Japan Given Reassurance on U.S. Ties by Albright

Speaking in the wake of President Clinton’s dramatic visit to China, Secretary of State Madeleine Albright reassured leaders of a nervous Japan on Saturday that their nation remains the “cornerstone” of Washington’s links with Asia.

The U.S-Japanese relationship “is the foundation for stability in the Asia Pacific. It is the cornerstone of our strategic policy in Asia,” Albright told reporters after a morning of meetings with Prime Minister Ryutaro Hashimoto and Foreign Minister Keizo Obuchi.

She described the Japanese-U.S. security alliance as “rock solid for the 21st century--just as it has been for the last four decades of the 20th” and called Washington’s improved ties with Beijing “a win-win-win outcome for the people of the United States, Japan and China.”

Standing next to Albright at the news conference, Obuchi said that his government applauded the success of Clinton’s trip to China, declaring that “progress in U.S.-China relations is essential for . . . stability in the Asia-Pacific region.”

Albright also used the brief stopover on her way home from China to give an additional nudge to the Japanese leadership on the need to push forward with measures to stimulate the country’s sluggish economy--measures considered essential if that dominant economy is to lead the region out of its year-old financial crisis.

Repeated U.S. criticism of Japan’s failure to implement effective economic reforms, coupled with Clinton’s praise of China for resisting competitive pressures to devalue its currency, has only added to the level of discomfort here about the flow of events.

Albright’s effusive reaffirmation of a relationship that has often been difficult, but whose importance has rarely been questioned in the past, is a measure of the unexpected political tremors Clinton’s China trip has sent throughout Asia. While Tokyo received similar reassurances before the trip, the nature of the Sino-U.S. summit seemed to make Albright’s words far more important Saturday.

The visit that many had predicted would be a juggling of symbols defined by embarrassing images of a presidential welcome in Beijing’s Tiananmen Square--where hundreds, perhaps thousands, of people were killed in a 1989 crackdown on pro-democracy demonstrators--instead ended amid speculation that it could alter the very fundamentals of Washington’s Asia policy.

To be sure, the idea that China might somehow replace Japan within the framework of Washington’s Asian priorities is, if nothing else, premature, scholars believe.

As recently as 18 months ago, U.S. officials heatedly debated whether Sino-American relations had reached the level of “partnership.”

By contrast, the U.S.-Japan security alliance has been the focal point of American policy in Asia during much of the post-World War II era.

Despite the end of the Cold War, about 40,000 American troops are stationed in Japan.

Still, there were signs Saturday of Japan’s heightened sensitivities.

“Clinton’s trip to China poses a challenge to Japan,” warned the liberal Tokyo Shimbun newspaper in an article published Saturday. “Washington is displeased with Japan’s economic management and its handling of the ongoing Asian financial crisis. If the U.S. concludes that Japan is incapable of playing a leading role in stabilizing Asian situations, it has to rely on China, with which it is establishing a constructive strategic partnership.”

Although Obuchi praised the depth of Japanese-American links at Saturday’s news conference, he was also careful to note that 11 years have passed since a Japanese premier has been welcomed in Washington with the pomp of an official visit.

While Japanese leaders have traveled to the U.S. since then--Hashimoto himself attended last year’s Group of 7 summit in Denver--a full-scale visit to Washington by Hashimoto scheduled for later this month will be the first by a Japanese premier since Yasuhiro Nakasone’s in 1987.

Hashimoto “will get a good reception,” a senior administration official said.

Albright met briefly with Hashimoto before holding an hourlong meeting with Obuchi that continued over a working lunch.

Her arrival came only hours after Hashimoto gave further indications that his government is prepared to introduce a tax reform package that includes permanent tax cuts--a measure the U.S. and other Asian nations have long urged Japan to take.

Speaking at a political rally in the town of Kumamoto in western Japan in advance of next week’s parliamentary elections, Hashimoto said Friday that such a permanent tax cut is already under study by the national tax commission.

“Their conclusion will be not one-time tax cuts but permanent tax reforms, and I hope their discussions will proceed this way,” Hashimoto said.

On Saturday, Obuchi added additional detail to the idea, saying the government was considering reducing Japan’s unusually high corporate tax rates to what he called “international levels.”

He said a tax-cut package will be presented for legislative action immediately after the national elections to the upper house.

A $124-billion economic stimulus package approved last month included a series of temporary cuts. Firmer talk of a permanent tax-cut package is the latest step undertaken by the government since December to spur economic growth.

Albright on Saturday was given details of a separate, multibillion-dollar “bridge bank plan” unveiled Thursday by Hashimoto’s government as a way to dig the country’s beleaguered banking sector out of a debt crisis similar in scale to the American savings and loan scandals of the 1980s.

She said the administration was encouraged by the plan but urged that it be implemented quickly.

The plan would close a string of insolvent banks yet protect borrowers in good standing by setting up so-called bridge banks.

Although widely anticipated by financial markets, the banking industry plan generated a mixed response when it was finally unveiled, mainly because of worries that the government will shy away from stringent implementation.

U.S. officials have been increasingly frustrated at the dearth of political will in Tokyo to push through economic stimulation measures.

These shortcomings have damaged the government’s credibility and frustrated other nations in the region that see Japanese growth as the key to their own recovery.

“I don’t think anyone seriously believes that the financial situation in Asia can get better . . . unless Japan can grow again,” Clinton said at his news conference in Hong Kong on Friday. “We have a huge stake in getting Japanese growth going . . . and if the first steps don’t work, then you have to just keep doing more.”