WPR Article | Strategic Posture Review: Japan As an advanced industrialized democracy and the worldâ€™s third-largest economy, Japan is well-positioned to help shape the economic, security and institutional architecture of the Asia-Pacific as the region increasingly becomes the center of gravity in the international system. Yet this island nation is beset by several challenges, including anemic economic growth, public debt, an aging population, a declining birthrate and political paralysis that could complicate efforts to sustain its strategic and diplomatic weight. The earthquake and tsunami of March 11, 2011, illuminated some of these challenges, and the subsequent nuclear disaster brought energy security to the fore as the country scrambles to find alternative sources amid public anxiety about the safety of nuclear power. Japanâ€™s strategic posture in the region and beyond depends fundamentally on whether political leaders can devise a plan for sustainable growth. As Japan focuses on the urgent need for a growth strategy, it also remains attuned to an external security environment that presents a range of challenges that could affect its national security. These include instability on the Korean Peninsula, nuclear proliferation, the opaque nature of Chinaâ€™s military buildup, territorial disputes, piracy and terrorism. Japanese defense policy continues to evolve in response to changes in the international security environment, but a sluggish economy and ongoing political debates about the role of the Self-Defense Forces (SDF) could continue to put downward pressure on defense spending and render security strategies insufficiently resourced. Furthering joint capabilities under the rubric of its security alliance with the United States and fostering relationships with new partners are priorities for Japan in this period of fiscal stringency. With the United States, Japanâ€™s closest ally, having recently announced a â€œpivotâ€ to the Asia-Pacific to support regional security and prosperity, Japanâ€™s strategic posture will be anchored by the common strategic objectives of the U.S.-Japan alliance as well as its own diplomatic engagement with the developing countries and rising powers of the region. Working with the United States and other partners, Japan has a unique opportunity to champion rules and norms, from trade liberalization to nuclear nonproliferation, that will ensure a future that is as stable as it is prosperous. Sustaining a visible strategic and diplomatic profile will ultimately depend on political stability and economic revival domestically. Foreign Policy The U.S.-Japan alliance constitutes the cornerstone of Japanese foreign policy. The strategic bargain struck between Japan and the United States at the end of World War II, which first took shape with the signing of the San Francisco Peace Treaty in 1951, dictated that Japan would embrace democracy, renounce offensive military capabilities and allow the United States to retain bases in Japan. Japanese Prime Minister Shigeru Yoshida developed his own interpretation of the relationship, later dubbed the Yoshida Doctrine, which captured the essence of Japanese foreign policy in the Cold War era: Japan would ally with the West, do the minimum necessary for defense cooperation with the United States and focus on reviving its economy. This core strategic bargain, clarified in the Treaty of Mutual Cooperation and Security between Japan and the United States in 1960, came under stress periodically as Japan tried to balance a simultaneous desire for increased sovereignty and a security umbrella from the United States. It remained intact, however, allowing Japan to engineer its economic revival while gradually increasing its commitments to defense in response to changes in the international security environment. Building on its increased economic prowess, Japan used economic tools such as official development assistance to advance its own diplomatic initiatives, while considering the bilateral agenda with the United States as the foundation of its foreign policy. A prime example of economic diplomacy was the Fukuda Initiative, named after former Prime Minister Takeo Fukuda, launched in 1977 to promote the economic development of Southeast Asia. Though periods of friction arose occasionally with the United States, such as during the 1980s, when Japanese exports threatened the competiveness of U.S. firms, the strategic logic of the Cold War served to dampen tensions. The end of the Cold War rendered Japanâ€™s pro-West, pro-business, anti-communist formula obsolete. Japanâ€™s foreign policy agenda, as well as the bilateral alliance with the United States, subsequently evolved in response to new challenges, such as the Asian financial crisis, tension on the Korean Peninsula and the fight against terrorism. A joint statement released in June 2011 by the U.S.-Japan Security Consultative Committee (SCC), composed of the U.S. secretaries of state and defense and their Japanese counterparts, is a testament to the current breadth of the foreign policy agenda. Regional priorities include the denuclearization of the Korean Peninsula; encouraging Chinaâ€™s responsible and constructive role in regional stability and prosperity, while improving openness and transparency with respect to its military modernization; strengthening cooperation with Australia, South Korea, India and the Association of Southeast Asian Nations (ASEAN); and encouraging Russiaâ€™s constructive engagement in the Asia-Pacific Region. The document also references concerns about Iranâ€™s nuclear program, the need to support stability and prosperity in the Middle East and North Africa, and the importance of good governance and development in Afghanistan. Other issues include eradicating terrorism, promoting nuclear nonproliferation and encouraging United Nations Security Council reform to include Japan as a permanent member. Japanâ€™s diplomatic agenda also includes regional and global dimensions, beginning with relations with its neighbors. China is Japanâ€™s largest trading partner, but residual tensions stemming from Japanâ€™s occupation of China during World War II, as well as territorial disputes in the East China Sea and Japanâ€™s concerns about Chinaâ€™s military buildup -- particularly its naval expansion -- complicate the bilateral relationship. An incident in September 2010 in which a Chinese fishing boat collided with Japanese Coast Guard vessels near the disputed Senkaku Islands caused a crisis and a series of escalatory responses from China, including the cessation of rare earth metal exports to Japan, though bilateral summitry has since resumed. History and territorial disputes also feature in the bilateral relationship with South Korea, but the prospects for enhanced security cooperation have improved in the wake of a series of North Korean provocations in 2010. Both countries sent observers to each otherâ€™s military exercises with the United States over the past two years, for instance. Japan also has developed robust economic and security ties with Australia and India, the only countries besides the United States with which Japan has signed a joint security declaration. Australia and Japan signed a joint declaration in March 2007 outlining areas for cooperation, including counterterrorism, maritime and aviation security, and humanitarian assistance and disaster relief. In May 2010, the two countries signed an Acquisition and Cross-Servicing Agreement (ACSA), providing a framework for the reciprocal provision of supplies and services for such activities as exercises and training, U.N. Peacekeeping Operations, humanitarian relief operations, operations to cope with large-scale disasters, transportation of nationals and others in overseas exigencies, among other routine activities. Negotiations over a bilateral Economic Partnership Agreement have been ongoing since 2007, with the sticking points due in large part to Japanese sensitivities in the agricultural sector. Japan and India penned a joint security declaration in October 2008 and have developed dialogue channels focused mainly on maritime security: safety, freedom of navigation and anti-piracy activities. The bilateral agenda also emphasizes joint exercises, and in 2009 the Indian navy invited Japanâ€™s Maritime Self-Defense Force (MSDF) to participate in the Malabar Exercises with the U.S. Navy. A bilateral exercise between the Indian navy and the MSDF is scheduled to take place in 2012. Japan and India signed a Comprehensive Economic Partnership Agreement that entered into force in August 2011, and Japan provides substantial development aid for projects such as the Delhi-Mumbai Industrial Corridor. A longstanding dispute over the Northern Territories casts a pall over Japanâ€™s relationship with Russia, but the countries have coordinated closely in the context of the G-8 Summit and the Six-Party Talks focused on the denuclearization of the Korean Peninsula. Energy trade animates the economic relationship, and Japan could expand its interest Siberian gas as it seeks alternative sources of energy supply in the aftermath of the March 11 disasters. Indeed, Prime Minister Yoshihiko Noda stressed the potential to expand bilateral cooperation in the energy sphere on the one-year anniversary of the tragedies.