Japan-U.S. relations are more uncertain and subject to greater strain today than at any time since World War II. Longstanding military allies and increasingly interdependent economic partners, Japan and the United States have worked closely together to build a strong, multifaceted relationship based on democratic values and interests in world stability and development. But Japan today is our foremost economic and technological competitor. It consistently runs the largest annual international trade surplus with the U.S. ($59 billion in 1993). The end of the Cold War, lackluster international economic conditions, and the focus on economic issues in U.S. politics have raised new questions about the appropriate U.S. policy toward this Asian ally.

Japan's uncertain political transition began in July 1993, when the conservative Liberal Democratic Party (LDP) -- in power since 1955 -- was replaced by a fragile multiparty coalition. Under Prime Minister Morihiro Hosokawa, the coalition faced turmoil in April 1994, when Hosokawa resigned abruptly amid a personal financial scandal. Then-deputy prime minister/foreign minister Tsutomu Hata succeeded, but only at the head of a minority government as the Social Democratic Party (SDP), a key coalition partner, quit the coalition. Though beset by its own internal squabbles, the LDP remained the single largest party in Japan's bicameral Diet, or parliament. In late June, Hata was forced to resign under threat of an LDP-led no-confidence motion.

Japan's political uncertainty continues as it has since July 1993, when the conservative Liberal Democratic Party (LDP) -- in power since 1955 -- was replaced by a fragile multiparty coalition. Under Prime Minister Morihiro Hosokawa, the coalition faced turmoil in April 1994, when he resigned amid a personal financial scandal. Then-deputy prime minister/foreign minister Tsutomu Hata succeeded, but only at the head of a minority government as the Social Democratic Party (SDP), a key coalition partner, quit the coalition. Though beset by its own internal squabbles, the LDP remained the single largest party in Japan's bicameral Diet, or parliament. In late June, Hata was forced to resign under threat of an LDP-led no-confidence motion.