World unemployment rising; rates, responses vary

In the October 2, 2009 article "World unemployment rising; rates, responses vary," Associated Press business writer Emma Vandore reports:

PARIS – Unemployment is rising around the world as the recession leaves few corners untouched — but sharp differences remain between companies directly hit by financial or housing-market collapses and those that have deliberately protected jobs with expensive measures — including subsidizing shorter working weeks.

Unemployment rates in the 30 wealthy countries that belong to the Organization for Economic Cooperation and Development range from a low of 3.2 percent in the Netherlands to 17.6 percent in Spain, according to July figures.

In the developing world, the downturn has also taken its toll. Unemployment in Brazil appears now to be easing a bit, but Mexico in August posted its highest jobless rate in 13 years. In Africa, the continent's largest economy, South Africa, is in the grips of its first recession in 17 years and about a quarter of the population is officially without work.

The U.S. unemployment rate was 9.4 percent in July, above the European Union rate of 8.8 percent. By August, the U.S unemployment rate had ticked up to 9.7 percent, a 26-year high. On Friday, the Labor Department is due to release data for September and economists are forecasting the rate edged up to 9.8 percent. Most economists see U.S. unemployment topping 10 percent by early next year.

The speed of the increase in unemployment rates also varies, with countries like France starting with relatively high unemployment and shifting only slightly upward, and Britain and Ireland starting low but rising fast.

"There are quite significant differences across countries and regions," said John Martin, head of the OECD's employment, labor and social affairs division. "Quite a number of the countries which so far have not seen major increases in unemployment were countries that either have expanded short-time working schemes or introduced them in the first places."

But he noted such programs — where workers agree to fewer hours and the government helps make up the difference in their pay — may not be affordable for much longer.

The OECD expects the jobless rate in its 30 members to approach 10 percent in the second half of next year, meaning 57 million people out of work. If forecasts are correct, about half of those would have joined the jobless lines in the three years from the start of the downturn to the end of 2010.

Stefano Scarpetta, head of employment analysis at the OECD, said that the U.S. is historically quicker at reducing unemployment after a shock than Europe. But still, he said it could take three years or longer for the U.S. to return to pre-crisis levels.

Here is a look at unemployment rates around the world:

GERMANY — Unemployment edged up this year to 7.7 percent in July from an annual rate of 7.3 percent in 2008, but that was down from 8.4 percent in 2007, according to harmonized OECD data. Employment has been kept in check so far by government financial support for workers put on shorter hours in order to avoid mass layoffs.

FRANCE — The increase in French jobless lines has been somewhat tempered by short-work arrangements and government incentives such as exempting payroll taxes for some workers. The unemployment rate rose to 9.2 percent in July from 7.8 in 2008, according to the OECD. It is expected to hit 10 percent by the end of the year.

BRITAIN — Unemployment hit a nearly 13-year high of 7.9 percent in July. The number of people out of work looks on course to pass the three million mark next year as the impact of the recession translates to rising dole queues. However, the number losing their jobs has fallen from spring highs.

SPAIN — Spain has gone from being a European model for growth, creating more than a third of all new euro-zone jobs over the past decade, to having the region's highest unemployment rate. This stems mainly from the collapse of a construction boom and a credit-fueled consumer spending spree over the past two years.

The OECD charts the rise in unemployment as moving from 8.3 percent in 2007 to 11.3 percent in 2008 and 17.6 percent this July.

IRELAND — The story is similar in Ireland, where unemployment has surged from 4.6 percent in 2007 to 6 percent in 2008 and 13.3 percent in July.

KOSOVO — The Balkan nation is one of the poorest in Europe, and not a member of the OECD club. With stagnant growth, its unemployment rate was 46.3 percent in 2007, according to the International Labor Organization. That may include the so-called "gray economy," in which people are paid under the table.

JAPAN — Japan's unemployment rate actually dipped to 5.5 percent in August after reaching 5.7 percent in July, the highest level in Japan's post-World War II era, amid mounting job and wage cuts. Still, the total number of jobless in August rose 32.7 percent from a year earlier to 3.61 million. The number of temporary workers has surged in recent years, reaching around a third of the work force in the world's No. 2 economy. The plight of these workers, who with little job security have born the brunt of the recession, has stirred emotions in Japan.

CHINA — The official urban unemployment rate was 4.3 percent for the three months ended June 30 but the actual level could be more than double that because the government system ignores millions of migrant workers and employees who are furloughed by state companies but not recorded as laid off. As of June 30, there were 9 million registered unemployed people in an urban work force of 210 million, according to a spokesman for the Ministry of Human Resources and Social Security, Yin Chengji.

As many as 30 million migrants are believed to have lost jobs in export-oriented factories in late 2008, government officials said. Some are believed to have found work on construction projects financed by Beijing's stimulus but no figures have been reported.

INDIA — The picture is even less clear in India where the government does an official employment survey only about once every five years. Ninety percent of the work force is in the so-called informal sector.

MEXICO — Mexico's unemployment rate rose to 6.28 percent in August, the highest rate in more than 13 years, according to The National Statistics Institute. The jobless rate among the country's roughly 45 million workers was up from 4.2 percent in August 2008. President Felipe Calderon has announced reforms to ease red tape and lower costs for investors in public works projects to foster job growth. The government also started paying one-third of the salaries of automotive workers to curb layoffs at the plants.

BRAZIL — Unemployment in Brazil reached 8.1 percent in August, remaining stable over the last two months. The figure shows a drop in the jobless rate from its peak of 9 percent in March. Brazil emerged from recession in the second quarter of this year and analysts are now predicting the economy will expand slightly in 2009.

SOUTH AFRICA — The unemployment rate in South Africa hovered at 23.6 percent in this year's second quarter, according to the country's statistics office. That was up slightly from 23.1 percent in the April-June quarter of 2008, as South Africa is mired in its first recession since 1992.

The African continent as a whole was initially unscathed by the financial turmoil that roiled Europe and the United States. But the collapse of Western consumer demand has meant Africans are selling less of the commodities on which many of their economies depend.

No we can't? UK think tank says US power is fading

In the September 15, 2009 article "No we can't? UK think tank says US power is fading," Associated Press writer Raphael G. Satter reports:

LONDON – A weakened United States could start retreating from the world stage without help from its allies abroad, an international strategic affairs think tank said Tuesday.

The respected London-based International Institute for Strategic Studies said President Barack Obama will increasingly have to turn to others for help dealing with the world's problems — in part because he has no alternative.

"Domestically Obama may have campaigned on the theme 'yes we can'; internationally he may increasingly have to argue 'no we can't'," the institute said in its annual review of world affairs.

The report said the U.S. struggles against insurgent groups in Iraq and Afghanistan had exposed the limits of the country's military muscle, while the near-collapse of the world financial markets sapped the economic base on which that muscle relied.
The report also claimed that the U.S. had lost traction in its efforts to contain Iran's nuclear program and bring peace to the Middle East.

"Clearly the U.S. share of 'global power,' however measured, is in decline," the report said.

The head of another respected London think tank, Robin Niblett of Chatham House, said the rise in the relative power of China, India, Russia and the European Union has made it harder for the U.S. to exercise its influence.

"America should apply changes in leadership style, but I wouldn't overplay the decline because decline is relative," said Niblett — who was not involved in drawing up Tuesday's report. "One should not doubt that the U.S. remains the most powerful nation in the world, but it's difficult to use the power and to use it to influence others."

In addition to a rise in regional powers, Niblett said the U.S. has long been viewed as being part of the problem rather than the solution on many issues — including climate change, the financial crisis, and the failure of the Middle East peace process.
"It's also carrying the baggage of failed policies and of a failed financial approach," Niblett said, referring to the Bush administration. "There's a lot of catching up to be done."

The IISS report praised Obama, saying that he recognized there was only so much America could do "to impose its views on others."

After years of often thorny relationships between the U.S. and its allies during Bush's administration, Obama has talked of the need to work with other nations on such issues as the financial meltdown, climate change and nuclear proliferation.
"These are challenges that no single nation, no matter how powerful, can confront alone," Obama said in April after attending the G-20 summit in London.

"The United States must lead the way," he said. "But our best chance to solve these unprecedented problems comes from acting in concert with other nations."

The think tank's report said Obama could help restore the United States' standing by working with other nations to contain emerging threats to its position as the world's pre-eminent power. Controlling the nuclear ambitions of Iran and North Korea would require help from regional allies, the report said. The same was true of Afghanistan, where the U.S. has had difficulty persuading its NATO partners to follow its lead in boosting the number of troops sent to fight a resurgent Taliban.

"In the next year or two, the greatest demand on U.S. talents and power will be to persuade more to become like minded and adopt greater burdens," the report said.

Niblett said Obama was moving in the right direction.

"This administration is far more frank about the U.S. interdependence with rest of the world, and that's a good thing," Niblett said.
___

Tariff on Tires to Cost Consumers

In the September 14, 2009 Wall Street Journal article "Tariff on Tires to Cost Consumers," Timothy Aeppel reports on a trade war between the U.S. and China in the market for tires:

Consumers who buy low-price Chinese tires — the bulk of the tires China exports to the U.S. — will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.

The tariffs, which apply to all Chinese tires, will cut off much of the flow of the more than 46 million Chinese tires that came to the U.S. last year, nearly 17% of all tires sold in the country.

The low end of the market will feel the impact of the tariff most, as U.S. manufacturers, who joined the Chinese in opposing the tariffs, have said it isn't profitable to produce inexpensive tires in domestic plants.

"I think within the next 60 days you'll see some pretty significant price increases," said Jim Mayfield, president of Del-Nat Tire Corp. of Memphis, Tenn., a large importer and distributor of Chinese tires. He estimates prices for "entry-level" tires could increase 20% to 30%.

Low-end tires cost roughly $50 to $60 apiece, while premium tires can sell for $200 to $250.

It will take many months for producers in places like Indonesia and Brazil to pick up the slack. And any tire manufacturer that wants to get involved in the low-end business would have to revamp factory lines to produce the sizes and types of tires favored by U.S. consumers, a costly and complicated process.

There could also be shortages, Mr. Mayfield said, as existing supplies run low and importers have trouble finding alternative sources. Many importers stopped placing orders for Chinese tires several weeks ago, fearing they might end up ordering tires that would carry a hefty tariff by the time they arrived in U.S. ports.

The tariffs won't just hit Chinese producers. Both of the U.S.'s remaining domestic manufacturers — Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. — make tires in China that they sell in the U.S. Cooper this year is on track to import 2.5 million tires that it made in China. It was planning to boost that to four million next year.

Most of the tires coming from China are sold under private-label names and little-known discount brands. Many of these tires are sold through large retailers and national auto chains.

While China mainly exports tires at the low end of the market, it does export tires at all price points, said Robert Purcell, chief executive officer of Purcell Tire & Rubber Co. in Potosi, Mo., which has 70 outlets selling retail and commercial tires. He said Chinese producers appear to be steadily moving toward selling higher-price tires as they and foreign companies invest in new technology in China.

Rod Lache, an industry analyst at Deutsche Bank Securities, said the tariff is hitting at a difficult moment, which could compound turbulence in the marketplace. Inventories are low, he said, as companies have reduced stocks in the face of the recession.

Meanwhile, a massive reduction in capacity is taking place. In 2005, North America had the capacity to produce 370 million tires. Today, that number has been cut by more than 40 million — and a further 35 million are in the process of being eliminated.

"And now demand is starting to creep back up," Mr. Lache said.

Write to Timothy Aeppel at timothy.aeppel@wsj.com

Mercantilism

The main goal of mercantilism was to increase the money in a country’s treasury by creating a favorable balance of trade. A country had a favorable balance of trade if it had more exports than imports. Colonies helped a country have the goods to maintain a favorable balance of trade. For example, say Spain sold $500 in sugar to France, and France sold $300 in cloth to Spain. France would also have to pay Spain $200 worth of precious metals to pay for all the sugar. Spain would then have a favorable balance of trade because the value of its exports (sugar) was greater than the value of its imports (cloth). Spain would become richer because of the precious metals it received from France.


Colonies helped nations grow rich in several ways. Colonies provided various raw materials as well as mines that produced gold and silver. In addition, colonies served as markets for goods made in the home country.

Source: http://mrthompson.org/text/2-1%20Spain%20Claims%20an%20Empire.htm

Global Arcade

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Inside, you'll find Shockwave games and quizzes, message areas to talk about global issues, stories and interviews on globalization, and links to many more organizations and resources for information and action.

A New Path for Japan

A New Path for Japan

August 27, 2009
OP-ED CONTRIBUTOR
A New Path for Japan

By YUKIO HATOYAMA

TOKYO — In the post-Cold War period, Japan has been continually buffeted by the winds of market fundamentalism in a U.S.-led movement that is more usually called globalization. In the fundamentalist pursuit of capitalism people are treated not as an end but as a means. Consequently, human dignity is lost.

How can we put an end to unrestrained market fundamentalism and financial capitalism, that are void of morals or moderation, in order to protect the finances and livelihoods of our citizens? That is the issue we are now facing.

In these times, we must return to the idea of fraternity — as in the French slogan “liberté, égalité, fraternité” — as a force for moderating the danger inherent within freedom.

Fraternity as I mean it can be described as a principle that aims to adjust to the excesses of the current globalized brand of capitalism and accommodate the local economic practices that have been fostered through our traditions.

The recent economic crisis resulted from a way of thinking based on the idea that American-style free-market economics represents a universal and ideal economic order, and that all countries should modify the traditions and regulations governing their economies in line with global (or rather American) standards.

In Japan, opinion was divided on how far the trend toward globalization should go. Some advocated the active embrace of globalism and leaving everything up to the dictates of the market. Others favored a more reticent approach, believing that efforts should be made to expand the social safety net and protect our traditional economic activities. Since the administration of Prime Minister Junichiro Koizumi (2001-2006), the Liberal Democratic Party has stressed the former, while we in the Democratic Party of Japan have tended toward the latter position.

The economic order in any country is built up over long years and reflects the influence of traditions, habits and national lifestyles. But globalism has progressed without any regard for non-economic values, or for environmental issues or problems of resource restriction.

If we look back on the changes in Japanese society since the end of the Cold War, I believe it is no exaggeration to say that the global economy has damaged traditional economic activities and destroyed local communities.

In terms of market theory, people are simply personnel expenses. But in the real world people support the fabric of the local community and are the physical embodiment of its lifestyle, traditions and culture. An individual gains respect as a person by acquiring a job and a role within the local community and being able to maintain his family’s livelihood.

Under the principle of fraternity, we would not implement policies that leave areas relating to human lives and safety — such as agriculture, the environment and medicine — to the mercy of globalism.

Our responsibility as politicians is to refocus our attention on those non-economic values that have been thrown aside by the march of globalism. We must work on policies that regenerate the ties that bring people together, that take greater account of nature and the environment, that rebuild welfare and medical systems, that provide better education and child-rearing support, and that address wealth disparities.

Another national goal that emerges from the concept of fraternity is the creation of an East Asian community. Of course, the Japan-U.S. security pact will continue to be the cornerstone of Japanese diplomatic policy.

But at the same time, we must not forget our identity as a nation located in Asia. I believe that the East Asian region, which is showing increasing vitality, must be recognized as Japan’s basic sphere of being. So we must continue to build frameworks for stable economic cooperation and security across the region.

The financial crisis has suggested to many that the era of U.S. unilateralism may come to an end. It has also raised doubts about the permanence of the dollar as the key global currency.

I also feel that as a result of the failure of the Iraq war and the financial crisis, the era of U.S.-led globalism is coming to an end and that we are moving toward an era of multipolarity. But at present no one country is ready to replace the United States as the dominant country. Nor is there a currency ready to replace the dollar as the world’s key currency. Although the influence of the U.S. is declining, it will remain the world’s leading military and economic power for the next two to three decades.

Current developments show clearly that China will become one of the world’s leading economic nations while also continuing to expand its military power. The size of China’s economy will surpass that of Japan in the not-too-distant future.

How should Japan maintain its political and economic independence and protect its national interest when caught between the United States, which is fighting to retain its position as the world’s dominant power, and China, which is seeking ways to become dominant?

This is a question of concern not only to Japan but also to the small and medium-sized nations in Asia. They want the military power of the U.S. to function effectively for the stability of the region but want to restrain U.S. political and economic excesses. They also want to reduce the military threat posed by our neighbor China while ensuring that China’s expanding economy develops in an orderly fashion. These are major factors accelerating regional integration.

Today, as the supranational political and economic philosophies of Marxism and globalism have, for better or for worse, stagnated, nationalism is once again starting to have a major influence in various countries.

As we seek to build new structures for international cooperation, we must overcome excessive nationalism and go down a path toward rule-based economic cooperation and security.

Unlike Europe, the countries of this region differ in size, development stage and political system, so economic integration cannot be achieved over the short term. However, we should nonetheless aspire to move toward regional currency integration as a natural extension of the rapid economic growth begun by Japan, followed by South Korea, Taiwan and Hong Kong, and then achieved by the Association of Southeast Asian Nations (ASEAN) and China. We must spare no effort to build the permanent security frameworks essential to underpinning currency integration.

Establishing a common Asian currency will likely take more than 10 years. For such a single currency to bring about political integration will surely take longer still.

ASEAN, Japan, China (including Hong Kong), South Korea and Taiwan now account for one quarter of the world’s gross domestic product. The economic power of the East Asian region and the interdependent relationships within the region have grown wider and deeper. So the structures required for the formation of a regional economic bloc are already in place.

On the other hand, due to historical and cultural conflicts as well as conflicting national security interests, we must recognize that there are numerous difficult political issues. The problems of increased militarization and territorial disputes cannot be resolved by bilateral negotiations between, for example, Japan and South Korea, or Japan and China. The more these problems are discussed bilaterally, the greater the risk that emotions become inflamed and nationalism intensified.

Therefore, I would suggest, somewhat paradoxically, that the issues that stand in the way of regional integration can only be truly resolved by moving toward greater integration. The experience of the E.U. shows us how regional integration can defuse territorial disputes.

I believe that regional integration and collective security is the path we should follow toward realizing the principles of pacifism and multilateral cooperation advocated by the Japanese Constitution. It is also the appropriate path for protecting Japan’s political and economic independence and pursuing our interests in our position between the United States and China.

Let me conclude by quoting the words of Count Coudenhove-Kalergi, founder of the first popular movement for a united Europe, written 85 years ago in “Pan-Europa” (my grandfather, Ichiro Hatoyama, translated his book, “The Totalitarian State Against Man,” into Japanese): “All great historical ideas started as a utopian dream and ended with reality. Whether a particular idea remains as a utopian dream or becomes a reality depends on the number of people who believe in the ideal and their ability to act upon it.”

Yukio Hatoyama heads the Democratic Party of Japan, and would become prime minister should the party win in Sunday’s elections. A longer version of this article appears in the September issue of the monthly Japanese journal Voice.

Japan must shake off US-style globalization

"Japan must shake off US-style globalization" is an excerpt from an article by Yukio Hatoyama, the leader of the Democratic Party of Japan.

Tokyo – In the post-cold war period, Japan has been continually buffeted by the winds of market fundamentalism in a US-led movement that is more usually called globalization. Freedom is supposed to be the highest of all values, but in the fundamentalist pursuit of capitalism people are treated not as an end but as a means. Consequently, human dignity has been lost.

The recent financial crisis and its aftermath have once again forced us to take note of this reality. How can we put an end to unrestrained market fundamentalism and financial capitalism that are void of morals or moderation in order to protect the finances and livelihoods of our citizens? That is the issue we are now facing.

In these times, we must return to the idea of fraternity – as in the French slogan "liberté, égalité, fraternité" – as a force for moderating the danger inherent within freedom. It must be the compass that determines our political direction, a yardstick for deciding our policies. The idea of fraternity is also the spirit behind our idea of achieving "an era of independence and coexistence" in today's world.

Fraternity as I mean it can be described as a principle that aims to adjust to the excesses of the current globalized brand of capitalism and accommodate the local economic practices that have been fostered through our traditions.

The recent worldwide economic crisis resulted from a way of thinking based on the principle that American-style free-market economics represents a universal and ideal economic order – and that all countries should modify the traditions and regulations governing their own economy in order to reform the structure of their economic society in line with global standards (or rather American standards).

In Japan, opinion was divided on how far the trend toward globalization should go. Some people advocated the active embrace of globalism and supported leaving everything up to the dictates of the market. Others favored a more reticent approach, believing that effort should be made instead to expand the social safety net and protect our traditional economic activities. Since the administration of Prime Minister Junichiro Koizumi (2001-2006), the Liberal Democratic Party has stressed the former while we in the Democratic Party of Japan have tended toward the latter position.

(For context on Japan's election August 30, read: Briefing: Why power may shift in Japan)

The economic order or local economic activities in any country are built up over long years and reflect the influence of each country's traditions, habits, and national lifestyles. However, globalism progressed without any regard for various non-economic values, nor for environmental issues or problems of resource restriction. If we look back on the changes in Japanese society that have occurred since the end of the cold war, I believe it is no exaggeration to say that the global economy has damaged traditional economic activities and destroyed local communities.

Capital and means of production can now be transferred easily across international borders. However, people cannot move so easily. In terms of market theory, people are simply personnel expenses, but in the real world people support the fabric of the local community and are the physical embodiment of its lifestyle, traditions, and culture. An individual gains respect as a person by acquiring a job and a role within the local community and being able to maintain his family's livelihood.

Under the principle of fraternity, we would not implement policies that leave economic activities in areas relating to human lives and safety, such as agriculture, the environment and medicine, to the mercy of the tides of globalism.

Our responsibility as politicians is to refocus our attention on those non-economic values that have been thrown aside by the march of globalism. We must work on policies that regenerate the ties that bring people together, that take greater account of nature and the environment, that rebuild welfare and medical systems, that provide better education and child rearing support, and that address wealth disparities. This is required in order to create an environment in which each individual citizen is able to pursue happiness.

Overcoming nationalism through an East Asian community

Another national goal that emerges from the concept of fraternity is the creation of an East Asian community. Off course, the Japan-US security pact will continue to be the cornerstone of Japanese diplomatic policy. Unquestionably, the Japan-US relationship is an important pillar of our diplomacy. However, at the same time, we must not forget our identity as a nation located in Asia. I believe that the East Asian region, which is showing increasing vitality in its economic growth and even closer mutual ties, must be recognized as Japan's basic sphere of being. Therefore, we must continue to make efforts to build frameworks for stable economic cooperation and national security across the region.

The recent financial crisis has suggested to many people that the era of American unilateralism may come to an end. It has also made people harbor doubts about the permanence of the dollar as the key global currency. I also feel that as a result of the failure of the Iraq war and the financial crisis, the era of US-led globalism is coming to an end and that we are moving away from a unipolar world toward an era of multipolarity.

However, at present, there is no one country ready to replace the United States as the world's most dominant country. Neither is there a currency ready to replace the dollar as the world's key currency.

Although the influence of the US is declining, it will remain the world's leading military and economic power for the next two to three decades. Current developments show clearly that China, which has by far the world's largest population, will become one of the world's leading economic nations, while also continuing to expand its military power.

The size of China's economy will surpass that of Japan in the not-too-distant future. How should Japan maintain its political and economic independence and protect its national interest when caught between the United States, which is fighting to retain its position as the world's dominant power, and China, which is seeking ways to become dominant?

This is a question of concern not only to Japan but also to the small and medium-sized nations in Asia. They want the military power of the US to function effectively for the stability of the region but want to restrain US political and economic excesses. They also want to reduce the military threat posed by our neighbor China while ensuring that China's expanding economy develops in an orderly fashion. These are major factors accelerating regional integration.

Today, as the supranational political and economic philosophies of Marxism and globalism have, for better or for worse, stagnated, nationalism is once again starting to have a major influence on policymaking decisions in various countries. As symbolized by the anti-Japanese riots that occurred in China a few years ago, the spread of the Internet has accelerated the integration of nationalism and populism, and the emergence of uncontrollable political turbulence is a very real risk.

As we maintain an awareness of this environment and seek to build new structures for international cooperation, we must overcome excessive nationalism and go down a path toward rule-based economic cooperation and security.

Unlike Europe, the countries of this region differ in their population sizes, development stages and political systems, and therefore economic integration cannot be achieved over the short term.

However, we should nonetheless aspire to move toward regional currency integration as a natural extension of the rapid economic growth begun by Japan, followed by South Korea, Taiwan, and Hong Kong, and then achieved by the ASEAN nations and China. We must therefore spare no effort to build the permanent security frameworks essential to underpinning currency integration.

Establishing a common Asian currency will likely take more than 10 years. For such a single currency to bring about political integration will surely take longer still.

ASEAN (Association of Southeast Asian Nations), Japan, China (including Hong Kong), South Korea, and Taiwan now account for one quarter of the world's gross domestic product. The economic power of the East Asian region and the interdependent relationships within the region have grown wider and deeper, which is unprecedented. As such, the underlying structures required for the formation of a regional economic bloc are already in place.

On the other hand, due to the historical and cultural conflicts existing between the countries of this region, in addition to their conflicting national security interests, we must recognize that there are numerous difficult political issues. The problems of increased militarization and territorial disputes cannot be resolved by bilateral negotiations between, for example, Japan and South Korea, or Japan and China. The more these problems are discussed bilaterally, the greater the risk that citizens' emotions in each country will become inflamed and nationalism will be intensified.

Therefore, somewhat paradoxically, I would suggest that the issues that stand in the way of regional integration can only really be resolved through the process of moving toward greater regional integration. The experience of the European Union shows us how regional integration can defuse territorial disputes.

I believe that integration and collective security in the Asia-Pacific region is the path we should follow toward realizing the principles of pacifism and multilateral cooperation advocated by the Japanese constitution. It is also the appropriate path for protecting Japan's political and economic independence and pursuing our national interest from our position between two of the world's great powers, the United States and China.

We are currently standing at a turning point in global history, and therefore our resolve and vision are being tested.

Let me conclude by quoting the words of Count Coudenhove-Kalergi, the father of the European Union, written 85 years ago, when he published "Pan-Europa." (My grandfather, Ichiro Hatoyama, translated his book "The Totalitarian State Against Man" into Japanese.)

"All great historical ideas started as a utopian dream and ended with reality."

"Whether a particular idea remains as a utopian dream or becomes a reality depends on the number of people who believe in the ideal and their ability to act upon it."

Yukio Hatoyama heads the Democratic Party of Japan. This is an abridged version of an article entitled "My Political Philosophy" in the September issue of the monthly Japanese journal "Voice." © Voice/Global Viewpoint Network. Distributed by Tribune Media Services.