Although there was little movement in Japan’s relations with North Korea, this quarter was dominated by the news leaking out of North Korea in early September that Kim Jong-il was potentially very sick. Questions about Kim’s health, the status of his leadership in North Korea, and the future of North Korea’s leadership quickly dominated discussion. Coupled with Japanese Prime Minister Fukuda’s surprise resignation and the quick choice of Aso Taro as prime minister, Japanese foreign policy was on a brief hiatus while the new leader set his own agenda. Known as a conservative, it is expected that Aso will take a harder line toward the North – and the region more generally – than did Fukuda. But his official appointment, coming on Sept. 24, was so recent that it is too early to see how Aso plans to proceed. Thus, there was actually little substantive change in Japan’s relations with North Korea, and the quarter ended basically where it began.

In contrast, Japan-South Korean relations plunged to new lows after a promising spring in which both Fukuda and President Lee Myung-bak had pledged to move the relationship forward. The question of who owns the Dokdo/Takeshima islets once again reared its ugly head, and both sides dug in their heels, choosing to be as provocative as possible. In what was at best a tone-deaf decision in July, Tokyo released a new set of guidelines for its middle-school teachers claiming that Takeshima was irrefutably Japanese. Seeming to contradict the spirit of the just completed and highly successful summit meeting between Japan and Korea during the spring, the decision left President Lee with little choice but to respond strongly, and relations quickly cooled between the two countries.

Although it appeared at first that there was some potential for progress on the two enduring issues on the agenda of Japan-North Korea relations – the abduction issue and Pyongyang’s nuclear development program – by the end of the quarter both issues remained essentially in the same place as they had been before. The abduction issue continued to define the tone of bilateral relations, as Japan tried to ensure that progress in the Six-Party Talks was tied to its resolution. The Tokyo-Pyongyang working-level talks in mid-August, following last quarter’s agreement that Pyongyang would reinvestigate the fate of the Japanese abductees in exchange for partial lifting of the sanctions on the North, concluded with an agreement on the terms of the investigation to be completed as swiftly as the fall of 2008. But Fukuda’s resignation as prime minister led Pyongyang to notify Japan that it would wait and see how the Aso administration approaches bilateral issues before starting the reinvestigation. Despite taking a step closer toward normalizing their diplomatic relations, there was no substantive policy change in Japan toward Pyongyang and by the end of the quarter, the new Aso administration decided to extend economic sanctions against North Korea for another six months.

Japan and North Korea fret over the U.S. State Sponsors of Terrorism List

President George W. Bush’s announcement on June 26 that he had asked the U.S. Congress to rescind North Korea’s designation as a state sponsor of terrorism put the Japanese government in a delicate situation. At home, families and supporters of Japanese citizens abducted by North Korea voiced their opposition to the prospects of any reward for Pyongyang without tangible breakthroughs in the abduction issue, including the lifting of Pyongyang from the State Sponsors of Terrorism List. In the Six-Party Talks, Japan’s continued refusal to participate in the economic and energy aid program for Pyongyang raised the prospect that Tokyo could become the odd man out just as negotiations were progressing toward the verification phase following Pyongyang’s declaration of its nuclear activities.

Reflecting this tension, the temperature of bilateral relations warmed very little since Tokyo and Pyongyang reached an agreement in June to reopen the case. North Korea criticized Japanese conservatives’ hard line stance on the U.S.’s delisting of Pyongyang as “a criminal act to scuttle the denuclearization process” and – siding with South Korea – vociferously condemned Tokyo over the Dokdo/Takeshima islets dispute. While Japan was being reassured by the U.S. that Japanese abductees would never be forgotten and that the actual rescission would take place after the six parties agreed on acceptable verification principles and protocol, Japan’s Foreign Minister Komura Masahiko criticized the North on the public broadcaster NHK in late June, saying that Pyongyang’s enduring goal is to divide Japan from the United States. During the two months between the June agreement and the working-level meeting on Aug. 11, neither side took the initiative to implement the pledges they had made in June.

When the Heads of Delegation Meeting of the Six-Party Talks was held July 10-12, Japan asked the other four parties to help settle its bilateral dispute with Pyongyang over the abduction issue, while refusing their call to join them in providing aid to North Korea. The South Korean daily Joongang Ilbo reported on July 14 that Tokyo’s insistence on resolving the abduction issue had become a major source of tension with the other parties during the negotiations. While Japan’s Director General of the Asian and Oceania Affairs Bureau of the Ministry of Foreign Affairs Saiki Akitaka explained that other countries understand Japan’s position, the Joongang Ilbo quoted a South Korean delegate’s comment that understanding Japan’s position does not mean they would take Japan’s refusal for granted or just accept it. After the failed attempts to produce the details of the North’s verification of its nuclear program and to push the abduction issue forward, the July negotiations left the Japanese government “anxious and frustrated,” according to Japanese conservative daily Yomiuri Shimbun on July 14. On July 23, the foreign ministers of the six parties met in Singapore on the sidelines of the ASEAN Regional Forum, but yet again, made little progress on the issue of a verification regime.

A thin ray of optimism clouded with mistrust: the August bilateral talks

Amid domestic calls to further pressure North Korea, Tokyo’s several requests led to a working-level bilateral meeting with Pyongyang on Aug. 11-13. As a result of the talks, North Korea agreed to reinvestigate its abduction of Japanese citizens with the goal of completing its probe by this fall. In return, Japan promised to partially lift economic sanctions against North Korea and allow North Korean ships to enter Japanese ports once Pyongyang commenced the reinvestigation probe. To date, the key points of contention between Tokyo and Pyongyang have been the number of Japanese abducted by Pyongyang and the fate of those abductees. After the talks, Saiki told families of the abductees that the talks had worked in Japan’s favor. Foreign Minister Komura described the agreement as progress and a step closer to the stage of “action for action,” because Pyongyang had agreed to report any progress in the probe to Japan and to hold talks whenever necessary. Japan was further entitled to confirm the results of the reinvestigation through interviews with the concerned parties, review of documents and visits to related sites. But domestic sentiment remained skeptical about whether North Korea would keep its promises, and there were calls for caution about rushing to lift sanctions.

Japan’s apprehension about the U.S. removal of North Korea from the State Sponsors of Terrorism List and its possible negative effect on Japan’s efforts on the abduction issue proved unwarranted – at least for now as Pyongyang announced that it had restored its nuclear facilities after the U.S. decision to postpone de-listing the North. Despite Tokyo’s hope that the reinvestigation would go on as scheduled regardless of the denuclearization efforts, immediately following Fukuda’s resignation on Sept. 1, North Korea informed Tokyo on Sept. 4 that it would suspend the launch of a panel to reinvestigate the fate of the abductees until it confirmed the new administration’s North Korea policy. The families of the abductees blamed Fukuda for being “irresponsible.”

Aso and North Korea

Not only Japan, but also North Korea may have a new head of state in the near future. Bilateral relations closed the quarter in the midst of rumors about North Korean leader Kim Jong-il’s health problems and uncertainty surrounding the future of the disarmament-for-aid deal with North Korea. Through its office Central News Agency of DPRK on Sept. 23, North Korea blamed Japan for designating Pyongyang as a “serious threat” in its recently published defense white paper, and for describing the Dokdo/Takeshima islets as part of Japanese territory as “nothing but a renewed declaration of reinvasion of Korea.” On Japan’s part, the Aso administration decided to extend economic sanctions for another six months. Although there were no active policy debates regarding North Korea leading up to the LDP prime ministerial election, it is likely that Japan’s North Korea policy under Prime Minister Aso will remain unchanged: pressuring Pyongyang while seeking closer coordination with other parties in the Six-Party Talks regarding the abductee issue. Aso, a supporter of strict economic sanctions against the North, originally handled the abduction issue under the Koizumi and Fukuda administrations while also playing a key role in drafting the U.N. Security Council resolution in 2006 sanctioning Pyongyang for testing long-range missiles.

Japan-South Korea relations: yet again disputes over some rocks

Last quarter’s pledges from both Prime Minister Fukuda and President Lee for “forward looking” bilateral relations did not pass the “Dokdo/Takeshima islets” test. Upon the Japanese government’s official announcement on July 14 that middle school teachers should describe the Dokdo/Takeshima islets as an “integral part of Japan,” Japan-South Korea relations quickly deteriorated and remained so until the end of the quarter with no sign of resolution.

Gone was not just the friendly mood between Tokyo and Seoul, but also all the diplomatic achievements from the Fukuda-Lee Summit in April. The Japan-Korea FTA talks were delayed indefinitely as South Korea announced that it was having a second thought whether it would cooperate with Japan with regard to the resolution of Japan’s abduction issue, that it might consider reducing or cutting military exchanges with Japan, and that several exchange programs between schools in Japan and South Korea were canceled due to unfavorable political climate.

Indeed, Lee may be the third consecutive South Korean president to have a “false start” with Japan: both Kim Dae-jung and Roh Moo-hyun had also pledged to look to the future in ROK-Japan relations, only to be drawn into disputes over the past. After all, this was not the first time that one would see this pattern in Japan-South Korea relations: Japan initiates a “provocation” over historical or territorial issues that leads to a vehement South Korean reaction of canceling meetings and suspending other initiatives, and then a change of administrations in either Seoul or Tokyo allows bilateral cooperation to resume. What was different this time about South Korea’s reaction was the comprehensive manner in which Seoul responded to the Dokdo/Takeshima islets issue, employing numerous measures to counter Japan’s claim. From South Korean public opinion to high-ranking government officials including President Lee and both the ruling Grand National Party (GNP) and the opposition Democratic Party (DP) leadership, criticism of Japanese moves was consistent.

What is often overlooked is that both Japanese and Korean claims are deeply emotional. Neither country is simply working off the “facts,” but both feel that the issue is nonnegotiable. Although each side tends to express this emotional sentiment differently, the simple truth is that decisions about what happened historically are never simply an adjudication of facts, but rather are bound up in decisions today about what countries care about and how they define themselves. For example, both sides produced maps from centuries ago to prove their claim; but it makes no sense to apply the modern concept of sovereignty – and in particular demarcated maritime borders – to a time when neither Japan nor Korea had any idea what that concept meant. The Dokdo/Takeshima issue is a modern dispute, born of facts that did not exist until the modern era.

In any event, the news about Tokyo’s description of the Dokdo/Takeshima islets as Japanese territory was followed by some 30 members of the Korean Federation of Trade Unions (the more radical of South Korea two umbrella unions) throwing rotten eggs and tomatoes at the Japanese Embassy and condemning the “revival of Japanese “militarism” and calling for tougher actions by Seoul. South Koreans welcomed a New York Times July 9 full-page advertisement claiming South Korea’s sovereignty over the islets. Kim Jang-Hun, a popular singer who bought the ad, became a national hero. According to the Choson Ilbo of Aug. 26, some 110,000 South Korean internet users funded another full-page advertisement in the Washington Post on Aug. 25.

For President Lee – who had pledged pragmatism in his dealings with Japan – the Dokdo/Takeshima islets issue was the latest foreign policy problem for his already struggling presidency. Lee had already faced mass protests against his decision to lift the import ban on U.S. beef and resistance to his more skeptical stance toward North Korea.  Thus, his attempt to strike a balance between responding to the South Korean public and pursuing forward-looking diplomacy with Tokyo came under increasing tension. According to the July 9 Choson Ilbo, prior to the July 14 decision about Japan’s new guidelines for schoolteachers, the South Korean government had been making strenuous efforts to prevent the new guidelines by contacting former and incumbent Japanese lawmakers. As recently as a week before Tokyo’s official announcement, President Lee had said, “I believe Japanese political leaders will not dare include the Dokdo/Takeshima islets in the document” in an interview with the Japanese press.

As a result, Lee had little or no choice in how to respond. Not only had his goodwill pledges to Fukuda been ignored in what Koreans saw as an insulting manner, South Korean public opinion firmly supported of a strong response. Thus, once Tokyo’s official decision was officially announced, Seoul took a series of both tough and immediate actions. On the day of the announcement, South Korea’s Foreign Minister Yoo Myung-Hwan summoned Japanese Ambassador Shigeie Toshinori to protest against the decision. South Korea recalled its ambassador to Japan, Kwon Chul-hyun, in another sign of protest. Ruling GNP Supreme Council member Rep. Chung Mong-Joon and DP Chairman Chung Se-Hyun each led delegations to the Dokdo/Takeshima islets. South Korea’s presidential office Cheong Wa Dae accused the Japanese government of spreading false information about President Lee’s remarks on the Dokdo/Takeshima islets issue because Japan’s Yomiuri Shimbun had reported in its internet edition on July 14 that President Lee made an ambiguous remark about the islets during his brief meeting with Prime Minister Fukuda on the sidelines of the G8 summit. Two days later, on July 16, South Korea’s Ambassador to Japan Kwon Chul-hyun indicated that Seoul might withdraw its support for Tokyo’s efforts to find Japanese citizens abducted by Pyongyang and to stop the North from developing long-range missile. Seoul also turned down Tokyo’s proposal for a bilateral meeting on the sidelines of the ASEAN Regional Forum.

As for Japan, it appears that an increasingly assertive Japan decided to push the islets issue forward fully expecting South Korea’s heated reaction, while hoping that the fallout might be minimal and not affect their other common bilateral interests. For example, Japan’s Cabinet Chief Secretary Machimura Nobutaka remarked that Japan “should fully teach the facts about Takeshima and deepen understanding of Japan’s land and territory.” On July 15, Tokyo stepped up its claims, and Japan’s public TV network NHK reported that the government will ask schools nationwide to start education on territorial issues in 2009, pushing forward from 2012 the implementation of these new middle school textbooks teaching guidelines.

Diplomatic tension went beyond angry words as the bilateral FTA talks were reportedly postponed indefinitely with no promise for resumption in the near future. South Korea’s three-day military exercise near Ullenug Island and the Dokdo/Takeshima islets caused Tokyo to protest that increasing military tension would do no good in strengthening the bilateral ties. According to South Korea’s Navy, the exercise was to prepare for an invasion of the area by countries including Japan. According to the Sept. 9 Korea Times, South Korea’s Ministry of National Defense was also considering severing high-level ties with Japan’s military authorities.

Also notable was the change in the South Korean government’s strategy toward the islets issue, from “quiet control” to active assertion of South Korean sovereignty over the territory. In the past, South Korea had been wary of Japan’s diplomatic goal of bringing international attention to the islets issue, because to do so might portray the area as disputed territory and increase the possibility of taking the case to the International Court of Justice. In addition to the establishment of a joint task force on the Dokdo/Takeshima islets (a permanent countermeasures system headed by the Prime Minister’s Office and joined by relevant ministries such as Foreign Affairs, Maritime Affairs, and Defense), South Korea produced various plans for the Dokdo/Takeshima islets, including building a marine hotel, ensuring accessibility to citizens, and creating a permanent residential village and a so-called “Dokdo experience center.” In its report on the South Korean government’s decision to enhance habitability of the islets, Japan’s conservative daily Yomiuri Shimbun accused South Korea of “illegally occupying” the islets.

To his credit, President Lee called for a “strategic and nonpartisan” response to Japan’s move regarding the islets, emphasizing that the South Korean public’s anger over the dispute should not be exploited for political gain. Lee used the example of joint efforts by Germany and Poland to create a history textbook, and emphasized the need for Japan and Korea’s efforts to compile history texts and use them in schools to contribute to regional peace. For his part, Prime Minister Fukuda did not visit Yasukuni Shrine.

The sudden resignation of Fukuda and the inauguration of Aso Taro as Japan’s prime minister seemingly brought little change in the dynamics of bilateral relations. To South Koreans, Aso is known for his spontaneous remarks, including his incorrect assertion in 2003 that Koreans had voluntarily adopted Japanese names during Japan’s occupation of Korea, for which he later apologized. Aso’s nationalist tendencies are well known, and how that will affect his foreign policies toward South Korea are still unclear.

Economic and cultural relations remain separate from politics

Yet again, despite all the political tension between the two countries, economic relations moved forward of their own accord. For example, Japanese car sales in South Korea were unaffected by the Dokdo/Takeshima islets dispute. The Aug. 5 Choson Ilbo reported that Honda Korea sold 1,665 cars in July, up 22 percent from its monthly all-time high set the previous month. The market for Nissan’s high-end Infinity model also grew 6 percent, although Toyota’s Lexus sales fell 10 percent. Overall, while Korean carmakers such as Hyundai and Kia (which hold more than 70 percent of the local auto market) try to defend their share in the South Korean car market, Japanese imports are doing very well. According to the Korean Automobile Importers and Distributors Association, Japanese cars were the most popular imported cars in June. Of the top 10 imported cars, six were Japanese.

The Dokdo/Takeshima islets dispute did not deter South Korean travelers from visiting Japan either. According to South Korea’s two largest tour agencies, Hana and Mode, sales of Japanese tour packages this summer were similar to last year’s, which set an all-time record. Some 23,400 South Korean tourists traveled to Japan in the month of July with Hana Tour, compared to last year’s 23,200. Mode Tour reported an 8.5 percent year-on-year increase in the number of travelers to Japan in July. There were hardly any cancellations since Tokyo’s announcement over the Dokdo/Takeshima islets.

South Korea’s trade deficit vis-à-vis Japan is growing not only in goods but services. According to the Bank of Korea, South Korea’s services account deficit with Japan increased 53.1 percent to $2.82 billion in 2007 from $1.84 billion in 2006. The rise is a 3.9-fold rise from 2005, the year when South Korea’s service account with Japan began going into the red with losses of $730 million. Last year South Korea’s travel account with Japan recorded a deficit of $2.88 billion, up 89.4 percent from $1.52 billion in 2006.

The Korea International Trade Association (KITA) issued its 2008 IT industry competitiveness index in September. According to the index, South Korea’s IT competitiveness fell to eighth among 66 countries from last year’s third (after the U.S. and Japan). Japan’s ranking dropped from second to 12^th, while Taiwan rose to second from last year’s sixth. China took fiftieth.

If economic relations were affected very little by the Dokdo/Takeshima islets issue, its impact was very much felt by those students whose plans for municipal cultural exchange programs were canceled or postponed due to the bilateral diplomatic dispute. According to the July 24 Japan Times, junior high school students from South Korea’s city of Chuncheon were planning on visiting Japan’s Kakamigahara in August, while Japanese students were going to stay in the South Korean city in the fall. But Chuncheon sent a letter to Kakamigahara saying that the exchange projects were not a good idea at such a time. Similarly, short home-stay projects of three female high school students between Japan’s town of Rifu in Miyagi Prefecture and South Korea’s Uijeongbu were canceled citing the territorial dispute as the main reason.

The coming quarter

The fourth quarter promises to be eventful. With Prime Minister Aso taking control of the government in Japan, both South and North Korea will watch carefully to see how he molds his foreign policy. Similarly, the fate of North Korea’s leadership remains unclear, but over the next few months it is possible that we may achieve some clarity about who is in charge, or whether Kim can return to visible power. How the leadership in both these countries pursue their bilateral relations will be one of the main questions for the autumn.