WORLD AGENDA 2016Opinion leaders from 8 nations discuss
global politics, economy at Tokyo forum

March 31, 2016

The Genron NPO launched their first official initiative of its World Agenda Council, a body that aims to improve multilateral discussion of global issues, with the World Agenda 2016 international symposium, held on March 27, 2016, at the United Nations University in Tokyo, Japan.

Session 1 of the event was titled "International Instability and Peace-Building Efforts." After a brief introduction by moderator Seiichi Kondo, president of the Kondo Research Institute of Cultural and Foreign Affairs and former Commissioner of the Agency for Cultural Affairs, Japanese Deputy Minister of Foreign Affairs Shinsuke Sugiyama provided the keynote remarks.

Sugiyama laid out for the audience his interpretation of the political situation the world faces today - that of 19th century political actors trying to deal with 21st century issues. The traditional concept of state actors divided by borders is changing, he said, and this paradigm shift makes traditional security thinking insufficient. He asserted Japan's official goal of becoming a political thought leader in Asia, while actively contributing to peace from the globe.

Kondo utilized the Deputy Minister's remarks as a foundation for the first discussion question, posed to four of the panelists:

Who should be taking a leadership position in the world today?

First to respond was Bruce Jones, vice president and director of the Foreign Policy program at the Brookings Institution in the United States and a senior fellow in the Brooking's Project on International Order and Strategy. Jones stated that "we are at an inflection point in the international order." Whereas there is a great amount of cooperation between the current powers, there remain a number of sources of tension as well.

Jones said that the world seems to be returning to "a form of proxy warfare like we experienced in the cold war," and pointed out that both the U.S. and China are at inflection points as well. China is balanced between opening up economically (which Jones called the Shanghai approach) and closing down politically (the Beijing approach), and the U.S. is poised between an internationalist stance and a return to isolationism. In that context, Jones said, the G-7 needs to do two things: take a unified position in regards the situation in the South China Sea, and increase economic openness.

Sunjoy Joshi, director of the Observer Research Foundation in India, pointed out a number of the challenges that arise from the changing face of globalization. Power today is shifting to the hands of "different kinds of countries" - countries that have large economies, a large share of the global GDP, but which are, in essence, low-income countries. Institutions are ignoring that shift, Joshi said, and he added that the G-7 must dig deeper into the inherent economic and political "contradictions" that were exposed by the 2008 economic crisis.

Thomas Gomart, director of the French Institute of International Relations, sees a disconnect between the globalization that is moving forward in technological terms, and the globalization that is advancing in institutional and political terms. There is "a dangerous convergence with terrorists and the vox populi," he said.

ithin the framework of the G7, Gomart believes "it's high time to talk about economic sanctions as a tool of policy." There are still some political costs, and the discussion must involve the BRICS countries who still express reluctance against economic sanctions, but as a policy tool, economic sanctions "should be debated much further between G-7 members."

Yoriko Kawaguchi, a professor at Meiji University and former Minister for Foreign Affairs, believes the reason behind the paradigm shift in four key areas: the U.S., China, informatics, and the economy. First, in order to understand the paradigm shift, we need to understand why the U.S. is so inward-looking, she said, citing a 2013 survey that found 52 percent of respondents saying that "the U.S. should be isolationist." In contrast, China's influence on the shift comes from its economic and systemic problems.

Regarding informatics, Kawaguchi believes that while it is important to "incorporate the views of developing countries," ultimately, the G-7 is responsible for paying for and maintaining a stable order. Finally, Kawaguchi noted that while intertwined economics can't stop conflict from arising, she said, it can "raise the threshold for conflict", and Japan is in a good position to help deal with such issues at the G-7 summit.

Kondo next asked the other five panelists about the challenges facing liberal democracy now: should we put less weight on the principles and values upon which liberal democracy is based and focus on more immediate issues?

Rohinton Medhora, president of the Centre for International Governance Innovation in Canada, pointed out that the subject of "values" is a complex one. The issue lies in how to discuss subjects for which values are important when there is no institution in place. The easiest situation is where the values are not an issue, but an institution exists, e.g. the World Health Organization. At the other extreme are issues where values are important and no institution exists, e.g. the Internet, which stands "at a cusp, and it could fracture." While "fundamentally different views" on privacy, security and other issues exist, there is no forum in which to discuss them.

Philips Vermonte, executive director of the Centre for Strategic and International Studies in Indonesia, reminded the audience that "democracy and prosperity are intertwined" and that economic crises could lead to lack of faith in the democratic system itself. Developed countries should help less-developed countries prevent the problems that arise through absence of government from spilling over into other countries, "where everyone has to deal with them." He also hopes that Indonesia - a predominantly Muslim country - can serve as a model for other countries and show that "it is not the religion but the moderating effect of electoral politics" that matters.

Hanns G. Hilpert, head of the Asia Research Division at the German Institute for International and Security Affairs, stated that the main deficiency in applying Western values has been Western behavior in terms of following them. However, the power of these norms is in the fact that they allow for self-correction and improvement, he believes, and "this kind of discussion is useful and healthy and will strengthen the West."

Akihiko Tanaka, a professor at the University of Tokyo and former president of the Japan International Cooperation Agency, reminded the panel that the true value of liberal democracy is the value of human beings, and such ideas are not limited to the West but "are values that can be shared across the human race."

For liberal democracy to improve, Tanaka says, "we have to be students of each other" but we must remember that society is complex organism; traditions and customs differ, and utilizing cookie-cutter copies of the democratic system could lead to increased ethnic conflict.

Ichiro Fujisaki, chairman of the Sophia Institute for International Relations and former ambassador to the United States, offered a word of warning: democracy (i.e. the electoral process) is important, but diversity and patience are also important elements of the system. Democracy embraces diversity, and allows the people to participate. There is a leader, and the people are allowed to criticize that leader. Fujisaki believes that "We should be more confident in promoting the democratic, and not focus on making it more palatable to other cultures."

Session 2 of the event was titled, "World Economic Instability and Associated Systemic Risks." Most of the guests from overseas remained on the panel to provide their considered opinions.

The session began with the words of the second keynote speaker of the day, Masatsugu Asakawa, Vice Minister of Finance for International Affairs, who laid the ground for the coming discussion by providing an overview of the current economic situation. He pointed to four primary risks that need to be addressed.

First is the downturn in China's economy. The Chinese economy had seemed stable, and Chinese authorities are trying to control the exchange rate, but "intervention isn't going to be enough." With too much capacity, excessive credit, and too many non-performing assets, something new must be done. Asakawa believes that a social welfare system will help boost consumer confidence.

The sudden drop in oil prices is another issue that Asakawa believes is increasing market risk. As oil prices drop, risk tends to increase, and while consumers in China and Japan benefit from low oil prices, risks tend to be realized faster than benefits.

The third risk is the problem of U.S. interest rates. They were predicted to rise in March, but had not done so by the time of World Agenda 2016. Asakawa did point out that while emerging countries are not doing so well right now, the U.S. and other developed countries but developed are growing relatively well. Inflation may be rising, but so are investment and consumption.

The final issue Asakawa raised was the so-called "Brexit" - the referendum that will determine whether or not the United Kingdom leaves the European Union - and the challenges Europe will face if the U.K. pulls out.

Session moderator Yasushi Kudo, president of The Genron NPO, asked the panelists to provide their perspectives on these risks - and specifically whether they thought the attempts at structural change in China would be successful.

Geng Xiao, a professor at the University of Hong Kong and executive director of the IFF Institute, noted that China observers should be watching with some patience. China is trying to contribute to the global order, Xiao stated, and he believes that the last 30 years have seen Chinese leaders and Chinese youth exposed to more ideas. In his opinion, the Chinese will converge with Japan and elsewhere in terms of thinking, but it will take time.

"The country is just so big and still in the early stage of modernization," he reminded the panel. "We need patience to see the progress."

In regards to structural change, Xiao discussed where he believes the issues originated: the success of local competition. That success led to high growth that brought 600 million people out of poverty, but in doing so, "it created corruption, pollution, overcapacity and debt problems." Fixing such structural problems is "like an engine that you have to fix mid-air." When President Xi Jinping's government began to address the issues, growth slowed.

Xiao noted that compared to advanced economies, "foreign currency is a huge problem" in China. If Chinese residents diversify into international assets, he says, it poses a huge risk of increased capital flight. To deal with that issue, Xiao believes that other countries should allow China to handle the opening of its markets for now.

Toshiro Muto, chairman of the Daiwa Institute of Research and former Deputy Governor of the Bank of Japan, stated that the Chinese government "has to control Renminbi depreciation and address capital flight." "The authorities," he continued, "are trying to support this from the fiscal and financial perspectives, and for a while they can contain those risks."

Muto also praised China's long term approach to dealing with over-capacity, and referred to Japan's own experience with the bursting of the economic bubble in the early 1990s. "Japan was dealing with bad debt of some 100 trillion yen, or 10 percent of what China may have now. It took Japan 10 years to deal with that. I hope China will manage it better than we did, but it will take time," Muto said.

Yasuchika Hasegawa, chairman of the Board at Takeda Pharmaceutical Co. and former chairman of the Japan Association of Corporate Executives, provided a potential blueprint to control future crises and their impact - global cooperation. However, he pointed out that the required structural changes, "can't be reactive." As Darwin said, "the creatures who adapted best to their environment survived. It's not always the most powerful who survive." In other words, as the rate of change accelerates, measures that are implemented as structural issues arise will come too late. "You need to preempt change, and take action ahead of time," he stated.

Session 2 concluded with a summary from Yasushi Kudo, who pointed out that while there were differences in perspective, the panelists did provide a number of suggestions for the upcoming G-7 summit. Those suggestions included the G-7 providing a concrete, unified message on sovereign debt protection; reducing economic barriers, and controlling the spread of protectionism and economic isolationism.

Numerous panelists referred to the idea of "keeping the oil in the ground" as prices remain low, both to improve the chances of achieving environmental targets, and to keep green energies competitive. Finally, particular to the panelists from Europe, the possibility of a "Brexit" is thought to pose potential challenges, not only to the rest of the E.U. if the U.K. leaves, but to the U.K. itself.

Read more:
The Genron NPO's new World Agenda Council to promote debate on global issues
On the launch of the World Agenda Council

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