Quotes of the Day

In mid-1950s Japan, during the years after the country's devastating defeat in World War II, Prime Minister Ichiro Hatoyama believed his island nation should not become too subservient to the U.S. To make his point, he flew to Moscow to normalize relations with the Soviet Union. It was a bold stand to take at the opening of the Cold War — and one that ultimately failed. Despite Hatoyama's views, Japan locked itself firmly into the U.S. orbit, becoming America's key Asian ally.

Now Ichiro's grandson Yukio is taking a shot. In a major turning point for modern Japan, Yukio Hatoyama's Democratic Party of Japan (DPJ) won a landslide victory in parliamentary elections last year, tossing out the staunchly pro-U.S. Liberal Democrats, who had reigned almost interrupted since 1955. Hatoyama, 63, with an engineering Ph.D. from Stanford University, followed his granddaddy into the Prime Minister's post and immediately set about changing Japan's economy, government — and relationship with the U.S. "It was always in response to what the U.S. had to say that Japan followed," Hatoyama told TIME in an exclusive interview in his Tokyo office. "I believe we should say to each other what we need to say. The time has come for us to seek a more equal relationship."

It is far from clear what, precisely, Hatoyama means by "more equal," but there's little doubt that his government policy has completely altered the tenor of relations between the U.S. and its closest ally in Asia. Twenty years ago, Tokyo and Washington routinely sparred, most often over trade, but in the past decade the two nations seemed to become closer than ever. Japan backed America's antiterror campaign, for example, by marshaling refueling missions in the Indian Ocean to support U.S. forces in Afghanistan. Japan was looking more American at home as well. Under Junichiro Koizumi, Prime Minister from 2001 to 2006, the government adopted several free-market reforms to try to restore growth to the perpetually sluggish economy.

Hatoyama has thrown those policies in reverse. Critical of what he has called U.S.-led "market fundamentalism," Hatoyama has rejected Koizumi's now unpopular market reforms and is steering the economy toward something akin to a European-style welfare state with a wider government-funded social safety net. Though Hatoyama has continued to stress the crucial nature of the U.S.-Japan alliance and his friendly relationship with President Barack Obama — "We have come to call each other Barack and Yukio," he said during Obama's November visit to Tokyo — he has also backed away from policies that Washington views as vitally important to its global security priorities. In January, Hatoyama ended the refueling missions in the Indian Ocean, just as Obama was ramping up operations in Afghanistan. Most irritating to Washington has been Hatoyama's effort to renegotiate an important agreement on the redeployment of American troops stationed on the Japanese island of Okinawa. Hatoyama's stand has caused a rare chill to beset Japan-U.S. ties, leading some Japan watchers to fret over the health of the alliance. "This is probably the lowest point [for U.S.-Japan relations] since the early 1990s," when the two were engaged in bitter trade wars, says Takatoshi Ito, an economist at the University of Tokyo.

At home, Hatoyama's ideas have struck a chord with those who want their country to chart a new course. For decades — ever since its defeat in World War II, in fact — Japan has struggled to define its role in the world. Though in many respects a political and economic power in its own right, Japan has remained reliant on the U.S. for its own security. (Japan's postwar constitution renounces the use of force in international disputes.) The stabilizing presence of the U.S. military in Asia is as crucial as ever to Japan, which shares the same neighborhood as a rising China and a belligerent, nuclear North Korea. But dependence on the U.S. has led some Japanese to lament that they don't live in a "normal" country, one responsible for its own defense and foreign affairs, and Hatoyama's talk of a more equal partnership has played well with an electorate bruised by a perception that Japan often plays the little nephew to Uncle Sam.

The Japanese public's desire for change goes far beyond the realm of foreign relations. They ushered Hatoyama into office to breathe new life into an ossified political system that proved incapable of reversing the slow-motion decline of Japan's economy and global influence, a phenomenon the Japanese call "Japan passing." Thirty years ago, Japan was much like the China of today, an up-and-coming global power with an economy that was the envy of the world. Japanese companies such as Sony, Toyota and Honda shoved aside their competition from the West. By the late 1980s, Americans came to see Japan's economic firepower as arguably a bigger threat to U.S. global dominance than the nuclear arsenal of the Soviet Union. Today, however, no one is scared of Japan. Growth has been anemic ever since a property-and-stock-price bubble collapsed in the early 1990s. China is likely to supplant Japan as the world's No. 2 economy this year; Beijing is usurping Tokyo's political influence in Asia as well. Once lauded Japanese corporate management has grown isolated and out of touch — symbolized by the recent recall fiasco at Toyota. Even the country's reputation as a paragon of environmental progress has been shaken by outrage over the slaughter of dolphins, graphically depicted in the Oscar-winning documentary The Cove.

Hatoyama seems an unlikely choice to fix the mess. A politician for 27 years, he is as much a member of Japan's élite as the politicians he kicked out of office. The Hatoyamas are the bluest of bluebloods, with a long history in politics and big business. (His father served as Foreign Minister, while his mother's family founded tire giant Bridgestone.) The most unusual thing about him may be his wife Miyuki, who created an international stir by revealing she believed her soul was abducted by aliens and taken to Venus. Ironically, however, it is Hatoyama himself who is widely known as "the alien," the genesis of which has been credited to his often cryptic turns of phrase that leave Japanese guessing about his true opinions. "He's a very mysterious guy," says Masatoshi Honda, a professor of Japanese politics at the National Graduate Institute for Policy Studies in Tokyo. "We still don't know who Hatoyama is."

Struggling for Approval
During last year's election campaign, this mystery man sold himself as a change agent. Hatoyama has pledged a complete overhaul of decades of policy held dear by the old regime. He has vowed to break the grip of the all-powerful bureaucracy and place greater policymaking authority in the hands of elected politicians to make the government more transparent and accountable. As a guiding principle in economic affairs, he has revived another concept from his grandfather — fraternity — which has translated into a menu of new initiatives aimed at building a more extensive welfare system. That, Hatoyama believes, will bolster consumer confidence and get Japanese, usually big-time savers, to spend more and revive economic growth. In the most recent budget, he has moved spending priorities away from the usual pork-barrel stimulus and toward social services like education. As he puts it, "We will be spending not on concrete but on people." In March, the Diet, Japan's parliament, passed legislation promised by Hatoyama to provide a $140 monthly subsidy to parents for each child of junior high school age or younger. With such measures, "the new administration will be able to lead the economy to a new growth path," he says.

So far, however, Hatoyama has struggled to satisfy Japan's high hopes. The Prime Minister has often appeared a weak, ineffectual leader, unable to provide a clear direction on policy or control a three-party ruling coalition that is a grab bag of politicians with contradictory ideologies, from relative conservatives to outright socialists. Open disagreements have broken out between Cabinet members, especially over the controversial privatization of Japan's postal system — a free-market initiative begun, not incidentally, during Koizumi's term as Prime Minister. "Whenever you try to get down to reforms you're bound to face difficulties," Hatoyama says, but he insists he has the support of the DPJ and is working cooperatively with his coalition partners.

Matters won't get any easier. Economists worry that Hatoyama's social-welfare programs will only increase the government debt ratio, which is already more than twice that of the U.S. His reforms are also likely to face stiff resistance from the still powerful elements of the establishment, especially the government bureaucracy, which won't readily surrender its influence. Just like so many other Japanese politicians, Hatoyama has already been tarred by an alleged scandal, this one concerning campaign finance. (Hatoyama has publicly apologized for the scandal, though he has said he had no knowledge of any wrongdoing.) His Cabinet's approval rating has plummeted in the six months since he took office to a dismal 33%, and there is chatter in Tokyo that he may not last long in office.

The confusion within Hatoyama's government has complicated his relations with Washington. His administration "has yet to craft a clear vision of their strategy" on security issues, says Sheila Smith, senior fellow for Japan studies at the Council on Foreign Relations in Washington. "They're working it out as they go." Nowhere has that been more apparent than in Hatoyama's handling of the status of American bases on Okinawa. That southern Japanese island, a famous World War II battleground, still hosts roughly 25,000 troops, almost all of them Marines, and the local Okinawans have long resented the heavy military presence. In 2006, the U.S. and Japan reached an agreement to move a Marine air base on Okinawa to a less populated part of the island and relocate 8,000 troops to Guam.

That wasn't enough to satisfy Hatoyama. During the election campaign, he promised the Okinawans that the air base would be shifted off the island entirely, and since taking office he has effectively shelved the 2006 accord and reopened negotiations with the U.S. After months of waffling and breaking self-imposed deadlines, it's not clear exactly what Hatoyama will propose to Washington, but he told reporters in late March, "I personally should like to consider a path to relocate the air station outside Okinawa."

Washington's Worries
That's a very unpopular view in Washington. During an October trip to Tokyo, U.S. Defense Secretary Robert Gates bluntly told Japanese officials that the original 2006 arrangement is "the best alternative for everyone," adding that "it is time to move on." Though the frustrated Obama Administration has since softened its approach — stating that it's willing to listen to Japanese proposals — it still sees the 2006 pact as its preferred option.

Concern in the U.S. about Hatoyama has been further heightened by his overtures to China. The two Asian giants have had icy, even confrontational, relations in recent years, due to lingering anger among Chinese over Japan's brutal invasion of their country in the 1930s and 1940s. But Hatoyama has defused tensions by promising not to visit Tokyo's Yasukuni Shrine, which is dedicated to Japanese war dead, including some convicted World War II war criminals. Regular visits by Hatoyama's predecessors had been a regular irritant in Japan-China relations. In contrast to Gates' testy visit, Japanese officials rolled out the red carpet in December in Tokyo for Chinese Vice President Xi Jinping, who was granted an audience with Japan's Emperor, at Hatoyama's request. His overtures to China are part of a larger foreign policy agenda to integrate Japan more closely into a growing Asia. He advocates the formation of an East Asian community along the lines of Europe's, with a common regional currency like the euro. Such plans have led some in Washington to worry that Hatoyama believes Japan's future rests with a rising Asia and not the long-standing U.S. alliance.

Hatoyama denies that. He told TIME, "The Japan-U.S. relationship is the most important relationship for Japan's diplomacy," and that his government "is working to create an environment in which Japan will firmly support the U.S. presence in Asia." He also makes clear that by forging warmer ties with China, he's not downgrading the alliance with the U.S. "We are always watchful of the rapidly rising military capability [of China]," he says, but "closer economic ties between China and Japan will be beneficial for the prosperity of the world and for stability in Asia." Better relations between the U.S., Japan and China "would be a win-win sort of relationship," he says.

In that way, Hatoyama's new foreign policy may be simply acknowledging the changing global balance of power. "Everyone understands that Japan's foreign policy is going to have to accommodate China," says Smith, of the Council on Foreign Relations. "Japan lives right next door." But that fact will also make it difficult for Japan to drift too far from its close alliance with the U.S. Hatoyama "is trying to move Japan closer to Asia to get more autonomy from the U.S.," explains Ellis Krauss, a professor of Japanese politics at the University of California at San Diego. But Japan is "not going anyplace. The U.S. and Japan together can maybe manage a rising China. Japan can't do it on its own."

Hatoyama would not necessarily disagree with any of that. He insists, after all, that he does not see "any contradiction" between close ties with the U.S. and with Asian powers. There is no reason to doubt he means what he says. But this isn't the mid-1950s. Anyone who thinks the balance of power in Asia is not changing — and with it the strength of the U.S., even among its old allies — hasn't been there lately.

• Michael Schuman / Tokyo
• Yukio Hatoyama aims to shake up a fading Japan, but he's causing more confusion than reform