With Abe Shinzo becoming prime minister of Japan in late September, Japan-Korea relations entered a new period. Political relations with both North and South Korea deteriorated badly under Prime Minister Koizumi Junichiro, and both Koreas waited to see whether Abe would take a new course toward the peninsula. His initial act of visiting South Korea and China won cautious praise from the South Koreans, although the real test of his leadership and where he plans to take Japanese foreign policy remain to be revealed. With North Korea’s nuclear test, Japan became one of the most eager participants in implementing UN Security Council Resolution 1718, although this was widely expected and thus did not unduly affect relations with South Korea. North Korea’s nuclear test marks a new phase in Northeast Asian politics, and how Japan and the two Koreas manage their relations in the coming year could have a major impact on stability in the region.

Japan-North Korea: nuclear test, more sanctions

Although there was not much interaction between Japan and North Korea, the actions that they did take this quarter are expected to have broader, lasting implications for the security of the entire region and the world. North Korea, after opening last quarter with missile launches in early July, opened this quarter with a nuclear test Oct. 9. Japan, with limited economic sanctions already in place, immediately increased those measures against North Korea, and looked to the international community for more effective, coordinated pressure. The possibility of bilateral dialogue between Japan and North Korea is thus more remote than ever. North Korea’s nuclear test – coming in the first month of Abe’s tenure as Japan’s new prime minister – appears to ease the way for Japan to move forward with a more assertive foreign policy.

Not surprisingly, the inauguration of the Abe Cabinet marked little change or breakthrough in Japan-North Korea relations, and three developments on the part of Japan stood out during this quarter. First, against the backdrop of its reaffirmed and strong alliance with the U.S., Tokyo continued its “diplomacy for pressure,” actively reaching out to the international community to address what Tokyo considers its most pressing foreign policy agendas: the abduction issue and the North’s nuclear weapons program. As skepticism has grown about whether it is possible to resolve these two issues through dialogue with Pyongyang (the last bilateral negotiations between Japan and North Korea were held earlier this year in February), the combined close cooperation with the U.S., UN Security Council and other UN agencies, and what Prime Minister Abe called “dynamic diplomacy” in Asia is beginning to emerge as a pattern in Japanese diplomacy.

Promptly after the nuclear test, the UN Security Council passed Resolution 1718, a product of tight coordination between the U.S. and Japan, which followed last quarter’s UNSCR 1695 in calling for tougher punitive sanctions against Pyongyang. Under Chapter 7, UNSCR 1718 imposed a ban on trade with North Korea not only in nuclear weapons and other WMD items, but also banned trade in high-end military equipment. According to the Oct. 22 Japan Times, the Japanese government was also considering seeking another, tougher UN Security Council resolution, one that would not limit the range of sanctions under Chapter 7 and would send “a more powerful message to North Korea,” should Pyongyang conduct any more missile launches or nuclear tests.

The trend to internationalize North Korea’s abductions by framing them as a human rights issue continued; the coalition that is most actively keeping this issue alive is the combined forces of family members of Japanese abductees, the Japanese government, and concerned NGOs. During their visit to the UN to seek help to bring their loved ones back to Japan, relatives of the Japanese abductees noted that North Korea has abducted people from 12 countries, including South Korea, China, Lebanon, Thailand, Romania, France, Italy, and the Netherlands, and they called on envoys and senior diplomats from 13 countries, including U.S. Ambassador to the UN John Bolton, “not to ease sanctions against North Korea as long as not only nuclear and missiles questions but also the abduction issue remains unresolved.” On Nov. 2, the Japanese government, together with the European Union and other countries, submitted a draft resolution to the General Assembly’s Third Committee, which deals with human rights, to denounce North Korea’s abduction of foreign nationals, and which resulted in the “Convention of the Protection of All Persons from Enforced Disappearance,” passed in December. The Convention, however, would not directly help resolve Japan’s abduction issue, since it is binding only on the parties to the Convention, and its jurisdiction is limited to abductions that occurred before its ratification.

The Japanese government also engaged in an unprecedented action regarding the abductees, with Internal Affairs and Communications Minister Suga Yoshihide issuing an order for NHK to air more on North Korea’s abduction in its shortwave radio service. While criticism and concerns were expressed in the media over the government’s interference with freedom of the press, the Radio Regulatory Council, an advisory panel to the minister, endorsed the order “specifically mindful of the problem of North Korea’s abduction of Japanese,” based on Article 33 of the Broadcast Law. NHK, mainly operating on subscription fees paid by the public, will receive ¥2.25 billion in fiscal year 2006 from the government. In a similar move, the Japanese government will also provide funding to the private “Investigation Commission on Missing Japanese Probably Related to North Korea,” in order to broadcast messages to abductees who may still be alive in North Korea.

In July 2006, Japan imposed a ban on the North Korean ferry Mangyongbong-92, and in September banned financial institutions from processing overseas remittances to 15 organizations and one individual with suspected links to the North’s weapons development program. Pyongyang’s nuclear test, coupled with Tokyo’s frustration over its “insincere responses” on the abduction issue, caused Japan to implement its harshest sanctions yet. Two days after the nuclear test, Japan imposed a total ban on North Korean ships entering Japanese ports, a ban on all imports from North Korea, and a ban on North Korean nationals from entering Japan, with the exception of those already living in Japan. Then, in early November, following UNSCR 1718 and relying on a book written by Fujimoto Kenji (who was Kim Jong-il’s personal chef for 13 years), Tokyo banned the export to North Korea of 24 luxury items, including beef, tuna meat, caviar, liquor, cars, motorcycles, yachts, watches, cameras, movie and music devices, jewelry, and tobacco. According to Chief Cabinet Secretary Shiozaki Yasuhisa, the 24 items accounted for 16 percent of the ¥6.88 billion worth of goods exported to North Korea from Japan in 2005. In December, as the Six-Party Talks recessed without much progress and with Tokyo’s attempt to include the abduction issue at the talks having failed, the Liberal Democratic Party (LDP) drafted a set of additional punitive steps that includes calls for tougher financial screening, broader financial sanctions, and further bans on trade and port calls. However, Foreign Minister Aso Taro said Dec. 24 that those additional measures at this stage were not likely “because Japan’s sanctions are working.”

For its part, Pyongyang attempted to isolate Japan before and throughout the Six-Party Talks. Song Il-ho, North Korea’s ambassador in charge of diplomatic normalization talks with Japan, said in an interview Oct. 11 that “we are currently studying to see where his [Abe’s] true intentions lie” and criticized Japan’s punitive sanctions against North Korea by saying that the North “will take strong countermeasures.” Once Pyongyang agreed to return to the Six-Party Talks on Oct. 31, the North Korean Foreign Ministry said in a statement that it wanted to leave Japan out of the Six-Party Talks since “a new administration was just launched in Japan, so Tokyo has many things to take care of” and told Japan to “mind its own business instead of poking its nose into the work of the talks to its inconvenience.”

When Japan dismissed the North’s statement as “Pyongyang’s usual tactic,” and attempted to bring up the abduction issue at the Six-Party Talks, North Korea responded by saying that “the Six-Party Talks are meant to deal with the nuclear issue in name and reality, not for discussing the abduction issue which has nothing to do with the former,” noted the Korean Central News Agency on Dec. 11. During the Six-Party Talks, in an apparent attempt to isolate Japan, North Korea held numerous bilateral meetings with all the participants except Japan, before ending the five days of negotiations in Beijing without progress. Throughout the quarter, Pyongyang stuck to the position that the abduction has been resolved and claimed that Japan was raising the issue to intensify Japan’s sanctions against it. Criticizing events such as the visit of 84 Japanese politicians to Yasukuni Shrine, and Abe’s “ambiguous attitude” toward history issues, North Korea argued that Abe’s real intention has been revealed and that the Abe Cabinet has succeeded in seizing power “by dramatizing the abduction issue and stoking bitterness toward the DPRK among Japanese.”

Japan-South Korea: talking, but avoiding big issues

Within the context of North Korea’s nuclear test and Abe’s assumption of the prime ministership were clear signs that Japan has begun moving away from its postwar pacifist security policy. Although Prime Minister Abe repeatedly pledged that his Cabinet would not debate the issue of nuclear weapons and would adhere to the three nonnuclear principles of “not possessing, not producing and not allowing the entry into Japan of nuclear weapons,” two prominent members of his Cabinet tried to rekindle the nuclear debate after the nuclear test. LDP Policy Chief Nakagawa Shoichi called for discussions on whether Japan should go nuclear on a popular TV show, while Foreign Minister Aso made similar remarks before the Lower House Foreign Affairs Committee. Although a Yomiuri-Gallup poll conducted in mid-November showed that about 80 percent of Japanese respondents viewed North Korea as a military threat to Japan, the Mainichi Shimbun reported Nov. 27 that 78 percent of respondents opposed Japan’s possession of nuclear weapons.

In the meantime, Prime Minister Abe named 14 defense and diplomacy experts to a committee to consider steps to reorganize and create a national security body similar to that of the U.S. National Security Council, which would function as a central information-gathering body and issue directives on security matters. The Defense Agency was upgraded to ministerial status effective in January 2007, and this decision will give defense officials more influence in national policymaking and budget decisions, which has caused some anxiety among some experts and politicians in and outside Japan.

Perhaps the most notable move by Abe, however, was his unexpectedly quick initiation of long-delayed summit meetings with China and South Korea, both of which were held within two weeks of his inauguration. Japan-South Korea relations were on the mend when South Korean President Roh Moo-hyun and Prime Minister Abe held a summit on Oct. 9. Although the sources of conflict between the two countries remain unresolved, at the very least Abe’s visit to Seoul opened the door for high-level diplomatic dialogues between Seoul and Tokyo. The overture for the summit began before Abe took office, based on the urgent need by both sides to mend bilateral ties. On Seoul’s part, the Choson Ilbo reported on Sept. 29 that the South Korean government was waiting to see what position Japan’s new prime minister would take with regard to Japan’s history and territorial claims over the Dokdo/Takeshima islets. However, even knowing Abe’s hardline orientation, Seoul expressed cautious hope that a new era in Japan-South Korea relations might be possible. Seoul also accepted the ambiguity over whether Abe would visit Yasukuni Shrine as prime minister, choosing not to make an issue of the shrine during the summit. On Tokyo’s part, in the leadup to his summits with Seoul and Beijing, Abe clarified his views on Japan’s past before the House of Representatives Budget Committee on Oct. 5, acknowledging the war responsibility of his grandfather and the late former Prime Minister Kishi, and accepting earlier government statements apologizing for Japanese colonial rule and aggression.

The first summit of Japanese and South Korean leaders in 11 months was a modest success, and repaired bilateral relations enough so that dialogue over more contentious issues is expected to continue. Both Abe and Roh condemned North Korea’s nuclear test – which took place on the day of their summit – and agreed to foster “future-oriented” relations, although Roh did not forget to mention Japan’s need to face up to its past, referring to the Yasukuni issue. Abe replied that Yasukuni would be handled “appropriately,” an ambiguous reply that kept the issue from overshadowing the summit while still leaving room for his own decision about how to handle it. Although it is more likely than not that Seoul would cancel a summit meeting again if Abe decides to visit Yasukuni Shrine, Abe’s ambiguity seemed to work and paved the way for high-level diplomatic exchanges between Seoul and Tokyo. The decision to launch a second round of joint historical research was reached during the summit as well. One added factor in softening Abe’s hawkish image during his visit might have been news about Japanese First Lady Abe Akie’s love for “things Korean.” South Korean newspapers noted that she is a fan of Korean dramas and is learning Korean.

Following the Roh-Abe summit came a number of high-level contacts between Seoul and Tokyo. South Korean Foreign Minister Ban Ki-Moon visited Japan and reaffirmed cooperation between the two countries in early November, and his visit was followed by talks at the level of director general, the 14^th set of such talks since 1994. Issues discussed included an exchange of views on the security situation in Northeast Asia, and it was decided to resume the defense ministers’ meeting early next year between South Korean Defense Minister Kim Jang-Soo and Japanese Defense Minister Fumio Kyuma. On Dec. 27, newly appointed South Korean Foreign Minister Song Min-Soon met Prime Minister Abe and decided to press for a visit by President Roh to Japan next year. During the visit, Foreign Ministers Song and Aso also exchanged documents ratifying a treaty that will enable law-enforcement authorities of the two countries to better cooperate in dealing with cross-border crimes.

While history issues were put on hold, the quarter revealed signs of bilateral cooperation and the seeds for further conflict. Reflecting the thaw in the bilateral relations, Foreign Minister Aso congratulated Foreign Minister Ban upon his appointment as UN secretary general, saying that he was happy that the secretary general was chosen from South Korea, “a country that embodies the remarkable development and growth that have marked Asia in the past 35 years.” It remains to be seen how deep or enduring this détente is. South Korean politicians and media, paying close attention of Japan’s moves toward revising its pacifist Constitution, have shown anxiety over the recent nuclear debate within Japan. However, given the rancorous tone of relations during the early part of 2006, the subdued tone, cautious optimism of the Roh-Abe summit, and the lack of any other emotional issues were all to be welcomed.

Economic relations

The political initiatives undertaken by Prime Minister Abe to mend relations with China and South Korea had a positive impact on economic relations. Although cooperation and competition in Japan-South Korea economic relations continued, the good news of the quarter was the revived discussion about trilateral cooperation between China, South Korea, and Japan to further integrate the three major economies of Northeast Asia. On the sidelines of the ASEAN-related meetings in the Philippines, Japan, China, and South Korea agreed to begin negotiations next year aiming to conclude a trilateral investment agreement. The working-level discussions had been put on hold due to former Prime Minister Koizumi’s visits to Yasukuni. The South Korean daily Choson Ilbo reported Dec. 8 that many South Korean and Japanese firms were hoping that the deal would ease regulations and promote investment in China.

Another notable development that drew much media coverage this quarter was the “yen bubble,” which referred to the weakness of Japan’s currency despite its healthy economy. The Choson Ilbo reported that the Japanese yen dipped below 800 won for the first time in nine years on Oct. 16, and the South Korean government verbally intervened in foreign currency markets, calling the fall “abnormal,” although that failed to stop the decline. The “yen bubble” affected Korean exporters competing with Japanese firms overseas or hoping to penetrate the Japanese market. As one example of the problem facing South Korean exporters, export prices of South Korean automobiles rose 2 percent this year due to the yen’s valuation, while the prices of Japanese automobiles declined 5 percent. According to Shin Seung-Kwan, a research fellow at South Korea’s Trade Research Institute, 45 percent of Korean exporters who gave up on the export business during the first half of 2006 cited the strong won as a reason for their decision.

Competition continued in the electronic markets. South Korean electronic makers such as Samsung Electronics and LG Electronics are expanding their presence in Hong Kong, moving ahead of their Japanese counterparts. Samsung Electronics boosted its market share in sales of liquid crystal displays in Hong Kong to 20.3 percent as of late August, which marked a milestone for Samsung, which have traditionally trailed Japanese rivals such as Sharp or Sony. In addition, LG Electronics was lauded by the Dutch Business Association in Hong Kong for its clever marketing, and the company also enjoyed high sales of Chocolate mobile phones, managing to outpace competing models by Panasonic. According to Choson Ilbo, these trends can be attributed in part to the regional emergence of Korean pop culture combined with savvy marketing strategy.

Interdependence between Japan and South Korea also deepened. The Joongang Ilbo featured an article Oct. 30 titled, “Who says Korea and Japan can’t get along?” and reported on the case of Hirose Korea Co., an electronic components producer that is a 50-50 joint venture between South Korea’s Dae Duck Electronics and Japan’s Hirose Electronics. Last year Hirose Korea racked up $158 billion in sales revenue. Japanese investor Hirose gave South Korean Dae Duck full control over management of the company, and Dae Duck made efforts to improve corporate transparency. Japanese investor Hirose also transferred technologies to Dae Duck, inviting South Korean engineers to learn various skills. These efforts led to Hirose chairman Hiroki Sasaki’s receiving the grand prize at the Korea-Japan Economics and Management Association held in Pusan in September for contributions to Korea-Japanese business relations.

Korea-Japan economic relations are also increasingly international. The Japan Times reported Oct. 11 that Toshiba Corp. will pay ¥5.5 billion for a 20 percent stake in the LG Phillips LCD plant in Poland. This partnership among rivals targets the European market, where the demand for LCD TVs is rapidly increasing. According to a statement by Toshiba, its investment in LG Phillips Poland will allow it to secure a stable supply of LCD panels at competitive prices. Competition among manufacturers is intense, but so is the cooperation – Sony makes LCD panels for Samsung TVs in another joint venture.

At the ninth bilateral talks in Tokyo on Dec. 24, maritime officials of Japan and South Korea agreed to cut fishing quotas in each other’s waters to 60,500 tons next year, down from the current quota of 63,500 tons per year. This was the second consecutive annual drop in the two countries’ fishing quotas. The number was trimmed by 3,500 tons in 2006 from 67,000 tons.

Society and Culture

One group that has suffered from North Korea’s nuclear test and the continuing fear within Japan about the potential threat from North Korea is North Korean residents living in Japan. There are about 598,000 Korean residents of Japan, and approximately 10 percent of them identify themselves with North Korea. According to Chongryun (the General Association of Korean Residents in Japan), there have been 171 physical or verbal attacks on Korean students and schools since North Korea’s missile launches. The harassment included violence against students, such as an incident in which a Yamaguchi Prefecture school for North Korean children had its musical instruments thrown out onto its athletic field, and another in which the message, “Sanctions to nuke, eye for an eye” was posted on a Tokyo school’s online message board. On another occasion, Kyodo News reported that an ultranationalist was arrested on suspicion of trying to intimidate members of Chongryun by mailing them a package that contained a severed finger and a threatening letter.

Chongryun has been put on the defensive, as well. The conservative Japanese newspaper Yomiuri Shimbun featured an article Nov. 29 titled “Government too slow to rein pro-Pyongyang groups,” and reported one incident in which the Tokyo Metropolitan Police Department searched the pro-Pyongyang Chongryun headquarters office in Tokyo and other locations upon suspicion that Chongryun was violating the Parmaceutical Affairs Law. It was reported that the wife of an executive of the Korean Association of Science and Technology in Japan (KAST), an organization affiliated with Chongryun, tried to smuggle medical supplies to North Korea, including intravenous solution bags obtained from a Tokyo doctor without authorization. The Yomiuri, criticizing Chongryun’s protest of Japan’s sanctions measure against Pyongyang as extremely unreasonable, opined that, “even considering the fact that Chongryun is an organization dedicated to Kim Jong-il, the statement must be seen as preposterous in that it disregards the profound nuclear threat felt by the Japanese.”

On Nov. 8, about 100 Chongryun members staged a sit-in outside the Diet to protest sanctions against North Korea and voice concerns about recent incidents targeted North Korean residents in Japan. North Korea, in the official Korean Central News Agency, criticized Japan Nov. 20 by writing that, “their hostile acts and frenzied suppression of the bare-handed Chongryun and Koreans in Japan clearly show that they are barbarians ignorant of elementary international law, diplomatic usage and morality.” In an interview with The Japan Times Oct. 13, Chongryun international affairs bureau chief Kim Jong-ui said economic sanctions are not likely to impact most Korean residents in Japan who are loyal to Japan except for those who do business with North Korea in the areas of seafood and other consumer products. But he also expressed concerns about Japan’s recent measures against North Korea, saying that, “the greater fear is that the heated rhetoric from both Japanese political leaders and Japan’s media, especially the anti-North Korea, rightwing media, will escalate to the point where it will be extremely difficult for diplomacy to calm the situation.” He may have been referring to LDP Policy Chief Nakagawa Shoichi who publicly warned against Pyongyang’s idiosyncratic behavior, claiming that Kim Jong-il might launch a nuclear attack on Japan “because the country’s leader has overeaten rich food and suffers from diabetes.”

Other aspects of Korea-Japan relations have been improving, however. Young South Korean tourists, boosted by the “yen bubble,” increasingly traveled to Japan for vacations. The Choson Ilbo reported Nov. 21 that the number of South Koreans traveling to Japan this year was poised to exceed 2 million by the beginning of December. In the first six months, 515,000 men and 489,000 women from South Korea went to Japan, and those in their 20s and 30s make up 60 percent of tourists to Japan, with 60 percent also being women. In the past, Japan was a popular destination for South Korean businessmen going golfing, but now the trend is that a woman in her 20s and 30s visits Japan since “things are less expensive in Japan than in Seoul’s Gangnam district.” To target those younger tourists, travel agencies offer airline tickets and accommodation packages leaving for Japan on late Friday night and coming back early Monday morning.

The coming quarter

At this point, the upcoming quarter looks to be fairly quiet. It is hoped that the Six-Party Talks will reconvene in Beijing, although that remains to be seen. Barring a major crisis, South Korea and Japan have no planned summit meetings, although working-level contacts will continue. There are also no plans for any major change in Japan’s stance toward North Korea.