“The future that has already happened.” That is how Peter Drucker described the relevance of demographics. Around the world, policy makers are starting to agree, and governments are taking unprecedented steps to prepare for the next generation. After more than three decades, China has abolished its one-child policy in a dramatic departure from a core Communist Party position. The Japanese government under Prime Minister Shinzo Abe has set the country’s first numerical target to stabilize the population at 100 million over the next 50 years, breaking a postwar political taboo. A consensus is reemerging that demographic trends are a crucial factor determining the fate of nations.

Japan is in the midst of a silently unfolding crisis. The figures are staggering. The country’s population peaked in 2008 at around 128 million and has been in decline ever since. Today, there are fewer than 127 million people in Japan, and its population is falling by nearly three hundred thousand a year, according to the National Institute of Population and Social Security Research. By 2040, Japan could be losing one million people a year. These numbers add up. By the end of the century, Japan’s population could fall to as little as fifty million—equivalent to what it was in the early 1900s. Japan is also the fastest-aging society in the world. Its working-age population peaked in 1995, and today one in four Japanese is over the age of sixty-five. By 2050, it could be two of every five.

At the same time, Japanese are having fewer children than before. In 1990, the country experienced what has been termed the “1.57 shock,” when the fertility rate dropped to its lowest level yet. Since then the fertility rate has fallen further, to around 1.4, well below the replacement rate of about 2.1 births per woman. There are few signs that this will improve. Belated pronatal government policies, such as tax incentives and attempts to make more childcare facilities available, have been largely ineffective, while a growing proportion of the population is delaying marrying or opting to become “lifelong singles,” which generally means fewer children. Globally, Japan is being recognized for the wrong things—a country with sexless youth, more registered pet cats and dogs than children under fifteen, and a market in which adult diapers outsell baby nappies. But beyond the negative consequences for the Japanese brand, the geopolitical implications of these demographic shifts are profound.

Historically, societies have been concerned with population growth and with the survival of their likeness. Religions have called for humans to “be fruitful and multiply.” Nations, in particular, fear population decline, as it is believed to be a harbinger of national weakness and defeat. Japan is no exception, and the nation should be weary of becoming marginalized in regional and global affairs. By 2050, Japan stands to lose its seat among Asia’s “population G7”—a grouping that will then consist of India, China, Indonesia, Pakistan, Bangladesh, the Philippines and Vietnam. To be sure, a large population doesn’t guarantee an increase in regional stature, but history has yet to provide an example of a declining population that is able to significantly build on its clout. If Japan is serious about being a leader in shaping the future Asia-Pacific regional architecture as a liberal-democratic state, it must not only concern itself with moral authority, but it must also be conscious of the regional population dynamics.

In 1904, Sir Halford Mackinder, the father of modern geopolitics, wrote, “Man and not nature initiates, but nature in large measure controls.” Demography is the underlying determining factor that poses the principal challenge to Japan’s national revitalization and attempts to overcome the legacy of its lost decades. The impending population bust threatens to undermine not only the success of Abenomics, but also the future of defense-policy reforms. It will deepen security risks and could ultimately result in Japan’s marginalization in the Asia-Pacific.

Population is power. After the devastating defeat in World War II, Japan benefited from a “demographic bonus” that paved the way for the nation’s economic growth and reemergence on the world stage. Conversely, since the 1990s a “demographic onus” has intensified its financial plight. Japan’s population decline is both an indication and perpetrator of Japan’s lost decades of chronic deflation and stagnant growth. Despite Prime Minister Shinzo Abe’s assertions that “Japan is back,” the lost decades are far from over. In an April 2015 report, the International Monetary Fund revealed the urgency of the need to redress fiscal imbalances, which have risen to unsustainable levels. The report warns that Japan’s debt level could balloon to 250 percent of its gross domestic product by the end of this decade. The heavy burden of a growing national social-security budget is a major source of this debt. A decade ago, social-security spending, which includes pensions, healthcare and nursing for the aged, was already a quarter of the national budget. Today, this figure has grown to a third, surpassing all other expense categories. To be sure, Abenomics is targeted specifically to reduce the public-debt burden and help Japan break away from its decades-long slump. Notwithstanding some positive short-term results such as the rise in stock prices as well as the dramatic boost in inbound tourism propped up by a weak yen, the jury is still out on the long-term viability of Abenomics. Indeed, Japan’s demography is the very issue that needs to be prioritized in order to avoid repeating the mistakes of the lost decades and escape its cycle.

Japan’s response to the emerging demographic trends in recent decades can be characterized as a crisis-less sense of pessimism and political procrastination. Countermeasures throughout the 1990s and into the 2000s were reactive, short term and limited in scope. The various pronatalist schemes have been largely unsuccessful, meeting with fierce opposition. First, the legacy of World War II is a key obstacle. Many Japanese still remember how pronatalist government policies were introduced during World War II to encourage women to give birth for the “nation’s sake.” It is therefore no surprise that a strong antipathy to what is perceived as government interference into the private lives of individuals still exists. Next, in a nation that imagines itself to be ethnically and culturally homogenous, immigration as a solution is still a politically sensitive topic. Likewise, when it comes to dealing with issues that are unpopular with the elderly electorate, such as reducing pensions, procrastination is a lower-risk option for those in power.

To be sure, the current government is doing more. As a core feature of Abenomics 2.0 set forward in September 2015, the government pledged to raise the birthrate to the “publicly desired level” of 1.8 children per woman, and further advance structural reforms to ease the burden of child and elderly care for working generations. Regional revitalization has also been identified as a major strategy to prevent the disappearance of rural areas caused by an overconcentration of the population in large urban centers. But such measures are far from sufficient and may be too little, too late. Like the lost decades, the approach does not match the urgency of the issue at hand. For example, the vanishing of regional areas is close to tipping point, and the crisis is fast moving towards the cities.

Japan must brace itself for a “Greater Metropolitan Area Shock.” In particular, policy makers have been overly complacent in their attitude towards Tokyo. The fact that Japan’s largest and overcrowded city, which is sucking in the rest of the country’s population, could soon be affected is unthinkable to many. But population decline and the ripple effects felt far from the capital are starting to hit greater Tokyo to a similar degree.

At the moment, Akita prefecture in Japan’s north and Shimane prefecture in its west have the highest percentages of elderly citizens in the country, each at around 30 percent of their residents. However, projections show that this will soon be matched by Chiba prefecture in 2022 and Saitama prefecture in 2028—both in commuting distance from central Tokyo. In 2013, Yokosuka city in Kanagawa prefecture, next to Tokyo, was already named as the city with the largest population loss (despite having a rate of decline of only 0.5 percent).

What does this rapid shrinking and aging mean for greater Tokyo? The cities are being transformed into “limited villages” where the local government can no longer offer the basic public services such as road maintenance, schools and medical care. For example, in 2008 Chiba’s Choshi city hospital was on the brink of closure. Although it managed to restart operations in 2010, the future looks bleak. Such cases are becoming the norm. Other symptoms of the population decline and aging are vacant housing, too few supermarkets and the breakdown of the social fabric within communities. Japan must now reformulate its thinking. No longer is it appropriate to imagine the population problem in terms of Tokyo versus regional areas, as both are now facing the same challenges. Similarly, Japan must move beyond the lost decades with its lack of an overarching strategy and governmental ministries taking a parochial approach. For Japan’s revitalization to be successful, a coordinated response between the various government ministries is urgently needed to address the multifaceted nature of the problem. Going one step further than the Abe administration’s new “Council for Promoting the Dynamic Engagement of All Citizens,” that covers the three arrows of a robust economy, childcare support and social security, a standalone “Ministry for Next Generation Issues” should be established to engage all of the potential areas that demographics can impact the nation. Similarly, Japan must move to establish a long-term bipartisan investigation commission on population issues attached to the prime minister’s office, in order to overcome the potential negative inconsistencies caused by a change in administration.

In September, the upper house of Japan’s National Diet approved legislation already passed by the lower house that, for the first time since 1945, would let Japanese troops fight overseas. Far from signaling the start of larger changes to the country’s long-standing pacifist position, however, the legislation stirred up impassioned opposition—especially opposition from unexpected sources. This may very well be the high-water mark from which Prime Minister Abe’s intention to reform Japan’s defense program recedes.

Demographics, it turns out, provide an unexpected explanation to the backlash against the national security legislation and the sudden turnaround in public backing for the Abe administration. Throughout the summer of 2015 thousands gathered in protest around the National Diet building calling for Abe’s resignation and an end to security bills that they believe could eventually entangle Japan into a war of someone else’s doing. Many of the protests were spearheaded by proactive youth—previously seen as apathetic to political issues—hearkening back to the 1960s student demonstrations against the U.S.-Japanese security treaty. Those protests ironically occurred under the premiership of Nobusuke Kishi, Abe’s grandfather, who was forced to resign.

Undeniably, explanations coming from Abe’s administration were poor, doing little to assuage the people’s concern. Furthermore, public distrust escalated when, despite media surveys confirming that an overwhelming majority of the constitutional-law scholars believe the bills to be unconstitutional, the legislation was pushed through parliament. Abe’s statements from his first spell as prime minister in 2007, declaring that he intends to usher in a “departure from the postwar regime,” have also added to the impression that the security bills are revolutionary. In reality, however, the legislation is no more than evolutionary.

Abe has no intention of departing from Japan’s pacifist stance. Yet, he firmly believes that Japan must overcome “one-country pacifism” in order to meet the demands of the post-Cold War security environment and to strengthen the U.S.-Japan alliance in light of growing tensions in the Asia-Pacific. The deficiencies of the “one-country pacifist” model were exposed in 1991 by what came to be known as the “Gulf War trauma.” Self-imposed laws prohibited Japan from supporting the U.S.-led coalition by sending its Self-Defense Forces (SDF) overseas. Japan could do little to contribute beyond checkbook diplomacy, and faced stern criticism from the international community. It was a salient “teachable moment” that served as a wake-up call to Japanese policy makers of the necessity for new thinking with respect to their country’s participation in international security. The recently passed legislation seeks to redress the limitations of the “exclusively defensive” policy by giving Japan the legal right to collective self-defense and an expanded overseas role for the SDF. In other words, Abe is simply attempting to shift Japan’s defense policy from a “passive” view of pacifism to “proactive pacifism.” However, attempts to reassure the public that this shift is no radical departure from pacifism have been fundamentally undermined by the hidden hand of demographic pressures that are starting to take their toll, giving rise to a form of “silver pacifism” in Japan.

First, support for the security bills was lowest amongst Japan’s pensioners—only 19 percent according to an Asahi Shimbun poll. For this generation that remembers World War II and grew up in the postwar era, Article 9 of the constitution forms a core part of their identity. They assert it was this dedication to pacifism that has secured seventy years of peace, providing the very foundation for Japan’s postwar miracle growth. For them, naturally, any deviation from this would jeopardize Japan’s future security and prosperity. Resisting the bills has been something of a swan song for this generation that has little time left to bequeath Japan’s postwar legacy of pacifism to future generations.

Next, expanding the role of the SDF costs money in equipment, joint military exercises and personnel. Japan, however, faces inevitable budgetary constraints brought about by a shrinking tax base. Belying reports of Japan’s “record-breaking” defense budget under the Abe administration, defense spending remains at 5 percent of the national budget (and 1 percent of GDP). The large elderly electorate is Japan’s most powerful constituency, one with a vested interest to keep the national budget in their favor. Some groups of pensioners have mobilized in protest against the defense reforms and proposed budgets, claiming that the government is steering funds away from their social security.

Finally, in a nation with few natural resources, human capital is everything. But with a shrinking labor force, the competition for young talent will be fierce. The SDF is also feeling the strain. With a tight budget, Japan’s SDF will find it hard to compete with private corporations offering generous packages to attract new recruits. Further complicating matters, the SDF shares a similar recruitment pool with the police and fire services, and as a result, enlisting male high-school graduates is harder than ever.

In a January 2015 public opinion survey, 92.2 percent of Japanese surveyed said that they have a very favorable impression of the SDF. This is especially true after viewing the media coverage of the rescue missions during the 2011 Great East Japan Earthquake. But an overwhelming majority (81 percent) imagines that the SDF’s role is in the realm of disaster relief. Only 42 percent said that the SDF’s role should be in international peacekeeping and even less (25 percent) answered that the SDF should be more proactive in its international peacekeeping missions. The expansion of the SDF’s remit in line with the security bills has caused alarm, as the young could potentially be dispatched overseas to areas of conflict and exposed to physical danger. The risk attached to the role of an SDF officer has now become a hotly contested issue—unthinkable in many countries. A nation of fewer children is more cautious.

This structural constraint of demography has become a blind spot for the Abe administration that not only failed to gauge the extent of opposition to its plans, it also failed to anticipate from where opposition might come. In particular, Abe took for granted the backing of the large elderly population, who are traditionally supporters of his Liberal Democratic Party. To be sure, pushing any further reforms through regardless of Japan’s demographic certainties may backfire. Abe is alienating the elderly, his most important constituency. Moreover, the Abe administration’s ambitious plans for Japan to develop its burden-sharing vis-à-vis the United States could prove difficult to achieve. The United States expects a greater commitment from Japan and Abe has given assurances that Japan can deliver. But domestic pressures may limit Japan’s ability to live up to its expanded defense commitments. Unable to fulfill its duties on the ground, an expectation gap could emerge if Washington fails to appreciate Japan’s limitations, as the University of Indiana scholar Adam Liff has cautioned. Just as Abe is seeking to strengthen the U.S.-Japanese alliance, and by extension to consolidate deterrence in the region, the relationship could inadvertently be strained. The American public could grow tired of spending taxpayer money on a defense budget that goes towards maintaining forward presence far from its borders, and protecting a Japan that does little to reciprocate. Japan may once again be labeled as an international free rider.

A graying Europe faces the same challenge. Burdensome welfare states and continuous cuts to defense spending have left many of the European NATO members with defense budgets that fail to meet the alliance’s 2 percent of GDP benchmark. In dollar terms, the United States alone spends nearly three times that of all its European partners combined. Meanwhile, Russia’s military intervention into Ukraine came as a rude awakening—Europe is still a dangerous place. The debate surrounding international-security burden sharing and free riding is beginning to reemerge. There is a real risk that expectation gaps could develop as a permanent feature of America’s relationships with its allies.

Japan’s demographic problem should also be a concern for the United States. At the dawn of the Cold War era, George Kennan acknowledged the importance of rebuilding Japan and “the restoration of her ability to contribute constructively to the stability and prosperity of the Far Eastern region.” These words are still relevant today. Indeed, the United States must continue to recognize that a strong Japan is vital to the long-term success of its rebalance to Asia and that population will play a critical role in determining Japan’s economic revitalization and regional relations.

Similarly, the United States cannot overlook the fact that the Indo-Pacific is set for an unprecedented rebalancing in populations. Asia is reported to be the region of growth during this century, but it is also the “population bust belt.” Suffering from fertility rates below replacement level and aging populations, both Singapore and South Korea have set aside large budgets to encourage their citizens to procreate, to little avail. Russia’s demographics are even worse. The society is rapidly aging and mortality rates are high. Moscow is anxious of the country’s demographic disaster, especially in light of the potential migration into its vast, resource-rich far east adjacent to China. China will also experience a reversal of fortunes and would do well to learn from Japan’s lost decade of stagnation. Low fertility means that the demographic structure is shifting from a youthful society with an abundance of cheap labor to an aging one. Despite abandoning its one-child policy, China will nonetheless face population decline by the middle of the century with an estimated quarter of its population over sixty-five—not to mention the challenge of several generations where there is a large proportion of unmarried men due to a gender imbalance caused by the one-child policy and a cultural preference for male children.

The numbers are known; national demographics can be measured and projected with impressive accuracy into the future. What is unknown, however, should worry all nations invested in the region, including the United States. Will Asia’s aging societies—Japan foremost among them—usher in a future peace dividend in which social security is prioritized over national security? Or, will rapid demographic shifts, imbalances and the fear of decline destabilize societies, giving rise to a violent form of nationalism and, perhaps, to conflict?

Yoichi Funabashi is chairman of the Rebuild Japan Initiative Foundation, a Tokyo-based think tank, and director of The Special Investigation Commission on Population Issues.

Image: Flickr/U.S. Pacific Fleet