Session One: Japan's Financial Crisis and its Impact on Asia
Session Two: Japan's Policy Response to North Korea's Rocket Launch
Center for Global Communications
October 6, 1998
Richard WERNER, Profit Research Center
Takahiro MIYAO, GLOCOM
Yasuhide YAMANOUCHI, GLOCOM
Hideya KURATA, Japan Institute of International Affairs
Daniel DOLAN, GLOCOM
The following information documents the first in a series of GLOCOM's
English language debates and panel discussions on topics related to Japan.
Question: Will Japan's financial strategy make the Asian financial crisis
better or worse?
Question: What is the nature of the financial problem in Japan?
Question: What needs to be done to deal with the problem?
Dr. Werner, taking the Right
position argued "Japan's economy still has enough strength to recover and
to ease the Asian crisis." "Monetary policy is the key to the recovery
of the Japanese economy."
Taking the Left position,
Professor Miyao responded "Japan's economy is now weakened so much so that
it will inevitably worsen the Asian crisis." "Japan's recovery, if possible,
would require a set of comprehensive measures to revive the stock and real
Text of Dr. Werner's and Professor Miyao's comments from the real-video
WERNER: The problem is fundamentally a monetary
one. That of course has an impact on the real economy, and to that extant
we agree, I think, that the real economy has been badly damaged, but in
terms of causation, I see the monetary factors as key. Therefore the solution
must lie--as a necessary and sufficient condition for economic recovery--in
expanding credit creation.
DOLAN: Professor Miyao, Dr. Werner is relatively optimistic
about the situation in Japan. What do you think?
MIYAO: Let me point out one important fact. Dr. Werner's
policy recommendation could be well taken if Japan were isolated in Asia
or in the world economy. Now, here's the problem we are now facing. If
Japan tries to expand credit and monetary supply, that will affect the
value of the yen relative to the other currencies, and therefore it is
almost inevitable to lower the value of the yen, and that will have secondary
impact on other currencies in Asia. For example, possible devaluation of
the Chinese currency, which would certainly trigger a second or third round
of currency adjustments, and also stock market adjustments in Asia.
Question: Are the sanctions imposed on North Korea by Japan in response
to the launching of a rocket by North Korea appropriate?
Question: What is the nature of the problem?
Question: If the response is insufficient, what needs to be done?
Professor Yamanouchi, from
the Right position, argued that sanctions imposed on North Korea
by the Japanese government are appropriate both in scope and timing, "[y]es,
it is appropriate, and Japan must do more to send a strong signal to North
Korea for the sake of Japan's security."
Mr. Kurata, from the Left
responded that although some of the sanctions imposed by Japan are appropriate,
suspension of KEDO is a mistake, "[n]o, it is neither appropriate nor effective.
We should take a more effective approach to defend ourselves against North
Comments by Professor Yamanouchi and Mr. Kurata, from the real-video
DOLAN: Do you think that the sanctions that have
been imposed by Japan at this point are appropriate? Professor Yamanouchi.
YAMANOUCHI: I think that the sanctions imposed by the Japanese
government were appropriate because of the following reasons. First of
all, the sanctions made very clear Japan's bargaining capacity in this
field. Needless to say, this comes from the economic field, but at any
rate it is diplomatic leverage to make the North Koreans hear what Japan's
interests are. And that leverage should be articulated at the appropriate
time, that is, right after the launch. So, I think the sanctions were quite
DOLAN: Mr. Kurata, you began earlier to detail what you
thought should be some of the moves from now. What do you think of the
appropriateness of the sanctions as they are being applied at this point?
KURATA: Well, I'm not in a position to say if all of the
sanctions are wrong or right. Some of the sanctions are right. But as far
as the KEDO project is concerned, I have a quite different opinion from
Professor Yamanouchi. For example, the Japanese government suspended the
food supply to North Korea, that is appropriate. But I'm very negative
toward the suspension of KEDO.