2004 국제정세 전망(영문판, 외교부)

[누리와 물네]

Name	마스터
Subject	2004 국제정세 전망(영문판, 외교부)

Prospects for International Relations in 2004

THE INSTITUTE OF FOREIGN AFFAIRS
AND NATIONAL SECURITY

CONTENTS

1.Prospects for International Political and Economic Situation

1.1 Acceleration of the US-led Reshaping of
International Order 5
1.2 Economic Upturns Amid Uncertainty 11
1.3 Mounting Importance of New Diplomatic Issues 21

2. Outlook on Situations in Major Powers and Regions

2.1 United States 27
2.2 Japan 36
2.3 China 45
2.4 Russia 53
2.5 Europe 67

3. Prospects for Security Situation in East Asia and on the Korean Peninsula

3.1 Prospects for East Asia Situation 79
3.2 Regional Cooperation 84
3.3 North Korean Situation 89
3.4 South-North Korea Relations 100

PREFACE

The international political and economic scene today is a
mélange of dualities. On the political front, the international community has rallied in a coalition to combat terrorism, which newly surfaced as a transnational security issue in the aftermath of the terrorist attacks on September 11, 2001. Underlying the process of rebuilding the global order, however, has been a crisscross of checks and balances and cooperation on a strategic level among those key powers trying to put the brakes on the dominant US lead. Economically, the advance of globalization and the resultant deepening of global economic synchronization are accompanied by regionalization tendencies growing in both depth and breadth as states seek reinforced solidarity within their respective regions.
Meanwhile, issues like human security, the environment, and transnational crime have turned into the primary focus of attention in the diplomatic arena, and worldwide and collective efforts are becoming more crucial to surmount them.
Remarkable advances in information and communications technology, moreover, have led to increased interdependence, which in turn has engendered a rather complex and multi-dimensional international environment. In light of these developments, the discourse on building a new framework for redefining international relations is gradually taking on a more animated tone.
These are all challenging factors that Korea will continue to encounter in the diplomatic sphere. In this light, Korean diplomacy will have to be propped up by perspicacious projections about the international situation’s outlook if it is to be conducted in a way that sufficiently reflects the national interest.
The Institute of Foreign Affairs and National Security (IFANS) has sought to contribute to the government's foreign policy-making process and enhance the general public's understanding of the international situation through the annual and quinquennial publication of short-term and mid- to long-term prospects for international relations, respectively.
This research document is a fruit of the IFANS' sustained efforts across the board. It is a compilation of in-depth studies by region and function as well as conclusions drawn from hosting and attending international academic conferences, seminars, and on-site research with a view to correctly reading the changes in the international situation.
This document is composed of three chapters in total, with each chapter focusing on the general international political and economic situation, situations in major powers and regions, and the situation in East Asia and on the Korean peninsula and inter-Korean relations. Each chapter takes on the format of reviewing and assessing the developments in its respective areas of study in 2003 and offers prognoses for 2004 based on those findings. In particular, we have devoted the second chapter, which deals exclusively with the situations in major powers and regions, to presenting prospects for each country's or region's domestic situation and their foreign relations and projecting how these countries will tackle the issues surrounding the Korean peninsula with a hope that our efforts may come handy to those working-level officials who are involved in formulating foreign policies.
Last of all, I would like to thank all the research staff who have participated in the drafting of this research document. My special note of appreciation goes to Professor Lee Jae Seung and researcher Hwang Sun Hee, who were in charge of editing this volume, for their strenuous efforts. The IFANS will continue to supplement and improve the international prospects series so that they may serve as useful reference tools for shaping Korea's foreign policy.

Lee Dong Hwi
Dean of Research, IFANS

March 2004
1.Prospects for International Political and Economic Situation

1.1Acceleration of the US-led Reshaping of International Order

1.1.1 Sustained Expansion of Counterterrorism and Counterproliferation Policies
Prospects for International Political and Economic Situation
Prospects for International Relations in 2004

The United States proclaimed the war against terrorism as the nation’s foremost priority policy in the aftermath of the September 11 terrorist attacks in 2001 and successfully conducted the war against Afghanistan in coalition with the international community. In early 2003, it commenced a war against Iraq as part of its policy of weapons of mass destruction (WMD) counterproliferation and swiftly declared the conclusion of the war.
Washington’s post－Cold War security policy was focused on seeking stability in each region by maintaining alliances and preventing the rise of a potential regional hegemon or hegemons. When the US homeland became the target of direct attack on September 11, however, the United States learned the hard way that homeland defense was a more urgent task in terms of “national security.”
Such a change in Washington’s perception of security once again highlighted the necessity of establishing a “missile defense (MD) system” for homeland defense and now serves as an opportunity for the United States to more strongly push ahead with its MD project, which hit a snag before making much progress due to considerable limitations like technology, budget, opposition from domestic quarters, and relations with foreign countries.
The potential danger of terrorism’s hookup with WMD has granted Washington with some leeway for nipping in the bud the possibility of those “rogue states” or “failed states” assessed to possess WMD development capabilities supplying those weapons to terrorist organizations.
While US-led counterterrorism and counterproliferation efforts are gaining support, any one or all of these variables―the slow stabilization of the Afghan situation, a delay in the actual termination of the war in Iraq, and a lack of visible progress in the international community’s efforts to resolve the North Korean nuclear issue―could enflame anti-war and anti-US sentiments across the globe and increase the likelihood that these worldwide endeavors will gradually lose steam.
The Bush administration’s foreign policy could surface as a hot potato in the lead up to the US presidential election in November 2004 as opponents question the legitimacy of the US war against Iraq. One cannot rule out the possibility, then, that Washington may run into obstacles in continuously broadening its counterterrorism and counterproliferation policies depending on whither the domestic public opinion swings.

1.1.2Revamping Alliances and Strengthening International Cooperation

The increasing possibility of terrorism as an act of war joining hands with new sources of threat like WMD demands the United States and other major powers to foster defense capabilities that would enable them to deal with all levels of conflict―ranging from high-intensity warfare to low-intensity conflict―and acquire countertechnology that would allow them to offset various forms of threats like nuclear, biological, and chemical weapons and information warfare.
The new security environment therefore calls on the United States and other major powers to overhaul their force structure, organization, and procurement with the goal of nurturing the military capabilities required for possible multi-spectrum warfare. The war against terrorism has evolved into asymmetrical warfare, which provides the impetus for the United States to further step up the revolution in military affairs (RMA), one of its core security policy tasks for the 21st century, and, at the same time, take a shot at reviewing key strategic foci from new angles. The United States will resultantly revamp its existing alliance systems at full speed.
The war against terrorism, launched after the September 11 terrorist attacks in target of Afghanistan, had but a minuscule impact on international oil prices owing to the global economic stagnation and surplus oil production at the time. The war in Iraq did not come as much of a shock to international oil prices either, for it came to a swift end thanks to overwhelming US firepower. Rather, there are growing expectations that an overhaul of the global oil supply-and-demand system in the future might stabilize international oil prices.
The global oil supply-and-demand system remains vulnerable to and could be further destabilized by political and social uncertainties that may arise from a protracted reconstruction process in Iraq, the extension of America’s intervention in the Middle East region to Iran and Syria in the name of counterterrorism and counterproliferation, or democratization pressures on Saudi Arabia and other large oil-producing Middle East countries.
From this viewpoint, the United States is likely to seek more in-depth discussions with Southeast Asian countries like the Philippines and Vietnam on the stationing of US forces and their use of local military facilities while preserving the tenet of a reinforced US-Japan alliance. In this light, Washington’s strategic realignments will likely have far-reaching implications for the situational changes of all concerned regions.
As its UN activities and handling of the “Kyoto Protocol to the United Nations Framework Convention on Climate Change” prove, the advent of the Bush administration heralded a passive US attitude toward multilateral issues.
The September 11 terrorist attacks have shown, however, that terrorism is transnational and a tremendously expensive battle to win. That day’s events have also attested to the possibility of WMD exploitation for terrorism. In light of the changed circumstances, the United States finds itself in a position of having to take a more realistic approach and promote international cooperation side by side with its counterterrrorism and counterterrorism agenda.
In sum, the United States will likely revamp the existing alliance systems in line with its counterterrrorism and counterterrorism policies and at the same time promote multilateral cooperation at the international and regional levels to proactively tackle the new security threats of the globalization era. In this context, an object of close attention will be how the “Proliferation Security Initiative” (PSI), which has recently come to the fore as the fruit of numerous rounds of international conferences, develops.

1.1.3 Major-Power Cooperation and Rivalry

The US-led counterterrorism and counterproliferation campaign that has unfolded since the September 11 terrorist attacks dovetails with major powers’ geostrategic interests.
The events of September 11 touched off a war in one corner of Central Asia, a region which had long been cited as the likeliest battleground of major powers in the 21st century. What is more, the war against Iraq was launched in a geopolitically and geoeconomically crucial region―the Middle East―on the grounds of counterproliferation. The international counterproliferation drive will thus further raise major powers’ geopolitical and geoeconomic, or, in a word, geostrategic, stakes.
This phenomenon is vividly manifested by major powers’ moves subsequent to the September 11 terrorist attacks: they concurred with the common cause of “counterterrorism” and united around the United States to form an international coalition against terrorism, and every step that each player took since then has fully reflected its strategic interests.
The coalition against terrorism has strengthened cooperative relations among major powers, but these are offset by subtle betrayals of moves aimed at mutual checks. Frequent China-Russia summit talks and some European countries’ opposition to Washington’s decision to go to war with Iraq, for instance, are seen as major powers’ attempts to achieve their strategic interests by curbing to a certain degree the US lead in world affairs, which has gained momentum since the September 11 terrorist attacks.
As can be seen, major powers have shown foreign policy trends of maximizing their existing national interests by taking advantage of the war against terrorism. This, however, is not limited to major powers only; regional powers like India, Pakistan, and Iran have made moves indicating they are seeking to take a similar path. In light of these developments, the campaign against terrorism hereafter will inevitably be coupled with the strategic interests of concerned countries and will thus likely set off changes in balances of power.
US political and military relations with Central Asian countries like Uzbekistan and Tajikistan have grown stronger at a fast pace since the post－September 11 war against Afghanistan, and to this effect, regional countries’ countermoves are becoming more and more palpable.
Central Asia, most notably the areas along the Caspian Sea coast, is home to 19.8 percent and 13 percent of the world’s oil and natural gas deposits, respectively, and naturally, the region’s economic importance is rising.
Seen in this light, one can say the victory in the war against Iraq hints at a US global strategy founded on an understanding of Eurasia’s strategic importance: in short, its attempt to build security and oil belts by connecting the Middle East and Central Asia.
Central Asia’s economic value will add to the geopolitical implications that the region has in the 21st century and will cast its geoeconomic importance in a new light. Consequently, the United States’ as well as Russia’s, China’s, and other regional countries’ interest in Central Asia will intensify and will only serve to highlight the region’s fate as a new strategic battleground of major powers in the post－post－Cold War era.


1.2 Economic Upturns Amid Uncertainty

1.2.1 Prospects for the Global Economy

Growth Prospects per Bloc

Advanced Industrial Countries (AICs): Upturn Led by American Economy

The global economy was somewhat sluggish in the first half of 2003 due to geopolitical uncertainties deriving from the Iraqi situation, the aftereffects of stock market bubbles, and, in particular, the aftershock of the severe acute respiratory syndrome (SARS) scare that swept across Asia. Since the latter half of 2003, however, improving investment climates in the United States and Asia and advanced countries’ conduct of positive macroeconomic policies free from inflation concerns have gradually made evident signs of economic upturns.
Drawing on these signs of economic upturns and the 3.2-percent growth of the world economy in 2003, the International Monetary Fund (IMF) projects the global economy will grow by 4.1 percent in 2004. The IMF adduces decreased geopolitical uncertainties, positive economic policies, an estimated decline in international oil prices, and a gradual decrease in bubble repercussions for this optimistic outlook.
The world economic recovery will likely be led by the American economy, which has shown clear symptoms of an upturn since the second half of 2003. Following its record growth of 8.2 percent in the third quarter of 2003, the American economy is expected to record yet another 4.2- to 4.5-percent growth rate in 2004 based on increased consumer spending and plant and equipment investment, thereby playing the role of an engine of global economic growth.
The Euro bloc is expected to record a very stagnant economic growth rate of less than 2 percent owing to a number of impediments like slow intra-regional demand, a sharp appreciation of the euro, and persisting difficulties in the German economy. While the Japanese economy is showing signs of escape from a chronic depression thanks to its stock market recovery and improved export indices since the second quarter of 2003, a full-fledged recovery is still questionable as Japan remains vulnerable to the danger of deflation and the frailties of its financial and business sectors continue to linger.

Newly Industrializing Countries (NICs): Mixed Growth Prospects

Equally restraining all NICs’ economic growth are a number of common environmental factors like uncertainties in the global economy and advanced markets’ economic trends. What better account for dissimilar growth prospects for this group of countries, then, are not shared variables but the diverse economic conditions in which they find themselves.
In 2004, Asian NICs will likely maintain continued growth trends that started in the latter half of 2003 as they benefit from their own positive economic measures, the American economic recovery, and China’s solid economic growth. Domestic demand recoveries, the degree of the global economic upturn, and a sustained upturn in the information technology (IT) sector, however, will remain the key.
The Latin American economy, on the other hand, has entered the road to stabilization, but a good number of countries are confronted with debt problems and high political uncertainties continue to ail the region. Against this backdrop, any fluctuations in foreign financial markets could destabilize the region.
Russia, Ukraine, and Central and Eastern European countries will lead the pack of transitional economies in scoring strong growth rates. Those countries scheduled to join the European Union (EU), in particular, have rather bright mid- to long-term growth prospects, for, while the euro zone is experiencing weak demand, it will likely continue to serve as a site for large foreign investment inflows.
The fragile security situation in the Middle East remains a key source of instability to the region despite the conclusion of the war in Iraq, and an anticipated decline in international oil prices in 2004 will likely have a negative impact on Middle Eastern economic growth.

Extremely Poor Developing Countries: Improved Economic Situations

Extremely poor developing countries, of which African countries make up the core, are projected to record relatively high economic growth rates in the middle to long term thanks to their improved macroeconomic policies as well as various debt reduction initiatives via international organizations.
The African economy is expected to perform somewhat better in 2004 compared to the 3.6-percent growth it is believed to have attained in 2003. This projection, however, will largely hinge on African countries’ political stability and improved climatic conditions.

Prospects for Oil Prices and Exchange Rates

Long-term Falls in and Stabilization of International Oil Prices

International oil prices, which had fallen to as low as $25.50 per barrel at the time of the Iraqi war’s commencement, have climbed to a maximum of $30 per barrel since May 2003, following increased US demand for oil, an oil production curtailment announcement by the Organization of Petroleum Exporting Countries (OPEC), and the slow reinstatement of Iraqi oil production. Once global oil reserves recover their previous levels and Iraq’s oil production level is restored to that of the pre-war days, oil prices will likely fall to the 25-dollar-a-barrel level by the second half of 2004.
It is highly possible that international oil prices will fall in the middle to long term as well, thanks to increased oil supply resulting from a combination of bearish factors which will retain a relatively strong presence. First, there is a possibility that Iraq will increase crude oil production. What is more, the OPEC will lose power as a cartel as its political unity weakens and its member countries move closer to economic marketization.

Continued Instability From Exchange Rate Fluctuations

Low interest rates and rising current balance deficits drove the US dollar to depreciate between early 2002 and mid-2003. Dollar-depreciating factors are expected to persist in 2004, which makes it impossible to rule out a further depreciation on a sizeable scale. Should the dollar deval‎uation continue to afflict the euro zone, it could degenerate into a destabilizing factor for foreign exchange markets.

1.2.2 Globalization and Regionalism

Scant Progress in Doha Development Agenda (DDA) Negotiations and Increasing Challenges to the World Trade Organization (WTO) System

Relaunch of DDA Negotiation Efforts

DDA negotiations were launched in January 2002, but they have made very poor progress to date. Negotiations concerning a few sectors like services have been a relatively smooth sail, but the negotiating groups for agriculture and market access for non-agricultural products stumbled from the very first step of reaching an agreement on modalities. To make matters worse, the Fifth WTO Ministerial Conference, which opened in Cancun, Mexico, in September 2003 amid high expectations, closed with no consensus, thereby clouding the prospects for future negotiations.
US-EU discussions will jump-start the resumption of DDA negotiations in early 2004. However, the negotiations face a rough road ahead as issues like anti-dumping, the “Singapore issues,” and developing countries’ development―aside from the traditionally knotty subject of agricultural products’ liberalization―stand in the way.
Putting aside the agenda, developing countries’ voices have grown conspicuously stronger since the fourth ministerial conference in Qatar in 2001, and it was confirmed once more at the Cancun conference. This recent phenomenon, coupled with the development question and the “Singapore issues,” will pose severer challenges to future DDA negotiations.
The agenda’s comprehensive and sensitive nature as well as member states’ acute confrontation surrounding the agenda are likely to render difficult DDA negotiations’ completion by the end of 2004, as originally scheduled. Even if member countries manage to hammer out an agreement by extending the deadline somewhat, it will probably be tough for the six negotiating groups to achieve the degree of liberalization for which they initially aimed.
Little progress in DDA negotiations could increase discontent with the WTO-centered multilateral trading system as the world economy advances toward a full-scale recovery. Waning support for the WTO, in turn, could serve as a defining moment engendering a new world trade order in which the hub shifts from the WTO to regionalism.

Anti-Globalization and Deepening Challenges to the WTO System

Once DDA negotiations surmount various hurdles and come to a successful end, the WTO will further consolidate its position as the central pillar of global trade that oversees all key issues in line with the changes in a new global trade environment. As was evidenced by the Cancun ministerial conference, harder-to-tackle complications await the WTO system, however: anti-globalization movements led by nongovernmental organizations (NGOs) are intensifying and spreading and developing countries’ voices are being strengthened within the WTO, both of which are suggestive of fiercer resistance to globalization in the future.
The WTO has represented the world’s multilateral trading system since its inauguration nine years ago. Since that time, it has spearheaded the global trade order on the one hand, while, on the other, mingling with increasing regionalist trends and playing the role of holding in check regional cooperation from developing into exclusive regional blocs. A failure to find a breakthrough in DDA negotiations before the deadline will pose a serious challenge to the WTO system in the middle to long term, for it will have the effect of increasing individual states’ dependence on regional cooperation in lieu of the existing multilateral trading system.
Those key trading countries that are not yet WTO members, namely Russia and Vietnam, are expected to gain accession to the trading body in the next few years. Increased membership will broaden the trade spheres administered by WTO regulations and complicate the nature of overall trade issues, which will resultantly further heighten trade friction among member countries. A possible weakening of the WTO’s ability to prevent friction and to suitably mediate in and settle discord when it does occur will be a key variable in the shaping of the future global trade environment.

The Intensifying Regional Integration Trend

Increasing Dependence on Regional Cooperation and a Reinforced “Tripolar System” in the Global Economy

The Cancun WTO ministerial conference’s failure to produce a consensus has opened an important chapter in the global trade order, which has existed in a mixed state of multilateralism and regionalism. A lack of some visible prospects sometime in 2004 for DDA negotiations’ successful closure will steer not only the United States and the EU but even developing countries to more actively participate in regional cooperation rather than multilateral negotiations. A possible erosion of the multilateral trading system may then result in the WTO’s falling short of presenting proper guidelines for regional cooperation’s development, at which point it would be hard to overlook the possibility of a distorted global trade order.
Individual countries’ wish to utilize regional cooperation as an engine of economic growth serves as the departure point for the deepening of regionalism amid increasing interdependence in the global economic arena. In this context, regional cooperation is likely to gain renewed vigor, and the centerpieces in this process will be the United States and China, the two likeliest leaders of future global economic growth. One form of regional cooperation is free trade agreements (FTAs).
The US-led negotiations for a Free Trade Area of the Americas (FTAA) will not yield much progress in the short term due to the politico-economic instability prevailing in South American countries, but judging from the Bush administration’s strong resolve to turn these negotiations into a success, they will probably make tangible progress before the end of the administration’s term. To attain the ultimate goal of an FTAA, Washington will employ a dual-track strategy: direct negotiations will run parallel to the indirect strategy of concluding an FTA with Central American countries, or Central America FTA (CAFTA), in 2004. The United States has already concluded an FTA with Chile as an extension of its FTAA drive.
In the meantime, the EU will seek to stretch its membership peripheries, deepen integration, and raise its political and economic status on the global scene through the successful accessions of 10 prospective members―eight Eastern European countries, including the Czech Republic, Poland, and Hungary, and two Mediterranean islands―to the EU in 2004.
The deepening of East Asian regional cooperation will give concrete shape to an East Asian economic bloc over the next several years. An Asian economic bloc composed of three Northeast Asian countries and the Association of Southeast Asian Nations (ASEAN) will then be placed on a par with the EU-centered European economic bloc and the US-driven economic bloc of the Americas, thereby further consolidating the “tripolar system” in the global economy.

Deepening Regional Cooperation in East Asia

The general direction of regional cooperation at present is regional cooperative bodies’ continued widening of membership and deepening of cooperation on the one hand, and, on the other, the dynamic emergence of greater-sphere regionalism rooted in the fostering of stronger links with other cooperative bodies. East Asia is expected to stand at the center stage of this trend as intra-regional cooperation and inter-regional cooperation and integration proceed with more vigor.
Bilateral and intra-regional multilateral cooperation is taking more definite shape or is becoming tangible across East Asia: aside from the ASEAN’s separate sets of FTA discussions with Korea, Japan, and China, the more recent developments include Korea-China-Japan discussions on the forging of a Northeast Asian FTA and Korea’s and Japan’s FTA talks with individual Southeast Asian countries. In this light, a number of FTA agendas, including a Korea-Japan FTA review, will move on to the negotiating stage sometime in 2004. The year 2004 is therefore likely to be a formative time when a sketchy outline for regional integration in East Asia evolves into a clearer blueprint.
East Asian countries are expected to achieve considerable progress in the conclusion of regional cooperation agreements or in integration with extra-regional countries at the regional or state level over the next several years. Korea and Japan, for instance, are expected to propose new talks or expand on the ongoing FTA discussions with the United States and Latin American countries. ASEAN members, too, are likely to step up the conclusion of FTAs with Australia and New Zealand.
The ASEAN has heretofore played a leading role in East Asian regional cooperation, and it styles itself to be the hub of this movement. What is more, a Japan-China rivalry surrounding FTAs has added a note of subtle confusion to this picture recently. To forestall regional cooperation in East Asia from developing into a jumble redolent of a “spaghetti bowl,” regional countries may more earnestly seek discussions for a pan－East Asia FTA.

Redefining Relationship Between Multilateralism and Regionalism

In the short term―or for the duration of the WTO’s DDA negotiations in 2004―present regional cooperation trends, which are manifesting themselves in varied shapes and forms, will probably develop in ways that complement the multilateral trading system.
The regulations on regional trade agreements as provided by the WTO, an epitome of multilateralism, poses many problems concerning the approval and monitoring of regional agreements. An issue at hand, therefore, is how a mixed bag of regional integrated bodies can be related to and reconciled with a specific set of multilateral trade regulations in the future, and a key bone of contention in the upcoming DDA talks will be the tailoring of WTO regulations to meet this need.
Premising our long-term projections on DDA negotiations’ closure without generating satisfactory results, the world will witness a situation parallel to the first half of the 1990s, when regional cooperation rapidly gained momentum in the face of the Uruguay Round agreements’ imminent conclusion, and may reopen the debate about the establishment of a new multilateralism-regionalism relationship.

1.3 Mounting Importance of New Diplomatic Issues

1.3.1 New Security Threats Come to the Fore

The end of the Cold War and the progress of globalization have markedly reduced the possibility of all-out wars between major powers. However, the end of the Cold War has also unleashed a much more diversified set of conflict factors like ethnicity, religion, territory, the environment, and resources, all of which challenge the international community to seek corresponding security measures on a new level.
The transition to globalized and information-based societies has facilitated increased exchanges among countries and the advancement of science and technology. These developments, in turn, have spawned various types of threats like international terrorism, transnational crime, WMD proliferation, and conflicts and disputes surrounding the environment and economy, and it is becoming increasingly likely that they will continually spill over the traditional sovereign boundaries of individual states and create havoc on a worldwide or regional level.
Against this backdrop, non-military issues like information technology, energy, finance, the environment, human security, and culture are taking root as key security goals of each country.

1.3.2 Terrorism and Transnational Crime

Consolidation of International Cooperation Against Terrorism

The September 11 terrorist attacks have established joint countermeasures to terrorism as a high-priority agendum for the global community.
The world is exposed to a steadily increasing possibility of further acts of terrorism motivated by political, religious, and ethnic reasons, and state-of-the-art science and technology enables terrorists to diversify the means by which they deliver their acts.
The intense debate about international cooperation against terrorism is not only confined to the United States and Europe but has made its way to Asia, which points to the prospects for the current counterterrorism drive to develop into a worldwide campaign.
Some of the suggested measures now under serious debate include not only reinforced physical controls, monitoring systems, and information sharing but the removal of those very economic and social factors that make up the roots of terrorism. In the light of the latter, increased external economic assistance has started to gain some attention as a requisite for the eradication of terrorism.

Countering Transnational Crime

Hand in hand with terrorism, transnational crime has materialized into another new type of security threat that undermines national economic, social, and cultural stability.
Transnational crime, which is showing signs of becoming more firmly organized, has triggered international solidarity in or between a number of regions, and this trend is expected to continue.
A range of anti-corruption tasks such as the strengthening of financial monitoring on funds for illegal activities and the prevention of bribery will continue to be of high interest as means of fighting transnational crime.

1.3.3 Information Technology and Increasing Importance of “Public Diplomacy”

The development of information technology has bound the entire world into a new, single global network that enables a multitude of countries to deal with major international events real time. The new setting denotes implications for the foreign policy－making process as well.
Progress in information technology is likely to play a bigger role in shaping the future international environment. The information revolution has placed information technology capabilities among the ranks of new barometers of national capacity in the 21st century, thereby reducing in relative terms the importance of traditional determining factors of national capacity like territory, population, and natural resources.
In the era of the information revolution, a country’s basic capacities are eval‎uated on how much information technology it possesses. Given this fact, each country places an absolute priority on information technology enhancements.
The information revolution and the concomitant advent of the Internet and cyberspace demand a shift in overseas diplomatic missions’ key traditional function of simply filing diplomatic reports to one of analyzing information that includes harnessing locally acquired good sense and discerning cultural subtleties. The possible establishment of “virtual embassies” and the installment of diplomatic information networks are creating a new environment heralding qualitative changes in the whole chain of foreign policy formulation and implementation.
Widening generation gaps and varying levels of access to the virtual space―the corollaries of innovations in information technology―will establish distinct identities in each society, which in turn will lead to drastic changes in individuals’ traditional sense of belonging to their home countries as well as in their sense of identity.
At the state level, the techniques and costs required for establishing new information and converting it into knowledge are expected to further widen the digital divide between advanced and underdeveloped nations.
The proliferation of “new media,” meanwhile, has brought forth new forms of political participation, which will likely call for the diplomatic sector’s heightened consciousness about “public diplomacy.”

1.3.4 Human Security

Even the advancement of globalization after the end of the Cold War could not stop the birth of “failed states,” and human security in these countries has emerged as an issue of major concern.
Human security goes beyond the passive definition of protecting individual human beings from chronic threats such as war, persecution, disease, starvation, and poverty; it entails the proactiveness of enhancing people’s quality of life by removing these threat factors altogether.
Sometimes individual states alone cannot effectively deal with these human security problems, and their dilemma gave rise to the discourse on the legitimacy of “peacekeeping intervention.”

1.3.5 Environmental Diplomacy

Environmental issues are becoming new threats to security in that they can trigger domestic and international conflicts politically and economically.
The invocation of trade controls and restrictions, production and consumption restrictions or bans, and a set of environmental standards―all to the end of resolving environmental issues internationally―have the potential of forming non-tariff barriers and limiting or prohibiting economic, industrial, and trade activity. In this context, the international community should search for ways to reconcile environmental regulations with economic activity.
Climate change from greenhouse gas emissions will grow into the core of all future discussions on international environmental issues.
“Sustainable development” will continue to remain a key item on the international agenda.

1.3.6 Cultural Diplomacy

The importance of culture as part of “soft power” has gradually escalated since the end of the Cold War, and in the new international order, there is just as much interest in culture and diplomacy as there is in political and military rivalry.
In this light, the value of cultural diplomacy is increasing as a tool for enhancing mutual understanding, and discussions are afoot to utilize cultural diplomacy as a means to facilitate confidence-building measures (CBMs).
The nurturing of cultural identity and the quest for harmony with other cultures have surfaced as new, dual diplomatic tasks on a worldwide level amid widespread cultural competition.
An understanding of other religions, in particular, would signify inter-civilizational dialogue aimed at settling various local conflicts such as the Middle Eastern issues, which essentially originated in a clash of civilizations.
Cultural diplomacy will oftentimes join hands with information diplomacy and show up in the form of efforts to seize the initiative toward a knowledge economy.


2. Outlook on Situations in Major Powers and Regions
Outlook on Situations in Major Powers and Regions

2.1 United States

2.1.1 Domestic Situation

Deepening Social Conservatization and Political Dichotomy

American society’s conservatization has taken root as a general trend since September 11, 2001, but President Bush’s conduct of state affairs has polarized the domestic political front along party lines, with his unconditional supporters and vehement opposers standing on two antipodes.
As is demonstrated by the majority of the American public’s desire for a “small state” and “big markets” on the one hand and objection to welfare budget increases on the other, American society’s conservatization is showing signs of drawing near traditional conservatism. The American people are manifesting neoconservatist tendencies at the same, however: they have ventured so far as to reach the stage of countenancing, to a certain degree, the advent of an “intelligence state,” that is, a “big state,” to allay their fear of terrorism. An instance of such tolerance would be the US government’s administration of even individuals’ personal information in the name of strengthening intelligence vis-à-vis terrorism. This dualistic traditional conservatism－neoconservatism trend is likely to continue for the time being.
Despite the overall conservatization trend in American society, assessments of President Bush are, as the expression‎ “Love Him, Hate Him President” sums up, polarized into two extremes. This political dichotomy, heavily factionalist in nature, is likely to retain its presence for a while.

Tangible Economic Rebound

The American economy achieved an 8.2-percent growth in the third quarter of 2003 (July－September), the most extensive quarterly growth rate it has recorded in 19 years, or since 1984. This latest indicator points to an economic recovery making strides toward visible outcomes.
As of the end of 2003, Washington’s tax-break, low-interest-rate, and weak-dollar policies have borne some fruit, most notably in the form of increased spending and an upsurge in exports. The US economy, therefore, is expected to enter a stage of full-fledged upturn in 2004.
For the improving macroeconomic indices to carry into a business sentiment rebound, the unemployment rate, which rose from 4 percent in 2000 to as high as the 6-percent level in 2003, should decrease to the 5-percent level. At this point, however, it is uncertain whether the job market will make a complete turnaround, and the possibility of a “jobless recovery” persists.

Possible Pell-Mell in the Contest for the White House

The two variables that will have the most far-reaching implications for President Bush’s chances for reelection are the Iraqi situation and the prospects for an economic rebound. The Iraqi situation has not improved as of the end of 2003, but the outlook for an economic recovery looks brighter. These two mutually counterbalancing factors make it highly probable that President Bush will be in for an unpredictable sail toward reelection.
With a melee of presidential candidates still flooding the Democratic Party scene, the fragmented Democratic Party stands incapable of seizing the initiative in or dominating issues by comparison to the Republican Party. Against this backdrop, President Bush’s reelection chances will likely remain relatively high as long as the Iraqi situation does not deteriorate into an uncontrollable mire and as long as the American economy makes a full-scale rebound that eventually leads to lower unemployment rates.
However, a declaration of candidacy on the eve of the Democratic National Convention by Senator Hilary Clinton, who has been cited in recent public polls as the Democratic Party’s unique “viable contender” capable of defeating President Bush, could very well throw the upcoming US presidential election into the throes of confusion that would entail an outcome too difficult to forecast.

2.1.2 Foreign Relations

Prolonged Situation in Iraq

Since the end of the war in Iraq on May 1, 2003, the Bush administration has funneled efforts into the reconstruction of Iraq and the establishment of Israel-Palestine peace on the one hand, while seeking to reshape the Middle Eastern order through the propagation of democracy and the market economy on the other. The unrelenting hullabaloos staged by Hussein’s Baathist Party remnants and other guerrilla elements and the ensuing surges in US military casualties throughout the Iraqi reconstruction process, however, have forced the US Coalition Provisional Authority (CPA) to veer toward handing over power to the Iraqi Governing Council as soon as possible.
A transition of power to the Iraqi Governing Council will not lead to an immediate withdrawal of US troops; rather, they will remain in the country for the foreseeable future to maintain public order. Washington will, however, gradually downsize its forces once the Iraqi security situation stabilizes.
The next five to six months will likely determine whether the US-led coalition forces’ post-war administration in Iraq head for prolonged travails or enter the stage of stabilization. Some of the factors that could have bearing on the Iraqi security scenario include, besides former Iraqi President Saddam Hussein’s arrest, the security situation of the Baghdad-Ramadi-Tikrit areas known as the “Sunni triangle” and America’s ability to win the international community’s support.

Partial Retrogression of Neoconservative Foreign Strategy

The “deterioration” of the Iraqi situation has placed the Bush administration’s neoconservative security strategies, the core of which comprises a sense of moral superiority, military unilateralism, and the preemptive attack doctrine, under criticism from both home and abroad. Washington now faces the pressure to attach more importance to multilateralism and alliances, and thus partial retrogression of neoconservative strategies appears inevitable, at least until the situation in Iraq stabilizes.
Confronted with the domestic and international public’s demand for renewed US multilateral cooperation, Washington will probably demonstrate more activeness in strengthening the verification systems of multilateral nonproliferation treaties such as the Nuclear Nonproliferation Treaty (NPT), Missile Technology Control Regime (MTCR), and the Biological Weapons Convention (BWC). However, the American exceptionalism, or, in this particular case, the idea that maintaining the US nuclear strategic superiority is the most realistic means of countering pariah states’ or terrorist organizations’ nuclear threats, will most likely remain unchanged.
The handling of post-war Iraq and the North Korean nuclear issue have split the Bush administration’s foreign policy team into moderates, who have supported diplomatic solutions to these problems, and hard-liners, who have called for the necessity of military pressure instead, and the rift between these two opposing sides has only widened. With the 2004 presidential election approaching, however, President Bush is likely to channel full effort toward minimizing the confrontation and dissenting views between the moderates and hard-liners and building a suprapartisan cooperative system.

Realignment of US Forces Overseas Picks up Speed

The United States is advancing an overseas force posture realignment in conjunction with its design for a new force structure befitting the present “age of terrorism.” To this end, Washington is seeking to move its overseas military bases to locations closer to those countries and regions most likely to witness terrorism or WMD proliferation (i.e. the Middle East, East Africa, Central Asia, and Southeast Asia). The shift in warfare concept from conventional operations to rapid decisive operations (RDO) is also nudging the United States toward strengthening naval and air force capabilities and nurturing cream-of-the-crop ground forces.
The United States has reached the conclusion that the success of modern warfare no longer hinges on large-scale forces but on a seamless union of high-technology electronic equipment and air and ground combat power, diverse intelligence-gathering sources, psychological warfare, and simultaneous covert operations. The recent war in Iraq verified these points, and Washington will implement its basic force relocation goal of fostering lighter and faster troops stationed worldwide.
Some have voiced the need for a ground forces buildup recently, but even the US Army has expressed skepticism about this proposition; rather, it has emphasized the indispensability of fostering a state-of-the-art army. The challenges the United States faces in post-war Iraq are more or less speed bumps to its military reform projects, including the relocation of foreign-deployed forces, but Washington is expected to step up the realignment of these troops once the situation in Iraq stabilizes to some degree.

Revamping of Alliances

The centerpiece of the US Defense Department’s new overseas force realignment plan is to operate all US overseas military bases in three categories divided by function: strategic bases, or hubs; forward-operating bases; and forward-operating locations.
A realignment of US overseas military bases will likely render a revamping of US alliance systems inevitable, for the categorization of US foreign-deployed forces according to the abovementioned criteria will naturally herald the classification of alliances into the same three groupings.

Relations With Japan: Cementing of the Strategic Alliance

The Bush administration has emphasized the importance of the US-Japan alliance since its inauguration. Washington, for instance, turned the war in Iraq and the North Korean nuclear issue into opportunities to urge Japan’s expanded role on the international stage and has lent positive support to Tokyo’s buildup of Self-Defense Forces (SDF) combat capabilities. These cases attest to the likelihood that Washington will further bolster US-Japan security cooperation.
As the realignment of US forces overseas proceeds and the revamping of alliances follows, the US-Japan alliance will firmly establish itself as the main security axis of the US Asia-Pacific strategy.

Relations With China: Blend of Cooperation and Rivalry

The United States and China have stepped up security cooperation since the September 11 terrorist attacks, namely by operating consultation channels to jointly tackle terrorism and WMD proliferation. This trend will likely continue as long as the Taiwan issue does not crop up as a sticking point.
Washington does, however, have a wary eye on Beijing’s earnest military modernization. The strategic focus of China’s modernization drive lies in achieving a military role transition from traditional “mainland defense,” which it has maintained through large-scale ground forces, to “strengthened overseas operational capabilities,” which it will seek to facilitate via maneuverability and state-of-the-art weaponry. The United States will study the relocation of its troops in the region and an extension of augmented security to Taiwan in light of the China variable.
Relations With Russia: Renewed Necessity for an Adjusted Cooperative Structure

The United States has intensified cooperation with Russia for an effective conduct of the war against terrorism. However, the ongoing war against terrorism has resulted in a mounting US influence in the Central Asian region, which can be called Russia’s “front yard,” and thus poses an increasing likelihood of creating a fissure in the US-Russia cooperative system.
Moscow’s attitude toward Washington’s management of post-war Iraq, meanwhile, has been two-pronged: while it has stood on the side of France and Germany to argue for the United Nations’ central role in Iraq, it has also taken an appeasement posture vis-à-vis the United States by expressing an intent to cooperate. The United States will seek to prevent Russia’s participation in a united anti-US France-Germany front by exerting efforts to preserve the US-Russia cooperative structure, one of which will include proposals to protect Russian economic interests in Iraq.

2.1.3 Policy Toward the Korean Peninsula

Limited Management of the North Korean Nuclear Issue

President Bush’s recent mention of possibly providing the North Koreans with a multilateral security guarantee postulated on the latter’s nuclear program relinquishment appears to have been aimed at a tactical change. In other words, with the post-war reconstruction process in Iraq still sailing through rough waters, Washington appears to desire limited “management” of the North Korean nuclear issue as long as North Korea does not step over the “redline” of trying US patience by testing nuclear weapons or transferring nuclear material overseas. The administration’s North Korea hard-liners, too―led by the US Department of Defense―are assessed to have accepted the Powell-style moderate approach for now, judging that they can better secure the grounds for hard-line policies only when all diplomatic efforts have been exhausted.
Should Pyongyang persist in carrying through its “foot-dragging” strategy and refuse to implement the “nuclear freeze” measure at the very least, the United States will step up pressure against North Korea, even if it means having to take this action prior to the presidential election in November 2004. The possibility of North Korea’s tit-for-tat provocation, then, shall not be ruled out.
There are five possible scenarios for the North Korean nuclear issue: 1) a peaceful resolution; 2) an early breakdown of the six-party talks; 3) North Korea’s employment of foot-dragging tactics; 4) North Korea’s failure to drag its feet; and 5) a dramatic settlement followed by a heightened crisis.

Pushing Ahead With US Forces Korea (USFK) Relocation Plans

President Bush stated on November 26, 2003 that the United States will hold intensive consultations with allies over the next few months on the relocation of US forces worldwide. As such, US global posture realignment plans will take concrete shape sometime in the first half of 2004, at which point USFK relocation plans, too, will become firm.
The United States will likely use the USFK’s Second Infantry Division as a deterrent against North Korea while transforming it into an expeditionary force for the whole of the East Asian region―in other words, operate the division as an expeditionary strike force that can be rapidly committed to any conflict or terrorist attack in the region.
Over the past half a century, US administrations have constantly emphasized US commitment to Korea’s defense, but the flip side of their renewed promises was incremental USFK downsizing at every turning point irrespective of administrations’ party affiliations. As the Second Infantry Division’s realignment heads for a makeover into a lighter, faster, and state-of-the-art contingent, we cannot rule out the possibility of some USFK troop reductions when the division relocation plan is enforced.


2.2 Japan

2.2.1 Domestic Situation

Coalition Cabinet Led by the Liberal Democratic Party (LDP) Retains Power

Prime Minister Koizumi was reelected as the LDP’s two-year-term president in the party presidential election of September 2003. The reelection has thus provided Koizumi with a foothold for long-term reign in the LDP.
The House of Representatives elections held on November 9, 2003, however, took 10 seats away from the majority LDP and rewarded 40 additional seats to the major opposition Democratic Party of Japan (DPJ), bringing the latter’s total number of members to 177. While the election results have enabled the DPJ to broaden its presence as an opposition that can effectively stand up to the LDP, they have undermined the popularity base of Prime Minister Koizumi, who is called “the face of elections.” Contingent upon how the Japanese political landscape evolves, then, the latest election outcome could bring potentially destabilizing consequences for Koizumi and the LDP.
It appears as though a coalition system led by the LDP and allied by the Komeito will continue to dominate the Japanese political scene. LDP-Komeito election cooperation and interdependence are growing deeper. As a counterbalance to the LDP-Komeito alliance, the DPJ will likely step up efforts to eat away at the LDP not by waging ideological contentions but by highlighting the differences between their and LDP policies.
The presence of reformist oppositions is diminishing from the Japanese political arena. In the November House of Representatives elections, for instance, the Japan Communist Party (JCP) and the Social Democratic Party (SDP) won but nine and six seats, respectively. These single-digit numbers indicate that those parties which take reformist positions on foreign policy are losing ground and that the Japanese political circle is becoming more conservative.
An event that greatly undermines the LDP’s or the prime minister’s trustability prior to the upcoming House of Councillors elections could embroil the Japanese political circle in a state of uncertainty, for it may cause independents and swing voters to suddenly withdraw their support for the majority party.
The outcome of the next House of Councillors elections, slated for July 2004, will likely determine the future of the LDP’s control over the Diet. Should the LDP achieve a sweeping victory and single-handedly secure the majority of the Upper House seats, the LDP stands a chance of forming a single-party cabinet; if it should suffer a crushing defeat, the Koizumi-led cabinet system will collapse, and a whirlwind of instability may possibly sweep through the political arena.

Hopes for Economic Upturn Generated by Concrete Economic Reform Policy

The economic reforms championed by Prime Minister Koizumi have tended to be heavily slogan-centric and preceded by rhetoric, but he could push for stronger economic reform measures with a view to making up for the LDP’s poor score in the last House of Representatives elections. Koizumi’s reform endeavors will most likely start with an attempt to implement his specific election pledges, namely the privatization of road-related public corporations and postal services, in a short period of time.
It is highly probable that the Japanese government’s privatization efforts will be accompanied by full-scale action programs designed to solve those structural problems considered the core target of Japan’s economic reform, such as the disposal of bad loans and improvement of the welfare system. These reform tasks will form the bone of contention in major-opposition parties’ policy debates.
Japan’s economic reform will be geared toward achieving twofold tasks: while pressing ahead with neoliberalist institutional reforms to keep abreast with the world’s internationalization tenor, the Japanese government will seek to ensure minimum living standards for the socially disadvantaged.
Japan’s economic recovery hinges on whether economic reforms can rejuvenate the domestic economy, which is in recession. It will likely be a long time before Japan’s reform yields tangible effects such as strengthened civilian demand and fundamental solutions to unemployment.
A swift Japanese economic recovery would be difficult to expect unless the government carries out sweeping restructuring across insolvent firms and sunset industries. A rising business sentiment spurred by the prospects for economic reform, however, is projected to bring about a slow economic recovery in the long term.

North Korean Issues Fan Conservative, Right-Wing Tendencies

One notable trend in Japanese society in 2003 was the public’s soaring vigilance about national security surrounding North Korea’s abductions of Japanese citizens and the nuclear issue. Unless Tokyo and Pyongyang can open a new page in the resolution of the abductions and nuclear issues, the “North Korea bashing” phenomenon will likely continue to incite a conservative mood in Japanese society. It is highly probable that the increasingly conservative, rightist tendencies will ultimately be used as a tool to atone for Japan’s economic recession and loss of self-confidence.
The impact of the North Korean issues will extend beyond the Japanese people’s heightened awareness of national security; it is likely to be felt in their overall view of foreign relations as well. Even Japanese media, which are challenged by a dearth of interesting economic and social articles and issues, will have a hard time fighting off the temptation to provide the populace with gripping video and textual material at the expense of North Korea.
A review of the Japanese domestic situation in 2003 lends itself to two possible conclusions about Japan in 2004. The Japanese government could arouse the public’s interest in North Korea and foreign affairs in an attempt to deflect their attention from sluggish economic reform and an increasing sense of insecurity prevailing in society. Quite to the contrary, the government could seek to minimize the public’s interest in international issues and stimulate intensive public discussion and debate about economic and social reforms in an effort to pursue full-fledged domestic reform. While these two possibilities are not mutually exclusive and can coexist, the public discourse is highly likely to be channeled to one side.

2.2.2 Foreign Relations

Active Cooperation in the US War Against Terrorism

Japan has actively participated in the US war against terrorism since the September 11 terrorist attacks, and its foreign policy focus will continue to be the cementing of the US-Japan alliance. Such attachment of priority importance to the Tokyo-Washington alliance is closely related to Tokyo’s moves to strengthen its political and military stature by actively joining in the US-led global order.
Japan is highly likely to speed up the institutional streamlining necessary to be able to dispatch the SDF overseas anytime it pleases in the name of reinforcing cooperation with the United States. The streamlining will proceed in the direction of easing the rules that have impeded the SDF’s dispatch overseas, such as bounded areas of activity and functional and weapons use limitations.
Like the United States, it is highly probable that Japan’s interest in international or multilateral cooperation organizations like the UN will wane in relative terms. In this context, Japan may seek to utilize international organizations only as a supplementary instrument for strengthening relations with the United States.
Japan’s propensity to foster diplomatic autonomy in the region by bolstering its alliance with the United States, which still retains the position of the world’s sole superpower, will conceivably grow. The Koizumi and Bush regimes’ strategic interests intersect on this very point. Japan will thus break free from its restrained politico-military role and head toward broadening the politico-military radius of action in regional and international affairs by stepping up cooperation with the United States under the banner of international contribution and cooperation.
As Japan seeks to build stronger ties with the United States, it will move toward acquiring its own influence on North Korea and take steps to more actively participate and increase political and economic clout in the North Korean nuclear problem and other East Asian issues within the boundaries of the US-Japan alliance.
By endeavoring to proactively solve regional problems and contributing to international peace, Japan will likely make sustained efforts to enhance its international stature with the aim of reducing the international community’s resistance and objection to Japan’s membership on the UN Security Council (UNSC).

Bolstering Multilateral Cooperation With East Asian Nations

Japan is projected to employ a strategy of counterbalancing China’s rapid growth by actively promoting a Japan-Korea FTA and accelerating economic integration with Korea. Such a strategy is aimed at boosting cooperation between two democratic nations through economic integration. By pushing for a Japan-ASEAN FTA, Tokyo will seek to check China’s lone lead in the region and protect its vested interests in Southeast Asia, which Tokyo believes lie within its sphere of influence. The other side of Japan’s sense of vigilance against China, however, reeks of intent to climb on the bandwagon of China’s economic growth. In this vein, Japanese businesses’ advance into and investment in China will continue to expand.
Japan is highly likely to opt for a consecutive strategy to forge a regional multilateral institution in East Asia. It will start by building a network of cooperative relations combining an accord with Korea―forged first―and a pact with the ASEAN―concluded later―and, using this layer of bilateral and multilateral arrangements as the basis, seek to forge a multilateral institution that encompasses China.
While taking full advantage of the regional multilateral cooperative mechanisms that are already operating in East Asia, such as the Asia-Pacific Economic Cooperation (APEC), ASEAN+3, ASEAN Regional Forum (ARF), and Asia-Europe Meeting (ASEM), Japan will look to utilizing Northeast Asia summit talks, which became institutionalized in 2003, as a leading vehicle for advancing cooperation and raising its own voice in Northeast Asia.

2.2.3 Policy Toward the Korean Peninsula

South Korea Policy

As was the case in 2003, Japan is projected to pool diplomatic efforts to minimize sources of friction and conflict with South Korea in 2004. Japan is likely to propose and quicken steps to give concrete shape to various cooperative programs to commemorate the 40th anniversary of the normalization of Korea-Japan diplomatic relations in 2005. The two countries are expected to actively promote a Korea