ABSTRACT
This chapter shows how domestic political dislocation, rather than changes in the Pakistan-US security relationship, led to difficulties in Pakistan-Japan economic ties. The reduction of Pakistan commitment to the US security system did not bring about any fundamental change in Pakistan-Japan economic relations. Rather their economic relations were affected by changes in the geo-political environment of Pakistan, i.e. the separation of East Pakistan, which resulted in the decline of Japanese economic interest. Second, nationalization of industries under Prime Minister Zulfiqar Ali Bhutto, had particularly adverse effects on prospects for Japanese investment in Pakistan. Nevertheless, Pakistan’s trade with Japan continued to strengthen and its economy became further enmeshed with Japan’s. Two positive aspects of the period occurred in geo-political spheres unrelated to the US alliance: first Sino-Japanese normalization removed a big obstacle to future cooperation between Pakistan and Japan; and second the Indian nuclear explosion allowed Pakistan and Japan to demonstrate a continuity in their anti-nuclear stances that both countries had devised in the late 1950s.
