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From my perspective, however, contemporary Japan is a highly dynamic society. This society in the late 1990s has changed very significantly from the Japan of the early 1990s or the 1980s. Far from being a "lost decade," I believe that the decade of the 1990s will be seen by historians as a time of significant and necessary reevaluation and change that provided the basis for Japans recovery in the 21st century and allowed it to take on a leadership role in the increasingly globalized world of the 21st century.

Today, in the face of many challenges, all sectors of Japanese society are facing questions and criticism as never before.

I believe we will see significant reform in all three sectors of what is sometime called Japans iron triangle-- the bureaucracy, the mainstream elements of the political world and the more privileged sectors of industry-- as well as in their relations with each other. Iron triangle governance is being replaced by new patterns of governance. Of course, there is resistance from those committed to the old ways of doing things, but change is inevitable. Let me address just those changes taking place in the political world.

I have sometimes described Japanese politics in the period before the end of the economic bubble as the "politics of promise." Although there were exceptions, during most of the period of the 1950s through the 1980s, the Japanese economy grew rapidly, and this gave us the resources to manage the inevitable stresses and strains associated with rapid growth. If jobs were lost in one sector, they were been gained in other sectors. If there were slower growth internally, the rise in the yen value gave Japanese greater international purchasing power. But in more recent years, however, we have had to shift to a "politics of choice," in which painful trade-offs must be made. Politicians not only have to choose more carefully where to place government resources, but they are also increasingly accountable individually for their choices.

While some politicians wish for a restoration of the good old days, I think there are many benefits to the new politics of Japan. First, politicians are increasingly forced to grapple with public policy issues rather than simply rely on the bureaucracy to solve most of the problems. We have many excellent bureaucrats, but bureaucracies in general are not well equipped to lead revolutionary change. This is the responsibility of politicians working together with forward thinkers in other sectors of society, including our more thoughtful and knowledgeable bureaucrats.

One illustration of the shift of influence in Japanese politics is the increasing tendency of the media to request interviews with political leaders or young politicians with policy expertise such as on the North Korean missile threat or reform of the social security system. Until relatively recently, the media would typically seek comment only from senior government bureaucrats.

A second positive development in the new era has been coalition politics. You might think it strange for a senior and dedicated politician of the LDP to say this. I believe, however, that coalition politics is a healthy development for our party and for the Japanese political system as a whole. In the old days, the opposite side of the coin from LDP dominance was a group of relatively small minority parties with virtually no expectation of participation in governance. This made it relatively easy for them to pursue opposition politics for its own sake without having to consider the dilemmas and responsibilities that those actually holding power must consider. LDP dominance also contributed to an attitude within our party of dismissing the opposition as well as to political ossification.

In the past six years, however, coalition politics has become not just a necessity but also the norm. For example, passage of the defense guidelines legislation in the Lower House required cooperation among Diet members of different parties. Politicians from diverse parties also worked closely with NGO leaders in drafting and passing a bill to strengthen civil society in Japan.

The LDP is prepared to work with opposition parties that want to contribute constructively to governance and the process of change, while most opposition parties now understand that they can no longer count on a certain level of support simply by opposing for the sake of opposing. I think broad based coalitions, both to address specific issues like the Defense Guidelines, and to maintain a credible and effective government induce a greater sense of responsibility in both the smaller parties as well as the LDP.

Despite these positive changes in Japanese politics, it is fair to say that many Japanese citizens feel that we politicians have not yet provided the kind and quality of leadership that Japan needs. It is my feeling that the election of Shintaro Ishihara as mayor of Tokyo reflected this dissatisfaction. Some foreign writers have suggested that Ishiharas election demonstrates the growing power of conservative, nationalistic sentiment in Japan. I believe, however, that what appealed to voters was not so much nationalism as the fact that Ishihara presented a more clear cut and understandable message. He will now have to show that he has the political and administrative skills to move forward an agenda of action, and not just talk loosely as a social and political critic.

I believe the Japanese people are looking to their political leadership for an agenda of action. First and foremost, an economic agenda is required. I do not want to discuss this at depth in this statement, although I would certainly be willing to address your questions about our economic dilemma and directions. Let me just say that I think both under Prime Minister Hashimoto and current Prime Minister Obuchi some significant steps have been taken to address the bad loan problem, recapitalize banks, and strengthen our contribution to the Asian economies most affected by the economic crisis. But I also believe more needs to be done to reassure citizens with respect to pensions and health care and restore a sense of confidence about the economic future that will encourage renewed private consumption and productive corporate investment.

Let me now turn to the subject of Japanese foreign policy, which has also become much more complex in recent years. It is no coincidence, I believe, that the end of the LDP hegemony in Japanese politics (the so-called 1955 system) more or less coincided with the end of the Cold War. The LDP was the party most associated with the American alliance and the free market system. With the collapse of the Soviet threat, new questions were raised about domestic politics in Japan as well as its foreign policy. This produced some unexpected and positive consequences, for example, the support of the US-Japan alliance by the coalition government led by former Prime Minister Murayama.

Today our foreign policy challenge is not one of containing an expansionist power, as the Soviet Union was, but of developing a constructive new order in the Asia Pacific region. Japan and the United States are the key partners in building this new order, but the other country most important to this process is China. Our most important task, therefore, is to reach out constructively to China and integrate it into a system embodying the appropriate rules and norms of international behavior.

Thus the relationships between Japan, China, and the United States will be decisive in the construction of the new order. These relationships can be thought of as a multi-faceted triangle. The United States and Japan are bound by their commitment to democratic values and to free market concepts. The two countries are genuinely "strategic partners," with a common set of interests in maintaining peace and stability in Asia and the Pacific and a voluntary alliance reflecting these interests. No other leg of this triangle can be called a strategic partnership.

United States and China have a different kind of relationship than had the United States with the former Soviet Union. The two countries have strong economic ties and consult and work constructively in many areas, including the North Korean problem. Many Chinese have or are studying in the United States, something totally lacking in the former US-Soviet relationship. So despite differences in many areas including TMD, human rights, and trade, there are many positive elements in the US-Chinese relationship.

Japan and China are bound together by geography and by their many common cultural roots. But we also have many differences that arose during Jiang Zemins trip late last year to Japan. Some of these are historical, and others reflect the differences in our systems as well as Japanese uncertainty about Chinas future role. Like the United States, Japan seeks to work constructively with China to build on the positive features in our relations.

As allies, Japan and the United States need to take into account Chinas sensitivities and its internal dynamics. We have a common interest in a stable China moving toward a freer economy and better and more accountable governance. However, we cannot allow China to affect our alliance or our commitment to the peaceful evolution of the international system in Asia Pacific. For the foreseeable future, an unshakable US-Japan alliance of the two largest Asia Pacific democracies is essential for peace in East Asia. Questions about North Koreas nuclear program and its advances in missile technology demonstrate the importance of this alliance and the guidelines legislation certainly give it greater credibility.

Looking at the broader context, the US-Japan alliance should not be thought of as simply a military alliance. It is a STRATEGIC alliance in the broader sense of that term. I think we have a similar vision of the world and our Asia Pacific region. But I think we have failed to develop the habits of consultation needed to develop joint political and economic strategies to move this agenda forward in a meaningful way.

At the same time, we need to develop consultative arrangements that reflect the vital importance of the trilateral US-Japan-China relationship. Unlike the relationship among North America, Europe, and Japan, we do not have a consultative mechanism on the official level such as the G7 Summit and the G7 Ministerials or the Trilateral Commission on the private level. These clearly need to be established and nurtured.

At this point, I would like to end my formal remarks and ask for your comments or questions.