harvard asia quarterly spring 2002 - harvard university · spring 2002 volume vi, no. 2 spring 2002...

1Harvard Asia QuarterlySpring 2002

2Harvard Asia Quarterly

Spring 2002

HAQHAQ Editorial StaffEditor in ChiefWai-Yin Alice Yu

Harvard Law School

Executive EditorIlya Garger

Graduate School of Arts and Sciences

Managing EditorCindy Xin Zhou


Production EditorLisa Thomas Chung

Harvard Graduate School of Design

Web EditorMatthias Lind


Area EditorsSharri Clark, Central Asia

Graduate School of Arts and SciencesCaroline Cooper, China

Graduate School of Arts and SciencesJongsoo Lee, Korea

Graduate School of Arts and SciencesEmily Parker, Japan

Graduate School of Arts and SciencesSujata Barai, South Asia

Harvard Law SchoolJin Pao, Southeast Asia

Harvard Law School

Associate EditorsHarvard Law School

Melody Chu Wei Lily ZhouGraduate School of Arts and Sciences Sharon Chen

Rebecca Culley Jay Fann

Holly Gayley Julianna Lee

Michael RichardHarvard Divinity School Seong Lee

Harvard Asia QuarterlyPublishing BoardVirginia Harper-Ho

Harvard Law SchoolVictor Shih


CONTENTS

4 Why Can’t Japan Apologize?Institutions and War Memory Since 1945Steven T. Benfell

A specific set of institutions established after 1945 explains the continuing importanceof the memory of World War II in Japanese domestic politics and foreign relations.Steven Benfell concludes that apologizing to wartime victims is not simply a questionof remorse, but of institutional change in Japan.

12 Interview with Ezra VogelChina-Japan RelationsIlya Garger

Ezra Vogel talks about the challenges facing Sino-Japanese relations in light of theongoing salience of history. He emphasizes that regardless of other factors, the UnitedStates will continue to play a key role in shaping relations between the two countries.

17 Dynamics of Sino-US RelationsThe Perspective from BeijingWilly Wo-Lap Lam

With the approaching retirement of Jiang Zemin as President and Communist Partygeneral secretary, Chinese foreign policy towards the US may change under the newleadership of Hu Jintao. Willy Lam considers the future of Sino-US relations, in light ofthe expected changes in the Chinese leadership and the policies of the Bush adminis-tration.

24 Interview with Sadako OgataJapan and the Reconstruction of AfghanistanEmily Parker

Japan’s special envoy for Afghan affairs and the former United Nations HighCommissioner for Refugees Sadako Ogata talks to HAQ about Japan’s involvement inthe reconstruction of Afghanistan.

28 The Breakthrough GenerationDalit Youth in Contemporary IndiaMarika Vicziany

Caste boundaries are blurring in Indian urban centers, resulting in the creation of a“breakthrough generation” of untouchables who are pursuing opportunities never beforepossible for members of their caste. Using interviews with students at the Universityof Mumbai, Marika Vicziany examines how the values and aspirations of this generationdiffer from those of their parents, and their counterparts in rural India.


Volume VI, No. 2Spring 2002

HARVARD ASIA QUARTERLY is a studentpublication affiliated with the Harvard Asia Cen-ter. HAQ was established in 1997 by mem-bers of the Harvard Asia Law Society in con-junction with students from other graduate andprofessional programs at Harvard University asan interdisciplinary journal of Asian affairs.

LETTERSHAQ welcomes readers’ letters and comments.HAQ reserves the right to edit correspondencefor length or format, and the right to decline toprint. Letters should be addressed to the edi-tor and submitted to the address below, or sentto: [email protected].

SUBMISSIONSHAQ invites the submission of articles and es-says to be considered for publication. Submis-sions should address matters of contemporaryconcern in Asia. Submissions should be deliv-ered in electronic form via email. All submittedmaterials become the property of HAQ. HAQreserves the right to reject submissions and toedit materials for length, format and content.To receive HAQ Editorial Guidelines, submis-sions schedules, or additional information,please contact HAQ at the address below, orvisit our website at www.haqonline.org. Elec-tronic submissions or inquiries should be sentto: [email protected]

SUBSCRIPTIONSAnnual subscriptions to HAQ are available ata rate of $28.00 (individual subscribers) and$35.00 (institutional subscribers) for four issuesdelivered in the United States and $45.00 fordeliveries elsewhere. For more information,please contact HAQ or your academic peri-odical subscription service. Subscriptions areavailable online at our website:www.haqonline.org

Please address all correspondence to:Harvard Asia Quarterlyc/o Harvard Asia Center1737 Cambridge StreetCambridge, MA 02138

USAFax: (617) 495-9976www.haqonline.org

email: [email protected]

Credits:Cover Design by Lisa Thomas Chung

Photo credits: Dan Hui (cover, p.5); MarikaVicziany (p.29)

No material appearing in this publication maybe reproduced without the permission of thepublisher. The opinions expressed in this pub-lication are those of the contributors and arenot necessarily shared by the editors or pub-lishers. All statements of fact and opinion rep-resent the work of the author, who remainssolely responsible for the content. All editorialrights reserved.

Copyright © 2002 by the President and Fel-lows of Harvard College. (ISSN 1522-4147).

38 The Threat of Islamic TerrorismA View from Southeast AsiaEva-Lotta E. Hedman

The notion of a “global war on terrorism” and the threat of “Islamic terrorism” begfurther questions about variation across national contexts. Eva Hedman examinesthe diversity in the responses of Indonesia, the Philippines, Malaysia and Thailand.

45 Korea’s New Development ParadigmPremier Business and Cultural Center in AsiaKihwan Kim

Kihwan Kim outlines a strategy for Korea’s transformation into a business and culturalcenter. While noting that Korea has great potential to become such a mecca forinternational business, he points out the many obstacles in the way of suchdevelopment and offers suggestions for overcoming them.

53 Harvard Asia Business Conference 2002:Phoenix Rising

HAQ provides coverage of the Asia Business Conference held at the HarvardBusiness School on February 1 and 2, 2002. Keynote speeches were made byChina’s Vice-Minister of Finance, Jin Liqun; former US Trade Representative,Ambassador Charlene Barchefsky; and managing director of Salomon Smith Barney,Jeffrey Shafer. Plenary panels and discussion panels addressed a wide range oftopics, with Asia’s economic recovery as the overarching theme.

62 Conference FocusIndia: A Turning Point on Trade?Susan Esserman and Arun VenkataramanFormer Deputy US Trade Representative Susan Esserman andArun Venkataraman discuss the factors that may push India intoa more liberal approach to international and regional trade.


Spring 2002

When he ascended to the Japanese premiership on April 26, 2001,Koizumi Junichiro seemed unlike any of his recent predeces-sors. Elected to the Liberal Democratic Party (LDP) presidency

without major factional support and largely because of his enormous per-sonal popularity, Koizumi seemed to signal a new type of Japanese leaderand a potential reformation of Japanese politics and political institutions.He both promised and seemed to embody change. During the race for theparty presidency, Koizumi declared that, if elected, he would pay an offi-cial visit on the symbolically important day of August 15 to the YasukuniShrine, where Japan’s war dead (including convicted war criminals) areenshrined. Once he won the LDP presidency, Koizumi reaffirmed thiscommitment.

Koizumi’s boldness and candor drew criticism both within Japan andfrom the main targets of Japan’s past militarist aggression, especially thetwo Koreas and China. While other prime ministers had visited Yasukunion August 15 or other days, most did so as “private citizens,” insistingthat the visit was not intended as a political statement or as a reflection ofgovernment views about war responsibility. One previous prime minister,Nakasone Yasuhiro, had visited the shrine in his “official capacity” andsucceeded in setting off a domestic and international firestorm, causingboth Nakasone and his successors to avoid the symbolically provocativeaction throughout the late 1980s and the 1990s. Koizumi’s bold declara-tion therefore seemed to signal change in how the government – or at leastthe Koizumi administration – would address the thorny issue of Japan’swar responsibility. In contrast to the deliberate ambiguity of past premierson the issue, Koizumi’s pledge suggested that his government would beforthright in addressing war responsibility, even in the face of inevitablecriticism and possible harm to relations with Japan’s neighbors.

By August 15, however, it was clear that Koizumi’s statement on theissue was not a signal of a real change in the government’s approach to the“politics of apology.” Instead, it was yet another instance of a long-estab-lished pattern of forthright statements followed by cautious back-track-ing, followed in turn by deliberate and carefully considered ambiguity. Inthe end, Koizumi did visit Yasukuni, but on the less symbolically loadedday of August 13 rather than the actual anniversary of the end of the war.And on August 15, Koizumi issued carefully worded statements that indi-cated “deep remorse” for the events of the past and “sincere condolences”to those who suffered because of those events. “We have caused greatpain and suffering to other nations, particularly our Asian neighbors, dur-ing the war,” he said. Although Koizumi’s statements were meant to mol-lify Japan’s critics, the visit to Yasukuni (which appealed to a domesticright-wing constituency) counter-balanced any goodwill created by con-ciliatory rhetoric. In short, despite Koizumi’s initial boldness, his ultimateactions reaffirmed the deliberately ambiguous pattern of his predeces-sors, in which cautious conciliation is paired with actions that predictablyprovoke outrage from Japan’s neighbors.1

A clear example of this pattern can be seen in the experience ofHashimoto Ryutaro, Koizumi’s chief rival in the April 2001 LDP presi-dential election and prime minister from 1996 to 1998. Hashimoto’s ownstatements and actions prior to his assumption of the premiership suggest

WHY CAN’T JAPAN APOLOGIZE?INSTITUTIONS AND WAR MEMORY SINCE 1945

BY STEVEN T. BENFELL

Steven Benfell is Assistant Professor of PoliticalScience at Western Michigan University. In 1997-1998 he was a post-doctoral fellow at HarvardUniversity’s Weatherhead Center for InternationalAffairs. His research focuses on nationalism andnational identity, collective memory, andJapanese politics and international relations.


a strong affinity with what may be called a “revisionist” po-sition on the war. Like many who question both the ambigu-ity of official government statements and the “masochism”of progressives who call for more open and self-critical ac-counting of Japan’s imperialist past, Hashimoto resentedmoves toward open apologies and overtly opposed additionalgovernment-funded compensation for atrocities committedby Japanese forces. In 1993, when non-LDP prime ministerHosokawa Morihiro issued an unprecedented (for a sittingprime minister) statement that Japan’s war had been a “warof aggression” (shinryaku senso), Hashimoto strongly criti-cized the prime minister. While Hashimoto did not deny thatJapanese actions in China and Korea had “contained elementsof aggression,” he criti-cized Hosokawa’s state-ments for implying thatonly Japan had been ag-gressive (when,Hashimoto claimed,Western powers hadacted with equal orgreater aggressiveness),and for opening the doorto myriad unjust repara-tion claims from self-de-fined “victims” of Japa-nese aggression.2 More-over, Hashimoto hadlong aligned himself withthe vehemently revision-ist Japan Bereaved Families Association (Nihon Izokukai,or JBFA), even serving as president of the group while hewas a sitting Diet member and a member of the cabinet.Hashimoto also visited the Yasukuni shrine with relative regu-larity, publicly trumpeting the interests and views of the JBFAand other revisionist groups. Based on this past, one couldperhaps conclude that when prime minister, HashimotoRyutaro would promote a revisionist agenda with regard toJapan’s war responsibility.

Once he ascended to the premiership in January 1996,however, Hashimoto’s revisionist views softened (or appearedto soften), and his own statements and actions followed theambiguous pattern of his predecessors rather than the pro-vocative actions and statements one would expect of the presi-dent of the JBFA. Indeed, Hashimoto felt compelled to re-sign the presidency of the JBFA on his assumption of theoffice of prime minister. Rather than visit Yasukuni on Au-gust 15, as he had done previously as a Diet member and asitting cabinet minister, Hashimoto visited in July, insistingthat his visit was not “official” but “personal” and was infulfillment of a childhood promise to an older friend whodied in the war. Moreover, in his official statements on theanniversary of surrender, Hashimoto drew upon the alreadyestablished rhetoric of ambiguity employed by most of hispredecessors. War itself, in Hashimoto’s pronouncements,was to blame for the devastation and inhumanity of the con-flict, as all Japanese (even the emperor) suffered with therest of Asia.3 Even Hashimoto, whose previous statementsand actions pegged him as a revisionist, toed the ambiguousgovernment line during his years in the premiership.

Koizumi, then, was not the first to express stark viewsand then choose (or be forced) to moderate those views andretreat into deliberate ambiguity. From the earliest postwardays to the present, in fact, Japanese leaders have followedthe same general pattern in addressing the issue of Japan’sresponsibility for the war, no matter the ideological or politi-cal tendencies of the leader involved. From the very first of-ficial war commemoration in independent Japan (held on theday the occupation ended in 1952) to the statements and ac-tions of Koizumi in the summer of 2001, Japanese leadershave taken a very similar approach to the politics of apology.

This deliberately ambiguous approach reflects a view ofhistory that may be called the “renegade” view of the war.4

In this view, only a smallgroup of “renegades” –mostly military men likeTojo Hideki – led Japaninto war. This group es-sentially usurped thepower of the emperor andmisled the Japanesepeople into a self-destruc-tive and imperialist war.Individual soldiers whofought for Japan, the Japa-nese people as a wholeand even the emperor him-self were blameless; theywere “victims” of a mili-tarist conspiracy. Accord-

ing to this view, issues of Japanese guilt were settled with theTokyo War Crimes Trials and other less prominent tribunals,and issues of reparation were settled with the San FranciscoPeace Treaty of 1951 and the series of bilateral agreements(with the signatories of the Peace Treaty and also Taiwan,South Korea, and the People’s Republic of China) that fol-lowed. As a result, all but a handful of Japanese join the manyKoreans, Chinese, Filipinos, Malays, Americans, and count-less others as “victims” of the war, and additional apologiesand offers of compensation are unnecessary. As suggestedby the deliberate ambiguity of Hashimoto and Koizumi, this“renegade” view has been the dominant and “official” viewheld by the political and media mainstream in postwar Ja-pan, although (as discussed below) it has not been hegemonicin the sense that it supercedes and de-legitimizes other viewsof the war.5

But why has this “renegade” view of the war remaineddominant? Why do virtually all prime ministers – even thosewho seem to advocate revisionist views, like Hashimoto andperhaps Koizumi – ultimately retreat into this official view?Why are the relatively forthright apologies of more progres-sive prime ministers like Hosokawa Morihiro (1993) andMurayama Tomiichi (1994 and especially 1995) watereddown by the opposition they engender and their own ulti-mate ambiguity? Why does the pattern seen in the careers ofHashimoto and Koizumi repeat with such regularity?

The answers to these questions lie in an analysis of theinstitutional structure set up in Japan after the end of WorldWar II. In this article, I outline this argument by first discuss-ing how a set of institutions helped channel official Japanese


Spring 2002

memory of the war and placed boundaries on how govern-ment leaders should speak and act in commemoration andremembrance of the war. Even ideologically opposed lead-ers have spoken and acted within the same set of institutionalconstraints, with a correspondingly high level of continuityin official discourse on the war. Second, I briefly discuss someof the key general consequences of this institutional frame-work, as Japanese leaders and other actors have respondedto the set constraints. Finally, I offer a few reflections on theimplications of my analysis for the future of the politics ofapology, both within Japan and in Japan’s relations with itsneighbors.

THE INSTITUTIONAL CONTEXT OF THE POLITICS OF APOLOGY

In postwar Japan, the meaning and political importanceof historical interpretations were bounded and channeled bya set of seemingly disparate institutions. These institutionshelped codify and propagate – and ultimately came to em-body – the “renegade” view of history outlined above. In sodoing, they set the stage on which subsequent politically-relevant historical discourse would unfold, and ensured thatthis stage was invariably a political one. These institutionsincluded: the Tokyo War Crimes Tri-als and the occupation purges of war-time leaders; a refashioned politicalrole for the emperor; internationaltreaties that codified war responsibil-ity; a set of cultural institutions likemuseums, rituals, and commemora-tion days; and history education inJapan’s relatively centralized educa-tion system. I will discuss each ofthese institutions briefly, explaining how each helped set theterms of politically relevant historical debate in postwar Ja-pan.

The Tokyo Trials and Occupation Purges

The International Military Tribunal for the Far East (orTokyo Trials, as it is more readily known) codified Japanesewar responsibility and enshrined the “renegade” view of thewar as official gospel. The outcome of the trials, as pros-ecuted by the Americans and facilitated by prominent Japa-nese witnesses and even some of the defendants, clearly sup-ported the “renegade” view. Page after page of testimonypoints the finger at a small group of militarists led by TojoHideki. Trial testimony paints a picture of tightly focusedindividual responsibility for the war and its atrocities, as onewould expect from a war crimes tribunal modeled after do-mestic criminal courts; a more nuanced, complex, and con-textually rich account is nowhere to be found.

Moreover, relatively few Japanese leaders were ulti-mately tried and convicted of the “crimes against peace” withwhich the allies charged them – a fact which reinforces theview that only a handful of renegade leaders was responsiblefor aggression. Most glaringly absent from the court’s in-dictments was the emperor, in whose name the war had beenpursued and in whom the 1890 constitution vested ultimateand inviolate sovereignty. Indeed, it was a deliberate policy

of the US occupation authorities to exonerate the emperor ofblame, as US authorities hoped to use the emperor in achiev-ing their own aims for Japan. General MacArthur, the Su-preme Commander for Allied Powers (SCAP), prohibitedthe prosecution and the defense from calling the emperor asa witness, and SCAP refused to carry out even a peremptoryinvestigation of the emperor’s possible liability for actionscarried out by his formal subordinates.6

Once the verdict was issued, SCAP further ensured thatthe “Tokyo Trials view of history” remained dominant in Ja-pan. American censors required the Japanese press to sup-port the verdict, to back up the prosecution’s specific chargesagainst Tojo and other Japanese leaders, and even to use theterm “Pacific War” (thus de-emphasizing Japanese aggres-sion in mainland Asia) when referring to the conflict. LikeJapan’s conservative leaders, US officials hoped the trialswould settle the issue of war responsibility so attention couldbe more clearly focused on the task of rebuilding Japan as anUS ally. In both process and outcome, the Tokyo Trials codi-fied, institutionalized, and propagated the “renegade” viewof the war. They helped weave this view of the war into theinstitutional tapestry of postwar Japan, ensuring that this viewachieved and maintained official sanction.

In addition to the Tokyo Trials,the waves of purges carried out dur-ing the occupation further entrenchedthe “renegade” view of the war. Aswith the Tokyo Trials, relatively fewpeople were removed from public life(0.29% of the population, in contrastwith 2.5% in US-occupied areas ofGermany), and many of those were ul-timately rehabilitated, even before the

end of the occupation.7 However, those who were purgedincluded many who may have earlier questioned the “ren-egade” view of the war that prospered under Yoshida Shigeruand other postwar leaders. For example, had more revision-ist figures like Hatoyama Ichiro or Kishi Nobusuke (both ofwhom served as prime minister after the occupation) foundthemselves in power before the institutional framework ofpostwar Japan had been established, the outcome may havebeen quite different. As a result, while the Tokyo Trials insti-tutionalized the view that relatively few were responsible forthe war, the occupation purges pushed out of office thosewho may have fostered an even more narrow view of warguilt. Thus the purges, in addition to the Trials, helped insti-tutionalize the “renegade” view that has dominated postwarpolitical discourse about the war.

The Emperor

The constitutional and symbolic reinterpretation of therole of the emperor – also carried out under American occu-pation – further institutionalized the “renegade” view of thewar. For example, the explicit political position of the em-peror was formally rewritten in the postwar Constitution. Theemperor – the former “head of the empire” in whom “therights of sovereignty” were combined – now was cast in Ar-ticle 1 as the “symbol of the state and of the unity of theJapanese people.” The imperial throne was thus shorn, at least

The Tokyo Trials reinforced theview that only a handful of

renegade leaders wereresponsible for Japan’s

aggression.


in theory, of its political potency and – more to the point – itspolitical accountability. Both Japanese and American authori-ties proclaimed that this new politically inert role for theemperor was merely the formalization of the long-standingreality in Japan. Thus, in addition to removing the postwaremperor from mere politics, this move also implicitly ab-solved the emperor of blame for the war. If Hirohito had al-ways been a mere symbol of the Japanese state, then clearlyhe had not called the shots or even condoned the actions ofhis militarist subordinates. The leaders who did lead Japaninto war were not subordinates at all, it could be argued, butusurpers of the emperor’s authority and abusers of the legiti-macy that authority provided. And if the emperor himself –he in whose name the war had been declared and atrocitieshad been committed – was blameless, how could the Japa-nese people be held responsible for the war? If the emperorhad been duped and victimized by the militarist conspiracy,then so too had the Japanese people, the civilian leadership,and even the majority of officers in the army. The constitu-tional reinterpretation of the emperor’s position clearly rein-forced the “renegade” view of the war.

In addition to explicitly reinterpreting the emperor’sconstitutional position, occupation and government authori-ties symbolically reinforced this rein-terpretation. For example, documentsand diaries were released which por-trayed Hirohito as a man of peace whoopposed the attack on Pearl Harborand worked behind the scenes to per-suade militarist leaders to surrender,culminating in his decisive interven-tion in the deliberations that producedthe surrender announcement of August 15, 1945. Moreover,while the typical image of the wartime emperor was of a mili-tary officer clad in full regalia riding a white stallion, thepostwar image was of “Citizen Hirohito,” a quiet, unassum-ing “everyman” who wore plain Western clothes and a brownfedora. Hirohito was sent on a wave of public tours and ap-pearances to reinforce this image.8 This symbolic positionof the emperor as a peace-loving symbol of “ordinary” andnow “pacifist” Japan was explicitly reinforced in the 1947constitution, whose first two chapters outline the symbolicposition of the emperor and the postwar renunciation of war.In short, then, both the new constitutional position of theemperor and the symbolic reinforcement of that position fur-ther institutionalized the “renegade” view of the war.

International Treaties

A set of international treaties and agreements, combinedwith the unwillingness of the Japanese government to pro-vide officially-funded reparations or compensation beyondthe relatively token amounts determined in the 1950s, formedthe international legal basis for the “renegade” view of his-tory. Most important was the San Francisco Peace Treaty of1951, signed by Japan and fifty of its former enemies (nota-bly absent were the Soviet Union, the People’s Republic ofChina, Taiwan, and both North and South Korea). This treatywas important because it explicitly codified the monetarycomponent of Japan’s war responsibility, and it set the inter-

national legal precedent for subsequent bilateral reparationsagreements. Article 14 of the treaty stated that “the AlliedPowers waive all reparations claims,” and that Japan’s re-sources were “not presently sufficient” to pay large sums tocover damages inflicted during the war. The treaty also rec-ognized (in Article 11) the verdicts of the Tokyo Trials as thefinal word on Japanese war responsibility.

As noted above, the most important state “victims” ofJapanese imperialism (China and the two Koreas) were notsignatories to this treaty. But when normalization agreementswere signed between Japan and South Korea (1965) and be-tween Japan and the People’s Republic of China (The Tanaka-Zhou Communique of 1972 and the Treaty of Friendship of1978), the San Francisco framework was reinforced. SouthKorea demanded the relatively paltry sum of $500 millionfrom the Japanese government (at a time when the Japanesegovernment had “sufficient resources” to pay much more),with no provision for future claims, while the Chinese fullyrenounced their “demands for war indemnities from Japan.”These bilateral agreements thus reinforced the principles ofboth material and moral war responsibility embedded in theSan Francisco Peace Treaty. Indeed, since all three of thesetreaties were signed, the Japanese government has repeat-

edly referred to their legal precedencein denying the legitimacy of subse-quent claims (for example, from so-called “Comfort Women” or formerprisoners of war) for reparations togovernments or compensation to in-dividuals.9 The international legalframework established by these trea-ties remains in force today.

Cultural Institutions

Not only did formal government institutions embody andpropagate the “renegade” view of the war, but a set of whatmay be termed “cultural institutions” – including museumsand commemoration days with accompanying rituals andceremonies – further reinforced the “renegade” view andhelped set the terms of political discourse about the war. In acountry where museums abound and where aspects of an-cient, medieval, and early modern history are widely com-memorated, museums on the war have, until very recently,been few and far between. Those that did memorialize thewar often focused on specific aspects of the war or glorifiedthe nobility of Japanese sacrifice during the war. In the lattercategory are museums that take at least an implicitly revi-sionist perspective, such as the Yushukan Hall at the YasukuniShrine or the kamikaze pilot museum at Chiran in KagoshimaPrefecture. These museums – far from exploring the issue –ignore the issue of Japan’s war responsibility. They explic-itly glorify Japanese servicemen and their aims, placing par-ticular emphasis on those who (like the kamikaze pilots) com-mitted suicide in the name of the emperor. While neither ofthese museums (nor others like them) is officially sponsoredby the Japanese government, the Yushukan was until recentlythe only prominent and permanent museum in Tokyo whichexplicitly remembers the war.

Museums commemorating the atomic bombings – espe-

If the emperor himself wasblameless, how could theJapanese people be heldresponsible for the war?


Spring 2002

cially the Peace Museum in Hiroshima – have been moreprominent and heavily visited. The “Peace Museum” wasnot designed to memorialize the totality of the war. Rather,its focus has been overwhelmingly (and appropriately) onportraying the depth and scale of suffering caused by theatomic bomb – a trait it shares with the similar museum inNagasaki. Until 1995, the museum also neglected to placethe bombings in a historical context, building instead on theassumption that the bombings were evil and ought never tobe repeated, no matter the context. Themuseum thus became a testament tothe horrors of atomic war. Moreover,almost all Japanese children have beentaken through one of the peace muse-ums on school-sponsored field trips,while equally powerful exhibitions onJapanese aggression or atrocities have until very recently beenunavailable for similar educational purposes. As a result, atleast two generations of Japanese school children have beenexposed to strong images of Japanese suffering under atomicattack without corresponding education in the suffering in-flicted by the Japanese during the same general conflict.Therefore, the Peace Museum has perhaps unintentionallyfostered the notion of Japanese victimhood that underlies the“renegade” view. Only in the 1990s did museums appearwhich featured more open exhibits of Japanese aggressionand atrocities, but because they are so new and have fewervisitors than those mentioned above, their long-term influ-ence remains unclear.10

Commemoration days, and the rituals and ceremoniesheld on those days, also contributed to the official dominanceof the “renegade” view. For example, August 6 memorial-izes the date when the first atomic bomb was dropped onHiroshima. Each year, an extraordinary gathering of atomicbomb victims (hibakusha), prominent politicians (usuallyincluding the prime minister), progressive peace activists,ordinary citizens, and even right-wing revisionists convergeson Hiroshima’s Peace Park, where speeches are given and aperiod of silence is observed in memory of those who diedfrom the bomb and its after effects. Almost invariably, theprime minister gives a speech in which he decries the use ofnuclear weapons and proclaims Japan’s intention (as the onlynation ever to suffer atomic attack) to fight for nuclear non-proliferation and world peace. While the purpose and mostof the effects of this commemoration are laudable and im-portant, one unintended consequence may be the furtherpropagation and establishment of the notion of Japanesevictimhood, as the residents of Hiroshima (and Nagasaki,whose memorial service is held three days later) clearly suf-fered enormously and uniquely during the last war. This com-memoration day thus helped to institutionalize and maintainthe idea that a small group of renegade militarists led theinherently peaceful Japanese population to near annihilationby nuclear weapons.

In addition, more general war memorial ceremonies havebeen widely and repeatedly held in postwar Japan, especiallysince the end of the occupation. Over time, the most widelyreported ceremonies have been held on August 15, the anni-versary of Japanese surrender. This date has invariably fea-tured important speeches, symbolic actions, and commemo-

ration rituals that have helped institutionalize aspects of thewar. While never officially recognized as a national holiday,August 15 corresponds with the celebration of o-bon, theperiod when many Japanese return to the home towns(furusato) and honor their ancestors. Hence, it has been usedas a date on which to remember those who perished duringthe war.

Each August 15, at least three events of symbolic im-portance occur. First, the prime minister offers a speech or

statement on the war, often issuing“apologies” and memorializing Japa-nese and other “victims” of the conflict.Second, this speech has been given forover thirty years at an enormous be-reavement ritual held at Tokyo’sBudokan Hall and attended by top gov-

ernment officials, the emperor and empress, and the leadersand members of the JBFA. Third, many top government offi-cials choose this day to worship at Yasukuni Shrine to bothhonor the war dead and at least implicitly glorify their ac-tions. Prime Minister Mori Yoshiro’s speech at the August15, 2000 Budokan gathering is typical in that he explicitlyrecognized Japanese victims of the war, expressed “regret”and “condolences” (but not “apology”) to largely unspeci-fied non-Japanese victims of the war, and blamed the suffer-ing on war in general rather than the specific actions takenby a government or people. He said, “The war caused tre-mendous pain and sorrow not only to our country but also topeople in many countries, particularly those in neighboringAsian countries. We would like to express our deep regretand condolences to them sincerely.” War responsibility insuch a statement is ambiguous, to say the least. The implica-tion is that war just happens, rather like a natural disaster.

Though Mori is not known for his eloquence or politicaltact, his statements in 2000 actually follow a long-standingpattern set decades earlier and followed by nearly all of Mori’spredecessors. Even when some have attempted to break thispattern, they have run into significant obstacles. In 1995, forexample, prime minister Murayama Tomiichi, a Socialist incoalition with the LDP, made it the goal of his administrationto pass a strongly-worded “apology resolution” through theDiet and issue a clearly-worded apology of his own on Au-gust 15. In the end, however, the Diet refused to passMurayama’s resolution and instead passed its own watered-down version that left war responsibility ambiguous and im-plicitly indicted the Western powers for forcing Japan intowar. Hence, while Murayama’s statement on August 15 didexpress the clearest apology to date, his failure to pass theapology resolution and the actions of others in his own ad-ministration (many of whom worshiped at Yasukuni evenwhile Murayama issued his statement) continued the patternof ambiguity and obfuscation set by more conservative poli-ticians. Rather than defuse the issue of war responsibility, asMurayama intended, the events of 1995 kept the issue aliveand well.11

History Education

In addition to the institutions already discussed, the na-tional education system also helped propagate and establish

The Peace Museum has perhapsunintentionally fostered the

notion of Japanese victimhood.


the “renegade” view of history. From the early postwar pe-riod, the Japanese Ministry of Education, with the implicitand often explicit blessing of the occupation authorities, hassought to ensure that accounts of the war placing blame onanyone other than a small group of militarists do not appearin officially sanctioned textbooks. In comparison with muchmore detailed accounts of Japan’s earlier history, official his-tory education has downplayed and even ignored the war.When the war is discussed, accounts of the atomic bombingsor of the fire-bombing of Japanese cit-ies (and the resultant societal effects ofthe bombings) are more prominent thanmore embarrassing aspects of the war,including the atrocities committed.Therefore, it is not entirely accurate tosay that the government has sought toreassign war responsibility in its offi-cially approved educational materials;rather, it has largely sought to avoid the issue altogether. Thiscan be seen in the typically bland and passive prose used todescribe the war in textbooks, in Ienaga Saburo’s (and oth-ers’) legal attempts to force the Ministry of Education to al-low more open treatments of the war in its textbooks, and inthe ultimate failure of Nakasone Yasuhiro’s administrationto introduce revisionist textbooks in the 1980s.12 Only in the1990s, and after the death of Hirohito, the (albeit temporary)collapse of LDP dominance, and the exertion of enormouspressure from progressives at home and abroad, did the Min-istry of Education begin to introduce even tepid accounts ofJapanese atrocities. Even then, a powerful array of politi-cians, officials, and conservative academics united to opposesuch accounts.

Furthermore, the entrance examinations, which governeducational advancement and on which most educational ef-fort is focused, almost entirely ignore the war. Hence, unlikeother aspects and eras of Japanese history which appear onentrance examinations, the war rarely crosses the educationalstage of Japanese students preparing for the rigorous exami-nations. Therefore, while the control of the Ministry of Edu-cation is far from monolithic, and while some individualteachers have defied ministry guidelines and introduced theirstudents to more balanced accounts of the war, the Ministry’spolicies and the structure of the examination system havecontributed to the dominance of a view that gives a place toJapanese suffering and downplays the suffering inflicted byJapan on others.

In summary, then, a set of seemingly unrelated institu-tions shaped and channeled politically relevant historicaldebate in postwar Japan. These institutions, which includedthe Tokyo Trials, a redefined imperial institution, a set ofinternational treaties and legal precedents, cultural institu-tions like museums and commemoration rituals, and historyeducation, helped establish as dominant the “renegade” viewof the war, ensuring that view would set the terms of the de-bate and would remain the official view espoused even byprime ministers whose personal inclinations (like Hashimotoand Koizumi) contradict its basic tenets.

FOUR CONSEQUENCES OF THE INSTITUTIONAL FRAMEWORK

In addition to establishing the “renegade” view as theofficial and dominant, if not hegemonic, view of the war inpostwar politics, the institutional framework discussed abovehad at least four perhaps unintended consequences. Theseconsequences have in turn contributed to the continuing im-portance, and even inevitability, of war memory in Japanesepolitics and political discourse.

Alternative Views of the War

While the “renegade” view out-lined earlier remained both dominantand orthodox, it also opened the doorto alternative views, for reasons dis-cussed below. The first of these alter-natives might be termed the “progres-

sive” or “structuralist” view, which holds that the countrywas not led into war by a small clique of militarists. Rather,the structure of the political, economic, and social systems inprewar Japan were inherently flawed and led inevitably towar. According to this view, then, the Tokyo Trials outlinedan exceedingly narrow conception of war responsibility,which in fact spreads to the system itself and indirectly im-plicates those who upheld or even refused to challenge theprewar system. Although this view’s emphasis on “structural”culpability implicitly downplays the notion of individual re-sponsibility for the war, it also implies the need for greaterlevels of compensation, more far-reaching and open apolo-gies, and even broad structural reforms in Japanese politicsand society.

The progressive view remained a challenge to the “ren-egade” view throughout the postwar period, partly becausethe official view held up so poorly to historical scrutiny. In-deed, the prevalence of the “renegade” view depended onthe ability of the Ministry of Education and other officialorganizations to suppress, paper over, or somehow explainaway evidence of Japanese aggression and atrocities that didnot explicitly blame a cabal of militarists. The governmentand other supporters of the “renegade” view were able to doso only imperfectly, and the progressive view found adher-ents among some of Japan’s more prominent intellectuals,whose positions in the academy and access to the media en-sured there was an audience for their critique of official or-thodoxy.

Similarly, the very triumph of the “renegade” view al-lowed for the resurgence of a largely right-wing revisionistinterpretation of the war. In this revisionist perspective, nei-ther a small group of militarists nor the structure of Japan’sprewar system is to blame. Indeed, Japan is not to be blamedat all. At worst, Japan launched a self-defensive war to fendoff the Western imperialists who threatened Japan’s indepen-dence in East Asia. And at best, Japan’s war was a noble one,aimed not at imperialist conquest but at liberating East Asiafrom Western domination. This view was fed by the relativearbitrariness with which the Tokyo Trials were carried outand by the fact that the emperor’s war responsibility was neveradmitted. Revisionists reasoned that if the emperor himselfwas blameless, and if the Trials unfairly singled out only a

Entrance examinations, whichgovern educational advancementand on which most educationaleffort is focused, almost entirely

ignore the war.


Spring 2002

handful of defendants, then is anyone really to blame? Forrevisionists, then, postwar institutions revealed not the guiltof a small group of militarists but the vengeance imposed onJapan by the victorious Americans. After the establishmentof the “renegade” view as official orthodoxy in postwar Ja-pan, this revisionist view posed a constant challenge, boththrough interest groups like the JBFA and by politicians whoquestioned the “victor’s justice” imposed by the Americansin the Tokyo Trials.13

Revisionist Interest Groups

Partly because such alternative views prospered underthe dominance of the “renegade” view, interest groups whosought to influence the debate also emerged. Foremost amongsuch groups is the JBFA. This group, founded in 1947 tofight for the restoration of military pensions and condolencepayments cut off by the occupation authorities, later (espe-cially under the leadership of convicted war criminal, latercabinet minister, and conservative power-broker KayaOkinori) moved toward and ultimately embraced a revision-ist agenda. The group built a formidable support base andgrew in political clout through its provision of financing tocooperative politicians and its ability to deliver blocks ofvotes. Partly because of the political influence of the JBFA,the Japanese government has given “Japanese victims” ofthe war a package of benefits exceeding 40 trillion yen.14 In1995, when the Murayama government proclaimed its inten-tion to pass an apology resolution through the Diet, the JBFAjoined with other like-minded groups in pressuring Diet mem-bers to mobilize against the resolution. The “National Com-mittee” set up by the JBFA threatened to withdraw electoralsupport from conservative politicians who supported (or evenrefused to oppose) the resolution. As a result, the resolutionactually passed not only avoided apology, it also implicitlyblamed the Western powers for the outbreak of war. Eventhen, a large number of Diet members boycotted the voterather than be associated with the resolution. The JBFA thusplayed an important role in mobilizing opposition to the apol-ogy resolution – to the point that the final resolution pleasedno one (including Murayama, and the Chinese and Koreanswho had been the intended audience). This powerful revi-sionist interest group has proven its ability to influence po-litical discourse on the war.15 Other groups remain similarlyactive – as evidenced by the role played by the nationalistShinto organization Sodaikai, one of whose members isformer LDP secretary general Koga Makoto – in persuadingPrime Minister Koizumi not to abandon his earlier pledge tovisit Yasukuni Shrine.16

The Politicization of the Past

The close tie between postwar institutions and the “ren-egade” view of history, coupled with the vigorous challengesto that view, ensured that history would remain a highly con-tested political issue in postwar Japan. To question the “ren-egade” view is also to question the institutions that estab-lished and maintain (and are partly legitimized by) that view.For example, to adopt a “structuralist” view of the war isalso to question the legitimacy of the postwar institutional

structure. For if the very structure of prewar institutions ledinevitably to war, then the continuity of many of those insti-tutions into postwar Japan signals the need for far-reaching(even revolutionary) institutional and structural change. Onthe other hand, if the revisionist view that Japan is not toblame triumphs, then what changes were instituted duringthe occupation and after are illegitimate. If Japan was not atfault in the war, then what is the need for a new constitution,for a redefinition of the emperor’s political role, for a prohi-bition on war and the maintenance of armed forces, and forother changes that were instituted in the postwar era? TheTokyo Trials and the occupation itself thus seem merely thevengeance imposed on Japan by the victorious Americans,not the noble efforts to “demilitarize” and “democratize”Japan so its government could be returned to the people (fromthe militarists who had usurped authority).

It should be no surprise, then, that most prominent poli-ticians and opinion leaders remain disturbingly ambiguousabout historical views of the war. Even those (as Hashimotoand Koizumi, above) who express strong views before reach-ing the highest positions find themselves retreating into am-biguity when faced with the potential political and institu-tional consequences of taking a stronger stand. The very in-stitutions on which they depend to preserve the postwar sys-tem rely on a view of history that places the blame on theshoulders of those already punished and executed. To adhereto less ambiguous views is to question the institutional frame-work and to acknowledge the revolutionary or reactionarydemands of those who hold stronger views.

In contradiction to “conventional wisdom” in the West-ern media, then, the inability of Japanese leaders to present aunited face in apologizing for past aggression does not re-flect the notion that war responsibility has never been ad-dressed in Japan. Neither does it reflect the notion that Japanis a nation of right-wing revisionists and closet militarists.While Japan has its share of revisionists, most Japanese re-ject that view. Rather, the very plurality of views, coupledwith the close tie between historical interpretation and po-litical institutions, is one reason why the issue is so difficultto resolve. While the “renegade” view has characterized theofficial government line, the government has rarely if everspoken with a united voice. Even when the cabinet has unitedbehind a single statement or point of view, other prominentpoliticians or opinion leaders have betrayed that unity. Theissue is too closely tied to hotly contested political and ideo-logical issues to be resolved in an easy and straightforwardmanner.

Japanese Sense of Victimhood

Finally, another consequence of the dominance of the“renegade” view has been the emergence and prevalence ofa sense of “victimhood” in postwar Japan. The one issue onwhich all – progressives, revisionists, and proponents of the“renegade “ view alike – agree is that the atomic bombingsof Japan were evil and should never be repeated. The onecommemoration in which all Japanese share, regardless ofthe specific view of the war, is that of the atomic bombings.As a result, virtually all Japanese share at least some sense ofJapanese victimhood that is inextricably intertwined with such


commemoration. Moreover, this sense of victimhood reso-nates powerfully with many older Japanese whose actualexperiences of genuine suffering are much more vivid thanthe obscured accounts of suffering inflicted by Japanese.Perhaps the clearest indication of the power of this sense ofvictimhood is the fact that official government compensa-tion to those classified as Japanese victims of the war out-strips that extended to foreign victims on a scale of roughly40 to 1.17 This sense of victimhood is another powerful con-straint on any political leader who may seek to issue a morestrongly worded or internationally acceptable apology or of-fer of compensation.

FINAL REFLECTIONS

In summary, a specific set of institutions established inJapan after 1945 explains the continuing importance of thememory of World War II in Japanese domestic politics andforeign relations. These institutions, which included the To-kyo War Crimes Trials, the redefined position of the emperor,international treaties, cultural institutions of commemoration,and history education, established the “renegade” view asthe official story of the war and bounded subsequent politi-cal discourse on the war. Moreover, this institutional frame-work had a number of perhaps unintended but very impor-tant consequences, including the emergence of alternativeviews to contest official orthodoxy, the rise of powerful in-terest groups to place further constraints on debate, thepoliticization of the past, and a widespread conception ofJapanese victimhood. Each of these consequences has in turncontributed to the persistent salience of this issue in Japa-nese politics and to the apparent difficulty of reconciling his-torical views in Japan’s relations with its former enemies.

Thus, even when seemingly committed revisionists likeHashimoto Ryutaro ascend to Japan’s highest positions ofpower, they retreat into the ambiguity and institutional safetyof the “renegade” view established as official orthodoxy. Andeven when seemingly committed reformers like KoizumiJunichiro promise both far-reaching institutional change anda shift in the politics of apology, they most often backtrackinto the same rhetorical and symbolic territory inhabited byless ambitious predecessors. Moreover, my analysis suggeststhat this issue will likely remain difficult to resolve in theforeseeable future, because this issue is so closely intertwinedwith the postwar institutional framework. Fundamental insti-tutional change must accompany transformation in the po-litical discourse on war responsibility. A resolution to thisissue, in other words, is not just a matter of a Japanese leaderfinally stepping forward and issuing the apology that has longbeen desired by many both inside and outside of Japan.18

Rather, a reassessment of the official Japanese position onthe war necessarily involves a fundamental reassessment ofinstitutions as basic as the postwar constitution. And this, inturn, points to a fundamental reassessment of postwar poli-tics, social and economic structures, and national identity.The obstacles that lie in the way of such reassessment, whilenot insurmountable, are formidable.

ENDNOTES

1 For Koizumi’s statements and accounts of his actions, see the eveningedition of Mainichi Shinbun, August 15, 2001; and Japan Times, August16, 2001.2 Hashimoto Ryutaro, Seiken Dakkai Ron (Tokyo: Kodansha, 1994), 98-100.3 For newspaper accounts of Hashimoto’s Yasukuni visit and his August15 statements, see the dailies, Asahi Shinbun and Japan Times, July 30and August 16, 1996.4 I thank Lou Perez for suggesting the term “renegade” as a way to charac-terize this general view of the war.5 In this sentence I place quotation marks around the word “official” toindicate that the “renegade” view is that espoused in public and in officialdocuments by the Japanese government. It is reflected in the statementsand actions of virtually all postwar prime ministers (while they are in of-fice), and it is the view expressed by the Ministry of Foreign Affairs (MOFA).However, as my analysis below is intended to make clear, this view hasnever been hegemonic even among top-level politicians. When the primeminister or MOFA proclaim the “renegade” view, cabinet-level politiciansissue statements or engage in behavior that reflect fundamentally differentviews of the war. Thus, while the “renegade” view is embodied in govern-ment policies and official statements, the government (broadly defined)has never spoken with a united voice on the issue. I do not repeat my usageof quotation marks in the rest of this article, but readers should take note ofthe fundamentally contested and ambiguous nature of “official history.”6 For a more complete treatment, see John Dower, Embracing Defeat (NewYork: Norton, 1999), especially 277-301.7 For relevant figures, see Howard B. Shonberger, Aftermath of War (Kent,OH: The Kent State University Press, 1989), 61.8 See Takashi Fujitani, “Electronic Pageantry and Japan’s ‘Symbolic Em-peror,’” in Journal of Asian Studies 51:4 (November 1992): 824-50.9 For one statement of this position in English, see Umezu Itaru’s opinionpiece in Far Eastern Economic Review (August 10, 2000).10 See Arai Shin’ichi, SensoHakubutsukan (Tokyo: Iwanami Booklets,1995). The new museums include Osaka International Peace Center andRitsumeikan University International Peace Museum. See Sorano Yoshihiro,“Piisu Osaka o Meguru Kibo,” in Kikan Senso Sekinin Kenkyu 29 (Au-tumn 2000): 52-5.11 On the events surrounding the resolution’s passage, see Ryuji Mukae,“Japan’s Diet Resolution on World War Two,” in Asian Survey 36:10 (Oc-tober 1996): 1019.12 For an overview of Ienaga’s three lawsuits and the mixed verdicts thatresulted, see Nozaki Yoshiko and Inokuchi Hiromitsu, “Japanese Educa-tion, Nationalism, and Ienaga Saburo’s Textbook Lawsuits,” in CensoringHistory: Citizenship and Memory in Japan, Germany, and the United States,ed. by Laura Hein and Mark Selden (Armonk, NY: M.E. Sharpe, 2000):96-126.13 Prominent politicians who have expressed revisionist views includeHatoyama Ichiro, Kishi Nobusuke, Shigemitsu Mamoru, NakasoneYasuhiro, Okuno Seisuke, Nagano Shigeto, Mori Yoshiro, and, as discussedabove, Hashimoto Ryutaro.14 On the JBFA’s political clout, see Tanaka Nobumasa, Tanaka Hiroshi,and Hata Nagami, Izoku to Sengo (Tokyo: Iwanami Shinsho, 1995), 194-204.15 Interestingly, while revisionist interest groups have been the most promi-nent and active throughout the postwar period, the last 10-15 years haveseen the emergence of progressive interest groups who challenge both the“renegade” view and revisionist groups like the JBFA. Such groups in-clude the Center for Research and Documentation on Japan’s War Respon-sibility, the Network for Postwar Compensation and the various groupsorganized to press the case of the so-called “Comfort Women” forced to besex slaves for Japanese troops.16 Yomiuri Shinbun, August 17, 2001.17 See Tanaka Hiroshi, “Why Is Asia Demanding Postwar CompensationNow?” in Hitotsubashi Journal of Social Studies 28 (1996): 11-12. Formore on the “sense of victimhood,” see James J. Orr, The Victim as Hero:Ideologies of Peace and National Identity in Postwar Japan (Honolulu:University of Hawaii Press, 2001).18 Such calls for apologies appear often in the press in China, the twoKoreas, the United States, and elsewhere. For just one US example, seeGeorge Gedda, “Why Won’t Japan Acknowledge Its Past,” Associated Press,August 15, 2001.


Spring 2002

HAQ: You are unusual among American East Asia specialists in that youhave worked on both Japan and China. How did you come to study bothcountries?

Vogel: My Ph.D. actually had nothing to do with Asia – it was on Ameri-can society and family and mental health. One of my teachers suggestedthat after my Ph.D. I do something comparative so that I’d have someperspective on the United States. Another one of my teachers had workedin Japan and he suggested I go there. So that’s how I got to Japan. WhenI came back, my first teaching job was at Yale, and we were working onthe sociology of mental health. While I was at Yale I came back up to visitHarvard, and one of my former teachers said, “How would you like towork on China?” I’d never thought about working on China before, but Ihad realized by the time I left Japan that I was more interested in studyingEast Asia than the United States. I decided to accept the opportunity fortraining as a postdoc on China. Harvard at the time was trying to developstudies of Asia and particularly of communist China, so they re-trainedme on China. My earlier work on both countries was on domestic issues,since I was trained as a sociologist. For many years I was interested inChinese society and Japanese society rather than in Sino-Japanese rela-tions.

Since there weren’t many people who had worked on both societiesand since I had many acquaintances in both places, naturally when I wentto one country they asked me about the other. And since there weren’tmany Americans working on Sino-Japanese relations, I was drawn intodiscussions of the topic. I also was very interested in the comparisons andrelations between the two countries. Because they’d had so many prob-lems stemming from World War II, I think that Americans like me, whoknow both countries and have good friends in both places, can play a rolein helping them to work together on the difficult historical issues. If theysit down together it’s easy to argue, but if there’s a third party it’s easier tohave a serious discussion. It helps remove the tension between the twoparties. Once I got into it, I found plenty of demand – it was a niche thatnobody else was filling.

HAQ: In the postwar period here has been a fair amount of cooperationbetween Japan and China, especially in terms of trade. However, the rela-tionship has many deep problems, largely related to Japan’s history ofaggression towards China. In the context of contemporary China and Ja-pan, how would you define “good” and “bad” relations?

Vogel: “Good” doesn’t necessarily mean they have to love each other.But they have to work together effectively enough to resolve the problemsthat naturally confront them, without the emotional baggage that can makeit very difficult. “Bad” is when the negative feelings are so strong thatthey interfere with constructive resolution of concrete problems. Now,with closer relations, and with the economies and information being soclosely linked, China and Japan really need to work together on manyissues.

INTERVIEW WITH EZRA VOGELCHINA-JAPAN RELATIONS

BY ILYA GARGER

Ezra F. Vogel is Henry Ford II Research Professorin the Social Sciences at Harvard University,where he taught from 1967-2000. From 1993-1995he served as National Intelligence Officer for EastAsia in Washington DC. Vogel is the author ofJapan’s New Middle Class (1963), Canton UnderCommunism (1969), Japan as Number One (1979),The Four Little Dragons (1991) and a number ofother books on China and Japan. He received hisPh.D. from Harvard in 1958.


HAQ: What are the main issues at stake in the Sino-Japa-nese relationship?

Vogel: One of the greatest priorities is creating an environ-ment in which both sides can feel secure without an armsrace. China’s growing military strength is alarming to somein Japan, and on the other hand some in China continue tosee Japan as a potential military threat. There are also diffi-cult regional security issues, like North Korea and the statusof Taiwan, whose peaceful resolution will require the coop-eration of China and Japan. Managing trade relations is an-other important issue, especially as economic ties continueto grow. They will have to work together on a wide range ofregional and global issues.

HAQ: In February 2001, Japan’s im-position of a tariff on certain Chineseagricultural products set off a tradedispute between the two countries.China retaliated with punitive tariffson Japanese electronics and automo-biles, and threatened further action ifJapan did not repeal its tariffs. Do youthink this was a sign of things to comein Sino-Japanese relations?

Vogel: That kind of thing happens with all countries that trade.I don’t think it’s unique and I don’t think we’ve seen the endof it. As trade with China grows and more Japanese indus-tries move production facilities offshore, it affects a lot ofpeople’s lives in Japan. That will be a continuing problem,and I expect it will probably get worse because industriesand their political protectors in Japan will be affected. Thetrade balance between Japan and China will also get worsefrom Japan’s point of view, and there will be ongoing fric-tion on that issue.

HAQ: The Japanese tariff was due to pressure from the po-litically powerful agricultural sector, and the Chinese re-sponse was also due in part to the government’s need to ap-pear tough toward Japan. Will it be difficult to isolate traderelations from domestic pressures, and will domestic pres-sure be a source of tension in bilateral relations?

Vogel: All democratic countries have public pressures. Ja-pan is going through difficult readjustments and I don’t ex-pect that process to end soon. I expect this adjustment toaggravate the political pressures, and those pressures willcontinue to be very important in relations with China. On theChinese side, while political pressure doesn’t work quite thesame as in democracies, public emotions toward Japan arequite strong and will affect relations.

HAQ: There is a great deal of popular animosity towardsJapan in China. Do the Japanese have a realistic idea of howthey are perceived?

Vogel: Yes, they do. I believe many Chinese have been in-fluenced by propaganda and education. The ability of theCommunist party to rally people to their cause in the 1930s

and 1940s was heavily dependent on anti-Japanese propa-ganda. In the 1990s, anti-Japanese propaganda has been re-vived in China. The Japanese are quite aware of this and theyrespond in a sensitive way when they meet Chinese. In the1950s and 1960s the natural way for Japanese going to Chinawas to apologize – they felt bad about what they had done inChina. But when China got stronger and began putting theseissues in a more forceful way – and also when the Japanesefound that at times China used these issues to achieve con-crete goals like getting more financial help from Japan orgetting support for countries in Asia to unite with Chinaagainst Japan – this added to the tension over the issue. Ofcourse the Chinese do have genuine anger, but just as mostJapanese who are alive today can’t be held responsible forWorld War II, so there’s only a small proportion of Chinese

now who can actually remember whatwent on. Of course, some memoriesof Chinese about Japan are passeddown in families.

HAQ: A Tokyo University law pro-fessor recently spoke at Harvard aboutthe need for Japan to apologize to andcompensate its wartime victims be-yond the requirements of the treatiesthat ended the war, which were actu-

ally very lenient towards Japan. What are your thoughts onthis issue?

Vogel: I have a different view on the compensation question.It’s now 57 years after the war and there’s no end to the ques-tion of compensation and apology. Should America compen-sate American Indians and black people for the way we treatedthem? Many countries did a lot of horrible things to othercountries around the world. There would be no end if wepush compensation. Societies would be polarized. We cando things to help those who suffered have better lives.

The Chinese government officially agreed not to ask forcompensation. Of course, lawyers stand to greatly benefitfrom these cases, and lawyers have been very much at thecenter of the efforts to get more compensation. There arecertain people – certain women in Korea, or certain peoplein China – who think that they can win big court cases. But Ithink it’s questionable whether they are the ones who suf-fered most. I think the way to deal with the issue is not bymore compensation or apology, but by being very open anddirect about looking into and acknowledging what happened,and being very firm and convincing that the Japanese aredetermined not to let history repeat itself. And by assistingthe people directly or indirectly affected build better lives.Also, most people in Japan feel that the war was imposed onthem by the military. You don’t find many Japanese todaywho feel that they are responsible, so it doesn’t make anysense to push them to pay for what militarists imposed ontheir parents. But I think that the Japanese should be openand honest about what happened, and teach their childrenabout what happened. Getting hung up on apologies isn’t theright way to deal with this problem.

HAQ: Do you think that Japan is headed in a direction where

You don’t find many Japanesetoday who feel that they are

responsible, so it doesn’t makeany sense to push them to payfor what militarists imposed on

their parents.


Spring 2002

it will be able to speak openly and convincingly about itswartime history, or are there institutional and psychologicalbarriers to dealing with the issue?

Vogel: Unfortunately, I don’t see signs that this problem isgoing to go away. One of the barriers in Japan is the rightwing, which is very intimidating to a lot of Japanese whowould like to deal with these issues openly and frankly. Butthere is considerable support among certain limited groupsfor trying to whitewash all the sins of World War II. I haven’tdone a careful analysis of the socialbase of those people – probably a lotof them are not the most successfulpeople in the society, and many areprobably people who have a lot of rela-tives who died or suffered in the war.Most Japanese do know that Japancaused horrible suffering in World WarII. Historical issues are very compli-cated to deal with. China has not fully dealt with the injuriesand deaths in the Cultural Revolution that ended 25 yearsago.

HAQ: Given the political value of the issue in China, is theChinese government in a position to accept a Japanese apol-ogy? What are the obstacles on the Chinese side to a resolu-tion of the history problem?

Vogel: Dealing with historical issues requires efforts on bothsides, and the Chinese and Koreans have not done a goodjob in talking about the developments in Japan after WorldWar II. Some Chinese leaders still use anti-Japanese issuesas a rallying point for national unity. Mao Zedong said thatthe Communists have to thank the Japanese for making itpossible to have the revolutionary movement, and certainlyfor the Communist victory.

Still, it’s paradoxical to me that in a lot of the placeswhere you’d think anti-Japanese feeling would be strongestthere are many people willing to work with the Japanese –particularly in the northeast and in Shanghai. You do find alot of anti-Japanese feeling, but you also find people wholearned Japanese, both during the Japanese occupation andafterwards. A high proportion of China’s Japan specialistscome from the northeast or Shanghai. Dalian is the city thatperhaps Japanese feel the most comfortable in even though itwas part of Japan’s Manchurian Empire. And there are a lotof Japanese in Shanghai. There’s a new book by Rana Mittercalled The Manchurian Myth, which argues that in additionto those who resisted the Japanese, there were a lot of col-laborators. The dominant narrative in China is that of thepatriotic Chinese fighting the Japanese, but in fact at the grassroots level there were many who actually worked with them,and lived with them. That is an issue that has not been fullydealt with in China.

I think the propaganda department in China finds theanti-Japanese sentiment convenient to use. And as some Japa-nese have noted, when China is negotiating a loan or aid, theissue often seems to be used as a pressure point. In China,the narrative of humiliation has been very powerful, but Ithink that is beginning to change. A more confident China is

starting to emerge, and the emphasis on defeat and humilia-tion and the horrors of colonialism is giving way to a self-confidence among some Chinese that they will be a strongcountry again. It’s my hope that the base of pride can be intheir successes, not their humiliation. Just to mention threethings that happened last year – one of course is the entryinto the WTO, which was a great success; another is gettingto host 2008 Summer Olympics; and their holding the APECmeeting in Shanghai last October and allowing foreign lead-ers to see how rapid the growth has been there. So I think

that all these things give some hopethat China can have a positive base forunity and will not need to use the anti-Japanese card so much in the future.

HAQ: Do you think that the autocraticnature of the PRC regime is an ob-stacle to relations with Japan? Wouldthe peaceful demise of the Chinese

Communist Party be a good thing for Sino-Japanese rela-tions?

Vogel: I don’t think so. When Korea concluded its pact withJapan in 1965, it was against popular anti-Japanese senti-ment. If anything, the leaders of the PRC in the 1980s – es-pecially Zhao Ziyang and Hu Yaobang, who had a responsi-bility for economic growth and wanted technology invest-ment, peace and stability in the region – had the ability to actin the national interest to attract Japanese investment despitepopular anti-Japanese feelings. Nationalism doesn’t go awaywith democracy, and democracy can even heighten patrioticfeelings. The Communist Party, in my view, has now becomean elite with superior education that feels a responsibility forthe nation as a whole. If they continue to believe – as Dengdid in 1978 – that they need a peaceful environment for eco-nomic growth, and that economic growth is the main prior-ity, then if anything the nature of the regime is more helpfulthan harmful to improvement of relations with Japan.

HAQ: Since the late 1970s, China has been a top recipientof Japanese economic aid – partly due to the belief that Ja-pan stands to gain from a stronger, more stable China. Onthe other hand, some in Japan have criticized the aid, point-ing out that China has repaid generosity with criticism. Skep-tics also argue that while Japan pours aid into China, theChinese government is spending money on a military buildupwhich could threaten Japan. What is your opinion on thisissue?

Vogel: I think 1998 was kind of a turning point when PrimeMinister Obuchi, in response to Jiang Zemin’s commentswhen visiting Japan, said that Japan wasn’t going to giveChina a written apology. I believe his decision reflected anaccumulation of Japanese frustrations, and the mood in Ja-pan that “we’ve been apologizing too much, we’ve been bend-ing down too low and it’s time to stand up.” This mood hasbeen fairly strong in Japan since 1998. It’s also aggravatedby the Japanese economic difficulties and by the Chineseeconomic boom. The Japanese feel they should be giving topoor countries to help them get over their poverty in early

In China, the narrative ofhumiliation has been very

powerful, but I think that isbeginning to change.


stages of development, but when China is booming then a lotof people begin to question the need for aid. Japan will cutdown on aid to China. But the bureaucrats will probably tryto control the process, so that it’s not so sudden that it de-stroys projects or gets people too upset.

HAQ: Some have argued that generational change, especiallyamong leaders, will alter relations between Japan and China.Do you think this will be an important factor?

Vogel: I feel that the impact of gen-erational change has sometimes beenexaggerated. It’s true that youngerpeople are richer and use more mobilephones, but Japan is a country wheremass culture is so widespread and themass media has such influence on pub-lic opinion that it’s not just the youngpeople who change. I’ve been im-pressed by how much older peoplechange. So I think that time change ismore important than generational change.

But in terms of generations of politicians, there is sometruth to the concept of generational change. In the early de-cades after World War II, Japan was led by the “Yoshidaschool” – people who were formerly bureaucrats and verysophisticated, such as Kishi, Ikeda, Sato and then Fukuda,Ohira and Nakasone. All those people were very poised andhad a grand vision. The politicians who came later had tospend so much time preparing for local elections, attendingweddings and funerals, and dealing with factional infightingthat they didn’t have the kind of distance from petty issuesthat it takes to become real leaders. Some of the talentedyoung politicians get so weighed down in politics that theymay not have the opportunity to develop their best talents, tokeep thinking about the big picture and to stand apart fromthe daily battles. There are quite a few in that generation whohave had more training abroad and speak English, and that’squite different from the current generation of leaders. Butthey need more time to focus on big issues and more supportso that they can be effective.

HAQ: What is the effect of the US-Japan Security Treatywith respect to the Sino-Japanese relationship? Does itstrengthen the relationship, or create tensions?

Vogel: When Nixon and Kissinger came to China, they per-suaded the Chinese that the US-Japan treaty contributes tostability in the region and is good for the Chinese as well.The more cynical way of saying this is that it’s “the cork inthe bottle” – the treaty keeps the Japanese from becomingmilitaristic again. I don’t think that’s an accurate statementof the treaty’s function. Japanese are not itching to becomemilitaristic. I believe the treaty provides many benefits toJapan. It can achieve security without the need to greatly ex-pand its military.

However, beginning in the early 1990s there was moreconcern on the Chinese side that the Japanese might be usingtheir relationship with the United States to get new weap-onry, as part of a plan to become an independent military

power. This became particularly true when the Japanese be-gan talking not only about the security of Japan but also inthe “vicinity”, and when they began sending PKO (UnitedNations Peace Keeping Operations) troops abroad. It wasnot unnatural for the Chinese – whose closest contact withJapan had come in World War II – to worry that Japan wasagain becoming militaristic, and to say that Americans hadshort memories and didn’t really understand the Japanese.So there’s been a growing concern in recent years in Chinathat the US-Japan Security Treaty contributes to Japan gain-

ing military technology that is not inChinese interests. Particularly after the1996 near-confrontation betweenChina and the United States over Tai-wan, there was concern that the US-Japan Security Treaty might be usedto prevent Taiwan from returning tothe mainland. China is really quite con-cerned about this now, and there’s alot of debate on the role of the treaty,and whether the US-Japan treaty will

be used to balance China.

HAQ: On the Japanese domestic political side, do you thinkthat Japan’s continuing subservience under the SecurityTreaty might have the effect of giving legitimacy to thosecalling for Japan to break away from America’s military in-fluence entirely?

Vogel: There are three fundamental choices for Japan. Oneis unilateral disarmament, where Japan becomes a neutralunarmed country. Another is the US-Japan Security Treaty.The third is for Japan to develop an independent military.The first and third alternatives, when you examine them verydeeply, are extremely unwise. To leave yourself as a weakcountry, subject to the intimidation of any country aroundyou, would not be sustainable for long. The idea of develop-ing an independent military – when the United States has somuch technology to offer, when the Japanese economy is introuble, and the dangers of a Japan-China arms race are sogreat – does not make sense. Even if the right-wing Tokyogovernor Ishihara Shintaro came to power, where would heget the money to have a really independent military? It justisn’t going to happen.

HAQ: Aside from the Security Treaty, what do you see asthe role of the US with regard to Sino-Japanese relations?Do you see any conflicts between US interests in the regionand mutual Chinese and Japanese interests?

Vogel: It is conceivable that in a few years, if there’s a strongChina, Japan will feel caught between the United States andChina. If there is a standoff between the United States andChina, or a lot of tension in the US-China relationship, thenJapan will have to make difficult choices. China would cer-tainly exert a lot of pressure. The Japanese want to avoidsuch a close embrace with the United States that they don’thave some flexibility in working with China. If I had to specu-late on 2045 (a century after the end of World War II) I’d saythat Japan may be equidistant from China and the United

There’s been a growing concernin China that the US-Japan

Security Treaty contributes toJapan gaining military

technology that is not in Chineseinterests.


Spring 2002

States, or even a little closer to China. Japan has to live withChina. It’s very close geographically, and trade between Ja-pan and China is likely to be greater than with the UnitedStates. But the idea of being allied with the United States, incase China should turn out to be a problem, is also very ap-pealing to Japan. Japan does not want to be completely de-pendent on China, but there’s more caution about alienatingChina than a lot of people in Washington would like to think.

HAQ: Japan has tried to approach the issue of East Asianregional security through multilateral institutions. In devel-oping and strengthening the Sino-Japanese relationship, howimportant are multilateral as opposed to bilateral mecha-nisms?

Vogel: Multilateral institutions in Asia cannot have the levelof interoperability and close communication in the near fu-ture that’s required to respond effectively to security threats.Even Europe had to work very hard to develop NATO. TheJapanese know that ASEAN+3 cannot be a real security alli-ance. Japan would like to expand multilateral discussions toreduce the risk of conflict and create a better environment allaround, but in the near future multilateral relations cannotoffer much more. Some people have suggested that Korea-US-Japan relations might become a regional force, but per-sonally I think that’s very dangerous because it would an-tagonize China. Korea would probably not want to lean thatheavily toward the United States against China either. So Idon’t think that meaningful security cooperation on a multi-lateral basis is really possible in the next decade or two. Butwe should move beyond bilateral alliances to increase coop-eration with China to preserve regional stability.

HAQ: What do you see as the best-case scenario and theworst-case scenario for Sino-Japanese relations?

Vogel: The best-case scenario would be that some Chineseleaders who are quite confident will behave somewhat likeKim Dae-Jung in saying to the Japanese, let’s think about thefuture and work together. And that some Japanese leaderswill be strong enough to push ahead on getting textbooks todeal fully and frankly with World War II issues. And thatscholars and other specialists from China and Japan wouldbegin to work together on those issues, and there would bean openness that would start the same kind of process as inGermany and France in the 1950s.

Pessimistic scenarios would be tension over issues likeTaiwan or the Korean peninsula. Also, particularly if the US-Japan Alliance is not very firm, arms competition betweenChina and Japan could grow. To me, an arms race, with someskirmishes along the edges, would be the worst kind of sce-nario.

HAQ: Finally, what kind of prospects do you see for thenear future?

Vogel: At the moment I’m working on trying to get histori-ans from China and Japan to look at World War II together.This could help provide the basis for political leaders in thetwo countries to work on healing. Security talks between

China and Japan are beginning. Thoughtful, responsible, cos-mopolitan leaders on both sides realize they need to worktogether, and there may be more accommodations than youwould guess from the rhetoric. There are quiet diplomats andbusiness people in both systems who realize they need towork together. I wouldn’t rule out the possibility that therecould be some real improvement in relations despite all thetroubles.


Superficially, nothing too exciting was accomplished at the Febru-ary summit between Presidents George W. Bush and Jiang Zeminin Beijing. On a number of issues, including Taiwan as well as reli-

gious and civil freedoms, both sides merely agreed to disagree. Jiang,who had earlier characterized relations with the US as a “constructive,cooperative relationship,” said at his joint press conference with Bushthat he was happy they were able to “seek common ground while shelvingdifferences.” Bush said on the same occasion, “we believe that we candiscuss our differences with mutual understanding and respect.”

The American leader also called bilateral ties “mature and respect-ful,” an assessment with which the Jiang leadership fully concurred. Atleast from the Chinese perspective, however, Jiang and Bush did morethan to the merely agree to disagree. At the summit, the two presidentscommitted both governments to regular high-level exchanges on issuesranging from human rights to arms non-proliferation. Moreover, joint com-missions on economics, commerce and trade as well as science and tech-nology were established, with their first meetings to be held in the comingyear.

Nevertheless, Jiang, who is Beijing’s highest foreign policy-maker,realizes that the new “constructive, cooperative relationship” with the USis a few rungs down the diplomatic ladder from the “constructive, strate-gic partnership” that he had agreed to forge with former president BillClinton in 1998. The idea of “strategic partnership” had meant not onlythat Washington would abandon what Beijing perceived to be an “anti-China containment policy,” but also would be willing to work on thornyissues such as Taiwan. The Clinton administration’s flexibility on Taiwanwas evident when the former president enunciated the “Three Nos policy”(no to Taiwan independence; no to one China, one Taiwan; and no toTaiwan joining international bodies whose admission criteria include state-hood) during a visit to Shanghai in 1998.

Beijing was alarmed when Bush labeled the US and China “strategiccompetitors” during his election campaign in 2000. Jiang and his advisersfeared that Bush, along with “China-bashing hawks” in the Pentagon andthe US Congress, were about to revive the Cold War agenda of encirclingChina and thwarting its development into a great power. Thus, Bush’snew-found willingness to engage in a dialogue with Beijing – albeit on thesomewhat minimalist premise of focusing on common interests and tem-porarily setting aside differences – represented significant progress, de-spite the fact that it took September 11 for the Bush administration torealize the importance of maintaining a hotline to the Beijing leadership.1

At stake are the growing economic ties between the two nations –bilateral trade was more than $80 billion in 2001, a jump of 32 times since1978 – as well as shared interests in maintaining peace and stability in theAsia-Pacific Region.2 Bush hopes that Beijing will continue its policy ofacquiescence in, if not full-fledged support for, America’s anti-terrorismcampaign in Central Asia and other hot spots. On the other hand, Jiangexpects Washington to help rein in the pro-independence gambit of Tai-wan President Chen Shui-bian.

While it is likely that Beijing will maintain its largely conciliatorypolicy toward the US in the foreseeable future, it is prudent to presume

DYNAMICS OF SINO-US RELATIONSTHE PERSPECTIVE FROM BEIJING

BY WILLY WO-LAP LAM

Willy Wo-Lap Lam is Senior China Analyst for theAsia-Pacific Bureau of CNN. From 1989 to 2000he was China Editor for the South China MorningPost in Hong Kong. He is the author of severalbooks, including China after Deng Xiaoping: ThePower Struggle in Beijing since Tiananmen (J.Wiley & Sons, 1995) and The Era of Jiang Zemin(Prentice Hall, 1999). Lam is currently writing abook on Hu Jintao and the Fourth GenerationLeadership in China.


Spring 2002

that such a policy will undergo significant mutations laterthis decade. Beijing will witness a changing of the guard atthe Chinese Communist Party’s (CCP) 16th Congress thisautumn. Moreover, the country is undergoing unprecedentedsocio-economic changes after its accession to the World TradeOrganization (WTO), and such changes will necessarily im-pact foreign policy.

THE UNDERPINNINGS OF BEIJING’S CONCILIATORY US POLICY

In an internal session to preparefor Bush’s February visit, Jiang reit-erated Beijing’s generally placatorypolicy toward Washington: “If nec-essary, we can make concessions [toAmerica] for 20 more years.” ThePresident and Communist Party chiefwas referring to the late patriarch DengXiaoping’s instructions that good ties with America wereessential to China’s economic development in the first de-cades of the new century.3 In the early 1990s, Deng, whowas fully in charge of foreign policy, laid down a series ofwell-known dictums on diplomacy, the best known of whichwas: “Keep a cool head, maintain a low profile and nevertake the lead.” With particular reference to the US, the lateparamount leader also instructed: “Boost cooperation andavoid trouble and confrontation.”

Ties between the two countries were jolted soon afterBush entered the White House. The CCP leadership wasalarmed by a series of “unilateralist,” even “anti-Chinese”actions by the new Republican administration. They includedthe decision to shift the focus of US military forces fromEurope to the Asia-Pacific region; enhanced strategic coop-eration with Asian allies such as Japan, South Korea andAustralia; the deployment of the national missile defense(NMD) system; Bush’s declaration that the US would do“whatever it takes” to defend Taiwan if it is attacked by main-land China; and the White House’s decision to sell to Taiwana package of sophisticated weapons that included diesel-fu-eled submarines.4 Beijing’s military and civilian strategistswere convinced that Bush was reviving the Cold War agendaof pursuing an “anti-China containment policy.”

By and large, however, the Jiang administration hasmaintained a moderate, even conciliatory stance towardWashington, to the extent that the Chinese President is widelycriticized by hard-line army officers and nationalistic pro-fessors and students for pursuing a pro-US policy.5 This wasapparent with the so-called EP3 incident of April 1, in whicha US spy plane was forced to land on Hainan Island after acollision with a Chinese jetfighter. A few days before theEaster holidays, Jiang agreed to release the EP3 crew de-tained on Hainan without any apparent concessions from theUS. Washington’s view was that because the Chinese pilotwho intercepted the spy plane was at fault, the crew shouldhave been released immediately, and that Beijing had cyni-cally used the incident to whip up an anti-American frenzyamong the public. However, Jiang, who took early action toprevent college students from holding anti-US demonstra-tions, was faulted not only by nationalists but also the gen-eral public for being too soft on Washington.

Beijing also adopted a generally cooperative attitudetoward the American war on terrorism. While the CCP lead-ership had consistently opposed efforts in the past by coun-tries and blocs, including the US and NATO, to “interfere inthe domestic affairs” of other countries, it opted for a policyof acquiescence toward the US-led coalition’s incursion intoAfghanistan. Equally significantly, officials and the statemedia did not play up the potential threat to China posed bythe much-enhanced US presence in Central Asian countries

such as Uzbekistan and Tajikistan,despite the perception among civilianand military strategists that the quasi-permanent stationing of US troopsclose to China’s western borderswould further promote America’scontainment policy. Given China’splans to import petroleum from orbuild pipelines through Central Asian

countries, Chinese observers also worried about a threat tothe country’s “petroleum security.” Furthermore, the Ameri-can presence in Central Asia will undermine one of Jiang’smajor diplomatic initiatives: setting up the Shanghai Coop-eration Organization mechanism (a grouping of China, Rus-sia, Kazakhstan, Tajikistan, Uzbekistan, and Kyrgyzstan) asa counterweight to the perceived eastward expansion ofNATO.6

Then came the alleged bugging of Jiang’s personal jet,the so-called Chinese Air Force One. Although the incidentwas not reported until January 2002, Chinese state securitypersonnel had discovered listening devices on board the planeas early as September 2001. Since the Boeing aircraft hadbeen outfitted by four contractors on US soil, some in Chinasuspected US government involvement. Nonetheless, Beijinghas kept mum on the incident, if only because more than 20Chinese army officers responsible for buying the plane andguarding it during the outfitting period were arrested for al-leged corruption.7 And on the eve of Bush’s February visit,Beijing showed it was willing to roll out the red carpet byreleasing Hong Kong resident Li Guangqiang, who was ar-rested last year for smuggling bibles into Fujian Province.

Economic arguments have remained paramount in ex-planations of Beijing’s forbearance. In a dialogue with thefaculty and students of Tsinghua University last summer, Pre-mier Zhu Rongji defended the Jiang leadership’s decision torelease the EP3 crew with the now-familiar argument thatChina needed access to the US market and investments tospeed up economic development. Moreover, at that juncture,Beijing required Washington’s blessings in areas ranging fromaccession to the WTO to hosting the 2008 Summer Olym-pics.8

In recent months, Beijing’s top US experts in the areasof defense, diplomacy and foreign trade have been workingon what they call a ratio of relative interdependence. While aratio of 50:50 denotes an equal degree of mutual dependence,the figure was 70:30 until the mid-1990s, meaning Chinaneeded the US much more than the US needed China. How-ever, the experts believe a ratio of around 60:40 better re-flects the current stage of mutual economic dependence. Thechange is mainly due to China’s fast-growing economic clout,and the reliance of American companies such as Boeing and

The Jiang administration hasmaintained a moderate, evenconciliatory stance toward

Washington.


Motorola on the China market.9 Beijing is convinced thatwhen the relevant ratio has reached 50:50, it will be easierfor the two countries to solve bilateral problems, includingTaiwan. Put another way, it will be more difficult for Wash-ington to continue bullying China. Before parity is reached,however, Beijing has to swallow its pride and “seek coop-eration instead of confrontation.”

The second reason behind Jiang’s conciliatory US policyis that in view of the wild gyrations in bilateral relations sincethe June 4, 1989 Tiananmen massa-cre, Beijing is eager to stabilize tieswith Washington. Particularly giventhe Bush administration’s“unilateralist” foreign policy and itsperceived coziness with Taipei, theJiang administration realizes that theold goal of a “constructive strategicpartnership” is unrealistic. However,Jiang hopes that the post-September11 reality – namely, Washington’s need for Chinese coopera-tion in the long-term fight against terrorism – might providea platform for focusing on common interests and setting asidedifferences.10

Beijing also hopes that a mechanism of regular consul-tation can be established to increase cooperation and ironout differences in areas including economic cooperation,human rights, terrorism, and arms proliferation. Both sidesfirst agreed to resume regular meetings on subjects such asarms proliferation and human rights soon after September11. Additional momentum on this score was symbolized bythe setting up an FBI branch in Beijing, which was agreedupon during the presidential summit.11

In return for Beijing’s placatory stance on the anti-ter-rorism issue and other fronts, Jiang hopes the US will ac-commodate Beijing’s concerns about curbing independencemovements within China. Early in the anti-terrorism cam-paign, a spokesman for the Chinese Foreign Ministry raiseda quid pro quo: in return for Beijing’s support for the Ameri-can campaign in Afghanistan, Washington should stop inter-fering in Chinese actions vis-à-vis Taiwan, Xinjiang and Ti-bet. In Chinese documents, anti-Beijing elements in Xinjiang,and to some extent Tibet, are labeled “splittists,” religiousextremists and terrorists. Chinese cadres have insisted in of-ficial statements that there be no “double standards” on anti-terrorism. This means that the West should not frown onBeijing’s own crusade against “East Turkestan terrorists” inXinjiang, who according to the Chinese, have received train-ing from the Taliban and Al Qaeda.

The Bush administration has indicated there would beno “selling out of Taiwan” despite Washington’s desire tosecure Beijing’s cooperation in the long-term struggle againstterrorism. In fact, in his Asian tour, Bush repeatedly cited theTaiwan Relations Act and Washington’s obligation to defendthe island if it is invaded. However, it is apparent that in re-turn for Chinese acquiescence in the US offensives in Cen-tral Asia, the Bush administration has obliged Beijing to someextent. While the White House has raised a hue and cry over“bible smuggler” Li and other religious prisoners, it haslargely remained silent over the more serious case of the de-tention of more than 2,000 Uighurs in western and southern

Xinjiang since late September.12

THE WILD CARD IN BILATERAL TIES: THE TAIWAN FACTOR

While from the US perspective, good relations withChina hinge on a number of factors including trade, humanrights, weapons non-proliferation, Taiwan and Tibet, for theChinese one question matters much more than the others:Taiwan. Thus, the Taiwan issue will continue to be the wild

card in bilateral ties.As discussed above, Beijing’s

reaction to the Bush administration’scloseness with Taipei has been largelymoderate. In addition to arms salesto Taipei, Washington allowed a num-ber of top Taiwan officials – includ-ing President Chen and Vice-Presi-dent Annette Lu – to stop in the USduring “transits” to Central and South

American countries. In March 2001, Washington permittedTaiwan Defense Minister Tang Yao-ming to attend a defense-related seminar in Florida – the first time that a Taiwan de-fense minister was allowed into the US since the US de-rec-ognized Taiwan in 1979. There is little doubt in Beijing’smind that Bush has gone back on pledges on Taiwan thatwere made by the Clinton administration.13

However, Beijing has refrained from high-decibel reac-tions such as stepping up war games along the coast. Rather,it has focused on three strategies. One is to stress that it doesnot serve American interests to be dragged into a mainland-Taiwan dispute. Beijing has reminded Washington that it hasextended a series of olive branches to Taiwan the past year,including Vice-Premier Qian’s statement in early 2002 thatcertain categories of Democratic Progressive Party (DPP)members were welcome to visit the mainland.

Second, Beijing has relied on the “business card” to luremore Taiwan investors and professionals to invest, work andlive in the mainland. Beijing’s hope is that if Taiwan becomeseven more dependent economically on the mainland, therewill be a limit to the extent that the DPP administration canpursue independence. Beijing’s success in luring even hightech Taiwan firms to industrial parks in Shanghai andGuangdong has been a factor in the reduction of tension acrossthe Taiwan Strait. Some Chinese experts on Taiwan have citedthe “Canada analogy” – a reference to the fact that givenCanada’s economic dependence on the US, Ottawa has nochoice but to subsume the country’s foreign and defense policyunder that of Washington. As Jiang Zemin remarked in oneinternal session, if Taiwan is dependent on China economi-cally, “the Monkey King can’t get out of the grip of [Bud-dha] Rulai.”14

Third, the PLA has persevered with preparations for theeventuality of a “military option” against Taiwan. The stock-piling of short to medium-range missiles in at least three basesin Fujian and Jiangxi Provinces has progressed unabated. TheUS and Taiwan media have quoted experts as saying thatmore than 400 such missiles, some on mobile launchers, havebeen installed in these two coastal provinces.

In the final analysis, however, the Jiang leadership thinksthat China’s sheer economic might will eventually persuade

Jiang Zemin remarked that ifTaiwan is dependent on China

economically, “the Monkey Kingcan’t get out of the grip of

Buddha Rulai.”


Spring 2002

Washington that it is in America’s best interest to gravitatetoward China and gradually “dump” Taiwan. Chinese cadreshave remarked in internal meetings upon the change of atti-tude on the part of various European countries concerningChina’s human rights record. Because of enhanced trade withand investments in China, fewer European countries are will-ing to confront China in the annual meeting of the UN Sub-committee on Human Rights held in Geneva every spring.15

THE MILITARY DIMENSION: FINDING TUPOKOU

It would, of course, be naïve to think that the CCP lead-ership will depend merely on the “economic card” to pursuediplomatic objectives. Beijing has al-ways insisted that it has a right to de-velop a military force commensuratewith its economic and geopoliticalclout. The People’s Liberation Army(PLA) has in absolute terms enjoyedsizeable budget increases since thelate 1990s. In 2001, it got a 17.7%budget hike over the previous year,and this year, the margin of increase is 17.6%.16 The pro-jected military spending for 2002 – 166 billion yuan (aboutUS $20.5 billion) – constitutes more than 1.5% of China’sGDP. While it is substantially lower than the American 5%,Western PLA experts estimate that actual defense outlays inChina are about three times the published figures. Most ofthe funds for research and development of new weapons, forexample, come from hidden civilian budgets.

Beijing is basically following tactics that Mao called“walking on two legs” and Deng characterized as “fightingwith two fists.” Should diplomacy and trade fail, naked mightwould be a means to pursue objectives in the internationaland Taiwan arenas. Chinese military sources say Jiang hasfor a long time instructed his military aides to find ways tocounter American “hegemonism” and unilateralism. “We mustfind tupokou [breakthrough points] to check American pre-ponderance,” the president said earlier this year. Jiang, whoalso serves as Chairman of the Central Military Commission,has also asked PLA strategists to find the weak links in theAmerican defense system.

Last December, the Jiang leadership reacted in a sur-prisingly muted fashion to Washington’s decision to unilat-erally withdraw from the 1972 Anti-Ballistic Missile Treatywith Moscow, even though this was a sign that the US isdetermined to develop the NMD soon. Beijing is very awarethat an Asia-based missile defense system that incorporatesJapan, South Korea and Taiwan may be used as an effectiveweapon in “containing” China. After all, Taipei has been lob-bying for the past two years to be included in such an anti-missile framework. How to thwart the NMD is the latest ad-dition to the many priority tasks slapped on the PLA for theperiod covered by the 10th Five Year Plan (2001 to 2005). Itis believed that the PLA is currently building upon Russianmilitary technology to develop new models of multiple inde-pendently targeted re-entry vehicles (MIRVs), or missiles withmultiple warheads.17

Beijing also decided earlier this year to set up an inter-departmental organ to speed up defense-related research and

development. The new body is composed of leading cadresfrom the Commission for Science and Technology for Na-tional Defense (a unit of the State Council, or central gov-ernment), the Chinese Academy of Sciences, and the Chi-nese Academy of Engineering. Since these three units arenot within the military establishment, funds that the new or-gan has earmarked for military R&D need not come from thePLA budget. At the plenary session of the National People’sCongress in March, Jiang in his capacity as CMC chairmanrepeatedly pledged that the state will be unstinting in provid-ing more resources for the PLA’s “high-tech transformation.”Given that issues such as the PLA’s arms build-up have beena source of friction between China and the US, the PLA’s

relentless high-tech drive could fur-ther complicate bilateral ties.

JIANG’S LEGACY: “GREAT POWER

DIPLOMACY”

A key reason why Jiang haspushed what his critics call a “pro-USpolicy” is that the core of the Third

Generation leadership – the group of septuagenarian leadersincluding Zhu Rongji and Li Peng – hopes that improvementof ties with the US and the European Union will go down inhistory as one of his major legacies. Jiang is due to give uphis position as party general secretary at the 16th CCP Con-gress this autumn and the post of President in March 2003.With retirement just one year away, the 75-year-old stalwartis very conscious of his place in the history books – particu-larly how he will fare when compared with First and SecondGeneration titans, namely Mao Zedong and Deng Xiaoping.

Jiang and his publicists have come to the conclusion thatthe President has broken new ground on diplomacy, espe-cially China’s relations with First World countries and group-ings such as the US and the EU. This “great power diplo-macy” – a reference to China’s ability to perform on the worldstage on par with great powers like the US and the EU – willbe featured prominently in the Selected Works of Jiang Zeminto be published this year.18

A centerpiece of Jiang-style great power diplomacy willbe Beijing’s ability to conduct business with the US and otherpowers on an equal footing, which is something that neitherthe Mao nor the Deng administration was able to do. More-over, Jiang hopes to consolidate his reputation as an interna-tional statesman with a last visit to the US as Chinese head ofstate in October, just prior to his participation in the APECheads of state meeting in Mexico City. Bush is in a positionto make Jiang very happy if he accedes to the ChinesePresident’s wish of paying a full-fledged state visit to Wash-ington. Jiang has also made known to his diplomatic advis-ers that he wants to go to Bush’s ranch in Texas much thesame way that Russian president Vladimir Putin did last year.

A source close to Jiang’s personal office says the Presi-dent also hopes to set up a protocol for diplomatic activitiesby China’s retired senior officials. “Jiang wants to establishsome kind of rapport with the Bush family, so that even afterstepping down he can still visit the US as a senior states-man,” the source said. Needless to say, Washington is in aposition to extract concessions from Beijing given Jiang’s

The Jiang leadership thinks thatChina’s sheer economic might

will eventually persuadeWashington to “dump” Taiwan.


anxiety to go down in history as the CCP leader who mendedfences with the US.

THE FUTURE OF BILATERAL TIES: THE HU JINTAO FACTOR

After Bush’s China trip in February, whether and howHu Jintao will modify Beijing’s long-standing US policy hasbecome one of the most crucial questions with respect to bi-lateral ties. The 59-year-old leader will in one year’s timetake over from Jiang Zemin as CCP general secretary andstate President. Not much, however, is known about Hu’sideas and statecraft, let alone his thinking on foreign policy.

While Hu was inducted into the elite Politburo StandingCommittee in 1992, the former headof the Communist Youth League hasconcentrated on party affairs. It is truethat as Vice-President and Vice-Chair-man of the Central Military Commis-sion (CMC), Hu should in theory havehad some input in foreign and secu-rity matters. However, Jiang, who isCMC Chairman and Head of the CCPLeading Group on Foreign Affairs(LGFA), has studiously kept Hu out of the diplomatic loop.Like Deng Xiaoping before him, Jiang has jealously guardedthe portfolio of foreign policy and Taiwan. It was not untillast October that Hu made his first trip to Western Europe.While the Bush administration had since then pressed for aUS tour for Hu, it was only shortly before Bush’s visit thatthe LGFA approved the trip. It is expected that, like he did inEurope, Hu will keep a low profile while visiting the US inlate April as the guest of Vice-President Dick Cheney.

For the first two or three years of Hu’s tenure, it is prob-able that he and his Politburo colleagues – who are in their50s and 60s – will toe the Jiang line on foreign policy. Afterall, it is likely that Jiang will continue to be a major influencefrom behind the scenes for some time.19 However, it is alsotrue that despite his ambiguous persona, Hu has ideas of hisown and that he is conscious of the need to quickly modifypolicy to suit China’s fast-changing political landscape. It isreasonable to expect that Hu could, if required, make signifi-cant shifts in foreign policy before his first term as party chiefends in 2007.

While it is difficult to make predictions about most thingshaving to do with the CCP and its secretive leaders, severalpoints can be made about Hu’s foreign policy, particularlywith regard to the US. First, despite his reputation as a light-weight, colorless apparatchik who owes his meteoric rise toan ability to cultivate patrons such as Deng, Hu has a keenintellect and a desire for reform. According to a senior West-ern diplomat who was with Hu for part of his European tour,the vice-president had a good grasp of matters beyond hisportfolio of party affairs. “Hu surprised us with his thoroughunderstanding of international economics,” the diplomat said.“At one meeting, Hu was asked about his views of the Japa-nese and Asian economies. He gave a well-rounded assess-ment of the situation in just ten minutes.”

Since early 2001, Hu has put together several think tanksto help him formulate policies on areas including the economy,political reform, and foreign affairs. Since late last year, the

vice-president has ventured into new areas such as econom-ics and world trade. Hu has also displayed greater initiativein foreign policy. For example, while the bulk of the prepara-tions for his trip to Europe last year, including the speeches,were handled by the Foreign Ministry and LGFA, sourcesclose to Hu’s personal office said the vice-president’s newthink tank on foreign affairs was responsible for planning hisUS tour.20

The sources close to Hu’s personal office said he couldfor practical and tactical reasons make considerable revisionsof Jiang’s so-called pro-US policy. Much of Jiang’s concilia-tory stance toward the US has to do with the pre-eminence ofthe Shanghai Faction – a reference to politicians who have

close associations with the easternmetropolis. Moreover, since Deng’stime, the majority of Politburo mem-bers are spokesmen for the interestsof coastal provinces and cities includ-ing Shanghai and Guangdong, whichare the major beneficiaries of theopen-door, pro-market and “pro-Westpolicy.” In addition, a good numberof the children of senior Politburo

members are either joint venture partners with American com-panies or senior executives in multinational companies.

This has given rise to accusations by so-called “left-ists,” or remnant Maoists, that three unsavory groups – “pro-US” Politburo members and their children, the rising classof private businessmen, and multinational, mostly Ameri-can, firms – have formed an unholy alliance to adulteratethe party’s socialist creed and “exploit” the riches of theland.21 While not being leftists, Hu and members of theyounger generation of leadership such as Vice-Premier WenJiabao are aware of the anti-Shanghai Faction sentimentsamong cadres and residents in the hinterland regions. Theyare also conscious of the negative fallout of fast-paced inte-gration with Western economies, such as income level dis-parities. Much of the opposition to China’s accession to theWTO – particularly the concessions that Beijing has madeto the American and other Western governments – comesfrom the central and western provinces, which stand to losethe most from an influx of foreign goods and produce. Hav-ing served long years in the heartland and western prov-inces of Gansu, Guizhou, and Tibet, Hu has a good under-standing of the needs and biases of officials there.

Hu and the new Politburo must also contend with therising tide of nationalism. Given the near-obsolescence ofCommunism, nationalism is virtually the only card that theCCP leadership can play to promote cohesiveness, and todivert attention from disasters such as massive riots that maybe caused by worsening unemployment. Sinologist Jean-Pierre Cabestan, who heads the Hong Kong-based FrenchCenter for Research on Contemporary China, said Hu couldface more pressure from nationalistic, conservative and anti-American groups in the party, army and society to be tougherwith Washington on certain issues. Cabestan indicated thatdue to his lack of a strong power base, “Hu may be in a weakerposition than Jiang to thwart pressures” from such groups.22

Nationalistic and anti-US sentiments have manifestedthemselves the past year in thinly veiled attacks on Jiang

Despite his reputation as alightweight, colorless

apparatchik, Hu Jintao has a keenintellect and a desire for reform.


Spring 2002

and his “weak and soft US policy.” Jiang has been taken totask by nationalistic intellectuals and army generals over arange of developments including his failure to check Bush’s“pro-Taiwan” policies and acquiescing to US actions in Cen-tral Asia. Despite the Jiang administration’s relatively tightgrip on the mainstream media, nationalistic feelings can of-ten be seen in the chat rooms of a number of websites. Givenhis hold on power, however, Jiang has been able to rein incritics of his US policy, including PLA officers.

It is true that Hu is not given to nationalistic excessesand that he is aware of China’s considerable economic de-pendence on the US. Yet the vice-president is untested andlacks national stature. On sensitive matters such as Taiwan,Hu must show the world that he canstand up to the Americans if he is toavoid an ugly confrontation withhardliners both within and outside thePLA. At this stage, most of Hu’s ad-visers on the US, including the headof the America Institute of the Chi-nese Academy of Social Sciences,Wang Jisi, are considered moderate figures who have alsoplayed a role in shaping Jiang’s “great power diplomacy.”However, Hu’s aides are also aware of his need to be seen astough. In a recent article, Wang cited the imperative of beingmore assertive with the US. “The nature of America’s [China]policy is aggressive, while ours is a diplomacy of peace gearedtoward self-preservation,” he argued, adding that Beijingneeded effective means to counter the incessant demands thatWashington was making on China. Wang also made an im-plicit criticism of cadres who wanted to make concessions tothe US in order to maintain a good Sino-US relationship. “Itis true that relationships count on the world stage,” he wrote.“Yet relationships are only a means, while [national] inter-ests are an end. It won’t do to give up interests in return forrelationships.”23

SINO-US TIES: STILL A DIFFICULT BALANCING ACT

That Sino-US relations still remain relatively fragiledespite tentative gains made at the Jiang-Bush summit isobvious in the aftermath of two incidents in early March:Taiwan Defense Minister Tang Yao-ming’s visit to Florida;and the leaked Pentagon report about the possible use ofnuclear weapons against seven countries, including China.While Beijing’s reactions did not go beyond protests madeby the Foreign Ministry – and it is unlikely that planned vis-its to the US by either Hu or Jiang will be affected – theseincidents have from China’s perspective undermined the ele-ment of trust that is essential to a “constructive, cooperativerelationship.”24

Moreover, the significantly more strident rhetoric usedby Jiang and his colleagues at the National People’s Con-gress (NPC) of March 5 to 15 has further confirmed the factthat the LGFA and other party and government diplomaticorgans are under tremendous pressure from hardliners to “acttough” toward the US. During the NPC, generals who haveremained largely quiet during the past year became outspo-ken concerning the need to develop state-of-the-art weaponsto guard against what they consider the still-treacherous glo-

bal climate. Partly because of Tang’s visit to the US, Jiangcalled upon the PLA to “make solid preparations for militarystruggle” in the course of national reunification. Diplomaticanalysts say the top cadre had not used such tough languagefor some time. Moreover, the analysts said, a number of mili-tary deputies to the NPC had privately criticized Premier Zhufor not mentioning in his annual government report to thelegislature that Beijing would never renounce the use of forceagainst Taiwan.25

It is likely that as long as the “pro-business” and “pro-West” leaders are in charge in Beijing – and that the Taipeiadministration does not seek aggressive steps to change thestatus quo of the Taiwan Strait – differences between China

and the US can be contained withinmanageable parameters. Tangiblebenefits that both sides can derivefrom trade and investment might serveto obscure their differences. Bilateralties also hinge on Washington’s per-ception of how much the US needsChina to defuse possible crises in the

Korean Peninsula and South Asia. However, China itself isalso undergoing rapid changes on economic and politicalfronts, and it is probable that nationalism will exert a moremarked influence on diplomacy. While there is no need to bepessimistic about how the Hu Jintao administration mighthandle ties with the US, it is reasonable to assume that rela-tions will continue to be informed by the yin and yang ofcooperation coupled with confrontation.

ENDNOTES

1 For an analysis of the impact of the fight against terrorismon Sino-US relations, see, for example, Catharin Dalpino andMinxin Pei, “Beijing’s chance to forge true alliance,” SouthChina Morning Post, September 19, 2001; and Cheng Li,“Assessing Sino-US relations after the APEC Shanghai meet-ing,” Center for Strategic and International Studies occasionalpaper, http://www.csis.org/pacfor/li_cheng.pdf.2 The figure provided for Sino-US bilateral trade is based onChinese customs statistics. The US calculates trade statisticsaccording to a different formula.3 Cited in Willy Wo-Lap Lam, “China plays waiting gamewith the US”, at www.cnn.com/Asia, February 13, 2002.4 For a discussion of Bush’s readiness to defend Taiwan, see“The End of Strategic Ambiguity,” Editorial, WashingtonTimes, April 27, 2001; and Robert Kagan, “Bush’s StraightTalk on China,” Carnegie Endowment for International PeaceNewsletter, April 30, 2001.5 For a discussion of Jiang’s US policy, see Matt Forney,“China’s Great Wall,” Time (Asia), April 23, 2001; FrancescoSisci, “China, US and the New World Order,” Asia Timesonline edition, September 19, 2001.6 For a discussion of the impact of US actions in CentralAsia on Beijing’s strategy considerations, see NiklasSwanstrom and Svante E. Cornell, “China’s Trepidation inAfghanistan,” Central Asia Caucasus Analyst, October 10,2001.7 For an account of the alleged bugging of the Chinese Air

Diplomats are under tremendouspressure from hardliners,

including PLA officers, to “acttough” with the US.


Force One, see Reuters “China Says President’s Jet Bugged,”January 19, 2002. See also stories about the bugging in theFinancial Times (London) and Washington Post, January 19,20028 For an account of Zhu’s speech at Tsinghua University,see, for example Reuters, “Zhu Rongji Says Reforms WillSlow Down,” June 8, 2001.9 Beijing, for example, is keenly aware of the growing de-pendence of Boeing on the Chinese market. Thus, when Vice-Minister of Planning Zhang Guobao signed a multi-billiondollar deal to buy 300 Boeing aircrafts soon after September11, Zhang pointed out that “China won’t forget our friends inneed.” For a view of the signing ceremony, see “ChineseAirlines Sign Procurement Contracts with Boeing Company,”website of the Chinese embassy in the US, October 2, 2001.10 In his analysis of 30 years of relations with the US, Vice-Premier Qian Qichen expressed optimism that both coun-tries would focus on their common interests rather than lettheir differences get out of hand. See “Qian Qichen: Chinaand the US can Lessen Troubles and Confrontation in theComing 30 Years,” China News Service, February 25, 2002.11 For a discussion of the mechanisms for Sino-Americandialogue, see, for example, “High Level Strategic Dialoguewill be Boosted,” in Wen Wei Po, February 22, 2002; Reuters,“FBI to Set Up Office in Beijing,” March 13, 2002.12 For a discussion of the arrests of Uighurs in Xinjiang, seeMarwaan Macan-Markar, “Asian Governments Seen Exploit-ing September 11,” in Asia Times online edition, December14, 2001. The US State Department report on human rightsconditions in China, released on March 4, 2002, criticizedBeijing’s suppression of legitimate religious practices byUighurs in Xinjiang.13 For a discussion of Taiwan Defense Minister Tang’s visitto the US, see Tom Wolf, “US Grants Taiwan Defense Min-ister Visa,” Reuters, March 6, 2002. After Bush got into theWhite House, he and senior officials have refused to repeatthe so-called Three Nos policy on Taiwan (no to Taiwan in-dependence; no to one China, one Taiwan; and no to Taiwanjoining global bodies that require statehood as admission cri-terion) that was enunciated by former president Bill Clintonin 1998.14 Cited in Willy Wo-Lap Lam, “Trade Ties Taiwan to China’sLeash,” in the www.cnn.com/Asia website, January 29, 2002.In the famous Chinese classical novel Journey to the West,the legendary monkey fails to escape the control of BuddhaRulai.15 Western diplomats in Beijing have expressed doubt as towhether a motion censuring China’s human rights recordswill be tabled at the UN Subcommittee on Human Rightsdue to be convened in Geneva in May 2002. They say thatsince the US is no longer a member of the committee, it isdoubtful whether any European country will raise the mo-tion.16 For a discussion of the 2002 military budget, see “China’sMilitary Budget to Increase by 17.6% to 166 Billion Yuan,”in Ming Pao, March 4, 2002.17 For a discussion of China’s latest weapons development,see Anthony Cordesman, “Weapons of Mass Destruction andChina,” Center for Strategic and International Studies, Wash-ington DC, February 2001; and “What is the current shape of

the Chinese military,” at http://www.uwmc.uwc.edu/political_science/MIIIE/Chinacurrentshape.htm18 Jiang’s writings, collected in The Selected Works of JiangZemin, are due to be released before the 16th CommunistParty Congress. For a discussion of Jiang’s writings, see, forexample, Willy Wo-Lap Lam, “Jiang Battles to Save HisLegacy,” www.cnn.com/Asia, November 28, 2001.19 For a discussion of Jiang’s succession crisis and his role inthe army, see, for example, David Shambaugh, “Commenton Civil-Military Relations in China: the Search for NewParadigms,” Rand Corp. papers; http://www.rand.org/publi-cations/CF/CF160/CF160.ch2.pdf20 For a discussion of Hu Jintao’s trip to the US and his think-ing on foreign policy see, for example, Willy Wo-Lap Lam,“Hu Jintao in the Wings,” China Brief (http://china.Jamestown.org), Jamestown Foundation, February 28,2002.21 For a discussion of the “collusion” between party bureau-crats, capitalists and multinationals, see Wu Li, “The Situa-tion In and Out of China After May 8,” at www.redflag.comwebsite, http://redflagsh.myetang,com/redsee/wu58.html.22 Author’s interview with Cabestan, February, 2002.23 See Wang Jisi, “It Won’t Do to be Passive and Concilia-tory,” in www.pen123.net., June 25, 2001.24 For a discussion of the impact of the leaked Pentagon re-port on Beijing’s Taiwan strategy, see “America’s NewNuclear Strategy and the Situation in the Taiwan Strait,” HongKong Economic Journal, March 14, 2002.25 For an analysis of Jiang’s response to the views of hardlinePLA elements on the Taiwan issue, see “Jiang Orders ‘Mili-tary Struggle’ Against Taiwan,” Ming Pao, March 13, 2002.


Spring 2002

HAQ: In January you co-chaired an international conference in Tokyoto raise aid money for the reconstruction of Afghanistan. At the confer-ence, Japan pledged up to 500 million dollars over the next two years.Were you satisfied with this amount of aid?

Ogata: Well, I think it is a very good start.

HAQ: What do you think was Japan’s primary motivation for giving suchextensive aid?

Ogata: I think you should look at the way that Japan has approached theproblem of Afghanistan. The whole region has been important for Japan,but Afghanistan specifically is very important both strategically and cul-turally. Japan has had a considerable interest and commitment to helpAfghanistan over the years. In 1996, when Kabul fell into the hands of theTaliban, there was an attempt to re-establish some sort of stability. Japantook the initiative in calling for political negotiations between the Talibanand the mujaheddin, and there were some attempts to bring them togetherfor consultations. Japan did not succeed at that time because I don’t thinkthat the objective situation really warranted a political settlement. But Ithink that Japan’s interest in trying to bring peace and stability to Af-ghanistan is not all that new.

The second important point is that when the September 11 attackstook place, many countries pledged support to the US fight against terror-ism. Prime Minister Koizumi came to the United States and met withPresident Bush, and said that Japan was fully committed to supporting thefight against terrorism, but Japan’s means would not be primarily military.At this point, the idea that Japan would take a lead in the reconstructioneffort, while the US would take the lead in military action, was under-stood and appreciated. This background is important for understandingwhy Japan is now playing such a central role in organizing the reconstruc-tion in Afghanistan.

HAQ: Given the problems facing the Japanese economy, and the fact thatthe government is in the midst of radical cost-cutting and structural re-form, do you think that the Japanese public is generally supportive ofsuch generous aid?

Ogata: In the course of the Afghan reconstruction debate and the partici-pating governments pledging aid packages, there was a lot of support inJapan. I was very pleased about that. I think the fact that the situation inAfghanistan warranted a lot of support for the sake of peace and stabilitywas quite widely understood. There was a lot of sympathy on the part ofthe public. I tried my best to talk to the public, and I was pleased with theirresponse. Although it is always more difficult to come up with major as-sistance when the economy is not good, economic assistance is not a ques-tion of recession or non-recession. Rather, assistance should be based ondifferent levels of development. Aid should be seen as assistance fromcountries and an economies that are far more advanced, to countries thatare far below them in GNP and standard of living. And nobody argued

INTERVIEW WITH SADAKO OGATAJAPAN AND THE RECONSTRUCTION OF AFGHANISTAN

BY EMILY PARKER

Sadako Ogata is currently Japan’s special envoyfor Afghanistan assistance. From 1991 to 2000,she served as United Nations High Commissionerfor Refugees. She is currently a Resident Scholarat the Ford Foundation in New York, where sheis working on a book examining the impact ofglobal trends on the refugee protection regime.Ogata received a Ph.D. in Political Science fromthe University of California at Berkeley in 1963.


against the reasoning that I presented.

HAQ: Was there any opposition at all to Japan’s pledge?

Ogata: I don’t think so. The November 22 conference inWashington was the first attempt to have a meeting to gatherinternational support for the reconstruction of Afghanistan.Although many countries came to this conference, the USand Japan took the main initiatives. The primary goal was touse reconstruction as a way to achieve the political develop-ment necessary in Afghanistan. The November meeting tookplace before the Afghan interim authority was set up, and itshowed the strong effort at that time to set up a governingbody in Afghanistan. It was there that it was decided to havethe first formal international conference to support the re-construction in Afghanistan, with To-kyo as the host. The clear message waspolitical, to show that Japan was behindthe political effort by committing to re-construction.

HAQ: When you spoke at Harvard lastfall, you mentioned that you were veryconcerned about inward-looking trends in Japan. In light ofthese concerns, were you surprised by such extensive publicsupport for aid?

Ogata: Yes, I was very pleasantly surprised. And I thinkKoizumi was very pleased. Because public support makes iteasier for the government to take initiatives. One of the rea-sons why Afghanistan became the hotbed of terrorism wasbecause of international neglect. If we let a country be for-gotten and allow terrorism to fester there, what will happento the people of that country and to the world? That kind ofmessage was well-received by the Japanese public.

HAQ: Does this mean you see Japan moving away from itsinward-looking tendencies?

Ogata: Oh, I don’t know about that. The Afghan situationbrought a lot of interest and attention from the global com-munity. Japan’s security and economic base is really global,and I think that was felt in Japan. Public interest depends alot on what political leaders say and what the media says.But since the end of the Afghan reconstruction conference, Ithink the issue has been receding from the public eye, and Iam a little worried about that. Because the need in Afghani-stan has not changed at all.

HAQ: Are you concerned about the effective distribution ofthe aid to Afghanistan?

Ogata: Japanese economic cooperation is provided throughtwo channels. One is through multilateral organizations, andthe other is through the central government. For the multilat-eral channels, such as UNICEF or UNHCR, the distributionof funds is not a problem so long as the programs are pre-sented correctly and in a way that agrees with the prioritiesand plans of the Japanese government. I think the bulk ofhumanitarian work takes place through multilateral channels.

When it comes to bilateral channels, there are a lot ofexpectations on the part of the Afghan interim authoritiesthat there will be contributions through the Japanese govern-ment. Of course, the capacity of the Afghan government forimplementation requires strengthening too, for examplethrough capacity building of ministries and officials. You canalso try to facilitate implementation, so that funds flowthrough the central government to the provincial governmentand to the various community leaders and community build-ing programs. This is really a learning process for the Af-ghan government and also for the Afghan people. But I thinkthat this is a learning process for the donors as well.

HAQ: In light of the recent controversy in the Japanese for-eign ministry, what do you think is the ministry’s first pri-

ority?

Ogata: There are two priorities. First,they have to carry out the necessaryreforms to correct what has to be cor-rected. But the other priority is to makesure that the foreign policy of Japandoes not suffer. In fact, it should get

even stronger. Although strengthening is the objective, I thinktemporarily the Japanese government and public are payinga lot more attention to reforming the organization. Reformshould end up strengthening foreign policymaking and per-forming capacity.

HAQ: Last fall the Diet authorized the dispatch of Self De-fense Forces to support the war in Afghanistan. What doyou think are the implications of this decision?

Ogata: I think it meant a lot for the United States that Japanwas also trying. The Anti-Terrorism Special Measures Lawwas passed by the Diet and Self-Defense force vessels aresupplying fuel to US and UK ships in the Indian Ocean. Also,Japan has not been using its military for active defense orfighting, but for peace-keeping purposes – for example, thecurrent dispatch of an engineering core of 680 to Timor forits reconstruction. I think these are very welcome develop-ments.

HAQ: What are the implications of this dispatch for Article9 of the Japanese Constitution?

Ogata: I think there is no contradiction. Some people ques-tion the constitutionality of the Self-Defense Forces to beginwith, but I think the SDF functions within the spirit and theprinciples of Article 9. I think that the SDF’s participation inpeace-keeping missions does not violate Article 9, because Ithink that military functions have been changing as well. Intoday’s world, war is not necessarily inter-state war like thekind that Japan lost in World War II. In those days, the mili-tary was looked at as primarily an aggressive combat force.Now, the military is taking on peace-keeping and peace-build-ing functions.

HAQ: The US has been vigilant in its war on terrorism, butare you concerned about how thoroughly the US will deal

I think the Self-Defense Forcesfunction within the spirit and the

principles of Article 9 of theJapanese Constitution.


Spring 2002

with the humanitarian aftermath and the reconstruction pro-cess?

Ogata: The US is still carrying out the war in Afghanistan.At the same time, the US is committed to reconstruction.And it is important that the government and the public sup-porting the US efforts also look at the importance of recon-structing a stable society in Afghanistan because that is alsoa very strong way to keep the country on the right track. Youcan not solve a problem by military means alone, although itis necessary to eliminate the dangerous elements. The AlQaeda and the Taliban have to be eliminated. At the sametime, in order to really make the country stable, you have torebuild it from the bottom up.

HAQ: Are you concerned that the UShas been too unilateral in its approachto Afghanistan?

Ogata: I think that the US, in its mili-tary activity, is moving on its own alot. At the same time, I think that inthe long run no one country can re-ally determine the fate of the worldand everyone in it. You have to have coalition building, sup-port building, at both the government level and at the publiclevel. If this unilateralism undermines the coalition then thatis not useful.

I think it is also important for the other parties, like Ja-pan and the European countries, to maintain their commit-ment and involve the US, or maybe I should say work withthe US. Japanese people were very supportive at the time ofthe Afghan reconstruction conference. I hope that Japan be-ing active will keep Americans active as well. If Japan letsthis process fail, then I think it will be bad for the Americansas well.

HAQ: A major theme in your talk at Harvard last fall wasthe international neglect of refugee problems, and the lackof international cooperation for humanitarian solutions. Yousaid that there has recently been more attention paid to theproblem. Do you think that the international community hasshown more concern for the current Afghanistan refugeeproblem? If so, do you see this as an enduring concern or ashort term one?

Ogata: Right now it is a real concern, because there is thepotential for four to five million refugees and up to one mil-lion internally displaced returning home. Their return andre-integration is a very high priority issue in the reconstruc-tion of Afghanistan. At the same time, international attentionis always at its height in a crisis situation and then it tends torecede. Now the most important thing is for governmentsand leaders to carry out their commitments, and if publicinterest wanes, to try to arouse and maintain it. This year, Isuppose the funding for the reconstruction will be all right,but whether it will continue next year or the year after that, Iam not sure. I have observed that the public as well as gov-ernments tend to have short attention spans when dealingwith international crises.

HAQ: Do you think the current attention on Afghanistancould lead to the neglect of humanitarian needs in other re-gions?

Ogata: Well, the Africans for example are very worried, andeven the Balkans think that they are no longer an issue, whichis not the case. Both of these areas need continuing supportand attention. And I think professional organizations like theone I led, UNHCR, have a major role to play. It is an uphillbattle to maintain interest and try to get the funds so thatother forgotten refugee problems will not be totally neglected.It is not easy, as I have seen in the case of Afghanistan. But Ihope the lesson of Afghanistan will be that total neglect of avery volatile situation is dangerous. We need to be repeat-edly reminded of this.

I think this year will probably beall right, but we will have to have areal conference again. There are con-ferences, maybe too many confer-ences, right now. There is one on thehumanitarian part of the operation,there is one on the development partof the operation, and there are all sortsof small meetings going on right now.

These are very useful in implementing the requirements ofrehabilitation and humanitarian needs and reconstruction, butif you really want to mobilize public support, you have toorganize well-managed, publicly supported conferences.

HAQ: So far, do you think the international humanitarianeffort has been truly multilateral?

Ogata: It is multilateral. Of course there are major donorsand less significant donors. But one of the things that wasvery encouraging in the Tokyo meeting was that the 61 statesthat came – and many of the ones that pledged – were notonly the traditional big donors but a lot of their neighboring,small countries as well. Asian countries came, such as Viet-nam and Thailand. It is very interesting that that they came toshow that they want to do whatever they can. This was a veryencouraging sign. Both Pakistan and Iran came, and pledgeda considerable amount. But you have to appreciate and en-courage this effort and make sure that it is a partnership ex-perience.

HAQ: In general, does the international response to this cri-sis make you optimistic about the future of humanitarianintervention?

Ogata: So far it has been moving in a good direction, but Iam not completely optimistic. To make sure that a globaliz-ing world means an interdependent world, you have to workat it all the time.

I have observed that the public aswell as governments tend to have

short attention spans whendealing with international crises.


Spring 2002

THE BREAKTHROUGH GENERATIONDALIT YOUTH IN CONTEMPORARY INDIA

India’s reputation as a country of violence and a high riskfor foreign investment is based, at least partially, on whathave become known in India as “harijan atrocities.”1 This paper looks

at a more positive side of Indian development. Despite centuries of socialdiscrimination and economic deprivation,2 India today is producing thefirst generation of tertiary educated untouchables in significant numbers.While tertiary education is not an entirely new phenomenon among India’sdalits or untouchables3 , the turn of the 21st century is beginning to seeenough of these graduates to term them the “breakthrough generation.” Inbreaking through the traditional boundaries that have kept India’s untouch-ables in conditions of extreme poverty and engaged largely in back-break-ing work in rural India or on the fringes of modern cities, the new genera-tion of college educated dalits is positioning itself for elite urban jobs.Whether or not these aspirations will be met is the subject of my currentresearch project tracing the career paths of dalit college students in thecity of Mumbai who embarked on a Bachelor of Commerce degree in theyear 2000.

This addresses another dimension of this “breakthrough generation”– how their values and aspirations are changing relative to those of theirparents and their counterparts in rural India. The lives of the “breakthroughgeneration” in the vast cities of India stand in stark contrast to the horren-dous violence that all too frequently blights the lives of rural untouch-ables. The second part of this paper will show how the daily life of ruraldalits differs from the college educated dalits of Mumbai.

The students that form the focus of this paper are currently enrolledin colleges affiliated with the University of Mumbai. These students arethe success stories of the dalit communities of India. They are often thefirst fully literate member of their family, and with few exceptions, thefirst family member to study at a university college. They are upwardlymobile in a manner very different from the mobility that characterizesdalits in rural India. By understanding dalit college youth, I hope to re-flect on the manner in which urbanization is transforming the lives ofpeople who until very recently were prohibited from any kind of learning.

One of the distinguishing characteristics of the Mumbai dalit collegestudents on whom this study is based is their insistence on being describedas “Bhod” or Buddhist. They do not object to the word “dalit” but theyprefer to think of themselves as Buddhists. Both words – Dalit and Bud-dhist – are associated with the political radicalism of Dr. Ambekdar’sattempt to mobilize untouchables after India’s independence in 1947.4

The term “dalit”, however, stresses the economic nature of the subordina-tion of India’s untouchables. It literally means ‘ground’ or ‘broken or re-duced to pieces’ and over time has increasingly come to mean those peoplewho are very poor. It is also a term that attempts to cross the barriers ofcaste, by focusing on socio-economic or class divisions in Indian society.Despite this, dalits in India are typically untouchables.

The Mumbai college students who insist that they are “Buddhists”are describing themselves as such because they wish to go beyond socio-economic parameters to the very heart of untouchable or dalit conscious-ness. They are reminding themselves and others that in followingAmbedkar’s original conversion to Buddhism in 1956,5 they are also as-

BY MARIKA VICZIANY

Marika Vicziany is Professor and Director of theMonash Asia Institute at Monash University,Victoria, Australia. She is the co-author, withOliver Mendelsohn, of The Untouchables:Poverty, Subordination and the State in ModernIndia (Cambridge University Press, 1998).


serting a consciousness that is distinctively different fromHinduism. In contemporary Mumbai, to identify oneself as aBuddhist remains as radical a statement as Ambedkar’s origi-nal declaration in 1935 that he would not die a Hindu.Mumbai, the heart of Indian business, has been governed bya coalition government of the BJP (Bharatiya Janata Party)and the Shiva Sena for over a decade. Both political partiesrepresent the new Hindu fundamentalism and the assertionof a strident Hindu cultural consciousness that has tradition-ally marginalized and even rejected the untouchables, includ-ing those who assert a dalit or Buddhist identity.

In this article, the term “dalits” rather than “Buddhists’”is used in describing the college students of Mumbai. Thisconvention makes the problems of the dalit youth more ac-cessible to an international readership that might otherwisebecome side-tracked into concerns about the nature of Bud-dhism in contemporary India. While the nature of Buddhismamong the dalits of Mumbai is an important issue, it is notthe subject of the present article. This account of dalit familylife in contemporary Mumbai begins with the viewpoint andexperiences of three students currently studying for the Bach-elor of Commerce (B.Com) at one of the colleges affiliatedto the University of Mumbai. The article compares their atti-tudes and experiences with those of their parents and the fi-nal section addresses the question ofhow the values and struggles ofMumbai dalit youth today differ fromrural dalit youth in other parts of In-dia.

THE REJECTION OF EARLY MARRIAGE

Although she is only 18 yearsold, Situ’s life and aspirations arevery different from her mother’s.6

Within a single generation the expec-tations and outlook of young, urbandalit women has changed dramati-cally. Situ is one of four children. Hermother has been a housewife for herentire adult life, having married at theage of 18, after studying up to 9th stan-dard.7 Situ is completing the first yearof her B.Com in a Mumbai collegebut she represents an entire genera-tional shift in the direction of tertiaryeducation. Her older sister completedan arts degree a year ago, and heryounger sister has just enrolled in ascience degree program.

Situ’s father and brother are bothfactory workers but one uncle runs aprinting business employing a dozenworkers in Mumbai. This diversifi-cation of employment is an impor-tant indicator that India’s dalits aremoving away from the traditionaljobs as hard manual laborers in agri-culture and as haulers, stone-cuttersand common laborers in the towns.

The uncle has two very young children who cannot yet helpwith the business. Situ hopes to find employment as an ac-countant at her uncle’s firm when she finishes her degree inMarch 2002. Among dalit families with extended branches,the upper caste pattern of cooperation appears to have dis-placed the earlier tendency for families to split up. In thepast, the division of the families was driven by poverty thatfrequently impelled family members to go their own way.These days, with less desperate poverty and better educa-tion, families are better able to help each other and simulta-neously solve the problem of what to do with their childrenwhen they finish their degrees, given the unemployment thatfaces them.

Situ, who is already the same age today that her motherwas at marriage, has given no thought to her life as a house-wife. She reminds herself that Ambedkar’s message was “edu-cate and organize” so for her, education is the only priorityfor the moment. On the subject of how to find a marriagepartner, her views are flexible and combine elements of tra-ditional and modern practice. She would not object to herparents arranging her marriage if they wished. Nor wouldthey object if she found a suitable boy and married him forlove. Both approaches were acceptable to Situ, reflecting astrong and trusting relationship between her and her parents.

There is no strong cultural compul-sion to insist on an arranged mar-riage. Nor is there any commitmentto dowry. Gifts will be given by thegirl’s parents to the boy’s parents, butthey will be modest. I asked herwhether any of her girlfriends hadbeen married. She replied yes, twoof them had married recently at theage of 18, but they were Hindus, notBuddhists – in other words, notdalits.

On the subject of children, Situhas also moved a great distance fromher mother. She plans to have onlyone child and would prefer that it wasa girl. Her one “traditional” value onthe subject of marriage is the desirefor a husband who is older than herby some years. Situ also hopes thatshe will fall in love and marry theman she loves. I asked her where allthese new ideas came from. Situshrugged. “Was it TV?” I asked.“No, not TV,” although her favoriteshow was the Star Plus soap operaKahhi Kisse Roz.8 This show dealswith the traditional conflict betweenmother-in-law and daughter-in-law,a theme that has enormous entertain-ment interest for Situ although itbears no relationship at all to her lifeor that of her mother’s. Her parentsmigrated from rural Maharashtra toMumbai the year Situ was born. Asa result of migration Situ’s parents

Bodybuilding is one of the professions that hasattracted dalit youth in Mumbai. In 1999, Ravi won2nd place in the Mumbai Body Building champion-ships. Given the uncertainty of the job market ofMumbai, however, he is keeping all his optionsopen by completing a Bachelor of Commerce de-gree.


Spring 2002

have never lived near their parents-in-law. But the tensionbetween mother-in-law and daughter-in-law is one of the greatthemes of Indian popular culture, classical literature andmodern sociology. The distance between these paradigms anduntouchable reality are a source of fascination and amuse-ment for Situ.

MARRYING A SUITABLE MAN

Rita is two years older then Situ, but her opinions andexpectations are not substantially different from Situ’s.9 Ifanything, Rita is much more focused on making a success ofher B.Com and seems to be more determined to proceed tohigher studies. This reflects both the maturity of her greaterage and her academic ability. The older an Indian studentbecomes, the more aware she is of thevast scale of graduate unemploymentthat surrounds her. Proceeding tohigher studies is often a short-term so-lution to unemployment. For Rita,marriage is not a consideration untilthe age of 24 or 25. Her pragmatismis also tempered by a less romantic out-look than Situ.

Rita represents the first generationin her family to achieve tertiary education. Her father, a fore-man in a public sector company in Mumbai, studied up to11th standard. Her mother, who has been a housewife all herlife, also studied to 11th standard. Like Situ’s siblings, Rita’sare college students. One 22-year old brother studied for aB.Com at the same college where she is presently enrolled.He also pursued computer studies with a major Indian soft-ware company over a period of two years while simulta-neously studying in college, but these efforts have not im-proved his job prospects. Rita pointed out that her brother’smarks were too low and his English was poor. This has madeit difficult for him to compete in the Mumbai job market. Heremains at home and is unemployed, with only the TV break-ing the monotony of his life.

Rita is willing to take any job when she finishes collegeand clearly has different ideas from her brother. Her Englishis very good so her prospects are also better. Like her brother,she is taking extra computer classes to expand her skills andknowledge in various software programs relevant to the ac-counting profession. These classes cost Rs.550 for threemonths, which makes them over three times more expensivethan a year at Mumbai college for the B.Com degree(Rs.660). This is one indicator of the investment that dalitfamilies are prepared to make to improve their children’sjob prospects. Like Situ, Rita also has an uncle involved in asmall business. He runs a cloth shop in Sattara district, inthe hinterland of Mumbai. Like her uncle, Rita is thinkingof setting up her own business, given the graduate unem-ployment affecting B.Com students.

Rita’s personal expectations and opinions differ littlefrom those of Situ. Her parents would agree to her marryinga suitable boy that she loved; on the other hand, she wouldagree to an arranged marriage with a suitable partner. In bothcases the important adjective is “suitable”, a word that indi-cates the parents’ willingness to reach a joint decision about

a marriage partner rather than force a choice on their daugh-ter. Once married, Rita expects to have no more than onechild and would welcome a girl or a boy. Boys have no spe-cial importance in her family. In this respect there is a greatdifference between dalit families and caste families in In-dia. With modernization, Indian families have shifted in thedirection of an enhanced preference for sons. In some partsof India the privileging of a son is taken to the extreme offemale infanticide or the abortion of female fetuses after thesex has been determined by amniocentesis. Upwardly mo-bile untouchable families are often caught up in this mod-ernization paradigm. In Mumbai, however, there is no evi-dence of this amongst the dalit college students I have beenworking with. The one point of difference with Situ is thatRita’s family will give nothing at all on marriage – there is

no dowry but there will be some ex-change of gifts. She plans on a verybig wedding but only because her fam-ily is so large.

Both Situ and Rita are very at-tached to Dr. Ambedkar and what herepresents to Maharashtrian dalits. Forsome days prior to our meeting, bothSitu and Rita had been involved in cel-ebrating the 100th birthday anniversary

of Ambedkar. In Mumbai, Ambedkar’s birth and death havegrown into large public festivals that bring thousands of un-touchables into the city from surrounding rural districts. Thepress of people is so great that the Mumbai police suspendall their rules against squatting so that the dalit visitors fromrural India are legally permitted to sleep and live on the streetswithout harassment. The main role of dalit girls is to servefood cooked by resident dalit families to the thousands ofvisitors who throng the streets. Situ and Rita had both servedat various food stalls as part of the celebrations.

AN EMERGING DALIT LEADER

My third mini-biography is of a young man, an emerg-ing student leader and most likely a major dalit leader inlater life.10 In late 2001, Sanjay and his friends launched astudent magazine that will report on the life of students andstaff at the Mumbai University. When necessary, they in-tend to use the magazine to articulate grievances surround-ing issues of equity and fair practice in employment and ex-amination procedures. Two years ago when we first met,Sanjay was involved in student theatre, but now his time istaken up by another kind of theatre. “Instead of performing,I am directing,” he said. This eloquent metaphor capturedhis shift out of being a mere player in student drama perfor-mances to a leadership role in the much larger drama of stu-dent politics in Mumbai.

Of all the students I have met, Sanjay is the most pro-gressive in his outlook. Like Situ and Rita, many of his friendscome from other castes; on the day I interviewed him hewas followed by a posse of magazine helpers who clearlylook to him for leadership. Sanjay has many admirers. Hisone love affair was with a caste Hindu girl.11 But after ayear, she called it off in response to parental pressure. Thegirl’s parents disapproved of a cross-caste relationship. De-

The older an Indian studentbecomes, the more aware she is

of the vast scale of graduateunemployment that surrounds

her.


spite this disappointment, Sanjay is confident that he willmarry a girl he loves. For him and his family, the caste iden-tity of his future wife is of no concern. “Caste is rapidlyvanishing in India; we share coffee together at college; wework together. Like the British, the new generation does notcare about caste.12 It is only a problem for the older genera-tion,” he said. For the moment, he has no thoughts of mar-riage but is preoccupied with his career. If and when he doesmarry, however, there will be no dowry involved. Sanjayhas strong views on dowry: it is very bad and not widelypracticed amongst Mumbai’s Buddhists. He went on to ex-plain: “Dowry is like selling a son. My father would wish toinvest in me, not sell me,” he said. By investment, he meantcontinuing with his education.

Sanjay has mapped out a five-year plan: first to com-plete the B.Com and then proceed toa Master of Commerce in ManagementStudies. Then, if he has the necessarygrades, he hopes to study law. Sincewe met at the start of his enrollment inthe B. Com. less than two years ago,he has become sharply focused onwhere he plans to go in the next fewyears. In contrast to Situ’s and Rita’sparents, Sanjay’s father has a degree– a rarity twenty years ago for dalits.The Bachelor of Arts degree is from the same college whereSanjay currently studies commerce. His father’s story wasone of genuine struggle beginning as a sweeper for CentralIndian Railways. He progressed upwards to become the headtypist. The success of his father has given Sanjay enormousconfidence. He admires his father greatly and they are goodfriends and confidants. Together they are active in thecollege’s council.

Another source of his confidence comes from a lifewhere he has experienced no caste discrimination. His fam-ily home is located in the midst of hutments13 belonging tohis uncle and grandfather. His parents are dedicated to hiseducation, despite the criticisms from his uncle who thinksthey are “wasting” too great a part of their income on Sanjay’seducation.14 They moved hutments in order to be closer to aprivate school that taught in English. It was not a conventschool and employed teachers from various caste and reli-gious backgrounds including Christian, Hindu, and Muslim.

The third inspiration in Sanjay’s life has been the teach-ings of Ambedkar and the values of Buddhism. Buddhism isnot a religion for Sanjay; it is way of living. He applies Bud-dhist principles to almost everything “My studies have taughtme that anyone can become a Buddhist – it is not a religion,not a caste and not a community. It is a bank of knowledge,a library, a path,” he explained. A year ago, Sanjay had ashort-term job with a bank in Mumbai earning Rs.3000 amonth plus bonuses for bringing in more business. But mak-ing money is of no consequence to him. He has no regretsabout his decision to forego earnings in the interests of pur-suing his five-year plan. At the same time he learned a greatdeal about communication skills from his short-term expo-sure to the world of marketing. Sanjay has his own philoso-phy about the values of marketing: he spoke at length aboutthe connection between marketing and good communica-

tion skills in general and he is obviously applying the les-sons of his banking experience to the new venture of thestudent magazine.

A COMPARISON: THE VALUES OF TODAY’S DALIT

COLLEGE YOUTH AND THOSE OF THEIR PARENTS

As the three case studies above show, Mumbai’s dalitcollege youth represent a break with the traditional life ofIndia’s untouchables in many ways. Unlike their parents, notonly are the youth literate but often the first generation oftheir families to obtain a degree. They plan to continue theirstudies and have no plans for immediate marriage, comparedwith the early marriages of their parents. They oppose dowryand believe in marrying partners they love, although they

would not oppose an arranged marriagebecause they expect their parents toconsult them. They mix comfortablywith non-dalit students and do not re-ject the possibility of an inter-castemarriage. At the same time, they rec-ognize that inter-caste marriages areopposed by the non-dalit communities.Finally, it is important to note that col-lege education is no longer regardedas something only for dalit boys. Young

women also attend colleges and their expectations are notsubstantially different from those of young men.

The most distinctive thing about these college studentsis their overwhelming sense of optimism. They are forwardlooking, have plans for the future and see caste as a dyinginstitution. They are confident and increasing numbers of themspeak English – a critical ingredient in any modern Indiansuccess story.15 This impression is confirmed by earlier workbased on a questionnaire distributed to 51 Mumbai dalit col-lege students in early 2002.16 The responses to the question-naire showed that the majority of them aspired to better thingseven though they did not always expect their lives to becomeeasier (Table 1). The responses to the questionnaire are alsointeresting because they show the social conservatism of dalitstudents when it comes to their parents – 96 percent of themhope to look after their elderly parents. During the in-depthinterviews conducted over the last two years, I sensed thattoday’s college students feel much gratitude to their parentswho sacrificed many comforts to enable them to finish schooland pursue a college education. They are also conscious ofthe fact that their parents lived in times when there was moresocial discrimination, as a result of which their lives weremore difficult ten or twenty years ago. This realization hasproduced a strong bond between today’s college youth andtheir parents.

Mumbai, in other words, is beginning to generate posi-tive social changes that go beyond a mere accommodation tothe conveniences of living in modern cities. In an earlier work,Oliver Mendelsohn and I argued that social discriminationin the sphere of public life had largely vanished but that dis-crimination persisted in private life.17 In the three case stud-ies above, the reader can see how discrimination in the pri-vate sphere has also started to erode among Mumbai’s col-lege students, with dalit and non-dalit students sharing cof-

The most distinctive thing aboutthese college students is their

overwhelming sense ofoptimism. They are forward

looking and see caste as a dyinginstitution.


Spring 2002

fee and conversations; common social goals in, for example,the establishment of an inter-caste theatre group; politicalgoals within the university environment and collaboration inthe production of a student magazine. Increasingly, emotionalattachments also cross caste barriers and while frequentlybroken in response to parental pressure from the non-dalitside, they do represent an important emotional engagementthat defies caste rules. Moreover, cross-caste relationshipsdo not typically bring upon urban dalits the extreme violenceand retribution that is normal in Indian villages.

COMPARISON WITH DALITS IN RURAL INDIA

In the following comparison between the values andexpectations of Mumbai’s dalit youth and their rural coun-terparts, I have momentarily set aside the worst case sce-narios associated with the extreme violence that all too fre-quently mars the family lives of rural untouchables. The dis-figuring impact of rural violence on daily dalit lives is asubject of great complexity. As a recent report noted, vio-lence in rural India ranges from the organized repression oflandlord armies in Bihar18 to the spontaneous, insane envyof Tamilnadu’s other backward castes (OBCs).19 Urban In-dia, too, has it moments of extreme caste violence, but howthis has impacted dalit youth is beyond the scope of thispaper.20 With these caveats, I now turn to an account of howthe family lives of rural dalits differ from the optimistic sce-nario that emerged from case studies of dalit college youthin contemporary Mumbai.

Discrimination in Schools

While there can belittle doubt about the trans-forming effects of urban lifeon the lives of India’s dalityouth and their non-dalitfriends, it is equally clearthat rural India has notcaught up with the new andmore open values. Drinkingcoffee and chatting withfriends in a college inMumbai contrast stronglywith the violence thatawaits rural dalits if theytransgress even modest so-cial boundaries. Althoughchildren have little or at bestimperfect knowledge of thenorms of caste behavior,this did not prevent oneteacher in the village ofK a t t u n a i c k e n p a t t i(Tamilnadu) from beating afive-year-old untouchablegirl for drinking from a cup“normally reserved for up-per caste students.”21 Onthe other side of India, in

Viraatnagar, Rajasthan, harrassment of Balmiki22 (formerlythe sweeper caste23 ) students has pressured them to drop outof school as a result of which Balmikis have the highest drop-out rate in that area.

Harassment ranged from degrading verbal insults to sit-ting on the floor at the back of the classroom, near the shoesof the other children, rather than on the mat where the otherchildren sit.24 Balmiki students in urban Rajasthan, by con-trast, fare much better – in the slums of Jodhpur, for example,their enrollment in primary school is 80 percent of eligibleBalmiki children. As in Mumbai, the rising literacy of urbanBalmiki is starting to be reflected in the diversification ofemployment away from the traditional practice of collectingnight-soil. One possible reason for the difference betweenrural and urban Balmiki lives is the small number and isola-tion of sweepers in villages compared to the greater safety oflarger numbers in Indian towns and cities. Urban India isalso a more intense and reactive political environment, invit-ing closer scrutiny from political parties and the press. Thiscontributes to the assertiveness of urban dalits.

Dalit Refusal to Perform Traditional Rituals

Traditional forms of discrimation in rural India also per-sist, creating unique pressures and tensions on dalit familylife. One method of ritual subordination over many centurieshas been the requirement by the “clean” caste Hindus25 thatdalits perform especially degrading functions during festi-vals such as the slaughter of sacrificial animals. The rejec-tion of such obligations became a major expression of dalit

Table 1

Aspirations of Dalit Youth in Mumbai’s tertiary colleges

Survey Statement % who strongly agreed with the statement____________________________________________________________________________________

I expect to travel in India 98%I expect to improve my occupation 96%I expect my children to attend an IIT1 96%I hope to look after my parents when they are old 96%I expect my children to attend university 90%

I expect life to become easier 76%I expect to own my own computer 76%I expect to earn more money 75%I expect to travel abroad 65%

I expect to investment on the stock exchange 45%I expect to own my own mobile phone 39%I expect to spend more money on clothes, restaurants, entertainment 20%I expect to have more holidays 18%

Source: Author’s database of responses to a questionnaire to 51 Mumbai dalit collegestudents.

1 IIT = Indian Institute of Technology. India’s IIT’s are the elite tertiary institutions trainingIndia’s leading engineers, scientists and business leaders.


rural protest from the nineteenth century onwards.26 Casesof conflict continue to be reported. The village ofJadimalkapur (Medak district), Andhra Pradesh, required onedalit family to slaughter 35-40 buffalos in the triennialDurgamma Jatara festival. In 1993, an educated dalit youthnamed Ratnam refused to perform this ceremony.27 His frail60 year-old father volunteered to do the job to prevent vio-lence against his son and family. Ratnam fled to Hyderabad,but three years later the conflict re-emerged. This timeRatnam’s father’s health had declined and he lacked thestrength to slaughter so many animals. The village panchayatsent for Ratnam, and then ostracized the family when Ratnamrefused to perform the ritual. A relative of his then “inher-ited” the task, an act that prompted Ratnam to complain tothe District Collector, the highest government servant in ru-ral India. The outcome was that his entire family was threat-ened with murder. They all had to leave the village and Ratnamgave up further studies to support his parents.

Dalit Assertiveness and Emulation of High Caste Rituals

Dalit assertiveness sometimes takes the form of emulat-ing the customs and habits of the high castes. The noted In-dian anthropologist M. N. Srinivas called such imitative be-havior “Sanskritisation.”28 One common manifestation of“Sanskritisation” affecting the lives of rural dalit families isthe popularity of taking grooms to weddings on horseback.A hundred years ago, only high caste grooms were allowedto do this. Today, landlords of all caste backgrounds ridehorses or tractors to their weddings. But when their landlessdalit laborers do likewise, the result is often rural violence asthe landlords and their hired hands seek to unseat presump-tuous dalit grooms.29 In some cases, the violence that hasexploded in response to dalits literally riding higher than theirtraditional status permits can best be described as “extrava-gant forms of revenge” – as was clearly the case in the AlmoraDistrict incident in May 1980. On that occasion, some 14untouchables were killed, including six youths who were burntto death in a house to which they had fled. They had beencarrying the groom in a palanquin when caste Hindus de-manded that he dismount. The caste Hindus claimed thatunless the groom dismounted at the entrance to the village,the Hindu deity in the Temple would be offended.30

Despite the respect accorded to Srinivas’s analysis ofupward social mobility by low castes, “Sanskritisation” maynot be the best word to describe the above phenomena ofriding horses or lounging in palanquins. It is possible to un-derstand the motivation of rural dalits without assuming thatthey actually believe in the intrinsic value of any of theseacts. Rather, dalit grooms and their parties might simply beasserting that they have as much right as anyone else to “ridehigh” in marriage processions. As such, “Sanskritisation” isnot so different from other forms of assertive behavior bydalits. The form of assertiveness might appear to condonetraditional upper caste behavior, but the meaning of protestmight be more closely associated with the radicalism ofAmbedkar than anything else.

Changing Names to Avoid Discrimination

Changing one’s name is another kind of response to op-pression, although this is more common in urban than ruralIndia for the obvious reason that in one’s ancestral villageeveryone knows who you really are. Dalit government offic-ers in many parts of India report that they must change theirnames to something “neutral” because an obvious dalit namewill prevent them from finding rental accommodation in thecities: “I was a ‘Choudhary’ for three years!” Laughs ChunniLal Jatav in Kumhere village of Bharatpur district. “That wasin Jaipur between 1975-1977. I was a savings officer of thegovernment of India.”31

A “neutral” name is typically a high caste name. Theabove experience relates to the 1970s but social norms re-main largely the same. Sainath reports that dalits working inTrichinopolly for BHEL (the large public sector electricitygiant Bharat Hiindustan Electricity Limited) find it neces-sary to hide their dalit names in order to get accommodationeven within BHEL’s own housing estates.32

In rural India, changing one’s name is typically an actperformed not by a single individual or family but an entirecaste. The Valmiki or Balmiki of northern India is a goodexample of this practice. Today the traditional word ‘bhangi’is never used to describe the sweeper caste because of itsassociations with the horrors of collecting night-soil often inwicker baskets which leaked onto the heads of bearers. In-stead, the name Valmiki or Balmiki has been adopted notonly because the sweepers revere the Ramayana but alsobecause in claiming a relationship to the mythical ancestorand author of the Ramayana they are also claiming self-re-spect and honor in the eyes of the wider Hindu community.

Emergence of Dowry in Rural India

Within the confines of family life, it is possible to dis-cern aspects of “Sanskritisation” that do reflect a deeperchange in values. In rural Bihar, untouchable castes like thechamars have traditionally paid a “bride price” on marriage.This requires the groom’s parents to pay the bride’s parentsfor the privilege of receiving a bride. The practice probablyreflects the long history of matrilineal customs amongst manyuntouchable castes. With modernization, however, the highcaste tradition of giving dowry in the form of substantialamounts of money and goods is gradually asserting itself.33

In contrast to the bride price, dowry is given by the bride’sparents to the groom. According to Jack Caldwell, the noteddemographer of India, dowry today increasingly representsthe economic pressure to “buy” a suitable groom for one’sdaughter. In one case I studied in the Patna district in 1983,the gold earrings of the dowry were used to finance a youngman’s Masters degree at the University of Patna. The familywere chamars or traditional leather workers. In modern Bihar,they are among the most upwardly mobile untouchablegroups. Unlike the desperately poor and down-troddenmusahars (the rat-catchers and rat eaters of Bihar) the chamarfamily I studied were not only reasonably well off (they hada magnificent bull tethered near their own tap, which in par-ticular is a rarity for rural untouchables) but the head of thehousehold was also the local representative of the Peasant


Spring 2002

and Workers Party.Since 1983, dowry is increasingly common amongst

upwardly mobile rural dalits. As the marriage of Dhanraj andKuchchi reveals, even modest amounts of dowry are impor-tant in rural India. Dhanraj was 24 when he married 20 year-old Kuchchi in 1989. Kuchchi’s dowry consisted of “rice,wheat and dal or pigeon peas – 10 pounds of each.”34 This isthe smallest dowry I have come across in my research. Thecase of Dhanraj and Kuchchi, however, is known not becauseof the issue of dowry but the circumstances in which Dhanrajwas murdered. Both Dhanraj and Kuchchi worked for a land-lord in the Indian state of Uttar Pradesh (of the Thakur caste)who demanded to sleep with Kuchchi. Dhanraj and Kuchchirefused. For their defiance, Dhanraj was soaked in keroseneand set alight the very same day. When he died almost twodays later, the landlord accused him of stealing Rs. 50 underthe influence of alcohol and suggested to the police thatDhanraj had set himself alight in shame.

“Sanskritisation” amongst some rural dalits takes manyforms of which dowry is only one. Thereis some limited evidence that sati mightalso have appeal to some dalits wishingto achieve self-respect. Sati, the customof a widowed woman voluntarily agree-ing to be burnt on the death of her hus-band used to be a practice limited tovery few, high castes and geographicallyrestricted to areas like Rajasthan. Someupwardly mobile families might be tempted to imitate therare practice of sati as a way of not only trying to equal thehigher castes but indeed outdoing them. An example of satiamongst the dalits occurred in the district of Bundelkhun(Uttar Pradesh state) in November 1999 when a 50 year oldwidow with a large family and six acres of virtually uselessland committed sati after her husband died.35

Early Marriage Among Rural Dalits

In contrast to the values and practices of urban dalits,early marriage is common among rural untouchables. Forexample, in one study of 33 dalit women in Bidar district,Karanataka, 30 percent had married between the ages of 7and 16. Of these ten, one was widowed, two separated fromtheir husbands, three married to a close relative, and therewere two instances of polygamy.36 Age of marriage is alsopositively related to level of schooling attained. The higherthe age of marriage, the higher the level of educationalachievement is likely to be. Primary education for the dalitgirls in Bidar district was a real possibility because of theactivities of a Women’s Association (the Mahila Samakhya).Even so, attending school was difficult (in contrast to theMumbai situation) because of many factors including the fearthat the girls will come to harm. The distance between homeand school poses a danger to girls, especially those who havehad their first menstruation. The families fear that the girlswill be raped and that they will be subject to corporal pun-ishment at school by male teachers.37

One of the greatest pressures encouraging the early mar-riage of rural dalit girls is the risk of rape by landlords andhigher caste men. As numerous observers have noted, par-

ents have a strong preference for marrying their daughtersjust before or immediately after the onset of the first menses.Marriage protects a girl’s reputation – even if rape results inpregnancy, there is no way of connecting the pregnancy tothe rape once a girl lives with her husband. This is especiallyso if the woman does not tell her husband about the rape,which is likely for reasons of fear, shame and retribution.

Inter-caste Marriage in Rural India

The three case studies at the start of this article showedthat inter-caste friendships are more tolerated in urban thanrural India. Inter-caste marriages are also increasing, but thereis still very strong opposition and resentment especially fromthe high castes. In October 2001, a Jat girl married a dalitboy in New Delhi. The Jats, a “clean” caste renowned for itsentrepreneurial drive both in agriculture and industry, wereoutraged and the dalit boy’s family were accused of kidnap-ping. There were grave fears for the couple’s safety espe-

cially for the Jat girl whose female rela-tives told reporters that she needed “tobe eliminated to redeem the lost prideof the community.”38

In rural India, it is much easier tofind and kill couples who cross casteboundaries through marriage. One re-cent murder in Purnia (Bihar state) in-volved a 35 year old backward caste

woman and her 22 year old dalit lover.39 From the viewpointof a foreign observer, this kind of marriage might seemunproblematic because the backward castes are also typicallypoor and disadvantaged relative to the higher castes. But thebarriers that divide the backward castes from the untouch-ables are just as insuperable as the barriers between high castesand untouchables. Indeed, some of the worst violence in ru-ral India has occurred between backward and untouchablecastes. This is because the backward castes have only re-cently become upwardly mobile. Typically, upward mobilityamong the “backwards” is achieved through small land ac-quisitions. These land purchases then convert the “backwards”into petty landlords who employ untouchable laborers andfrequently exploit them just as ruthlessly as traditional, highcaste landlords. Beyond these economic considerations thereis the more fundamental fact that the rituals of caste in Indiadefine the “backwards” as being “clean castes.” As such, theyare ritually separated from the permanently unclean, impureand polluting untouchables.

If the partners of a cross-caste marriage manage to sur-vive the wrath of their families and castes, the parents of thehigh caste partner might be compelled to endure social hu-miliation. One recent report noted that when a Brahmin girlmarries a dalit boy, she must go to live in the untouchablesection of the village. The Brahmin community can only tol-erate this humiliation if the girl’s parents declare that theirdaughter has died. As a public declaration of this “ritual death”the father is required to shave his head and drink gobar pani(cow urine). All visits between daughter and parents are for-bidden. These ritual punishments, or worse, are decided bythe relevant caste council that controls caste law and proto-col at the village level.40 Even if the parents sympathize with

In rural India, it is much easierto find and kill couples who

cross caste boundaries throughmarriage.


a daughter who decides to defy caste rules, they cannot con-travene the ruling of the caste council unless they are willingto be ostracized.

The degree of violence that inter-caste affairs and mar-riages engender varies from region to region and depends ona wide range of circumstances affecting inter-caste relation-ships in particular areas. As with land disputes, it is impor-tant to remember that some of the worst violence can occurbetween untouchable dalits and other low castes that are notmuch above them in the rural hierarchy. For example, theIndian constitution recognizes the need to provide specialconcessions and protection to Scheduled Castes (or SCs) andScheduled Tribes (or STs). The former term is the bureau-cratic name for dalits or untouchables who form some 15percent of the Indian population while the latter term is howthe Indian administration describes the 12 percent of the In-dian population who come from tribal backgrounds. Bothpopulation groups are severely disadvantaged in compari-son to the “clean” castes of India. Despite the low positionshared by SCs and STs in the gen-eral scheme of Indian society, thereare also sufficient differences be-tween these two groups that cangive rise to violence if circum-stances arise in which the rituallyhigher caste feels offended. The un-touchables are never the “highercaste” in such circumstances.

In Bellary district (Karanatakastate), for example, an affair be-tween a Valmiki41 scheduled tribe woman and a dalit manwere the occasion for inter-caste violence in the village ofVannenur. The local Valmiki tribe are the numerically domi-nant caste in the village from which the couple came. Theyalso own land and they regard themselves as superior to thedalits. The couple initially escaped from the village, but even-tually the woman was caught and brought back for punish-ment. The man was never caught, but his dalit friends wereattacked and the dalit woman who had allegedly encouragedthe affair was severely beaten. Violent cases of this kind canbe prosecuted under the Prevention of Atrocities Act of 1989for Scheduled Castes and Scheduled Tribes, but this was notpossible on this occasion because the perpetrators of the vio-lence were themselves members of a Scheduled Tribe whichthe Act of 1989 seeks to protect. In this situation, the Protec-tion of Civil Rights Act of 1955 had to be invoked. The eightValmiki attackers (including three women) were arrested butwhen released on bail, the five men disappeared from thearea. Further prosecution of the case, despite widespreadpublicity and media coverage, appears unlikely. The Indianjustice system is no more likely to succeed in cases of thiskind of conflict than in cases under the Prevention of Atroci-ties Act (1989) involving higher castes who carry out violentattacks on untouchable dalits and Scheduled Tribes.42

CONCLUSION

Freedom of association has been a long struggle but hadbeen sufficiently achieved in large Indian cities by the early1990s. In 1998 Oliver Mendelsohn and I noted the emer-

gence in India of a new “civic culture” driven by a “sense ofconvenience and utility” rather than a more profound behav-ioral change in more intimate social situations.43 Living incities requires the easy sharing of public utilities – it is sim-ply not practical to discriminate against individual users oftrains, buses, cafes and offices. Discrimination in the privatesphere – where resistance to social and behavioral changehas been most enduring – is an entirely different matter. How-ever, evidence from the life stories of dalit college youth inMumbai today suggests that by the beginning of the 21st cen-tury, the personal lives of young dalits are also freeing up, associal interaction with higher castes becomes more accept-able. This explains their new optimism. By 2030 about halfof India’s population will be living in cities, a good omen forgrass roots democracy and freedom.

A number of factors have empowered young urban dalits,the most significant being education. Despite ongoing dis-crimination and caste prejudice from the older generation ofhigher castes, bright young urban dalits are able to be lead-

ers, attracting support and admi-ration from across the caste spec-trum whether their endeavors arefocused on college theatre or stu-dent politics. All this represents amajor shift in outlook and oppor-tunities. Not surprisingly the mod-ern generation of college dalityouth also have different familyideals that begin with the notionsof choosing their life partners,

marrying for love, delaying marriage, continuing with theireducation and repudiating dowry. None of these values haveany special connection to Buddhism. They are, however, areflection of the impact of Ambedkar’s political teachings:educate, organize and agitate. They are also values sharedwith millions of undergraduates across the world. However,Mumbai’s dalit college youth have come to articulate thesevalues through the teachings of Ambedkar who made “mod-ernism” relevant to them.

The “breakthrough generation” has begun to breakthrough the social and political barriers that have tradition-ally divided India’s untouchables from the rest of society.Just how difficult this process is can be gauged by the kind ofsocial violence that continues to define the lives of dalits inrural India. This violence is not only between high castesand dalits, but also between dalits and other very low castesand tribal communities that do not appear to be much betteroff than the dalits themselves. By the standards of Indianvillages, the lives of dalit college students in Mumbai haveimproved in ways that are unthinkable to the majority of land-less dalit laborers today.

Author’s acknowledgements: A special word of thanks to Dr SaviaViegas of K C College, Mumbai, for her assistance with this project.Fieldwork in Mumbai during the last few years has also been sup-ported by grants from the Faculty of Business and Economics(Monash University) and the hospitality of the Hyderabad SindNational Collegiate Board, Mumbai.

Evidence suggests that by thebeginning of the 21st century, the

personal lives of young dalits are alsofreeing up, as social interaction with

higher castes becomes moreacceptable.


Spring 2002

ENDNOTES

1 The documentation of violence against India’s untouchables be-gan with the reports of the Commissioner for Scheduled Caste andScheduled Tribes after the 6th Report of 1956-7, which noted com-plaints about the gross mistreatment of “harijans.” Over time, re-portage on the number, frequency and severity of violent incidentsagainst untouchables increased. The Commissioner’s Report for1971-3 included an enlarged complaints section titled: “Cases ofAtrocities and Harassment.” Over time, the Indian media also be-gan to report on the rising level of violence and in doing so, theterm “Harijan atrocity” slipped into common usage. The term“Harijan atrocity” covers a range of violent incidents including rape,murder, beatings and arson. The worst examples of atrocities in-volve mobs and private armies (representing the interests of land-lords, often petty landlords) attacking not only individuals but en-tire harijan families and villages. Women and children are not, typi-cally, spared in such attacks. For a discussion of “Harijan atroci-ties” see Oliver Mendelsohn and Marika Vicziany, The Untouch-ables: Subordination, Poverty and the State in Modern India, chapter2, “The question of the ‘Harijan atrocity’’’, pp.44-76, CambridgeUniversity Press, Cambridge, 1998. The chapter distinguishes be-tween ‘traditional’ forms of violence against untouchables and‘modern’ forms arising from disputes about land, wages and socialoppression.2 Ibid., chapter 1 ‘Who are the Untouchables?’, pp. 1-43.3 The term “dalit” has gained acceptance as a descriptor for “un-touchables” in many parts of India. In western India and Mumbai,urban untouchables in particular, often prefer to describe themselvesas “dalits.” In doing so, they are identifying themselves with a radi-cal stream of untouchable politics that dates from Dr. Ambedkar’sattempts to mobilize untouchables.4 Dr. Ambedkar remains India’s most famous untouchable leader, aman who had the education and authority to challenge MahatmaGandhi’s claim that only he “the Mahatma” represented all Indi-ans, including untouchables. The famous contest of wills and phi-losophy between Ambedkar and Gandhi, as illustrated by the eventsleading up to and following on from the Poona Pact of 1932 (seeMendelsohn and Vicziany, op.cit., pp. 104-117) is one of the bestdocumented events of the history of pre-partition India. Ambedkarwas a Maharashtrian mahar untouchable, whose position contin-ued to rise despite the concessions he made as a result of the PoonaPact. He eventually became the principal draftsman of the IndianConstitution and therefore, also the architect of the concessionsand reservation policies which the Constitution establishes in theinterests of untouchables (officially called Schedule Castes) andtribal peoples (official termed Scheduled Tribes).5 Dr. Ambedar decided to convert to Buddhism in 1956, takingmillions of maher untouchables with him. In doing so he carriedout the declaration he made in October 1935 at the Yeola Confer-ence that he would “not die a Hindu.” This statement led to deepdivisions amongst caste Hindus and the untouchables themselves.Between 1935 and 1956, Ambedkar considered a wide range ofoptions to Hinduism, including Sikhism. In the end he opted forBuddhism because he saw values that were compatible with mo-dernity, in particular a belief system based on egalitarianism. Seeibid., pp. 114-117.6 Interview by the author, Mumbai, Tuesday 11 December 2001.The real names of the three students whose mini-biographies arethe subject of this paper have been changed in the interests of safe-guarding their privacy.7 Indian schools are based on the British model. Schooling is fin-ished when students complete their 12th standard or 12th year, afterwhich they can go either to university colleges or technical schools.Completing the 9th standard is the equivalent to completing juniorschool. It is doubtful that Situ’s mother actually completed the 9th

grade.8 The family has color, cable TV that they watch late into the night.This particular program begins at 11.30pm. The cable TV fee isRs.100 per month.9 Interview by the author, Mumbai, Tuesday 11 December 2001.10 Interview by the author, Mumbai, Thursday 13 December 2001.11 I am using Sanjay’s words to describe his former girlfriend. Bycontrast, the dalits or untouchables of India are regarded as beingbeyond the pale of caste. They do not belong to the original four-fold Varna division of the Indian caste system. Hence the literatureoften talks of the untouchables as being permanent outcasts of In-dia. For a discussion of these concepts, see Mendelsohn andVicziany, op.cit., pp.5-8.12 The role of the British in breaking down caste barriers is a fre-quent refrain amongst the dalits. While the British were too fright-ened to directly challenge caste for fear of destabilizing what theyalready regarded as an unruly society, they nevertheless behaved ina manner which undermined the ritual prejudices of caste, e.g. theyemployed untouchables servants within their own homes as cooksand butlers. This was unthinkable within the parameters of tradi-tional India where one’s home had to be quarantined from the pol-luting presence of untouchables.13 Dalit homes are called “hutments” because they are typically toosmall and modest to be called houses.14 The fees for Sanjay were Rs.30 per month in the early 1980s;Rs.60 per month in the late 1980s; Rs.100 per month in the early1990s. Regrettably data about household income is not yet avail-able.15 The interviews reported in this article were conducted mainly inEnglish with occasional questions to Dr. Savia Veigas who, whennecessary, was able to clarify things in the local Marathi language.16 With the help of Dr. Savia Veigas, we distributed a simple ques-tionnaire to a sample of 51 dalit college students enrolled in theBachelor of Commerce degree in Mumbai. The returns were usedto create the dalit database on which Table 1 is based. Thanks toTim Thornton (Project Officer, Monash Asia Institute) for settingup the database.17 Mendelsohn and Vicziany, op.cit., pp. 266-267.18 Ibid., “The case of Bihar”, pp. 55-69.19 Human Rights Watch, Broken People: Caste Violence AgainstIndia’s Untouchables, New York, London, Washington, Brussels,March 1999, chapter V: The Pattern of Abuse: Southern DistrictClashes in Tamilnadu and the State’s Response: http://www.hrw.org/reports/1999/india/India994.htm, accessed in November 2001. Theviolence against dalit Pallars has been caused mainly by the Thevars,an OBC (Other Backward Caste) group. The other backward castes/classes or OBCs is a term which has emerged in post-independenceIndia to recognize that it is not only the untouchables who sufferpoverty and disadvantage. While this is true, we still need to recog-nize that the untouchables suffer far worse forms of economic dep-rivation and social discrimination.20 For example, police violence against the dalits of RamabaiAmbedkar Nagar in Mumbai when the dalits protested against thedesecration of a statue of Dr. Ambedkar in 1997. See ibid., chapterVI “The Ramabai Killings.”21 Case cited in Submission by the Ambedkar Centre for Justiceand Peace to the UN Committee on Human Rights, Geneva, 20-27July 1997 on the website of the Ambedkar Centre for Justice andPeace, http://saxakali.com/CommunityLinkups/dalits3.htm, ac-cessed in November 2001.22 Balmiki or Valmiki is the assumed name of the former sweeper(Bhangi) caste of northern India. They have adopted the name afterthe poet and author of the renowned Hindu “Story of Ramayana”or the Ramayana that dates from about the 3rd century BC. Follow-ers of Balmiki or Valmiki are often identified with the devotionalstream of Hinduism known as bhakti, the bhakti tradition, which is


closely associated with low and even untouchable castes. The changeof name occurred over a period of time from the turn of the twenti-eth century as part of the self-respect movement amongst the sweepercaste.23 The sweepers of India remain amongst the most despised anddiscriminated untouchable caste. Traditionally, their function wasto remove nightsoil, dead animals and other very dirty and highlypolluting tasks. As part of their attempt to gain respect, they changedtheir names to Valmiki.24 P. Sainath, “This is the way they go to school”, The Hindu, 28November 1999 from Dow Jones Interactive Database accessed inNovember 200125 The concept of the clean Hindu castes arises from the view thatthe four Varna that make up the non-untouchable/non-tribal com-ponent of Indian society only suffer from temporary impurity andtemporary ritual pollution. Such temporary impurity can be ex-punged through prayer and ritual washing. The untouchables, bycontrast, are permanently unclean because they are permanentlypolluted as a result of history, prejudice and some of the traditionaltasks they used to perform. No amount of physical cleansing orprayer can remove their ritually permanent “unclean” or pollutedstate.26 One reason for the involvement of dalits in traditional ritualswas the belief that they had special connections with the under-world and were therefore better able to appease demons. In the latenineteenth century, the Madigas of Andhra Pradesh, for example,were subjected to violence for their refusal to propitiate the evilspirits which afflicted village life. See Mendelsohn and Vicziany,op.cit., p.8527 P. Sainath, “Whose Sacrifice is it Anyway?”, The Hindu, 6 Sep-tember 1998 from Dow Jones Interactive Database accessed inNovember 2001.28 M. N. Srinivas, “The Social System of a Mysore Village”, inMcKim Marriott (ed.), Village India, Chicago: University of Chi-cago Press, 1955, p. 17.29 “Opposition Walkout in Rajasthan House”, Hindustan Times,10 April 1999 from Dow Jones Interactive Database accessed inNovember 2001. This article concerns an incident to which theBJP responded by storming out of Rajasthan assembly in protestagainst the alleged indifference of the Congress Party.30 Mendelsohn and Vicziany, op.cit., pp.51-53.31 P. Sainath, “A Dalit by Any Other Name”, The Hindu, 17 Octo-ber 1999 from Dow Jones Interactive Database accessed in No-vember 2001.32 Ibid.33 Marika Vicziany 1983, “Below the Poverty Line: Musahar andChamar Women in a Bihar Village”, Manushi, vol.4, no.1, Novem-ber-December, pp. 8-15.34 Mark Fineman, “Death of a Martyr Shakes the Land of Untouch-ables”, Los Angeles Times, 14 May 1990, from Dow Jones Inter-active Database accessed in November 2001.35 Subash Mishra, “Medieval Madness”, India Today, 29 Novem-ber 1999 from Dow Jones Interactive Database accessed in No-vember 200136 Moses Seenarine, “Dalit Women: Victims or Beneficiaries ofAffirmative Action Policies in India – A Case Study”, Paper pre-sented at a brown bag lecture held at the Southern Asian Institute,Columbia University, 10 April 1996. The study was conductedthrough the auspices of the Mahila Samakhya, a local NGO. Theauthor notes in another paper that “One and a half centuries ago,my dalit fore parents left South Asian shores as indentured labourersbound for Caribbean plantations. Now, 150 years later, I was re-turning as an American graduate student on a year’s scholarshipprovided by the University of California, Berkeley…” in M.Seenarine, “Dalit Female Education and Empowerment”, Dalit In-ternational Newsletter, vol. 2, no. 1, February 1997 in http://

saxakali.com/Saxakali-Publications/dalitwo2.htm accessed in No-vember 2001.37 Ibid.38 “Dalit Boy Marries Jat Girl, Community Bays for Blood”, TheStatesman, 3 October 2001 from Dow Jones Interactive Databaseaccessed in November 2001.39 Bhuvaneshwar Prasad, “Livid at ‘Unholy Alliance’, Moral Guard-ians Kill Couple”, The Times of India, 20 September 2001 fromDow Jones Interactive Database accessed in November 200140 In the case of the Brahmin community, this caste council is theBrahamana Samaj. See P. Sainath, “Four Weddings and a Funeral”,The Hindu, 6 February 2000 from Dow Jones Interactive Databaseaccessed in November 200141 This Valmiki tribe is not related to the untouchable, dalit Valmikiof northern India, but no doubt adopted the name Valmiki for thesame reason – to increase social respect in the eyes of Hindu soci-ety.42 The case above was reported by Parvathi Menon, “The States:Another Caste Crime”, Frontline, vol. 18, no. 19, 15-28 September2001, http://www.hinduonnet.com/fline/fll11819/18190420.htm.The reporter noted the high failure rate of prosecutions by theCivil Rights Enforcement Cell in Bangalore under the Preventionof Atrocities Act of 1989. Between 1991 and June 2001 a total of11,170 offences were registered. Of these 8,282 cases were chargedbut the total number of convictions was only ten and after 1998statistics about the number of convictions were not even available.These figures can be treated as one index of the failure of the In-dian justice system to deal with violent caste crimes.43 Mendelsohn and Vicziany, op.cit., pp.266-267.


Spring 2002

In the aftermath of September 11, President GeorgeW. Bush promptly declared a “global war on terrorism” in which gov-ernments around the world had but two choices: to be, in his words,

“with us or with the terrorists.” Not surprisingly, this call from Washing-ton D.C. focused attention on the reactions of the European allies underthe security umbrella of the National Atlantic Treaty Organization (NATO)as well as on the predominantly Muslim nation-states in the Middle East,Central and South Asia. The attacks and the ensuing sea-change in USforeign policy, however, have also had important, if highly variegated,implications for governments in the Association of Southeast Asian Na-tions (ASEAN). Indeed, both the Philippines and Indonesia were quicklyidentified by the Bush administration as potential sites for anti-terroristintervention. Malaysia, on the other hand, is seen by Washington as some-thing of an Islamic version of the “Third Way” between East and West,and between Muslim society and secular modernity. Finally, Thailand cameunder considerable pressure from the US government to abandon itsadopted public stance of “neutrality” in favor of one more supportive ofAmerican foreign policy and military strategy.

Such reassessments of the role and significance of these four “core”ASEAN states in international politics raise critical questions about thesocial landscapes and domestic politics that have contributed to the shap-ing of government policies and responses in Manila, Jakarta, Kuala Lumpurand Bangkok to the threat of terrorism in the name of Islam. In this regard,the historically strong bilateral ties that developed during the Cold Warbetween many Southeast Asian governments and Washington, and theassociated weakness of institutionalized regional frameworks, includingASEAN, further underscore the importance of focusing attention on suchcross-country variations. Whether in the predominantly Muslim societiesof Indonesia and Malaysia, or in the Philippines and Thailand, where Is-lam is relegated to “minority” status, the changing transnational environ-ment after September 11 has spelled out very different constraints, chal-lenges and opportunities. Such variations also provide a useful backdropfor any attempt at tracing the inroads made and difficulties faced by thewider transnational network of Al-Qaeda on the regional map of South-east Asia.

JIHAD IN SOUTHEAST ASIA?

After the September 11 attacks and the subsequent US bombing ofAfghanistan, many observers were indeed dismayed that the calls for jihadagainst America reverberated throughout parts of Southeast Asia. Targetingthe US embassies in Jakarta and Kuala Lumpur, for example, Indonesianand Malaysian Muslim radicals organized demonstrations that featuredsome protesters burning effigies of Bush and wearing t-shirts with picturesof bin Laden. While such demonstrations shocked the media and diplomaticcircles, many observers have since stressed the limitations of popularsupport for anything akin to so-called “militant” Islam.

However, there have also been numerous reports of the Al-Qaedanetwork attempting to establish linkages with local Muslim groups andindividuals in Southeast Asia in the 1990s.1 In the case of the Philippines,

THE THREAT OF “ISLAMIC TERRORISM”?A VIEW FROM SOUTHEAST ASIA

BY EVA-LOTTA E. HEDMAN

Eva-Lotta Hedman is Research Fellow in PoliticalStudies at the School for Oriental and AfricanStudies in London. She is the co-author with JohnSidel of Phillipines Politics and Society in theTwentieth Century: Colonial Legacies, Post-Colonial Trajectories (Routledge, 2000) and theguest editor of Human Rights Law Review(Special Issue: East Timor in Transition, 1999).


An interlocking directorate ofIslamic terrorist groups wasrevealed to be operating on a

regional scale in Southeast Asia.

such efforts appear to have focused on the Abu Sayyaf(“Bearer of the Sword”), based on the island of Basilan inthe Sulu Archipelago, although recent reports have pointedto increasing evidence of Al-Qaeda ties with the much largerMoro Islamic Liberation Front (MILF). Having earned itsreputation through a series of bombings, kidnappings andextortion, the Abu Sayyaf was allegedly founded byAbdurajak Janjalani, a Libya-trained Filipino mujahideenveteran of the Afghanistan war in the 1980s. In addition toits own predatory fund-raising activities, the Abu Sayyaf hasalso reportedly enjoyed the financial patronage of Osama binLaden’s brother-in-law, Jamal Khalifa, through such non-governmental organizations as the International Islamic ReliefOrganization (IIRO) and MercyInternational. Finally, it is believedthat Abu Sayyaf leaders and membershave received combat training in Al-Qaeda camps in Afghanistan, as wellas from Al-Qaeda operatives in thePhilippines.

In an apparent attempt to expandthe reach of Al-Qaeda into Indonesia,two close associates of bin Laden, Ayman al-Zawahiri andthe late Mohammed Atef, alias Abu Hafs, reportedly visitedMaluku and West Papua in 2000. By July 2001, an Al-Qaedaenvoy was said to be seeking to develop ties with severalIndonesian groups, including the notorious Laskar Jihad(“Jihad Squad”) whose leader, Jaffar Umar Talib, allegedlydeclined such overtures on the grounds that Al-Qaeda was“too radical.” In the aftermath of the US bombing inAfghanistan, Jaffar reportedly changed his mind andvolunteered his Indonesian Laskar Jihad troops to fight forAl-Qaeda. Meanwhile, according to Indonesian intelligencesources, armed contingents of Al-Qaeda were training LaskarJihad forces in Maluku and the Central Sulawesi town ofPoso. Finally, the Front Pembela Islam (“Front to DefendIslam”) has reportedly received training from Al-Qaedafighters in Afghanistan, as well as in Mindanao and on anunknown Indonesian island.

According to FBI reports, close bin Laden associateKhalid al-Midhar reportedly met with other bin Ladenfollowers in Malaysia in January 2000. In the next few months,Malaysia witnessed a series of bank robberies, killings andkidnappings by the “Jihad gang” and a major arms heist atGerik, Perak carried out by another so-called militant Islamicgroup, the al-Maunah, in June 2000. After their capture onJune 7, 2000, members of the “Jihad gang” reportedlyrevealed prior experience as mujahideen in Afghanistan, andas students at Islamic universities and madrasahs in Pakistan,Egypt and the Arab states. By August 2001, the Malaysiangovernment had detained ten Islamist activists due to allegedinvolvement with a clandestine group called the KumpulanMujahidin Malaysia (KMM, or the Malaysian MujahideenMovement). In the same month, the government warned thatunderground networks of “Islamist militants” were operatingin the cross-border regions between Malaysia, Indonesia, thePhilippines and Thailand. Indeed, visitors to the southernprovinces of Thailand, where an Islamic separatist movementonce claimed considerable popular support, noted a surge oflocal interest in bin Laden and his jihad campaign. More

recently, the uncovering of an alleged plot to target US militaryand corporate facilities in Singapore has reportedly revealedlinks between Al-Qaeda and a local network of terrorists witha leadership based in Malaysia. In short, an interlockingdirectorate of Islamic terrorist groups was revealed to beoperating on a regional scale in Southeast Asia. Yet, asillustrated below, there is considerable variation across theregion in terms of the opportunities and constraints faced bysuch groups.

THE PHILIPPINES

In Manila, the official government response to theSeptember 11 attacks and thesubsequent “war on terrorism” wasone of immediate and full support forUS military action. Indeed, presidentGloria Macagapal-Arroyo promptlyoffered use of the very naval baseswhich the Philippine Senate hadclosed to American forces in 1991. Inthe weeks following the attacks, US

officials started arriving in the Philippines to brief theirFilipino counterparts on terrorism. In November 2001,Macapagal-Arroyo went to Washington to shake hands withBush on a $92 million military aid package, as well as apersonal pledge of support, for her government to step up“pacification” efforts in Muslim areas of Mindanao and theSulu Archipelago. During the last days of January 2002, some660 US soldiers, including 160 Special Forces, joinedPhilippine government troops in training exercises at amilitary base in the vicinity of Zamboanga City. In thefollowing month, the US Special Forces have joinedPhilippine troops in military maneuvers on Basilan Island,widely believed to be the base of operations for the AbuSayyaf.

While the outcome of such joint US-Philippines militaryoperations remains to be seen, the short-term politicalconsiderations and the longer-term historical backdropshaping this process are perhaps more readily discerned atthis stage. First of all, the irregular transfer of power fromprevious President Joseph Ejercito Estrada by means of so-called “People Power” protests in January 2001 left hissuccessor (and former vice-president) Macapagal-Arroyo inan unusual position vis-à-vis other civilian politicians, as wellas the military top brass, for purposes of consolidating hergovernment. Indeed, the new President’s efforts to secure abroader popular mandate in the May 2001 local and Senatorialelections were made more difficult by entrenched politicianswho remained loyal to Estrada. At the same time, Macapagal-Arroyo also initiated a major reshuffling in police and militaryranks to replace key Estrada appointments. In this context, itwas no coincidence that she opted to reverse Estrada’sdeclared “all-out war” strategy against the Moro IslamicLiberation Front (MILF) and, after months of negotiationsand informal arrangements, signed a formal ceasefire in KualaLumpur on August 7, 2001. In another important reversal ofgovernment policy under Macapagal-Arroyo, key politicalsupport was subsequently withdrawn from the Moro NationalLiberation Front (MNLF) leader Nur Misuari as Governor


Spring 2002

of the Autonomous Region of Muslims Mindanao (ARMM).2Second, there is a more protracted history of “internal

colonization” of the Islamicized southern parts of the Philip-pines, begun under Spanish and then American colonial aus-pices, and continuing into the post-colonial period of what issometimes referred to as “Manila imperialism.” Inasmuch asSpanish colonization focused on evangelization, for example,the Muslim – or, in local parlance, “Moro” – population ofMindanao and the Sulu Archipelago found itself at a distinctdisadvantage in terms of cultural assimilation, capital accu-mulation, and political integration. In many ways, this pro-cess of internal colonization gained further momentum in theAmerican period due to the deferred expansion of Philippinecolonial democracy into theIslamicized south compared to else-where in the country. Finally, the longauthoritarian reign of Ferdinand E.Marcos (1972-1986) interrupted theintegration of Muslim Mindanao andthe Sulu Archipelago into the electoralpolitics of the post-colonial Philip-pines, thus encouraging local politi-cians to sponsor a Muslim Indepen-dence Movement, as well as the arm-ing and training of Muslim guerrilla fighters in the 1970s.

In the Islamicized parts of Mindanao and the SuluArchipelago, local resistance to the martial law regimeconverged upon the Moro National Liberation Front (MNLF),under the leadership of Nur Misuari. By the mid-1970s, thearmed conflict in Muslim Mindanao and the Sulu Archipelagohad claimed as many as fifty thousand lives, displacedthousands of families, and caused extreme hardship for manyresidents of the southern Philippines. Even after the TripoliAccord of 1976, the government’s promise of regionalautonomy, and the MNLF’s agreement to call a cease-fire,pockets of Muslim Mindanao and the islands of the SuluArchipelago remained in the hands of the MNLF or splintergroups like the MILF. Occasional clashes between ArmedForces of the Philippines (AFP) troops and Muslim rebelscontinued over the years.

Muslim Mindanao and the Sulu Archipelago were knownto be the among the most dangerous areas of the Philippineswell into the 1990s, with kidnappings, killings, and assortedacts of violence occurring with greater frequency and impu-nity than elsewhere in the archipelago. Such problems havepersisted to this day, despite the peace accord of 1996, whichsaw the demobilization of the MNLF in exchange for theempowerment of the Autonomous Region of MuslimMindanao (ARMM) and other bodies, the election of MNLFleader Nur Misuari as ARMM governor, and the integrationof many MNLF troops into the Philippine National Policeand the Armed Forces of the Philippines. The MILF, whichsplit off from the MNLF in the late 1970s, still claims sub-stantial influence and commands large numbers of troops inthe provinces of Cotabato, Maguindanao, and Sultan Kudarat,and fighting between MILF forces and local police and mili-tary units has occurred sporadically as well as periodic threatsof a more sustained conflict.

At the same time, the MILF is clearly involved in localelections and amply represented, indirectly or otherwise, by

elected officials at the municipal, gubernatorial, and congres-sional level. Local economic activities – legal and illegal –likewise link MILF commanders and their troops to govern-ment programs (such as road construction) and private busi-nesses (such as smuggling) in ways that draw them into thestatus quo and discourage outright rebellion or “Islamic ter-rorism.” Overall, the MILF appears to operate less as anarmed separatist movement and more as a shadow govern-ment of sorts. It coexists, however uneasily, with the struc-tures of the ARMM and the Philippine Republic, and en-gages in conflicts with government forces over turf along thelines of a local protection racket rather than an insurgent armyor a terrorist group.

During the final year of Estrada’sbeleaguered presidency, certaindevelopments contributed to thereactivation of the “Muslim threat”to political stability in Mindanao andthe Sulu Archipelago. First of all, inan important departure from priorfrequent but limited breaches by bothsides, the Estrada governmentlaunched full-scale militarycampaigns against MILF camps in

Mindanao in May 2000, thus prompting the collapse of theCessation of Hostilities Agreement of July 1997. After a five-year interlude, moreover, the Abu Sayyaf resurfaced with aseries of widely publicized kidnappings of foreign tourists in2000 and 2001. Meanwhile, there was a deepening sense thatthe central government in Manila had failed to deliver on theterms agreed upon under the ARMM accords in 1996, thusslowly eroding the political clout of its governor, MNLFleader Nur Misuari.

Having thus inherited a reactivated armed insurrectionand terrorist threat in Mindanao and the Sulu Archipelago,the new administration in Manila under Macapagal-Arroyomoved swiftly and decisively in the aftermath of September11. With minimal risk of a political backlash reaching pre-dominantly Catholic Manila, the Macapagal-Arroyo govern-ment seized the opportunity to attract more US military as-sistance and other support. Without the kind of nationalist-left opposition which helped end the US-Philippine basestreaty in 1991, Macapagal-Arroyo has effectively reversedthat decision and also arranged with Washington for jointmilitary training and other maneuvers with Philippine andAmerican troops.

In view of the highly publicized violence of the AbuSayyaf, as well as the numerous reports of Al-Qaeda linkagesand sightings in the country, it is perhaps unsurprising thatthe administrations in both Manila and Washington deem thesouthern Philippines an important target in the “war againstterrorism.” However, it is important to recognize thatMacapagal-Arroyo also faces a more protracted struggle for“hearts and minds” in Muslim Mindanao and the SuluArchipelago. In this regard, it remains unclear what mayfollow from her courting supporters from among competingMNLF factions, thus provoking the ill-fated return to armedstruggle by MNLF founding leader Misuari in early 2001. Inthis context, the “war against terrorism” in Basilan is only apart of the larger process of bargaining between Manila

The “war against terrorism” inBasilan is only a part of the larger

process of bargaining betweenManila politicians and variousMuslim groups in the southern

Philippines.


politicians and various Muslim groups in the southernPhilippines. At the same time, there are many questions as tothe limits of the Macapagal-Arroyo administration’s effortsto bring increasing numbers of MILF supporters into the orbitof the ruling political coalition.

INDONESIA

In contrast with the Philippines, the Indonesiangovernment response to the US-led “war against terrorism”was much more equivocal. While condemning the September11 attacks, Indonesian President Megawati Sukarnoputripublicly expressed reservations about the American bombingcampaign in Afghanistan. Anti-USprotests and threats of “sweepings”(i.e. round-ups) of American citizensby militant Islamic groups inIndonesia heightened concern inWashington. By early 2002, bellicosestatements by US Deputy DefenseSecretary Paul Wolfowitz – a vocaladvocate of military action and aformer ambassador to Indonesia –suggested that American pressure on Jakarta to crack downon Islamic groups allegedly linked to the Al-Qaeda networkwas intensifying. As of this writing, however, there is noevidence of new government moves against the small pocketsof armed Islamic activity exemplified by Laskar Jihad.

At first glance, this apparent lack of action against“Islamic terrorism” in Indonesia seems to reflect thesensitivity of the government to a predominantly Muslimpopulation and political forces – both civilian and military –that are hostile to US foreign policy aims in the Middle Eastand the Muslim world in general. Indeed, Megawati’s ownpolitical party, Partai Demokrasi Indonesia-Perjuangan (PDI-P or the Indonesian Democratic Party of Struggle), commandsonly a plurality of seats in the parliament, and she rose to thepresidency in mid-2001 through backroom-dealing with acoalition of other parties, among which various Islamicorganizations and interests were well-represented.

Her own vice-president, Hamzah Haz, is the head of theUnited Development Party (PPP or Partai PersatuanPembangunan), the single most popular Islamic party in thecountry, and her ministers of defense and justice are leadersof other Muslim parties. More importantly, perhaps, thespeaker of parliament, Akbar Tanjung, is a former leader ofthe influential Muslim university student association HMI(Himpunan Mahasiswa Islam) and the head of Golkar, thesecond strongest political party. The head of the People’sConsultative Assembly or MPR (the supra-parliamentarybody which elects the president and vice-president) is AmienRais, the former chairman of the influential modernist Muslimassociation Muhammadiyah and the head of anotherpredominantly Muslim party, PAN (Partai Amanat Nasionalor National Mandate Party). Because these politicians controllarge blocs of votes in the parliament, the MPR, regionalassemblies, and the Cabinet, and has sympathizers in variousechelons of the civilian bureaucracy and the militaryestablishment, they are in a position to make trouble for anygovernment that ignores those interests and aspirations

associated with organized Islam in Indonesia. Indeed, thesewere the politicians who prevented Megawati from assumingthe presidency in the 1999 MPR session despite her party’splurality in the elections a few months earlier, and whosecooperation was necessary for her to replace AbdurrahmanWahid during the MPR session in mid-2001.

Viewed more closely and in context, however, neitherthe much-feared threat of “Islamic Terrorism” nor the oftenlamented vagaries of Indonesian government policy are causefor excessive alarm. In fact, groups like Laskar Jihad andFront Pembela Islam represent not the rise of an insurgentIslam in Indonesia but the declining fortunes of the mostmilitant Muslim forces in the country in the past few years.

Strident advocates of Islamicization inIndonesia enjoyed unprecedentedfreedom and access to state patronagein the last years of the Suharto era andthe brief Habibie interlude, aselements in the government sought touse the banner of Islam – and variousgroups dedicated to the promotion ofthe faith – to champion the interestsand aspirations of an ascendant

modernist Muslim middle class, and to defend themselvesagainst a rising tide of political opposition. Thus, militantIslamic groups rallied behind the Suharto government whenit ousted Megawati Sukarnoputri from the PDI-P leadershipin 1996, joined in the government’s anti-Chinese campaignduring the economic crisis in early 1998, and provided “shocktroops” to counter anti-Habibie demonstrations in late 1998and early 1999.

As for Laskar Jihad itself, this group was formed inJanuary 2000 after the fall of Habibie and more than oneyear after Abdurrahman Wahid’s presidency. The leader ofthe “traditionalist” Islamic association Nahdlatul Ulama,Wahid had long promoted multi-faith religious tolerance andpursued alliances with Christians and secular nationalistsagainst the threat to his constituency represented by modernistIslam. His rise to the presidency was thus viewed as a majorsetback to the cause of promoting Islam in Indonesia, and hisefforts to protect Muslims in areas of inter-religious conflictlike Maluku and Central Sulawesi were seen as woefullyinadequate by those who claimed to represent the faith. Thus,anti-Wahid politicians rallied behind the cause of jihad inthe mosques of Jakarta in early 2000, and anti-Wahid elementsin the military establishment aided the armed teams of LaskarJihad dispatched to Maluku to assist their co-religionistsagainst armed Christian attacks.

Overall, these forms of armed activity in the name ofIslam represented desperate rear-guard reactions to a suddenreversal of political fortunes for militant Islamic groups in1999. In the June 1999 elections, the parties representingmodernist Islam performed poorly compared to parties likePDI-P, Golkar, and those parties like PPP and Wahid’s PKBwhich drew strength from a “traditionalist” Islamic constitu-ency. While modernist Muslims had experienced an unprec-edented surge of upward social mobility and enhancement ofaccess to state patronage in the late Suharto era and the briefHabibie interlude, they remained a small, privileged minor-ity of urban middle class, university-educated professionals

Armed activity in the name ofIslam represented desperate rear-

guard reactions to a suddenreversal of political fortunes for

militant Islamic groups.


Spring 2002

in a country whose population remained overwhelminglypoor, illiterate and unschooled in the modernist notions ofwhat it meant to be a “proper” Muslim. Thus with the turn tocompetitive elections in 1999, modernist Muslim parties weregreatly disappointed to find that their constituency was farsmaller – and more divided – than their leaders had hopedand claimed over the years. In contrast, parties representingmore traditional, more syncretic, and more ecumenical ap-proaches to religion were in the ascendance. Those smallgroups working to promote a more thoroughgoingIslamicization of Indonesia, who had enjoyed shelter, sup-port, and a sense of entitlement in the late Suharto era andunder Habibie, now found themselves facing a much moreuncertain future.

Indeed, Megawati Sukarnoputri’s rise to power hasrepresented the culmination of these downward trends formodernist Islam in general, and for militant Islamic groupsin particular. Like her father’s Partai Nasionalis Indonesia,Megawati’s PDI-P has emerged as a political machine capableof attracting millions of Indonesians of diverse faiths andbackgrounds through a combination of patronage and populistappeal. Since her assumption of the presidency, the party’sprospects for future electoral victories have only beenstrengthened. While capturing the vote of millions of ordinary,nominally Muslim voters, the PDI-P has also – from itsinception in the early 1970s as a forced fusion of Christianand secular nationalist parties – represented small butinfluential pockets of Protestant and Catholic voters aroundthe archipelago, and it enjoys generous support from ethnicChinese businessmen as well. Megawati and the PDI-P arethus not only much more inclined towards an alliance withtraditionalist Muslims who are more syncretic in theirreligious practices and preferences than most modernists, butalso sympathetic to the concerns of Indonesia’s smallChristian minority. In Maluku, where violence between armedgroups of Christians and Muslims has claimed thousands oflives since 1999, the ruling PDI-P is overwhelminglyProtestant, as it is in violence-torn Poso, Central Sulawesi,where Laskar Jihad has also sent its troops. In a much-publicized incident in late 2001, Laskar Jihad elementsclashed with PDI-P forces in the East Javanese town of Ngawi,in a conflict that pitted local protectors of illegal gamblingoperations against the promoters of a stricter observance ofthe fasting month of Ramadan.

Against this backdrop, it is clear that Megawati and thePDI-P have faced Laskar Jihad long before the September11 attacks on New York City and Washington D.C. Indeed,as Megawati’s influence in the military establishment – andthe inevitability of her rise to the presidency – grew in early2001, government security forces launched a crackdown onLaskar Jihad in Maluku and elsewhere in the country. InAmbon, the provincial capital of Maluku, Army troops shotdead more than a dozen Laskar Jihad members, and leadersof the group soon found themselves under arrest and facingprosecution for various offences. Security measures andcivilian conflict resolution efforts in both Maluku and Posohave worked to prevent Laskar Jihad from turning popularsentiments against local Christian communities.

More generally, the promotion of a stricter, “purer” andmore state-backed form of Islam in Indonesia has failed to

attract popular support. The calls for jihad in Maluku and inthe mosques and religious schools of Jakarta and otherIndonesian cities and towns in early 2000, inspired only afew thousand Muslims to join Laskar Jihad and other groups.The small-scale anti-US protests in Jakarta and elsewhere inthe country in late 2001 likewise fizzled. To be sure, thereare small numbers of Muslim preachers, teachers, students,and activists in Indonesia who are deeply disappointed withthe lack of momentum towards a more “genuinely” Islamicsociety and state in the country, and who draw support,encouragement, and inspiration from militant Muslim groupsin the Middle East. In addition, there are politicians in regionalassemblies and the national parliament, and military andpolice officers as well, who turn a blind eye – or lend a helpinghand – to such activities in the hopes of short-term politicalor pecuniary advantage. There must also be elements in theruling political elite and the military and intelligenceestablishment who find the existence and activities of groupslike the Laskar Jihad useful, to justify security measures andto expedite and expand the resumption of US militaryassistance to the Indonesian Armed Forces. Yet in the mostpopulous Muslim country in the world, what is most strikingis not the strength and growth of “Islamic Terrorism” but itsdecline and weakness.

MALAYSIA AND THAILAND

In contrast with the Philippines and Indonesia, the threatof “Islamic terrorism” has appeared much less menacing inMalaysia and Thailand. The Malaysian government has alsosteered a careful course in staking out its official positionson international terrorism and US foreign policy. Prime Min-ister Dr. Mahathir Mohamed issued an early condemnationof the September 11 attacks, accompanied by public condo-lences to the victims’ families. Within a day of the start ofthe US-led military campaign in Afghanistan on October 7,however, Mahathir told a press conference held in Parlia-ment that he had strong reservations about the wisdom andeffectiveness of fighting terrorism with war. While givingvoice to wider concerns about attacks on Islam and Muslimsaround the world, Mahathir also swiftly declared Malaysiaan “Islamic state” – albeit one characterized by political sta-bility, economic prosperity and a “plural society.”

Whether viewed from the perspective of internationalrelations or domestic politics, Malaysia presents perhaps themost dramatic instance of a reversal in the political fortunesof the incumbent regimes surveyed here, at least in the short-to medium-term after September 11. In a world seeminglybesieged by so-called “Islamic terrorism,” Malaysia’srenewed significance as a moderate and progressive Muslimnation-state quickly overshadowed prior internationalcriticisms against the Mahathir government for its imperioushandling of the 1997 financial crisis and of the 1998 protestmovement in Kuala Lumpur demanding Reformasi(government reforms). Indeed, during their first meeting afterthe terrorist attacks at the APEC summit held in Shanghai onOctober 20, President Bush reaffirmed the US government’sappreciation for the support shown by the Mahathiradministration, especially in the face of challenges from thedomestic political opposition, the Pan-Malaysian Islamist


party (PAS). Both leaders reportedly agreed to increase tradeas well as security cooperation.

The ruling United Malays Nationalist Organization(UMNO), under Mahathir’s leadership since 1981, has alsogained much domestic political capital as its main contenderfor the majority Malay-Muslim vote, PAS, openly declaredsupport for jihad against the US and other Western powers.After two decades of intensifying competition over the Malay-Muslim vote, PAS in many ways emerged the primarybeneficiary of the political fallout from the 1997-98 economiccrisis. This was evidenced by unprecedented gains insubsequent elections, both nationally and at the state level,most notably in the state of Kelantan, which they now control.However, the position of PAS in the aftermath of September11 alienated many Malays who had lent their support inprevious elections as a “protest vote” against UMNO ratherthan as an endorsement of the country’s Islamicization. As aresult, Mahathir was allowed to play the time-honored roleof “middle-of-the-road” consociationalist, promoting“moderate” Malay sentiment against the threat of Islamicextremism both for Malays, non-Malays whose support forUMNO, and its Chinese and Indian partners in the NationalFront (Barisan Nasional) in the last elections.

If Malaysia has witnessed the most obvious of politicalrealignments in the region since September 11, then perhapsThailand represents the opposite end of this spectrum. Despiteprime minister Thaksin Shinawatra’s public proclamation of“neutrality” in the US war on terrorism, there is little to suggestany significant changes in relations between Bangkok andWashington over the past several months. While the Bangkokmedia was debating whether any assistance should beextended to the US-led military campaign, for example, theThai government continued to grant the US full access to theU-Tapao airbase as per existing treaty obligations. Indeed,the Thai government had reportedly obliged all US requestsfor support from the outset, public declarations to the contrary.

In contrast to the governments in Manila, Jakarta andKuala Lumpur, the Thaksin administration has refrained fromany attempts to step up military campaigns or otherwise in-tensify pressure upon the various slumbering separatist move-ments and small Islamic groups in southern Thailand. In ad-dition to the two major Muslim separatist movements – thePattani United Liberation Organization (Pulo) and the BarisanRevolusi Nasional (BRN) – there are also reports of GerakanMujahedin Islam Pattani (Pattani Mujahedin Islamic Move-ment) and some 40 splinter groups of the Pulo and the BRN.While relatively small-time compared to their counterpartsin the southern Philippines, these groups have been linked tovarious incidents of political violence, including some bomb-ings during 2001. However, perhaps their comparative in-significance, in combination with the much bigger stakes ofgaining an electoral foothold in the predominantly Muslimsouth, cannot but deter Thaksin and his party from focusinginternational as well as domestic attention on any would-bethreat of Islamic terrorism.

CONCLUSION

As suggested by this brief overview, the notion of “glo-bal war” and the threat of “Islamic terrorism” beg further

questions about variations across different national contexts.In Southeast Asia, there are considerable differences acrossthe region. Moreover, there is only a relatively weak regionalinfrastructure in place for articulating responses to interna-tional shocks, as evidenced in the aftermath of both the 1997financial crisis and the 2001 terrorist attacks. Since Septem-ber 11, the Philippines, Indonesia and Malaysia have report-edly started exploring the possibility of establishing an intra-regional framework for sharing intelligence on terrorist ac-tivities, controlling cross-border flows of weapons, and un-dertaking joint law-enforcement operations. However, thenature and direction of any such regional or transnationalefforts are necessarily contingent on the complexity of short-term political considerations of ruling parties or coalitions,as well as the long-term trajectories of Muslim movementsand splinter groups.

ENDNOTES

1 See, for example, Rohan Gunaratna, “Al-Qaeda’s infrastructurein Asia,” Jane’s Intelligence Review, January 1, 2002. Thefollowing brief account of Al-Qaeda’s ‘outreach’ into SoutheastAsia draws heavily on this article.2 For historical background on the MNLF and the MILF, seeespecially, Thomas M. McKenna, Muslim Rulers and Rebels:Everyday Politics and Armed Separatism in the SouthernPhilippines (Berkeley: University of California Press, 1998).


Spring 2002


There is little question that South Korea is in need of a new develop-ment paradigm. The old paradigm of the developmental state nolonger serves, as the economy has become far too large and its

structure far too complex for the government to intervene in the activitiesof private sector on a regular basis. Moreover, in the new era of the WTO,the rest of the world simply will not permit Korea to pursue what amountsto a mercantilist policy of development. It can also be argued that thefundamental cause of the 1997-98 financial crisis was the country’s fail-ure to discard its old paradigm in time and adopt a new one appropriate toa changing global environment.

There is one other compelling reason for Korea to adopt a new para-digm. Over the past four years, Korea has implemented many reforms notonly to overcome the 1997-98 crisis but also to regain international com-petitiveness. To this day, however, it is not at all clear that the country hasachieved this goal. Korea has yet to implement many reforms to removethe institutional weaknesses that brought about the crisis in the first place.This shortcoming is due in no small measure to Korea’s failure to designand implement reforms in a consistent and sustained fashion. This failure,in turn, can be traced to the absence of a clear vision and overall strategyfor the nation’s long-term development.

ABSENCE OF A VISION

Korea has been without a clear vision for national development forquite some time. Looking back on the history of Korea’s modern eco-nomic development, it was during the 1960s and 1970s that Korea had avision that was capable of mobilizing its people. At that time, PresidentPark Chung Hee provided a powerful vision called the “modernization ofthe fatherland.” It was easy to see why this was so powerful. Koreans thenknew all too well that the primary cause for the great hardship they suf-fered under Japanese colonial rule was their failure to modernize as theJapanese had done. Thus, Park’s vision was synonymous with a call notonly to catch up to but also to get ahead of Japan. Due to the great humili-ation that the Koreans had experienced under the Japanese, any idea thateven remotely suggested overtaking Japan was enough to energize thewhole nation. Park not only came up with this powerful vision, but alsopresented a concrete export-led development strategy to realize it.

Unfortunately, subsequent administrations have failed to do the same.During the presidency of Chun Doo Hwan (1980-88), the stated goal ofnational development was “building an advanced nation.” This vision wasat best a mechanical extension of Park’s “modernization of the father-land.” What was lacking was any mention of a particular benchmark countryor countries for comparison, the absence of which made the motivation ofordinary Koreans difficult.

There were greater problems with the vision presented by the suc-ceeding Roh Tae Woo Administration (1988-93). President Roh presentedthe extremely vague expression “regaining national self-respect” as thegoal for national development. It was no doubt meant to instill a sense ofpride in the Korean people, especially on the basis of their dazzling eco-nomic achievements over the preceding decades, but it failed to signal

KOREA’S NEW DEVELOPMENT PARADIGMPREMIER BUSINESS AND CULTURAL CENTER IN ASIA

BY KIHWAN KIM

Kihwan Kim is Chairman of the Seoul FinancialForum and Korea National Committee for PacificEconomic Cooperation. He also serves asInternational Advisor to Goldman Sachs.


Spring 2002

any direction for the country.The vision presented by the Kim Young Sam govern-

ment (1993-98) was even more problematic. In the earlymonths of the administration, “building a new Korea” wastouted as a national vision. However, apart from the messageimplicit in the act of removing many of his opponents, in-cluding high-ranking military officers, the administrationfailed to specify what the president meant by a “new Korea.”To make matters worse, the administration’s goal for nationaldevelopment kept changing. For the first year, it was “a newKorea”; for the second, it was “internationalization”; for thethird, “globalization”; and for the remaining years of the ad-ministration, the goal was “righting the wrongs of history.”Needless to say, it was very difficult tomanage national affairs in a consistentand effective manner under these shift-ing goals and priorities.

What about the vision for nationaldevelopment presented by the current ad-ministration led by President Kim DaeJung? During its first year in office, theadministration’s vision was “the paralleldevelopment of democracy and a market economy.” How-ever, as unemployment rose in the course of overcoming thefinancial crisis, the administration found it necessary to in-clude a new objective in its vision, namely “productive wel-fare.” To be sure, the explicit incorporation of both democ-racy and market economy in the vision for national develop-ment marked an advance over the previous administrations.This does not mean, however, that Kim Dae Jung’s vision iswithout problems. The triad of ideas is far too abstract forordinary Koreans. What is more, the first two concepts inparticular represent universal values being pursued in alldeveloped countries. Thus, they fail to take into account theunique challenges and opportunities facing Korea at this par-ticular point in its history. In addition, there are grounds tobelieve that a market economy and productive welfare areincompatible. While a market economy aims to achieve maxi-mum efficiency, productive welfare – the term “productive”notwithstanding – seeks to achieve greater equity by distort-ing market mechanisms.

NEW CHALLENGES AND OPPORTUNITIES

What are the particular challenges and opportunitiesfaced by Korea in its effort to formulate a new vision and aparadigm for development at this juncture? Basically, theyare two-fold. The first concerns Korea’s new geopoliticalenvironment. Although there are still many remnants of theCold War on the Korean peninsula, Korea’s geopolitical en-vironment is undergoing fundamental changes. Virtually allof the major countries surrounding the Korean peninsula,including China and Russia, are now placing the highest policypriority on economic development and improving the stan-dard of living for their people. Even more importantly, theyhave chosen to achieve this goal through the expansion oftrade and investment rather than through war and territorialacquisition, as they did in the past. In this new environment,the strategic value of the Korean peninsula is to be assessedmore in commercial terms than in military ones. In other

words, for some time to come, the Korean peninsula will belooked upon as an ideal place for economic activities andinternational commerce, rather than a strategic place in termsof military planning and the actual conduct of war.

The other major opportunities and challenges to be takeninto account have to do with globalization, which has beenaccelerated by rapid development in information technology(IT). As globalization and the IT revolution progress, na-tional borders will increasingly cease to be barriers to themovement of final goods and services as well as to manyfactors of production, including capital, technology, andhighly trained manpower.

Even as globalization proceeds, however, some factorsof production cannot easily move fromone country to another. They are the poli-cies and institutions of a country and itsphysical environment. Hence, if in thecourse of globalization a country fails tomake itself attractive to economic play-ers by upgrading its policies, institutions,and physical environment, the countrywill not only fail to draw capital, tech-

nology, and highly trained professionals from abroad, but itwill also be unable to retain them domestically. This will rel-egate the country to a cultural and economic backwater. Bythe same token, if a country succeeds in making itself attrac-tive through policy reforms and environmental improvements,capital, technology and highly trained manpower will flowin, making the country a vibrant center of economic activity.

In short, what Korea ought to do in this century is tomake good use of its new geopolitical environment as wellas the new opportunities brought about by globalization. Thestrategy Korea should follow to achieve this objective is toposition itself, first, as a new business center in Asia andultimately, for the whole world. This is the new developmentparadigm for Korea.

NEW PARADIGM FOR KOREA

What is a business center? More than anything else, itis a convenient place to do business, particularly interna-tional business, because of its institutions, high quality ofmanpower and agreeable physical environment. It is also aplace that supplies high value-added goods and services thatare indispensable to its neighboring countries in several keyareas, such as finance, trade, media, data processing, researchand development, high-tech manufacturing, logistics, tour-ism and engineering. Owing to the high degree of freedomfor economic activities it provides, a business center alsoserves as a leader in entrepreneurship, innovation and tech-nological development for neighboring countries. At present,there are two such business centers in Asia: Singapore andHong Kong.1

A business center gives rise to many benefits for itspopulation, one being economic. Per capita income of abusiness center is usually very high compared to its neigh-bors due to its high value-added economic activities. Withits leadership in innovation and entrepreneurship, a busi-ness center also enjoys abundant opportunities to earn manykinds of economic rent.2 This, in large measure, explains

Korea has been without aclear vision for national

development for quite sometime.


why per capita GDP of a country like Singapore was closeto US$27,000 in the year 2000, a figure at least seven timeshigher than that of neighboring Malaysia and forty timeshigher than Indonesia for the same year.

The other major benefit of being a business center hasto do with national security. Since a business center sup-plies neighboring countries with indispensable goods andservices, its peace and stability are important to everyone inits vicinity. In addition, since many multinational corpora-tions from industrially advanced countries locate their re-gional headquarters in the business center, their home coun-try governments take great interest in the peace and stabilityof the center. This explains in part why a city state likeSingapore has prospered without seri-ous threats to its national security, al-though it has not spent an inordinateamount of money for national defense.For Koreans who cannot do anythingabout their physical location betweenChina and Japan, two major powerswhose actual or potential military capa-bilities will always surpass those ofKorea, this benefit of being a business center takes on spe-cial significance in terms of national security.

KOREA’S POTENTIAL AS A BUSINESS CENTER

The critical question then is whether or not Korea hasthe potential to become the premier business center in Asia.The short answer is “yes.” Korea’s conditions, both internaland external, are very favorable. Speaking of external con-ditions first, tensions on the Korean peninsula have signifi-cantly eased since the end of the Cold War. There are nolonger any countries that support a North Korean militaryadventure against the South. To be sure, it is in China’s in-terest to keep North Korea communist for some time to come.Likewise, Russia will want to continue to give support toNorth Korea because it wants to regain its influence overthe Korean peninsula. One thing is very certain, however:neither China nor Russia will want to extend unqualifiedsupport to North Korea in total disregard of their existingeconomic and political relations with South Korea. More-over, it is not unreasonable to expect that the talks betweenthe US and North Korea, which have stalled since the ad-vent of the Bush administration, will resume sooner or later,notwithstanding the September 11 terrorist attacks. Whenthat happens, military tensions on the Korean peninsula willease even further.

With all major powers in Northeast Asia giving priorityto economic development rather than strengthening militarycapability, the volume of trade among countries in this re-gion will continue to expand. Now that China is in the WTO,Northeast Asia, which has 25% of the world population andaccounts for 22% of global GDP, is likely to emerge as themost dynamic economic region in the world. Given the highgrowth rates achieved in Northeast Asia compared to thosein the rest of the world in recent years, it is not unreasonableto project that this region’s share of world GDP will increaseto about one third in the next ten years. It is also noteworthythat no fewer than 43 cities with a population of one million

or more, including mega-cities such as Tokyo, Osaka, Shang-hai, Beijing, Tianjin, and Chongqing, are located within threeand a half hours of Seoul by air. What all this means is thatas a business center, Korea will soon have the world’s larg-est market in its hinterland.

Korea’s domestic conditions for becoming a businesscenter are equally favorable. Thanks to the high value Koreansplace on education, the quality of Korea’s workforce is rapidlyimproving. As of the year 2000, over 22% of Korea’s laborforce consisted of college graduates, and the percentage ofhigh school graduates obtaining tertiary education was about70%, which was higher than the figure in the US and secondonly to that in Israel. Hence, Korea’s workforce will soon be

one of the most highly educated in theworld.

Korea is also investing heavily inthe infrastructure that is essential to itsbecoming a business center. To cite justa few examples, deep-sea ports on thesouthern coast, particularly Pusan andKwangyang, are being improved.Construction of a high-speed railway

between Pusan and Seoul is underway. Furthermore, the newinternational airport at Inchon was opened in March 2001.The airport, when fully completed, will be the largest hubairport in Asia. Korea’s telecommunication infrastructure isalso second to none in Asia and it is a leader in the use ofInternet technologies. With three-quarters of Koreanbusinesses connected to the Internet and over two-thirds ofstock transactions being conducted online, Korea is ahead ofother countries in Asia in the conduct of business activitieson the Internet. Korea is also far ahead of other Asian nationsin the use of the Internet in general. According to an estimateby Goldman Sachs, the percentage of the population usingthe Internet regularly last year was over 51% in Koreacompared to 40% in Taiwan, 29% in Japan, 24% in HongKong and 21% in Singapore.3 Over 63% of Internet users inKorea have access to broadband, high-speed Internet service,making the percentage of the population using this servicethe highest in the world.

Korea is also richly endowed with cultural resources,especially compared to other business centers in Asia. Thisis particularly true in the area of performing arts. Korea’straditional Samulnori seldom fails to captivate audiences fromaround the world. Korea also has produced numerous world-class violinists, pianists, cellists and opera singers, includingthe Chung siblings, Keunwoo Paik, Hanna Chang and SumiJo. Encouraged by the success of these artists, thousands ofKorean families have sent their children to leading musicand art schools all over the world, and many have alreadyreturned to Korea to pursue their careers. But unfortunately,some of them have yet to find opportunities to demonstratetheir talents, thus creating a sort of excess capacity in thisfield. Korean movies have also come of age, winning manyinternational prizes and recognition. Lately, Korean pop songshave become very popular in China and Southeast Asiancountries, and even in Japan. Thus, if only political andbusiness leaders in Korea can be persuaded to undertake alittle more investment in these fields, especially in physicalinfrastructure, Seoul in particular could well emerge not just

Korea’s conditions forbecoming the premier

business center in Asia arevery favorable.


Spring 2002

as a business center in the league of Hong Kong and Singaporebut also as an exciting cultural center à la Vienna or NewYork.

ANY OBSTACLES?

There are, of course, some conditions that are not entirelyfavorable for Korea’s emergence as a business center. Somepoint out that the low level of English proficiency in Koreawill be an obstacle. This problem, however, should not beexaggerated. When Singapore set out to become a businesscenter in the late 1960s, there were at most 100,000Singaporeans, or about 5% of the total population, who werecomfortable with the English language. There are no reliablestatistics as to how many Koreans have a good command ofEnglish. Nonetheless, it is encouraging that Koreans of allages are eager to learn English, and with today’s ITtechnologies coupled with the influx of American culture,learning English is no longer as difficult as it was in the past.

Some believe that Koreans are far too inward-looking inorientation. The point made in this regard is that due to theirlong history as an inward-looking nation – having earnedthe dubious reputation as the “Hermit Kingdom” – Koreanswill have difficulty living and working with foreigners. Aswith the previous point, one should not push this argumenttoo far. It is not true that Korea has been inward lookingthroughout its entire history. In the periods when it was, theorientation was not Korea’s own choice. It was imposed bythe Chinese empire, much as Eastern European nations werecut off from the rest of the world by the Soviet Union in thepost-World War II period.

In any event, Korea’s inward orientation began to erodeduring the Korean War. In the course of the war, manyKoreans, particularly those in the South, discovered thatforeign troops were willing to make sacrifices to help them.It was this positive experience of working and fightingtogether with foreign troops against a common enemy thatprepared Koreans to pursue an outward looking developmentstrategy with emphasis on exports with great success in the1960s. This outward orientation was further reinforced whenKoreans overcame the financial crisis of 1997-98 with thehelp of multilateral institutions and foreign governments.Thanks to this experience, there are few Koreans today whodo not appreciate the benefits of attracting foreign investment.Conceptually, it is only a short step from appreciating thevalue of foreign investment to playing the role of the premierregional business and cultural center.

BASIC STRATEGY

It is one thing to say that Korea has many favorableconditions for becoming the premier business and culturalcenter; it is quite another to say that it will actually becomeone. Korea needs to implement a well-designed strategy toachieve this goal. The strategy is surprisingly simple, withtwo main components. One relates to restructuring policiesand institutions, and the other to improving the physicalenvironment.

Completing the Four Sector Reforms

In order to change policies and institutions, Korea shouldfirst complete, in a focused and systemic way, theimplementation of the reforms started by the Kim Dae Junggovernment in four sectors: financial, corporate, labor andgovernment.

In the financial sector, three major issues have yet to beaddressed. Although the amount of non-performing loanscarried by financial institutions has been reduced significantly,this problem requires continued attention. Due to theremaining non-performing assets, the rates of return oninvestment in the financial sector remain low by internationalstandards. The second problem yet to be addressed has to dowith the optimal scale of financial institutions. Consideringthe impact of the IT revolution, not a single bank in Korea islarge enough to exploit the full economies of scale. The thirdissue concerns the state of the nation’s capital market. Overthe past two years, the government had to intervene a numberof times to help roll over a large amount of the bonds issuedby private corporations in the wake of the financial crisis.Although the Korean stock market has shown a remarkablerecovery over the past several months, the market is not readyto absorb a substantial placement of new equities.

Thus, what the government has to do in the financialsector is clear. It should provide more incentives for financialinstitutions to take the initiative in compelling non-viablefirms to exit. One way to do so is to inject additional publicfunds in order to bolster the capital positions of financialinstitutions, although this would be highly unpopularpolitically. With regard to the need to attain economies ofscale, the government has so far relied mainly on its role as abehind-the-scenes matchmaker to bring about mergers andacquisitions of financial institutions. However, that is not theanswer and the government should instead put in placemanagement with a more robust sense of ownership. With astronger sense of ownership among the management,corporations would not need prodding from anyone to figureout what is good for them. The best way to bring about thisoutcome is to expedite re-privatization of those financialinstitutions that have become de facto nationalized in thecourse of overcoming the 1997-98 crisis. In the area of capitalmarkets, it is critical for the government to resist temptationsto pursue quick fix measures that may distort the market. Itshould rather concentrate on strengthening the institutionalunderpinnings, such as increased transparency andaccountability in corporate governance.

There are also three key issues in corporate reform thathave yet to be addressed. First, far too many companies withquestionable financial viability are still allowed to remain inthe “workout” process. In this process, creditors and debtorsare compelled to work together to restructure the companiesin order to avoid outright bankruptcies. Similarly, the sale ofseveral financially troubled companies, including DaewooMotors and Hynix, to overseas buyers has been delayed toolong. Second, although a very large number of chaebols wereallowed to fail, several major chaebols that have survivedcontinue to have as many subsidiaries as before the crisis,casting doubt on whether they have indeed strengthened theircore competence. Third, while there is little question that


corporate governance has greatly improved over the past fouryears, the country still has a long way to go before it can holdup its corporate governance as a model for others.

Thus, what the government has yet to do in the corporatesector is also clear. More than anything else, it should shortenthe workout process and force non-viable companies to exitspeedily. For companies experiencing liquidity problems butjudged to be viable, lending institutions should convert theirdebts into equity without further delay. While the injectionof additional public funds will be necessary, care should betaken to ensure that such funds are not spent to prolong thelife of non-viable firms. The government should enforcecompetition laws more vigorously to improve the corecompetence of chaebols. Ultimately, it should be marketforces that discipline the chaebols rather than the multifariousregulations currently relied on by the government. To furtherimprove corporate governance, it is essential that morerigorous corporate auditing standards be applied and thatoutside board members are chosen on the basis of professionalcompetence rather than political connections.

Of the four sectors that have been subject to extensivereform, progress in the labor market has been most limited.The idea that workers should not be paid salaries for theperiods they were on strike under the “no work/no pay”principle has been debated since the 1980s, but this principlehas yet to be implemented. Moreover, Korean companies arestill required to pay salaries to workers engaged in full-timeunion activities. In addition, companies have great difficultydischarging workers for restructuring purposes due to theonerous conditions they must meet, such as the requirementfor the advance consent of labor unions and the near-bankruptcondition of a company before employees can be discharged.Furthermore, the tripartite labor commission – created in thewake of the financial crisis to formulate public policy on labor-management issues based on consensus among labor, businessand government – has become a problem in that its veryexistence has politicized virtually all labor-managementdisputes.

There is no excuse for further delaying theimplementation of the “no work/no pay” principle. Withregard to the payment of salaries to employees working full-time for the unions, the government should reconsider thedecision it made in the spring of 2001 postponing for anotherfive years the termination of company payment of salaries.As for the restricted ability of companies to lay off workersduring restructuring, the stringent requirements should berelaxed. The government should also consider abolishing thetripartite commission altogether, because in a genuine marketeconomy, labor-management issues should be resolved firstand foremost by the parties directly involved.

Structural reform in the public sector has not gone veryfar either. One important reason for this has been the failureon the part of the current government to define precisely therole of the government in a genuine market economy andobtain public consensus on this issue. As a result, manyreforms in the public sector have been carried out in ahaphazard manner at best. The number of governmentministries was substantially reduced three years ago, but overthe past year and a half, this trend has been reversed. Inaddition, many new cabinet-level commissions have been

created. An incentive-based salary system was introducedinto the civil service in the early days of the presentgovernment, but to this day the new system applies to only asmall number of senior officials. As for the privatization ofpublic enterprises, only six of the eleven targeted have beenprivatized so far.

In response, the government should make efforts to obtainpublic consensus on its role in a genuine market economy.At the minimum, the creation of new ministries and theproliferation of commissions should stop. The incentive-basedsalary system should be extended to the majority ofgovernment workers, if not all of them. Public enterprisesshould be more expeditiously privatized. The practice of so-called “parachute” appointments given to politicians andretiring senior bureaucrats should come to an end.

Apart from insufficient progress with reforms, there havebeen problems in their implementation. There were manyinstances of reforms inconsistent with market principles, onecase being government compulsion of chaebols to swap theirbusiness lines in 1998, and another forcing commercial banksto form a bond stabilization fund in the summer of 2000. Thegovernment also failed to maintain the momentum of reform,in anticipation of the general election in April 2000. Yet, thegovernment did not resume the pressure after the electionbecause it feared an adverse impact on the North-SouthSummit that was to be held in two months. The governmentalso failed to maintain a sense of priority in its reform efforts.A case in point was the government initiative to realign thedivision of labor between medical doctors and pharmacists.In retrospect, one wonders if the need for this initiative wasso urgent that it took precedence over other reforms. In anyevent, the drive generated an untold amount of controversyand social strife, using up much of the government’s politicalcapital and causing “reform fatigue” prematurely among thepublic.

The moral is clear. In all future reform efforts, marketprinciples must not be compromised. Reforms must beimplemented with a clear sense of priorities. In this regard,having a clear long-term vision helps. Once a reform agendahas been started, the government should stay the course.Otherwise, not only will the momentum for reforms be lost,but the credibility of the government itself will also beimpaired.

Key Reforms for the New Paradigm

In addition to completing the four sector reforms in themanner indicated, Korea ought to undertake several keyreforms to become the premier business and cultural centerin Asia.

The first of these relates to education, particularly highereducation. Although Korea has made remarkable strides inthis area, the progress to date has been mostly quantitative,not qualitative. That none of Korea’s institutions of higherlearning ranks among the top 50 educational institutions inthe world is most telling. The basic cause is the failure toexpose the nation’s higher education to competition both athome and abroad. Thus, one effective remedy for this situationwould be to allow foreign universities to open campuses inKorea. The Korean government would do well to study the


Spring 2002

various kinds of incentives – including subsidies for initialoperations and generous funding of research projectsundertaken jointly with local institutions – offered by thegovernment of Singapore to first-rate foreign institutions tooperate in that country.

The second major strategic reform Korea shouldundertake lies in the area of immigration policy. Historically,Korea was unwilling to accept any significant inflow ofimmigrants because its limited domestic resources might notbe sufficient to support a larger population. However, Korea’sproblem today is very different. It will need more talentedand creative people from overseas if it is to play the role of aworld-class business center in the global economy. For thisreason, Korean immigration policy needs to be changedfundamentally. In order to make upfor the shortage of workers in labor-intensive industries, the Koreangovernment has allowed the inflow ofa growing number of unskilledworkers to do what is called 3-D(“dirty,” “dangerous,” and“demeaning“) work shunned bylocals. However, when it comes to theinflow of highly trained professionals, the government hasbeen issuing long-term visas only sparingly. Like Singapore,the Korean government should grant permanent visas to allforeigners who meet certain standards and criteria in termsof professional competence. In this regard, the governmentshould also learn from the experiences of such countries asthe United States and the United Kingdom, which havebenefited enormously from a liberal immigration policy asfar as highly trained professionals are concerned.

Fundamental reform should also occur in the area oftaxation. Korea’s system of taxation is not conducive to thecreation of a good business environment because itdiscourages people with ability and talent from working hard.Korea’s personal income tax rate structure is overlyprogressive. The highest marginal tax rate is 39.6%, one ofthe highest in the world. This high marginal tax rate appliesto an annual taxable income of 80 million won, or roughlyUS$64,000, and above. As for corporate income tax, thehighest marginal tax rate is 29.7%, which is applicable toany corporation with profits of more than one hundred millionwon (roughly US$80,000) during any tax year.

On the surface, such high marginal tax rates appear toachieve an equitable redistribution of wealth through taxation.The actual results are very different, however. As marginaltax rates increase, taxpayers are tempted to reduce their taxburden in unusually creative ways. The upshot of this is three-fold. First, as many exemptions and deductions have beenadopted thanks to taxpayers’ lobbying efforts, the tax structurehas become extremely complicated and non-transparent,giving rise to opportunities for corruption. Second, taxexemptions and deductions decrease the tax revenuessignificantly. Third, such tax rate structures make littledifference in terms of income distribution after tax, sinceexemptions and deductions favor the wealthy. In short, bothpersonal and corporate income taxes with steep progressiverates result in high social costs with few social benefits.

One way to deal with these shortcomings would be to

adopt a personal income tax with few exemptions ordeductions and a proportional rate structure, as is the case inHong Kong today. Korea should also drastically reduce thecorporate income tax rates, following Ireland’s example.Ireland adopted a 10% corporate tax rate in 1981 formanufacturing activities, the lowest of its kind in the EuropeanUnion, with the result that it has succeeded in attracting moreforeign direct investment than any other EU member. This,in turn, has helped Ireland sustain the highest economicgrowth in the EU for the last 15 years. Actually, Korea cando better than Ireland. Korea should abolish the corporateincome tax. As it stands, the tax does much harm to theeconomy: it entails double taxation, discourages managementfrom maximizing profit, and encourages them to rely more

on debt than on equity financing.A fourth major reform Korea

needs to undertake is strengthening therule of law. Without the rule of law,no country can possibly hope to be-come a vibrant business center. Forexample, unless the rights and prop-erty of the people are properly pro-tected, few would undertake invest-

ment. Even a casual look at what has transpired over the pastyear alone should suffice to convince anyone that Korea stillhas a long way to go. For instance, many believe that theauditing of the media by the national tax authority was not animpartial enforcement of law. Similar doubts surround theinvestigations by the Office of Prosecutor-General into theallegations of corruption involving politically well-connectedindividuals. The fact that many foreign enterprises, includ-ing those already operating in Korea, would rather sign im-portant contracts in Hong Kong or Singapore than in Koreais an indication that they have less than full confidence inKorean courts when it comes to the enforcement of thesecontracts.

For the rule of law to take root in Korea, it is essentialthat Koreans eliminate the cronyism that is deeply embed-ded in their culture. Koreans should also accept the view thatthey must abide by all laws regardless of whether they aregood or bad. For this change in the popular attitude to occur,however, the government should streamline the current bodyof laws in the nation. In the course of introducing modernlegal systems from the West, Korea has incorporated far toomany laws and regulations that are either too idealistic ortotally unsuited to local conditions. Unless this reform isundertaken, it would not be possible for Koreans to respectall laws and abide by them, and effective enforcement wouldlikewise be difficult.

For the rule of law to prevail in Korea, it is also impera-tive that the government abide by law as much as individualcitizens. All laws must be enforced equally, impartially andin a transparent manner. One of the most urgent issues Kore-ans should resolve in this regard is to insulate the nation’slaw enforcement agencies, particularly the Office of Pros-ecutor-General, from partisan politics. The judiciary shouldalso be given full independence. To this end, the nation shouldreview its constitutional arrangements for the separation ofpowers among the three branches of government, given thatone of the biggest obstacles to the rule of law lies in the “im-

Korea will need more talentedand creative people from

overseas if it is to play the role ofa world-class business center.


perial” powers and prerogatives enjoyed by the President. Inundertaking these and other reforms, Korea should open itslegal profession to outside competition. The resulting ex-change of legal knowledge would not only greatly enhancelegal professionalism in Korea but also strengthen the rule oflaw.

Finally, one should not overlook the fact that in orderfor a country to become a business or cultural center, an at-tractive physical environment is necessary. Although Koreais endowed with a pleasant climate and much geographicalbeauty, pollution has become a serious problem as a result ofits headlong industrialization. One way to deal with this prob-lem is to give police powers to officials responsible for moni-toring environmental damage, which would lead to timelyand effective enforcement of environ-mental laws and regulations. Unlike theMinistry of Environment, the police caninitiate direct investigation into viola-tions of law even against the will of theparties involved. In addition, the policecan take actions to stop criminal viola-tions in progress without obtaining per-mission from prosecutors, whereas most other departmentsincluding the Ministry of Environment can take actions onlyafter violations have become fait accompli. Korea should alsorecognize that the basic layout as well as the infrastructureprovided in many cities fall short of international standards,making it difficult for foreign professionals to workefficiently.4 To address these problems, Korea should ideallyredevelop all of its cities. As this will require far too manyresources, however, the government might consider devel-oping or redeveloping jointly with private entrepreneurs afew select cities to serve as models for others.

THE FUTURE SHAPE OF KOREA

I have been promoting the strategy outlined above forthe past eight years. Initially, these ideas and proposals re-ceived only a limited acceptance. Over the past year and ahalf, however, they have been more widely embraced be-cause the nation’s economy once again experienced a sharpdownturn beginning in the second half of 2000, in spite ofthe many reforms implemented by President Kim Dae Jung.This economic downturn has convinced many of the needfor a new perspective in the future direction of Korea.

President Kim seems to follow this view. In his NewYear press conference this year, he announced that the trans-formation of Korea into a business hub in Asia should be anational goal. As a result, many government ministries areexpected to formulate strategies to achieve this goal by theend of March this year. Although this is a welcome develop-ment, it is too bad that President Kim failed to espouse thisparadigm much earlier. Given that his administration has lessthan one year remaining in office, the best that one couldhope for is that it will lay down the foundation for imple-mentation of the strategies outlined above.

What will Korea look like if the major reforms outlinedabove are implemented as key components in Korea’s strat-egy to emerge as the premier business and cultural center inAsia? First and foremost, Korea will be able to maintain high

growth for a considerable time to come. The general consen-sus among Korean economists today is that since the Koreaneconomy has now reached maturity, it can no longer be ex-pected to grow as rapidly as it did over the past four decades.For this reason, the potential growth rate of the Koreaneconomy over the next five years is believed to be 5-6% atmost. Needless to say, this estimate of Korea’s potentialgrowth rate does not take into account the reforms proposedabove. Nor does it take into account the fact that as a busi-ness center, Korea will provide leadership for entrepreneur-ship, innovation and technological progress. In performingthese roles, it will attract highly creative and talented peoplefrom all over the world. This will all add up to higher pro-ductivity and growth.

As Korea undertakes reforms in itshigher education, its society willundergo a significant transformation aswell. With improvement in the qualityof education and physical environment,Korea will become an attractive placefor intellectual and creative talent. This,in turn, should make Korea not just a

business center, but a cultural center as well. As Korea’s taxsystem becomes more simplified and transparent and the ruleof law is strengthened, there will be less corruption in bothgovernment and business, making the economy even moreproductive. In a corruption-free society, all citizens will enjoygreater and more equal opportunities to develop their fullpotential. This will reinforce the willingness of all Koreansto work together for their common future, thus making Koreansociety more cohesive. Furthermore, as Korea becomes hometo many multinational enterprises from industrially advancednations, their home governments will be more willing toextend cooperation and render assistance in securing peaceand stability on the Korean peninsula. This too will help Koreasustain high growth, better preparing it to achieve peacefulunification on the peninsula, which in turn will improve theprospects for peace and stability for the whole of Asia.

In conclusion, what Korea needs more than anything elseat this stage of its development is a clear vision and concretestrategy to realize its full potential. Korea should aim tobecome the premier business and cultural center in Asiathrough a series of reforms designed to achieve this goal.

ENDNOTES

1 Some may wonder why Tokyo is not mentioned as a businesscenter in Asia. The reason is that most of the businesses conductedin Tokyo are domestic in nature, rather than for clients in neighbor-ing countries. Many also would not consider Tokyo as a conve-nient place to do international business due to over-regulation.Hence, Tokyo should be regarded more as a national business cen-ter than an international one.2 The term “rent” in economics is used to designate that part ofreturns to any input used in the production process over and abovethe returns it could earn in a purely competitive market.3 The sources include CNNIC, Ministry of Information and Com-munication of the Republic of Korea, NASSCOM and IDC.4 The impairment of efficiency is of course not limited to foreign

This economic downturn hasconvinced many of the need

for a new perspective.


Spring 2002

professionals. But greater attention must be paid to them for tworeasons. (1) They are used to higher standards than domestic pro-fessionals. (2) Without a substantial presence of foreign profes-sionals, talents and other creative people from abroad, a countrycannot hope to become a first rate business center.

TRANSLATORS

U.S. Goverment office seeks experiencedUyghur-English contract translators.

Successful candidates must be able to translate writtenUyghur into good, idiomatic English, and must be able toread both Latin and Arabic forms of Uyghur.Candidates will work from home, must provide their owncomputers, and have access to and familiarity with theInternet and e-mail. Please send to the e-mail addressbelow a cover letter and resume in English, whichincludes the following information:

- Estimated translation capacity per day/week(number of words).- Any Areas of expertise, including technical fields,and area knowledge.- Any additional skills (for example, otherlanguages, ability to translate from audio).- Translation experience.- Citizenship/permanent resident status.- Remuneration rate expecteed per 1,000 translatedEnglish words.

E-mail address: [email protected]

PROUDLY SUPPORTS

THE 2002 ASIA

BUSINESS CONFERENCEOne Liberty PlazaNew York NY 10006TEL 212.225.2000FAX 212.225.3999www.cgsh.com

NEW YORK WASHINGTON PARIS BRUSSELS LONDON FRANKFURT ROME HONG KONG TOKYO


HARVARD ASIA BUSINESSCONFERENCE 2002: PHOENIX RISING

On February 1-2, students, academics, entrepreneurs and pro-fessionals converged at the Harvard Business School to attendthe 2002 Asia Business Conference, organized by students ofthe Harvard Law School and Harvard Business School. Titled“Phoenix Rising”, the conference examined the state of theAsian economies in the aftermath of the 1997 financial crisisand the global recession of 2001. The Harvard Asia Quarterlyprovides full coverage of the keynote speeches and plenarypanels, along with a selection of the discussion panels.

HAQ Conference Editors: Rebecca Culley, Weishi Li, Jin Pao,Victor Shih, Alice Yu, Wei Lily Zhou.

OPENING REMARKSCHRIS ZOOK, DIRECTOR, BAIN & COMPANY

Despite the conference’s optimistic “Phoenix Rising”theme, opening speaker Chris Zook said that the present“world synchronized recession” makes a quick Asian eco-nomic recovery difficult. Against this background, he dis-cussed the concept of sustained profitable growth by sharingthree observations and applying them to Asia.

First, the business environment has become increasinglypressurized, and performance expectations of top businessexecutives have never been higher. Conversely, the penaltyfor poor performance has never been so severe, and the at-tainment of sustained profitable growth is more difficult thanever before. Today, the price-earnings ratios for most bigcompanies’ stocks are over 20, while the average period thata stock is held has shortened to less than a year. With theaverage turnover rate for top executives at 22% in the USand 27% in Korea, the shortened duration of corporate lead-ership and strategy has increased the tension between shortterm results and long term growth.

Second, sustained profitable growth – defined by Zookas a 5.5% annual increase in revenue and net income overten years – is inherently difficult to achieve. Currently, this isreached by only 13% of US public companies. The percent-age is even lower among the largest companies in Asia, withonly 9% of Chinese companies, 7% of Korean companiesand less than 5% of Japanese companies experiencing sus-tained profitable growth respectively.

Third, it is important to identify and succeed in a coremarket. Thirteen percent of US public companies that haveachieved sustained profitable growth have created more thanone-half of the value and captured more than one-half of theinvestments in the market. Among these most successful com-panies, 80% are built around core businesses, and only 20%are high-tech companies. The key to success is to “dominatea core market and then use it to branch out.”

KEYNOTE SPEECH 1: DEEPENING THE REFORMAND OPENING UP PROGRAM IN THE CONTEXTOF GLOBALIZATIONVICE-MINISTER JIN LIQUN, PEOPLE’S REPUBLIC OF CHINA

Chinese Vice-Minister of Finance Jin Liqun presented asunny view of the future of his government’s “DeepeningReform and Opening Up” program in the context of China’srecent entry into the World Trade Organization (WTO). Hebegan by noting that the Chinese economy has demonstrateda high degree of resilience in the general global recession.For example, China’s GDP increased 7.3% last year, whileits export growth was 6.8% and import growth was 8.2%. Heattributed these achievements to the “Deepening the Reformand Opening Up” program and to the success of new reformmeasures.

“China is determined and has the ability to meet the ex-pectation of the other WTO members,” said Jin, adding thatChina has a good record of keeping international commit-ments. Implementation of China’s WTO commitments is the“necessary and logical step forward” in carrying out the re-forms for the country’s overall sustainable growth.

Jin also talked candidly about the “real and tangible”challenges faced by the Chinese government and the Minis-try of Finance. For example, in keeping with its WTO com-mitments, China has already reduced tariffs from 15% to 12%in 2002, which will be followed by a further reduction to9.4% in 2005 for a number of products and sectors. The tar-iff reduction is especially threatening for industries lackingin competitive advantage, such as the automobile industry.

Hundreds of reform measures are being pursued to en-sure China’s smooth transition into WTO membership. Bankreforms are a key part of the financial sector reform. Withinfive years, all restrictions on foreign banks’ entries into theChinese market will be phased out. “Commercial banks inChina, whether state-owned or not, have independent deci-sion making ability,” said Jin, and these banks should notview foreign banks as competitors, but as coaches. The goalof the public financial system reforms is to eventually freethe government from micro-management, so that it can fo-cus its efforts on providing public goods and services, suchas education, technological development and environmentalprotection.

Following the discussion of China’s reform measures,Jin turned to the importance of the Sino-US relationship. Inthe past decade, trade between the two countries has qua-drupled. Today, the US is China’s second largest trading part-ner and China is the fourth largest trading partner for the US.Jin also stressed China’s commitment toward cooperation with


Spring 2002

the US in fighting terrorism, saying that “the Chinese peopleare friendly toward the American people... [They felt] out-raged by the September 11 attack on America.”

KEYNOTE SPEECH 2: CHINA’S WTO ACCESSION:NEW DEBATES IN A NEW ERAAMBASSADOR CHARLENE BARSHEFSKY, FORMER US TRADE

REPRESENTIVE

Charlene Barshefsky – the chief negotiator and princi-pal trade policy maker in the Clinton Administration from1996-2001 – addressed three major issues stemming fromChina’s accession into the World Trade Organization: China’srole as a shaper of the global trading system, China’s internaleconomic development and the Sino-US relationship.

Barshefsky began by addressing the future impact ofChina’s role as a shaper of the global trading system. As op-posed to reacting to international changes, “membership inthe WTO will give China the chance to shape the WTO forits own interests, in Pacific diplomacy and cross-straits rela-tionships.” Barshefsky was cautiously optimistic when sheemphasized that China was very pragmatic in its trade policyand therefore would likely be a source of growth for smallercountries in the region. Turning to the cross-straits relation-ship, she said that since trade between Taiwan and China hasincreased, it will be important to see “what role economicconvergence can play in ameliorating political conflict.”

Regarding the consequences of membership for China’sinternal economic development, Barshefsky said that WTOmembership will “force China into developing a more com-petitive domestic economy.” The elimination of tariffs willresult in easier access to technology and reinforce the impor-tance of rule of law. Although cautious in predicting a newdirection for political change, she said political pluralism mayresult in China in the long term.

Finally Barshefsky turned to the Sino-US relationship,underscoring the ability of trade and economic policy to unitethe two countries around common interests and shared ben-efits. For the Clinton administration, prioritizing China’s en-try into the WTO was a way to put the common ground be-tween the two countries “on center stage.” In China, minis-tries that opposed entry are now charged with implementa-tion of the reforms, and the US will need to work with Chinato achieve them. “The US will need to pay attention to divi-sions in the Chinese government,” Ambassador Barshefskysaid. Export growth in China is up 18% this year, but a largerquestion remains: “Will the China policy consensus provesustainable?”

In conclusion, Barshefsky said that the biggest obstacleto a successful future Sino-US relationship is the emotion onboth sides. National pride and differences in values could beobstacles if they are not addressed. China’s WTO entry, bybringing a closer convergence of interests, will hopefully helpboth governments to better manage crises in their future re-lationship. “A greater appreciation for the cost of failure”will hopefully lead to a relationship “characterized less bysuspicion and more by cooperation and concern for the com-mon good, peace and prosperity.”

KEYNOTE SPEECH 3: ASIA’S STRENGTHS ANDCHALLENGES IN THE YEARS AHEADJEFFREY R. SHAFER, MANAGING DIRECTOR, SALOMON SMITH

BARNEY

Jeffrey Shafer provided a look back to the Asian finan-cial crisis of 1997, as well as a look ahead to the future inAsia. He began by going over some broad macroeconomicfacts. The Asian financial crisis led to lower growth acrossthe region. Yet, Asian economies are much less vulnerable toshocks now than before 1997, due to a number of reasons:more flexible exchange rates (except in Hong Kong, Chinaand Indonesia); improvement in the ratio of international re-serves to short term debt; renewed confidence that has al-lowed governments to follow counter-cyclical policies; andinflation under good control. Asian economies are also lesssusceptible to swings of the Japanese economy now than fouryears before. Japan has become just another country havinga recession and will not be as likely to have catastrophic ef-fects on the rest of Asia.

While acknowledging the fact that growth slowed in 2001– with Singapore, Taiwan and Hong Kong going into reces-sions due to their high investments in information technol-ogy and consequent vulnerability to the US recession – Shaferindicated that consumer confidence and other indicators arepositive. Always a good barometer of recovery, stock mar-kets have been up recently everywhere but in China. As aresult, Shafer was optimistic about the Asian economic out-look. Citibank economists have projected positive growth in2002 for all Asian countries. Nevertheless, this growth is stillbelow what the Asian countries can aspire to. The challengeis to restore growth commensurate with the region’s high sav-ings record and potential.

Three things need to happen before this restoration canoccur. First, Asian governments need to push for corporateand economic restructuring. Although needs vary from coun-try to country, there is a lot of unfinished business in the elimi-nation of bad debt. Given that the governments are often adirect or indirect creditor or equity holder, they need to spear-head the effort. Otherwise, there will be an incentive for firmsto stall for time. In China, the focus has been on the fourstrong commercial banks, by instituting a credit culture andgetting return for risk. A start has been made in liquidatingbad loans by auctioning off debts, but determination is re-quired to clean up their portfolios. Shafer suggestedrecategorizing the banks into three tiers: good banks, workout banks, and bad banks.

Second, Asian countries need to take corporate gover-nance reform seriously. Governments need to provide a solidlegal framework to target crony capitalism, and the businessstructure must move toward private markets to achieve theefficient allocation of resources. Using the bankruptcy ofEnron as an example of the universal challenge in achievingcorporate accountability, Shafer nevertheless cited the US asa model for quickly fixing what is broken.

Third, Asian countries need to identify growth sectorsand opportunities in the region and capitalize on them. WhileShafer does not expect the US or Europe to be the main mar-ket for Asian countries in the long term, he said that entre-preneurs in Asia should pay attention to the opportunities in


China. Although it was the number ten importer in the worldin 2001, China is the biggest market prize in Asia, especiallynow that it will play by WTO rules. As China grows, its wageswill rise and the appreciation of its currency will equalizecompetition. In Shafer’s opinion, the rest of Asia is well-placed to sell into China and access its markets, even moreso than China’s interior provinces. Moreover, cultural tiesmay enable Asians to do better in China than foreigners. Insum, “it is the wrong mentality to see China as a threat.”

PLENARY PANEL 1: ASIA’S FUTURE - REGIONALINTEGRATION OR REGIONAL COMPETITION?AMBASSADOR SUSAN G. ESSERMAN, PARTNER, STEPTOE &JOHNSON

HOMI KHARAS, CHIEF ECONOMIST, WORLD BANK

ROBERT G. LEES, SECRETARY GENERAL EMERITUS, PACIFIC

BASIN ECONOMIC COUNCIL

GARY L. ROGERS, VICE CHAIRMAN OF THE BOARD AND

EXECUTIVE OFFICER OF GENERAL ELECTRIC COMPANY

Can we assume that Asian regional integration is themodel forward? And what is the role of regional integrationin the age of globalization? Do they conflict with or comple-ment each other?

Ambassador Susan Esserman, former deputy US TradeRepresentative in the Clinton administration, looked at theprospects for India’s further integration into the region. Notexport-led and largely marginalized in regional trade, India’scourse of economic development is unique in Asia. How-ever, she argued that a world-class hi-tech services marketmight change India’s history of anti-regional integration

Citing the influence of Nehru and Gandhi, Essermanoutlined the historical and political reasons behind India’spursuit of economic development along the socialist autarkymodel. Policies emphasizing small-scale enterprises have ledto a loss of competitive advantage against other regional com-petitors, specifically China. In sharp contrast to other Asiancountries’ export-led growth strategies, India’s limited par-ticipation in regional trade has increased only slightly, nowconstituting a 4% of total trade. Coupled with a suspiciousview of the WTO, India’s anti-trade attitude has hamperedits ability to reap the rewards of being rich in resources, es-pecially in its hi-tech services sector. While Esserman didnot forsee dramatic changes in India’s anti-trade political ori-entation, she suggested that China’s emergence in both theworld and regional economies may provide a positive forcefor reform. Still, she concluded that India’s broader integra-tion was unlikely to occur rapidly.

Turning to the question of regional cooperation, HomiKharas, the Chief Economist at the World Bank, laid out threeprinciples influencing the degree and nature of Asia’s inte-gration: consensus building, non-intervention, and informalinstitutions. Emphasizing the diversity of the economies andcountries in the region, he pointed out that while the histori-cal drivers of integration remained, the multilateral openingof the region had become much more difficult.

Kharas then illustrated the way in which these forces arecurrently affecting the economic development of ASEAN,China and South Korea. Although trade is no longer driving

development in theses countries, the welfare gains from lib-eralization and the perception of China as an economic threatare, or should be, catalyzing structural reform and economicreorientation. Accounting for 57% of stock market capitali-zation in the region, China is currently the recipient of 84%of the region’s foreign direct investment (FDI), which is upfrom 30% ten years ago. While China’s dominance clearlychallenges ASEAN countries, Kharas suggested that it alsoprovides an opportunity for them to focus on attracting FDI,and improving corporate governance standards and the qualityof labor. He added that China presents a market opportunityfor the exports of ASEAN countries.

He then outlined the “hard infrastructural” elements nec-essary for future regional integration: the creation of regionaltransportation hubs, like Singapore; the improvement ofpolicy compliance and efficiency of supply chain manage-ment; as well as increased protection of intellectual assets.Kharas pointed out that South Korea was leading the way inthe protection of such assets by complying with the TRIPSaccords.

In conclusion, Kharas underscored that further regionalintegration is the “stepping-stone” for more successful glo-bal opening. While liberalization brings tremendous benefits,it also has social costs, and how to share those costs is achallenge: “It is essential that the poorest countries in theregion get pulled along in this kind of regional development.”

Robert Lees, drawing on his past experience as Secre-tary General of the Pacific Basin Economic Council and 20years of doing business in Asia, observed that “Asia is not amonolith” and that its long-term economic growth may re-side in a global market orientation rather than a regional one.He outlined what he saw as the three necessary steps to thatsuccess. First, China, as an “800 pound gorilla on steroids”needs to grow and share its wealth by investing in neighbor-ing countries. Second, given that the Japanese economy rep-resents 60% of Asian GNP, Japan needs to tame its bureau-cracy, open its culture and allow for economic growth. Fi-nally, looking at ASEAN, Lees emphasized the need to re-build infrastructure and deal with corruption. “Just becauseyour economy is in Asia doesn’t mean it will be successful,”he warned.

Gary Rogers, Vice Chairman and Executive Officer ofGE, contributed the perspective of his company’s extensiveexperience in Asia by breaking down what he saw as themain trends for economic development in the region. ForJapan, he highlighted the need for the country to undergo arestructuring like the US did in the 1980s. For India, he em-phasized its enormous intellectual capability and potentialin information technology. Finally, Rogers summed up thegeneral spirit of the panel by emphasizing China’s promiseas a huge consumer market, and its potential to have a posi-tive impact on the entire region.


Spring 2002

PLENARY PANEL 2: CHINA’S ENTRY INTO THEWTO AND ITS IMPACTDR. DONG-SUNG CHO, DEAN, COLLEGE OF BUSINESS

ADMINISTRATION, SEOUL NATIONAL UNIVERSITY

YA-FEI HE, MINISTER AND DEPUTY CHIEF OF MISSION,PRC EMBASSY TO THE UNITED STATES

RUDOLPH A. SCHLAIS, JR., GROUP VICE PRESIDENT,GENERAL MOTORS CORPORATION, PRESIDENT AND CEO OF

GENERAL MOTORS ASIA PACIFIC

MYOUNG-HO SHIN, VICE PRESIDENT, ASIAN DEVELOPMENT BANK

The central inquiry of the panel discussion was capturedby a question put forth by Rudolph Schlais of GM: Will theWTO tiger be tamed, or will it wreck havoc in China? Thefour panelists shared a cautiously optimistic outlook for theimpact of China’s entry into WTO on China itself, on sur-rounding nations and on the world economy.

Dong-Sung Cho started the discussion by noting that sizeand rapid economic development make China a dauntingplayer in the world economy. It is not a question of if, “butwhen, China becomes No. 2 and eventually No. 1 economyin the world” surpassing Japan and United States. Similarly,Ya-Fei He emphasized the continuous healthy growth ofChina’s economy against the backdrop of global economicrecession, calling China “the only bright spot in the worldtoday.”

The panelists reached a consensus that the new WTOmembership will undoubtedly bring both benefits and chal-lenges for China. Benefits include both tangible and intan-gible economic benefits. According to Myoung-Ho Shin,China’s WTO accession will be a “turning point,” leading tomore employment opportunities, sector-specific benefits suchas improved textile export due to quota elimination, and longterm economic gains in the range of 1-2% of GDP. Addition-ally, Cho noted that increased competition from multi-na-tional corporations will likely prompt massive bankruptciesand restructuring efforts for domestic firms and result in stron-ger domestic industries. However, he also acknowledged theopposite argument, which is that increased foreign competi-tion may result in the loss of economic independence andincreased unemployment, social unrest, and political insta-bility. On top of economic benefits, He listed numerous long-term intangible benefits that the new WTO membership maybring for China. For example, joining the WTO may facili-tate China’s transition from a planned economy, strengthenrule of law, and foster “clear and credible commercial rela-tionships with other WTO members.”

The panelists identified several key industries that willbear the brunt of the new WTO membership. Agriculture isin serious danger, since China has 800 million farmers whoselivelihood depends on the well-being of the agriculture in-dustry. As an example of the threat from foreign competi-tion, He noted that the increased importation of cheaper highyield soybeans from the United States has already driven manyChinese soybean producers out of business. Many other in-dustries, including banking, insurance, auto, telecommuni-cation and pharmaceuticals, resisted reform. As a result, theseindustries are not yet ready to face the enormous challengesbrought by China’s WTO entry.

In the face of the daunting challenges, the panelists of-

fered slightly different prescriptions and outlooks. A com-mon theme is that all participants stressed the critical role ofthe Chinese government in handling the challenges. Cho citedthe political leadership and stability as keys to China’s suc-cess. Shin, on the other hand, offered more practical advice:the Chinese government should speed up reforms, promote apro-business environment, transparency and rule of law, stampout corruption and honor contracts. In response, He made itclear that the Chinese government is confident and ready tohandle the challenges and capitalize on the opportunities,given its experience with economic reform in the past 20years. As examples of China’s preparation efforts “at all lev-els,” he noted that China has enacted many new laws and hasinitiated major educational campaigns regarding the conse-quences of WTO entry. In addition to China’s own efforts,the need for foreign cooperation in this process was also high-lighted. For example, He emphasized the need for improvedUS-China relations, quoting a US official that the US itself“will be a big beneficiary of China’s WTO membership.”

China’s entry into the WTO will have significant impacton neighboring Asian countries, according to Cho. China islikely to become the “center of gravity” for international capi-tal. There will be increased flow of goods and capital amongChina, Korea and Japan, leading to the potential emergenceand integration of a Pan-Chinese economy in Southeast Asia.More importantly, China is likely to emerge as a regionalpolitical leader, and lend help to troubled economies of neigh-boring countries.

China’s WTO entry will impact the world economy in atleast two ways. First, China now ranks 8th in trade. Joiningthe WTO should move China up the rankings, and catalyzethe expansion of international trade and the growth of theworld economy. Second, as a new WTO member, China isanticipated to strengthen the voice of developing countriesand redress the traditional power asymmetry between devel-oped and developing nations in trade negotiations.

Schlais from GM brings a more focused perspective tothe panel. In his view, China’s WTO entry will bring majorbenefits for the foreign auto industry, by eventually eliminat-ing quotas. Import quotas will be reduced from the current80% to 25%, and automotive financing will be available fromfinancial institutions. He noted that the advantages for localdomestic producers also abound. As an example, he pointedto local manufacturers’ easy access to the market of servicesand repairs as an advantage. To further emphasize that thebenefits will not be lopsided for foreign corporations, he high-lighted benefits that WTO membership will bring for China,at least for its auto industry. For example, increased foreigncompetition will encourage consolidation of domestic autoindustry, and hasten the elimination of failing companies. Anadditional side effect is that investment in China will likelybe accelerated at the expense of other South East Asia na-tions.

In the end, there appears to be no simple answer to thequestion of whether the WTO tiger will be tamed. At best,China’s entry remains a “mixed picture.”


Spring 2002

PLENARY PANEL 3: LEADERSHIP IN ASIA’S RE-COVERY - WHO WILL EMERGE AHEAD?KO KHENG HWA, MANAGING DIRECTOR, SINGAPORE ECONOMIC

DEVELOPMENT BOARD

WANDA S. TSENG, DEPUTY DIRECTOR, ASIA PACIFIC

DEPARTMENT, INTERNATIONAL MONETARY FUND

RICHARD SMITH, PRESIDENT, ELI LILLY ASIA

YASHENG HUANG, PROFESSOR, HARVARD BUSINESS SCHOOL

Ko Kheng Hwa of the Singapore Economic Develop-ment Board began his remarks by voicing his optimism aboutgrowth in the region. He reasoned that Asia will recover inthe near future, given the recovering US economy, fiscalstimulus policies implemented by governments in the region,greater resilience of regional economies, and strong growthin China and India. He reviewed familiar arguments for Asia’sgreat potential: strong human capital, attention to high tech-nology development, a huge emerging middle class in Chinaand India, and governments largely committed to fosteringgrowth.

Asia can no longer be seen as simply a production cen-ter for labor intensive goods but as an integral part of theglobal production process, from research and developmentto downstream marketing. Focusing on Singapore, Ko attrib-uted its strong performance to its business-friendly macro-economic policies, benevolent government, large talent pool,and good infrastructure, all of which foster the creativity nec-essary for Singapore’s jump into the “innovation driveneconomy.” To ease Singapore’s transition toward this newphase of economic development, the government has cre-ated incentives for leading universities around the world toset up branch campuses in Singapore and for startups andventure capitalists to set up shop in the island city. Ko wasvery confident in the effectiveness of these policies.

Richard Smith painted a less sanguine portrait of Asia,in particular China. Smith reviewed popular arguments aboutthe giant potential of China, but expressed his own reserva-tions about its future. First, he noted that there exists large-scale social unrest and increasingly severe social inequalityin China. Although not often reported in the Western media,these problems nevertheless have the potential of derailingChina’s economic development. A more fundamental prob-lem involves the adaptability of the Communist regime tomarket institutions. The main question for the future of Chinais this: can the current regime carry out necessary marketreforms before a crisis of confidence triggers a massive exo-dus of foreign investors? During the question and answersession, Smith further pointed out that while the pharmaceu-tical industry is beginning cooperative relationships withChinese research institutions, it is still wary of the lax en-forcement of intellectual property rights in China. Disagree-ing with Smith’s pessimistic assessment, Prof. Huang Yashengcountered that China’s high savings rate and export growthprovide a cushion for institutional inefficiencies. However,Prof. Huang warns that the current inflated growth rate onlyallows the leadership to delay painful, but ultimately neces-sary, reform measures.

Refocusing on the entire region, Wanda Tseng of theInternational Monetary Fund provided a richly empirical pic-ture of regional economic conditions. Disagreeing with Ko,

Tseng pointed out that the 9/11 attacks on the US and slowreform in EU and Japan meant that all three economic powerhouses have fallen into recession simultaneously. Thus, glo-bal growth is likely to be slow and is estimated by the IMF tobe about 2.4% in 2002. This slow growth will hit export-oriented and IT-dependent economies the most. As is typicalfor continental economies, China and India will be the leastaffected by the global slowdown. However, due to the highforeign exchange reserves, flexible exchange rates, and lowexternal debts across the region, she did not expect a repeatof the Asian financial crisis.

Some of the fundamental problems that caused the Asianfinancial crisis still exist. Better financial statistics across theregion now reflect increasing involvement of the state in thebanking sector and the transfer of debt to asset managementcompanies rather than fundamental reforms. Bank profitabil-ity has plunged due to low lending levels, a risk-averse strat-egy favored by state-run banks. In order to increase efficiencyof the financial sectors, risk evaluation within banks needs tobe revamped; banks need to be recapitalize to provide suffi-cient lending capital; and governments need to pass regula-tions to prevent repetition of previous excesses. Asian gov-ernments ultimately need to re-privatize banks to insure long-term efficient allocation of capital and achieve sustainablegrowth. However, Tseng was elated at the lack of a resur-gence of protectionist policies among Asian economies, de-spite the global slowdown. This is a sign of political willtoward reform and opening. Tseng concluded by saying thatAsian countries should further increase their competitivenessby diversifying their exports and limiting their reliance on ITproduction.

STREAM 1, DISCUSSION PANEL 2: GOVERNMENTRESPONSES TO ECONOMIC DOWNTURNALICE AMSDEN, PROFESSOR, MITZHU GUANG YAO, EXECUTIVE DIRECTOR FOR CHINA, WORLD

BANK

WANDA S. TSENG, DEPUTY DIRECTOR, ASIA PACIFIC

DEPARTMENT, INTERNATIONAL MONETARY FUND

Wanda Tseng of the IMF began this discussion by com-menting that China’s financial reform is tied inexorably withreform of its lumbering state-owned enterprises (SOE). With-out fundamental change in the ownership structure of China’sindustries, the government will need to inject massive amountsof capital into SOEs. On the topic of non-performing loans,Tseng urged Japan to fully confront its giant non-performingloan (NPL) problem and accelerate the dissolution of baddebt. Otherwise, Japan will face slower growth in the nearfuture. China must similarly hasten to reform its state bank-ing system and deal with its own NPL problem. There is alsoa need to strengthen corporate governance across Asia, sothat financial problems are not hidden by banks and corpora-tions. Finally, in order to effect these reforms, Asian govern-ments need to establish social safety nets to ensure a mini-mum level of welfare during the tumultuous reform process.When asked whether or not China needed to privatize itsstate banks, Tseng acknowledged that ownership reform inChina’s banking sector is likely to be a gradual process led


by fledging joint-stock banks in China.Zhu Guang Yao, who serves concurrently as executive

director of the World Bank’s China Office and director ofthe international division of China’s Ministry of Finance, gavehis remarks as an MOF official. Zhu first pointed out thatthree major developments – China’s accession to the WTO,Beijing’s winning bid for the Olympics, and the conventionof APEC in Shanghai – had a significant impact on China’sfuture trajectory. On the whole, these three major develop-ments have brought China further along the path of reformand integration with the global economy. Zhu then echoedTseng’s concern with SOEs and banking reform. He statedthat changing the traditional mentality of the government willbe a significant yet formidable step in the overall reform pro-cess. In sum, the government must learn to cut off its tieswith SOEs. Furthermore, China must open up to the world ina mutually beneficial way and comply with all the interna-tional agreements that it enters. He ended his remarks by say-ing that China sees regional cooperation as supplementaryto, rather than a replacement for, global cooperation.

Sounding a dissenting note to the previous speakers’ pro-reform agenda, Prof. Alice Amsden of MIT argued that manyof Asia’s woes are results of the global recession, not of theinsufficiency of reform in Asian countries. Recalling the his-tory of development in Asia, Amsden pointed out that West-ern reporting of Asian business practices has always beentoo pessimistic, perhaps originating from jealousy or distrustof Asian successes. Furthermore, many Asian policy makershave now adopted the perspective of the West and are work-ing toward Western models of economic organization. Still,the Asian model has produced extraordinary high growthacross the region. Why should Asia change? Why shouldChina reform when it has a highly successful telecommuni-cations sector? Why should Japan reorganize its society whenit has enjoyed unparalleled social harmony for generations?Her provocative comments drew many responses from theaudience and from her fellow panelists, most of whom pointedout that active state intervention popular among Asian coun-tries discourages private investment and severely underminesthe efficiency of capital allocation in these economies.

STREAM 1, DISCUSSION PANEL 3: CORRUPTIONIN ASIAIRA BELKIN, FORMER CHINA LEGAL EXCHANGE OFFICER, USDEPARTMENT OF JUSTICE

DAVID KANG, PROFESSOR OF POLITICAL SCIENCE, DARTMOUTH

UNIVERSITY

AKIRA KOJIMA, MANAGING DIRECTOR AND CHIEF EDITORIALIST,NIHON KEIZAI SHIMBUN (NIKKEI)

Ira Belkin, a Department of Justice official who observedcorruption investigations while on an exchange program tothe Chinese Supreme People’s Procuratorate, began his re-marks by noting that corruption is an openly discussed issuein China, both among the elite and the general population.Belkin made several observations about the problem of cor-ruption in China. First, in Chinese criminal law, the defini-tion of corruption only includes the exchange of money andproperty, and not compensation through ownership in a busi-

ness. In fact, foreign companies frequently complain of localprotectionism because local officials often hold a stake inlocal enterprises. Another problem is that China has a casheconomy, which makes the tracing of money difficult. Untilrecently, anyone has been able to open a bank account underanother person’s name. While the government acknowledgesthis problem and has tightened regulations on opening ac-counts, owners of pre-existing accounts do not have to re-veal their true identities for another three years. Finally, Chi-nese prosecutors refuse to entrap public officials by offeringthem bribes because, according to Chinese officials, “every-one will take it.” This perhaps speaks to a deeper problem inthe system.

Professor David Kang of Dartmouth University identi-fied some of the underlying causes of corruption. He cau-tioned that the elimination of corruption will be a gradualprocess in Asia. Essentially, the more power politicians haveover the economy, the more incentives businesses have ofinfluencing politicians. In Asia, corruption was a severe prob-lem especially during the authoritarian eras in many coun-tries. Contrary to traditional expectations, however, democ-ratization often allowed businesses to influence politiciansmore. With democratization, the cost of power increased suchthat both politicians and businesses have incentives to in-crease rent-seeking activities. The long-term solution is forgovernments to reduce their control of the economy, but theintegration of the government and economy is so tight in manycountries that a withdrawal is gradual at best. Economic cri-sis might become one mechanism whereby politicians areforced to relinquish economic power.

Finally, Akira Kojima, managing director of the Japa-nese daily Nihon Keizai Shimbun, observed that despite pro-tracted stagnation in the Japanese economy, Japanese bureau-crats continue to wield enormous power. They continue tohold sway over legislative drafting, and the Diet usually ap-proves bills that are submitted. Meanwhile, bureaucrats alllook forward to high-paying private sector jobs upon theirretirements. Although few outright bribes are offered, com-fortable retirements give bureaucrats strong incentives topromote protectionist policies for certain industries. More-over, the opaqueness of the entire process gives bureaucratsenormous discretion in policy making. Because written lawsare insufficiently specific about legal behavior, businesseshave to constantly consult the bureaucracy about their nextmoves. Although a law passed in 2000 forces the bureau-cracy to release more written information to the private sec-tor, the new statute does not affect “special administrativeguidance,” which is often given orally by individual bureau-crats. This obsolete practice raises transaction costs to un-imaginable proportions. Kojima ended his remarks by stat-ing that Japan urgently needs to make laws that force gov-ernment officials to increase the transparency of the bureau-cracy.


Spring 2002

STREAM 3, DISCUSSION PANEL 2(B): MEDIA ANDENTERTAINMENTEKKEHARD RATHGEBER, PRESIDENT, DIRECTGROUP BERTELSMANN

ASIA

WU XIAOYONG, CEO, PHOENIX SATELLITE TELEVISION (US)SHERYL WUDUNN, PROJECT DIRECTOR, STRATEGIC PLANNING

GROUP, NEW YORK TIMES

The importance of the Asian media industry is linkedwith the global demographic and economic shift in favor ofAsia. By 2050, Asia may account for more than 50% of glo-bal GDP. China and India will provide an increased propor-tion of human capital to the global market. The rapid growthof the Internet in Asia also magnifies the impact that infor-mation will have there. For example, in expanding its trans-portation infrastructure, China is concurrently building fi-ber-optics in order for an increased number of people in lessurban areas to have Internet access. In light of these factors,Sheryl WuDunn underscored the importance of the Asianmedia industry to “build bridges between the East and West”to enable understanding and facilitate co-operation.

Another key to understanding the media industry is theidentification of the different functions played by the mediain Asia as opposed to the West. In Asian countries such asChina, the degree of government influence is quite substan-tial. Rather than checking the abuse of governmental authori-ties, the media is often an instrument of government control.WuDunn stated that there exists a limited degree of freedomin the reporting of sensitive political issues.

Another theme of the panel was the tension between theneed for Asian nations to open their borders to internationalinformation flows and the preservation of local identity andculture. In the Chinese context, the panel examined whetherthe blocking of Internet access contradicted China’s goal ofeconomic development, increasing openness, and transpar-ency. In response to this question, the panel explained thatthe target of censorship is generally politically sensitive ma-terial and not information used for business purposes.

Wu Xiaoyong, speaking from his experience in dealingwith the Chinese bureaucracy in establishing a non-govern-ment controlled television broadcasting company, claimedthat the key to success was high quality programming thatdid not contain politically controversial material. When askedwhat was the central ingredient of Pheonix’s success in China,Wu simply responded, “we’ve got the right stuff” which wasan allusion to both the neutral content provided and also thepositive relationship that Pheonix enjoys with the Chinesegovernment. One recent example of Pheonix’s success wasits coverage of the September 11 terrorist attack, which ex-ceeded both in terms of quality and duration the coverageprovided by the government network, CCTV. The panel con-cluded by examining some of the difficulties faced by themedia, including the relatively low level of development ofintellectual property rights in Asia, the need to create trulylocalized content, and the impact of media on traditional cul-ture within Asia.

STREAM 3, DISCUSSION PANEL 3: LEGAL SER-VICESLAWRENCE A. DARBY III, PARTNER, KAYE, SCHOLER LLPYONG G. LEE, PARTNER, CLEARY, GOTTLIEB, STEEN & HAMILTON

DETLEV VAGTS, PROFESSOR, HARVARD LAW SCHOOL

This panel examined the challenges facing the legal ser-vices sector in Asia, with an emphasis on the role of foreignlaw firms operating in Asia. Both Prof. Vagts and LawrenceDarby stressed that it is critical for foreign firms to over-come the difficulties of language, culture, and knowledge oflocal legal rules.

Darby explained that the nascent legal system and therelatively immature state of legislation in China made legaladvising difficult at times. Problems include the lack of legaltitle to property, the non-enforceability of contracts, regula-tory uncertainties, and corruption. However, Darby also rec-ognized that the situation was improving as China moves awayfrom a socialist economy toward one that embraces marketforces. Focusing on American firms operating in Asia, heexplained that the focal point is China and that there is are atpresent limited opportunities in other areas, such as SouthEast Asia.

Foreign law firms in China primarily perform “due dili-gence” work for listings of Chinese firms in foreign stockmarkets, such as the New York Stock Exchange, and legalwork related to the establishment of equity joint ventures be-tween foreign and local parties. The special position of HongKong in relation to China was also explored. Its role of pro-viding quality legal advice to foreign investors and its influ-ence in China’s substantive law were highlighted, particu-larly in the area of securities regulation, where Hong Kong’sSecurities and Futures Commission has assisted in the devel-opment of Chinese legislation.

Several unique points about the Asian legal services in-dustry were noted, including the relatively small proportionof lawyers in the entire population. As pointed out by YongLee, this may be more of a definitional rather than quantita-tive difference. The broad nature of legal work in Westerncountries, such as the United States, would be performed bynon-lawyers such as accountants and notary publics in Asiancountries.

When asked whether there is a “glass ceiling” on thepromotion prospects of Asian lawyers working abroad, Leeexplained that overt and blatant discrimination is uncommonbut conceded that there may exist unconscious factors in de-cision-makers’ minds that work to the disadvantage of Asianlawyers. He also said that although Asian representation atpartnership level is relatively low at the moment, there arepromising signs of it increasing in the near future.


Spring 2002

CONFERENCE FOCUSINDIA: A TURNING POINT ON TRADE?

BY SUSAN ESSERMAN ANDARUN VENKATARAMAN

Susan Esserman is a partner in the internationalgroup of Steptoe & Johnson, a Washington D.C.based law firm, and served as Deputy US TradeRepresentative in the Clinton administration. AsDeputy US Trade Representative, she wasresponsible for WTO negotiations with Europe,India, Russia and Africa. She has also served asthe US Trade Representative General Counsel,where she was responsible for formulating WTOlitigation strategy.

Arun Venkataraman is an associate in theinternational group of Steptoe & Johnson inWashington D.C., where his practice focuses onissues arising under the US trade and customslaws and the WTO agreements. Prior to joiningthe firm, he was a law clerk to Judge Jane A.Restani of the US Court of International Trade.

India has pursued a starkly different course of economic developmentfrom the larger trading nations of Asia. While many Asian countrieshave pursued an export-led growth strategy, India has resisted to its

detriment, adopting instead an inward-looking approach based on importsubstitution. It has largely been marginalized from the flurry of regionaltrade and economic integration initiatives. However, recent developments,including India’s steps toward market liberalization, the emergence of aworld class information technology sector in India, and the entry of Chinainto the WTO, may prompt India to adopt a more affirmative trade strat-egy.

EMERGING FROM THE LICENSE RAJ

The dominant influence in India’s economic philosophy since its in-dependence has been India’s founding Prime Minister Jawaharlal Nehru.Nehru sought to emulate what he viewed as the successes of the Sovieteconomic model: large-scale industrialization and government ownershipof the key sectors of the economy, in conjunction with high barriers forimports. This socialist approach was reinforced by Gandhian ideals ofself-reliance.

The 1950s and 1960s saw a particularly dramatic extension of gov-ernment restrictions on the development of the private sector and on rela-tions with foreign companies. This era gave birth to what became knownas the “License Raj”, an intricate patchwork of regulations used by thegovernment to decide, on a case-by-case basis, the extent to which privatefirms were permitted to import certain inputs, expand their operations,and partner with foreign companies in joint ventures. The centralgovernment’s restrictions during this time period and through the 1970sled to the withdrawal of the already very limited presence of multination-als such as Coca-Cola and IBM from the Indian market. Because of thismicromanagement of the private sector, hostility to foreign direct invest-ment (FDI), and simultaneous expansion of already-high barriers to im-ports, the growth of Indian entrepreneurship was limited. Private firmswere not permitted to respond to market forces due to the government’sregulation of the entry of competitors into various geographical and prod-uct markets. In particular, the public sector stagnated because it failed todevelop the discipline and economic efficiencies traditionally imposedby a freely functioning marketplace.

The disappointing returns from Nehru’s economic legacy stand incontrast to the rapid economic growth of other Asian economies duringthe same time period. Between 1960 and 1985, India’s GDP per capitaincreased annually by less than half of one percent. During that sameperiod, the high-performing Asian economies of Japan, Hong Kong, SouthKorea, Singapore, Taiwan, Indonesia, Malaysia and Thailand had a col-lective average increase in GDP per capita of greater than 3.5%. In addi-tion, the opening of China, beginning in 1978, helped to stimulate eco-nomic growth: between 1975 and 1990, China’s economy grew by 15%,compared with India’s 5% for the same period. The dynamism of theseother Asian economies has been premised on export-led growth strate-gies that emphasized the export of manufactured goods in which they


held a comparative advantage.While East Asian economies reaped the rewards of mar-

ket-oriented growth policies, another dramatic developmentof special consequence to India began unfolding in the late1980s: the collapse of the Soviet Union and the general shifttowards market economies throughout Eastern Europe andthe former USSR. Not only did the end of the Cold War sig-nal the failure of India’s model for economic planning as aconceptual matter, it also drastically curtailed one of India’smost significant trading relationships to date – that with theSoviet Union and the Eastern Bloc. Whereas the former So-viet Union and Eastern Europe collectively accounted for13.4% of India’s imports and 25.5% of exports in 1990, by1992 those figures had dropped to 2.2% and 4.4% respec-tively. India had to look elsewhere fornew export markets and for those re-sources and supplies it had until 1991been able to secure from states in theSoviet sphere of influence.

However dramatic these develop-ments were, a fundamental shift inIndia’s economic policies did not oc-cur until a balance of payments crisisnecessitating a major rethinking oflong-held Nehruvian beliefs. In exchange for IMF assistance,India embarked upon the most significant economic reformsin its post-independence history. These reforms included thefollowing trade-related measures: (1) removal of certain li-censing requirements for most capital imports; (2) permit-ting majority foreign ownership of firms in certain sectorsand inviting participation by foreign firms in major infra-structure projects; (3) reduction in export controls/restric-tions; (4) full rupee convertibility with a floating exchangerate; and (5) sizeable reductions in weighted average tariffs.It should be noted, however, that tariffs were reduced by largeamounts principally because they had been so high to beginwith. Furthermore, notwithstanding these reductions, India’stariffs remain quite high and are still among the highest inthe world.

Even as various members of India’s elite embraced theliberalization efforts that Prime Minister Narasimha Rao wasforced to undertake starting in 1991, there remained a strongundercurrent of resistance in the mid- to late 1990s, whichwas reinforced by a number of factors. First, India experi-enced a series of unstable and short-lived governments afterRao’s tenure ended in 1996. No single political party wascapable of holding office or even leading a coalition intopower and remaining for one full year. In the absence of ex-ternal pressures such as the 1991 balance of payments crisis,these administrations lacked the political capital and there-fore the commitment to continue and extend the previousreforms.

External factors also raised doubts in Indian minds aboutthe pace and extent of reform. Events in Russia highlightedthe difficulties inherent in the rapid transformation from asocialist to a market economy. Most notably, the massive dis-placement of workers, shortage of food and other goods, anddrain on foreign exchange reserves, possibly followed by therise of nationalist and other extremist political parties, coun-seled in favor of caution when contemplating further steps

toward economic reforms. Indian observers were also struckby the swift and severe consequences of the Asian financialcrisis. Rightly or wrongly, certain Indian policymakers, aswell as those in other developing countries, viewed the crisisas a direct consequence of excessive and overly hasty liber-alization of financial controls.

These and other factors significantly slowed the pace ofreform in the 1990s. For example, consistent with its obliga-tions undertaken in the Uruguay Round and an adverse WTOruling, India eliminated quantitative restrictions on approxi-mately 1500 products. Unfortunately, rather than utilize theliberalizing measures as an opportunity to enhance the effi-ciencies and competitiveness of producers in the Indian mar-ket, as well as to attract investment, the Indian government

has chosen to impose a maze of addi-tional new restrictions, such as in-creased tariffs and taxes and othercomplex measures. Indeed, as the re-cent India Planning Commission Re-port notes, India’s average tariffs haveincreased from 24.6% to 35.1% in thelast five years. By replacing the liftedquantitative restrictions with a seriesof trade barriers, India has missed an

opportunity to present itself favorably to the internationalinvestor community. This is particularly damaging since Chinahas a far more investor-friendly image, with its engagementin sweeping trade and economic reforms as part of its WTOaccession. Hopefully, the Indian government will take stepsto reverse the situation, demonstrating to the investor com-munity its intention to lower trade barriers on a consistentbasis.

INDIA’S APPROACH TO TRADE

To the extent India has engaged in trade with other coun-tries, it has done so primarily through the multilateral forum.India was a founding member of GATT, although by no meansa leader or active proponent of the multilateral liberalizationof trade restrictions. As a reactive participant in a series oftrade rounds that resulted in a substantial worldwide reduc-tion of tariffs and certain non-tariff barriers, India itself lib-eralized very little through GATT. India’s minimal liberal-ization under the GATT regime, in contrast to many otherGATT members, was possible because relatively few de-mands were made on India by other states to open its mar-kets, and India’s import substitution policy was inconsistentwith self-initiated trade liberalization initiatives. Ironically,it would be difficult, if not impossible, for India to enter theWTO today with the high trade barriers it has maintained inthe fifty years since it joined GATT. New WTO membersmust comprehensively lower their trade barriers in order tojoin the WTO. For example, China was required as a condi-tion of WTO entry to commit to tariffs that are, on average,one-half of India’s.

India continues to look at the WTO in a defensive, con-servative way rather than as an affirmative vehicle to achieveits market opening goals. This is especially regrettable giventhe richness of the Indian economy and the many opportuni-ties for India’s private sector presented by WTO negotia-

India continues to look at theWTO in a defensive,

conservative way rather than asan affirmative vehicle to achieve

its market opening goals.


Spring 2002

tions. India’s traditional anti-trade stance damages its desiredimage as a modern economy hospitable to investment andgreater economic interaction with the outside world. At Doha,India took a strong position against the launch of a new roundof trade talks. In doing so, India purported to be the leader ofthe developing world, but in reality, other developing coun-tries had abandoned India. Indian government representa-tives cling to this old fiction of a unified developing-countryopposition to further liberalization of global trade, when therealities in 2002 reveal that developing countries are a di-verse group of states with greatly differing needs and inter-ests.

While India was the last country opposing a new roundof global trade negotiations, the round itself is in India’s in-terests. The fundamental focus of thenew negotiations is on market accessin agriculture, services, and industrialproducts – all of which are areaswhere India stands to gain. India hasan interest in reducing Western agri-cultural subsidies that are so detri-mental to its own agricultural devel-opment, which will free up resourcesfor more pressing developmental needs. India also maintainsa comparative advantage in a number of services sectors,particularly in computer services, which have increased over400% in the decade after the institution of economic reforms.India’s particular strength in certain critical sectors, such ashigh-tech services, only reinforces the possibility of gainsfrom a new round of services liberalization. The proposedagenda for the new round is also likely to benefit India’s in-creasing exports of garments, pharmaceuticals, gems, as wellas IT-related goods and services. Given these strengths andespecially since India is not in significant regional tradingalliances, India’s interests are fully consistent with active andpositive engagement in the WTO negotiations, particularlyas a means of complementing the domestic liberalizationmeasures begun in 1991.

Although regionalism has not historically played a criti-cal role in its economic policy, India has taken preliminarysteps through the South Asian Association for Regional Co-operation (SAARC). Under the aegis of SAARC, India hasentered into the South Asian Preferential Trading Area(SAPTA), viewed as the precursor to the eventual establish-ment of the South Asian Free Trade Area (SAFTA). How-ever, integration along these lines is fundamentally unrealis-tic, given that political tensions between India and Pakistanare an ongoing and obvious impediment to genuine progressin SAARC trade initiatives. As a result, India has pursuedmarket-opening initiatives independently with individualSAARC members other than Pakistan. Such initiatives in-clude a 1996 agreement reducing customs duties and quanti-tative restrictions on goods traded with Nepal; a 1998 freetrade agreement with Sri Lanka; and an agreement withBangladesh to exempt Bangladeshi goods from quantitativeand import licensing restrictions.

These independent bilateral free trade agreements arelikely to be of limited economic value, however, because in-tra-SAARC trade is negligible, still accounting for only 4%of the member states’ total trade. That intra-SAARC trade is

minimal is an obvious reflection of the fact that India and itsSouth Asian neighbors share the comparative advantage in ahighly similar basket of goods and services. Furthermore,because the comparative advantage is similar, India’s neigh-bors fear that a certain inherent advantage exists for Indianproducers by virtue of their significantly larger market andaccess to resources. Finally, because there is little intra-SAARC trade, there are no compelling economic rationalesfor liberalizing trade solely within South Asia.

PROSPECTS FOR A NEW TRADE STRATEGY?

While contiguous bilateral and regional agreements donot appear promising, several recent developments may

prompt India to pursue initiatives inthe broader Asian region. These ini-tiatives are likely to produce more tan-gible results for the Indian economythan previous attempts at South Asiantrading arrangements because there isa possibility of exchanging goods andservices with countries with a com-parative advantage in complementary

rather than competing sectors.First, the emergence of China as an economic power-

house, overshadowing much of the continent’s economicdevelopment in recent years, is both a challenge and a provo-cation to the Indian government. While the upward climb ofthe Asian Tigers and the utter failure of the Soviet economicmodel did not shock India out of its isolationist stance, China’sgrowing economic influence in India’s backyard may pro-vide India with sufficient incentive to seek greater economiclinkages with its Asian neighbors and take a more pro-activestance in the WTO. China’s accession to the WTO will onlyincrease its economic dominance, as companies seek to takeadvantage of the market openings and investment opportuni-ties newly available. As one Indian government official statedrecently, “With the total dismantling of the non-tariff barri-ers by the developed world in the next few years and China’sentry in the WTO, the situation for India can only be consid-ered ominous unless various steps are initiated at all con-cerned levels.” Furthermore, China’s recent overtures toASEAN have culminated in a jointly-expressed intention toestablish a free trade area between ASEAN and China withinten years.

These changes add to the pressure exerted by the prolif-eration of regional trade agreements in Asia, which involvesvirtually every other major Asian country except India. Inthe last year, regional initiatives have included (1) China andJapan’s aforementioned offers; (2) Japan’s separate negotia-tions with Singapore and South Korea for free trade agree-ments; (3) Korea’s proposed free trade agreements (FTA)with Thailand and New Zealand; (4) Singapore’s proposedFTAs with New Zealand and Australia; and (5) the proposedcreation of a free trade area between ASEAN and Australia-New Zealand. Numerous initiatives between Asian and non-Asian states, such as the United States, have also been un-dertaken. As Singapore Trade Minister George Yeo observed,such initiatives are often driven by fear and insecurity. Giventhe pattern of trade agreements developing around India, such

The emergence of China as aneconomic powerhouse is both achallenge and a provocation to

the Indian government.


fear and insecurity arising from India’s exclusion from re-gional trade agreements may well become powerful motiva-tors for necessary reforms.

Finally, there is likely to be more political pressure onIndia to pursue opportunities within the broader Asian re-gion and internationally. First, India has strong assets in theknowledge and services industries – particularly in the soft-ware, information and entertainment services, where it pos-sesses a comparative advantage over other Asian competi-tors. Second, there are leading industrial companies withinIndia that are currently looking to expand in foreign markets.These new interests and world-class export sectors stand tobenefit from trade liberalization.

Although India has not been an active world trader orregional player in Asia, these recent developments raise theprospect of greater trade engagement by India with its Asianneighbors and globally. Whether the government of India hasthe resolve to pursue such a forward-looking trade policyremains to be seen.


Spring 2002

Advertise with theHarvard Asia Quarterly

Please return this section with your payment in US Dollars, payable to “Harvard Asia Quarterly”.

(Please PRINT clearly)

Company: _____________________________________Contact Name:__________________________________Address:_________________________________________________________________________________________________________________________________________________________________________E-mail: _______________________________________Phone: ________________________________________

SpecificationsPlease send your advertisement as either:(1) an Adobe PageMaker file; (2) a .jpeg, .gif or .pdf file; (3) a Microsoft Word file

For faster processing, please submit your order form and advertisement through email to [email protected] ordering by email, please send the check to the address above and retain a copy of this form for yourrecords. A copy of the issue(s) for which you purchase an advertisement will be sent to you at the addressyou list above.

Return this form with yourpayment to:

HARVARD ASIA QUARTERLYC/O HARVARD ASIA CENTER

1737 CAMBRIDGE STREETCAMBRIDGE, MA 02138

USA

Advertisement Options (Please check one)Back Cover ($650) ______Inside Front Cover ($500) ______Inside Back Cover ($350) ______Full Page ($200) ______Half Page ($150) ______Quarter Page ($75) ______

Issue Options and DeadlinesSummer (April 15, 2002) ______ Ad Price: ______Fall (October 15, 2002) ______ Number of Issues: ______Winter (December 15, 2002) ______ Four-Issue Discount: ______Spring (February 1, 2003) ______ Total Cost: ______

NOTE: We offer a 20% discount for ads placed in four consecutive issues.


Subscribe to the Harvard Asia QuarterlyPlease return this section with your payment in US Dollars, payable to “Harvard Asia Quarterly”.

(Please PRINT clearly)

Name: _____________________________________

Mailing Address:_________________________________________________________________________________________________________________________________________________________

E-mail: _____________________________________

Rates (postage included): Domestic orders USD $28 (within the United States).International orders USD $45 (for all countries outside the United States)

Return this form with your paymentto:

HARVARD ASIA QUARTERLYC/O HARVARD ASIA CENTER

1737 CAMBRIDGE STREETCAMBRIDGE, MA 02138


Spring 2002

NOTES

harvard asia quarterly spring 2002 - harvard university · spring 2002 volume vi, no. 2 spring 2002...

Documents