There are certain facts that all senior foreign policymakers recognize but none will ever unequivocally articulate in a public or diplomatic setting. For example, they will never refer to the relative decline in US power and the concomitant decline in the importance of the Japan-US alliance, in writing or in speech. Nonetheless, this awareness is slowly but surely influencing the course of Japan’s foreign policy.

Since the end of World War II, the Japanese government has upheld the Japan-US alliance as the linchpin of its foreign policy. Our leaders have been able to advance the nation’s interests by moving in step with Washington over the years, not only on security policy but on economic policy as well.

But the international environment in which Japan operates has changed dramatically over the past few years. In Asia, China has blossomed into a regional superpower, while India and the Association of Southeast Asian Nations are flexing their economic muscle as well. As more and more players assume an increasingly important role, the United States is finding it ever more difficult to exert its will. This makes it all but certain that Japan will face international problems that cannot be addressed merely by following Washington’s lead.

An analysis of the government’s diplomatic record in 2011 suggests that Japan’s foreign policymakers are finally steering a new course in response to this changing environment.

From Power Politics to Regional Networks

The essence of this shift was summed up in a little-noted address by Minister for Foreign Affairs Koichiro Genba at the Japan National Press Club in Tokyo on December 14 last year. Under the heading of “Creating an Open, Multilayered Network,” Genba stressed the need to make full use not only of bilateral diplomacy but also of such multilateral economic and security platforms as the Asia-Pacific Economic Cooperation forum, ASEAN, the East Asia Summit, and the ASEAN Regional Forum, as well as smaller frameworks for regional dialogue (Japan-US-China, Japan–US–South Korea, Japan-US-Australia, etc.).

Of course, this in itself is textbook diplomatic strategy. What made the speech remarkable was the juxtaposition of the network concept with two other key points rarely articulated by Japanese foreign policymakers in recent years.

The first was a readiness to move beyond the concept of the “balance of power.” Genba put it like this: “After centuries of trying to maintain order through the balance of power among sovereign states, humankind is now seeking a new approach—beyond the balance of power—under which it can achieve security and prosperity.” The aforementioned “open, multilayered” Asia-Pacific network describes the structure of this new order.

The second point was the importance of including China in any regional order. Genba stressed that “the development of the rules that provide the foundation for the Asia-Pacific network, and support the new order, must be consistent with international law”—a reference intended to dissuade Beijing from challenging the international order with its own Sinocentric reasoning. At the same time, he was quick to emphasize that the network was “in no way intended to contain or exclude China.”

With the rise of China as a major power in the region, the government’s traditional focus on the Japan-US alliance as the linchpin of foreign policy has all too often manifested itself as an impulse to hold China back. During the last decade of the Liberal Democratic Party’s rule, this attitude surfaced in Prime Minister Jun’ichiro Koizumi’s remark that “when the Japan-US alliance goes well, our East Asian diplomacy goes well,” and more blatantly in Prime Minister Taro Aso’s “arc of freedom and prosperity”—a thinly veiled China containment strategy. The difference between this approach and the strategy outlined by Foreign Minister Genba is self-evident.

Through most of the postwar era, the dominance of US military and economic might sustained an international order based on the balance of power. But the political, economic, and military advantage of the United States is gradually dwindling. Early in January, President Barack Obama began moving away from the strategy of maintaining the capacity to fight a “two-front war” upheld by previous presidents, outlining an initiative to cut defense spending and shift the emphasis from Europe and the Middle East to the Asia-Pacific region. This policy change is further evidence of the relative decline in US power.

China’s growing international clout is also an inescapable reality. Under the LDP, Japan coped with China by working to strengthen the Japan-US alliance—or, to put it another way, by pushing China out to the periphery. But now that China is a regional superpower, such an approach hobbles our ability to address the various issues that crop up between Beijing and Tokyo. Indeed, as the Japanese and Chinese economies grow ever more interdependent, we are in dire need of a coherent strategy for nurturing a constructive relationship with China.

The same applies to other countries in the region. As the ASEAN nations, India, and others emerge as significant players, a variety of regional networks and partnerships have sprung up alongside the traditional US-centered hub-and-spokes framework. Japan needs to decide how to make optimum use of this diverse array of diplomatic networks.

These two salient themes of Genba’s speech—moving beyond power-balance diplomacy and creating “an open, multilayered network”—constitute the basic principles of a new foreign-policy strategy adapted to today’s changing international landscape. And late in 2011, we saw this new strategy being put into practice for the first time.

Toward an Asia-Pacific FTA

The first two years of rule by the Democratic Party of Japan saw virtually no progress in the area of foreign policy. After months of vowing to renegotiate an unpopular plan for the relocation of US Marine Corps Air Station Futenma in Okinawa, Prime Minister Yukio Hatoyama confounded everyone with an abrupt about-face, leaving things exactly where they had started.

In the months that followed, Hatoyama was succeeded by two more prime ministers, and this rapid turnover, combined with the legislative gridlock of a divided Diet, severely hindered efforts to hammer out a coherent foreign policy strategy. As a result, when faced with the unexpected—such as the confrontation with a Chinese fishing vessel near the Senkaku lslands—the government has tended to respond in an impromptu and erratic fashion.

But last year, even while struggling with a dysfunctional legislature, the prime minister’s foreign policy staff was working behind the scenes with Foreign Ministry officials to plan and implement a diplomatic initiative targeting the November 2011 East Asia Summit in Bali. Reflecting the government’s new foreign-policy orientation, the initiative was focused on two concrete goals: the development of an open regional economic framework centered on the Trans-Pacific Partnership and the establishment of a multilateral maritime security forum to help resolve the territorial disputes in the South China Sea.

Addressing economic and security goals simultaneously, it was an initiative of the sort seldom seen in postwar Japan, a sweeping, ambitious plan for the creation of a new East Asian order to ensure regional stability and prosperity. Needless to say, it was also designed to bring China into the fold of the international community.

On the economic front, Noda took a major step at the November APEC summit in Honolulu, when he overrode opposition from his own party by announcing a decision to seek a place at the table in the ongoing TPP negotiations. At the summit and in talks with President Obama, Noda was careful to include China and other Asian countries in his vision, stressing his government’s intention to work not only for the TPP but ultimately for the creation of a Free Trade Area of the Asia-Pacific.

The Japanese government’s decision on the TPP negotiations had an instantaneous effect. Immediately after Noda’s announcement, Canada and Mexico also asked to join in the trade talks. China and the ASEAN countries began speaking more positively of an ASEAN+3 or ASEAN+6 East Asian free trade agreement and lobbying Japan for action. Negotiations for Japan-Australia and Japan-EU FTAs picked up steam. For the first time in years, Japan found itself at the center of attention in international trade talks.

Defusing Tensions in the South China Sea

In the area of security, Japan’s focus was on resolving tensions in the South China Sea. With China in mind, the Japanese government has insisted on two points: freedom of navigation in the South China Sea and application of international law for the resolution to territorial disputes.

For Japan, which relies heavily on shipping lanes through the South China Sea, freedom of navigation is a matter of the utmost importance. Japan also has a stake in China’s territorial disputes with Vietnam, the Philippines, and other countries in the South China Seas, since their handling is bound to affect the outcome of Japan’s disagreements with China in the East China Sea over the Senkaku Islands and the development of undersea gas deposits.

China has angered its neighbors by disregarding international law and unilaterally claiming “jurisdiction” over an enormous chunk of the South China Sea, sometimes referred to as “the cow’s tongue.”

The Japanese government began to move aggressively on the issue in 2011, viewing Indonesia’s term as ASEAN chair as an opportunity for progress. At the July ASEAN Regional Forum in Bali, China and ASEAN reached an agreement on guidelines for implementation of the 2002 Declaration on the Conduct of Parties in the South China Sea (DoC), and the ASEAN chair’s statement called for the eventual establishment of a regional code of conduct (CoC) in the South China Sea.

And despite objections from China, the chair’s statement issued at the East Asia Summit the following November incorporated language calling for solutions based on international law and welcoming the expansion of the ASEAN Maritime Forum, thus paving the way for resolution of territorial disputes in the South China sea via a multilateral platform including Japan and the United States, instead of the separate bilateral negotiations espoused by Beijing.

Domestic Obstacles to Progress

The Japanese Foreign Ministry was a prime mover behind these developments; although the process was assisted by close consultations and exchange of information with Washington, there is no refuting the fact that Japan took the initiative in many areas. The adoption of formal language calling for a legally binding code of conduct and for use of the ASEAN Maritime Forum—in the face of stiff resistance from the Chinese—was a tactical victory for Japan.

Though not particularly flashy, this diplomatic initiative can be regarded as one of the most successful undertakings of the Foreign Ministry in recent years.

But now comes the real challenge: turning the language of these documents into action. Statements can be hammered out by bureaucrats at the working level, but concrete policy measures and conflict resolution require political leadership by heads of state and national legislatures. Unfortunately, the Japanese political forecast is for another year of chaos.

With the public debt reaching massive proportions, the Noda cabinet is planning to submit legislation to raise the consumption tax in an effort to put government finances on a sustainable footing. But the opposition LDP and New Komeito, which retain control of the upper house, are in no mood to cooperate; their sole aim is to force Noda to dissolve the lower house and call a general election. Under the circumstances, the cabinet will be lucky to push through budget legislation to fund the government in fiscal 2012, let alone a tax increase.

Meanwhile, the DPJ and the LDP are heading into elections for party leader this coming fall. The upshot of all of this is likely to be yet another change of prime minister.

Last year, the government made important progress in charting a new foreign policy based on a realistic reassessment of the Japan-US alliance. Whether it can overcome domestic political obstacles and build on that progress remains to be seen.