Cooperation in Times of Uncertain Leadership

April 12, 2017
Peter Chase
Daniel Twining
Rod Hunter
Sarah Raine
Joanna Świątkowska
Sharon Stirling
12 min read
Photo credit: ESB Professional / Shutterstock, Inc.

Photo credit: ESB Professional / Shutterstock, Inc.

The liberal world order that has been a central source of security and prosperity for the United States, Europe, and Japan is under assault. Polls suggest an American ambivalence about upholding the rules-based  international system. A rising China wants to create a new global order that is not U.S.-centric, one in which smaller powers defer to bigger ones and norms of democracy and rule of law do not prevail. Populists are besieging governing elites in the West while Russia works strategically to destabilize European and U.S. governments through propaganda and proxies. North Korea has broken out of its nuclear box and threatens a non-proliferation order that has kept the world free from the horror of nuclear war. Meanwhile, the U.S. alliance system in Asia and Europe looks adrift while competitors in China and Russia appear to be on the march.

At a time when the future international leadership of both the United States and Europe looks uncertain due to internal political and economic factors as well as a shifting global balance of power, Japan is a key leader of the liberal world order that can step up to reinforce a system based on the rule of law, democratic norms of governance, peaceful resolution of disputes, free and open global commons, and a market-based international economy that is not subverted by state-sponsored mercantilism and protectionism. There is an urgency to trilateral cooperation between the United States and its transatlantic and trans-Pacific allies to shore up an international system that is rooted in common values, inclusive institutions, free markets for trade and investment, and a military balance of power that tilts in favor of the democracies.

This collection seeks to outline an agenda for Japan–Europe–U.S. cooperation on global trade, management of the political and economic risks of Chinese investment flows, engagement with a post-EU Great Britain, and defense against hostile influence operations and information warfare conducted by authoritarian states that seek to subvert democratic institutions. Since the U.S. alliance with Europe and the U.S. alliance with Japan have been traditionally strong, there is a particular emphasis on enhancing the “third leg” of the critical strategic triangle of G7 democracies by focusing on closer cooperation between Japan and Europe, including both the European Union and key European great powers like the United Kingdom. Given the uncertainties posed by President Donald Trump — an insurgent populist without previous political experience who now sits in the Oval Office — this volume also considers how core U.S. allies in Japan and Europe should engage with the United States to shore up the transatlantic and trans-Pacific alliances and to develop new agendas for cooperation on trade, Britain after Brexit, Chinese investment, and information warfare.

Japan as a Pillar of Global Order

Japan enjoys several advantages relative to its G7 peers. It enjoys stable leadership under a prime minister with broad authority and popularity, who is not constrained by the political gridlock and polarization evident in the great democracies of the West. Japan’s economy is growing (albeit modestly) and the country is short of workers, unlike in places like the United States where workforce participation rates are alarmingly low and the growth outlook is uncertain.  Japan has a homogenous society that is not subject to the pressures of migration that the crises in the Middle East have injected into European politics.

But Japan also faces a set of systemic risks to its position in the international system.  The Trump administration’s withdrawal from the Trans-Pacific Partnership trade agreement leaves Tokyo in an awkward position as China seeks to build a new economic bloc in Asia that excludes the United States. The United Kingdom, home to fully half of all Japanese direct investment in Europe, is leaving the European Union, upending both Japanese businesses’ strategy as well as the Japanese government’s political and economic engagement with Europe.

China is using its vast financial power — in 2016, Chinese outbound investment totaled nearly $200 billion, with much of it going to Europe and North America — to make itself a global player, including by acquiring sensitive technologies that could enhance its military power in Japan’s near neighborhood. While China engages in cyber espionage, Russia is using forms of information warfare and propaganda to influence elections in both the United States and Europe. They are reversing the long-held expectation that authoritarian forms of government were doomed in the Information Age, which seems to have empowered these regimes more than it has their civil societies.

Dangers of a Sphere-of-Influence World

The continuing erosion of the liberal world order built by Europe, Japan, and the United States — if not reversed — could otherwise produce a spheres-of-influence world, which authoritarian leaders hostile to a world governed by the G7 democratic powers find intuitively attractive. But were such an order to replace one based on global integration and leadership by the United States and its allies in the geopolitical cockpits of Europe and Asia, it would only engender insecurity and conflict. 

In a spheres-of-influence world, great powers order their regions. The United States would go back to a “Monroe Doctrine” version of grand strategy; Russia would dominate the former Soviet space; China would pursue what its leaders view as their historical right to organize an Asian hierarchy in which lesser neighbors kowtow to Beijing. The problem with this kind of order is several-fold. 

Too many spheres overlap in ways that would generate conflict rather than clean lines of responsibility. Japan would oppose Chinese suzerainty in East Asia, including by possibly developing nuclear weapons; India and China would compete vigorously in Southeast and South Asia; Russia and China would contest the resources and loyalties of Central Asia; Europe and Russia would clash over primacy of Central and Eastern Europe. The Middle East would be an even more likely arena for hot war between Saudi Arabia and Iran, and Turkey would pursue primacy in regions also claimed by Russia, Europe, and possibly China. Even Europe, shorn of its U.S. security umbrella, could revert to inter-state competition and conflict.

A spheres-of-influence world would also sharpen great power competition outside of each region. Regional hegemony is a springboard for global contestation. China would be more likely to challenge the United States out-of-area if it had subdued strategic competition in its own region. Russia, like the Soviet Empire before it, would keep pushing west until it met enough hard power to stop it. (The fact that Russian troops marched through Paris during the Napoleonic Wars demonstrates that the limits of Russian power need not be confined to the former Warsaw Pact). American leaders from Woodrow Wilson to George W. Bush have long understood that a “Fortress America” approach is a source of national insecurity. 

A spheres-of-influence world would also crack up the integrated global economy that underlies the miracle in human welfare that has lifted billions out of poverty in past decades. It would replicate the exclusive economic blocs of the 1930s, which deepened the Depression and set the stage for world war. In the postwar period, enlightened leaders in Japan, the United States, and Europe promoted economic integration as a way to reinforce diplomatic alliances and produce a wider prosperity than any that is possible from protectionism, mercantilism, and other forms of government interference with market-based economic growth.

Agendas for Trilateral Cooperation

Contributors to this volume assess specific risks to Japan–Europe–U.S. cooperation to uphold the liberal norms and institutions that underwrite global security and prosperity. The authors propose policy agendas for deepening collaboration in light of these threats to international stability, in ways that leverage the strength and influence of the developed democracies. The dangers to the rules-based order are global in scope and are evolving rapidly — the national security implications of Chinese outbound investment, for example, are not a traditional source of concern for the transatlantic and trans-Pacific allies. Nor, until recently, were Russia’s information operations and the broader risks of cyber-war with China or North Korea considered top-tier security challenges in the face of more traditional dangers.

In “Japan and the Changing Global Trade Order,” Peter Chase, a retired American diplomat with decades of both government and private-sector executive experience, argues that Japan has an opportunity to step forward even more decisively as a defender of the rule of law in international trade. Protectionist and mercantilist instincts are on the rise — not only among competitors like China but among allies like the United States. The Trump administration’s withdrawal from TPP left Japan in the lurch after Prime Minister Abe’s bold leadership in joining TPP and stewarding a final agreement together with the Obama administration. Japan now has an even greater role to play in promoting a level playing field for international trade, including with the European Union, that preserves the goals of TPP and prevents China or other powers from pursuing more exclusive spheres of economic influence.  Japan has been one of the lead beneficiaries of the open global trading order, which is now being buffeted not only by the aforementioned forces but by factors such as Brexit. Tokyo’s ambitious trade diplomacy can begin to fill the void left by the U.S. retreat from multilateral trade liberalization under Trump, perhaps even moving forward with a TPP-minus-one strategy that the United States could join down the road. Even if they do not formalize new trading arrangements among themselves, Japan, the United States, the European Union, and Great Britain can forge a common front to prevent China from benefiting from unfair trade practices that destabilize the global economic order.

In “Trilateral Investment Policy Coordination,” Rod Hunter, a former senior director for International Economic Affairs at the U.S. National Security Council, charts the extraordinary rise in Chinese outbound investment flows, half of which target the United States and Europe.  Directed by a state-led strategy for investment in key sectors including information technology, advanced industrial machinery, and biotechnology, Chinese companies have aggressively sought to acquire sensitive assets in the United States and Europe in particular. This has led to a series of debates in the West about more carefully examining the national security implications of Chinese investment, as well as demanding reciprocity for American and European investors in China’s internal market, which remains one of the world’s most restrictive for foreign investment. Japan has a big stake in U.S. and European scrutiny of Chinese investments in their economies, including to create a level playing field for global investors but also to prevent China from acquiring sensitive dual-use technologies with military applications that could change the balance of power in East Asia. Hunter argues persuasively for more structured Japan–Europe–U.S. cooperation on investment policy, “to ensure that legitimate security interests are protected while using their joint leverage to encourage China to open its market for investment and trade.” Indeed, managing Chinese investment with an eye on both national security and economic reciprocity will grow in urgency as the tsunami of Chinese outbound financial flows grows in coming years and increasingly impacts on domestic politics in the United States, Europe, and Japan.

In “Brexit: An Agenda for UK-Japan Relations,” former British diplomat and Asia expert Sarah Raine considers how Japan can engage with the more “Global Britain” after its departure from the EU.  While many see Brexit as a tragedy, Raine argues that it creates opportunities for heightened U.K.–Japan defense cooperation in particular, more than a century after the Anglo-Japanese alliance of 1902 and in the wake of London’s 2015 Strategic Defense and Security Review conclusion that Japan is its “closest security partner in Asia.” Brexit also potentially offers as well as new avenues for joint cooperation with the United States and U.S.–Japan–U.K. coordination to shape China’s strategic choices in Asia and beyond. These three leading naval powers could usefully partner “in the protection of maritime security in Asia and the rules-based international order at sea.” The fact that all three are among India’s closest military partners also creates new equations for cooperation in light of Prime Minister Abe’s “Free and Open Indo-Pacific Strategy,” a welcome counterpoint to China’s efforts to lock up the South China Sea and challenge Japan’s sovereignty over the Senkaku Islands, as well as the right under international law of the United States and other navies to operate in Asian waters. However, Brexit will unquestionably create frictions that London and Tokyo, as well as Washington, DC, will need to navigate. In 2015, the top two foreign investors in Britain were the United States and Japan; the U.K. accounted for nearly half of Japanese direct investment in European Union. Brexit will transform Britain’s access to the European single market and, by extension, the ability of Japanese companies operating in Britain to compete in Europe. Raine’s wise advice as the Brexit negotiations proceed is for all parties, including Britain’s Japanese and American allies, “to keep their disagreements focused on the technical and their eyes on the strategic.”

In “Information Warfare is Not Just a European Problem,” Dr. Joanna Świątkowska, a leading European authority on cyber-attacks and information operations from a front-line state that has come under assault from both in recent years, argues for a global approach to the weaponization of digital tools by authoritarian great powers and rogue nations like North Korea. She distinguishes between the “soft information warfare” of propaganda and influence operations, such as those Russia conducted around the U.S. 2016 presidential election, and “hard information warfare” that attacks digital systems, such as the cyber-attacks North Korea has conducted against Japanese and American civilian and military targets, including critical infrastructure. Her essay illuminates the fact that new cyber tools give states the means to pursue aggression and war through means that stay below the threshold of military conflict but which are hostile acts that can transform both the internal balance of power in democratic societies — by influencing election outcomes — and the external balance of power, by rewarding the countries that launch such assaults given the difficulty in deterring and defending against them. Świątkowska praises Japan’s plans to open an Industrial Cybersecurity Promotion Agency and calls for new efforts in Europe and the United States to educate citizens to distinguish between fact-based news and analysis and the “fake news” promoted by media directed by authoritarian governments. Lest readers believe that Japan is less a target of influence operations than are the Western democracies, she also highlights how “the Senkaku Islands dispute is a perfect example of a political conflict where tools like manipulation, disinformation, and propaganda can be utilized to great effect,” and argues that democratic countries should execute strategic communications campaigns to counter those of their geopolitical competitors.

A New Agenda

These essays highlight how a new agenda for trilateral cooperation — in trade and investment, amidst the fracturing of European unity, and in cyberspace — can supplement the more traditional agenda of collaboration through institutions like NATO, long-standing diplomatic dialogues, and coordination in international institutions. Both are important. But as the global balance of power is transformed by new powers and new technologies, it is vital for the advanced democracies, from West and East, to come together not only to defend traditional values and interests, but to develop new avenues of cooperation that are relevant to the future that lies ahead. The transatlantic and trans-Pacific allies should do so confident in the belief that their open societies — characterized by free citizens, accountable institutions under law, free flows of information, and market-based innovation — are surer sources of security, stability, and prosperity than the tools used by brittle authoritarian regimes to control their people, stifle dissent, and pursue dominion over other nations through the use of strategies designed to subvert the liberal international order.