nytimes.com
September 21, 1998
Japan Sees Itself as Scapegoat of Washington in Asia Crisis
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By NICHOLAS D. KRISTOF
OKYO -- Japan is often seen these days as an insouciant bumbler, fiddling while much of the world's economy burns. But government officials here, grimly plodding the corridors of power, see things rather differently.
As Prime Minister Keizo Obuchi prepares for a summit meeting with President Clinton on Tuesday in Tarrytown, N.Y., some officials here are irritated at what they perceive as American arrogance and its scapegoating of Japan. They say that Japan tried several times to grapple with the Asian economic crisis in the early stages, but each time the United States slapped Japan down.
When the crisis was in its infancy a year ago, for example, Japan proposed setting up a $100 billion fund to help Southeast Asian countries pull through. The United States swiftly killed the idea, sending a humiliated Japan slinking back to its corner.
Now many economists think that Japan's idea should have been tried, and even the United States sounds humble on that point.
"I think we've all learned a lot of lessons over the last year or so," said Stuart Eizenstat, under secretary of state for economic affairs. "Perhaps with 20-20 hindsight, this was an idea that might have gotten more attention."
Japan was the first major country to pay attention to the crisis unfolding in Thailand in the summer of 1997, and then-Prime Minister Ryutaro Hashimoto tried to get world leaders to discuss the economic instability in Asia at the Denver summit meeting, two weeks before the crisis exploded into the public eye. But no other leader wanted to discuss what then seemed like an obscure topic.
Then just this month, Obuchi proposed that leaders of the industrialized countries meet to consult on the Russian crisis and global economic risks. Washington killed that idea, too. But a few days ago, as the crisis became more serious, Clinton summoned finance ministers and central bankers from the same countries to discuss the problems.
Japanese officials are not exactly gnashing their teeth, nor do they want to be hailed as visionaries who saw the crisis coming and tried to galvanize international action. But they do bridle at the suggestion that they are part of the problem rather than the solution, and that Japan is the culprit in the Asian crisis.
"That is a wrong perception," complained Kaoru Yosano, the minister for international trade and industry. "Sure, Japan has lots of political problems. But Japan has contributed more than any country in the world to the Asian countries hit by the crisis since Thailand, and we intend to continue those contributions."
Yosano noted that Japan has contributed $43 billion to rescue packages in Asia, compared to $12 billion from the United States and $7 billion from Europe.
"Japan is not paralyzed," he added. "It would be an interesting yarn if it were true, but it's not."
When asked if he was annoyed at repeated American statements urging Japan to do more to address the crisis, Yosano allowed a smile to flit across his face.
"We're used to it, so we're not frustrated by it," he said. "It's like a church bell ringing at the same time every day, so that after a while you don't notice it. But of course if you say things too many times, then nobody will listen to you any more. So I think it would be more effective to speak less often."
Not everybody in the Japanese Cabinet is quite so patient. Seiichi Ota, director of the Management and Coordination Agency, complained at a press conference the other day about the impact of international banking standards stipulating the appropriate levels of capital that banks should maintain.
"I wonder if everyone is just accepting this because it is decided by Anglo-Saxons," Ota fretted. "Everyone, including Japan, bows to these rules, because Anglo-Saxons are powerful in the financial world. But being powerful is not the same as being right."
For all their frustration, Japanese officials still go out of their way to try to pacify American demands. Late last week, for example, leaders of the ruling and opposition parties stayed up all night and worked frantically to cobble together a frail agreement on stabilizing the banking system, all so that Obuchi would have the deal in place by the time he met Clinton.
The simmering resentments in Tokyo may grow with the summit meeting, since one of its purposes seems to be to give Clinton a chance to drum into Obuchi the importance of rapid action to revive Japan's economy. Clinton said a few days ago that in terms of resolving the global financial crisis, "the key here is Japan," and he added: "It is difficult to see how any actions of the world community can be successful in restoring growth in Asia in the absence of the restoration of growth in Japan."
Yuji Tsushima, a prominent member of Parliament for the ruling Liberal Democratic Party, warned that if Americans continue to complain about Japan, then there could be a serious backlash.
"If American policy-makers continue to criticize us or push too hard, a sentiment might develop here similar to that in Malaysia," Tsushima said, referring to the strong strain of anti-Western opinion in Malaysia. "That's what we have to avoid."
American officials respond that while they would prefer not to give offense, the world is at an extremely delicate juncture and requires dramatic action from Japan to stimulate its economy.
"The United States feels quite acutely that Japan must bear its share of responsibility for mitigating as much as possible the Asian crisis," said Charlene Barshefsky, the U.S. trade representative, who was in Japan last week. Ms. Barshefsky said that Clinton and Obuchi would speak "in an unusually forthright manner for a first-time meeting."
"We can express perhaps exasperation, but it's up to Japan to take the measures," she added. "The president will certainly make clear that Japan must act."
There has been some disagreement in the administration about how harsh to be with Japan, and the result is an inconsistency in tone. Ms. Barshefsky and Treasury Department officials have been unrelentingly tough, while State Department officials have soothingly offered advice rather than making demands.
Some American officials say that one reason why Washington has often made tough statements is the feeling that pressure to the point of rudeness is the only mechanism that has ever worked in Japan.
"I think it's demonstrably the case that external pressure tends to help more than it hurts," Ms. Barshefsky said.
Early last year, for example, the United States fairly politely urged Japan not to raise its national consumption tax. Japan raised it anyway, and fell into its worst recession in half a century -- threatening the global economy.
Likewise, even after falling into recession, Japan felt much less urgency than other countries. Tokyo delayed action on measures to stimulate the economy and tackle the nation's bad debt problem, and the frustration in Washington grew so acute that some Treasury officials dubbed Japan's finance minister the "minister for the destruction of the world economy."
Such sarcasm is particularly painful for Japanese officials, who try hard to build good relationships with their American counterparts.
"Japanese officials are really interested, almost obsessed, with the reaction of Americans, and so these days they are very resentful because the reaction is bad," said Yasuaki Onuma, a law professor at Tokyo University. But he added that fundamentally the blame should lie with the Japanese officials because, he said, they are invariably disastrous at public relations and thus never get credit even when they manage to do things right.
One reason why Japanese proposals for summit meetings or other global measures have not been taken seriously is that the Japanese government has almost no credibility abroad. It has insisted for so long that its economic problems are under control that the assumption whenever a Japanese prime minister speaks out on global issues is that he is simply trying to divert attention from problems at home.
The distress of Japanese officials at being blamed for the global crisis comes on top of the distress at seeing the once-great Japanese economy steadily lose strength. The Japanese stock market is at a 12-year low, and Japan's banks are now not just the world's biggest but also among the world's shakiest.
A headline last week on a column in the Asahi Shimbun, perhaps Japan's most respected newspaper, grimly described the despair at Japan's economic morass: "The Feeling of Losing a Second War."
In the Japanese public at large, the measure of resentment at perceived American arrogance has been no greater lately than usual. One reason may be that the public is focusing its indignation on its own leaders.
Indeed, Obuchi can make Clinton look comparatively strong politically. A poll last week for the Asahi Shimbun found only 21 percent of the public supported Obuchi's government, and even members of his own party are jockeying to succeed him.
"Right now, most of the public frustration isn't with foreigners," said Charles Horioka, an economist at Osaka University, "but with the Japanese government and its difficulties in getting things done."
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