Moving Closer, Inch By Inch

Written by Subhash Agrawal | Updated: Aug 26 2004, 05:30am hrs
Official relations between India and Japan have improved beyond those frosty post-Pokharan days when Japan withdrew its ambassador in a dramatic gesture and India responded with an equally overplayed grudge. Since then, there has been pragmatic reassessment on both sides, propelled in large part by a series of nervous geopolitical developments, resulting in the Japanese posture on Indias defence and nuclear policy becoming far more nuanced and discreet.

There are now a number of high-level exchanges and consultations on issues such as regional security, Sri Lanka and even the Iraq war. In 2003, India became the largest recipient of Japanese overseas soft loans. And during the recent visit of the Japanese foreign minister, the two nations even agreed to back each others bids for permanent membership of an enlarged UN Security Council.

Positive as all this is, there is still a wide social, intellectual and emotional chasm between the two countries. In business, there is still little mutual awareness or pull, the Indian successes of Suzuki, Sony and Toyota notwithstanding. Japanese investment in India continues to be minuscule, less than half of one percent of total Japanese investment overseas. In terms of bilateral trade, China recently replaced Japan as Indias top trading partner in the region, with Sino-Indian trade expected to cross $10 billion by next year.

While the mending of relations with Japan may perhaps turn out to be a quiet success story of Indian foreign policy of this era, the India-Japan relationship still remains tenuous and awkward. Why, especially when both are leading democracies of Asia and hold no historical axe to grind against each other Why have Japanese investors not been seduced by Indias growing middle class and the 7% plus GDP growth clocked in two successive quarters

The answers lie partly in the decade-long recession in Japan which is pushing society to fundamental structural changes, if not painful self-appraisal, and partly in culture. In fact, the question being asked around the world, including in Japan itself, is whats wrong with Japan Why did this superstar of the 1980s do so poorly in the last decade

There are perhaps thousands of well-articulated economic essays, articles and doctoral theses out there on the problems of Japanese manufacturing, high costs, woefully idle corporate assets, complex cross-holdings of shares etc. But in many ways these economic issues are dwarfed by social, political and cultural issues that Japan needs to address. For instance, why do Japanese firms have such absurdly high levels of Japanese expatriates in top jobs in their overseas subsidiaries Why do they need such extensive handholding

In India, for instance, Japanese companies have invariably chosen the wrong time, wrong location and the wrong local partner for their investments. And this is despite the extensive due-diligence in Japanese firms. When will the Japanese really learn foreign languages and local knowledge and become true globalists

The Japanese are a consensus-driven people and slow to change, but for all their faults they also hold some exemplary qualities such as teamwork, cooperation, rectitude and harmony. But the real play in Japan, and an important milestone for India to watch, could well be in the transformation of its society rather than its economy. And, of course, the question of how Japan redefines its priorities in Asia. Despite its economic success and its sometimes checkbook diplomacy, Japan has never really achieved influence on the world stage, often waiting for signals from Washington on major issues.

Socio-political change in Japan is in fact happening, and is being shaped by the rise of China and the realisation for the first time that Japans economic and strategic interests have to be protected far more independently of the US. The best sellers in Japan continue to be books like The China That Threatens to Swallow Japan and The Ugly Chinese.

Coming back to bilateral realities, the Japanese have always viewed Indians as somehow deserving more training than respect. They find us too ready with glib answers, or too unruly. We certainly have our faults these and perhaps others but in the context of globalisation or Asian geopolitics, it may be time for the Japanese to learn a few hard-nosed lessons from India.

The author is editor of India Focus