Japanese and Chinese political leaders and diplomats, focusing on the steps necessary to build a strategic mutually beneficial relationship, worked throughout the quarter to lay the groundwork for a successful April visit to Japan by Premier Wen Jiabao. Dialogue, cooperation, and peaceful resolution were omnipresent bywords. But, in fact, little progress was made in addressing longstanding issues related to the East China Sea, North Korea, security, and China’s Jan. 11 anti-satellite (ASAT) test – all hopefully deferred for resolution to the Wen visit. Meanwhile, Prime Minister Abe Shinzo and the Liberal Democratic Party (LDP) were caught up in a debate over history, comfort women, and Nanjing. Interestingly, Beijing’s response was low key, suggesting a commitment on the part of China’s leadership to progress with Japan.

The first quarter of 2007 saw new developments in the Japan-Korea relationship, while some very old issues resurfaced. Prime Minister Abe’s honeymoon appears to be over in both domestic politics and Japan’s foreign relations, while South Korean President Roh Moo-hyun is a lame duck with the next presidential election coming this December. The Six-Party Talks experienced unexpected and dramatic progress as a result of U.S. and North Korean initiatives, with a potential resolution appearing on the horizon. Japan’s unyielding insistence on making resolution of the abductions issue the center of its relations with North Korea threatened to isolate Japan even further as the six-party process continued.

Abe further heightened regional suspicions about Japan’s intentions when he seemed to cast doubt on both the Japanese government’s role in the World War II “comfort women” brothels and its 1993 apology, by questioning whether coercion was involved and whether the military and government were directly involved. This led to predictable outrage in South and North Korea, although South Korea’s responses were more muted than in the past. Even Australian Prime Minister John Howard told Abe that Japan should “stop quibbling” over the details of the women who were pressed into sexual service during World War II. Given Japan’s new emphasis on human rights and “value-oriented diplomacy,” as well as its insistence on resolving the abduction issue, Abe’s comments led to concerns about Japan’s new foreign policy direction.

Despite the political tensions between Japan and the Koreas, economic relations between South Korea and Japan continued their slow integration, and at the working levels, the two governments continued to find new areas of cooperation. So far, Abe has not fully defined his stance toward the two Koreas, and the coming quarter promises to be an eventful one.

The Russian-China strategic partnership moved to high gear toward the end of the quarter as Russia kicked off its “Year of China.” This coincided with President Hu Jintao’s state visit to Russia on March 26-28, his third trip as president. Beyond the grand opening gala of Russia’s China Year in Moscow, Putin and Hu were facing global dynamics, dilemmas, and growing dangers. Meanwhile, the two Eurasian powers closely coordinated, throughout the quarter, to soft-land the Korean nuclear crisis as well as postponing, and preparing for, the upcoming storm regarding Iran.

There was, however, a rather paradoxical mist in the festival air as Russia launched its first-ever China Year. While a stronger Russia chose the first quarter to severely criticize U.S. unilateralism and its missile defense program in Eastern Europe (Feb. 10), Moscow also proceeded to “Russianize,” despite China’s “inquiries,” its vast retail market: in other words, it decided to expel a million non-Russian “illegal” vendors, about 90 percent of whom were ethnic Chinese. After years of working through the worst economic hardship in the post-Soviet era, those Chinese entrepreneurs found no space in a recovering Russian economy.

The quarter started with a bang, literally, as North Korea made good on its threat to test a nuclear weapon, resulting in a strongly worded (but not strongly enforceable) UN Security Council resolution (UNSCR 1718) imposing sanctions. To the surprise of some, Pyongyang agreed to return to another round of Six-Party Talks this quarter; to the surprise of virtually no one, the talks went nowhere. The most anticipated multilateral event of the quarter, the second East Asia Summit (EAS), was postponed (ostensibly due to weather), but the Asia Pacific Economic Cooperation (APEC) Leaders Meeting did take place on schedule, along with a side meeting between President Bush and the “ASEAN Seven.” Democracy took another hit in the region, this time via a military coup in Fiji, even as the road back to democracy in Thailand is proving to be longer than promised. The Asia Pacific economic outlook remains good, with the region continuing to set the pace for the rest of the world. The political outlook is not as sunny.

The third quarter of 2006 began with North Korea’s July 5 missile launches. This quarter, Pyongyang added another provocation with the Oct. 9 nuclear test. The prospect of another nuclear weapons state in Japan’s neighborhood was bad news, but the test also created an opportunity for Japan and its neighbors to begin forging consensus on an approach to this new regional security challenge. While the nuclear test posed a significant threat to Tokyo and prompted discussions (normally considered taboo) of nuclearization as a means to strengthen Japan’s deterrence, it also led the United States to reaffirm its commitment to defend Japan under the nuclear umbrella.

Prime Minister Abe Shinzo, in his first meeting with President George Bush as prime minister, demonstrated a strong commitment to the U.S.-Japan alliance and pledged to cooperate closely on North Korea and other regional security issues. He also pledged to move toward implementing an agreement on the realignment of U.S. forces in Japan, particularly on Okinawa where the new governor appears willing to work with the central government. It is unclear if implementation will go smoothly, but the dynamics of Japan’s security environment, complicated by the North Korean nuclear test, could facilitate further progress in bilateral security cooperation. In the fourth quarter, Abe engaged in a series of security and diplomatic challenges that allowed him to show that he has the “right stuff” to be prime minister, despite his relative youth and inexperience.  But a sudden sag in popularity at home in December and questions about his commitment to economic reform will be areas to watch in the new year.

A gaggle of Cabinet secretaries, led by U.S. Treasury Secretary Paulson, traveled to Beijing in mid-December to launch the Strategic Economic Dialogue. No breakthroughs were achieved, but both sides had low expectations for near-term results and seemed pleased with the outcome. On the North Korea nuclear front it was all bad news, with Pyongyang testing a nuclear device in early October and no tangible progress achieved at the resumption of the fifth round of Six-Party Talks after a 13-month hiatus. A positive byproduct was that intensive consultations between Washington and Beijing boosted bilateral ties. The U.S. mid-term elections that resulted in the seizure of control over both the House and Senate by the Democratic Party generated some concern in China about increased pressure on trade and human rights. On balance, however, Beijing remained confident that China-U.S. relations would remain on a positive track. Military-to-military ties continued to develop with a three-day U.S. ship visit to Zhanjiang, China, joint military exercises between the U.S. Navy and Marines and their Chinese counterparts, and a visit to China by U.S. Pacific Fleet Commander Adm. Gary Roughead.

North Korea made good on its long-time threat to conduct a nuclear test when it exploded a small nuclear device of less than a kiloton on Oct. 9. The test generated political shock waves and led to comprehensive sanctions imposed by the UN Security Council Oct. 14. Under tremendous pressure from the international community and China, in particular, North Korea announced Oct. 31 it would return to the Six-Party Talks.

When the talks reconvened in Beijing on Dec. 18, they made little progress other than reaffirming the main accomplishment of these negotiations to date – the Sept. 19, 2005 joint statement in which North Korea agreed to abandon its nuclear program in exchange for security, political, and economic benefits. Given North Korea’s nuclear test, the real surprise this quarter was that a new round of nuclear negotiations occurred at all.

In their ongoing negotiations on a free trade agreement (FTA), the U.S. and South Korea ran into difficulty on issues including autos, pharmaceuticals, antidumping measures, and beef. At the end of the quarter, Korean negotiators were reportedly considering whether to propose a “big deal” that would resolve outstanding differences on major issues. Both the U.S. and Korean negotiating teams are aware that they must wrap up an agreement by March 31 and give Congress 90 days for review before President Bush’s “fast-track trade promotion authority” (TPA) expires June 30, 2007.

The U.S. and South Korea agreed in late October to transfer wartime operational control of Korean troops to South Korea between Oct. 15, 2009 and March 15, 2012. The precise time of transfer along with detailed implementing arrangements will be decided in joint consultations during the first six months of 2007. The U.S. will continue to provide significant air and naval “bridging capabilities” as well as intelligence, surveillance, and reconnaissance until South Korea acquires sufficient capabilities of its own in these areas.

South Korea notified the U.S. in early December that it would extend the deployment of its troops supporting U.S.-led coalition forces in Iraq for another year, although at a reduced level. South Korea’s “Zaytun Division” has contributed humanitarian and reconstruction assistance since 2004 in the northern Iraqi city of Irbil. Korean commandos have also provided security for the UN Assistance Mission for Iraq.

In a relatively quiet quarter for U.S.-Russia relations, the issues topping the bilateral agenda were trade, nuclear proliferation, and energy security. That nuclear proliferation and energy security were at the top of the list should come as no surprise. The big news was the announcement that the U.S. government had agreed in principle to Russia’s long-awaited accession to the World Trade Organization (WTO). Presidents George Bush and Vladimir Putin met twice during the quarter, a few days apart in Moscow and Hanoi. At their meetings the discussions centered on WTO, Iran, and North Korea. A surprise announcement by the Japanese foreign minister concerning the dispute over the Northern Territories caused a few ruffles in both Moscow and Tokyo, but the Japanese-Russian relationship returned again to its stagnant state by the end of the quarter.

In his November visit to Southeast Asia attendant to the Hanoi Asia Pacific Economic Cooperation (APEC) Leaders Meeting, President George W. Bush raised the prospect of an Asia-Pacific free trade area, discussed implementation of the ASEAN-U.S. Enhanced Partnership that emphasizes good governance, praised Indonesia for the success of the peace process in Aceh, and assured Vietnamese officials that permanent normal trade relations would be approved by the U.S. Congress by year’s end. (It was.) The Visiting Forces Agreement in the Philippines survived a severe test when a U.S. Marine was convicted of rape and sentenced to 40 years in a Philippine prison. The conviction is being appealed. At the APEC summit, Philippine President Gloria Arroyo asked the U.S. president for a “deeper and broader” U.S. role in combating Philippine terrorists as well as in the ongoing peace process with the Moro Islamic Liberation Front. Although continuing to press the Thai coup leadership to restore democracy, Washington announced plans to hold the annual multinational Cobra Gold military exercise in May 2007 and continued to provide assistance for counterterrorism.

Top Chinese leaders engaged Southeast Asian counterparts during a meeting in China celebrating 15 years of China-ASEAN ties, and during the APEC leaders gathering in Hanoi. The implications of China’s rising prominence for the changing regional order were reviewed in detail during a meeting in the United States of Chinese and international specialists, and in assessments by prominent scholars that went beyond headline-driven media accounts.