MIKE M. MOCHIZUKI

A number of external shocks have buffeted Japan in recent years. The Iraqi invasion of Kuwait in 1990 shocked the Japanese into realizing the international inadequacy of their brand of paci­ fism. To the last moment until American-led air forces struck Bagh­ dad, most Japanese did not think a large-scale multinational war would really happen. The collapse of the Soviet Union also has been a shock of sorts. It brought the Cold War to a definitive end, and with it the bipolar system that had provided the international stability (albeit an uneasy one) and predictability essential to Japan's prosperity as a trading nation. Now the United States has been asking Japan to aid a former enemy--just when Japan had begun to take more seriously the Soviet threat. With the geopoliti­ cal glue that held the U.S.-Japanese relationship together gone, Japan has to search for new ways to revitalize the trans-Pacific al­ liance. It also faces tougher American policies for dealing with bi­ lateral economic disputes. Finally, yen appreciation has shocked Japan's economic system. Earlier, the Japanese successfully weath­ ered the yen appreciation in the wake of the 1985 Plaza Accord by shedding productive capabilities in uncompetitive areas, by invest­ ing abroad and at home, and by using their financial clout to open up new external markets. But the 1993-94 yen appreciation has been different. The bursting of the so-called bubble economy se­ verely weakened the Japanese financial system and plunged the country into one of its worst recessions since World War II. Given

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