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 economic position through services to other nations. But here Japan's economic interests do conflict directly with those of shipping circles in the United States. Arguments for a subsidized American merchant marine are based not on economic but on strategic grounds. Here again appears the divergence between the Japanese emphasis on economic problems and ours on defense.

A fully restored Japanese merchant marine would come into even stronger competition with European shipping, particularly that of the United Kingdom and Scandinavia, which, like Japan, depend heavily on such services. This is but one aspect of Japan's major conflict of economic interests with the outside world, which is with western Europe rather than the United States and involves her whole export trade and search for raw materials as well as her shipping interests. Because of American interest in the economic well-being of western Europe as well as of Japan this is certain to become a major area for careful negotiation, if not for open disagreement, between the United States and Japan.

The only way for Japan to develop an adequate economy is to increase her export of manufactured goods and services to the parts of the world which can absorb them best, that is, primarily the less technically advanced areas of the world in southern and eastern Asia, Africa, and South America. But western Europe too depends on exports of the same kind to these areas. For the United States to encourage the growth of such exports from Japan or western Europe at the expense of the other area would be a policy of robbing Peter to pay Paul. But because of the American interest in both areas and their common continuing need for American cooperation if not outright aid, it seems certain that the United States will be forced increasingly into the role of impartial judge between them. This, of course, will be a position of the greatest delicacy and one which is almost certain to breed resentment and hostility from at least one side, if not both.

Thus the position of western Europe greatly complicates American relations with Japan in the economic field, but it should be noted in passing that this is not true with respect to Japanese-American relations in the political and military fields. Here the countries of western Europe and America's allies in the Pacific tend to serve as a buffer rather than as a source of friction. Western Europe naturally is primarily concerned with its own defense problems and therefore is inclined to minimize the need for Japanese rearmament or American defense preparation in the Pacific. Our Pacific allies, Australia, New Zealand, and the Philippines, take an even more negative view of Japanese defense. In these countries hatred of Japan for her past aggressions and atrocities remains fresh and is a strong factor in domestic politics. The result is open opposition to American efforts to encourage Japanese rearmament. Thus, America's allies in Europe and the Pacific, by opposing American views of Japan's defense needs, help to bring the American and Japanese positions on this question closer together, at the same time that the economic interests of our allies in western Europe show signs of becoming a serious source of friction between the United States and Japan.

An even more immediately dangerous area of economic dispute lies in the future relations between Japan and her Communist neighbors on the mainland of Asia—China Proper, Manchuria, and North Korea. This area is important to Japan as