Volume 9, Issue 1

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January - March 2007 · Published: Apr 2007

The Year of the Golden Pig has gotten off to an auspicious beginning. The Six-Party Talks, seemingly left for dead at the end of last quarter, were miraculously revived, resulting in an “action for action” game plan for the phased implementation of the September 2005 joint denuclearization agreement. Neither weather nor terrorism concerns prevented the second East Asia Summit from taking place as rescheduled, with the U.S. nowhere to be found. ASEAN leaders also took a step forward in examining their first formal Charter while agreeing with their Plus Three partners (China, Japan, and South Korea, finally once again on speaking terms) to promote greater regional integration. Tokyo and Canberra took a dramatic step forward in strengthening bilateral security cooperation, while the second “Armitage-Nye Report” was released, laying out a bipartisan vision for “getting Asia right.”

In the last quarter of 2006, the first quarter since taking office, Japan’s Prime Minister Abe Shinzo enjoyed his honeymoon period by showing the “right stuff”: (snap visits to China and South Korea as part of efforts to reconcile relations with the two countries, success in reaching the unanimous resolution of the United Nations Security Council condemning North Korea for its October 2006 nuclear test; and the first summit meeting with U.S. President George W. Bush that reconfirmed the importance of and confidence in the U.S.-Japan alliance). But the decline of his popularity over the same period because of scandals and disciplinary problems in his Cabinet also revealed political weaknesses. Across the Pacific, President Bush saw his political situation deteriorate with Republican defeats in the House and Senate in November.

The first quarter of 2007 turned out to be a rough patch not only for President Bush and Prime Minister Abe domestically, but also for the U.S.-Japan alliance. In the United States the shock came from comments made by Abe and other political leaders in response to U.S. Congressional hearings regarding “comfort women” (women put into brothels for the Japanese army during the war). In Japan, the shock came from the sudden shift in U.S. policy toward North Korea with the Feb. 13 Six-Party Talks agreement. Several major U.S. newspapers criticized Abe for attempting to justify Japanese behavior during the war and virtually all Japanese newspapers criticized the U.S. decision to take a more accommodating line toward North Korea so soon after the nuclear test. For the first time since the 1995 Okinawa rape incident, editorials in both countries raised questions of trust about the other.

Despite this Sturm und Drang in the press and the legislatures, this quarter also saw a marked increase in high-level attention to Japan from the Bush administration, with visits to Japan from Vice President Dick Cheney, Deputy Secretary of State John Negroponte, and Deputy National Security Advisor J.D. Crouch. Meanwhile, Japan moved ahead with steps to strengthen its security policy institutions, passing legislation that elevates the Defense Agency to a ministry and introducing new legislation to establish a U.S.-style National Security Council. And fears that a more protectionist Congress might start targeting Japan proved mostly wrong as the new Democratic majority instead set its sights on China.

Prime Minister Abe will make his first visit to Washington since taking office in late April. Until then, he has to do his utmost to remind audiences in Japan and the United States that he still has the “right stuff” when it comes to tough problems like North Korea and sensitive issues like the comfort women. He also has to demonstrate his resilience domestically in April local elections just before coming to Washington. And then there is the big test – Upper House elections in July that could be make-or-break.

China’s test of an anti-satellite weapon against a defunct Chinese weather satellite on Jan. 11 prompted concern and criticism that reverberated around the world. A U.S. decision to allow Taiwan President Chen Shui-bian to make a stopover in San Francisco and notification to Congress of a possible arms sale to Taiwan led to Chinese protests. A Private Property Law was passed at the National People’s Congress along with a Corporate Tax Law. U.S. officials credited China with making positive contributions toward strengthening the international system, notably in the Six-Party Talks, but urged China to do more. In a possible signal of toughening U.S. trade policy, the Commerce Department slapped duties on imports of coated paper, reversing a decades-old policy of not applying duties to subsidized goods from non-market economies. Sino-U.S. military ties advanced with the visit to the U.S. by Gen. Ge Zhenfeng, deputy chief of general staff of the People’s Liberation Army, and the visit to China by Gen. Peter Pace, chairman of the U.S. Joint Chiefs of Staff.

North Korea promised to shut down and seal its nuclear facilities at Yongbyon this quarter in a deal that implements the Six-Party Talks September 2005 Joint Statement, committing Pyongyang to dismantling its nuclear weapons program. To achieve this breakthrough, the Bush administration agreed to transfer back to North Korea approximately $25 million in funds that were frozen since the fall of 2005 in a Macau bank for reported laundering of U.S. money.

Despite the political will on both sides, however, “technical issues” involving financial regulations prevented the funds from being transferred, as scheduled, by the mid-March round of Six-Party Talks, which was quickly adjourned. At the end of the quarter, U.S. diplomats expected to resolve the banking issues shortly so North Korea would move to shut down its reactor and allow inspectors from the International Atomic Energy Agency (IAEA) to reenter the country.

The U.S. and South Korea reached an historic free trade agreement (FTA) at the end of the quarter, which must now go to the U.S. Congress and South Korean National Assembly for ratification. The agreement would eliminate more than 90 percent of the tariffs currently applied in the two countries’ international trade. Reportedly, a “rice for beef” deal clinched the FTA. South Korea agreed to lift completely restrictions on U.S. beef that aim at preventing the spread of mad cow disease. In return, U.S. negotiators agreed to exclude rice from the FTA, effectively giving into demands from Korean rice farmers who had angrily demonstrated against the accord.

Senior U.S. and South Korean defense officials reached a tentative agreement in March on the timetable and funding to relocate U.S. forces in South Korea to a newly expanded base at Pyongtaek, south of Seoul. South Korea agreed to pay $6 billion of the $11 billion project and promised that base construction would be completed no later than 2012.


US - Russia

January — March 2007

Coming Full Circle

The opening of 2007 witnessed perhaps the nadir in bilateral relations between Moscow and Washington since the establishment of the “strategic partnership” in the war on terror in late 2001. In a highly publicized speech in Munich in February, Russian President Vladimir Putin launched a broadside against U.S. foreign policy, suggesting that the United States seemed to view force as the only policy option at its disposal. If relations did not return to the dark days of bipolar confrontation during the Cold War, then the series of events that transpired this quarter did resemble a return to the tumultuous days of the late 1990s, when U.S. and NATO forces were bombing a long-time Russian ally in the Balkans, when NATO expanded into the former Soviet sphere, and when China and Russia were locked in an embrace hoping to contain U.S. “unilateralism.” But, in an interesting twist, by the latter stages of March it appeared that Moscow and Washington had agreed on the need to foil Iran’s bid to march down the road to uranium enrichment. Thus, the quarter concluded on a favorable note, hinting that – at least temporarily – the bilateral relationship had regained sounder footing.


U.S. military support for Philippine counterterrorism forces has led to significant gains against the Abu Sayyaf radical Islamist criminal gang in the southern Philippines, although Philippine complaints against the Visiting Forces Agreement continue in the aftermath of the rape conviction of a U.S. Marine. Manila passed long-awaited anti-terrorism legislation to Washington’s applause. The U.S.-backed UN Security Council (UNSC) resolution condemning Burma’s human rights violations was defeated by joint Chinese-Russian vetoes, although a majority of the UNSC members supported the resolution. Free Trade Agreement negotiations with Malaysia have run up against significant labor and service industry obstacles, while former Prime Minister Mahathir Mohammad convened a private tribunal to condemn the Bush administration’s actions in Iraq. Meanwhile, Indonesia’s importance for U.S. security was emphasized in a visit by Gen. Peter Pace, chairman of the U.S. Joint Chiefs, and U.S. naval visits to Vietnam and Cambodia signaled growing warmth in those relations.

China advanced relations with Southeast Asia during ASEAN-related meetings in Cebu. China’s veto of a U.S.-backed UN Security Council draft resolution on Myanmar and Chinese military advances, including a controversial anti-satellite test, occasioned little apparent negative reaction among Southeast Asian governments.

Despite the basic stability of cross-Strait relations, Beijing has been concerned this spring that Taiwan’s President Chen Shui-bian would somehow take steps to realize his dream of a new constitution for Taiwan. In contrast, Washington has been more impressed by the domestic constraints that make constitutional reform affecting Taiwan’s sovereignty all but impossible. President Chen has not abandoned his dreams, as he made explicit in this “four wants” speech, but he has focused on the more modest and achievable goal of heightening the public’s sense of Taiwan’s separate identity – steps that appeal to the Democratic Progressive Party’s core supporters and create realities his successor will have difficulty reversing. Treatment of Taiwan at the PRC’s National People’s Congress in March reflected the continuity of President Hu Jintao’s approach to Taiwan. Talks on Chinese tourism to Taiwan and on expanding cross-Strait charter flights have continued but no agreements have been announced. China’s anti-satellite test and another major increase in its defense budget have been sources of concern in Taipei, but the Legislative Yuan has not yet passed its arms procurement legislation.

For South Korea, as for all North Korea’s interlocutors, dealing with Pyongyang during the first quarter of 2007 was – in a cliché beloved of British soccer commentators – “a game of two halves.” When the new year began, and well into February, most official contacts remained suspended in the wake of last year’s twin shocks: the DPRK’s missile launches in July, followed by its nuclear test in October.

Yet even then there were hopes of an early thaw amid visibly energetic efforts to breathe life into the Six-Party Talks after their resumed session in December ended in failure. On Feb. 13, after appearing close to collapse over North Korea’s large energy demands, this on-off forum finally produced an agreement that – if imperfect – nonetheless looked more comprehensive and detailed than many observers had dared to hope after more than three years of getting nowhere much.

China played a key role in resurrecting the Six-Party Talks from near death through a Feb. 13 agreement in which North Korea would shut down its reactors for 50,000 tons of heavy fuel oil and disable its reactors for an additional 950,000 tons of heavy fuel oil or the equivalent. The deal had stalled by the end of the quarter over the return of North Korean funds frozen at the Macau-based Banco Delta Asia (BDA) to the account owners. This glitch underscored the extent of North Korea’s financial and political isolation from China as well as the distance between Beijing and Pyongyang, especially on economic matters. During bilateral working group meetings with the United States in New York in early March, DPRK Vice Foreign Minister Kim Gye-gwan publicly vented frustrations about China, even while Kim Jong-il maintained the facade of Sino-DPRK friendship through a rare visit to the PRC Embassy in Pyongyang during the first full moon following the Spring Festival.

China-South Korea coordination in the six-party process and through three-way dialogue with Japan on the sidelines of the ASEAN Plus Three Meeting continued to develop. South Korea proposed to institutionalize tripartite consultations among the three foreign ministers. China-South Korea trade and investment grew to new highs amid a mounting list of irritations and obstacles. These challenges included disputes over the handling of North Korean refugees, worsening pollution from China, historical and territorial spats, concerns over changes in Chinese investment rules, and shifts in the balance of China-South Korea trade and investment relations.

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.

Daily Digest

Associated Press – Taiwan is selling more to the US than China in major shift away from Beijing

Whether it’s tapioca balls or computer chips, Taiwan is stretching toward the United States and away from China — the world’s No. 2 economy that threatens to take the democratically ruled island by force if necessary.

Associated Press – Kim’s sister denies North Korea has supplied weapons to Russia

The influential sister of North Korean leader Kim Jong Un again denied Friday that her country has exported any weapons to Russia, as she labeled outside speculation on North Korea-Russian arms dealings as “the most absurd paradox.”

Associated Press – China and Cambodia begin 15-day military exercises as questions grow about Beijing’s influence

Cambodia and China began 15-day military exercises on Thursday as questions grow about Beijing’s increasing influence in the Southeast Asian nation.

Associated Press – North Korea test-fires suspected missiles a day after US and South Korea conduct a fighter jet drill

North Korea fired suspected short-range ballistic missiles off its east coast on Friday, South Korea’s military said, a day after South Korea and the U.S. flew powerful fighter jets in a joint drill that the North views as a major security threat.

Reuters – South Korea urges better cooperation on supply chain with China

South Korea’s finance minister on Thursday said Seoul and Beijing should seek better economic cooperation on the supply chain for raw materials.

Reuters – Putin and Xi deepen partnership and scold the United States

Russian President Vladimir Putin and Chinese President Xi Jinping agreed on Thursday to deepen their “strategic partnership” while scolding the United States for a series of moves that they said threatened their countries.