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Contents

Introduction
1. International Financial System Reform and G7/8 Process
2. Evaluation of Summit Process
3. Japan and the Asian Economy -Asian Approach-
4. The Task of the Okinawa Summit and Japan
Conclusion

Michio Morishima (a professor emeritus of LSE) published his book with a very provocative title, "Why Do I Expect Japan to Collapse?" The reason why I introduced it is that I have interest in his proposal of avoidance. He asserts that the only way to avoid the collapse in the near future is the formation of an Asian Community (Japan, China, North and South Korea, Taiwan and Ryukyu). Okinawa becomes independent as Ryukyu. As it is the centre of the Asian Community, the capital of it put in Ryukyu. He also mentions that Japan has to apologize to the Asian people and other victims heartily and make an effort to talk with them about Asian futures.

I basically agree with his proposal. I think that the Asian Community does not need to be limited within North-East Asia. The Asian Community will consist of all Asian countries including Australia and New Zealand. In the context of the reforming international financial system, it means the establishment of Asian Monetary Fund (AMF) in the short run and the formation of Asian currency bloc in the long run. This will be a basic stream of the "Asian Approach" in the 21th century. There are two obstacles against this stream. The first is that some Japanese political leaders have a wrong understanding their history, especially the Emperor system of Japan and Japan's aggressive war.

I know that this conference intends to discuss Global Governance by G8. The reason why I begin with my insistence like a regionalist is as follows: The past reform programs leading by G8 can be regarded to some extent. The basic framework consists of four key ideas, "market mechanism", "self-responsibility", "monitoring or surveillance", "safety net". But, on the other hand, their pace is too slow and they often tend to be compromised. Because there has remained a big difference of their interests, philosophy, thought, society and culture among them, even if G8 members had the same slogan, "Democracy and Market Economy". Even though there is the possibility that the financial crisis will still break out, it will take a very long time for G8 process to agree with the grand design of the International Financial System in the 21th century and to accomplish the drastic reform of the system. We have to recognize the limits of IMF surveillance. G8 and IMF have to make the U. S. economy soft-landing at present. As measures of financial crisis that will happen in this long term, we have to build regional cooperative system. Such cooperation could supplement the G8 process and IMF to stabilize the International Financial System.

Further more, democracy is one of the fundamental principles of global governance. So its burden should not only be owed by people in G7 countries from their tax. The present system of the payment for its cost has some bad effects. Some countries complain about using the fund of the IMF, that is their tax, for other countries' failure in their management of the economic policy. The present system induces the group of G7, especially U.S., to show over reaction to the other countries' moral hazard. When G7 members try to set finances in order, it is more difficult for them to reach an agreement on their share of the cost. The big share of G7 countries is sometimes an incentive to cut down the International Financial Institutions (IFIs) and the United Nations. I think that the cost for the Global Governance will increase more and more. One of ways to solve such a dilemma is to introduce so-called "Tobin Tax". If so, coping with Offshore Financial Centre, Tax Heaven and Financial Crime will become to be more important and IT revolution will strengthen the feasibility of Tobin Tax.

G8 Summit agreed to seek the globalization with human' face. ASEAN+3(Japan, China and South Korea) agreed to strengthen their financial cooperation in East Asia at Chiang Mai, Thailand in May 2000 (Chiang Mai Initiative). Many Asian countries want AMF and China is not an opponent now. The Japan's task of this Okinawa Summit is to relay the Asian voice to other Summit countries and to draw the grand design of the global management in the 21th century with them. The G8 will also need to discuss the relationship between globalism and regionalism. It is obvious that the Japanese government as a host, gives the IT revolution too much of a one-sided importance. And a big problem against Asian Approach is that the diplomacy of Japanese government is easily influenced by the U.S. This is the second obstacle. The mission of Japan, now Japan of Asia, is very serious.