Japan's New National Security Economy

Japan's Emperor Akihito (3rd L), flanked by other members of the royal family, waves to well-wishers who gathered to celebrate his 83rd birthday at the Imperial Palace in Tokyo, Japan, December 23, 2016. Royal family members are (L-R) Crown Princess Masako, Crown Prince Naruhito, Emperor Akihito, Empress Michiko, Prince Akishino, and his wife Princess Kiko and their children Princess Mako and Princess Kako. REUTERS/Issei Kato

Japan’s long-awaited resurgence depends first and foremost on getting its economic house in order—and that includes developing a geoeconomic strategy.

Prime Minister Shinzo Abe’s quest to raise Japan’s security profile has had remarkable success. His administration has halted the decline in defense spending, restructured the national-security bureaucracy and engineered considerable changes in national-security policy and doctrine. For all that progress, however, there are critical gaps in Japanese efforts. The most glaring omission is a geoeconomics strategy that integrates economic and strategic statecraft, an absence that is increasingly debilitating as more governments turn to economic tools to advance national interests.

In the five years since taking power, the Abe administration has presided over a virtual transformation of Japanese security policy. His government established the National Security Council (NSC), which reconfigured national-security decisionmaking and centralized power in the prime minister’s office (the Kantei). The NSC produced Japan’s first National Security Strategy and led the development of new National Defense Program Guidelines and the Mid-Term Defense Plan, which translates that policy into defense procurement. The government passed legislation to protect secrets, reinterpreted the constitution to permit Japan to exercise the right of collective self-defense, and then produced bills to allow that interpretation to be operationalized. Japan has strengthened its alliance with the United States, deepened security relations with partners like Australia, South Korea, India and the United Kingdom, and stepped up defense cooperation with other regional governments. The Abe government has liberalized arms export policies and Overseas Development Assistance (ODA) in ways that allow both to address and advance national-security interests. Finally, this government has developed national strategies to address the national-security dimensions of space and cyberspace.

Missing from this impressive list are initiatives that focus on the economic instruments of statecraft. That is a remarkable oversight for a country that has, since its modernization, emphasized the economic foundations of national power. It is even more surprising given Abe’s insistence that Japan’s long-awaited resurgence depends first and foremost on getting its economic house in order.

Japan’s National Security Strategy mentions “economy” or “economics” sixty-five times. It highlights the importance of cyberspace and outer space to the country’s economy. The new ODA charter and the revised arms export regulations note that the changes should stimulate parts of Japan’s own economy. The 2013 Japan Revitalization Strategy called on Japan to actively use ODA to acquire a larger percentage of global infrastructure projects and medical markets, which would “revitalize the Japanese economy by taking in growth of emerging countries” and “support the overseas development of small- and medium-size enterprises using ODA.”

Yet, a strategic mindset that begins with acknowledgement of the centrality of economics to Japan’s own power should also incorporate the use of economic tools into a national strategy that shapes the behavior of others. Japan hasn’t ignored such instruments: Tokyo has been one of the leading advocates of the use of sanctions against North Korea. Its policy does not appear to have progressed beyond that application of its economic tools, however.

The Japanese government should be developing a strategy that identifies and prioritizes areas of economic engagement and expansion and it should help shoulder the risks of implementing that strategy. For example, the government should identify how particular ODA projects fit into a larger strategic framework. Currently, the government provides funds for discrete individual projects, which the private sector accepts because they are profitable. But while ODA funds to build hospitals in Russia may buy goodwill, such initiatives must be designed to advance the Japan-Russia relationship. Private companies need a framework to understand Japanese government intentions not only in the context of the overall relationship with Russia, but also to show how they, working with the government, can shape Russia’s national medical strategy and policy.

This strategy must go well beyond ODA and arms exports. Hudson Institute analyst Arthur Herman has highlighted the “technologies and systems that until recently lay outside the conventional defense sector, but which now overlap with the Pentagon’s new third offset strategy for developing and fielding future military systems, in many cases by tailoring commercial high-tech technologies to fit defense needs.” Core components of this strategy include unmanned systems, robotics, miniaturization, artificial intelligence (AI) and big data, among others.

That list overlaps with many key sectors identified in various national-technology plans, which invariably include robotics, AI, and big data, along with nanotechnology, biotechnology, quantum computing and composite materials. The U.S. Defense Innovation Initiative, launched in 2014, aims to tap the energy and potential of actors “outside the Department of Defense’s traditional orbit.” Foreign countries are among them. Japan, which has cutting-edge technologies in many of these fields, is a primary partner in this effort.

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