Increasing costs are pushing the two countries to end their trade dispute and disagreements over historical treaties. Despite the dawn of a new imperial era, damaged mutual trust could prove a hindrance to an agreement.
Bilateral relations between Japan and South Korea have sunk to a long-term low, and the two countries recently signaled that they were seeking a solution. Tuesday's enthronement ceremony for Emperor Naruhito may provide a basis for rapprochement between the two countries.
South Korea's President Moon Jae-in originally wanted to travel to Tokyo for the celebration in person and meet Japan's Prime Minister Shinzo Abe, according to South Korean media. But the Japanese government reportedly preferred a visit by Prime Minister Lee Nak Yon so that possible ways out of the current difficult situation could be explored. Lee's meeting with Abe is scheduled for October 23 or 24. Lee is also trying to arrange talks with Toshihiro Nikai, general secretary of the ruling conservative Liberal Democratic Party (LDP) and other political and economic heavyweights.
Openness to a solution on both sides
South Korea's head of government told news agency, Kyodo, that he wanted to take on the role of messenger between President Moon and Prime Minister Abe and would most likely bring a letter from Moon with him.
Prime Minister Lee, who is fluent in Japanese, was vice president of the bilateral parliamentary union and worked as a newspaper correspondent in Tokyo in the 1990s.
"I will listen carefully to Abe's words and explain Moon's and my thoughts as well as I can," Lee said. The Japanese side also signaled its openness to finding a solution.
"We should continue the dialogue and not rule out such opportunities (like the meeting with Lee)," Abe said in Parliament. On Wednesday, high-ranking officials from both sides met in Seoul for discussions.
In recent years South Koreans have been more vocal about mistreatment and forced labor under Japanese colonial rule
But the main point of contention will be difficult to resolve, especially as it evokes strong national emotions. In fall 2018, South Korea's Supreme Court held that several Japanese companies had to pay compensation to forced laborers from the Japanese colonial period. Now these companies' assets in South Korea are being confiscated.
According to the Japanese government, however, the 1965 bilateral agreement conclusively clarified the question of compensation. For this reason, it is demanding compliance with the treaty. When Seoul did not react, the Japanese government restricted the export of important materials for the production of semiconductors to South Korea. Moon then terminated an agreement to exchange military information.
The search for a common denominator
Japan has already rejected a first attempt by South Korea to find a compromise. This involved a suggestion that Japanese and South Korean companies voluntarily pay into a fund for the forced laborers' compensation.
South Korea's ambassador to Japan, Nam Gwan-pyo, told financial newspaper Nikkei that South Korea is looking for a solution without state involvement. But if Japan offers any good suggestions, they will be discussed, he said.
A second hurdle is the 2015 agreement to compensate forced "comfort women" with Japanese money through a South Korean foundation, which President Moon neither wants to implement nor renegotiate. Prime Minister Abe has repeatedly lamented the "damage to mutual trust" caused by the failure to honor agreements. This situation further complicates any deal beyond the widely divergent positions.
The willingness to achieve a compromise is probably related to the growing cost of the bilateral disputes. Both countries have crossed each other off the list of preferred trading partners. Hundreds of companies on both sides now need export licenses, which slows down trade in goods and economic exchange.
However, both economies are currently struggling. Japan's government has just lowered its own economic evaluation, and economic growth in South Korea is weaker than it has been for years. South Korean President Moon also appears politically weaker than ever before after the resignation of his Minister of Justice and renewed hostile rhetoric from North Korea.
New dispute over Olympic Games 2020?
Japan will have to bear other unexpected consequences as a result of the dispute. In August, the number of South Korean tourists travelling to Japan fell by around 280,000 or almost 60% compared to the previous year. South Koreans are the largest group of tourists in Japan after the Chinese. But anti-Japanese feelings in South Korea have dampened the desire to travel and caused a drop in the sale of cars, textiles and other goods from Japan.
South Korea also launched an international campaign against Olympic events in the allegedly radioactively contaminated Fukushima region. This could turn the 2020 Tokyo Olympics into a new frontline dispute between the two nations.