Japanese Prime Minister Taro Aso, who leads the world's second-largest national economy, spoke with editorial page editor Fred Hiatt and reporter Anthony Faiola yesterday ahead of his planned attendance at today's G-20 meeting. Excerpts:
Aso: First, I'd like to say that there seem to be many people nowadays talking about what should come after Bretton Woods or after the dollar key-currency regime, but I do not think this is realistic. . . . We must continue to support the dollar regime for some time.
I'd also point out . . . that, with regard to the IMF, it does not have adequate resources and . . . therefore we feel there's a need to increase the capital resource of the fund.
Japan is prepared to provide, in the form of loans, up to, say, a maximum of $100 million to the IMF.
Oil-producing countries, China, perhaps some other countries that have ample foreign currency reserves could also contribute.
Q. It's said that China is unlikely to [contribute] unless its clout in the IMF is increased. Would you favor that?
Well, I think it is true that the Asian voice is somewhat limited at the IMF and other international institutions. The economic clout of emerging economies is far different today than when the Bretton Woods system was established, in 1944, or when the United Nations was established. So not just the Chinese, but it is quite understandable that other Asian countries also would express that sort of view. . . .
How quickly would you like to see China have greater voting rights in the IMF?
I don't think that is something that should be achieved today or tomorrow. I believe that needs to be worked out in time through the IMF annual meetings, because if we try to achieve that in haste, it will only cause some frictions within the IMF.
Do you think the administration is making a mistake by only injecting capital into banks and not buying troubled assets?
There are certain things that Japan did back in '97 and '98 that are not properly understood outside our country. The first thing was to properly and fairly value the troubled assets that were held by the banks in the form of real estate, and remove these troubled assets from their balance sheets.
Second we discovered that market policy alone would not enable us to get over the crisis. You see, bank lending rates would approach infinitely close to zero, and yet business corporations did not borrow from banks. . . . Banks found a huge glut of money on hand for which there was no one to borrow, so the balance sheets of banks continued to weaken, which led Japan into deflation. If the situation had been left unattended, doubtless Japan would have fallen into something akin to the Great Depression. So, at that point, the government went ahead with the mobilization of public funds.
But, just as it has been in the United states, in Japan, too, taxpayers were quite skeptical; in fact, many were opposed to the injection of public money into banks. "Why the hell do taxpayers have to donate to those filthy bankers?" -- that was the ordinary taxpayer reaction.
The United States is considering helping its auto industry. Would you see subsidies as a form of protectionism? Are you concerned that we may be entering an era of protectionism?
Well, I think there are three basic mistakes that we need to learn from the experience of the 1920s. One, countries around the world organized into closed economic blocs. Two, many countries devalued their currencies in order to expand their exports, and, three, these economic blocs did not talk to each other. . . . So we need to learn those lessons and firmly stand against protectionism.
I believe the auto industry is a major factor for the U.S. in terms of jobs, and I think American people in general have a close attachment to the automobile, so, at the end of the day, I think a U.S. government will end up having to, in one way or another, provide some kind of help to the auto industry. . . . But will it really suffice just to provide financial support? Is ensuring their cash flow sufficient? As I see it, other factors [are] needed for putting the automotive industry back on its feet, such as technological factors, labor training and so on, because I think they need to work on developing fuel-efficient cars.
You recently had to fire your air force chief of staff [for a nationalist essay that said, among other things, that the United States trapped Japan into bombing Pearl Harbor]. Is such nationalism widespread in the military, and should that concern your neighbors?
It's difficult to ensure that there is a common perception with regard to history. For example, in the United States, the Civil War is the name that is used in the North, whereas you go to the South and the textbooks there actually refer to the Civil War as the invasion into the South by the North. . . .
And while I believe there is nothing wrong with being patriotic, and different views are aired by many people on history -- including views that oppose the chief's view -- I would not think that it's as if views of the right are rising rapidly in Japan.