The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. We will first summarize the news this Thursday. Then as President Bush finishes his mission to Japan, Paul Solman will finish his series on the clash of cultures between the United States and Japan, a discussion among two Americans and two Japanese follows that, and we close with a Jeffrey Kaye report on converting the power of a volcano into electricity. NEWS SUMMARY

MR. MacNeil: President Bush wrapped up his trade mission to Japan today by proclaiming it a success. U.S. business leaders with the President were not as upbeat. The President concluded his stay with a state dinner hosted by Japanese Emperor Akihito. Mr. Bush, who collapsed from a bout with the flu yesterday said he was feeling pretty good today. He also said he'd made significant progress toward reducing the U.S. trade imbalance with Japan. He spoke at a joint news conference with Japanese Prime Minister Miyazawa.

PRES. BUSH: This visit has been a success. It has reaffirmed our vital political security in economic relationships. It has advanced our goal of leveling the playing field in U.S.-Japan competition of further opening Japan's markets to our exports. So this progress translates into jobs and economic growth in America, because I know the American worker can compete with anyone around the world if given a fair chance.

MR. MacNeil: The President won a loose pledge from the Japanese to buy an additional 20,000 U.S. cars a year and to double their purchases of U.S.-made auto parts in 1994. But American automakers traveling with the President were disappointed. Chrysler Chairman Lee Iacocca said it didn't sound like a lot of cars to him. Ford Chairman Harold Pohling was asked whether the agreement was embarrassingly small. "Pretty close," was his response. Japan exports 1 3/4 million cars to the United States. It currently imports 35,000 vehicles a year from the U.S., but most are built by Japanese companies operating in this country. We'll have more on the trade story later in the program. Jim.

MR. LEHRER: Inflation at the wholesale level was down in the United States in December. The Labor Department reported today wholesale prices fell .2 percent. They were down for all of 1991 .1 percent. It was the first full year decline in those prices in five years. The government moved today to protect the Northern spotted owl. The U.S. Fish & Wildlife Service restricted logging on 6.9 million acres of forest in the Pacific Northwest. The owl had been declared a threatened species in 1990. A spokesman said failure to restrict logging could lead to its extinction. Some 33,000 logging industry-related jobs could be affected by today's action.

MR. MacNeil: The FBI is redeploying some 300 agents from spy catching to anti-game operations. Attorney General William Barr said the changes were made possible by the demise of the Soviet Union. He said it was the largest single reallocation of resources in FBI history. Barr said street gangs were a major factor in the increase of violent crime in U.S. cities. He spoke at a Washington news conference.

ATTORNEY GENERAL WILLIAM BARR: Gangs are becoming increasingly sophisticated and frequently operate in many jurisdictions. Good intelligence information about their structure and membership is essential to coordinate attacks on these organizations. Because of our tough federal laws, we have the capacity to take out a gang in one fell swoop. Our message to gangs, gang leaders, and gang members is this: When we throw the federal book at you, it will be a knock out blow. There will be no bail, no probation, no parole. And you will spend a long time in a federal penitentiary.

MR. MacNeil: Barr said the agents would be reassigned to 39 cities around the country, starting with Baltimore, Dallas, Atlanta, and Washington, D.C. The troubled Bank of Credit & Commerce International today pleaded guilty to federal racketeering charges. The plea was entered by court-appointed liquidators in a plea bargain agreement. Under the plan, BCCI would forfeit a record $550 million in assets to pay off U.S. creditors and others. A federal judge will decide whether to approve the deal later this month.

MR. LEHRER: Doug Wilder is no longer a candidate for President of the United States. Last night, the governor of Virginia took himself out of the 1992 race for the Democratic Presidential nomination. He did so at the end of annual State of the Commonwealth Address to legislators in Richmond. He said Virginia's economic problems were a factor in his decision. He was also running low in the polls and in fund-raising.

MR. MacNeil: A dispute between Russia and Ukraine was temporarily defused today. The two republics have be arguing over control of the former Soviet navy's Black Sea fleet, which is based in Ukrainian waters. Russian President Boris Yeltsin said today the fleet was, is, and will be Russia's. The Ukrainian President insisted the fleet should belong to his republic, but offered to postpone the takeover for six months until the fleet's nuclear weapons are removed. What happens to the former Soviet Union's nuclear weapons was the focus of talks today between Defense Sec. Dick Cheney and his British counterpart. After the London meeting, Cheney expressed concerns about the control of nuclear and conventional weapons in the new commonwealth. He spoke in an interview with John Snow of Britain's Independent Television News.

SEC. CHENEY: I think this debate that's currently underway over who controls the military assets of the former Soviet Union is an extraordinarily important one. It is the sort of first major challenge to the new political structure that they've tried to establish in the commonwealth. It is vital in part because the military infrastructure was the most important thing that the former Soviet Union had. And how these issues get resolved will say a lot about their capacity to conduct peaceful relations among themselves in the years ahead. And finally, of course, all of this debate is taking place atop a stockpile of some twenty-five or thirty thousand nuclear weapons. And the question of who controls the Black Sea fleet could easily be translated at some point into a question of who owns certain strategic systems. For now, they appear to have an agreement to maintain centralized control over the nuclear systems that appears to be holding up today, but clearly there is a major dispute over the future of conventional forces.

MR. MacNeil: U.S. officials will travel next week to Russia and Ukraine to hold talks on nuclear safety and security. The State Department said the U.S. team will also visit Kazakhstan and Belarus. Serbians in the Yugoslav republic of Bosnia-Hercegovina today declared their own state. The republic is divided between three main ethnic groups. Today's move raised fearsthat fighting like that in neighboring Croatia could break out. Meanwhile, the European Community reconvened its Yugoslav peace conference after a one-month break. Leaders from all six Yugoslav republics attended the Brussels, Belgium meeting. Lord Carrington, the presiding European Community official, said the cease-fire in Croatia appeared to be holding. He said prospects for a lasting settlement had improved.

MR. LEHRER: Arab negotiators arrived in Washington this afternoon to resume peace talks with Israel. Those meetings are expected to begin Monday. But a Palestinian spokesman said his delegation would leave if Israel goes ahead and deports 12 Palestinians from the occupied territories. And that's it for the News Summary tonight. Now it's on the United States versus Japan and changing volcano power into electricity. FOCUS - IRRECONCILABLE DIFFERENCES

MR. MacNeil: We begin tonight with the U.S.-Japan story in the wake of President Bush's visit. In a moment, we'll get two American and two Japanese perspectives on the relationship between the world's two major economic powers and whether their disputes over trade will undermine 40 years of close diplomatic and political cooperation. First we look at the personal and emotional ties between the two nations that was evident today at a joint news conference between President Bush and Prime Minister Miyazawa.

PRES. BUSH: I have been troubled about anti-Japanese feeling in the United States and anti-U.S. feeling in Japan. And I think because of the hospitality of Prime Minister Miyazawa, because of the schedule that had been worked out, because the personal attention to us by their majesties, the emperor and empress, and hopefully by the way our business people have moved out and talked to a lot of different folks and Barbara's visit to the schools, I hope that that has helped. I think time will tell, but I'll tell you from our standpoint I think that the signals going back to the United States of this kind of hospitality, this kind of genuine friendship, this kind of caring when I had a little tiny bout of flu, sends a good signal. And sometimes we forget the big picture. And as I tried in my statement to say, this U.S.-Japan relationship is vital to world security and to many other things.

KIICHI MIYAZAWA, Japanese Prime Minister: [Speaking through Interpreter] We have to understand the other person's position. I was especially moved by the friendship shown by the President, the sense of trust expressed by the President. Japan was able to grow this much thanks to the continued support and help by the United States. This, again, we should not forget. And this friendship was at the very foundation of these meetings that I had with the President this time. Now, in discussing economic issues this time, there was concern expressed that the entire world might fall into protectionism, and what can we do in order to prevent that. The trade imbalance has persisted for 20 years or so and if nothing is done, then one of the parties concerned may fall into protectionism. So something ought to be done about it. SERIES - CULTURE CLASH

MR. MacNeil: To further consider the relationship between the Japanese and Americans, we go now to our series entitled "Culture Clash." In his final report, Business Correspondent Paul Solman of public station WGBH looks beyond the stereotypes of the past to the future of the relationship. [CATCH A RISING STAR COMEDY CLUB SCENE]

MR. SOLMAN: We're at Catch A Rising Star, a New York City comedy club, to watch a Japanese comedian milk the U.S.-Japan relationship for laughs.

TOMAYO OTSUKI: [PERFORMING] I didn't say anything. I just did my impression of American people doing the Japanese. And now you do that sometimes. Please don't do that. [audience laughing] It's really confusing. [audience laughing] Sometimes you make sense. [audience laughing]

PRIME MINISTER KAIFU: Well, you know the old saw the most serious stuff is often said in jest. Tonight we stray beyond the bounds of business to watch people from both cultures trying to make the U.S.-Japan relationship work. Since Tomayo Otsuki is a professional observer of the culture clash, it's not only fun to listen to her, it's instructive.

TOMAYO OTSUKI: [PERFORMING] Do you like Japanese people?

AUDIENCE: [shouting] Yes! [applauding]

TOMAYO OTSUKI: [performing] Eight people now, eight people. How about the rest of the people? [audience laughing]

TOMAYO OTSUKI: When I go on stage now, it used to be like, you know, like this, you know, people, oh, Japanese girl, I can see them in the aisles. Now, they're like Japanese, huh. I mean, I do feel that. I really do.

MR. SOLMAN: What Tomayo Otsuki feels is that Americans are no longer charmed by the Japanese. The specter of a truly powerful Japan makes an American audience nervous. Sensing the discomfort, she's modified her routine.

TOMAYO OTSUKI: Ny humor had to change because at the beginning the little tiny country you Americans thought, we kick the butt, just seen a few years ago, and those tiny guys with glasses, funny looking, start making car and doing good, it's funny, no -- oh, Japanese guys bought the building, ha, ha, ha. Two American people watched but wait a minute, they're not funny anymore -- they're buying our country!

MR. SOLMAN: So this is now Rockefeller Center?

MS. OTSUKI: Oh, my God, yes! Mr. Mitsubishi bought this place, but do you know what he had to go through to buy this place?

MR. SOLMAN: No.

MS. OTSUKI: Sell a two bedroom apartment in Ginda. [Solman laughing at joke]

MR. SOLMAN: With inflated real estate prices in Tokyo, New York is now cheap by comparison and so Japanese have been buying. We Americans have been resenting the shift in economic power. Now, on the anniversary of Pearl Harbor, some think we risk confusing 1991 with 1941.

CAROL GLUCK, Columbia University: We're seeing Pearl Harbor entirely in terms of our national concerns with Japan, which means that instead of bombs dropping from zero fighters, we're seeing fax machines and walkmen descending on us in a commercial version of the original Pearl Harbor attack.

MR. SOLMAN: Historian and Japan scholar Carol Gluck thinks that it's misleading to equate present Japanese economic power with its military power of the past. She points to this cartoon from a recent Japanese magazine as evidence of how much the U.S.-Japan relationship has changed over the past 50 years. Back in 1945, old war rebel Uncle Sam is seen as cradling bride Japan en route to the marital bed. By 1990 though, Sam's pooped. The bride has to stand on her own two feet. Sam's fantasy for the future? Japan cradling him. Psychiatrist Steven Fochios here at his Manhattan office works extensively with interracial couples, usually an American man married to a Japanese woman. Fochios sees the changing power relationship and its problems up close and personal.

DR. FOCHIOS: [Talking to Couple] Why are you here seeing me?

STEVE: We're having difficulties because of a lot of things, language. I don't think like a Japanese man. I don't have the same drive, the same desire, and I think that causes problems for her dealing with me.

MR. SOLMAN: In this session, Steve and Yoko, married for only six months, are struggling with problems that most marriages face, but in their relationship you can see hints of a larger cross-cultural struggle. The balance of power and energy has been shifting. Americans are no longer in the driver seat; Japanese are conflicted about setting the pace.

DR. FOCHIOS: So on the one hand, you like the power and you like the control and you like the decision making. On the other hand, you complain that he's not strong enough. What about that?

YOKO: I don't think I'm powerful or just like to be in the position at all, but I happen to be in that position for now, but I'm expecting him to take the position in the future, but if nobody's driving the car, where is this car going to go? Until certain point, somebody has to take care of that and right now I am --

DR. FOCHIOS: So, in other words, you are going to drive that car until he takes the wheel away from you?

YOKO: Yeah. And I hope he's going to drive the bigger wheel.

DR. FOCHIOS: So you're looking for someone that you can depend on to take care of you?

YOKO: Sure, 100 percent. That's my ideal position.

DR. FOCHIOS: What do you do about it?

YOKO: But should be stronger than me, a lot stronger, that's the basic condition.

MR. SOLMAN: Now we don't mean to draw sweeping conclusions from one isolated counseling session. It's just that this session is a useful illustration of some very basic trends. It's also a useful metaphor for the power relationship within the U.S.-Japan marriage. For better or worse, each side is probably going to have to adapt to the other and to changes in the rest of the world in order to make the relationship work.

MR. SOLMAN: Tomayo Otsuki makes the point with humor.

TOMAYO OTSUKI: [performing] Have you ever seen Japanese people apologizing? Yeah. Have you ever seen them competing who's sorry more? Have you? Have you? Ah, I so sorry, I apologize. No, don't you worry about it. I sorry more. I sorry, ah, ha, ha. Oh, no, I sorry more. I sorry more. Oh, no, no, don't you worry about it. I sorry more. I sorry. I sorry this much. [making loud noise] We don't do it anymore. We finally realized it's stupid. It took us 800 years to realize it.

MR. SOLMAN: A joke with a serious punchline. Real change takes time. Meanwhile, in the short run our stereotypes are less and less amusing.

CAROL GLUCK: I think stereotypes have the longest half life in the history of the globe. They will not go away. So I think it would be well if we realize that we cannot operate internationally or bi-nationally on the basis of those stereotypes. We cannot wait until we understand each other to get along with one another. To me, to be humorous about the relationship is a breath of fresh air. There's pitiful little rumor in either Tokyo or Washington about the Japanese-American relationship or the changes in it.

MR. SOLMAN: These men know how sobering the Japanese-American relationship can be. Clyde Prestowitz was for years one of America's top trade negotiators. Taizo Watanabe is a prominent Japanese diplomat.

CLYDE PRESTOWITZ, Former U.S. Trade Negotiator: One of the weaknesses I think of many American negotiators is that they do want to be liked and there's a tendency for some American negotiators to separate themselves from their own team, and to approach the Japanese on the basis of "I really understand you", and my team is maybe asking too much, but I am the one you can deal with, and the Japanese just love that because then they know they can drive a wedge down the middle of the American side and they've won the negotiation.

TAIZO WATANABE, Japanese Foreign Ministry Spokesman: We sometimes try to find that kind of person not really intending to put the wedge between the members of the American delegation, but we like to do Japanese way, that is, formal -- negotiating table is one thing, but it is also important to have kind of confirmation of the basic understanding of what this meeting is intended to be. That kind of process of confirmation does not necessarily take the formal table but social sort of occasions, and we would like to sort of have dinner together and drinking together, especially in Japan, and just try to establish the fundamental base of communication.

MR. SOLMAN: The differences they're describing are not just stylistic. Watanabe and Prestowitz are dealing with issues of real power. Understanding the other guy is obviously important but the relationship may not be able to wait that long. And, meanwhile, these men think it may get worse before it gets better.

MR. WATANABE: Because of the scope of the items we have to deal with, getting more complicated, in-depth, it's almost like now we are trying to put our hands into other's pockets and trying to identify. This is what they should not have or they should take it out, or something of that sort. So naturally it will touch upon the nerve of the many certain, domestic political interest of people, so it is getting more difficult, but I think we've got to settle that.

MR. PRESTOWITZ: Actually we agree with that. The U.S. is, in effect, asking Japan to change the nature of its society, and Japan is responding in the same way. And neither side has sufficient understanding of the other side to really make that request. It is becoming enormously more difficult and because of that I personally fear that the frictions are not going to go away but may become more intense.

MR. SOLMAN: In a sense then, you could look at the recent Pearl Harbor commemoration as both a threat and an opportunity, a threat to reinforce the negative stereotypes of the past, an opportunity to learn more about each other's history, and the context in which the relationship has developed at both the macro and micro level.

DR. FOCHIOS: Have you yet had difficult discussions between yourselves about forming an "us" or forming a "we"?

YOKO: Yeah, two times.

DR. FOCHIOS: Because right now you talk as if that's not operating when you talk about what you're going to do about the problem.

STEVE: She's very willing to refer to her business association as a partnership, but it seems sometimes she's very unwilling to refer to us as partners. And that bothers me. So in that respect - -

YOKO: When you're talking about money and those things, I don't want to get involved in this idea of "us". I'm, you know, myself. You are yourself.

STEVE: But we're not.

YOKO: Yourself plus myself could be "us", but there's nothing like "us".

DR. FOCHIOS: Are you saying that there's nothing like "us" ever, or yet, or --

YOKO: Yet.

DR. FOCHIOS: Yet.

YOKO: I believe there is something like that but not yet definitely. I think it takes time. It's not going to happen one day or just six months. I think that's kind of an ideal situation, husband and wife, but --

DR. FOCHIOS: What? The "us"?

YOKO: Us as one unit, but not yet.

MR. SOLMAN: Not yet, but some day perhaps. After all, nobody ever said getting along with another person, let alone another culture, was going to be easy. On the other hand, Steve and Yoko are still together and report that they're working out their differences and have a new baby girl named Sakura. And, as we end this series, Historian Carol Gluck reminds us that getting along often precedes deep understanding.

CAROL GLUCK: I hope you understand when I say that I don't think we can wait for you or I or the rest of us to achieve mutual understanding before we achieve mutual accommodation in international relations. Yes, of course, I think we should all try to understand one another. What else could I say? But I don't think international relations can wait. And I think the Americans and the Japanese have to get along with one another and not only with one another, but with lots of other rising countries, and falling countries, and they have to get along right away, because if they don't, the allegedly new world order will not materialize. FOCUS - IRRECONCILABLE DIFFERENCES

MR. MacNeil: Now four views on the state of U.S./Japan relations in the wake of President Bush's trip. They come from Paul Volcker, former Chairman of the Federal Reserve and current member of the Commission on U.S.-Japan Relations for the 21st Century. He's also a professor of international economics at Princeton and chairman of James D. Wolfenson Incorporated. Amb. Masamichi Hanabusa is consul general from Japan in New York City. Ayako Doi is editor of the Japan Digest and a free lance writer on U.S.-Japan affairs. James Fallows is Washington editor of the Atlantic Monthly Magazine and is at work on a book about the relationship between the U.S. and Japan. Ms. Doi, the report, we've just seen suggests that America and Japan are not getting on that well and things may get more difficult. Do you agree with that?

MS. DOI: I definitely do. I think this, President Bush's trip may have caused even long-term negative effect for the relationship by raising American expectation for Japanese trade concessions and by somewhat hurting the Japanese feelings about American pressure and more demand on concessions.

MR. MacNeil: Consul Hanabusa, do you agree the man you're replacing, you're about to go back to Tokyo as the spokesman for the foreign ministry and you're going to replace Mr. Watanabe, who we just saw in that report.

CONSUL GENERAL HANABUSA: Singular pleasure.

MR. MacNeil: Yes. He said things are getting more difficult. Do you agree with him?

CONSUL HANABUSA: Well, she said things are getting more difficult.

MR. MacNeil: No. I think he said so too.

CONSUL GENERAL HANABUSA: Well, it depends on many factors. It takes two to tango and both sides must make efforts. As far as the Japanese are concerned, we're willing and prepared to do whatever we can to maintain the relations intact and strong and we look to the American side to reciprocate and on region efforts, we can maintain good, strong relationship.

MR. MacNeil: Do you think the American side is reciprocating at the moment?

CONSUL GENERAL HANABUSA: Well, I have lived in New York for the past three years and I have observed that the realization that America need to reinvigorate its economy and increase competitiveness worldwide has been coming home to Americans, and President Bush's visit to Japan I think impressed upon the American audience on TV that how interdependent our relations are becoming and how they must address them. So I think I'm optimistic for the future, but it requires efforts on the Japanese part, as well as on the American part.

MR. MacNeil: James Fallows, how do you view the relationship? Is it bad and getting worse and how will President Bush's visit to Japan impact on it?

MR. FALLOWS: I think it's important to separate the personal level of relationship of how Japanese-American individuals get along, which I think is good and probably getting better as there's one more contact among people. And the structural relationship between the countries, the basic terms for this bilateral relationship, were set after the U.S. occupation when the power relationship was just enormously different from now. The U.S. was so economically strong it didn't have to worry about economic competition. Japan was so weak that it wanted to rebuild in the shadow of America. That has changed. It's not simply that Japan is stronger, which, as many other countries are strong too, but the U.S. feels it doesn't have the economic wherewithal to maintain this relationship or many others, and so the question is I think the wrong way to deal with this would be something that this trip illustrates, of pushing the Japanese to change this or that part of their society, their system. I think it would be more, it would be calmer and more sensible for the U.S. to say for our own reasons we need to change some of our policy. But in short, it's natural that the relationship is strained because the conditions have changed so much.

MR. MacNeil: How do you see the relationship, Mr. Volcker?

MR. VOLCKER: Well, I think there are a lot of frustrations and irritations that are coming to the surface. And I think they are somewhat dangerous and need to be contained and dealt with. I think underneath there is so much common interest. This is the most critical bilateral relationship in the world, and there is so much we have in common that is being obscured that's a danger. I remain quite confident that the underlying common interest will triumph in the end. But you do get a little worried at the degree of frustrations and irritations that are expressed on both sides.

MR. MacNeil: Ms. Doi, the President called the trip a success. Is it a success in terms of how it will work on this relationship, how it will improve, or help this relationship?

MS. DOI: I don't think so. You have American executives who traveled with Bush, with President Bush, already complaining that they did not get enough trade concessions and on the other hand, you have the Japanese business people saying that they were forced into making concessions that they don't want to make because of the political reasons. And from President Bush's point of view, having his business entourage already complaining about what they achieved, would that improve his reelection bid this year? Hardly, I would say. And also his collapse at the state dinner, of course, what effect does that have in his reelection chances?

MR. MacNeil: How do you see the impact of this visit? You've heard what, the carmakers who went with the President are unhappy, some of your own people, the Japanese, are unhappy, saying that the U.S. is scapegoating Japan for its present economic difficulties. Is this visit going to improve relations?

CONSUL GENERAL HANABUSA: Well, for those people who believe or who like to believe that the fault lies with the Japanese basically, and expect that if Japan changes, the situation will improve for the United States, I think that this is the wrong perception and people may not be satisfied with the outcome of this visit. But I think this visit was a success on two accounts. One, I think by adopting total declaration on the U.S.-Japan goal of partnership put our bilateral relationship in good perspective, that is, we share a common interest and roles in the maintenance and prosperity of the world and peace of the world. And we have common interest in trade and investment and science technology, and I think that some people, those people who look at the other part of relationship say trade imbalance or just investment. I think the adoption of this declaration I think put in the whole gamut of our relationship in perspective. So I think that's a great contribution achieved at this meeting. And the other side is in spite of the fact that we share a great common interest and we have been successful in the past 45 years, we have problems because we have substantial imbalance in trade and unless this is addressed properly, this could undermine our relations. So we adopted action plan, detailed, substantial, to start things, both Japanese and Americans, mostly Japanese side is going to aim at. Anyway, this is quite important because it is not right to say that playing field is not level. I think the playing field is level, but there are problems because of the differences in culture, the differences in the business practices, so it requires the efforts on the part of the Japanese and on the part of the American business people to understand each other and make efforts to address the differences in culture and behavior also.

MR. MacNeil: Mr. Volcker, is this declaration in Tokyo and the President's visit going to relieve the frustrations you were talking about?

MR. VOLCKER: Well, I'm afraid not. I think the declaration was constructive. I think what the President had to say, heard tonight, is very constructive, it is in the context in which this relationship ought to be put. And I think it came at the end of a trip that raised entirely unrealistic expectations, as Ms. Doi was saying. You can't come back from Tokyo with anything that says there are going to be more jobs in any discernable time period. We're not going to end the recession.

MR. MacNeil: Twenty thousand additional cars made by Japanese firms here.

MR. VOLCKER: That's not going to make any difference. It's not going to bring us out of the recession. The Japanese market isn't going to be open one day to the next or one year to the next. I think progress is being made in that direction. So against those expectations, there's a certain amount of danger I think that the irritations at least will not subside. I agree very much with the declaration. If there's some way of getting attention on that, it would be a great success, but that's a very hard thing to do. and I also think that we are basically complaining about a lot of things that are reflected in this relationship that grow out of our own shortcomings. Japan, a country half our size, is doing as much investment as we are. They do as much savings as we are, even more. How can we complain about them buying up our industry or investing here, when we are not generating the savings to invest in our own industry here? Our great aircraft industry, where we dominate the world, has to begin looking for investment, in this case not from Japan, but from Taiwan to support itself. Well, what is that saying about what we're doing to ourselves?

MR. MacNeil: James Fallows, the President said the Japanese relationship was vital to world security, that this came out of this Tokyo declaration. Do the dynamics we've been talking about of Japan's growing economic strength and the U.S. relative decline, are they going to threaten that relationship? Is that the dynamic that we're just going to have to get used to? It's going to make it harder and harder.

MR. FALLOWS: To put it a different way, if you extrapolated the trends the last 20 years to the next 20, you could see a much more unstable and difficult world for everybody, for the U.S., for Japan, for many other countries in Asia, because all three of those participants, U.S., Japanese and other Asians, are I think more comfortable with the kind of diplomatic relationship that Japan and the U.S. have maintained for 40 years. The question is, but if the shift in technological capacity and capital and trade remains what it has been, that will be hard to sustain politically, so therefore, to turn it the other way precisely because this strategic relationship has benefits for everybody, it is in all of the parties' interest to find a way to make it economically sustainable and to make the U.S. feel that it can afford a sort of long-term partnership with Japan it's had.

MR. MacNeil: Ms. Doi, do you think the tensions that Mr. Volcker and others have referred to are going to make it harder and harder to maintain that comfortable, strategic, friendly relationship?

MS. DOI: I think it has been going towards that direction already before President Bush's visit this time. Japanese increasingly feel that Americans are demanding changes and concessions and hand-outs from Japanese that they don't feel they should be giving and it's just unfortunate that the relative changes in economics positions don't necessary mean worse relationship, doesn't haven't to mean worse relationship. It can be built into a small cooperative relationship. But the way it's being handled, especially from Washington, is to ask for Japanese concessions. And the Japanese feel that they have enough of this and they are doing it this time because they are afraid of the prospects of having somebody else than George Bush in the White House. But that's about the only reason that they're doing it, political reason. So I think the feelings are soaring in Japan about how they are treated by the Americans.

MR. FALLOWS: I wonder if I might add something quickly?

MR. MacNeil: Yes, Jim Fallows.

MR. FALLOWS: There has been a kind of pathology to U.S.-Japanese relations that is illustrated by this trip, as Ms. Doi says, where the U.S. policy has been based on forcing Japan to change, so we're constantly complaining from positions of weakness, we're whining, we're wanting them to alter their practices, and this is just bad for both parties and for the relationship. And that's why there is an argument about having a different policy that doesn't require Japan to change but instead changes our policies.

MR. MacNeil: Mr. Volcker, the editor of "DAEDALUS," the magazine of the American Academy of Arts & Sciences, argues in the current edition, not argues, but points to some curious parallels between the position of the U.S. and Japan today and the position at the end of the 19th century between Britain just past its imperial peak, facing the rising economic competition of Germany, and with all, with a result we all know led to, the First World War. Is there a parallel there? Is there a frustration in the U.S. passing its economic peak that is just built into the situation that is really dangerous?

MR. VOLCKER: I don't think there's any doubt about that. I think two things are going on here that make it rather dangerous. We've had a common security enemy. That's disappearing before our eyes at a rate of speed nobody expected. So there isn't that feeling of cohesion that comes from a commonality. At the same time as the couple in the video was showing, who's driving the car? Well, it was clear the United States was drivingthe car. I think in a modified way the United States ought to still be driving the car frankly. But it's going to take a lot more back seat driving from the Japanese, but that's very irritating. I don't think you can have both people driving cars the same way, but how do we make this transition? And I think part of the difficulty is that in Japan they are a rather closed, it's a closed society, and it operates by consensus. It's got certain habits that aren't conducive to importing freely. I think they've been changing but it's a pretty slow process and it's frustrating. On the other hand, we haven't been taking care of our own problems at home that give us the strong and confident posture. I would like to say, if I can put in one plug, you mentioned in the introduction that I spent some time on this Commission on Japanese and American Relations for the 21st Century, we struggled with these problems. We didn't find any simple answers. We thought it might help and it would be quite important to raise a higher flag, a higher objective for all of us. We are both part of the Pacific that has enormous potential. It's the fastest growing part of the world, in any event. There are lots of problems. There are lots of problems of economic cooperation. There are lots of security problems that aren't going to be solved without Japan and the United States working together. I think that's pretty self-evident. Can we look at our problems in that specific context and find it a little easier to find a new role for each other that we can both live comfortably with?

MR. MacNeil: Can we?

MR. VOLCKER: I think so. It's not going to happen overnight.

MR. MacNeil: Can you see a danger in this situation? Do you see a parallel between Britain and Germany a hundred years ago and Japan and the United States now?

CONSUL GENERAL HANABUSA: Well, we shouldn't draw easy parallels on these experiences. But I think the United States is still strong, much stronger than some of the Americans think themselves. If you take a poll, 70 percent of Americans say that Japan is stronger than United States in certain economic sector. I think that 70 percent is too high to me. I think this is much exaggerated fear of Japan.

MR. MacNeil: You mean Americans are exaggerating Japan's strength?

CONSUL GENERAL HANABUSA: Yes, yes. But if America don't change and make more investments and improve competitiveness, I think there's a danger definitely.

MR. MacNeil: What is the danger?

CONSUL GENERAL HANABUSA: Well, we --

MR. MacNeil: How dangerous is it?

CONSUL GENERAL HANABUSA: -- the cold war certainly diverted resources to say non-productive sector, 70 percent of GNP was spent on armament and so forth, which was a drag on the economy. Now it's over. It's behind us. I think that it's time for the United States to reorient its priorities and make its own economy strong. This is a good, I think, moment for America to do that.

MR. VOLCKER: Let me come back a little bit on this British-German transition you were referring to. There's an enormous difference here. Japan is basically disarmed and I don't see any great driving force in Japan to change that. Britain and Germany were running a military rivalry as it developed. I think there's an enormous difference in terms of the potential for damage in the world.

MR. MacNeil: Let me quote you some figures raised in the very alarmist sounding book. I haven't read it. I've only read about it, "The Coming War with Japan," and they say that Japan has the third largest defense budget after the U.S. and the U.S.S.R. Now it is, the U.S.S.R. defense budget is in question, $33 billion spent on defense in 1990, rising at more than 6 percent a year, and with Ms. Doi, you have, you have written about the Japanese pacifism masking Japanese nationalism. And talk about your view of this, of the danger of Japanese frustration and its growing strength, both economically and militarily becoming a, you know, posing the danger of a real clash ultimately.

MS. DOI: Well, I do not think that you have to worry so much about the Japanese military build-up. Japan may spend money on equipment and other military spending, but the fact is that Japanese self-defense forces haven't been able to fill their ranks for many years. The Japanese, young Japanese people don't want to go into the military. They are enjoying a prosperous economic life and they can find very well paying jobs in private sectors. Why should they go into the military? Japanese will much rather pay the cost of keeping the American military in Japan and have them defend their country, rather than going to the war for themselves. I'd like to add that from the Washington perspective, I think Washington has to choose the way of dealing with Japanese between the two different ways. I mean, it's unfortunate that foreign pressure often is the only way to get large concessions out of Japan. And in this case, this much trade concessions, even if the United States businessmen complain that it's not enough, this much wouldn't have come if it were not for President Bush's and other people's pressure on Japan to produce this. However, this has a long-term implication on the Japanese feelings about the United States, as I said before.

MR. MacNeil: Excuse me interrupting. If the vision of the authors of the book "The Coming War With Japan" is too extreme and perhaps even lurid, what is the danger of the relationship continuing to sour if the problems are not taken care of? Where does the danger lead, in your view?

MS. DOI: I think the danger is that Japan at some point may think that the United States is not, not as reliable a political partner in the world as it has been and that they do not share the common values that they have always said that we do, and they may decide to go their own ways, meaning they may decide to use their financial capabilities to do other things in Asia, build up economic ties, closer ties with Asian countries, and reduce the economic presence in the United States. I mean, they cannot go to the Communist Bloc anymore, but there are other alternatives. And the Japanese presence in Asia is already very, very large compared to the American presence.

MR. MacNeil: Let me ask Mr. Fallows, if there are dangers in this relationship, souring further, because the problems the Consul General, Mr. Volcker, the frustrations they've referred to are not taken care of and there's more scapegoating of Japan and everything else, where does the danger lead, in your view?

MR. FALLOWS: Well, I think the danger is not a war between Japan and California, as that book proposed, but it is instability in general, where you have two very powerful nations feeling touchy, just a lesson of history suggests that's difficult for all involved. I want too go back briefly to a previous point about the historical parallels. I think the more accurate one is to Britain and the U.S., the turn of the 20th century, where Britain having built its industrial base largely through protectionist measures and colonialism in the 18th, 19th century developed a free trade theory to explain how it really happened and what, as more protectionist powers, namely Germany and the U.S., which was very protectionist in the 19th century, rose in their industrial strength, and Britain had a very difficult time coping with that and didn't finally, I think something similar is going on now. The U.S. now interprets its rise as having been due to free market principles, which historically was not true, and finds itself discomforted by a different kind of economic system rising to challenge it.

MR. MacNeil: What are the dangers?

MR. VOLCKER: Well, I think the right analogy is the one of passage in the sense of the torch from Britain to the United States, and there was some interregnum there that left you vulnerable to a number of dangers, and I think there are two that are quite clear. One is a descent into protectionism, and the irritations on the surface, on the trade area lead directly to threats of retaliation and restrictions on both sides.

MR. MacNeil: But if that's the analogy, the United States and Britain have ended up as close at the end of the 20th century as any two --

MR. VOLCKER: I think after a great depression --

MR. MacNeil: So that's very hopeful.

MR. VOLCKER: That's very hopeful if you've got a 50 year time perspective. It's not very hopeful if you were sitting there in 1930, which is when the transition was taking place and you had a very difficult economic situation, plus, you've got potential for all kinds of instability in the Far East, I think, Eastern Asia I guess is the right term now. The Korea thing may be working itself out, may not, instability in the Philippines, instability in Vietnam. We should be working with an air of stability there. The United States has interests out there. I think those countries basically want us there as a stabilizing force. We're not going to be there in my opinion if intentions between Japan and the United States get too severe.

MR. MacNeil: Ms. Doi, you argued in the Wall Street Journal last spring right after the Gulf War produced certain strains between the U.S. and Japan that what the Japanese, although they hadn't adopted it as an official policy, what Japanese really wanted was a permanent seat in the United States Security Council. Is that the way to absorb Japan's growing energies and bring them, a constructive way to bring them into the world scene?

MS. DOI: I think that's one way. Japanese foreign ministry have expressively said that that's one of the objectives of the diplomacy in the coming years and Japan has just elected to be a two year term at the Security Council and they will try to make that permanent somehow and they, you remember the sort of a conflict between the U.S. and Japan and Europe about the seating arrangement at the IMF and the World Bank. Japan feels that it's paying enough that they should have more political say in the world affairs.

MR. MacNeil: Is that now an objective of Japan, to secure a permanent seat on the U.N. Security Council, and you feel that that is the real answer to your, where your economic might now stands?

CONSUL GENERAL HANABUSA: I think that there's an aspiration of Japan, Japan accepting the responsibility to make international contributions in terms of finance or in other areas, peacekeeping operations. I think they deserve to be treated in having more say in the real world. I think permanent seat on the Security Council is a very good step to convince the Japanese people that the Japanese have the presentation even if we have taxation.

MR. MacNeil: Would that be a smart move for the United States, to back that reform?

MR. VOLCKER: I think in principle the case is very clear. There are obviously practical complications. It's also got to include Germany, I presume. And the question is when you put people on, who do you take off? I think that question is relevant, but in principle, I certainly think we ought to be going in that direction and beyond that, which is partly symbolic, Japanese representation in international institutions generally, and particularly in financial institutions, well, here they are, the second largest financial power in the world, the largest in terms of generating savings are very poorly represented in the World Bank, in the IMF, and in other institutions of that sort.

MR. MacNeil: Well, Mr. Volcker, Consul General Hanabusa, James Fallows, and Ms. Doi, thank you for joining us. UPDATE - WHOSE NAVY?

MR. LEHRER: Finally tonight who owns the former Soviet Black Sea fleet. It is one of the sore points between Russia and Ukraine. The two republics have the most territory, the largest armies, and the most nuclear weapons among the old Soviet republics that have come together in the new confederation of independent states. Nik Glass of Independent Television News reports.

MR. GLASS: The Black sea port of Sevastopol, the question being asked here, as elsewhere in the new commonwealth of independent states is blunt, who militarily is in command of what? Between the big two, Russia and Ukraine, the differences are being exacerbated by the hour. In the main square of Sevastopol, several thousand Russians attended the rally to protest against Ukrainian planes on the Black Sea fleet. It's a local issue of evident friction as it is between Kiev and Moscow. Boris Yeltsin, continuing his provincial tour, is adamant. The Black Sea fleet was, is and will be Russia's. Another Russian leader, Anatoly Subchak, the mayor of St. Petersburg, has been equally forthright. The Black Sea fleet has been created over centuries and even he said a Communist Party hack like Kravchuk couldn't change all that in a day. Leonid Kravchuk, the Ukrainian President, will have heard the words. Whether he heeds them is another matter. Today he met with naval and army officers to discuss the dispute. President Kravchuk is asking all servicemen on Ukrainian soil to sign an oath of allegiance within the next 11 days. In the case of the Black Sea fleet, there's more than a little resistance. The admiral of the fleet has pledged only to take orders from the commonwealth military commander and was disparaging of the directive from the Ukrainian defense minister.

ADMIRAL IGOR KASATONOV, Commander, Black Sea Fleet: [Speaking through Interpreter] It's immaterial to ask whether the Fleet agrees or refuses to take an oath. The question doesn't arise. The Navy isn't answerable to the Ukrainian Defense Ministry. That may be what Minister Morozov wants. There's nothing wrong with wanting.

MR. GLASS: Of the full naval fleet, the two most important are in Russia, first the Northern fleet at Murmansk, which includes the nuclear submarines, secondly, the Pacific fleet at Vladivostok. The Baltic fleet at Kaliningrad is a relatively small naval presence. The Black Sea fleet, less important now than it was historically, still constitutes about a fifth of the entire navy. It has three main bases, Sevastopol and Odessa, and Poti in Georgia. Western military experts estimate its strength at some 45 major vessels, including several aircraft carriers.

HENRY DODDS, Jane's Intelligence Review: Well, the nationalities you see on the ships is a very major one, about 90 percent of the officers and about 70 percent of the sailors are Russians, and really there's no chance of them signing any oath of allegiance to the Ukraine, because that, you know, simply isn't in their interest, so it would actually be very difficult for Ukraine even to find the crews for the ships even if they could find the money to run them.

MR. GLASS: Today the Ukrainian ambassador in Moscow spelled out a nuclear free future for Ukraine by 1994, as well as a much reduced armed force. As the temperature rises on both sides, Ukrainian and Russian, there's evidently more to the dispute than just military control.

PETER FRANK, University of Essex: Russia resents not simply the idea of breaking up the unified military but behind it, there's also a territorial issue. The Crimea, which is where the Black Sea fleet is based, historically belonged to Russia. In 1954, Mr. Kruschev arbitrarily gave the Crimea to Ukraine as a kind of birthday present to mark the 300th anniversary of the unification of Ukraine and Russia. Now if Russia were to concede that the Black Sea fleet belongs to Ukraine, then that would be tantamount to conceding the territorial point that Crimea belongs to Ukraine. That I think would not be acceptable to Russia given that a very large proportion of people who live in Crimea are ethnically Russia and have recently expressed a desire to remain with Russia.

MR. GLASS: As of today, Ukraine cut its communication links with the military high command in Moscow. It'll soon also have greater control over the nuclear weapons on its territory, at least an override button to stop their use. RECAP

MR. LEHRER: We had promised you a story on converting volcano energy into electricity but time problems got in the way. We'll present it in the near future. Again, the major stories of this Thursday, President Bush said he was feeling pretty good after collapsing yesterday from the effects of stomach flu. He said his trade mission to Japan was a success but U.S. business leaders traveling with him said Japan had made few concessions. And wholesale inflation fell 1/10 percent in 1991. It was the first full year decline in five years. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour tonight. We'll be back tomorrow night with the political week in review as seen by our regular Friday analysts, Gergen & Shields. I'm Robert MacNeil. Good night.