POWER ON THE PACIFIC RIM : Regional Outlook : Now Playing in the Pacific: A Clash of Titans : Washington and Tokyo struggle for economic and military balance in their new post-Cold War roles.

TOKYO —  Pax Americana II. It sounds like one of those movie sequels, like “Rocky IV” or “Police Academy 6.” And like the films, there’s a very good chance it won’t live up to the original.

Pax Americana was the term used to describe America’s dominant role in the post-World War II years--the period during which the United States seemed almost alone in underpinning the non-Communist world’s defense and underwriting the system of free trade held key to economic prosperity.

Now the term--with Roman numeral attached--has re-emerged here to describe one vision of a new era of American power in the Pacific. In this scenario, America continues to reign supreme, but Japan plays a key supporting role as the good guy doling out financial aid to needy developing countries.

Critics argue that it is a weak premise on which to build a new world order.

“You can’t have one guy always playing cop and the other guy always playing Santa Claus,” said Donald Hellmann, professor of political science at the University of Washington and an occasional adviser to the Department of Defense.

But the fact that Pax Americana II has entered the diplomatic lexicon on this side of the Pacific underlines a reality that sometimes seems to have been missed in all the excitement about the fall of communism in Eastern Europe and the American-led victory over Iraq: The post-Cold War era poses challenges to the old military and economic order in the Asian Pacific region at least as crucial as those the United States faces in Europe and the Middle East.

Whether the rearrangement of power on the Pacific Rim will be peaceful and evolutionary or will spin dangerously out of control, however, is still unclear.

Europe, by contrast, appears well on its way to building new institutions that reflect the post-Cold War realities. Western Europe will have something close to a true common market by the end of 1992, with all the economic advance that promises. Eastern and Western Europe alike, along with the United States and the Soviet Union, are deeply involved in charting the Continent’s future through the Conference on Security and Cooperation in Europe.

But here in the Asian Pacific, where diverse, rapidly growing economies have created a world center for manufacturing and commerce, the region remains fragmented. There is no forum, for example, in which Asian nations can ponder joint security concerns with such onetime threats as the Soviet Union, China and Vietnam.

The backbone of American policy in the Pacific--its alliance with Japan--seems frozen into its Cold War pattern. While America wants to remain the pre-eminent power in the Pacific, and continues to bear the cost and responsibility of defending the region and to badger countries into removing trade barriers, Japan quietly reaps the benefits of the arrangement.

America’s role today has “all the ominous qualities of the 1930s, when England was playing a hegemonic role without the means to do it,” warned Chalmers Johnson, professor of political science at UC San Diego. “While America drifts, Japan continues to grow.”

American policy has lagged behind public opinion in its failure to adjust to new realities. According to a recent poll sponsored by the Chicago Council on Foreign Relations, by a wide margin Americans now rank Japan’s economic power as a greater threat to the United States than Soviet military power--a complete turnaround from just two years ago. In Japan too there are growing questions about the bilateral relationship.

With the approach of the 50th anniversary of the start of World War II in the Pacific in December, Asia’s economic landscape is beginning to look a little like the Greater East Asia Co-Prosperity Sphere that Japan once tried to build through force of arms. An army of Japanese businessmen is drawing from deep wells of capital, technology and management know-how to build an integrated economic empire heavily dependent on Japan.

By the time Pax Americana II ends, perhaps even before the turn of the century, it may be remembered as little more than a transitory phase--a fig leaf to cover America’s decline and ease Japan’s rise to power.

Said Japanese scholar Takashi Inoguchi, who first introduced the term Pax Americana II : “Asia and Japan are bound to grow and prosper, and the U.S. decline is inevitable.” How the shift in power occurs, however, could determine whether the two major powers jointly shape the region’s future or whether they are set on a collision course.

It is an issue that involves rethinking at least four major questions about the region:

* What is America’s military role in the Pacific?

* Can America successfully compete on the Pacific Rim?

* How much does Japan already dominate other East Asian economies?

* Can Japan be trusted?

ALL ARMED AND NOWHERE TO GO?

The Cold War era in Asia was a simpler, if more violent, period for America. Soviet-backed communism was the enemy, and the United States built a network of alliances and fought wars in Korea and Vietnam to contain the threat. America strengthened its Asian allies by giving favorable treatment to products from their struggling economies.

Today, with the exception of North Korea, there are no longer any overt threats in the Pacific. If China mistreats Hong Kong after the colony’s reversion to mainland sovereignty in 1997, it would clearly send a chill throughout the region, but for the moment relations seem mostly to be improving between Beijing and its neighbors. President Bush wants to extend China’s most-favored-nation tariff treatment.

Meanwhile, Soviet President Mikhail S. Gorbachev has already unilaterally reduced his Asian army and has pulled most of his navy out of Cam Ranh Bay, the former U.S. base in Vietnam whose occupation by Soviet forces after the American withdrawal was once seen as the start of a Kremlin offensive into the Pacific.

Former socialist nations are hitching their futures to the market economies of Asia. Taiwan is showing its trust in China by investing heavily in the mainland, and China has restored trade ties with Indonesia.

Gorbachev has established diplomatic relations with South Korea and is seeking Japan’s help in rebuilding the battered Soviet economy. Although disagreements remain over ownership of four islands off the northeast tip of Japan that the Soviet Union occupied after World War II, Gorbachev’s state visit in April helped ease fear in Japan of its still heavily armed neighbor.

The lingering Soviet threat and fears of regional flare-ups require some American forces to remain as “honest broker” in Asia, Adm. Charles R. Larson, commander in chief of the U.S. Pacific Fleet, told the Senate Armed Services Committee in March.

Nevertheless, it is clear that America’s military role as defender of non-Communist Asia has shrunk in importance, and knowledgeable critics argue that U.S. firepower in the Pacific can be cut by considerably more than the 10% reductions now scheduled to take place during the next two years.

Reagan, and Alan D. Romberg, a fellow at the Council on Foreign Relations, argued in a recent article in the journal Foreign Affairs that America could, for example, safely cut troop levels in half in South Korea, where that nation’s powerful economy far outclasses that of its isolated Communist rival to the north.

If America would drop its longstanding opposition to naval disarmament talks with the Soviet Union and lead an effort to bring Asian nations into a cooperative security arrangement, even broader cuts could be made on both sides, Crowe and Romberg wrote.

Some analysts argue that American reluctance to cut Pacific forces could lead to greater instability. If it doesn’t proceed with an orderly reduction of forces now, in this view, the United States will be ambushed down the road by budget constraints that could force a far more sudden and drastic cutback.

Even though America is the world’s largest debtor, it spends $290 billion on security--nearly 10 times Japan’s budget. Up to $60 billion of that is spent on forces in the Western Pacific.

America has tried to ease its financial burden by calling on Japan to share the costs, and Tokyo now pays several billion dollars annually to subsidize American bases in Japan. In response to American pressure, it also has raised its economic assistance to developing countries, becoming the largest provider of foreign aid in the world.

But there may be a limit to how far this pattern can be comfortably carried. In Japan, American forces are viewed as a carry-over from World War II, and there is little public support for keeping them here. And American officials worry that increased Japanese financial assistance could ultimately limit their range of independent action. If Japan paid for the fuel of the U.S. Navy, for example, would it have a say in where the Navy sails?

The Gulf War demonstrated just how much ill will this Pax Americana II can generate. Some Americans felt that they were playing “mercenary” to Japanese capital when Japan promised $13 billion for the war effort but offered no troops or even a significant medical corps. Japan, meanwhile, felt that it wasn’t adequately consulted throughout the planning and execution of the war. “It was taxation without representation,” Japanese Foreign Ministry officials frequently complained.

THE LIMITS OF PROTECTIONISM

America’s declining competitiveness in world markets also threatens to push it out of center ring in the Asian Pacific, where economies are growing at twice the rate of those in other developed nations. In Japan, America has for years subordinated questions of access to the local market to what it considered its highest priority--maintaining U.S. military bases here. But Americans today seem less willing to make that trade-off as they see fellow workers laid off, often as a direct consequence of Japanese competition.

America continues to put heavy pressure on Japan to open its markets wider to imported goods. And protectionist sentiment remains strong in Congress. Meanwhile, however, America’s policy options have shrunk as the United States has grown more dependent on Asia--and Asia less dependent on America.

U.S. industry is now so dependent on Japanese technology, for example, that most protectionist measures might end up hurting this country more than they would its Pacific ally. Two years ago, the Pentagon released a long list of components necessary for weapons production that were available only from Japan.

Meanwhile, Asia’s economies are gradually reducing their heavy dependence on exports to America. In part because of America’s stagnant economy, trade and investment flows are growing far more rapidly among Asian nations and between Asia and Europe than between America and Asia.

Intra-Asian trade, at $200 billion in 1989, is skyrocketing and will outpace transpacific trade, which now totals $270 billion, by the end of the decade, Johnson of UC San Diego predicts. American investment in the region, at about $900 million in 1989, barely surpassed Taiwanese investment in the region that year, according to the Institute for Developing Economies, a Tokyo-based think tank. Japanese firms, meanwhile, invested $2.3 billion in Southeast Asia alone in the same year.

Decades of American support for free-market ideals have not left a deep imprint on these dynamic economies, challenging America’s basic views on the necessity of democracy and laissez-faire economics to healthy economic growth. Singapore, for example, has a healthy per capita income of $10,000--and one of the most restrictive regimes in the world. Taiwan and South Korea have both had authoritarian governments. The region’s formula for growth, generally government guided and pragmatic, looks far more like the Japanese model than America’s laissez-faire ideal.

“These developing nations have shown that a government technocracy with a fairly popular authoritarian leader can take many shortcuts toward economic development,” Philippine consultant Washington SyCip noted in a recent speech.

America has persistently promoted free trade in the region. But trade officials in Japan and South Korea complain that Americans aren’t competitive enough. Consequently, they say, new measures to open their markets only lower the floodgates for an onrush of other Asian products.

The U.S. trade deficit with the Asian Pacific region now totals more than $75 billion annually, and the much-publicized recent reduction in Japan’s trade surplus with America is to some extent a mirage.

Japan has been playing an “export shell game,” said Jesper Koll, economist at S. G. Warburg Securities’ Tokyo office. Japanese products are shipped to Thailand, go through some assembly or often just warehousing, are stamped “made in Thailand” and shipped to the United States. Japan’s trade surplus falls but Thailand’s increases.

The central problem, critics argue, is that in its obsession with creating free markets in recent decades, America has lost sight of how its policies affect the competitiveness of American industry. The breakup of AT&T;, for example, presented Japanese telecommunications makers a giant new market opportunity in America without opening any markets for American firms in Japan. One result: The U.S. 1990 trade deficit with Japan in telecommunications and computer equipment--two of America’s most advanced industries--reached $22 billion, exceeding the deficit in auto trade.

A growing chorus in the United States is pushing for Japanese-style industrial policies that favor infrastructure investment over military spending, saving over consumer spending and factory investments over corporate takeovers.

“A lot of economic thinking hasn’t been done by Bush,” said Lester Thurow, dean of the Massachusetts Institute of Technology’s Sloan School of Management. “If you want to be both the world’s largest economic and military power, you have to have the highest savings rate in the world (to pay for it all), not among the lowest.”

CO-PROSPERITY, JAPANESE STYLE

In a sign of the extent to which America is losing influence in Asia, Malaysian Prime Minister Mahathir Mohammed recently proposed the establishment of a new Asian trade bloc. He called on Japan to lead the group to give Asia bargaining leverage with competitive economic blocs developing in Europe and North America.

In fact, a true bloc won’t be workable for some time because of the region’s continued dependence on exports to America. And Japan rejected the proposal. “The Greater East Asia Co-Prosperity Sphere is too small for Japan,” said scholar Inoguchi, of the University of Tokyo. “Japanese don’t like the idea of being confined to a region.”

Still, Tokyo is grooming its Asian ties at least in part to prepare for the eventuality of a world of hostile trade blocs. “The involvement of Japanese corporations in the development of Asia and the Pacific will help reduce the region’s dependence on America and Europe, thereby lessening the region’s vulnerability to protectionist measures,” said Hajime Ohta, a senior executive of the Keidanren, Japan’s largest industry association.

Massive Japanese investments in the region since 1985 have created a horizontal division of labor. In audio equipment, for example, while Japanese manufacture the latest compact disc and digital audiotape players at home, they have set up plants in Southeast Asia to produce lower-tech cassette stereos.

Japanese firms have also created a supplier network throughout Southeast Asia that closely integrates the economies of those nations with Japan’s own. Toyota, for example, has built or has plans to build a transmission plant in the Philippines, a metal-stamping facility in Indonesia and a factory to produce electrical components in Malaysia. Critics charge that such arrangements are intended in part to avoid giving any one nation sufficient know-how to develop its own competitive industry.

America has asked Japan to boost its foreign aid to developing nations as a means of burden sharing. But that foreign aid too has contributed to Japan’s growing power in the region. Tokyo’s aid budget, about $9 billion a year, now exceeds America’s roughly $8 billion in foreign assistance. About 62% of Japanese aid goes to Asia, giving Japanese companies influence in the region’s halls of power. Japan also heads the Asia Development Bank, a key lending institution in the region.

Although Japan says it is steadily increasing the amount of aid it is giving for projects that can be handled by non-Japanese companies, aid analysts say the bulk of the projects are still handled either by Japanese companies or by local firms that act as fronts for Japanese interests.

It may be premature to say Japan is putting into place the Greater East Asia Co-Prosperity Sphere that it sought in World War II to guarantee itself natural resources and markets for its products. But many common elements are emerging.

Many Japanese talk of the nation once again becoming a spokesman for the developing nations of Asia that don’t have a voice in international affairs. Shumpei Kumon of the International University of Japan sees the nation replacing its disciplinarian “father” role of the World War II period with a more nurturing “mother” role, a role that in Japan connotes both nurturing and dependence.

A senior engineer at Samsung Electronics, a South Korean conglomerate, says Asian companies are making a mistake in allowing themselves to depend so heavily on Japan. “Once you get into a relationship with a Japanese company, they never let you go; they starve you,” the engineer said. “Korea experienced that when it was a Japanese colony.”

Japan sees the Asian Pacific as a flying-geese formation of economies at descending levels of development. It is at the head of the flock with a gross national product that accounts for about 70% of the value of the region’s total economic activity. Behind Japan are the so-called Four Tigers--Hong Kong, Singapore, South Korea and Taiwan--and behind them are the countries of Southeast Asia.

Even China is being drawn into the system. It is more dependent on trade now than in its pre-Communist days, when it complained that imperialism was leading it astray.

THE SPECTER OF MILITARISM

A major brake holding Japan back from a more active role on the world stage is widespread fear at home and abroad that it will one day re-emerge as a militarist nation.

“During the war, the Japanese military came in first to invade the country, and they were followed by the businessmen,” reflected Renato Constantino, an influential Filipino writer speaking before journalists in Tokyo earlier this year. “Now, businessmen come in first, and because of Japanese economic supremacy, the army, in order to protect this interest, may come after the businessmen.”

Constantly feeding those fears is the widespread perception that Japan, unlike Germany, has not fully come to terms with its behavior in World War II. Japanese textbooks gloss over wartime atrocities, and Parliament member Shintaro Ishihara was recently quoted questioning the very occurrence of the so-called Rape of Nanking--the wartime Japanese massacre that most historians agree took hundreds of thousands of Chinese lives.

Kumon of the International University of Japan shocked his audience after a keynote speech at a recent Hawaiian conference when he said: “The final judgment isn’t in on World War II.” He later explained to a reporter that Japan’s effort to free Asia of white colonialism had not been properly appreciated.

At the same time, many Japanese believe that there is something in their culture that somehow makes them more susceptible to being set on the path toward militarism.

Chie Nakane, one of Japan’s leading sociologists, expressed a concern common among Japan’s intelligentsia when she wrote: “We Japanese have no principles. . . . If someone is able to mobilize this population in a certain direction, there is no checking mechanism.”

“Quite a few Japanese have a sense of racial supremacy,” warned Yukio Matsuyama, chairman of the editorial board at Asahi Shimbun, the prestigious newspaper that has long campaigned against a broader political and military role for Japan. “Many young are overconfident and disdainful of others.”

A young Ministry of Finance official confides over drinks that he and many of his colleagues believe that it is “inevitable” that America and Japan will eventually face each other again in battle.

And Hisahiko Okazaki, the author of several books on Japanese foreign relations, who is now serving as ambassador to Thailand, predicts that “Japan won’t become militaristic as long as it has an alliance with the United States.” But he goes on to warn that “if Washington decides to cut the tie, I predict that in just six months we’ll revert to militarism.”

With talk like that, it is no wonder that Japanese pacifists have fought right-wing efforts to water down Article 9, the so-called peace clause of the Japanese constitution, by which “the Japanese people forever renounce war as a sovereign right of the nation” and disavow maintenance of any war-making potential. That article is the dam holding back a new wave of militarism, the pacifists believe.

Japan and most of Asia would like America to remain the dominant power in the region. So would America. To sustain U.S. pre-eminence, Japan has gradually agreed to American demands for burden sharing and is likely to continue to do so. That is what Pax Americana II is all about.

But it is unclear how much longer America can afford to pay for Asia’s security. And there are limits to how much money America can take for providing the service without both giving up some of its power and generating friction in ties with its allies.

An alternative is to persuade Japan to take on responsibilities that go beyond economic self-interest and to develop new regional institutions for collective security.

Under American pressure, Japan has already built one of the world’s largest military forces, with the responsibility for defending a perimeter around the archipelago extending 1,000 miles from shore.

Some argue that the whole postwar pretense of a demilitarized Japan should now be laid to rest, allowing it to play a more active, though perhaps constrained, role.

Examples of responsible Japanese political and military behavior in the Pacific would go far to alleviate fears of the country’s rearmament. Japan is already taking steps in that direction. In his visit to Southeast Asia in early May, for example, Japanese Prime Minister Toshiki Kaifu met with Cambodian resistance leaders and promised to play a larger role in achieving peace.

Japan has also warned countries such as China that arms exports to hostile nations could result in an aid cutoff. Tokyo’s decision to send a fleet of minesweepers to the Persian Gulf was a decision strongly backed by America and helps clear the way for a future Japanese role in peacekeeping efforts.

Further actions will require more determined Japanese leadership. Some Japanese officials, for example, argue that Japan should forge a more independent policy by establishing relations with Vietnam and North Korea, moves America has been hesitant to make for a variety of domestic reasons, including past wars. If Japan could negotiate settlements agreeable to the parties concerned, including South Korea, it would contribute to stability in the region. Such a move could also speed America’s rapprochement with those nations.

One of the key barriers to building a new order in the Pacific is America’s reluctance to give up any political power in the region. While it keeps calling on Japan to share more of the burden of protecting the Pacific, said Hellmann of the University of Washington, the United States is far less willing to share its power. Japanese leaders have long found it galling that America fails to consult with them on important policy changes ranging from President Richard M. Nixon’s decision to recognize China to President Bush’s decision to send troops to the Persian Gulf.

Although it has vocally supported such regional groups as the Asian Pacific Economic Cooperation organization, created in 1989, America has made little effort to encourage such groups to become authoritative bodies capable of making their own economic and political decisions.

But as the post-Cold War era reduces the importance of U.S. military power, and its economic status in the region shrinks, America may have no choice but to reach out politically to Japan and other emerging regional powers if it is to have a significant role in shaping the future of the Asian Pacific.

Coming to America

Foreign students studying in United States in 1989 and 1990: Australia: 1,740 China: 33,390 Hong Kong: 11,230 Indonesia:9,390 Japan: 29,840 Malaysia: 14,110 New Zealand: 610 North Korea: 31 Philippines: 4,540 Singapore: 4,440 South Korea: 21,710 Taiwan: 30,960 Thailand: 6,630 Total: 168,621

SOURCE: Institute of International Education

Cornering the Car Market

Japanese passenger cars exported 1990:

YEARLY DAILY To Australia: 144,569 396 To Hong Kong: 27,841 76 To Indonesia, 49,195 135 To Thailand: 54,181 148 To United States: 1,876,055 5,140

SOURCE: Japanese Automotive Trade Assn.

Busy Signals

Telephone traffic between the United States and selected Asian countries in 1989. The volumne increased in the calendar year 1990 and is expected to increase again this year.

CALLS YEARLY DAILY Japan to United States 37 million 101,370 United States to Japan 39 million 106,850 Hong Kong to United States 14 million 38,355 United States to Hong Kong 15 million 41,095 South Korea to United States 11 million 30,135 United States to South Korea 18 million 49,315 China to United States 2 million 5,480 United States to China 3 million 8,220

SOURCE: AT&T; International Division

Coming to the Southland

The enrollment of Asian students at local colleges in 1991.

UCLA USC UC IRVINE CHINA 209 405 62 HONG KONG 106 229 24 INDONESIA 33 202 N/A JAPAN 138 170 44 KOREA 179 384 35 MALAYSIA 23 50 N/A PHILIPPINES 25 46 N/A SINGAPORE 38 49 N/A TAIWAN 354 825 56 THAILAND 14 51 N/A

SOURCES: UCLA, USC, UC Irvine Press offices

U.S. Transpacific Trade

(in billions of current dollars)

Imports Exports 1990 1990 AUSTRALIA 4.4 8.5 CHINA 15.2 4.8 HONG KONG 9.5 6.8 INDONESIA 3.3 1.2 JAPAN 89.7 48.6 MALAYSIA 5.3 3.4 NEW ZEALAND 4.9 1.1 PHILIPPINES 3.4 2.2 SINGAPORE 9.8 8.0 SOUTH KOREA 18.5 14.4 TAIWAN 22.7 11.5 THAILAND 5.3 3.0