Japan's diplomatic difficulties deepen on all sides

Subject Japanese foreign policy. Significance Prime Minister Shinzo Abe’s energetic effort to raise Japan’s global diplomatic profile and cultivate new foreign partners has little to show for it besides a limited improvement in relations with China. Impacts China-Japan rapprochement may prove an axis of convenience that is short-lived; substantive cooperation will probably be minimal. No resolution is in sight for the worsening confrontation with South Korea in which both sides have imposed export controls. Declarations of any imminent breakthrough in Japan-Russia relations should be treated sceptically.

Significance Neither is from their party’s mainstream, and has never been elected as a lawmaker. The conservative, Yoon Seok-youl, is a former prosecutor general. The liberal, Lee Jae-myung, was a provincial governor until late October. Whoever wins will succeed Moon Jae-in on May 9 for a single five-year term, until 2027. Impacts Even if Yoon wins, the liberals will control the legislature until at least April 2024 and will do their best to block his initiatives. The election will be fought mainly on domestic issues; if foreign policy becomes salient, this will benefit the pro-US, Japan-friendly Yoon. Lee's universal basic income proposal would make South Korea the first major economy to adopt such a policy.


Significance The reshuffle involves some significant changes, including the promotion of Economy Minister Nadia Calvino as first deputy prime minister. Other notable changes include new ministers at the head of foreign policy and territorial policy, which deals with relations with Catalonia. Impacts Sanchez has increased the number of women and young people in the new cabinet; this could broaden his appeal among centrist voters. While Madrid will continue to respect EU policy parameters, Sanchez’s continued reliance on UP and ERC support will worry investors. Sanchez’s leadership of the PSOE could come under threat if he is seen as ‘giving too much’ to Catalan nationalists.


Significance The recent fall in the price of oil was expected to provide a timely boost to the South Korean economy, but its performance in the first quarter of 2015, though rebounding from the previous quarter, has been below expectations. Beset by slowing exports and weak domestic demand, the mood in both the business and household sectors is downbeat. Impacts Absent a sustained growth rebound (or some kind of foreign policy breakthrough), Park's presidency will be seen as a failure. Deflation could threaten South Korea if there is no adjustment to monetary policy. An FTA with China will boost South Korean exports only in the longer term. The sharp depreciation of the euro will make Europe a challenging market for South Korea for now.


Subject Foreign policy after the attempted coup. Significance Before the July 15 coup attempt, foreign policy was showing signs of turning towards pragmatism from the ambitious positions associated with former Prime Minister Ahmet Davutoglu. Rapprochement was sought with both Russia and Israel, and relations with the United States and EU were relatively stable. The attempted coup introduces considerable uncertainty. President Recep Tayyip Erdogan's insistence that US-based cleric Fethullah Gulen was behind it is drawing the United States into Turkey's most serious political trauma in decades. Impacts Relations with the West are unlikely to return to their pre-coup warmth soon. The most likely result for US-Turkish relations is what may be termed a 'stressed-out partnership of convenience'. How both US-Turkish relations and Turkey's conflict with the PKK develop will determine Turkish policy on Syria and the ISG.


Subject Prospects for India in 2016. Significance Prime Minister Narendra Modi's government has accelerated its agenda of piecemeal and sequential reform following his Bharatiya Janata Party (BJP)'s defeat in the Bihar elections last month. As difficult state elections approach in the first half of 2016, the government is banking on these reforms and headline growth to secure voter and investor support. In foreign policy, the government is likely to focus on regions of strategic importance, especially Russia and the Middle East.


Significance The Pakistan Muslim League-Nawaz (PML-N)’s five-year term ended on May 31. PML-N President Shehbaz Sharif faces a tough fight to become prime minister, with the main challenge set to come from Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) and further opposition provided by Bilawal Bhutto Zardari’s Pakistan Peoples Party (PPP). Impacts With Khan as prime minister, the military would likely have free rein to pursue an anti-India foreign policy. Khan would step up his criticisms of the war in Afghanistan and likely have a difficult relationship with US President Donald Trump. Pakistan under any government will pursue balanced diplomacy in the Middle East, seeking good ties with both Saudi Arabia and Iran.


Subject Japan's foreign policy strategy. Significance Prime Minister Shinzo Abe has changed core structures and frameworks within which Japan's foreign and defence policies are made. These changes can be seen as responses to the rise of China. Impacts Japan will use aid to counter China's influence, competing on quality and a record of delivering on promises. Laws passed under Abe could allow much greater defence cooperation with Australia and India. India is a future partner in Japan's developing relationship with Africa to compete with China’s Africa strategy.


Significance The next election will be the first since the military, led by then general, now Prime Minister Prayuth Chan-ocha, deposed Yingluck Shinawatra’s administration in May 2014. Impacts The prime minister’s Washington visit later this month will be portrayed as a pre-election display of foreign policy strength. The government will increase public investment for the remainder of this year, at least. This, it hopes, will maintain economic momentum, and strengthen the junta’s popular appeal. The post-election possibility of fresh political interventions by the military will concern investors.


Subject Singapore's political challenges. Significance The ruling People’s Action Party (PAP) has begun what will be a lengthy leadership handover from Prime Minister Lee Hsien Loong to Heng Swee Keat, currently finance minister and the PAP’s first assistant secretary-general. Speculation is mounting that Lee could bring forward the general election due by January 2021. In recent months, Singapore’s relations with Malaysia have soured. Impacts Turbulent relations with Malaysia will have no impact on the PAP’s leadership handover. Malaysia-Singapore ministerial ties will mitigate the effects of Malaysian Prime Minister Mahathir Mohamad’s erratic foreign policy. Judicial verdicts against legislators from the opposition Workers’ Party (WP) could worsen the WP’s already weak position in parliament. A prolonged US-China trade war would lead to a further decline in exports to China from Singapore.


Subject Prospects for East Asia in the second quarter of 2015. Significance Pronouncements made at the National People's Congress (NPC), which opened in Beijing yesterday, will give pointers on policy during the coming months. Debt has become a significant issue in the assessment of China's economic outlook. In Japan, nationwide local elections in April could see setbacks for Prime Minister Shinzo Abe's government, hit in recent days by political funding scandals. Meanwhile, annual large-scale military exercises have just begun in South Korea, antagonising Pyongyang.


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