Japan looks towards EU in search of powerful geopolitical partnership

Date: 06/03/03

The recently-appointed European Commission "ambassador" to Japan, Bernhard Zepter, is relishing the challenges of his new role. Words and pictures by EV editor Dennis Abbott, who met him in Tokyo

IF IT weren't for his neat, cropped grey hair and a CV which bears witness to years of international experience, on first impressions one could be forgiven for thinking that Bernhard Zepter was new to the diplomatic game.

The 58-year-old head of the European Commission's delegation in Tokyo doesn't fit the stereotypical image of a fusty, foreign affairs man.

As diplomats go, he is refreshingly forthright and perhaps even rather outspoken by the standards of Japan's "polite society".

He doesn't pull his punches in identifying the tough solutions required if the country is to reverse its decade of economic stagnation and win its fight against deflation.

But more of that later.

Zepter, former deputy secretary-general of the European Commission and a one-time deputy head of cabinet to Jacques Delors, leapt at the opportunity to take over as the EU's man in Tokyo after Dane Ove Juul Jorgensen stepped down last summer.

Although he's been in the post less than six months, the Bavarian already looks completely at home in his new surroundings on the fifth floor of "Europa House". A discreet, modern glass-fronted building in an area dotted with embassies, it lies a short distance from the Imperial Palace (off-limits to the public) and controversial Yasukuni Shrine to Japan's war dead (it also enshrines war criminals).

The EU's base is smaller than many of the member state missions. For instance, the UK embassy, around the corner, is at least ten times its size.

Even the Vatican embassy, housed in an elegant villa next door to Europa House, looks a good deal more spacious.

Zepter isn't complaining though. There's more than enough room in the seven-storey block for him and his 54 staff, of whom only 17 have been recruited via the EU institutions.

The ambassador reports directly to External Relations Commissioner Chris Patten, although, in practice, he enjoys considerable autonomy - one of the major attractions of the job, he admits.

"I have tremendous freedom of action. The head of the delegation in Japan has much more influence than the head of the delegation in America," says Zepter, explaining that commissioners tend to have better personal contacts in the US because they are used to speaking English.

"This networking doesn't exist in the same way in Japan; a lot more is done through the delegation."

Zepter calls his new home a "fascinating" country and one that is keen to develop its ties with the EU.

"Japan knows the EU is relevant to them. The single market and success of the euro has made a difference.

"They are more curious about Europe and they are looking for a powerful geopolitical partner."

Japan's economic problems have been well documented, but Zepter says they shouldn't be overdone. "It's still a very wealthy country - people tend to forget that."

However, he is not convinced that Japan is facing up to its problems or ready to accept the tough medicine required to get the economy back on track.

Prime Minister Junichiro Koizumi's decision last week to nominate policy moderate Toshihiko Fukui as the next governor of the Bank of Japan has only reinforced such concerns in the West.

"The Japanese will only restructure when they are squeezed against the wall, but they are not squeezed yet," says Zepter.

Nevertheless, he believes that Koizumi's government wants to be "bullied" by the international community "to do what is necessary".

The Japanese have a special term for this influence from abroad - gaiatsu.

"The pressure is always to Japan's advantage: they have difficulty accepting it, but they are disappointed if they are not bullied," claims Zepter, smiling.

The EU is pressing for a bold programme of regulatory reform to shake-up Japan's overly bureaucratic and protectionist infrastructure.

"Koizumi has said he wants to double FDI [foreign direct investment] in five years, but first you have to create the appropriate conditions," says Zepter. "Japan has to be more transparent."

That means enforcing competition with vigour, adopting a model of independent regulation and axing rules which have kept the country's rate of business start-ups below that of their major trading partners.

"The Japanese have established a structure [for regulatory reform] and are asking the EU and the Commission for input. If the reforms work, new ideas will come in, new management procedures, fresh money."

But that still looks some way off.

"Japan has real structural problems and I don't see light at the end of the tunnel for now," Zepter admits. "The bureaucracy's everywhere and they're still spending too much public money on "white elephants".

"I read recently that that they spend 40 times more on public works than America per capita. Even the beaches are full of concrete.

"They want to make the country more attractive for tourists. I tell them, 'you need less concrete!'"

Even more important, he suggests, is the need to ensure a free flow of information to the media.

At present, the channels of communication from the government and leading companies are tightly controlled through Japan's kisha press club system, which means only the privileged few are properly served.

"If you're not a member of the kisha club, you're not informed.

"That's why a lot of foreign correspondents leave," says Zepter.

Despite these misgivings, the EU ambassador - the status is accorded to him by Emperor Akihito rather than Brussels - cautions against those who suggest the Union should be concentrating on developing a relationship with communist China instead.

"China is a bet on the future: it might go well, it might not. There's a lot of corruption in the system, with risks to intellectual property rights and so on.

"The reliable partner remains Japan. It would be a big mistake to forget that."

Indeed, Zepter believes that the EU can learn a lot from the world's second largest economy. He singles out the low level of crime, high work ethic, relatively small gap between rich and poor, solid research capacity and honesty. "Once you make a deal with the Japanese, they stick to their word," he adds.

Walking the streets of Tokyo, there is little on the surface to suggest that this is a city potentially facing financial meltdown. The people look affluent and cheerful. Designer-label stores such as Gucci, Tiffany, Chanel and Louis Vuitton (one academic told me that Japan accounts for 70% of the world market for luxury accessories) still appear to be doing a roaring trade in the fashionable districts of Ginza and Omotesando.

Unlike most capitals, there is little sign of begging - save for a few entrepreneurs who rifle the refuse bins to recover items which they then resell - and hardly any rough sleepers.

Most people have significant savings in post office accounts, insurance schemes or under the mattress - it's the government and banks that are near broke.

Surely Germany, another classic post-war success story turned sour, is in a far worse position? Zepter disagrees entirely.

"The situation is much less dramatic in Germany. The banking system there remains sane and reliable.

"And you have to remember that a state of normality in the domestic market is not the sole criteria.

"Between a fifth and a quarter of Germany's economy is earned abroad - in Japan it's only 10%. Japan has a very high level of indebtedness, it is very far from the Maastricht criteria!"

Economic concerns aside, the EU remains committed to campaigning for Japan to end capital punishment.

Like the US, it has a queue of Death Row inmates, waiting for their turn to face the hangman. The Japan Times carried reports last week of another two people sentenced to death for murder.

But the main thrust of the Commission delegation's work will continue to be based on the joint action plan, unveiled at the December 2001 EU-Japan summit in Brussels, which seeks to increase dialogue on regulatory reform and boost international cooperation. Given Zepter's frank assessment of Japan's weaknesses (and strengths), it is tempting to ask whether he is communicating just as plainly to his hosts to ensure the EU's calls for reform are being heeded.

At least he will soon be able to speak to them like a native after taking Japanese language classes.

Perhaps Zepter might say something along these lines: "Okite, kohinokaoriwo kaide, anatano subeteno seikouni sayanara wo tsugetekudsai." ("Wake up and smell the coffee, or say goodbye to all the success you have built.")

Interview with Bernhard Zepter, the recently-appointed head of the European Commission's delegation to Japan.