What has prompted the recent estrangement between Japan and South Korea, and why have the two countries been unable to put aside their differences? In a paper originally prepared for a forum in Washington, DC, at the Carnegie Endowment for International Peace in October 2013, Research Fellow Bonji Ohara points to both domestic and regional factors, noting the important role Washington can play in breaking the impasse between its two East Asian allies.

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South Korean President Park Geun-hye has criticized Japan over historical and territorial issues, reportedly telling US Defense Secretary Chuck Hagel during a meeting on September 30, 2013, that repeated regressive remarks by the Japanese leadership have prevented the nurturing of bilateral trust. This was her reply when Hagel—who was in South Korea to mark the sixtieth anniversary of the US-South Korean alliance—urged the president to improve the country’s relationship with Japan. While the statement captures the strained nature of the relationship between Japan and South Korea, it probably does not reflect the true sentiments of the South Korean leader. President Park was no doubt compelled by circumstances to make the remark.

This can be seen as a typical “two-level game” in the bilateral relationship, in which the leaders of both countries are constrained by the domestic political situation. No leader can play the diplomatic game without also considering its domestic political repercussions. Usually, though, options are available to ease diplomatic tensions. In the case of Japan and South Korea, however, both leaders seem unable to pursue such options.

Both Japan and South Korea are adhering to their respective perceptions of history, although this is what is hindering an improvement in their relationship. This suggests that for both leaders, domestic politics has higher priority than the bilateral relationship and that they would rather live with a poor relationship with a neighbor than lose domestic support. So despite their differences, Japan and South Korea appear to have similar policy priorities.

Park and Japanese Prime Minister Shinzo Abe no doubt have their reasons for their policy choices and are also aware that conditions allow them to pursue those choices. Both countries understand they need to improve the relationship but have reasons for avoiding an appeasement policy. To find a way to improve the relationship, we need to understand those reasons and also the conditions, especially diplomatic conditions, that are allowing them to postpone resolving the problem.

Domestic Priorities

The answer mainly lies in both leaders’ concerns about their constituencies. This is a typical two-level game situation in which the two governments give priority to domestic issues, at the expense of diplomatic ties.

Japan needs to take a firm stance against South Korea, mainly because the Abe government draws support from conservative voters. They assume the prime minister has been playing things safe for a while, rather than advance a conservative agenda. But the government’s true colors can be gleaned from the fact that Abe has not yet visited China and South Korea, even though he has made visits to other Asian countries.

Abe may be feeling some pressure from Japanese society. The administration’s present stance toward China and South Korea is somewhat different from that of Abe’s first term as prime minister in 2006–07, when public support for the administration faltered; evidently, he has learned a lesson and does not want to repeat his mistakes. Abe’s predecessor, Yoshihiko Noda, was driven from office after failing to demonstrate leadership. Therefore, the Abe government wants to show its firm stance on every policy. Prime Minister Abe is trying to prevent Japanese society from losing its dynamism, and campaigned successfully during the recent elections for the two houses of the National Diet on the theme of bringing Japan back to a position of strength.

The administration’s stance toward China and South Korea is thus based on popular sentiment. There are many who feel that China and South Korea are unreasonably critical of Japan’s aggressions during World War II, demanding apology after apology and endlessly playing on Japanese feelings of guilt. Feeling that Japan has been too apologetic to date, they are losing patience with criticism from China and South Korea and strongly support the Abe administration’s resolute attitude. Needless to say, there is a huge gap between perceptions in Japan and in its two neighbors. Chinese government officials, scholars, and private citizens have told me that China is not demanding that Japan apologize again and again. They understand that Japan has already made an apology to other Asian countries and that this is enough. They are, however, concerned about the prime minister’s remarks and actions, which have caused them to lose trust and to harbor suspicions about Japan’s real intentions. This perception gap has influenced the Japan-China relationship, making it difficult for either side to adopt an appeasement policy. The deterioration in the Japan-China relationship has also influenced South Korean thinking and diplomatic policy.

There is one more reason that the Japanese government cannot concede on the history issue. Since the Abe administration decided on October 1, 2013, that the consumption tax rate would be raised from 5% to 8% as scheduled, effective April 2014, many people in Japan are worried about making ends meet. The government cannot be seen as being weak for now, including over the history issue.

Tough on Japan

South Korea, too, needs to take a firm stance against Japan, owing to the weak political base of President Park Geun-hye, who was elected in December 2012 by only a narrow margin. Her approval rating had been low before she began taking a strong attitude toward Japan and North Korea, falling to 44% a month following her inauguration. She needs to count on public support for her foreign policy, partly because her economic policy has not successfully fueled a strong recovery.

Another dilemma is that she is frequently labeled as being pro-Japanese owing to her father’s ties with imperial Japan, and she needs to deny this legacy. Her approval rating recovered to 59% on August 25 after taking a strong attitude toward Japan and North Korea, so she cannot easily change her attitude against Japan.

There are other reasons for the firm stance. It is one way of developing relations with China, which, in the past, was hesitant to build closer ties with Seoul out of deference toward North Korea. China is a vital factor in South Korea’s economic growth and has a critical influence on the relationship among Northeast Asian countries, which I will come back to later.

Usually, countries consider security, economic, and other factors when choosing their closest partners. In the case of Japan and South Korea, their estrangement stems, in part, from the economic situation.

Abe is confident about his Abenomics policy of economic growth, and indeed the Japanese economy has been recovering. Japan has good economic ties with Southeast Asian countries, and sees these countries as its new economic partners. Many Japanese companies are now choosing to sidestep the “China risk” and are moving their business operations to Southeast Asia. The Wall Street Journal published a report on September 13, 2013, noting, “Japanese investment in China is falling amid political tensions between the nations, a trend that means Beijing could be missing out on a fresh wave of overseas expansion by Japanese companies.” It added, “Japanese investment in Southeast Asia jumped 55% in the first six months of 2013 from the year before to $10.29 billion, while outlays in China tumbled 31% to $4.93 billion, according to statistics from the Japan External Trade Organization.” [1]

A Chinese local government official participating in a forum in Beijing asked me to help find Japanese companies to invest in an industrial complex that was developed by the local government. He said the situation was serious and required more foreign investors.

Having succeeded in its bid to host the 2020 Olympics in Tokyo, Japan can look forward to seven more years of good economic conditions. Tokyo and nearby cities have already begun drawing up many redevelopment plans.

The Japanese government believes it is possible for the Japanese economy to grow even in the absence of good relations with China and South Korea. It therefore sees no need to rush to address the problem of tensions with Seoul.

The economy is not the only concern in Northeast Asia, however; there are security issues involved as well. This is why the Japanese government is under US pressure to improve relations. Japan relies heavily on the United States for its security, but at the same time, the United States also needs Japan to bear a growing burden of maintaining stability in East Asia. This requires that Japan, at the very least, not be in a state of confrontation with China and South Korea.

South Korea’s Economic Ties with China

The economic situation is slightly different in South Korea, which is losing steam and wants to enhance cooperation with Japan. But because President Park cannot make concessions to Japan, South Korea must to find other ways to drive its economy, one way being to bolster cooperation with China. South Korea has always been eager for closer ties, but this had not been reciprocated because of Beijing’s special relationship with Pyongyang. This time, though, South Korea is finally being viewed as an important partner, and so it can be expected to continue acting in concert with China over the history issue, facilitating good relations with China.

The South Korean population in China is burgeoning, especially in cities near the Korean Peninsula, such as Dalian and Qingdao, which, by around 2005, had over 80,000 and 30,000 South Korean residents, respectively. The South Korean communities in these cities have built schools, hospitals, markets, and homes, and many enjoy a higher quality of life there than in their native country.

Samsung Electronics has begun construction of a huge factory in Xian at a cost of $7 billion, making it the biggest investment ever by a foreign company in China. Such deals serve to demonstrate to other countries, notably Japan, the closeness of South Korean and Chinese economic cooperation.

Washington is following these developments carefully and calmly, as it needs the cooperation of both China and South Korea in dealing with North Korea.

The China Factor

China’s conduct has a huge impact on the situation in the Asia-Pacific region, including relations between Tokyo and Seoul.

Chinese President Xi Jinping treated President Park Geun-hye as an important guest when the latter made an official visit on June 27. China’s reasons for pursuing good relations with South Korea are both diplomatic and economic.

China needs more Asian supporters because its assertions about Japan’s historical “misperceptions” are rarely echoed by Southeast Asian officials, who usually only want to talk about the future. The only exception may be Singapore. For Xi, then, Park was a highly welcome visitor who also took a strong attitude toward Japan and openly voiced concern about remarks made by Japanese leaders.

China also has expectations of increased investment from South Korea. Local governments have developed many industrial complexes, but few foreign companies have built factories there, and many complexes are turning into ghost towns because there are no jobs. The situation has become a very serious problem in China.

Japanese companies were expected to move in, but following violent anti-Japanese demonstrations, many chose to avoid the “China risk,” forcing China to find other investors. Some South Korean companies have already started investing, but this may not be enough, given South Korea’s economic conditions at present.

On the other hand, the Chinese leadership is now busy fighting off political rivals, namely those in the “right wing,” which sometime includes the Jiang Zemin group. Many pro-Japan senior officials and experts belong to this group, although the only member with a key party post is currently Foreign Minister Wang Yi, who, under the circumstances, is unable to act freely. The power struggle has extended to the Railway Ministry, and one Chinese official told me that the next targets may be the electricity and oil groups as President Xi tries to bring all powerful groups under his control to push his economic reform agenda forward. Since Xi is preoccupied with domestic concerns, he has devoted little energy to easing tensions with Japan, making improvement in the bilateral relationship more difficult.

At the same time, China is afraid of unexpected collisions with Japan. Xi discussed the situation in East Asia with US President Obama directly in seeking a “new type of major-power relations.” China wanted a guarantee that the region would be free of war, which, for China, would mean having to fight US forces—something that it wants to avoid at all costs. Here is the importance of the US influence in this region.

A Nuclear North Korea?

The China—North Korea relationship was originally not very good. Chinese military officers have always said they did not trust the North and felt it was a burden on China. At the same time, they felt they had no choice but to support Pyongyang because of their “friendship sealed in blood.” Recently, though, the bilateral relationship appears to be getting worse.

North Korea conducted missile launch tests on April 13 and December 12, 2012, even though China had voiced its opposition to them. The December launch was the first time that North Korea succeeded in putting a satellite into orbit. North Korea conducted a nuclear test on February 12, 2013, declaring it to be a success. If we take North Korea at its word, then the country already has the capability to launch a nuclear attack.

Although China opposed any new sanctions against North Korea in the UN Security Council, it announced financial sanctions of its own on May 7, 2013. These were implemented without the cooperation of international society, but they did represent a response to US demands that China play a new role in the problem. China usually does not act just because other countries ask it to. China’s leaders, though, were unhappy because North Korea failed to listen to China’s requests and felt slighted when young North Korean leader Kim Jong-un did not visit President Xi Jin-ping to express his intention to submit to China’s wishes.

Moreover, the Chinese public became angry over North Korean behavior toward China. The Chinese media published the number of war dead in the Korean War, and I have heard that the Chinese people were surprised by the large number of Chinese casualties and wondered why so many Chinese soldiers had to die in the war. A staff member of a Chinese government organization has commented that more than 95% of China’s micro-bloggers were opposed to sending troops to support North Korea if war with the South were reignited. Many Chinese people feel that North Korea is rude to their country.

China’s economic sanctions were an attempt to convey its frustrations to North Korea, which understood that China could desert leader Kim Jong-un, although it was unlikely to abandon North Korea altogether. But still, Pyongyang failed to obey China. China did not forgive Kim even after he dispatched a special envoy on May 22. Relations between China and North Korea are becoming confrontational, and North Korea needs another economic supporter, enabling it to sidestep mounting pressure from China.

South-North Relations

North Korea reopened dialogue on the Kaesong factory complex with South Korea in early June 2013 and reached agreement to restart the facility on August 15. The factory complex is the first cooperative economic project between South and North Korea that was unilaterally shut down by North Korea in April 2012 following a UN Security Council censure of North Korea and the “Key Resolve” and “Foal Eagle” joint US–South Korea military exercises.

North Korea depends on China for more than 80% of its trade and is in dire need of new economic partners, as China has started joining the economic sanctions imposed by international society. South Korea is an obvious choice, but it needs more investments from other countries. The restart of the Kaesong factory complex was an attempt to show international society that North Korea is ready to accept investment by foreign companies.

Needless to say, North Korea is unpredictable and very difficult to deal with. On September 21, it ordered the indefinite postponement of a scheduled series of reunions for families divided since the 1950–53 Korean War, setting back efforts to improve its relationship with the South.

North Korea also appears to have begun preparing a “Japan card,” inviting Isao Iijima, an aide to Prime Minister Abe, to Pyongyang from May 14 to 17, 2013. Iijima conveyed Abe’s concerns about the abduction of Japanese nationals by North Korean agents in the 1970s and 1980s, preventing the two countries from normalizing relations. North Korea appears to have used the abduction issue as a bait to win a dialogue with Japan, which Pyongyang has conveniently been using to strike a balance with its other neighbors. Japanese reporters were invited to Pyongyang in September to visit the home of an “ordinary” resident, a beach, and an amusement park. All of the people interviewed by the Japanese media emphasized that they were “ordinary” citizens. This was obviously an attempt to show international society that the North Korean economy was not affected by the UN sanctions.

Contrary to Pyongyang’s intentions, however, these North Korean overtures suggest that the country’s economy is in dire straits and needs foreign support. It can also be inferred that China’s sanctions have been effective and that relations with China have not improved. In this light, North Korea will no doubt keep trying to play one country off another in this region.

The United States as a Central Player

In many ways, North Korea’s behavior holds the key to regional relations. Japan’s ties with China and South Korea are now stymied over historical issues, but if Beijing-Pyongyang ties continue to deteriorate, this may help Japan seek better ties with China and South Korea, as the necessity of closer trilateral ties would becomes more apparent. If, on the other hand, North Korea restores good relations with China, then China will be unable to accept South Korea’s fervent overtures, and North Korea could expect renewed support from China. The quality of North Korea’s relations with China influences South Korean thinking and behavior and could prompt Seoul to seek better relations with Japan. This kind of situation occurred in 2010, when China unwillingly supported North Korea after it torpedoed and sank a South Korean corvette on March 26. Beijing was forced to take a stance under US pressure, and it eventually sided with North Korea. Japan supported South Korea at that time, after which South Korea softened its attitude toward Japan.

The United States has a counterbalancing presence in this region, preventing the situation from getting out of hand. The United States does not want to see tensions escalating and is persuading each country—including Japan—to improve its relationship with one another. Washington needs to deal with North Korea by cooperating with Japan, China, and South Korea. If North Korea continues with its nuclear weapons development program, the country could become a true threat to the United States, requiring that its allies—Japan and South Korea—to cooperate. Poor relations between Japan and South Korea would weaken the effectiveness of US operations, and in that sense, the current situation in East Asia is contrary to US wishes.

Washington has gone along with China’s desire for a “new type of major power relationship,” but it has been very careful about defining this phrase. China understands the US attitude and has changed the English translation to “major country,” recognizing that “major power” may be too sensitive. Russia is another important country for China, but relations between these two countries have always had an element of distrust. Russia is a counterbalance against the United States for China. As such, the degree of China-Russia cooperation in East Asia will be affected by the US attitude toward this region.

North Korea has always sought bilateral security dialogue with the United States. And because Japan and South Korea are both US allies, the United States remains the central player in this region.

The Gap between Politics and Defense

Although Japan and South Korea are locked in a stalemate politically, this has not meant a complete halt in defense exchange. A South Korean Navy submarine and submarine rescue ship visited Yokosuka, Japan, on September 18, 2013, before taking part in the “Pacific Reach 2013” joint submarine rescue exercise. This multinational naval exercise began in 2000 and has been conducted once every two or three years; this was the first time it was held in Japan since 2002. Japan, the United States, Australia, South Korea, and Singapore participated in the exercise this year, and Ecuador, India, Indonesia, Malaysia, Peru, Thailand, and Vietnam took part as observers.

The South Korean Navy is unable to undertake military exchange with Japan on a bilateral basis because of the strained relationship. But it can participate in multilateral exercises, even when Japan is a participant.

I visited Seoul in August 2013 and met my former classmates from Japan’s National Institute for Defense Studies. All of them were in the South Korean Navy then and were now retired. They gave me a warm welcome, setting aside considerable time for discussion over lunch and dinner, even though they were quite busy. All of them criticized the Japanese attitude when talk turned to perceptions of history. But once we moved to a different topic, they were smiling and joking again. They were working for civilian companies after retiring from the Navy and asked me to help arrange a joint project between Japanese and South Korean defense companies. They commented that senior naval officers are offered good jobs after retirement because of their ability to facilitate projects on joint development of equipment with other countries. But officers with ties to Japan have a difficult time finding good post-retirement jobs because there are no joint projects with Japan. If Japan and South Korea launched the co-development of naval equipment, they and their colleagues would have a better chance of landing good jobs. This may also encourage more naval officers to seek deeper ties with Japan. Generally speaking, they are more pragmatic than emotional.

My ex-classmates still serving in Japan’s Maritime Self-Defense Force have told me that their counterparts in the South Korean Naval Headquarters have apologized for not being unable to conduct bilateral exchange with Japan right now. The South Korean Army, on the other hand, has not stopped sending officers to the Ground Self-Defense Force Staff College as students. A retired South Korean Navy rear admiral told me that the Army is much stronger than the Navy in South Korean politics; while the Army can act as it pleases, the Navy has to be mindful of the political situation, even in the Joint Staff Office.

What this shows is that it is not the South Korean military that is resisting exchange with Japan; it is simply following political instructions. Both the SDF and the South Korean military are still open to cooperating with one another. There is a perception gap between politicians and military personnel in South Korea, as politicians have a need to consider public opinion.

Changes in the Japan–South Korea Relationship

Japanese Foreign Minister Fumio Kishida met South Korean Foreign Minister Yun Byung-se in Washington, DC, on September 26, 2013. Most Japanese media reports described the meeting as having ended in a stalemate because they failed to come to an agreement on a bilateral summit. But this was hardly unexpected. The more important thing was that they met at all and that they agreed on the importance of the two countries’ relationship.

Minister of Education, Culture, Sports, Science, and Technology Hakubun Shimomura likewise met with Minister of Culture, Sports, and Tourism Yoo Jin-ryong in South Korea on September 27, 2013, during a Japan–China–South Korea meeting of culture ministers. The South Korean minister stated that his country intended to return the Buddhist statues that were stolen by Korean thieves from Tsushima, Japan, in October 2012 and smuggled into South Korea. This was despite the fact that South Korean courts had ordered a stop to the returning of the statues. It was first time that the South Korean side showed any intention of returning the stolen items.

Conclusion: Dealing with Japan’s Neighbors

I have made frequent mention of China and North Korea because I wished to explain the difficulties faced in dealing with them. Japan, South Korea, and China have similar policy priorities; importance is attached in all three countries to domestic popular opinion, which is deeply linked with the economic situation. Although the diplomatic situation allows China and South Korea to maintain a strong posture toward Japan, they face divergent security challenges and have different perceptions of security threats.

Japan needs to pay close attention to these differences. China and South Korea may have similar domestic concerns, but their relationships with the United States are quite different. Japan and South Korea are both US allies, so if Japan deals with China and South Korea in the same way, then it will have difficulty improving ties with either. Another major difference between China and South Korea is the nature of the territorial issues with them: Takeshima is occupied by South Korea, but the Senkakus are not occupied by China. South Korea stations troops on Takeshima, and former President Lee Myung-bak visited the island in August 2012. But no Chinese government officials or military personnel have ever tried to land on the Senkakus, although some civilian activists have tried to do so. The Chinese leadership, in fact, usually seeks to prevent them from sailing to the Senkaku Islands, including in August 2013. Japan can lower the tone of claims from China by appreciating Chinese government efforts to prevent activists from landing on the Senkakus, although China does continue to send law enforcement ships near the Islands. Since improving relations will prove to be difficult anytime soon, Japan will need to avoid unexpected collisions over the long term. Japan should respond to China on an issue-by-issue basis. Should China lower its tone of claims against Japan, this is bound to have an influence on South Korean thinking. This would be a positive way for Japan to use Chinese influence on South Korea. The important thing is for Japan to improve its relationship with South Korea for the sake of regional security, and I believe this is possible.

We should take note of the fact that there are differences in the attitudes of South Korean government leaders, such as between the president and her cabinet ministers, as I mentioned above. The South Korean military will seek to continue pursuing military exchange with Japan. The Japan–South Korea business relationship can also be developed. I have South Korean friends in Japan working for Japanese civilian companies that are interested in developing their business in South Korea. When I introduced them to my retired Korean Navy officer friends who are now executives at big companies, they were very happy to meet each other.

This suggests that a Japan–South Korean summit does not need to happen first. Japan can develop its relationship with South Korea at various levels and arenas. President Park is likely to allow lower-level officials to cooperate with Japan, particularly with regard to military exchange, such as in a trilateral context with US forces.

These aspects of the bilateral relationship are quite different from the situation with China. Here, Japan needs to pursue a summit meeting with President Xi Jinping first. Otherwise, the lower levels will be unable to freely start discussions with Japan. US involvement in easing tensions between Japan and China will be instrumental here as well, though. Japan must brace itself for long-term tensions with China. And Japan must be careful in its treatment of North Korea. The abduction issue is very important for Japan, but North Korea should not be allowed to use it to disturb East Asian stability. Good relations between Japan and South Korea will help to improve the Japan-China relationship and to deal with North Korea as well.

Japan has to treat the relationships one by one, as they all have different characteristics. And Japan needs to continue cooperating closely with the United States. This will enable South Korea to cooperate more easily with Japan and to also ease tensions with China.

[1] Wall Street Journal , “Japan’s Companies Shun China for Southeast Asia,” http://online.wsj.com/news/articles/SB10001424127887324549004579070820138376020 .