East Asia is a tinderbox of sibling rivalries, economic and otherwise. There is no robust central organisation like the NATO to keep class in order. The biggest bully is of course China. With increasing wealth China has seemed to assert itself more strongly in international affairs.

This is possibly a reflection of China's cultural will. Chinese society is much more homogenous than most others are; over 90 per cent of the population belong to the same ethnic group. The Chinese feel strongly the weight of their past; and humiliations by the colonial powers (including Japan) in the last century have not been easily forgotten. Now that they havethe means, support for an expanding Chinese presence overseas would probably be easily given. This should translate to expanded military spending. China this far has resisted pressures for modernising its army, preferring to give precedence to economic growth. But this should change soon. Even so, military spending estimated to be larger than 50 billion dollars was second only to the Americans.

China's surge in importance has so far been kept in check by the presence of the Americans. The Americans, remember, had signed a treaty after the World War-II, to undertake responsibility for the defense of Japan. Clearly this was aimed to stop imperial Japan from going on the rampage again. There are now signs that America may be tiring of its role as protector in Asia. It is estimated that America has spent over $900 billion on the defense of Japan over the last fifty years. In an era of unending trade disputes, domestic pressures to cut this American subsidy on Japan's defense are increasing. Even moreimportantly, with the fall of the Soviet Union, Japan no longer functions as a bulwark against communism. Since the Chinese don't believe in exporting revolution as the Soviets did. The rationale for having a strong American presence in Asia weakens in many American eyes.

The Japanese themselves have become increasingly disinclined to pay for America's presence there. Many in Japan feel America's presence in Japan might serve to provoke others to target Japan. They also fear that America's increased trade with China act as a way of increasing the cost of American involvement in any disputes with China. They worry that when push comes to shove, America might just be inclined to sit back and watch.

Increased Japanese military and diplomatic activity then seems the only way to counter China's threat. China's claim of sovereignty over various South China Sea islands threatens shipping lanes vital to Japan's commerce. Even over Taiwan, whose status Japan prefers to remain vague about, she cannot afford to letChina have its way. Trade between Japan and Taiwan, tops $40 billion--not a sum to let go lightly.

But Japan is not trusted by her Asian neighbors, a result of Japanese excesses during the world war. China is not keen on Japan becoming more prominent because Japan is really the only country in the region rich enough to counter China. Japan desperately needs diplomatic support for an increased role in international affairs.

This is where we come in. When the permanent membership of the Security Council comes up for expansion Japan's only real competition for the Asia seat is India. But the last time anybody bothered to vote, Japan defeated India by over 100 votes including those of many third world countries we claim to represent. This should not be a surprise to anyone. Japan has a huge foreign aid budget where we cannot even really afford to feed our poor. India could instead withdraw from the race and support Japan. Remember also, the nuclear blasts have virtually scotched any support we may have hadfrom the developed world. Support from India would enormously improve Japan's diplomatic standing, both within Asia and in the wider international community. Japan could then claim to represent the democratic interest in the balance of power stakes in Asia.

A strategic relationship like this would not hurt India. We do not have the means to project power over a wider area than the sub-continent, nuclear weapons notwithstanding. On the other hand we stand to gain a lot. Mostly in economics, where we need help.

Start with FDI. Currently India accounts for only about 0.5 per cent of Japanese FDI. This figure can so easily be increased. There is also evidence to suggest that Japanese FDI is a better fit for our needs than American FDI. An OECD study found that increasingly Japanese FDI was aimed at producing goods in low cost locations to re-export to Japan and other economies. In contrast, American firms invested in local production facilities to serve the local markets in which they were based. This is animportant distinction for a developing economy like India because FDI aimed at re-exporting helps to push up the country's export revenues.

Another trend worth looking at is Japan's demographics. Japan's current working population is around 87 million. Even as the population increases, the working population is set to decrease to 73 million by 2020. As the old age dependency ratio increases, the number of people collecting pensions increases. This exerts pressure on the country's public finances. As a result the public debt is set to increase from 25 per cent of Japan's GDP to 300 per cent of GDP. The only way out for the Japanese economy would be to invest these pension funds in longer term high yielding equities. These funds are estimated at nearly $1.5 trillion. Since over the long-term profits rise at the same rate as a country's GDP, the highest yields would come by investing in a younger fund-hungry economy such as India's. A strategic relation with Japan might just help to push some of these fundsour way.