Beware a more muscular Japan

Japan's offer to help in Iraq - with $5 billion and 2,000 peacekeeping troops - will make it easier for the US to improve security in Iraq and foster a civil society.

But this gift wasn't born of altruism. Japan - a resource-poor country - has a stake in seeing Iraqi oil brought back on the international market. And its aid to the US mission in Iraq has both economic and military strings that could harm US-Japanese relations long term.

For one thing, Japan's money appears to be a shield from overt criticism of a currency policy that could have serious implications for the US economy. And if Japan's peacekeeping foray in Iraq is a preliminary step to raising the country's military profile - something the Bush administration has advocated - it could allow Japan to pursue a more independent path. That would lay the groundwork for Japan to join the ranks of US geopolitical partners that don't always follow the American line. The US ought to examine the implicit consequences of Japan's largess.

In the short term, the US is paying an economic price for Japan's help: Japan's fat check looks like an unspoken quid pro quo that could worsen prospects for the ailing US manufacturing sector. It's no accident that at the same time Prime Minister Koizumi made his $5 billion pledge, Japan was buying dollars - depreciating the value of the yen. A strong dollar makes US exports more expensive abroad, depresses US sales, and increases joblessness.

Mindful of the harm to US interests, Treasury Secretary John Snow, in September, admonished Japan to let its currency appreciate. But a key part of the prime minister's plan to keep Japan's fragile recovery going is to spur exports, and after the value of the yen jumped, Mr. Koizumi quickly intervened in the markets again. Since then, there's been little US comment on Tokyo's exchance policy. Apparently, Japan's $5 billion check has bought cover.

This inaction could be costly for Bush. A big chunk of manufacturing jobs has been lost in swing states like Pennsylvania and Michigan, and a jobless recovery could bring support for a Democratic challenger.

But at this point Iraq is Bush's biggest crisis. So Japan's help in the Middle East is likely to outweigh the damage its monetary policies might inflict. Bush administration officials realize they'll pay a price for Koizumi's financial generosity. But they look at Japan's offer of military support - and broader steps the country is taking to rearm - as an unmitigated good.

Certainly, a fresh influx of Japanese troops will help in Iraq. And it's a big deal, because it would be the biggest military operation Japan has engaged in since World War II. But if Japan decides to distance itself from its pacifist Constitution and beef up its defense structure - as some Japanese politicians have advocated - there could be unpleasant long-term consequences for the US. The Bush administration wants Japan to become a military power because it could provide a proxy force for the US in a dangerous part of the world (North Korea and China are neighbors). That view presumes Japan would be an unwavering ally even if it didn't depend on the US for its defense. But many Japanese policymakers suggest the government is alarmed by the unilateralist and muscular power the US has become.

"In my three decades in government, this may be the most difficult administration to be a good ally to," a senior Japanese foreign policy official said earlier this year. But those concerns aren't going to be openly expressed as long as Japan looks to the US for its protection. It's a big reason Koizumi staunchly supported US action in Iraq, even as 70 percent of the Japanese opposed the war.

If Japan had a more autonomous defense structure, government leaders wouldn't feel as obligated to toe the line on foreign initiatives its people don't support - like the war in Iraq. "We can more frankly consult with big brother if our military posture changes," is the way the Japanese government official put it.

A Japanese journalist pointed to the example of Germany, another country that was vanquished in World War II and adopted a national policy of pacifism. But under German Chancellor Gerhard Schröder, the country has been more aggressive in utilizing its troops, most notably aiding the US in postwar Afghanistan. That provided the country leverage to oppose the war in Iraq, the journalist argued: "Germany could speak out. Japan didn't have the right to express its opinion in the same way."

Japan's money and manpower will help in Iraq. But if the effect is to give Japan more autonomy, US policymakers may be surprised at how loyal allies aren't so hesitant to chart their own course if they aren't dependent on "big brother." And that could make life more difficult for future US administrations.

Alexandra Starr, Business Week's Capitol Hill correspondent, was a Foreign Press Center fellow in Tokyo last March.

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