Wednesday, June 10, 2009

Silicon Valley, Japan and US Diplomacy

PALO ALTO,, Calif. — The announcement of Silicon Valley attorney and Barack Obama fundraiser John V. Roos as U.S. ambassador- designate to Japan has sparked questions about what this appointment means for the U.S.-Japan relationship. Is the choice of a Washington outsider with no obvious Japan experience a sign of "Japan passing"?

The personal qualifications and interests of the ambassador-designate will become clearer in the coming months under the scrutiny of the press and Senate confirmation. But one can already argue that Roos' experience as a key player in the creation and growth of some of Silicon Valley's greatest companies instead may be just right for the relationship of the U.S. with an emerging New Japan.

As CEO of Wilson Sonsini Goodrich & Rosati (WSGR), Roos leads an institution that is more than just a large law firm in the San Francisco area. WSGR changed the legal services industry by establishing a new type of specialized practice, namely full service legal solutions for new high-tech companies and related industries.

Until John Arnot Wilson established the direct predecessor of WSGR in Palo Alto in 1961, entrepreneurs in what would later become Silicon Valley had little alternative but to go to San Francisco law firms whose expertise and worldview focused on large corporate clients and traditional financial institutions.

Wilson and his team developed a culture as well as a suite of legal services that was responsive to, and aligned with, the needs of high-tech entrepreneurs and venture investors. In 1969, they even took the pioneering step of creating an investment company to manage the stock options that some startup clients were using instead of cash to pay their legal fees.

With a history that includes assisting in the formation of the first Silicon Valley venture capital firms and seeing companies like Apple Computer and Google through initial public offerings, WSGR has played a direct role in shaping the Silicon Valley of the present.

Roos came to WSGR in 1985 as part of an aggressive expansion of the firm from 32 lawyers in 1981 to 97 lawyers in 1986. Promoted to partner in 1988, he became a player in the subsequent exponential growth both of the firm and of Silicon Valley. WSGR now includes around 600 attorneys, and its client base numbers over 300 public and 3,000 private companies. Moreover, Roos, who became CEO in 2005, achieved his professional success during a time of major seismic shifts in the Silicon Valley business environment: several boom-and-bust economic cycles, the emergence of new technology paradigms, and intense globalization.

According to the "2008 Index of Silicon Valley," a language other than English is now spoken in 48 percent of the homes of Silicon Valley, more than double the U.S. national average.

His experience puts Roos at the center of a dense network of personal and business relationships with key players in every aspect of the Silicon Valley new venture ecosystem: serial entrepreneurs, venture capitalists, angel investors, top university innovators and successful venture accelerators, as well as the large firms, opinion makers, journalists and others with whom they interact.

Accordingly, Roos has direct personal insights into the full range of conditions that face the high-tech industries that have come to the forefront of business relationships between the U.S. and Japan. His work as an attorney has required him to recognize and adapt quickly to the corporate cultures and concerns of new clients on a case-by-case basis. His success, achieved in the volatile atmosphere of Silicon Valley, bodes well for his ability to grasp quickly the new patterns of institutional change that are beginning to emerge in what has been termed the New Japan.

The scale and breadth of change already under way in Japan extends to all sectors: economy, government and politics and social structure and culture itself. It has been clear for some time that Japan is in the process of making a major shift toward a more innovation-based knowledge economy.

Japanese government programs and private sector emphasis on increasing the capacity for entrepreneurship, open innovation and global integration all point to some new model of economic competitiveness for Japan. Government itself has been the object of numerous efforts at reform, and the future impact of current demographic trends (low birth rate, aging population) has become a top concern among Japanese citizens as well as policymakers.

Nevertheless, exactly which new patterns will become the stable, dominant characteristics of New Japan is still an open question. This topic is the focus of several recent and ongoing research programs in U.S. universities and research institutions, including some that are being conducted jointly with Japanese counterparts.

The U.S. Foreign Service likewise includes many professional career diplomats with a wealth of experience who have been following all aspects of the evolution of U.S.-Japan relations. Ambassadors are encouraged by the State Department to develop their own signature, country-specific programs.

For example, former U.S. Ambassador to Italy Ron Spogli launched the Partnership for Growth, a comprehensive program to grow a new venture ecosystem, which resulted in a measurable increase in new venture formation and angel and venture investing in Italy.

Any ambassador will have many resources at his disposal to deal with the full range of issues that may appear in the U.S.-Japan relationship. It is his personal experience as a driver of the Silicon Valley innovation machine under conditions of rapid, dramatic change that makes John Roos a very promising choice for ambassador to Japan at the present time....or an expansion of conflicts into South East ASIA....?

Global military expenditure in 2008 is estimated to have totaled $1,464 billion, an increase of 4% in real terms compared to 2007, and of 45% since 1999. Military expenditure comprised approximately 2.4% of global gross domestic product (GDP) in 2008, the Stockholm International Peace Research Institute (SIPRI) writes in its Yearbook 2009.

The Swedish analysts write that the driving forces behind the increase were the wars in Iraq and Afghanistan, Russia's return to the global scene, as well as the growth of China. This may be so, but it appears that growing world tensions were the root cause of these and other factors.

According to SIPRI, the United States' military expenditure was the largest in the world in 2008, $607 billion (41.5% of the world's total). Other large military spenders were China ($84.9 billion), France ($65.7 billion), Britain ($65.3 billion), and Russia ($58.6 billion).

Twenty-five years ago, the world was divided into two warring camps. But the Cold War they were waging, although it cost them much money and effort, actually had a stabilizing effect on the world. The two superpowers controlled their satellite countries, and although the global arms stockpiles were sky-high and mutual rhetoric was very harsh, the number of local conflicts taking place simultaneously was relatively stable.

The disintegration of the socialist bloc and subsequently the Soviet Union disrupted the balance, and the probability of conflicts grew dramatically. New players tried to fill the military vacuum, which resulted in new local wars, including in the former Soviet Union. The number of simultaneous conflicts grew from 25-30 in 1972-1974 to 30-35 in 1985-1986, and peaked at 45-50 in 1992-1993.

After that, their number plummeted, only to start growing again in the 21st century, when the Soviet Union's adversaries in the Cold War increased their military activity.

Many analysts believe that the conflicts in the Persian Gulf and the Balkans would have been unimaginable when the Soviet Union was strong, because its influence alone could prevent Iraq's invasion of Kuwait and the subsequent U.S. Operation Desert Storm to liberate it, and also the interference of foreign powers in the internal Yugoslav conflict.

By the end of the 1990s, NATO and above all the United States unambiguously demonstrated their intention to use military force to solve domestic and global problems. After the terrorist attack against the United States on September 11, 2001, Washington ordered the invasion of Afghanistan and Iraq to liquidate terrorist organizations and lower the terrorist threat. However, these goals have not been attained to this day.

The civil wars in Iraq and Afghanistan were provoked by foreign interference, which local people view as occupation. As a result, more and more innocent civilians are dying in terrorist attacks there and in other countries.

The growing threat of military conflicts has encouraged many countries to increase spending on the acquisition of modern weapons and training of their armed forces. The trend has spread worldwide, from Southeast Asia to Latin America.

Another factor spurring military expenditure is the growing prices of weapons and military equipment. This explains why military expenses are growing although the number of military systems each particular country has is decreasing. A modern fighter plane now costs $30-$100 million compared to $8-$10 million 25-30 years ago, even though the dollar has become considerably weaker.

The Untied States, although it spends over $600 billion on its armed forces, has to gradually cut the number of the main types of armaments, from aircraft carriers to armored personnel carriers. The same is true of other countries, including Russia.

The number of weapon systems is decreasing, but the world is not becoming a safer place....

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