SINGAPORE STILL LOOKING FOR A MORE EFFECTIVE JAPAN

C O N F I D E N T I A L SECTION 01 OF 02 SINGAPORE 000302

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/07/2017
TAGS: ECON JA PGOV PREL SN ETRD MARR
SUBJECT: SINGAPORE STILL LOOKING FOR A MORE EFFECTIVE JAPAN


Classified By: Economic/Political Section Chief Ike Reed for
Reasons 1.4b and d.


1. (C) Summary: Singapore officials have long believed that
Japan should do more to capitalize on its significant aid,
trade and investment in the countries of Southeast Asia,
noting that China garners more attention with much less
effort. Singapore and Japan enjoy close economic and
political ties founded on extensive trade and investment
links and overlapping strategic interests. A stronger Japan
would help Singapore realize two of its own strategic
priorities: ensuring that the United States remains fully
engaged in Asia and that proliferating regional groupings
remain open, inclusive and resistant to Chinese domination.
GOS officials are hopeful that a more active foreign policy
under Prime Minister Shinto Abe could translate into more
effective Japanese engagement in the region, though GOS hopes
for a quick turnaround have begun to fade. End Summary.

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Little Diplomatic Bang for the Buck
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2. (C) Senior GOS officials have long lamented Japan's
perceived inability to capitalize on its status as one of
ASEAN's largest sources of foreign direct investment (FDI),
trade, and aid. MFA Second Permanent Secretary Bilahari
Kausikan told a visiting U.S. official that Japan "has done a
lot (for the countries of ASEAN) but through clumsy and
reactive diplomatic skills has painted itself as the past
while China, through adroit and proactive diplomacy, has
managed to paint itself as the future." By contrast, China
has received glowing reviews for its first small-scale aid
projects, Kausikan said. His view was shared by several
local ASEAN and Japan specialists at the Rajaratnam School of
International Studies (RSIS),who told us that despite the
scale of Japan's economic engagement with ASEAN, Japan's
efforts garner "no publicity."


3. (SBU) Japan,s stock of accumulated investment in the
region is massive, and the flow of Japanese FDI is still
large, even though it has not kept pace with earlier years
and other countries have begun catching up. It supplied 11
percent ($24 billion) of total FDI in the countries of ASEAN
in 2005, making it the second biggest source after the United
States. Japan is the ASEAN region's largest external trading
partner, accounting for 13.7 percent of total ASEAN trade, a
slightly higher level than that of the United States, which
was 13.5 percent in 2004. Japan is also a major aid donor in
the ASEAN region. Its Official Development Assistance (ODA)
accounted for 39 percent ($896 million) of all ODA flows to
ASEAN countries in 2004. RSIS academics believe Japan's
limited success in collecting goodwill from ASEAN ODA
recipients is due in part to Japan's colonial legacy, which
created a sense of entitlement within the ASEAN region, but
also in part to Japan's failure to pursue clear foreign
policy objectives.

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Close Ties and Shared Interests
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4. (U) Singapore and Japan enjoy close economic and political
ties and share overlapping interests in the region. Japan
was Singapore's sixth largest trade partner in 2005, and
approximately 1,600 Japanese multinational companies operate
in Singapore. Japan is also a major source of FDI. From
1995-2004, Japan invested $11.3 billion in Singapore, more
than it invested in any other ASEAN country. In 2002, the
two countries signed the Japan-Singapore Economic Agreement
for a New Age Partnership (JSEPA) which further opened
bilateral trade and had the additional aims of encouraging
Japan and Singapore "to take a leadership role in Asia" and
to strengthen "Japan's engagement in Southeast Asia." Senior
officials from the GOS and GOJ regularly visit each other.


5. (C) MFA Japan and Korea Director Alice Cheng told us that,
of the countries in the region, Japan,s strategic interests
were the most consistent and aligned with Singapore,s own.
The two highest strategic priorities for both countries, she
said, were to keep the United States "entrenched" in Asia and
to develop an "open and inclusive" approach in the region,s
emerging institutional architecture. Shared interests
underlie cooperation on a range of other security issues.
Singapore supported Japan's bid for a permanent UN Security
Council seat over China's strong objections. The Japanese
Maritime Self Defense Force calls regularly at Singapore,s
Changi Naval Base, and the two countries work closely on
maritime security. Singapore hosts the Information Sharing
Centre for the Regional Cooperation Agreement on Combating

SINGAPORE 00000302 002 OF 002


Piracy and Armed Robbery against Ships in Asia (ReCAAP)- a
GOJ initiative.

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GOS Looking to Leverage Ties
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6. (C) Singapore sees Japan as one of the few regional
countries with the potential to offset China,s growing
influence, and would like it to play a more active role in
setting the region's agenda. Given its shared interests, the
GOS has long seen Japan as a potentially strong diplomatic
partner, for example in helping to shape an emerging Asian
institutional architecture that will not be dominated by
China -- or any other country. MFA,s Kausikan told us that
Japan had in fact played a critical role in "hijacking the
East Asia Summit (EAS) from the Chinese" by working to ensure
India, Australia, and New Zealand were included as members.


7. (C) Despite Japan's extensive ODA programs in Indonesia,
Singapore contrives to urge Japan to increase its foreign aid
to help its huge neighbor strengthen political and economic
stability. MFA,s Cheng asserted that Japan's "ODA
mentality" handicapped the aid programs it did fund -- its
first instinct when there were problems with Indonesia was to
"throw money" at projects without evaluating broader
strategic considerations. Cheng also cited a need for Japan
to be more flexible in its dealings with ASEAN. She noted
that among some ASEAN countries, Japan was being unfavorably
compared with China, Korea, and India, all of which were
making significant diplomatic progress with Southeast Asian
nations. Citing the stalled ASEAN-Japan FTA talks, Cheng
noted that "even" Korea -- an economy with strong
protectionist inclinations -- was making more progress on its
FTA with ASEAN than Japan, which had been the first to start
FTA talks with the organization.

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Fading Hopes for a Quick Turnaround
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8. (C) The GOS was initially encouraged by signs of a more
sophisticated and assertive foreign policy under Prime
Minister Shinto Abe, including his decision to visit China
before the United States and Japan's more proactive approach
on North Korea. MFA's Kausikan told a visitor in December
that Japan was now heading in the "right direction." Barry
Wain, former editor of the Asian Wall Street Journal and now
writer-in-residence at the Institute for Southeast Asia
Studies (ISEAS),said Singapore welcomed Japan's "new
assertiveness," even if it was unsure how long Japan would
sustain its more robust approach.


9. (C) However, GOS hopes for a quick turnaround in Japan's
regional standing are fading. Kausikan said that even with a
more assertive foreign policy under PM Abe, Japan's "instinct
to be all things to all people" and poorly focused policies
toward ODA and ASEAN would continue to limit its influence in
the region. MFA's Cheng told us Japanese officials needed a
"critical change of mindset" to recognize the importance of
strategic engagement before Japan could translate its
economic might into political and diplomatic influence in
ASEAN. She noted that Japan's recent proposal for a Closer
Economic Partnership Arrangement (CEPA) -- an EAS FTA
initiative -- was viewed among some other ASEAN countries as
a "transparent" and "clumsy" attempt to undercut separate
regional FTA initiatives of greater interest to China.
Following the EAS and ASEAN Summits in January, MFA ASEAN
Director Jacky Foo told us of GOS disappointment that Japan
had not followed through on promises to revitalize its
stalled FTA talks with ASEAN, even while China had quickly
added a services agreement to its existing FTA. MFA North
Asia Director Simon Wong recently told us that GOS hopes for
a more effective Japanese foreign policy are shrinking as PM
Abe's political troubles at home mount.

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Comment
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10. (C) As a small country with big strategic concerns and
few close friends in the neighborhood, Singapore has long
looked to outside powers, in particular the United States and
Japan, to "do more" in Southeast Asia. Singapore's
perception of Japan's failure to assume a larger role
underlines the importance for Singapore of deep U.S.
engagement. While encouraging us, Singapore will continue to
work on Japan and to court new friends, notably India, to
play major supporting roles.
HERBOLD