The Japanese government reacted quickly, criticising Lee’s visit, recalling its ambassador to Seoul, proposing the Takeshima case be taken to the International Court of Justice (ICJ), and threatening economic counter-measures such as refusing to extend a bilateral currency swap arrangement. The heightened tensions have also reopened historical wounds, particularly regarding the comfort women issue.

In order to address the diplomatic fallout, the bilateral relationship must be reframed in such a way that shared interests and cooperation, not history and territorial disputes, take centre stage. Leaders in both countries need to recalibrate and re-emphasise the importance of Japan–South Korea cooperation, not only for the sake of the two countries themselves but also for the region as a whole.

The intensity of the current tensions is attributable to domestic politicking and the emergence of a perception gap between the two countries in how to approach the bilateral relationship. In South Korea, Japan continues to be framed as an aggressor nation that should be more aware of its past crimes. For ROK politicians, emphasising Japan’s past and connecting it to Japan’s claim over Takeshima has become a convenient mechanism to exploit nationalism and divert voters’ attention from policy shortcomings.

Japan, on the other hand, has generally maintained a low-key approach in its East Asian foreign policy since the end of the war out of consideration of its history of aggression in the region. But in recent years, Japan has come to see South Korea as a partner, not a country to be tiptoed around. South Korea has democratised and developed into the world’s 15th largest economy. And Japan-ROK cooperation has progressed significantly, with Japan’s financial support for South Korea under the Miyazawa Plan during the Asian financial crisis, the co-hosting of the 2002 FIFA World Cup, the rise of bilateral trade, and the popularity of Korean TV dramas and K-pop music in Japan. But despite this sense of partnership, the inflammatory nature of Lee’s Takeshima visit intensified public pressure and pushed the Noda administration to hold firm.

In order to mitigate the impact of the diplomatic fallout, Japan and South Korea should keep the following four points in mind.

Territorial and historical disputes are difficult issues that require a long-term commitment from both sides to work toward resolutions. In the meantime, it is crucial that everyone remain aware of the inflammatory nature of the issues and avoid unnecessarily politicising them in antagonistic and nationalistic ways.

The stakes of cooperation between Japan and South Korea are high. As industrialised democracies, Japan and South Korea have important roles to play as regional leaders. This is especially crucial right now given the shifting balance of power in the region and the need for Japan and South Korea to jointly cooperate with China to direct the evolution of the regional order toward stability and prosperity. Moreover, Japan–South Korea cooperation is necessary for robust contingency planning vis-à-vis North Korea. US troops based in Japan are likely to be involved in any contingency plan for a major crisis in North Korea, and Japan’s role of providing the United States with rear support is essential. To this end, Japan–South Korea cooperation is vital and should be enhanced through multiple measures, including the proposed General Security of Military Information Agreement.

It is crucial that history and territorial issues be prevented from spilling over and affecting substantive areas of cooperation. In particular, after President Lee Myung-bak’s term ends, the new president would do well to take steps to restore positive relations between the two countries.

Finally, in order to achieve these objectives it will be necessary to improve the channels of communication across all levels of the bilateral relationship. Communication needs to be open and frank but also constructive so that Japan and South Korea may develop a deeper mutual understanding and work together most effectively to build a brighter East Asia.

Resolving the territorial dispute surrounding the Takeshima Islets will remain difficult, but the current political impasse needs to be dealt with in a calm, constructive manner so that Japan and South Korea can continue to address other challenges facing the region. Open channels of communication and efforts to build trust and mutual respect at all levels are vital to achieving this goal and require strong commitment from both sides. Both countries will benefit in the end if shared interests are able to trump historical animosity.

Hitoshi Tanaka is a senior fellow at Japan Center for International Exchange and chairman of the Institute for International Strategy at the Japan Research Institute. He previously served as Japan’s deputy minister for foreign affairs.

This article is an extract from East Asia Insights Vol. 7 No. 4 October 2012, which is available in full here, and is reprinted with the kind permission of JCIE.