger than Japan around 2000. And I say 
around because the numbers don't allow us to really be finer 
than that.
    So Japan today is roughly, depending on whose base you use, 
a third smaller than China, or China is 50 percent bigger than 
Japan. India is coming up fast, but is still 30 percent smaller 
than Japan. As we look to the future, Japan is number three in 
terms of output. China is growing fast, as has been alluded to. 
India is coming up fast. So Japan will be number three or 
number four for as long as we can look out into the future. I 
don't foresee a collapse of China as happened to the USSR.
    India is coming up fast and could overtake Japan in say 5 
years. But still Japan is going to be big, it is going to be 
rich, it is going to be powerful. When I look at Japan I think 
of Switzerland. Switzerland is a country with a very low growth 
rate, but it is rich. If you go to Switzerland you don't get a 
sense of a collapsing country, of poverty. You can't afford 
most of the things. And Japan is like Switzerland but many 
times bigger than Switzerland--a rich, stable, slow growing 
country.
    Mr. Rohrabacher. Mr. Chairman, let us note with those 
figures was we are trying to cope what this means Japan, and 
this is what I learned as a young boy when I lived there as two 
of our panelists lived there as well, is Japan in terms of 
natural resources is a very poor country. And the very basic 
natural resource, which is the amount of territory and land 
available to the people is limited, which should cause us to 
reflect on how countries do succeed, how a country can become a 
rich country.
    When I lived there, the Japanese people lived in rubble, 
and from the aftermath of World War II, my father did fight in 
the Second World War, and let me just note that during my 
lifetime my father would always come to me until the time he 
passed away and say, you know the Japanese people are the 
people you can trust to keep their word. And he became a 
businessman after he left the Marines, and said, when you shake 
hands with a Japanese businessman, you can count on it, and he 
is not going to try to find little loop holes to get around the 
agreement that he has made, which as a lot of other people in 
that region try to do.
    I think that integrity level among the Japanese and their 
again striving for excellence and striving for perfection, 
these elements in their culture has permitted them to succeed 
with very strong limitations where they don't have energy and 
they don't have land and they don't have the natural resources 
that you think of as some other countries do in that area. So 
we should note that and promote, knowing that if other 
countries are to succeed, perhaps those are the types of things 
in the future, rather than just giving away resources, foreign 
aid, et cetera, we should be focusing on some of the more basic 
things that permitted countries like Japan to succeed.
    Mr. Faleomavaega. Professor Nye, I know you have an 
airplane to catch, and we cannot thank you enough for coming 
all the way here to offer us your insights and tremendous help 
to the members.
    Mr. Nye. Thank you, Mr. Chairman, and I am sorry to have to 
leave, but it is an unfair world, while I often wait for 
airlines, they never wait for me. Thank you.
    Mr. Faleomavaega. Thank you again, Professor Nye.
    I am sorry, Professor Alexander. When you mentioned one-
third, from a layman's point of view, can you help us with the 
real numbers in terms of trillions of dollars?
    Mr. Alexander. Yes. What is real?
    Mr. Faleomavaega. Well, with some symbolism I think.
    Mr. Alexander. I am looking at World Bank figures that I 
have here for 2007. The U.S. has something like----
    Mr. Faleomavaega. $19 trillion?
    Mr. Alexander. More like $15 trillion.
    Mr. Faleomavaega. $15 trillion.
    Mr. Alexander. According to these World Bank records, this 
is 2007.
    Mr. Faleomavaega. Okay.
    Mr. Alexander. China is less than half that, a little over 
6.
    Mr. Faleomavaega. $6 trillion.
    Mr. Alexander. So we are talking about the Chinese economy, 
even growing at the rate it is, say 10 percent a year and the 
United States growing say 3 percent a year, it is going to take 
10 to 11 years for China to catch up if China continues that 
kind of growth rate. But, there is nothing that assures us that 
it will. It is still undeveloped. It is still on the average a 
poor country, although if you go to Shanghai it might not look 
that way, but it is a poor country but growing very rapidly. It 
has to keep together its political, its economic institutions, 
it has to live with increasing pollution as has been mentioned, 
that will have a negative effect over the long run. So it is 
hard to say when China might catch up in absolute scale with 
the United States.
    Mr. Faleomavaega. I want to add on to what my good friend 
from California said earlier. I think, with a sense of 
amazement, how a people with no resources, a population 
somewhere between 100-125 million, from rubble, developed a 
democracy and to the extent now it is the second most powerful 
economy in the world. And I think that really speaks well for 
the industry and the creativity of the Japanese people and how 
they are able to come this far or this high in terms of their 
industry. And I think I could not agree with my friend from 
California more in saying this.
    Mr. Alexander. You have emphasized what Congressman 
Rohrabacher said on this: From that rubble in the Second World 
War, the thing that survived was what economists like to call 
the human capital, the capabilities, the knowledge, the 
technical abilities, the education, the skills and management 
abilities that they had before and during the war; there was 
vast physical destruction but the human capital survived, and 
the habits and the institutions and the way they did things.
    So with American help and with even more of their own 
contributions, they started investment going, rebuilding going, 
they could build on that basis that was not destroyed--the 
human element and the human capital and the enormous sacrifice 
and effort that they put into it. And it wasn't really much of 
a surprise to economists when things then slowed down in the 
1970s. They caught up with their potential. There was that 
miracle, and it truly was a miracle, but when they caught up 
with that potential, with the physical infrastructure, the 
investment, the human capital, and they all started growing 
together, we got the deceleration of growth down to this long 
range trend of rich countries of about 2 percent a year.
    Mr. Faleomavaega. My apologies, I am sorry. I didn't mean 
not to give my good friend time for his line of questions. Mr. 
Inglis, you are welcome.
    Mr. Inglis. Thank you, Mr. Chairman. Actually, this ties in 
exactly with what I, it may sound like an opening statement now 
but it is really in the form of a question is that, what we 
have just been talking about I think illustrates a wonderful 
opportunity for the United States to participate with Japan in 
the reinvention of energy sources. Because Japan is a country 
with so little resources but yet has the human capacity to 
innovate.
    This is our great strength too, so it seems to me there is 
a tremendous opportunity for us to collaborate and to figure 
out a way to break this addiction to oil. Because what I see is 
a collision course that we are on with China, we and Japan, 
really the whole world is on a collision course if we are going 
to continue to be dependent on oil. And so what a fabulous 
opportunity for us to figure out that, we have got a lot more 
resources than Japan does, and there is this false hope that 
many have that we can drill in our dirt and solve our problem.
    Well, we won't do it with OPEC having 70 percent of the 
world's known oil reserves and us having 3 percent of the 
world's known oil reserves, we really need to drill here in our 
heads rather than in our dirt. Sure, we have got to drill in 
the dirt in short term, but it is really not a very bright 
thing to do. It doesn't take much to do it, you just stick a 
pipe in the ground in the Middle East and up comes a bubbling 
crude, and the people stay generally under oppression because 
it enriches somebody at the top and everybody else stays sort 
of poor and not very educated.
    So Japan has a completely different strategy, and it is one 
that I think that we should be pursuing, and what a fabulous 
opportunity. So here is the question finally. You know, we are 
talking cap and trade and it is very interesting that we are 
here in the Subcommittee on Asia, Pacific, and Global 
Environment, it is very appropriate I suppose to ask this 
question here. Cap and trade, I am going to predict for you, is 
in some trouble in the Senate, and may get through the House 
but it won't get through the Senate.
    If that happens, then what about a replacement? And the 
replacement that I would love to get your comments on is this 
thought of something that really can bring left and right 
together, reduce payroll taxes, in an equal amount impose a tax 
on carbon dioxide. It is a revenue neutral tax swap. And then 
apply, this is a crucial thing for us and Japan vis-a-vis 
China, apply the mixture to imported goods as well as 
domestically produced goods. It is a border adjustment that we 
are working to make WTO compliant.
    That would make it so that then, China sort of needs to 
join us at that point, needs to join countries like Japan and 
the United States, it might be interested in taking this action 
because it doesn't behoove them to have a downstream 
application of a carbon dioxide tax when they could enjoy the 
administrative efficiency of an upstream application. So, 
anybody want to comment on that kind of concept?
    Mr. Faleomavaega. Gentlemen, I just want to add one thing 
to what my good friend is saying. We are currently having to 
import over $700 billion worth of oil every year from foreign 
countries, so I appreciate the gentleman's question.
    Mr. Alexander. Professor Nye did comment on this, and 
Professor Calder is one of the world experts on this question. 
I will make a few very brief points. First, economists love the 
idea of a carbon tax or carbon dioxide tax, and then giving 
people back the money in payroll taxes. So you increase the 
price of one thing but give the people back the money to spend 
and it does everything economists would like to do.
    Japan itself is one of the most energy efficient advanced 
countries. It uses less energy per unit of GDP than any other 
rich country, it has tremendous technology. Now the United 
States has the science. Japanese science is not really up to 
the mark in terms of what it needs for the future. American 
science and basic research is at the forefront. So with this 
combination of Japanese technology and experience, something 
like a carbon tax which would give the incentive to really look 
for those technologies and look for those means, I think is a 
good combination. I am certainly not a politician to say how 
that is going to----
    Mr. Inglis. And by the way, before we hear from Dr. Calder, 
in fairness to the people who are advancing cap and trade, they 
would say it attaches a price to carbon and I would agree with 
that. It is just that it doesn't do it in as elegant a way and 
as transparent a way as what we are talking about. Besides, the 
bill that I am talking about, it is Inglis, Flake, Lapinsky 
Bill, is 15 pages long. As compared to I think Waxman Markey 
now is over 1,000 pages. So you can do ours in 15 pages. Dr. 
Calder?
    Mr. Calder. I think this is a very interesting idea. I am 
not familiar with the details of your proposal, so I am 
hesitant to respond to it categorically, but the notion of 
forcing China toward greater energy efficiency through some 
kind of a competitive process it seems to me is a positive one. 
It could actually help to catalyze some of the cooperation, 
this trilateral cooperation that Professor Nye was talking 
about.
    If I might also just add on resources, as you have 
mentioned and the chairman and Congressman Rohrabacher, the 
lack of resources and the differences in the energy 
circumstances of the United States-Japan relationship is going 
to be extremely important. It is something that the Japanese 
are deeply concerned about. Of course they have been very 
effective in improving efficiency, they have pursued safe 
applications of nuclear power, of course we haven't solved the 
storage problems and so on.
    But broadening the relationship to include more 
consideration of energy along the lines we have discussed, you 
know, all of it, alternative dimensions to oil, to me it is one 
of the most important potential ways of strengthening the 
alliance and also speaks to some of the security concerns that 
are arising in northeast Asia as well. I think it is definitely 
a win-win area and we need to think much more seriously about 
specific proposals.
    Mr. Inglis. Yes.
    Mr. Green. As you probably know, Congressman, the Japanese 
Government has committed to Kyoto, to cap and trade, they just 
announced very ambitious targets, and they have introduced an 
experimental emission trading scheme that, since there is no 
cap is kind of a game, but just to see how they would trade 
emission credits. I have actually talked to a number of 
Japanese CEOs and executives, it is a project I am working on 
and I have been interested in their views, privately they all 
would prefer a green tax.
    And the reason they say, it is because they don't want in 
their case the Japanese bureaucrats meddling or the diet or 
others getting involved. I mean the 15 pages versus 1,000 pages 
would really resonate with a lot of Japanese company 
executives. But it is not where the government is, the 
government is moving ahead with cap and trade scheme. I would 
also, I think we need to look more seriously at what we can do 
with Japan on this.
    Japan I think it actually is the most energy efficient 
country in the OECD by quite a significant margin, and I have 
been watching the new Energy Department leadership and others 
talk about what they want to do in Asia, and they have very 
ambitious and impressive plans for cooperation with China and 
dialogue. I have yet to hear anything of any significance from 
the White House or State or DOE on what they want to do with 
Japan, which has all of these enormous capabilities that would 
really help us help China work through their problems. So I am 
glad you asked the question because, I don't mean this as a 
criticism, the action is with China in many ways, but people 
are forgetting how much Japan has to offer in cooperation with 
us to get that done.
    Mr. Inglis. And, Mr. Chairman, if I could just extend a 
little bit longer just to say this, that another challenge of 
cap and trade is the uncertainty of the price of the credits. 
And so I would think that a reason that some of those CEOs may 
be more interested in a clear and transparent tax is then you 
can see the line of taxation, you can see what rate it is going 
to be, and you can predict the point at which your new 
technology can defeat the incumbent technology. As it is with 
cap and trade, the price of the credits will fluctuate, so when 
do you bring the plug-in hybrid to market? Well, it is a big 
question.
    But if you have a revenue neutral tax swap and you can see 
the trajectory of that tax line which we propose to start at 
$15 a ton and end over 30 years at $100 a ton, then you know 
the point at which you can compete. And it gives certainty to 
the marketplace. And I think that is an advantage that business 
types see and frankly I think that a lot in the political world 
have sort of fallen in love with the concept of the girl rather 
than the girl when it comes to cap and trade. They really want 
a girlfriend, they want to believe in this concept of 
girlfriend, but if they really take a look at her.
    Mr. Faleomavaega. It depends if the girl is good looking.
    Mr. Inglis. I think what they can look at there, is that 
when they see cap and trade with all of her warts, they are 
going to say, Gee she isn't quite as beautiful as we thought 
she was. But we will see as this process goes on. I hope though 
that we can work in a cooperative way with our partners like 
Japan to produce something that is very clear, very workable, 
that doesn't punish trade, but rather applies it equally to 
imported and domestically produced goods and that works here in 
the United States on both the left and the right.
    The two people that are very big on this concept that I am 
talking about here are Art Laffer, Ronald Reagan's economics 
adviser, and Al Gore. And so that is a broad spectrum. They may 
actually have gotten together in Nashville where they both live 
and talked about this concept, and it is pretty exciting when 
you can get people that divergent together in saying, gee we 
can work together on this. So thank you, Mr. Chairman, for the 
opportunity.
    Mr. Faleomavaega. No problem. I guess on the issue of 
climate change and global warming and with implications on 
energy resources, the major issue that is now being debated and 
discussed even in the Congress at this point in time, I guess 
it will come down really to three countries that will have to 
take the lead on this whole question of what my friend was 
saying--India, China and the United States.
    With Japan, I would say we should follow the lead that 
Japan has taken with its initiatives in addressing some of 
these environmental problems coming out as a result of what we 
are faced with, as my friend from Illinois would say, man-made 
pollution.
    One other issue that I wanted to share with you gentlemen 
concerns nuclear waste. For years this exchange has been going 
on between France and Japan, and most recently there was a 
shipment of MOX, a kind of a nuclear oxide. It is very, very 
lethal, and a shipment was sent from France going around the 
Cape of Good Hope in Africa through the Indian Ocean through 
southeast Asia all the way up to Japan. The amount of this MOX 
was sufficient to build 200 nuclear weapons. It is the biggest 
shipment ever. Do you think that Japan and France should 
continue to make these kinds of shipments?
    If something happens, let us say due to pirates or some 
accident, realizing people say, ``Well these things don't 
happen.'' Well we said the same thing about the Valdez in 
Alaska regarding the oil spill there. I am very concerned. We 
can't even figure out how we are going to get rid of our 
nuclear waste. Of course Yucca Mountain in Nevada was the 
chosen state.
    And to this day not one ounce of nuclear waste has been 
shipped to Nevada, because here is the question--whose states, 
whose towns, whose cities are going to be traveled through 
whether by truck, by train, by airplane or whatever, that will 
eventually end up in Nevada? Nevada doesn't want it. And it 
seems to me if you are going to produce electricity as a result 
of using nuclear energy, don't you think that a given country 
or state should store its own nuclear waste? Well, do you think 
it is right that Japan and France continue to do this? Dr. 
Calder?
    Mr. Calder. Just very briefly, the one thing I could add on 
that point is of course domestic reprocessing is one way to 
reduce this. I agree with you that it is dangerous and should 
be reduced or eliminated. Over time, I think the Japanese plans 
certainly are to stop this kind of transfer, but then to do a 
domestic reprocessing within Japan itself.
    Mr. Faleomavaega. Dr. Green?
    Mr. Green. For the reasons that Kent just said, I think it 
is appropriate Japan and France are doing this because the aim 
is to create a cycle that would be sustainable and reduce 
dependence on fossil fuels and other things. And the security 
is good. I would add one footnote though, since you raised it, 
and this is getting in the weeds, I apologize, but there is a 
new organization being formed by the Nuclear Threat Initiative 
called WINDS, which is I think the World Institute for Nuclear 
Security.
    Mr. Faleomavaega. By Senator Sam Nunn?
    Mr. Green. That group. And they are very keen to have Japan 
be a core member. And the purpose of this group is to have 
government and business come together and improve security for 
nuclear power plants for these kinds of shipments. Japan hasn't 
joined yet, and they should. And it is not for any substantive 
reasons, it is just bureaucratic wrangling in Tokyo. So there 
are things, for the concerns you raised, Congressman, there are 
reasons why Japan really needs to step up and show it is taking 
security of nuclear fuel and facilities more seriously. It is 
good, but it is probably not good enough in the age we live in.
    Mr. Faleomavaega. Dr. Calder?
    Mr. Calder. If I might add just one point, I think the 
issues that we are talking about here show exactly why a United 
States-Japan bilateral energy dialogue, we have had these as 
Mike said with China, with Korea, with all sorts of other 
countries, we don't have a bilateral energy dialogue with 
Japan. In some form or other, it does seem to me that that is 
important, because often our views can help to provide the kind 
of important input into Japanese decision making on exactly the 
kind of issues he is talking about.
    Mr. Faleomavaega. I don't know if this question was 
answered, but for the record I am going to restate it since 
maybe I didn't state the question properly. We all know that 
under Japan's constitution the whole framework of its defense 
structure is strictly to defend the country, not to take 
offensive means to attack another country. We all understand 
that. But given the realities of the world that we now live in, 
do you think that it is time that Japan needs to change that, 
that its military should take a more offensive posture in terms 
of being an active participant like other countries that 
conduct peacekeeping operations under the auspices of the 
United Nations?
    If you really want to be a real participant, you have got 
to be willing to spill your blood too in the process. Anybody 
can print money, but to bring somebody back after being killed, 
it is nothing like that. We all know the realities of that. But 
Japan is a democracy, Japan has all the military capabilities 
like any other, with an economy second only to the United 
States. Should Japan's military be more offensive in its 
operations in concert with whatever alliance agreements or 
whatever operations with the United States or even with United 
Nations peacekeeping forces, whether it be in the Middle East 
or other troubled areas of the world?
    Mr. Green. I recently had the privilege of speaking to the 
Japanese National Defense Academy, and these young men and 
women were eager to demonstrate that Japan could carry its full 
burden in international society, and I think you find among 
diet members, almost regardless of party, that diet members in 
their 30's and 40's and 50's feel strongly the same way. So I 
think the trend, perhaps incrementally, but the trend is going 
to be toward Japan doing more. For example this new law that 
passed on anti-piracy, which is really quite significant in 
many ways because it allows the use of force to save other 
ships, not just Japanese ships.
    So there is movement in that direction. I think there 
should be more movement. I think that it is unfortunate that 
Japan has only several dozen peacekeepers abroad right now 
doing U.N. peacekeeping operations when China has thousands. 
Whether or how those constraints are lifted and Japan plays 
that larger role really is up to the Japanese people. It is a 
democracy, and I am personally quite confident that as these 
issues of the constitution or collective defense are addressed, 
it will be transparent and it will be for the right reasons. 
And it is not really for us in many ways to say. The question 
of offensive capabilities is a little bit different.
    And for our entire alliance the United States has had the 
responsibility for taking the fight to the enemy if there is a 
threat to Japan. As I said earlier, there are debates in Japan 
about whether Japan ought to have a little bit of that 
capability themselves. If there is an operational reason, if it 
strengthens defense, deterrents, dissuasion, makes Asia more 
stable, in my view we ought to consider it, we ought to talk 
about how we do that in the alliance. If it is just for the 
sake of having offensive capabilities, perhaps it doesn't make 
as much sense. But I do think that is going to be an area where 
this administration and subsequent ones are going to have to 
talk to our Japanese allies about how we define our roles and 
missions.
    Mr. Faleomavaega. Dr. Calder?
    Mr. Calder. I think there are two additional points that 
have to be made. First of all, the issue of interoperability 
and cooperation with the United States. I think those are both 
quite fundamental. For us the most important change I would say 
is some change in the understanding of collective self defense, 
so that Japan could cooperate more flexibly with our forces. 
Interoperability is another element.
    The second point, I think Japanese transformation of their 
defense capabilities, it is for the Japanese people to decide, 
but they are divided internally, and particularly given the 
tangents in the region and history, there is a possibility that 
Japan could go further than would be stable for the region as a 
whole I think. And so from that perspective, some appreciation, 
not any direct intervention on our part, but respect for the 
other tradition in Japan, of namely the sufferings that 
Japanese people went through in relationship to the war and so 
on, I think somewhere in a nuanced way, that also has to be a 
piece of our approach since these issues are going to be quite 
debated domestically in Japan.
    Mr. Alexander. Just one quick issue here. I was doing some 
research on the use of civilian technology in Japan for defense 
purposes and wanted to talk to companies like Sharp about LCD 
displays; they wouldn't talk to me because I wanted to talk 
about potential military uses. The company at first flatly 
refused to speak to me. After a lot of cajoling and discussion, 
they finally did it, but at a restaurant. Finally it looked as 
though I was okay, and we had meetings at their corporate 
headquarters.
    But it was an indicator to me, it was not only Sharp but 
Sony, other companies as well, about how strong some of these 
ideas written into the constitution are among the Japanese 
public. And I was actually quite surprised that as much as we 
know has gone on in the developments in the political military 
sphere, still among the people and among corporate leaders, 
these feelings of the pacifist constitution are still very 
powerful.
    Mr. Faleomavaega. Dr. Calder, you had indicated earlier in 
your statement that you say that Japan is changing, is not 
static. I consider the changes going on with the two major 
parties and the ups and downs no different from our own 
political system. But there seems to be concern in some circles 
saying that Japan is going down the drain because its politics 
have become so bad. And I don't know, after going through with 
our own sense of politicking the last 20 years, I certainly 
wouldn't say this is a point of admiration in our own political 
system as the pendulum swung from one end to the other. Can you 
elaborate a little? I would like to think of it more 
positively: The up and coming Democratic Party versus the 
Liberal Democratic Party, I think is great.
    Mr. Calder. Well, you present an extremely important 
question. On the face of it, it does seem to me there is no big 
difference between the ups and downs that we have and possibly 
two-party competitive politics, which in the longer run I think 
Japan is headed for. But the important contrast, and I think 
the key point, is that this pattern would be sharply different 
from the past 50 years of Japanese politics, which has 
fundamentally been one-party dominance, preeminent role for the 
bureaucracy, not a great deal of debate on security issues.
    But particularly in the context of a security system, which 
is somewhat unusual in comparative perspective. We have the 
peace constitution; we have all kinds of constraints on 
deployment of forces, and so on. So that the shift is not in a 
sense totally parallel to what would be the case here because 
there is a different embedded history. I think what that means, 
the bottom line, and fortunately the Japanese people I think 
are becoming more and more sophisticated and sensitive on 
security issues, is again, it is a very interactive American 
diplomacy with Japan including and on-the-ground element, the 
embassy, the consulates, the American centers I think are going 
to be much more important in the future.
    Because security with two parties and the kind of debates, 
you know, that more transparent than we have here, is probably 
what will begin to emerge more in Japan. And presenting the 
American point of view not only to bureaucrats or not just 
dealing with things behind doors, you know, between the 
ministries or at the White House level, but also dealing with 
the public side of this, I think that is really the big change 
that is going to occur. That is why the focus of a lot of my 
testimony has to do with public diplomacy and the way that we 
are organized and what we do on the ground in Japan.
    Mr. Faleomavaega. Whose phone is that? Turn off your cell 
phone please. Somebody's cell phone is on.
    Nine thousand9,000 deg. Marines are going to leave 
Okinawa with about a $15 billion price tag on it in terms of 
transferring the Marines to Guam with some 20,000 dependents. 
We have Members of Congress who say, enough is enough, why 
should we continue having military forces in other countries? 
Why don't we just bring our soldiers back home whether it be in 
Europe or the 50,000 in Japan? Why should we continue having 
50,000 soldiers in Japan? Do we need our soldiers there? Japan 
is capable of defending itself, are they not?
    Mr. Green. Of course, Members of Congress, the American 
public have been asking those questions since 1945, whether we 
have to have so many troops abroad, and the numbers have come 
down considerably over the past 60 or 70 years. The answer in 
the region is, absolutely they have to be there. We recently 
did a survey at our institute of strategic elites in nine Asian 
countries, and they in spite of economic integration, in spite 
of increasing summits and cooperative efforts, they 
fundamentally do not trust security in the region absent the 
American presence. And that goes for Japan, Korea, Australia.
    Mr. Faleomavaega. And why is that?
    Mr. Green. Well, part of it is we are, as Secretary 
Madeline Albright once said, the indispensable power. We are 
the onus broker. Relations among Asian states are complex; in 
most cases they have better relations with us than they do with 
their neighbors, so that is part of it. Part of it is because 
they are focused on economic growth. Success for a leader in 
China, Korea, Thailand, anywhere except basically Burma and 
North Korea, depends on providing growth and opportunities for 
their people.
    And they can't do that if they have to start looking over 
their shoulders and worrying about a possible war with their 
neighbors. So they want to keep focused on economic growth 
which is good for everyone. And then of course you have all 
these big, big questions. What is China going to do with its 
increasing power? What is North Korea going to do with its 
nuclear weapons?
    So for a pretty small investment at the end of the day, we 
buy ourselves stability in the region, access for economic 
relations, good will frankly in spite of some of the issues 
around local bases. And we manage the changing power dynamics 
in a way that means we can, you know, live up to Joe Nye's 
strategy of integrating China and not having to worry as much 
about the hedging piece of the equation.
    Mr. Faleomavaega. Professor Calder?
    Mr. Calder. I agree with that very much. I do think our 
foreign deployment is important and its role goes far beyond 
the military. One could add as well the humanitarian side of 
this. For example the tsunami in 2005, the United States was 
the only, by far the first nation and the main nation that 
responded to that tragedy across the Indian Ocean because of 
its global presence. So it is a diplomatic role, it is 
military, of course in an age of terrorism we can't forget that 
aspect of it. But it goes really far beyond that. That said, 
having just done a book in that area, I do think that it is 
politically contingent. We have to be sensitive to the local 
politics in the key countries, and that includes Japan, in 
thinking about the stability of our basing network.
    Mr. Green. I should add briefly if I could, the one other 
reason it is a good deal for us, frankly, is because our 
Japanese and Korean allies pay billions and billions of dollars 
a year, and if you did the math it would be a lot more 
expensive for us to actually station them at home. That is how 
much they value our presence, and Kent is right, there are 
challenges at the local level with bases, but there is no 
ground swell in Japan or Korea for us to go home. I think there 
is a pretty broad consensus at a national level that our 
presence is critical for their national interest as well.
    Mr. Faleomavaega. And if our presence really has the right 
decision or the right reasons for it, we paid a dear price in 
Vietnam. For 10 years we couldn't even figure out what our 
foreign policy should have been, at the cost of almost 60,000 
lives of our men and women in uniform. That was not a very 
pleasant experience for me as a veteran who served in Vietnam. 
And it seems that we didn't learn our lesson from Vietnam, and 
look what we have done in Iraq.
    We have expended over $900 billion supposedly to go after 
Saddam Hussein who never attacked us in 9/11. So we have got 
some real serious problems here--and I say at least in our 
relationship with Japan overall from your testimonies, 
gentlemen, the relationship is sound. I deeply appreciate your 
coming and sharing with us and with the American public. I 
don't know how far this television broadcast is going, but I 
hope we have given better insight, better understanding, and 
helped better relations between our two countries. And with 
that, gentlemen, thank you again for coming. The hearing is 
adjourned.
    [Whereupon, at 12:21 p.m., the subcommittee was adjourned.]
                                     

                                     

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