The Japan Economic Journal reported in 1980 that “influence in Washington is just like in Indonesia. It’s for sale.” It still is. Today, more than 100 foreign governments and hundreds of foreign corporations are running on-going political campaigns in the United States, as though they were a third major political party.

Mexico, for instance, is spending more than $50 million in 1993 to hire dozens of Washington, D.C., lobbyists, super-lawyers, former trade officials, political advisors, and public relations specialists to secure passage of the North American Free Trade Agreement. Japan is spending more than $400 million annually to operate a grass-roots political machine across America whose principal goal is to keep U.S. markets open to Japanese imports and investments even as Japan remains closed to U.S. investors and exports. Foreign corporations and governments now finance most of the work of those U.S. think-tanks and universities that supply ideas to America’s opinion-elite and politicians. And corporations from dozens of countries are contributing monies to both the Democratic and Republican parties and to hundreds of political candidates, just as though they were American voters.

The goal of these foreign political campaigns is simple—shape the outcome of decisions that directly affect their political and economic interests, decisions in which every day hundreds of millions of dollars—and cumulatively billions of dollars—are on the line. By using their intelligence networks to monitor discussions before decisions have been made, their well-connected Washington insiders to lobby the U.S. government, their public relations flacks to shape journalists’ coverage of issues important to them, and by financing the work of opinion leaders in American think-tanks and universities, these foreign interests are able to shape how Washington, D.C, thinks and acts.

Foreign interference in America’s domestic affairs is nothing new. Ever since the arrival of Citizen Genêt in 1795, foreign interests have regularly sought to influence politics and public opinion in the United States. The Greek lobby, for instance, has been able to sway U.S. relations with Turkey, Greece’s neighbor and rival. For many years, Chiang Kaishek’s Chinese lobby dominated American thinking on China. The Israeli lobby has a powerful voice in America’s Middle Fast policymaking. The Irish lobby has long influenced American policies on Northern Ireland.

What is different today is the scope, nature, and goal of this foreign politicking and propagandizing. Its goal is to buy economic advantage—to win in the back halls of government instead of in the open marketplace. And of all nations, Japan understands best that political power in America is a commodity like all others that can be acquired by the highest bidder. Of all nations, Japan has been willing to pay the most to shape America’s attitudes and actions. Of all nations, Japan wields the most striking power over America’s economic and trade policies. And of all nations, Japan succeeds best at using its political strength in America to gain economic advantage for itself.

Over the past two decades, Japan has constructed an American political machine that stretches from coast to coast. Its foundations rest on political and economic espionage and intelligence gathering, diplomacy, lobbying, politicking, and propagandizing—each carefully crafted and systematically integrated with the others. Following Japan’s successful example, the Koreans, the Mexicans, the Taiwanese, the Germans, the French, the British, and dozens of other countries are expanding their political machines in America. To understand the goals and operations of the Japan lobby, therefore, provides an insight into how foreign interests around the world buy political influence in America.

Among the victories racked up by the Japanese lobby in recent years—machine tools, optical fibers, biotechnology, air transport, semiconductors, financial services—one recent example illustrates its scope and power. In the spring of 1991, Chrysler, Ford, and General Motors concluded that Japanese automakers were dumping cars and minivans in the American market—an unfair competitive practice that is prohibited under international trade agreements and both American and Japanese law. Despite the law and trade agreements, however, Japan repeatedly used dumping to gain a strategic advantage over its American competitors. The way the ploy works once an industry is targeted is that the Japanese market is closed to foreign producers, the prices paid by Japanese consumers are kept artificially high, and the monopoly profits from the Japanese market are used to subsidize the predatory pricing of Japanese goods in the United States market until the American producers are driven out of business. This scheme has been used by Japanese producers to destroy their American competitors in the television, radio, stereo, machine tool, and semiconductor industries among dozens of others.

In regard to Japan’s dumping of cars and minivans in America—selling its vehicles at far below the price that similar goods were bringing on the domestic Japanese market—the price differential was so great that some West Coast autobrokers were able to buy Lexus automobiles at full retail price in California and ship them back to Japan and make profits of $15,000 or more per vehicle. Clearly, the Japanese automakers were buying market share in the upscale American luxury ear market. But the dumping was not limited to luxury vehicles. The Big Three concluded it was happening across all product lines, giving Japanese producers a distinct unfair and illegal advantage.

As a consequence of this predatory pricing, Japanese automakers had cut into the American automakers’ market share, cut their production volumes, eliminated their profits, forced them to close dozens of plants and fire tens of thousands of workers, and significantly reduced their capacity to raise capital. When in early 1993 Chinese steelmakers tried to buy market share in the Japanese market through dumping, the government of Japan immediately imposed duties on these imports. Under U.S. law, American automakers could avail themselves of a similar remedy.

In 1991, the Big Three decided to exercise their legal rights, but they chose to proceed on a step-by-step basis. Their strategy was to do a test case on just one product line, get a win, and then file a broad-based dumping petition covering all passenger vehicles imported from Japan. The test case that they selected was Japanese dumping of minivans. Minivans were one of the domestic automakers’ few profitable lines. They had been invented by Chrysler in the early 1980’s and were wildly popular with consumers.

In 1991, the Big Three filed a dumping petition on minivans with the U.S. Commerce Department. In 1992, the Commerce Department ruled that the Japanese manufacturers were indeed dumping minivans. But before duties could be imposed, another step had to be taken—the International Trade Commission (ITC) had to make a determination that this dumping was actually damaging the American industry.

While the case was under consideration, the Japanese automakers mounted a public relations campaign to convince lawmakers, the media, and ultimately the ITC that there was no dumping and that, even if there was, the imposition of remedial duties would harm American consumers. The idea was to avoid having to pay duties. It worked. In a surprise ruling, the ITC concluded that the Japanese dumping did not threaten the domestic minivan industry and that no duties should be imposed. The quirky nature of the ITC finding was highlighted by the fact that the Big Three were suffering historic operating losses, which threatened their very existence. Thus, any loss of sales in one of their few profitable lines could only worsen the condition of the Big Three and ultimately their capacity to produce minivans.

Despite the ITC ruling, the Big Three decided to file a broad-based dumping case against the Japanese automakers. It would include all imported sedans, station wagons, hatchbacks, and sports cars. But in January 1995, two weeks before the petition was to be filed, a Commerce official leaked the story to the press.

Almost immediately, the Japanese lobby sprang into action. Its political advisors quickly devised a multifaceted political and public relations campaign to shape the debate and preempt the Big Three. A key element of this strategy was to shift the focus of discussion from “Japanese dumping” to “an added cost for American drivers”—that is, the message the Japanese wanted to convey was that any action to stop their dumping would raise the cost of Japanese vehicles. Second, the Japanese lobby pulled out all stops to demonstrate to the Clinton administration that the dumping battle would be messy. The idea was to get the new administration to discourage the Big Three from exercising their legal rights. As part of this intimidation campaign, the Japanese lobby planted a story in the Detroit newspapers that 17 foreign carmakers had agreed to hire lawyers to file antitrust suits against the American automakers and pursue libel suits against those who denigrated Japanese vehicles. By any measure, this was very hard, hard ball.

At the same time, the Japanese lobby quickly formed a coalition of interests within the United States. They included import auto dealers, American parts makers who sold to the Japanese transplants, local chambers of commerce. For their part, American auto dealers who owned Japanese car franchises launched a nationwide grass-roots political campaign. Working through their trade association, the American International Auto Dealers Association, the import dealers were given training in effective techniques to lobby Congress.

Simultaneously, Japan’s Washington lobbyists began to contact members of Congress and the press. Each of them delivered a series of messages that had been tested and prepackaged by public relations firms employed by Japanese automakers and the government of Japan. These messages included “Competition from import manufacturers has forced America to be more competitive. . . . Enforcement on the dumping statutes was protectionist. . . . Clinton will stumble again. . . . Drop Detroit’s tariff. . . . Your car price will increase by 20 percent. . . . One more Detroit bail out. . . . Past tariffs have only hurt the American people. . . . ” Friendly journalists and editorial writers quickly echoed these messages. Again, the idea was to intimidate the Big Three with negative publicity into not pursuing their legal rights. In Washington, D.C., access and influence go hand-in-hand; they are the stock and trade of the lobbyist, the lawyer, and the political advisor. They are, as well, the biggest “skill” current officeholders and staff members can take with them when they leave the government.

Finally, representatives of the Japanese Embassy quietly contacted newly appointed officials in the Clinton administration and suggested that the dumping case would harm relations with Japan. The not-so-subtle message was that the government should urge the domestic automakers to drop their case. In a February 1993 off-the-record session, newly appointed U.S. Trade Representative (USTR) Mickey Kantor told trade reporters that the new administration might oppose the dumping petition. After the Los Angeles Times printed a story about Kantor’s comments, a spokesperson for the USTR denied them.

In the face of possible political opposition from the new administration and adverse publicity generated by Japan’s lobbyists, public relations specialists, and grass-roots organizations, the Big Three announced that they had decided to “postpone” their ease. In the end, Japan’s investment in lobbyists, public relations advisors, and political consultants allowed it to preempt the Big Three’s case. And in the process, the Japanese automakers avoided having their competitive practices examined—without making a single concession or agreeing to a single demand. This is what political power is all about.

Foreign politicking and propagandizing in America raise important questions about how the United States wishes to conduct its democratic practices. The importance of these questions is reflected in the fact that Japan’s government and leading companies together spend $500 million annually running an ongoing political campaign in the United States. This figure represents an amount roughly double the annual expenditures of both the Republican and Democratic parties. Put another way, Japan spends more on its thousand-person lobby in Washington, D.C., than the five most influential American business organizations—the U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable, the Committee for Economic Development, and the American Business Council—combined. In fact, Japan spends more in America on lobbying, politicking, and propagandizing than the 12 nations of the European Community combined. The people whom it hires as its representatives, lobbyists, and spokespersons come from the highest levels of American public life—the best and the brightest policymakers, political strategists, legal experts, and elected and appointed officials.

Like any high-quality political campaign, the Japanese program in the United States depends on a tested formula for its success: keep your message simple, use a variety of credible messengers, and let the echo-effect drown out your opponents. The basic components of their ongoing campaign are: intelligence gathering, lobbying, politicking at the grass-roots level, and propaganda. The campaign, of course, is completely legal. It also deeply corrodes the integrity of the economic and political system of the United States.

In polities, as in manufactured products, the Japanese follow a simple and predictable strategy: protect your domestic market from foreign penetration and capture as much of your competitor’s market share as possible. In Japan, it is unthinkable that a top government official would become a top lobbyist for an American corporation, that a candidate for high office would accept a campaign contribution from a foreign corporation, that a foreign government would stage-manage a grass-roots political campaign among its people, or that foreign companies or governments would establish think-tanks to feed ideas into its government. In all these ways, Japan is a closed political market.

Yet in all these ways, Japan is gaining political market share in the United States, spending hundreds of millions of dollars for competitive advantage. To the Japanese, politics is another legitimate business expense. Moreover, they are prepared to spend whatever it takes on politics to secure their economic goals—recognizing that $500 million per year is a bargain if it safeguards a $50 billion-per-year bilateral trade surplus.

Japan’s political machine in the United States is designed to serve six national and corporate goals: to keep the American market open for exports from Japan; to smooth the way for additional purchases of key assets in the United States; to blunt criticism of Japan’s adversarial trade practices; to neutralize or, even better, to capture the political influence of the American companies that compete with Japan; to influence U.S. trade policies toward Japan, Europe, and all other markets where Japan has significant economic interests; and to create an integrated American-Japanese economy that prevents the United States from confronting Japan economically and politically.

The Japanese political strategy in the United States replicates the political mind-set in Japan in some fundamental respects. In Japan, money politics is an established fact. A gold triangle, consisting of the Liberal Democratic Party (LDP), elite bureaucrats in government ministries, and established corporate leaders from business dominates Japan’s domestic political machinery in a way designed to serve the country’s economic interests. In Japanese politics, moreover, the line between gifts and bribes is hard to discern. As dozens of recent scandals in Japan have revealed, leading Japanese politicians take millions of dollars from companies that want special favors. Invariably, the politicians are never prosecuted and the money is seen as political contributions. The Japanese call this approach to politics “structural corruption.” It is the same approach to politics that the Japanese are now vigorously practicing in the United States—with the active participation and eager complicity of American lobbyists, powerbrokers, and government officials.

Greed and self-interest in Washington, D.C., after all, are what make this structural corruption possible, the “revolving door” of government at the highest levels that confuses “public service” with “personal advancement” and mistakes “legal” for “ethical.” For many, a top job in the Cabinet is merely a sabbatical from a more permanent career as a registered agent lobbying for a foreign corporation. For example, between 1973 and 1992, one-half of the principle trade officials of the USl’R left to become registered foreign agents; most did work for Japan. During the 1992 presidential election, the Clinton, Harkin, Kerrey, and Bush campaigns had 31 active foreign lobbyists in key political positions. Also, since the late 1970’s, half of the Republican and Democratic party chairmen have worked as lobbyists for both domestic and foreign interests either while in office or immediately after.

In October 1992, while the Washington, D.C., political community speculated over whom Bill Clinton would name to his Cabinet if he were elected President, officials of the Japanese government quietly circulated among themselves a list of the top three candidates for key White House and Cabinet posts. In retrospect, the Japanese list was almost completely accurate. The only big misses were who would be named to head the Justice Department.

The Japanese information was accurate because, according to Peter Schweizer, author of Friendly Spies, the Japanese devote more than 80 percent of their worldwide intelligence budget to economic and political espionage in the United States. As a result, Japan boasts the best political and economic intelligence system in the United States of any nation.

Indeed, one of the most important functions of the lobbyists and public relations firms hired by the Japanese is to keep a steady flow of current information streaming back to Tokyo. According to Herbert E. Meyer, vice-chairman of the National Intelligence Council during the Reagan administration, “Every branch office of every trading company operates like an information vacuum cleaner, sucking in information.” Normally, the Japanese will assign three or more companies to the task of analyzing the same problem or issue. The redundancy allows them to discern the difference between tatemae—the official story—and honne—the real truth. It also guarantees that they will know more than any individual lobbyist and permits them to tailor their response to the political circumstances, utilizing the firm or individual whose background, skills, or personal relationship best fits the needs of the situation.

Because Japanese businesses hire so many senior insiders and coordinate their collection of information so effectively, the Japanese actually have a better overview of what is happening in the federal government than all but a handful of those who serve in the administration. And by having more and better information on the inside workings of our government, the Japanese are able to affect a decision before most people even know that there is a decision to be made.

To put the intelligence they gather to good use, Japanese companies excel at the next phase of polities, gaining access to the policymakers. In Washington, D.C., access and influence go hand-in-hand; they are the stock and trade of the lobbyist, the lawyer, and the political advisor. They are, as well, the biggest “skill” current officeholders and staff members can take with them when they leave the government.

Consider a recent case involving the 1990 U.S.-Japan Super 301 talks on bilateral trade in high technology. During the negotiations, Fujitsu Ltd., one of Japan’s largest electronics companies, hired David Olive, one of the State Department’s principal experts on the substance of the talks, to be a senior representative in its Washington, D.C., office. Olive had helped draft State Department position papers, attended interagency meetings, had access to confidential information shared by American companies, and knew the U.S. negotiating strategy for such critical high-technology industries as semiconductors, telecommunications, and supercomputers. The U.S. State Department defended Olive’s job change as “in accord with applicable U.S. laws and regulations.” Nevertheless, whether intended or not, the Japanese gained two important advantages over their American rivals by this one move: they secured the services of an individual with a finely honed sense of political possibilities, and they sowed distrust among American companies about whether to share information with their own government.

The easiest way for Japanese and other foreign interests to gain access and establish influence is simply to pay for it. Generally, an insider is hired as a lobbyist “consultant” or “member of an advisory board” of an agency or company. As the economic stakes have grown, the Japanese have added yet another lure to attract United States government officials—an equity position in a business deal, with the prospect of substantial and ongoing returns. The transaction is a simple equation: equity for influence.

The sums of money from Japan are so large and the absence of ideals in Washington, D.C., so complete that a substantial number of American public officials are dramatically altering their career paths in the federal government—as well as their decisions while in office. The influence of Japanese money is so pervasive that there is even a name for it, “the demonstration effect.” The huge sums of money made available to Japan’s friends once they leave office “demonstrate” the value of a friendly Japanese policy to officials still in office. Dozens of former government officials now make $200,000 per year or more working for the Japanese lobby. There is a strong lure for those still in office.

Funneling money to politicians after they leave ofhee works at one end of the political value-added chain. An even more important activity is to funnel money to them at the front end—to help them get elected in the first place. While American election law prohibits a foreign national from making a direct or indirect contribution in any local, state, or federal election, foreign-owned companies in the United States are allowed to operate political action committees (PACs) and to make political contributions as if they were American corporations. In the 1990’s, more than 120 foreign companies—primarily from Europe and Canada—used this legal loophole to play a direct and influential role in American politics. The Japanese use a more subtle technique; they encourage Americans with whom they have important business links to make political contributions to pursue their shared political interests.

Another technique employed by Japanese and other foreign interests is the use of an existing organization or the creation of an ad hoe coalition—an association of U.S. members that allows foreign interests to put an American face on their politicking. One example of this approach is a Washington, D.C.-based public interest group, Consumers for World Trade (CWT). Since the early 1980’s, CWT has been one of Washington, D.C.’s most avid advocates of unrestricted free trade; its arguments focus on the benefits free trade affords the American consumer. The organization has steadfastly opposed any reciprocal trade law that would threaten Japan with restrictions on access to the U.S. market as a way to pry open the Japanese market. In 1987, CWT organized a grass-roots campaign against what are labeled the “protectionist” features of the pending Omnibus Trade Act of 1988; CWT testified in front of congressional committees six times, each time arguing the case for American consumers and against tough trade sanctions aimed at closed foreign markets, most notably of Japan.

Starting in 1980, the Japanese have taken a deep interest in CWT. Subaru, for example, paid the initial dues for 1,500 of its employees to become members; in November of 1980, Subaru employees represented more than half of CWT’s 2,700 members. Toyota and other Japanese companies made direct corporate contributions. By staying in the background, they did not jeopardize the American face of CWT.

But the most effective lobbying technique reflects the current tangle of global politics and economics. It is the high art of creating a captive competitor. The Toshiba story illustrates how it works. In 1987, the Toshiba Machine Company, which is half-owned by the Toshiba Corporation, was found to have sold sensitive technology to the Soviet Union—technology that would allow Soviet submarines to escape detection by the United States Navy. Congressional reaction was swift and fierce: in June 1987, the Senate voted 92 to 5 to impose sanctions on Toshiba and the House was prepared to ban the sale of all Toshiba components in the United States for two years.

The principal way the Japanese lobby beat these sanctions was to get American companies that were dependent on Toshiba for products or sales to lobby on its behalf. Thus, dozens of U.S. companies used their Washington lobbyists on behalf of Toshiba—because they, like so many American high-tech companies, simply could not do business without Toshiba’s components. In a textbook example of “leverage lobbying,” Toshiba, the Japanese supplier, used the leverage of its strategic components to get its American customers to lobby Congress on its behalf. The American companies had become Toshiba’s captive competitors.

According to former House Speaker Tip O’Neill, all politics is local. It is a principle that the Japanese have been quick to grasp, building an extensive coast-to-coast network of politics at the grass-roots level across America. And it is a principle best put into practice by the Electronic Industries Association of Japan (EIAJ) and Sony’s Akio Morita.

In a June 1985 presentation to the EIAJ, which is made up of Japan’s 600 largest electronics companies, Morita explained that American criticism of Japan “is not due to a misunderstanding of and prejudice against Japan, but rather to certain political intentions.” In response, Morita said, Japan needed to mount a grass-roots political campaign in the United States, a campaign that “should not stop with PR within the electronics industry, but . . . should expand PR activities to the mass media, consumer groups, and political groups on the state level.”

Going further, Morita next laid out an extensive list of political activities for the EIAJ. The program would consist of: managing debates and seminars at the state and local levels; staging local events with Japanese plants and factories; publishing local newsletters and magazines; creating exchange programs with state universities and think-tanks; establishing links with state economic development offices, local chambers of commerce, and the local offices of federal elected officials; organizing exchanges with consumer groups at the local level; and operating student exchanges. To weld the campaign into a coherent whole, Morita proposed a unified message that would be repeated in every locality: Japanese investment creates jobs; Japanese companies rebuild America’s depressed communities; Japanese companies satisfy American consumers; the Japanese and American economies are intertwined.

In 1988, the Keidanren—Japan’s big-business lobby—with Morita again in the lead, formed the Council for Better Investment in the United States, later renamed the Council for Better Corporate Citizenship in the United States, an organization with the avowed purpose of helping Japanese companies become fully integrated “into American society.” The nationwide effort aims to win public favor and goodwill through a massive program of charitable donations and highly visible public relations activities. What makes the donations troubling, however, is the fact that Japanese companies have no tradition of charitable giving, either at home or abroad. They generally combine charity and political contributions into one accounting line on the balance sheet. Now the Japanese government is pressuring them to make large, public contributions to defuse the mounting hostility in the United States toward Japan’s predatory practices and growing trade surplus.

The mission of Japanese propaganda is simple: to persuade Americans to adopt favorable views toward Japan. Through propaganda and the endless repetition of its messages, the Japanese have successfully stifled criticism of their own nationalistic approach to economics and shaped the prevailing view of Japan and global economics.

Japanese propaganda is effective primarily because it is delivered by highly credible spokespersons—most of them Americans. Some are long-standing experts on Japan, dubbed the Chrysanthemum Club by their critics; others are academies, members of think-tanks, and journalists, often with a freetrade ideological bent. While most of them hold their views honestly, almost all are stroked, supported, and promoted by the Japanese, who recognize the enormous value of having earnest American defenders who will make Japan’s case.

Also in the foreign policy category of Chrysanthemum Club members are entrenched Defense Department officials, unreconstructed Cold War warriors who give little weight to geoeconomies and continue to place enormous emphasis on the importance of maintaining American military bases in Japan. To them, national security is defined only in military terms; economic friction should not be permitted to jeopardize the geopolitics of the American-Japanese relationship. Other members of the club are free-trade ideologues and American corporate leaders who do not want to see criticism of Japan change the existing rules of commerce between the two nations.

A second major instrument for Japanese propaganda dissemination is American universities and think-tanks, a majority of which depend on significant Japanese funding and Japanese access to operate their Japanese Studies programs. In turn, the Japanese recognize that these institutions craft many of the ideas and conduct many of the studies that shape American opinion on trade and economic policy. Almost without exception, Japanese contributions support the work of those who advocate neoclassical laissez-faire trade policies. These views are genuinely held; the Americans who argue for this approach would make the same argument with or without Japanese financial assistance. What the Japanese hope to accomplish through their support of these people’s work is to amplify it, sustain it, and give it added influence in the highly competitive marketplace of ideas. Moreover, since ties to and support from Japan are often obscured or left unreported, the question of objectivity goes unasked.

American academics typically line up on every side of every issue. But in the case of American relations with Japan, more than simple intellectual disagreement has come into play. The Japanese exercise extraordinarily tight control over access to information within Japan. In more than one case, American scholars, academics, and students who have been critical of Japan have found their research efforts jeopardized or hindered. Conversely, friends of Japan can find most obstacles swiftly removed. Another consideration is money. It takes a great deal of money to run a major Japanese Studies program—and the Japanese only contribute substantial sums to those