Staff writerGreater competition stimulated by more foreign investments is what Japan needs to revive its sagging economy, according to Jorn Keck, departing ambassador of the European Union."Japan, now more than ever, needs foreign investment in order to improve the efficiency of many areas of industry," he said in an interview. "Yes, foreign investment is too low and it is too low in the interest of Japan."The ongoing turmoil in Japan's financial sector would not have happened if there had been greater competition here with powerful foreign financial institutions, he said. "Europe did not like Japanese car imports. But I have to say that Japanese investment in the car industry in Europe and exports (from Japan) have made our car industry more competitive," he said.Keck, who has been here for 3 1/2 years as head of the Delegation of the European Commission in Japan, is to leave Sunday. He will become deputy director general in charge of industry at EU headquarters in Brussels. He said the eventual emergence of a continental market in Europe will benefit not only European industries but Japanese ones as well.Economic and monetary integration in Europe will eliminate the cost of hedging against foreign exchange risks and provide more efficient distribution systems, while the enlargement of the union will provide an even greater market, he said. In addition, he said, the euro will eventually serve as another anchor currency, providing greater stability to the global currency market. Recalling his tenure here, Keck said Europe and Japan have been able to keep bilateral relations "steady without unnecessary drama and excitement, and true to our slogan, dialogue and cooperation.""Dialogue does not mean that you always just agree on everything," he said. "But if you have a problem, there are two ways (to solve it). You can just start shooting or you can just start talking." Keck also said that political dialogue between the EU and Japan, which he felt was underdeveloped when he came, has been developing steadily."Obviously, U.S.-Japan relations are very strong because of the security arrangement here. Similarly, Europe's relations with the United States are very strong because of the North Atlantic Treaty Organization," he said. "And we don't have this (arrangement) between the EU and Japan."However, he said, EU-Japan relations, which have been overly focused on the economic front, are now gradually changing, with the EU slowly getting a political profile and with Japan determined to take a higher profile in world political affairs. "There aren't so many (major) political players in the world," Keck said. "So, automatically, if you want to do something in the context of the United Nations or something else, you will have to deal with the European Union. And if we want to do something, we have to deal with Japan. That's why this relationship has to become stronger."Speaking about the Japanese economy, Keck said he remains basically optimistic despite its prolonged stagnation. "The fundamentals are basically good," he said, noting that certain industries, which are global players, are even generating a great deal of trade surplus and thus causing concern over friction.On the other hand, he said, many areas have yet to be exposed to foreign competition and must go through restructuring. But the problem is manageable, he added. "We have been urging ... that Japan take all the necessary measures to stimulate domestic demand, and we're seeing this is happening," the ambassador said. "We're confident that Japanese politicians and decision-makers know what they are doing."The Japanese government faces the sheer tradeoff between long-term fiscal stabilization and the need for quick actions to boost domestic demand, he said. For the time being, however, Keck said Japan needs to look at the short-term stabilization and stimulation of the economy, and long-term stabilization has to take a second seat. Keck would not agree with the argument that Japan's sagging economy is responsible for the ongoing economic turmoil of its Asian neighbors.