Germany and Japan: The New Civilian Powers

As the postwar international order dissolves, some of the initial concerns that informed and shaped it are resurfacing. One key objective of this old order was the containment of Japanese and German military expansionism and its threat to the international status quo in the Far East and Europe. This was achieved brilliantly by embracing both countries in an American-led alliance system directed against a new adversary, the Soviet Union. This rationale is rapidly fading now, and old specters once more raise their ugly heads; the power of Japan and Germany has again become a cause of concern for their partners in the alliance.

Some observers fear a return of either state (or both) to traditional temptations of military power politics and suspect that Japan or Germany may revert to challenging the status quo, or perhaps even try to replace it with a "Pax Nipponica" or "Pax Teutonica." Others worry about the implications of a changing distribution of economic power as a result of Germany's and Japan's single-minded pursuit of economic gain abroad and tendencies toward parochial and closed societies and economies at home.

Most fears about Japanese and/or German revanchism turn less on perceived political strategies by today's leaderships in Tokyo or Bonn than on the dynamics of ungovernable change. German unification and its impact on the alliance are seen in terms of a "runaway freight train" headed for collision as a result of sheer momentum and the inability or unwillingness of the drivers to apply the brakes. And as for Japan, we are told by a "revisionist" that nobody really is in charge there.1 The forces of change in the postwar era, which have worked so powerfully in favor of the West and against the East, are now seen as threatening American control over events.

Those concerns no doubt reflect certain realities. The redistribution and growing diffusion of economic weight is a fact (although it is often not appreciated that the U.S. share of gross world product actually grew in the 1980s). It also seems correct to suggest that the dynamics of international relations have shifted from the military-political sphere to economic and social developments-a shift that favors Japan and Germany, as economically dynamic and socially cohesive countries.

Yet on balance the alarmists are probably wrong-not because they do not identify trends correctly, but because they fail to put them in the proper perspective. International relations are not just undergoing a reshuffling of power hierarchies, but a sea-change affecting both the structure and substance of international politics. It is hardly surprising that the demise of the East-West conflict should direct our eyes (invited and guided along by Paul Kennedy's The Rise and Fall of the Great Powers) toward the traditional play of geopolitics-balance-of-power calculations, the struggle of nation-states for power and a relentless security dilemma. The question is whether this perspective really captures the essence of today's international relations. I would submit it does not, because elements of fundamental change have become more important than those of continuity. This implies, inter alia, that the term "power" no longer means what it used to: "hard" power, the ability to command others, is increasingly being replaced by "soft" (persuasive) power. Neither Japan nor Germany, then, is about to become a new superpower, for this role no longer exists in the old sense.

Nor is the United States about to be dethroned as the leader of the Western alliance, though this role, too, will continue to change. Rather, the United States will have to evolve into a new type of international power, of which Germany and Japan are already in a sense prototypes: it must become a civilian power. This implies: a) the acceptance of the necessity of cooperation with others in the pursuit of international objectives; b) the concentration on nonmilitary, primarily economic, means to secure national goals, with military power left as a residual instrument serving essentially to safeguard other means of international interaction; and c) a willingness to develop supranational structures to address critical issues of international management.2

The central argument of this essay is that international relations are undergoing a profound transformation that offers an opportunity to take history beyond the world of the nation-state, with its inherent security dilemmas and its tendency to adjust to change through war. As a result of their own hubris, the farsightedness of the American victors in World War II and a series of historical accidents, Germany and Japan now in some ways find themselves representing this new world of international relations. Circumstances, in a supreme example of irony, have turned them from "late modernizers" into prototypes of a promising future.

II

Although historical parallels between Japan and Germany extend from the mid-nineteenth century, the starting point of this exploration of the similarities in Germany's and Japan's roles in the modern world is their position at the end of World War II.

Both nations had lost ruthless gambles for regional supremacy and world power. The victors' most immediate and pressing concern was to ensure that German and Japanese militaristic expansionism would never again pose a threat to the international status quo. Sharp divisions developed among the former allies, however, and these came to supersede their concern about Germany and Japan. The result was the American strategy of "double containment," in which Germany and Japan were embraced as junior partners in the effort to contain the Soviet Union; at the same time they were firmly anchored in the U.S.-centered alliance system by a web of security, political and economic ties.3 The logic of this strategy was put bluntly, but quite appropriately, by Lord Ismay, in his famous dictum about NATO's purpose in Europe (which could also have described, with a minor adjustment, U.S. policies toward the Japanese): "Keep the Americans in, the Russians out, and the Germans down."

Western policies toward Japan and Germany in the decade from 1945 to 1955, as well as the defeated nations' respective policy responses, thus bore considerable resemblances. Both Germany and Japan were subjected to selective screening and weeding out of the old elites, the dismemberment of industrial concentrations, and democratic reforms by the occupying powers. While the scope and intensity of those programs differed importantly between Japan and Germany (with the latter, for understandable reasons, being treated much more thoroughly), they helped indigenous democratic tendencies in both countries sufficiently to clear the path toward establishing sound democracies. Democracy in Japan and Germany today may not be perfect, but it looks strong enough to prevent any return toward militarism, fascism or nationalistic authoritarianism.4

The military defeat resulted for both countries in very substantial territorial amputations and-in the case of Germany-division between East and West. Japan saw its whole overseas empire dismantled. Less justifiably from the Japanese viewpoint, Japan also lost Okinawa and the Northern islands-territories that had clearly and firmly belonged to Japan proper for a long time. Germany lost the areas east of the Oder-Neisse line and (temporarily) the Saarland. It also was divided into two separate entities (although it must be added that this was not the result of a deliberate dismemberment-something that was considered during the war by the Allies, but eventually discarded-but of the escalation of the Cold War). Overall, this confronted both states with the loss of more than forty percent of their prewar territorial expanse, and a massive (and proportionately comparable) influx of people from those areas.

In territorial terms, the settlement of World War II was harsh-harsher in fact than that of World War I against Germany. This reflected the desire of the victors to weaken the two states decisively, but also was a result of the onset of the Cold War, which prevented territorial revision and deepened the partition of Germany. The results of the settlement have been challenged by both Germany and Japan, which have been unwilling to accept fully the postwar territorial status quo-let alone, in the case of Germany, the division of the nation. Revanchism nonetheless never became a serious problem in the postwar world. One reason was the democratic transformation of both countries.

More important, however, may have been another element: German and Japanese territorial demands were rapidly drawn into the East-West conflict. In this context, Germany and Japan were able to secure the return of territories taken over by the West (Saarland, Okinawa), while their demands directed against the Soviet Union were tied into the patterns of the broader international antagonism between East and West. As long as the Soviet Union was unwilling to consider concessions to German or Japanese territorial demands, both countries had to pursue their goals by enlisting U.S. support. Alternatively, a Soviet willingness even to consider territorial concessions offered Moscow opportunities to pry those countries away from their alliance with the West. Not surprisingly, therefore, Washington played an important role in scuttling exploration of Soviet signals to allow German reunification (1952, 1954-55) and to return two of the four Northern islands to Japan (1956). The allies also withheld support for West Germany's territorial demands east of the Oder-Neisse, but gave qualified backing to German reunification.

After the late 1950s, West German and Japanese demands for the territorial revision of the results of World War II acquired an unrealistic quality. The superpowers' interest in reducing tensions between the blocs collided with the position of Germany and Japan. Any serious revision of the territorial results of the postwar settlement would inevitably have undermined the whole postwar order. It was, therefore, hardly surprising that such demands found less and less serious support not only among the allies, but also among the foreign policy establishments in West Germany and Japan; the status quo was more stable, more predictable and, in the last analysis, more advantageous.

Insistence on the return of the lost territories and the reunification of Germany did provide internal political fodder and some external leverage, but this had no real effect on the disputed borders. Japan's political parties used the issue of the Northern Territories to bolster electoral support and to underpin their anti-Soviet orientation; West German conservatives saw reunification as a way to mobilize nationalist voters and those who had fled the East, and to strengthen sentiments of anticommunism and orientation toward the West. Unlike Japan, however, which could pursue this course at little real cost, West Germany confronted a serious dilemma: insistence on reunification and territorial revision contributed to tensions in Europe and blocked possibilities for alleviating the human burden of German and European partition. This eventually led to the Ostpolitik of the Social Democratic/Liberal coalition from 1969 onward, which explicitly recognized the Oder-Neisse boundary and the existence of a second German state, albeit as part of the German nation. The rationale of this policy was twofold: it was to be a means to reduce East-West tensions and a way, ironically, to undermine the partition of Germany and Europe by first recognizing it.

Both Japan and Germany accepted a renunciation of autonomous security policies. This monumental step profoundly transformed international politics in the direction that had been suggested by the European visionary, Jean Monnet-toward an international order created through mutually accepted reciprocal dependence. By ensuring that neither Germany nor Japan would be able to resume its past quest for military supremacy, it also removed or at least weakened regional security dilemmas arising out of fears of a revival of military expansionism, and thus enabled both Germany and Japan to integrate themselves better in their respective regions. In that sense, the postwar security arrangements by and for Germany and Japan were probably the key ingredient in the transformation of this postwar order: they made possible the effective stabilization of two critical regions, Europe and Northeast Asia, and thus established the military and political stability required to shift the emphasis of international relations to enhancing prosperity. The postwar settlement also enabled Japan and Germany to turn their national energies toward economic resurgence. Both became prototypes of the modern trading state.

A number of factors inclined Germany and Japan toward becoming economic superpowers. The security alliance with America provided both countries with a comparatively cheap solution for their defense problems, and gave them new international respectability. Blocked national aspirations could be rechanneled toward economic achievements through international exchanges-an ideal path for states that had seen their ambitions as traditional nation-states profoundly discredited and had renounced defense sovereignty. The American strategy of double containment also provided for economic integration into an open world economy, offering both countries initial financial support and a stable international economic environment.

To underline the parallels between Japan and Germany is not to ignore very substantial differences between the experiences of the two nations. The transformation has undoubtedly been more profound in the case of Germany; even after unification, it will be anything but a reborn Bismarckian empire. It will be a democratic and federal state, economically integrated, solidly anchored in the European Community and preoccupied with internal and regional problems of reconstruction and development, to which traditional military power has no relevance whatsoever. The webs of interdependence tying Germany to its partners in Europe and across the Atlantic are much more varied and broad than those between Japan and the West-the importance of European integration in this context can hardly be overestimated.

Japan, by comparison, has benefited less from the reappraisal that, on the whole, accepts the entrance of Germany into the mainstream of Western democracies. Thus, the burden of Japan's past (which arguably is much less extraordinary than Germany's) seems more of a political impediment than is the case with Germany; Japan's domestic political transformation from militarism to democracy seems less complete.

But Japan, too, has been profoundly changed in the past 45 years. There are few signs of a serious radical or militaristic threat to the present political system, and there remains a powerful undercurrent of pacificism with which the experience of the Second World War imbued Japanese society. Japan, like Germany, has traded significant parts of its sovereignty in favor of interdependence-by accepting American bases, by developing its defense capabilities in close coordination with the United States and by the sheer weight of its economic presence in America and other parts of the world.

Both Germany and Japan must now define their interests and objectives in the context of integration and interdependence, and pursue them through cooperation and negotiations with their partners. This makes a return to old policies nearly impossible.

III

Nevertheless, Japan and Germany have once more become sources of concern to many Americans. Those concerns may be grouped around the following themes: old-fashioned national expansionism, either military or economic; a shift of international leadership from America to Japan and/or Germany; and maintaining international stability and prosperity, as it were, "under new management."

To expect a revival of traditional militarism in Germany or Japan at present requires a considerable leap of imagination; it is hard to construct plausible scenarios for such a return of history. Even if domestic developments were to evolve in this direction, however, it would be enormously difficult for either country to extricate itself from the complex webs of integration in which they have allowed themselves to be bound and to develop their own, independent military capabilities. Such moves would also immediately trigger powerful reactions and no doubt involve very serious economic and foreign policy costs. In short, those fears simply seem unrealistic.

But what about new, economic forms of nationalist expansionism? Opinion polls show a high percentage of Americans perceiving Japan as a greater threat to their future than the Soviet Union. But because those polls invite comparisons between vastly different types of problems, such answers are deceptive. The real issues behind American fears are the economic successes of German and Japanese industries in comparison to those of the United States.

Economic imbalances reflecting differences in national savings rates and the relative competitiveness of certain sectors of industry do not in themselves constitute "threats." Basically, the concerns about Japan and Germany are that their economic systems are not compatible with a liberal world economy, that their economic values and priorities differ profoundly from those of America, and that their inability to change course, combined with the inability of others to achieve levels of international competitiveness similar to those of Germany or Japan, risks producing a proliferation of protectionist and interventionist measures. Such developments, it is feared, could gradually destroy the open world economy and transform it into a system of relatively closed regions: a European economic space dominated by Germany, an East Asian "Greater Co-Prosperity Sphere" dominated by Japan.

Those fears are based on the assumption that Germany and Japan direct their economic activities toward a noneconomic goal-the pursuit of national power. The economies of Germany and Japan are seen as qualitatively different from other Western economies. At its most pointed, this argument sees the Japanese economy orchestrated by faceless bureaucrats, politicians and managers aiming at world domination through a relentless pursuit of market share abroad and the effective closure of the market at home. West Germany has been singled out less frequently but it, too, has been accused of running a "corporatist" economy with excessive emphasis on exports and a strictly regulated domestic market.

Considerable evidence supports an alternative conclusion: that the forces of global interdependence will produce changes and mutual adjustments of the economic imbalances between Japan and the outside world. Some of those pressures will be economic, others will be political; some will be international, others domestic. Their effects can already be detected in changing corporate strategies of Japanese firms, which are restructuring themselves toward becoming global entities. One result has been a shift from trade to foreign direct investment, and hence a shift from one form of interdependence to another (which ironically has not only failed to diffuse trade conflicts, but has instead opened a new arena of economic conflict concerning Japanese investments abroad).

But it is not only international economic and political counterpressures that will force domestic adjustments in the Japanese and German economies. Economies following mercantilist strategies act against the interests of their own societies, and against the notion of "vertical interdependence" between state and society: export surpluses represent underconsumption and hence a suppression of domestic well-being; excessive regulation results in inflated prices, hence again a restraint on welfare. In Japan economic success has been achieved on the back of the urban consumers. American pressure for change can thus, in principle, count on powerful domestic social forces to support its objectives. In Germany the bias toward deflation, underconsumption and regulation may be wrenched open by the challenges of unification and reconstruction in Eastern Europe.

The fear about German or Japanese economic domination also fails to take adequately into account the nature of technological and economic power. Such power today differs profoundly from traditional state power. First, the resources of these forms of power are in the hands of economic actors such as firms or banks, which pursue their own objectives and strategies. Economic "power" thus cannot be easily manipulated and targeted by governments. Moreover, this power grows out of firms' interaction in markets that are rapidly becoming transnational, even global-and this again militates against a straightforward political manipulation of economic capabilities. Finally, economic power thus embedded in webs of interdependence implies substantial vulnerabilities even where interdependence is highly asymmetrical; the implications of interfering with interdependence may be unpredictable and very costly for all concerned.

None of this is to say that economic mercantilism can be discarded as a real danger. Dynamic interdependence implies rapid change and thus requires substantial adjustment to changing circumstances. This is painful, and will produce resistance. Mercantilism could develop as the cumulative result of defensive interventions to protect domestic constituencies against the burden of adjustment, as well as offensive industrial policy efforts to secure national economic advantages. But why should such a development be triggered by Japan or Germany, which have been the principal beneficiaries of the present system? It seems much more plausible that they would try their utmost to defend this system, even if doing so means allowing changes that somewhat reduce their relative benefits.

It is also profoundly wrong to see Germany or Japan as immune to change; their international economic successes reflect, if anything, a superior capacity to adjust to changing circumstances. The same must also be said about the evolution of domestic politics. The direction and implications of those changes may not be precisely what critics would like to see-yet it should be clear from the preceding discussion that many of the pressures to which Germany and Japan have responded are global in nature, and have forced them to become even more international. Still, there can be no doubt that the management of the German and Japanese economies reflects values and forms of social organization that differ from (and may be more effective than) those of other industrialized countries. An emphasis on stability, social consensus, cohesion and continuity amid change can be found in both societies. It is possible that such orientations and forms of social organization could become important features at the level of the global economy as well.

American worries about being pushed aside and replaced as the leading Western power also largely miss the real point. For one thing, U.S. leadership is not really threatened, although it is undergoing qualitative changes. Moreover, as Herbert Stein has rightly pointed out, the American concern about losing preeminence confuses leadership with dominance and economic strength with economic monopoly.5 Put differently, these worries look at today's world of international relations-shaped by the dynamics of interdependence-through yesterday's lenses of balance-of-power politics among nation states obsessed with territorial insecurity and expansion. The political debate in the United States simply seems to be catching up with the realities of interdependence, which Germany and Japan have been used to for a long time. The United States will not be replaced in its leading role within the alliance by Japan or Germany; ours is no longer an international system of superpower hegemony, but one of cooperation and conflict among highly interdependent partners.

It is true, of course, that interdependence implies a loss of autonomy. In that sense, American worries are real. This autonomy, however, cannot be retrieved without a concomitant loss of benefits from interdependence. Japan and Germany have long accepted this logic, and have opted against autonomy, with good results. Opting against interdependence and for autonomy has often produced disastrous results-witness the socialist experience in Eastern Europe and the Soviet Union. To suggest seriously that Japanese companies could withhold their chips from the United States and sell them to the Soviet Union, and thus change the military balance of power, as Shintaro Ishihara and Akio Morita have done in The Japan That Can Say No, seems breathtakingly unrealistic. Such a move would endanger Japan's access to the American market, unravel its ties with the West and even risk confrontation with it, and destabilize the whole Northeast Asian region, with potentially huge costs for Japan.

Interdependence, however, does not by itself supply a vision of world order, other than to offer material welfare and comforts. It is thus hardly surprising that the trading states Germany and Japan have been criticized for the lack of such vision, and for the arcane and parochial quality of their domestic politics. Moreover, the outcomes of interdependence, the distribution of its costs and benefits, will as a rule not be symmetrical. They will also not necessarily reflect values such as social equity or environmental stability; the burdens of adjustment will tend to be pushed onto marginal actors and global institutions, while each nation will strive to maximize its own benefits.

Thus, interdependence will imply intense conflicts over the distribution of its costs and benefits-and continue heavily to involve national governments. If the outcomes of those political bargaining processes do not reflect values other than maximization of overall benefits and the relative bargaining strength of participants, the results of interdependence may threaten political legitimacy in those countries that do not benefit proportionately. Systemic legitimacy will also suffer if issues such as the protection of the global environment or the gap between rich and poor are not addressed.

IV

The core of the American problem with Germany and Japan is not the redistribution of power within the alliance but the overall change in the international system. This change affects both the substance and the power structure of world politics, and requires major foreign policy adjustments from all powers. It also demands a willingness to think about, and act upon, a new model of international politics-complex interdependence6-which is based on three fundamental pre-conditions: a security framework that guarantees systemic political stability and permits a sustained focus on interdependence; the ability of interdependence to satisfy people's aspirations; and the effective and socially just management of interdependence to avoid breakdowns and crises in the processes of modernization and transformation.

The critical challenges and risks for the future will largely come from economic, social and cultural dislocations and their potential for producing political crises and turmoil. Social changes in this broad sense have been at the roots of the crisis of the Soviet empire and the revolution in Iran; they foster new security problems such as migration, drugs and international terrorism. Military power seems to have become a residual, rather than a central, element in international politics. This is not to deny the continued relevance of the security dimension for international relations; nuclear deterrence and conventional force still play a role in guaranteeing the state-centered character of the international system, and war and civil war have, if anything, become more, rather than less, frequent and destructive in the Third World. The proliferation of weapons of mass destruction and of missile technology in the Third World add to such concerns. Nevertheless, military force is likely to be largely irrelevant in confronting such new challenges as political instability and crises in Eastern Europe or the Third World, terrorism, drugs or environmental dangers.

The interpenetration of state and society ("vertical interdependence"), which has resulted from the shift toward the modern welfare state in the postwar era, implies a much more intense interplay of domestic and foreign relations and a much higher importance for economic success as a means to secure political legitimacy. Failure to exploit the potential of interdependence resulted in the fall of the Soviet empire and the transformation of the East-West conflict. The future of East-West relations will depend on the management of political and security interdependence (arms control, development of new security structures in Europe) and the development of economic and social interdependence-or, if such efforts fail, on the containment of turmoil and violence spawned by the bitter Soviet legacy of economic, social and political distortions.

The ability to shape international processes of conflict and cooperation will depend strongly on technological and economic capabilities. As events in Eastern Europe have demonstrated, individual aspirations have become highly relevant for international politics. These aspirations, insofar as they are focused on basic needs, material well-being and quality of life, can only be met through economic growth. But technological and economic strengths differ qualitatively from military capabilities: they are increasingly produced in transnational networks linking firms across the globe.

To think and act in terms of complex interdependence will not be easy. Reservations about giving up national sovereignty with all its symbolic and political paraphernalia are bound to interfere; the necessary domestic adjustments will be hard to organize; and patience will be required to carry through extensive bargaining to find compromises between diverging national interests and conditions.

Whether complex interdependence will be viable will depend importantly on the future behavior of Germany, Japan and the United States. There can be no doubt that both Germany and Japan have very strong reasons to remain tied to the West. Economically, a loosening of integration could only be achieved at tremendous cost; politically, Germany's and Japan's integration in a broader security context ensures regional stability, defuses the legacy of the past and offers the best chance to maintain the reorientation of international politics away from military competition and war and toward the exploitation of benefits from interdependence. This fundamental interest in continued close alignment with the United States and Western Europe is well recognized by public opinion, and the strong institutional ties that bind Japan and Germany to the West also work in the same direction.

Although the integration of Japan and Germany into the Western "club" has undoubtedly changed both countries and laid solid foundations for the future, it is unlikely to provide in itself the answers to new questions of identity and national purpose. These questions arise out of asymmetries between economic weight and political roles, and they are given additional urgency by the transformation of the East-West conflict both in Europe and the Far East, which will involve a redefinition of alliance relations.

In the case of Germany, there is, of course, the need to define a united Germany's place in Europe and the world. For Germany, Europe provides an important dimension of supranational identity. While the emotional appeal of Europe may have receded recently, it is interesting to note that opinion polls now show a certain revival of interest in and attachment to Europe as a counterweight to the emotional uncertainties stirred up by the prospect of German unification. Although this European orientation has developed considerable strength, West Germany's sense of international identity in the postwar era has been largely economic, rather than political, and pragmatic, rather than emotional. It has also never been entirely persuasive, as recurrent debates about West Germany's identity and role in the world have demonstrated. The unification of Germany, as well as the new environment of international relations, will make it imperative for Germany to reexamine and develop its European identity.

At present, however, everything indicates that this process will strengthen, rather than weaken, Germany's European identity. There is also a strong factual basis for such an identity: for many practical purposes, the West German economy has become submerged in a wider European economy, and the European Community is developing a substantial supranational identity of its own. Europe, in fact, has become a functioning laboratory of the new international order; in many ways, it no longer makes sense to talk about Germany as a distinct national unit.

Germany's new identity will thus have to be supranational and European. At its outset, it will have to reaffirm the basic choices made in the early 1950s-the choices for security integration with America and political and economic integration with Europe. The core identification with the European Community will become more difficult to sustain, however, as processes of deepening West European integration are synchronized with efforts to bring Eastern Europe and eventually the Soviet Union into the webs of economic and political interdependence. Both processes, moreover, will have to be kept open for participation by the United States and Japan. This development of European relations with the other principal industrial centers will no doubt be complicated by the dissolution of the unifying threat to all from the Soviet Union, and by the macroeconomic imbalances caused by the erosion of U.S. economic competitiveness. This makes for a fairly complicated set of requirements; Germany's future identity ought to be West European at the core, marked by a strong sense of solidarity with Eastern Europe, and open for intensified ties with America, Japan and Russia.

In the case of Japan, the transformation of East-West relations has prompted a vigorous debate about the future of the U.S.-Japan Security Treaty. For Japan, the development of a purely regional identity seems inconceivable. Through its very close trans-Pacific ties with the United States, and its worldwide economic presence, Japan has become the first global civilian power. Its political identity will have to follow those ties. This means that Japan's sense of responsibility must be shaped around its alliance with the United States, and around global challenges such as Third World development and environmental reconstruction. There are some signs that such a sense of identity may be developing: the United Nations has long enjoyed very strong support in Japan, the "internationalization" of Japan has been a popular obsession for several years now, and public opinion reactions to the recent crisis in American-Japanese relations show considerable understanding of the need to make concessions to Washington. Official assistance to developing countries has rapidly increased in recent years. There is also the strong aversion of Japanese society to militarism. Yet in spite of all these positive signs, Japan clearly still has a long way to go toward developing a sense of global political responsibility.

Both Germany and Japan thus face the need to develop international identities that explicitly recognize and accept the facts of interdependence. Even if they do, however, this will in no way make U.S. world leadership redundant. Its substance and policies, of course, will have to change to accommodate pressures for supranational cooperation and a partial transfer of sovereignty. Only effective political cooperation between North America, Europe and Japan will be able to provide sufficient resources to meet the challenges the world will face in coming years.

Sovereignty has already, in reality, been transferred. National foreign policies will now have to recognize this, accept the conclusions, and build on them. Transfer of sovereignty allows the development of the rule of law in international relations and thus helps to push forward the process of "civilizing" international politics. It also offers an important set of values. Solidarity with other societies, and a sense of responsibility for the future of the world-and particularly the global environment-are values that will have to be inculcated. Those values must be developed domestically to make effective international interdependence policies possible. Paradoxically, the new challenges of international relations will thus require a much more active emphasis on the domestic political side of international relations-and particularly so in Germany and Japan.

1 This is the central thesis of Karel van Wolferen's The Enigma of Japanese Power, New York: Knopf, 1989.

2 Richard Rosecrance has coined the term "trading state" to define this new paradigm (see his The Rise of the Trading State, New York: Basic Books, 1986). It basically conveys the same notions as the term "civilian power" but suggests a primarily economic orientation.

3 The term "double containment" is Wolfram Hanrieder's (see his Germany, America, Europe, New Haven: Yale University Press, 1989).

4 To substantiate this point would go beyond the scope of this article. For West Germany, perhaps the simplest way to support the argument is to point to the fact that West German democracy has already passed the ultimate test, a peaceful change in government, twice-in 1969 and in 1982. For Japan, this test still remains to be passed, and the democratic character of the Japanese political system has recently been subjected to much critical scrutiny.

5 Herbert Stein, "Who's Number One? Who Cares?" in The Wall Street Journal, March 5, 1990.

6 The seminal work for this paradigm is Robert O. Keohane and Joseph S. Nye, Jr., Power and Interdependence, Boston: Little, Brown, 1977; revised edition 1989.