For the first time in over a year, the foreign ministers of Japan and China met on May 23.  Both ministers retreated to well-worn talking points on Yasukuni but agreed to move ahead in expanding exchange programs.  Afterward, Foreign Minister Aso Taro announced that Japan’s relations with China were moving toward normalcy and in early June, to further warm the atmosphere, the Koizumi government removed the freeze on loans to China.  In turn, China’s President Hu suggested that under the proper conditions and at an appropriate time, he would like to visit Japan.

The vice ministers of foreign affairs also met in Beijing to conduct the Fifth Japan-China Comprehensive Policy Dialogue. Meanwhile, director general-level discussions continued on the East China Sea.  Beyond a desire to keep talking, little progress was evident.

In Japan, political leaders jockeyed for position in the post-Koizumi prime ministerial sweepstakes.  Increasingly, foreign policy, Japan’s relations with its Asian neighbors, and Yasukuni-related matters assume growing importance in the political debate, with candidates attempting to find their footing on the issues.  In meetings with Japanese political figures, China’s political leaders and diplomats worked to shape the post-Koizumi environment in Japan.

Japan-Korea relations continued to be tense during the quarter. North Korea and Japan faced off over abductees, history, and the North’s presumed preparations for a missile launch. South Korea and Japan came close to a skirmish over the disputed Dokdo/Takeshima islands, and only intensive negotiations avoided a crisis between the two countries. With Japan and both Koreas seemingly locked into their respective foreign policy approaches, it is no surprise that there was little progress and much squabbling.

Five years after its inception, the Shanghai Cooperation Organization (SCO) held its sixth summit meeting in Shanghai in mid-June to celebrate its steady growth as a “mature” regional security body. In many respects, the SCO is also at a crossroads at both operational and philosophical levels: achieving internal cohesion without interfering with member states’ internal affairs, and increasing its international profile without appearing intrusive, at least in the eyes of the U.S.  While the key for the SCO’s sustainability is a stable Sino-Russian “strategic” partnership, Moscow and Beijing in the second quarter worked hard to coordinate their respective approaches to the Iranian nuclear issue, both inside and outside the SCO framework.

The 2006 National Security Strategy (NSS) was released this quarter. News coverage has focused primarily on one word: preemption. Largely overlooked has been the much greater emphasis on the promotion of freedom and democracy as the primary objective of U.S. foreign policy in the second George W. Bush administration. How far and fast a nation (like China) proceeds down the path toward democracy – or refuses to do so (North Korea and Myanmar) – will have a major bearing on its future relations with a State Department that is being reoriented toward “transformational diplomacy.” Largely overshadowed by the NSS release were two Defense Department documents: the Quadrennial Defense Review and the National Military Strategy to Combat WMD.

While Washington pushes the theory of democracy, its practice has proven difficult for both Manila and Bangkok this quarter, even as the fruits of democracy have added challenges to Washington’s relations with Taipei. Meanwhile, Pyongyang has used the “hostile attitude” reflected in the NSS as yet another excuse for not returning to the stalled Six-Party Talks. One significant gathering of democracies this quarter was the inaugural ministerial-level Australia-U.S.-Japan Trilateral Strategic Dialogue focused, in part, on supporting the emergence of new democracies. Finally, Washington took a major step forward in advancing its “strategic partnership” with the world’s largest democracy, India, during President Bush’s historic visit to New Delhi in early March.

The U.S.-Japan alliance returned to earth this quarter. After a dizzying five-year run during which Japanese actions consistently exceeded U.S. expectations, old habits reasserted themselves in the first quarter of 2006. Unfinished business – base relocations and the reimposition of the Japanese ban on imports of U.S. beef – bedeviled both governments, while coordination on a range of other global issues proved equally frustrating. This is especially troubling as Japan becomes increasingly focused on the transition to the post-Koizumi era, which begins in September when the prime minister steps down. There is a real danger that alliance issues will fester as the Japanese gaze narrows to domestic concerns.

Economic issues garnered most of the attention this quarter with U.S. officials and members of Congress pressing China to address the trade imbalance, revalue China’s currency, and curtail Intellectual Property Rights (IPR) violations in advance of Hu Jintao’s April visit to the United States. Summit preparations were conducted in high-level visits. Deputy Secretary of State Robert Zoellick met Chinese leaders in Beijing and hugged a panda in Chengdu. Chinese Vice Foreign Minister Yang Jiechi visited Washington, D.C. and urged the Bush administration to rein in Taiwan President Chen Shui-bian. Two major U.S. government reports were issued – the National Security Strategy and the Quadrennial Defense Review – both of which provoked Chinese condemnation. Beijing convened the fourth session of the 10^th National People’s Congress, which focused on domestic priorities, including rural reform, education, public health, social security, and the legal system.

In fits and starts, North Korea and the U.S. sought procedural common ground this quarter for resuming the Six-Party Talks on North Korea’s nuclear program. The deputy head of Pyongyang’s delegation, Ri Gun, traveled to New York in early March for a “working-level” meeting to discuss U.S. financial sanctions for North Korea’s alleged counterfeiting of U.S. dollars.

The substantive positions of the two sides remained the same after the meeting:  Pyongyang said it would continue to boycott the nuclear talks until Washington lifted the financial sanctions; Washington argued the sanctions were a purely “law enforcement measure” not linked to the nuclear issue.  In mid-March, however, U.S. Ambassador to South Korea Alexander Vershbow proposed that discussions on the financial issue could continue bilaterally at the Six-Party Talks. At quarter’s end, North Korea had not yet responded to this proposal.

In early February, the U.S. and South Korea announced the beginning of negotiations on a Free Trade Agreement (FTA) that U.S. Trade Representative (USTR) Rob Portman called the “most commercially significant free trade negotiations we have embarked on in 15 years.” Not to be outdone, South Korean Trade Minister Kim Hyun-Chong said the initiation of FTA negotiations “is the most important event [in U.S.-Korea relations] since the signing of the military alliance in 1953.” The first round of official talks is scheduled to begin in early June, following several procedural meetings.

The U.S. and South Korea held their first “Strategic Consultation for Allied Partnership” (SCAP) this quarter, not long after Presidents George W. Bush and Roh Moo-hyun agreed to initiate these talks at their summit meeting in November. During the consultation, the two governments reached a general agreement that the U.S. could exercise “strategic flexibility” and use its forces stationed in South Korea to meet military contingencies outside the Korean Peninsula.

Late in the quarter, the U.S. and South Korea also agreed to form a joint panel to consider the modalities of transferring wartime command of South Korean armed forces to the government of South Korea.  At present, the commander of U.S. forces in South Korea would exercise operational control over the armed forces of South Korea, through the Combined Forces Command, during wartime.

After nearly a half-decade of strategic cooperation, U.S.-Russia relations appear to have reached a turning point in the first months of 2006. The momentum behind this turn has been building for at least two years, but events of the past three months have put the future of the strategic partnership in doubt. Apart from the usual catalogue of disagreements – U.S. designs in Central Asia and the Caucasus, Russia’s stalled democratic development, and the fate of Ukraine and Belarus – there have emerged a number of other troubling issues that are potentially more damaging to the future of the U.S.-Russian partnership. These include the Iranian nuclear issue, Moscow’s rapprochement with Beijing, and a disturbing report that Russian diplomats may have shared sensitive information with the regime of Saddam Hussein about U.S. war plans in Iraq in 2003.

Determined to reverse impressions that the United States is out of sync with regional dynamics, the State Department floated the idea of a formal U.S.-ASEAN Summit and speculated publicly on a possible U.S. role in the next East Asia Summit.  Condoleezza Rice made her first visit to Jakarta as secretary of state, while U.S. Trade Representative Rob Portman launched negotiations with Malaysia on a free trade agreement in Washington. Southeast Asia’s two oldest democracies, Thailand and the Philippines, spent much of the quarter in political turmoil.  Protests in Thailand put U.S.-Thai Free Trade Agreement (FTA) talks on ice, but the Balikatan 2006 exercises went forward in the Philippines as planned, despite a declaration of national emergency.  As the U.S. and Vietnam moved closer to agreement on Hanoi’s accession to the World Trade Organization (WTO), the focus began shifting to Congress and the debate on Permanent Normal Trade Relations. In Cambodia, the return of exiled opposition leader Sam Rainsy – and hints that Rainsy could join the government coalition – led Washington to contemplate shifts in U.S. policy.

The quarter saw much less of the high-level Chinese-Southeast Asian interchange that marked past periods and was notable in the lead-up to the East Asia Summit in December 2005. The visit of Myanmar’s prime minister to China in February was the highlight in bilateral exchanges. Beijing hosted a major international donors’ conference in January to assist China, Southeast Asia, and other Asian states affected by the avian flu epidemic.

The mid-winter Lunar New Year’s or “spring festival” celebrations usually are periods of relative inactivity for Chinese leaders. Senior Chinese leaders also were preoccupied this year with issues related to the new five-year development plan and significant changes in domestic laws and regulations considered at the annual National People’s Congress session in March. Chinese leaders had little to say about policy toward Southeast Asia at the Congress, which as usual featured detailed press conferences by the Chinese premier and Chinese foreign minister discussing salient policy issues. This seemed to reflect the absence of significant controversy in Chinese-Southeast Asian relations rather than any diminution of Chinese attention to the region.

Meanwhile, political turmoil in Thailand prompted the Chinese premier to postpone a visit to Bangkok scheduled for April, according to Thai media reports. China responded to the February landslide disaster in the Philippines with a pledge of $1 million in assistance, but avoided significant comment on President Arroyo’s declaration of a state of emergency and related political difficulties.

There was little official reaction in Southeast Asia to Chinese developments with implications for Southeast Asian security. These included the disclosure at the National People’s Congress that China’s defense budget would increase over 14 percent in 2006, and a concurrent report by the Chinese-controlled media in Hong Kong of a Chinese general and deputy director of the Science and Technology Commission of the People’s Liberation Army (PLA) General Armament Department disclosing the Chinese military’s determination to build an aircraft carrier fleet. China welcomed Southeast Asian statements criticizing the Taiwan president over his controversial decision in February to end the island’s National Unification Council and Guidelines for political unification with China.