FORUM REPORT: DOES JAPAN MATTER IN CENTRAL ASIA?

By Michael Leung (05/02/2007 issue of the CACI Analyst)

On April 25, 2007, the Central Asia-Caucasus Institute (CACI) and the Sasakawa Peace Foundation co-hosted Akio Kawato, Visiting Professor from Waseda University and former Ambassador of Japan to Uzbekistan and Tajikistan, who discussed “Japan’s Policy toward Central Asia.” Evan Feigenbaum, Deputy Assistant Secretary of State in the Bureau of South and Central Asian Affairs, was present to provide comment, and CACI Chairman Frederick Starr moderated the event.

Dr. Kawato began his presentation by pointing out the importance of Central Asia in understanding the history of other civilizations. Chinese history, ancient Greek history, and Indian history all have linkages with Central Asia. On Japan’s intentions and role in international politics, Kawato stated that Japan had no selfish objectives in Central Asia and was mainly interested in peace and security for the region.

Kawato presented “Central Asia Plus Japan,” the framework by which Japan was looking to pursue its policies in Central Asia. “Central Asia Plus Japan” pursued a regional approach, using ASEAN as a model. Its main goal was independence and stability in the region. Human welfare and human rights was also an objective. The framework followed three principles: respect for the diversity of the five countries, awareness of the competition among the states and the potential for conflict, and emphasis on open cooperation which Kawato did not believe exists in the China-led Shanghai Cooperation Organization (SCO).

Japan’s main tool in Central Asia has been economic assistance, consisting of loans and grants. Loans for construction of infrastructure in Central Asia have so far amounted to US$2 billion. Grants have totaled $600 million, of which $260 million is for technical assistance for capacity building. Japan preferred loans because it motivated the borrower to generate a return on projects for loan repayment.

Japan had been the top donor in several Central Asian countries prior to the recent involvement of the United States. Kawato marveled at the speed and level of U.S. influence in the region, and criticized Japanese policy-making as unnecessarily bureaucratic. Kawato also warned that the recent wave of generous lending by China could adversely affect the long-run capability of the Central Asian countries for loan repayment.

Therefore, Kawato noted, Japan’s economic assistance was becoming less effective. He identified trade, investment, and energy resources as other avenues to promote Japanese relations in Central Asia. Japan’s trade with Central Asia, however, remained small ($620 million annually compared to Japan’s global trade of $1.227 trillion annually). Investment has totaled $900 million to-date in Kazakhstan, mainly in oil fields.

On energy, Japan and its private companies remained limited in their interests – only Kazakhstan had enough oil to export in significant quantities. Also, the transportation distance and lack of transparency remained obstacles for doing business. Uranium remains the greatest possibility. Kazakhstan has the second largest deposit of iron ore in the world and Japan had been proactive in ore import. Uranium import from Central Asia would, however, ultimately require cooperation with Russia in the nuclear field––uranium ore required initial processing and enriching, which are usually performed in Russia. Japan will conclude an agreement for cooperation with Russia by the end of 2007.

Kawato ended his presentation by stating that a “great game” was not needed in Central Asia, and that stability and independence of the region were the most important goals. He cited four mid-term objectives of Japan for the region:

- stability in Afghanistan;

- assurance of the status-quo to eliminate the incentive for a “great game” (i.e. maintenance of present border lines);

- patient assistance for the reform of the socialist societies; and,

- respect for Central Asia’s deep history and culture

In his comments, Evan Feigenbaum declared that many states seemed to be interested in Central Asia and outlined a framework that examines four categories of interest to evaluate a country’s sustainability of involvement in the region: strategic, commercial, economic assistance, and project finance.

He gauged that Japan was active in all four categories: strategic as exemplified by former Prime Minister Junichiro Koizumi’s visit to the region and the “Central Asia Plus Japan” Dialogue; commercial, particularly in uranium development; economic assistance through Japan International Cooperation Agency (JICA); and, project finance through Japan Bank for Cooperation (JBC). Feigenbaum further stated that the presence of Japanese embassies in all five Central Asian capitals and its level of political interest, attention, and money suggested that Japan would have a sustained and increasing role in Central Asia.

Feigenbaum remarked that Japanese involvement suited Central Asia’s priority needs of infrastructure and economic development. He remarked that activity in the region was increasingly multinational. The U.S. will be inaugurating a bridge this summer that connects Dushanbe with Afghanistan; this will link to the Afghanistan ring road, which is a multinational project, and to several Tajikistan projects being undertaken by China, Japan, and the Asian Development Bank (ADB).

Feigenbaum remarked that the Japan-U.S. bilateral relationship was becoming global as challenges became global in scope. Countries, including the U.S., are realizing that the common agenda for stability, security, democracy, and market reform cannot be pursued alone. He stated that Japan is one of the best and promising partners. Consequently, the U.S. and Japan have inaugurated policy talks on an inter-agency basis to discuss strategy, policy, and assistance priorities.

Feigenbaum posed several questions concerning Japan’s involvement in Central Asia:

- Can Japan sustain the level of interest?

- Can Japanese private companies develop interest?

- Can Japan sustain relations with Russia and China to facilitate a greater role in region?

- Can Japan work with international financial institutions (IFIs) to create more robust mechanisms?

- With respect to values-based diplomacy, what is the role of democracy, rule of law, and good governance?

In the question period, Kawato affirmed the importance of relations with Russia and China. Despite remaining territoral issues with Russia and anti-Japanese demonstrations in China, there have been recent improvements in the relationships. Kawato stated that Central Asia is a balancing factor that discouraged Japan from antagonizing Russia and China.

In conclusion, Kawato noted the importance of relations with Uzbekistan for Japan’s Central Asia policy. Uzbekistan shares common borders with each of the other Central Asian states, it has the region’s largest population, and it potentially has the region’s largest economy. He said that investment is one solution to increasing relations with Central Asia, but that profitability in the region was still limited and local government regulation remained arbitrary and strict. Kawato stressed that more patience was needed on human rights issues and remarked that the culture of the people rather than the specific leader may be the more important factor when attempting to change the region’s mentality with respect to authoritarian rule. He saw this as a difficult and gradual process, requiring time and economic development.