"Japan's Leadership for the Future of Asia"

June 3, 1999

The Honorable Masahiko Koumura
Minister for Foreign Affairs, Japan

Ladies and gentlemen,

I would like to begin by saying what a heartfelt pleasure it is that the Fifth International Conference on The Future of Asia has been successfully hosted with the participation of distinguished leaders from Asian countries and regions. Asia, which accomplished such great growth as to be deemed a miracle, has over the last two years been at the mercy of a currency crisis. The Asian financial markets, however, are beginning to calm down , and although the real economy continues to face difficulties, we are seeing signs of recovery. Under such circumstances, I believe that now is the time for us to question again the implications of the currency and economic crisis, and to reconsider what action should be taken to ensure peace and prosperity in Asia. In this sense, the International Conference: The Future of Asia is both meaningful and extremely timely. It is a singular honor for me to have been given the opportunity today as the first speaker at the Conference, to address you on an issue of great importance, "Japan's Leadership for the Future of Asia."

In order to build a bright future for Asia in the 21st century, it is firstly of utmost importance that we create an environment of peace and stability. Elements of instability and uncertainty have been present in Asia since the end of the Cold War, and a look back over the year 1998 reveals that there were a number of incidents which had negative impacts on the Asian security environment. The launching of a ballistic missile by North Korea at the end of August last year resulted in crossing Japan's airspace. Not only did this incident have direct influence on Japanese security and was of great concern to Japan, but it was also extremely regrettable from the viewpoint of peace and stability in Northeast Asia and the non-proliferation of weapons of mass destruction. Toward the end of May, a team of technical experts from the United States visited suspected underground nuclear facilities in North Korea, and at present the United States is conducting a technical analysis. It, however, remains an issue of great concern for the international community. Moreover, in May 1998, India and Pakistan conducted nuclear tests successively, followed in April this year by missile tests. There are seen as both a challenge to the international non-proliferation regime and a new factor of instability to the peace and stability of not only the Southwest Asian region, but to the Asian region as a whole.

In order to ensure peace and stability in Asia under such circumstances, it is important that countries that play significant role in ensuring peace and stability within the region strengthen relationships of trust through close dialogue and cooperation. Japan has been strengthening mutual trust with the United States, China, Russia, South Korea and the countries belonging to Association of Southeast Asian Nations (ASEAN) in various frameworks, ranging from Summit level to security and defense dialogue at the working level. In particular, in terms of policy toward North Korea, which is key to peace and stability in Northeast Asia, the Government of Japan, along with South Korea, supports "the comprehensive and integrated approach", which is currently under consideration by Dr. William Perry, North Korea Policy Coordinator for the United States, who recently visited North Korea. Under the basic guidelines of addressing the issue by gauging an appropriate balance between deterrence and dialogue, Japan will continue to persistently urge the North Korean side to open the door to dialogue. Furthermore, Japan advocates that in the future, in addition to trilateral dialogue between Japan, the United States and South Korea, a forum for discussion be established with the participation of Japan, the United States, China, Russia, South Korea and North Korea in order to discuss security issues in Northeast Asia. I also believe that building a new network of dialogue between Japan, China and South Korea, or between Japan, the United States and China to discuss various cooperative relations, and developing the network in addition to the existing frameworks , will also contribute to peace and stability in Asia.

The ASEAN Regional Forum (ARF), which has originated from an initiative by ASEAN, has achieved steady results since its inauguration in 1994, and has established itself as the sole forum for multilateral dialogue and cooperation on politics and security in the Asia-Pacific region. Japan has thought highly of ARF activities, and has proactively participated in them. Japan will continue to maintain its proactive stance toward ARF activities in order to ensure that the Asian economic crisis, which began in the middle of 1997, will not slow down the efforts to promote such confidence-building. The way ARF will address preventive diplomacy is one of the main agenda, particular focus ahead of us, and at the ministerial meeting to be held this June in Singapore, I myself would like to lead discussion so that we can achieve progress on the issues of how ARF will address preventive diplomacy.

As a premise to such efforts, the presence and engagement of the United States in the region are both important and essential. On the occasion of Prime Minister Obuchi's visit to the United States last month, Prime Minister Obuchi and President Clinton reaffirmed that Japan and the United States will continue to cooperate in order to realize peace and prosperity in Asia. The presence of the United States in Asia serves as a deterrent to prevent contingencies from occurring, and at the same time provides measures to resolve such contingencies if they were unfortunately to occur. One of the pillars of such presence and engagement of the United States in the region are the Japan-US Security Arrangements, whose significance is appreciated by many countries in the Asian region. Laws related to the Guidelines for Japan-US Defense Cooperation were recently passed and approved in the Diet, and it is my belief that this will contribute to the peace and prosperity of the Asia-Pacific region by strengthening the credibility of the Japan-US Security Arrangements.

Japan also proactively participates in the efforts made toward stability in Asia by the Group of Eight (G8). The G8 Foreign Ministers Meeting will be held in Cologne next week, at which discussion will take place on issues related to stability in Asia. As is apparent from the examples of North Korea, India and Pakistan, the non-proliferation of weapons of mass destruction is an issue of grave importance to security in Asia. As the only Asian country participating in G8, I intend to reflect Asia's viewpoint and lead the discussion so that a consensus can be reached that will contribute to stability in Asia.

I would now like to take the opportunity to speak about Japan's efforts toward realizing prosperity in Asia.

In the summer of 1997, the Asian economy was severely hit by the currency crisis, and had to face unprecedented difficulties, including negative economic growth. Japan itself has been compelled to implement stricter management of its economy during this recession. However, in order to provide maximum assistance to Asian countries struggling from the economic crisis, Japan has to this point pledged assistance measures for Asia totaling approximately US$80 billion and has implemented approximately US$65 billion, and is doing its best to implement them steadily. The support provided by Japan and other members of the international community in the form of emergent public assistance, together with the reform efforts of Asian countries is now beginning to bear fruit, and the Asian economy is beginning to show signs of recovery. In light of such circumstances, the APEC Symposium on the Asian Economy will be jointly hosted by Japan and Thailand in July, where discussion will be held on the causes of and lessons from the East Asian economic crisis, challenges for economic growth in East Asia and other issues.

I would now like to mention the five points in which I place the utmost importance for our efforts toward prosperity of Asia.

First, the political stability and economic development of Indonesia is vital for prosperity of Asia. The general election which is to take place four days from now, is extremely significant from that point of view. It is essential that the general election on 7 June be implemented freely and fairly in order for Indonesia to recover political stability and the confidence of the international community which are vital to the revitalization of the Indonesian economy . Bearing this in mind, in addition to providing financial contributions of approximately US$31 million, Japan is providing the fullest cooperation toward the smooth implementation of the general election in the form of dispatching election specialists and election observer teams. We hope that an environment can be established in which each Indonesian can join hands and push forward toward building a prosperous state.

Second, I would like to touch upon the importance of building social safety nets in the crisis- affected countries. The Asian economic crisis has had direct impact on the socially vulnerable in Asian countries-the poor, the elderly, women and children and the unemployed-and has come to threaten their very lives and ways of life. Although the Asian economy is showing signs of recovery, the social impact of the economic crisis has been extremely grave, and if we neglect this, substantial recovery and stable growth of the Asian economy will become difficult. The building of social safety nets is important in order to give human elements to globalization, which I will be speaking about later. Japan to this point has made strenuous efforts to extend aid to the socially vulnerable in areas of medical relief, food assistance and rural development, and will continue to actively address this issue in order to create a brighter Asia in the 21st century. I would also like to stress that Japan is active in appealing to countries outside Asia to take note of the social impacts of the Asian economic crisis. At the Japan-US Summit meeting held last month, both Japan and the United States reaffirmed that they will cooperate toward recovering the Asian economy taking into account the necessity of providing assistance to build effective social safety nets in Asian countries.

Third is Japan's cooperation toward ASEAN10, which was realized following Cambodia's accession to ASEAN in April. In the 32 years since its establishment, ASEAN, while maintaining political unity, has successively expanded its membership. ASEAN has, in addition, achieved high economic growth by strengthening intra-regional cooperation in the economic sector and by steadily promoting the liberalization of trade and investment, and has literally functioned as a driving force for the realization of peace and prosperity in Southeast Asia. It is both a great joy for Japan and a promising factor for future of Asia that as we are about to enter the 21st century, we have seen the realization of ASEAN10, a long-held hope since ASEAN's establishment, and that ASEAN has now entered a new era. I pay the utmost respects to the efforts being made by ASEAN to strengthen intra-regional cooperation, such as the acceleration of processes to establish the ASEAN Free Trade Area (AFTA) and the ASEAN Investment Area (AIA), while overcoming the differences in political systems and economic development caused by the expansion of membership. I would like to take this opportunity to state that Japan will continue to work with indomitable resolve toward the further development of ASEAN.

Fourth is the response to globalization. Current trends in the global economy reveal the characteristics of globalizing capital and information movements. While this provides new opportunities for humanity, it also brings to the fore such issues as economic crisis, poverty and unemployment. People can still clearly recall that Asian countries which enjoyed powerful growth, fell into currency crisis with the rapid large-scale movements of capitals. The reconstruction of international financial systems will be dealt with at the upcoming G8 Summit in Cologne in June, and Japan will participate in discussions, placing emphasis on how to address short-term movements of capital, the improvement of financial mechanisms, International Monetary Fund (IMF) reforms and other issues. Furthermore, we must address the issue of globalization not only from a financial aspect, but also from the trade and investment aspect. The further activation of trade and investment is a key to prosperity of Asia. The World Trade Organization (WTO) Ministerial Meeting will be held in Seattle in late November to early December, at which we must set up the next round of negotiations for further strengthening and developing the multilateral free trade system toward the 21st century. It is Japan's belief that the negotiations will be comprehensive, allowing all member states including Asian states to enjoy benefits, and that they should be able to achieve results in the short-term period of approximately three years according to the principle of a "single undertaking". We would like to closely cooperate with Asian countries to this end.

Last but not least, I would like to say a word or two about efforts toward revitalizing the Japanese economy. We recognize that the revitalization of the Japanese economy is vital for the revitalization of the Asian economy, and are, therefore, making the utmost efforts to overcome the current severe economic conditions. Japan has been implementing economic measures including tax reductions worth 44 trillion yen in projects focusing mainly on stimulating demand. The Bank of Japan has been easing its monetary policy and encouraging short term interest rate to move as low as possible. Japan has also have been working to revitalize the financial system by recapitalizing financial institutions with public fund amounting to 7.5 trillion yen. Furthermore, as reinforcement the supply-side of the economy is essential to the revitalization of the Japanese economy, Japan has promoted efforts aimed at strengthening industrial competition, while at the same time been addressing employment measures. Japan intends to continue such efforts and do its best to achieve positive economic growth in FY1999 and revive the economy by the year 2000.

Japan has made and will continue to make efforts by adopting various measures, in the full conviction that it must demonstrate its leadership to realize prosperity in Asia. The high savings rate, diligence, craftsmanship and other factors which have supported the economic growth of Asia have not been lost. I am convinced that the Asian economy will once again start grow powerfully, if the Asian countries can assess the economic crisis as distortion that was created by rapid economic development or adjustment of pace of structural reform including financial sector reform, bounce back from the economic crisis and continue to make reform efforts making full use its potential.

We will need to stand up to a great number of issues and challenges in order to create a brighter Asia in the 21st century. I am convinced that if we can bring together the wisdom of Asian countries, which, while sharing the characteristic of diversity, are bonded by a strong sense of community, we will be able to build a brighter future. I would like to bring my address to a close by stressing my hope that this Fifth International Conference will be a great success, and will set a precedent for intellectual dialogue and exchange at all levels.

Thank you very much.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.