Foreign Relations

In 1951, Japan regained its sovereignty upon signing a peace treaty with 48 nations. A security treaty with the United States signed at the same time provided for the stationing of American troops in Japan. On United States insistence, Japan agreed to assume some responsibility for its own defense. During 1957–58, United States ground troops were withdrawn. In 1972, Okinawa and other Ryukyu islands held by the United States were returned.

Japanese wartime occupation of other Far Eastern countries left a legacy of ill will and distrust toward Japan. Huge reparation and aid payments in the 1960's and 1970's by Japan, however, led to improved relations. A growing rapprochement with China resulted in the establishment of diplomatic relations in 1972. In 1989 Emperor Hirohito died. He was succeeded by his son Akihito.

During the 1980's, Japan's success at selling its products overseas strained relations with the United States and Western European countries, which faced mounting trade deficits with Japan. In 1990 the Japanese real estate and stock markets crashed, leading to Japan's worst economic recession since World War II. An earthquake in 1995 devastated the port city of Kobe and killed more than 6,000.

The Liberal Democratic party, which had ruled the country since 1955, was voted out of office in 1993 in favor of a coalition of smaller parties. Various coalitions headed by three successive prime ministers ruled the country until the Liberal Democrats regained an absolute legislative majority in elections held in November 1996. A series of major banking and brokerage house failures in 1997 and 1998 furthered Japan's economic problems.