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02/19/92

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Japan, Germany taking new roles in world finance, Nakasone says

STANFORD - There is a potential for economic friction between developed nations and developing ones, former Japanese Prime Minister Yasuhiro Nakasone told an overflow audience at the Stanford Business School on Tuesday.

"It is my opinion that late-comers, including most of the countries in the former Soviet Bloc, are likely to adopt the strategy of 'developmental market economies,' such as that employed in the past by Japan and more recently by the newly industrialized nations," Nakasone said. "This could create friction with 'liberal market economies' such as America's."

He called for Japan to share the experience it gained in becoming a major world economy with these emerging nations, to lessen the friction.

Nakasone, who was invited to Stanford by the Graduate School of Business and the Hoover Institution, also issued a battle call against protectionism. Any failure of the current "Uruguay" round of international trade negotiations "would bolster proponents of protectionism and economic blocs, and the recession-ridden world economy would face a dark future," he warned.

The United States' economy no longer dominates the world's financial picture as it did when the 1944 Bretton-Woods conference created the International Monetary Fund, he said.

"The U.S. dollar is less dominant today; the German mark and the Japanese yen have risen to prominence to supplement the role the U.S. dollar has long played," Nakasone said. "The International Monetary fund, in addition to . . . stabilizing the world's currencies and exchange rates, has become involved in such diverse efforts as resolving North-South problems, monitoring drug-related fund flows, and finding solutions to environmental problems. This may be demanding too much of the original financial institution."

Nakasone also called for Japan and Germany to become permanent members of the United Nations Security Council, although conceding "I do not anticipate a revision of the Charter soon."

He would like at least one small revision, he said. "The enemy clause of the United Nations charter, which still names the former Axis countries as enemies is an anachronism," Nakasone said.

He called for Japan to open its research and academic circles to more foreign access. "Japan must promote educational exchange, employing more foreign professors and guaranteeing credit transfers and degree recognition between educational institutions, both domestically and abroad."

He also urged Japan to invite foreigners to address the Diet - the Japanese Parliament - and to participate in government- appointed commissions.

"Government and industry briefings must be made accessible to foreign news agencies, and private press clubs should be opened to foreign journalists," Nakasone said. "The legal profession must be opened so that more foreign lawyers may practice in Japan.

"If Japan is to strengthen its position as a respected member of the international community, it must take drastic measures to improve access and ensure transparency."

Nakasone called for Japan to "reconfirm our belief in liberal democratic values and consider as an essential mission the dissemination of these values. . . .

"Holding this conviction, Japan, as a member of the Free World, is determined to participate in the cooperative task of building a world order based upon democratic principles. Japan wishes to become the beacon, as well as the engine, of democracy in Asia. Accepting this as a national priority, Japan should make positive contributions, both materially and spiritually, to spreading the principles of democracy in Asia as well as in the rest of the world."

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