Monday, November 02, 2015

My July 16 CRI Q&A on Peace and Security Legislation (and Japan-China Relations)

I also found that the CRI website claims that I said that “the security bills go against Japan's pacifist constitution” when it passed the lower house. Nothing of the sort. Sure, I'm critical of the way the Abe administration handled the issue. The following is the script. Haven't heard the audio, but I don't think that I said anything that could have led to a misunderstanding.

1 First up, could you please tell us what collective self-defence is? How does it influence Japan’s military?
Simply put, it’s an arrangement where two or more countries in an alliance agree to come to the defense of the others. In Japan’s case it is going to be very limited because we will only come to the defense of its allies when those allies are acting in defense of Japan. Aegis, Japan Sea, DPRK. It will help coordinate operations with the United States in the nearby area.

2 The bill now awaits the approval of both the lower and upper houses of Japan’s parliament. How do you evaluate the likelihood of it getting passed? If it gets passed, how will it influence Japan’s position regionally and globally?
Almost 100%. It will make Japan a more active player in UN sanctioned operations, but strictly in a non-combat role, unless you count minesweeping operations as combat. It will enable the Self-Defense Forces to work more seamlessly with Japan’s allies, mainly the United States.

3 There were protest going on outside the parliament building when the voting happened. Also opposition lawmakers shouted their disapproval and mobbed the chairman of the committee who was in charge of the voting. AP even reported that some began slapping and grabbing him. Is this common phenomenon in Japanese politics? What does the intensity tell us?
Protests around the Diet complex are not that unusual, but physical altercations in the Diet have been rare in recent years. There are many people, including the overwhelming majority of constitutional scholars, who strongly believe that the reinterpretation to allow collective self-defense is unconstitutional. More generally, there is a broader, and vague, fear that the bills—not just the constitutional reinterpretation—could draw Japan into war. On the first point, I am not a constitutional scholar, though I note that most constitutional scholars used to think that the Self-Defense Forces were unconstitutional, but they no longer do. On the second point, I strongly disagree. However, the Abe administration has done a poor job of explaining what is a very complicated political compromise legislation to the public, and the Liberal Democratic Party has made a couple of serious tactical blunders along the way, adding fuel to the fire.

4 Shotaro Yachi, Japan’s National Security Advisor is now visiting China at the invitation of Chinese State Councilor Yang Jiechi. The two met in Beijing last year and reached a four point consensus aiming at restore relations between the two.

----How would read the timing of his visit this time?
The bilateral political relationship is on the mend, but August 15 is only a month away. What Prime Minister Abe says on the 70th anniversary of the end of the war will be crucial in keeping the process on-track. I’m sure the Chinese authorities would appreciate some reassurance from Mr. Abe’s most trusted envoy.

----So what are the possible topics that might be discussed during his visit this time?
Beyond the anniversary statement, I assume that Chinese activities around the Senkaku Islands and in the East China Sea near the median line will be raised by the Mr. Yachi, and the Chinese authorities may wish to know what Japanese intentions are in the South China Sea. Talk will not change anything, but it’s better than not talking to each other at all, because it helps keep these matters of contention from doing harm to the broader relationship. I am sure that there will also be talk on broader, more positive issues, and there may be a renewed invitation to join the Asian Infrastructure Investment Bank and/or talk on cooperation with the Asian Development Bank, but I don’t see much happening.

5 There are speculations that Abe might meet Chinese President Xi Jinping and attend commemoration activities of the World War II in this coming September. If the two countries really want the meeting of two to happen, what are further needed to be done from both sides?
In his 70th anniversary statement, Mr. Abe should hold to the line that he expressed in his speech to the U.S. Congress. A specific reference to China would be highly desirable. The Chinese authorities would very much like to hear a specific reference to the Murayama Statement, though I would be surprised if Mr. Abe did so. On the Japanese side, no Chinese escalation around the Senkaku Islands and more broadly, the East China Sea.

6 Former Japanese Prime Minister Fukuda Yasuo is also reportedly visiting China. What is his mission and how he might help improve ties between the two sides?
I am not informed well enough to know what he’s doing there specifically, but the fact that a former Japanese prime minister who is very well-liked in China is shuttling back and forth, presumably with Mr. Abe’s blessing, surely helps to calm the waters and keep it that way.

7 On another note, Chinese Vice President Li Yuanchao has met with a group of war-displaced Japanese orphans who were raised by Chinese families after World War II. We know that there are also people from this group of orphans who returned to Japan later.

----How are they coping with life in Japan?
I am not well-informed. All I can say is that some are coping better than others.

----The orphans left in China to a certain degree have helped tighten the ties between people of the two countries. What other measures do you think should be taken to further promote people to people exchanges between the two countries?

It certainly reminded us of the good will that existed at the people-to-people level that endured the brutality of war, and the kindness was not forgotten here in Japan. I don’t have any specific ideas, but there needs to exist a sense among the common folks in Japan that China is a safe and healthy place where we Japanese are welcomed. This will come from the perception of Japanese journalists, businessmen, and tourists, not from government-sponsored exchanges.

Thursday, October 29, 2015

East Asia Trilateral Summit

1: The China-ROK-Japan Trilateral Summit is expected to be resumed over the weekend after a 3-year hiatus. Can you first give us a brief introduction to the background of this meeting this time?
I believe that the gradual but steady thawing of the Japan-China from the spring of 2014 including the two summits on the edges of multilateral sessions has set the stage for normalization of the political relationship. More specifically, I believe that the bilateral improvement spurred South Korea to seek a rapprochement of its own. And what better venue for this than the trilateral summit, which is South Korea’s turn to host—a home game, if you will? And Japan has always been working tirelessly to this end. Indeed, it is unnatural for the heads of three neighbors with deeply intertwined economies and highly reliant on the global market for manufactured exports and commodity imports not to discuss issues of common interest and/or concern. Moreover, each of the three economies now faces serious structural challenges that it must confront forcefully or suffer the long-term consequences. The trilateral summit goes a long way in defusing a political distraction.

2: What sort of issues do you expect that this summit will try to focus on? How important are they to the three countries?
A recent news report says that they will confirm cooperation in such areas as disaster prevention, the environment, and tourism, and talk about cybersecurity and making progress on the China-ROK-Japan FTA. Now the summit will have no substantial bearing on most of these matters. They would move ahead just as smoothly if the three heads kept kicking the trilateral can down road. One exception is that it would give the ROK authorities sufficient political cover at home if they decide to seriously pursue the trilateral FTA.

3: The three countries also resumed negotiations over the China-ROK-Japan FTA. China and ROK have already signed a bilateral FTA. The obstacles apparently remain between China and Japan as well as ROK and Japan. How likely do you think that they may make a breakthrough?
The three governments will behave constructively on the trilateral FTA. However, I am rather pessimistic about the prospects for a breakthrough. ROK does not have much to gain, since Japan already imports most manufactured products tariff-free. And why would ROK want to compete in the Chinese market with Japan on an equal footing? As for China, I’m sure that it wouldn’t mind having Japan compete with ROK for its favors on an equal footing, but as I said, Japan already imports most manufactured products tariff-free, so there’s not as much urgency for China than there is for Japan. And, of course, it takes three to tango. I will be very happy, though, if I’m proven wrong.

4: South Korea and China are not members of the TPP. How will this affect China-ROK-Japan FTA negotiation? Will this pushed the two countries to seek an early conclusion of the China-ROK-Japan FTA negotiations?
I think that it affects ROK negatively with regard to the trilateral FTA. I expect ROK to focus on joining the Trans-Pacific Partnership (TPP), which promises more substantial benefits than a trilateral FTA and is unlikely to include China in the near future. As for China, I believe that it will find that the TPP hurdle is too high, but a trilateral FTA is too small a consolation prize. Instead, I expect China to focus on another broad-scope trade agreement, the Regional Comprehensive Economic Partnership (RCEP), which will also serve as a geopolitical counterweight to TPP.

5: Earlier this week, China’s state councilor Yang Jiechi visited Japan, where he met with Japanese Prime Minister Shinzo Abe. Both sides expressed the willingness to improve ties. Can we see this meeting as well as the upcoming summit as a thaw in relations between China and Japan? Why do you think that this is happening even when the key thorny issues between the two sides still remain unsolved?
This is the culmination of a painstaking process of rapprochement since Prime Minister Abe’s visit to Yasukuni in 2013. The “key thorny issues” are mostly matters of perception; on their own, they have very little tangible effect on the real world. Japan is not executing a landfills and building air strips on the Senkaku Islands. China is not digging for oil on the Japanese side of the median line. And so on. Now, Prime Minister Abe issued a 70th Anniversary statement that was tolerable to the Chinese authorities, and has stayed away from Yasukuni. There remained no reason that the heads of two neighboring countries highly reliant on manufactured exports and commodity imports should not meet to give their blessings to engagement in areas of common interest and/or concern.

6: Do you expect the summit to add strength to the China-Japan trade relations, which are going downhill since 2012?
I expect it to make Japanese-brand goods and services marginally more acceptable, but not by much. For better or worse, it has been business-as-usual on the economic front for the last couple of years, and so it will remain. The vector of the bilateral trade relations will mostly be determined by the same factors that affect the rest of China’s trade relations. You know, things such as what China will or won’t do with regard to what it considers to be strategic industries or flagship companies, whether Chinese wages keep going up, and so on.

7: Will this summit have any impact on the denuclearization of the Korean Peninsula in any way?

No. The most that I expect to emerge from the summit on this issue is some vaguely worded admonishment of North Korea. China is the only one that can turn the screw hard enough to force North Korea to give up its nuclear weapons and ballistic missile programs completely, and it probably would if it could do so without decisively destabilizing the North Korean regime. But it is not going to risk the collapse of the Kim dynasty just to make Japan feel safe, or even to make the United States happy.

Sunday, April 26, 2015

Good Luck, Mr. Abe…

Let’s see…

Cheer up friends of America in the Middle East: President Abdel Fattah el-Sisi, Egypt, check; King Abdullah, Jordan, check; Israeli Prime Minister Benjamin Netanyahu, check. DONE!

Bind Japan more tightly to US security policy: change interpretation of Constitution to allow collective self-defense, check; push base relocation to Henoko against Okinawa’s wishes, check; fully engage the U.S.-centric weapon systems development network, check. DONE!

Support U.S. global economic structure: commit to TPP negotiations, check; stay away from Asian Infrastructure Development Bank, check… um, only two? Oh well, done.

All supported by the Obama administration, but even more copacetic for the Republican Congress. But did the rumored coolness between Prime Minster Abe and President Obama also help the former secure this speech before a joint session of Congress? Not nearly Netanyahu-Obama bad, but still, I wonder.

I can already see the post-talk editorials lining up, WSJ on one end, NYT on the other, and WaPo somewhere in between. I also think that I could write an op-ed on any and all points of that spectrum (I don’t know, extended out to BBC, say) send them out now, with little need to edit them after the speech. But it would be so much more fun if Mr. Abe proves me wrong and surprises us all.

Saturday, April 25, 2015

5No Bilateral TPP Deal until Final Collective Deal

There, I’ve said it.

There has been a lot of public doodling by the media and analysts around the progress, impasses and, in the fevered imagination of Yomiuri Shimbun, “effective agreement” at various stages in the TPP negotiations between the United States and Japan. Now, I’m seeing reports that there will be no deal during Prime Minister Abe’s visit to Washington.

And that’s news?

Give me a break. It’s not even about TPA. Look, no bilateral deal will be made public until all the bilateral deals have been cut. To illustrate, let’s say that Japan and the United States make a deal on beef that is more favorable to the United States than the one that Australia got in their bilateral FTA with Japan. That would displease the Australian government, who would want a similar deal from Japan. But not only is that likely to induce the Japanese government to demand a quid pro quo but would also displease U.S. and Japanese beef producers, who would make new, mutually conflicting demands of their own. So any bilateral deal on tariffs will have to be kept under wraps until all the chickens come home to roost, as it were.

So what was all the “negotiating” about? My guess is that it was a mixture of sounding out the other side to figure where and what the real issues and the other side’s priorities were, ironing out technical issues, establishing and reinforcing relationships with the other side so that the endgame could proceed expeditiously, and otherwise doing their best to minimize glitches along the way. The rest, I would argue, was camouflage.

I could, of course, be wrong. But I think that I’ve done a better reading of the process so far than most. And I’m not worried that I’ll be proven wrong this time either.

Friday, April 24, 2015

A Few More Words regarding Prime Minister Abe’s Bandung Speech

If Japanese media reports are to be believed, China is officially disappointed that Prime Minister Abe did not assume responsibility and South Korea is officially disappointed because he did not refer to “colonial rule.” I’m not sure what the operative meaning of “responsibility” is here for the Chinese government. Is it for domestic consumption, to prepare the Chinese public for further improvement of bilateral relations? South Korea frets, in case anyone missed the point, because “colonial rule,” not “the war,” is the source of its complaint. And how bad was it for the Koreans compared to, say, Native Americans or Australian aborigines? Look to the biographies of their most recent Presidents Geun-hye Park and Lee Myung-bak for perspective.

And while we’re on the subject of Native Americans and Australian aborigines, if Americans and Australians of European descent want to jump on the bandwagon criticizing Mr. Abe’s latest speech, shouldn’t they apologize and go back to Europe first? I mean, clean hands and all? At least we left. (Okay, not of our own volition. Still…) As for Germans who want to chime in, have you petitioned your government to respond positively to Greek demands for multibillion Euro reparations, or do you agree with your finance mister that a deal is a deal so the Greeks should STFU?

But if you must, please at least have the decency to remember that “China and South Korea” and “Asia” are not interchangeable terms.

Okay. Rant over. Back to real life.

Thursday, April 23, 2015

Prime Minister Abe’s Speeches

Good friend Paul Sracic has been invited to attend Prime Minister Abe’s speech before a joint session of Congress, so I decided to give his some unsolicited advice on what to look for.

Here's the preview, Paul.

Money quote:

"Refraining from acts or threats of aggression or the use of force against the territorial integrity or political independence of any country."

"Settlement of all international disputes by peaceful means...."

Those are some of the principles Bandung affirmed. And Japan, with feelings of deep remorse over the past war, made a pledge to remain a nation always adhering to those very principles throughout, no matter what the circumstances.

In keeping with this same spirit, it was our friends in Asia and Africa who propelled Japan after the Second World War to make possible our reentry into the international community.
To those friends of ours, let me take this opportunity to extend our heartfelt gratitude.

History made it inevitable, one could say, for those countries gathered here three score years ago to show their strong unity, since our forefathers then had a common wish, a wish for peace.

Edit the first two and last two paragraphs as appropriate for the U.S. audience, and you have Mr. Abe's take on the history issues in his speech.  He uses the word "remorse," but he doesn't make it personal. He uses the word "aggression," but its connection to Japanese "remorse" is contextual, only implied. Did it work? The meeting with President Xi Jinping went off without a hitch, and that's all that mattered. As for President Park, Mr. Abe is content to wait her out. It would be nice to have South Korea on our side, but it's not essential to Japan's well-being. They need us much more than we need them. Be polite, but firm. I think this is the outline of what Mr. Abe and his associates are thinking, and I think that they are right.

As for the substance of the speech, the new bilateral guideline and TPP will be the highlights on the bilateral relationship going forward.

And speaking of TPP, it's so nice to see bipartisanship break out after years of increasing acrimony. I did read your comments, and I agree. But I think that she'll come out in clear support with the caveat that she will make sure to enforce both the letter and the spirit of the eventual environmental and labor provisions. I don't think that she has a choice. Neither "non-committal" nor "against" works for her. (See Paul’s take here on Hillary Clinton’s dilemma on what Paul and Eurasia Group both consider a close call in Congress.)

Tuesday, April 14, 2015

My Take on the Asian Infrastructure Investment Bank

Actually, they are two of my comments on the draft of a weekly newsletter. They went largely unheeded, alas, but good friend Tag Murphy sent me the link to a vastly more exhaustive (and professional) analysis, which appears to be broadly in the same vein, so I am emboldened to post them here.

“I too think that it's a better than even bet that Japan will announce its participation in the AIIB by June but with a decent interval after Abe's DC visit. I also think that it's unfair to blame the Obama administration for the landslide participation of its European and Asia-Pacific allies Japan and South Korea were the only countries that the US had meaningful leverage over, and when the UK knocked out the rest of the dominoes, even that mostly dissipated.

“That said, don't overestimate the significance of the AIIB challenge. The ADB will still be around; likewise the WB--and more importantly the IMF and BIS, as well as SWIFT, VISA, Mastercard and other non-governmental institutions that have grown up around the international financial and monetary systems. What does it mean in this context for the Renminbi to challenge the dollar? It means the existence of a large and highly liquid market in Renminbi-denominated financial assets (including banking deposits). In other words, the Renminbi would become just another reserve currency, like the yen and Euro, but much bigger than the former and more trustworthy than the latter. And that's by no means a bad thing. Of course if the Renminbi (and Chinese financial institutions) become big enough, China could conceivably use that leverage as a weapon in the same way that the US is using it. It's something to keep at the back of your head, but it'll remain highly hypothetical, at least during my lifetime.

“Something similar can be said for RCEP, which excludes the US. As long as it does not replace WTO and TPP come through, it's not something to worry about.”


“I also think that it will be useful to remind your readers that the United States essentially was the only game in town from an economic perspective, although the USSR did provide an alternative model. China is not nearly as dominant, never will be. For that matter, the US is no longer so either.”

Friday, March 13, 2015

Four Mini-Essays on Japanese Politics

The following is the memo that I typed out on Wednesday for a Thursday talk-and-Q&A lunch for a group of people from the embassies in Tokyo. I did wind up doing a lot of talking regardless, and we never got to item 4. I am conceited enough to think top believe the courteous post-session comments to the effect that I came across as both entertaining (YES!) as well as thought-provoking.

In the interests of brevity and in view of the fact that I am a poor impromptu public speaker but a reasonably competent conversationalist, I have whacked out the following mini-essays based on the talking points that Ms. Yuka Tatsuno at the British Embassy for you to read beforehand to a) decide whether or not I am actually worth listening to and b) save the session for further elaboration (if someone of you arrive without prior reading, it will have the added benefit for me of having my lunch while it is still warm), on those or any other matters that are of interest to you.

March 11, 2015   Jun Okumura

Command Performance

1. The Legal Framework for National Security (The post-budget authorization legislative process; Japan’s post-legislation role)

Only legislation that secures the consent of Komeito will be submitted. This means that a) enactment is only a matter of time and b) little will change in Japan’s national security policy as the result. But turn your eyes away from the legislative process, and you will see more substantial changes going on that have more geopolitical significance.

Much of the discussions revolving around a) the legislative and administrative consequences of efforts to expand the scope of Japan’s military efforts through, among other things, the reinterpretation of the Japanese constitution to allow collective self-defense and b) the longer-term efforts to amend the constitution to provide a sounder footing for the Japanese military and its activities are politically important but are of very limited practical significance. Vastly more significant from the national security and geopolitical perspectives are the Abe administration’s efforts to a) enhance Japan’s security relationships with countries sharing “common values including a belief in peace, freedom, democracy and the rule of law, respect for human rights and the promotion of sustainable development” through regular two-plus-two (foreign and defense ministers) arrangements and b) embed Japan more deeply into the military-industrial complex based in those countries. Let me explain.

First, let’s take a look at the practical consequences of the ongoing legislative and administrative initiative. Even before the parameters of the eventual compromise between Prime Minister Abe and the LDP and Komeito emerge, any Japanese involvement in the fight against Islam State (ISIL) beyond the humanitarian assistance currently being provided has been ruled out by Mr. Abe. In fact, the only area of agreement on the “international contribution” front is logistics in areas where fighting has ceased. The rules for engagement by force is being somewhat eased, but the JSDF will almost remain unable to come to the rescue of their non-Japanese cohorts under fire. Beyond the fact that new individualized legislation will not be required in case situations like the After-war in Iraq and the pirates of Somalia present themselves, the only meaningful change on the ground appears to be that the JSDF will no longer have to limit logistic support to whatever they have till now have had to provide under the guise of transporting non-military personnel and materiel.

There is somewhat more on collective self-defense, with expansion beyond the Japan-U.S. Mutual Security Treaty to include other allies. Still, any military assistance in the course of self-defense will continue to be limited to the service of defending Japan. So sorry, Australia, but if “The Coalition Nations” come a-calling, you will be on your own as far as Japan is concerned. The exchange for extraterritorial acts of self-defense per se of the “situations in areas surrounding Japan” for phrasing without geographical constraints when “dealing with imminent unlawful situations where the people’s right to life, liberty and the pursuit of happiness is fundamentally overturned due to an armed attack by a foreign country,” combined with an expansion of interdiction authority, will bring real change. But here again, actual war zones beyond the “areas surrounding Japan”—read the Hormuz Straits—are likely to be assiduously avoided.

All this is surely much less than half of the full loaf that Prime Minister Abe or the majority of LDP legislators want. The reason for this remarkable restraint is twofold: a) Komeito, the electorally indispensable junior coalition partner, will not stand for more; and b) the Japanese public taken collectively is very reluctant to support overseas military ventures even within a UN collective context. These two constraints are insurmountable in the foreseeable future. The LDP could conceivably pass more ambitious legislation with the cooperation of Toru Hashimoto’s Japan Innovation Party. But it will not be able to do so without rupturing the coalition with Komeito and encouraging the emergence of a viable and more pacifist-minded opposition. If this were all that there was, the geopolitical impact would be largely cosmetic, a rhetorical tool for Mr. Abe’s opponents at home and abroad to bludgeon him with. But Japanese accumulation of bilateral 2-plus-2s and engagement in the world of the international industrial and military complex tell a different story.

 Japan has been adding 2-plus-2s, regular bilateral meetings of cabinet members holding the foreign and defense portfolios to coordinate security policy, to the original arrangement with the United States. The process began with Australia (2007), and has added India (2010), Russia (2013), before the events that led to President Putin’s invasion of Ukraine), France (2014), and the U.K. (2015). (Indonesia seemed to be in the works, but the current president’s plans are unknown to me.) I run the risk of seriously overstating the importance of these alliances. After all, Russia never was an ally of Japan in the balmiest of times, never will be in the foreseeable future, and India like is unlikely to throw in its lot unconditionally with Japan. That said, other than Japan and China, these two countries are the ones that matter most in Asia-ex Middle East, and both see China as a source of direct long-term geopolitical risk. The United States aside, Australia, France and the U.K. have historically been the countries that are most likely to engage in extraterritorial military interventions in areas that are of undeniable interest to Japan in terms of national security. Given the significant backup support Japan has been providing, at least in financial terms, to joint military undertakings in geographical locations of varying national interest, the modest uptick in the involvement of the JSDF in those undertakings, and, as I will now hold forth on, the engagement in the world of the international industrial and military complex mean that these 2-plus-2s will gain increasing significance over the long run.

In 2013, the Abe administration replaced the long-standing “the Three Principles on Arms Exports and Their Related Policy Guidelines,” a virtual ban on arms exports that had been relaxed for specific items, almost exclusively for the United States, over the years with a new set of principles on overseas transfer of defense equipment and technology entitled “the Three Principles of Transfer of Defense Equipment and Technology.” This change has been accompanied by active efforts to compete for Australia’s submarine replacements and new maritime rescue seaplanes. Future Japanese work on the F-35 stealth fighter has a real chance of being reflected in its development for sales in the global market. More modest joint efforts are reportedly afoot with the U.K. and France. Much of such efforts require involvement in international weapons consortiums, bringing Japan more fully into the sphere of the international industry-military complex. This is a turn of events that take Japan beyond rhetoric and rare events and more deeply into the world of security in the narrow sense, a world where actions have real, day-by-day consequences. This in turn is likely to give more substance to the 2-plus-2s, as, for example, sticky issues such as theater of use and sales to third parties will have to be worked out. It is notable that China and, to a lesser extent, Russia are largely quarantined here beyond the purchase of turn-key systems. How good is this technology? Good enough to build some of the most high-spec conventional-fuel submarines in the world, good enough to develop its own version of a stealth fighter aircraft, and backed by a cutting-edge industrial and technological base for potential. Japan is a huge prize for the international weapons consortiums, from which China and Russia are almost completely excluded beyond what they can buy or, um, borrow.

Finally, the bilateral security ties and the weapons consortiums are mutually reinforcing. The multiyear commitments inherent to the relationships ensure that they will endure all but the most extreme of regime changes on either side. Growth and permanence: What more can Mr. Abe wish for?

Have I overemphasized the importance of the latter, non-legislative efforts in order to make my point? That is for you to decide. But there is no denying that they must be of significant concern to countries whose geopolitical interests come into conflict with Japan and, more broadly, the countries with which Mr. Abe is reinforcing mutual ties.

2. The Japan-China-South Korea Relationship(s) (Japan-South Korea dialogue; the substance of Mr. Abe’s 70th anniversary statement)

There will be no bilateral summitry with South Korea until the 70th anniversary speech is over and done with. Who knows what he’ll say, though I am confident that Mr. Abe’s minders will stage manage a formula for his statement that will be acceptable by a South Korea president. But can Mrs. Park be that president? (My thoughts have changed somewhat since I wrote that last sentence weeks ago.)

Of the three national leaders, President Park Geun-hye has the weakest hand. Note also that South Korea is the smallest country of the three, and is under the most serious security of all in the form of North Korea, 80 kilometers from national capital Seoul. More immediately, the South Korean economy is in poor shape, her political team has been beset with a series of scandals, and her support is down to the conservative core, hovering around the low 40% to mid-30% in national polls. Yet given the harshness of national opinion toward Japan and the Abe administration on history issues, Mrs. Park has minimal wiggle room for compromise to begin with.

President Xi Jinping has by far the best job security of all three. He is halfway through presumably the first of two five year terms, putting his political enemies on the run or eliminating them altogether through reassignments and corruption charges, and is plowing ahead with far-reaching economic reforms while continuing the decades-long expansion of China’s military power and projection. (The long-term outlook for Mr. Xi and China come across as being far more uncertain than is generally appreciated. We can go into this in more detail if you so desire.) He appears to be a popular figure, at least with the masses, and also has much better control over the conventional and social media, which he could use to minimize the political fallout from any compromise with Mr. Abe on history issues in the interests of rapprochement. That said, Japan and China have competing geopolitical interests. China is the potential regional hegemon; Japan is big enough to offer meaningful resistance with help from the global and New World hegemon United States. Moreover, public sentiment in China toward Japan on history issues is genuine, if stoked and exaggerated by CCP propaganda and education. (The Chinese people suffered most, followed by the Japanese, with residents of the Korean Peninsula (with no U.S. carpet bombing and no Imperial Army draft) coming in a distant third.) China is taking a loss on tourism due to the animosities; likewise some of the shrinkage in Japanese investment is attributed to the negativities. But history issues are but one of the problems in the way of more Japanese involvement in the Chinese economy If the others are taken care of—a big if—the economic consequences of  history issues will seem trivial, at least from the Chinese side. Xi has the least incentive to back off.

Mr. Abe actually has the easiest hand of all. All he needs to do is to refer explicitly and positively to the Murayama and Kono Statements, as all his predecessors have done as required and repeat a few key phrases there, then move on. But on a subjective level, that is very difficult for him to do, because he does not seem to believe in the spirit, much less the words, of the statements. Perfunctory acknowledgement, accompanied by gaffes when pushed, seems to be the best that he can offer. And that only because he is intelligent enough to be aware that rejection of the statements are inimical to Japanese national interests as defined by political realism. He is most capable of compromise, yet personally, surely least inclined. As the impact on the economic relationships, particularly with China, has stabilized, with the history issues increasingly quarantined, he might as well settle in for the long run and try to wait it out.

Luckily for the rest of us, who would prefer an easing of tension, Washington largely feels the same way, and has been willing to weigh in, if gingerly, to protect its own national interests. When Washington speaks, whether from the White House and its agents or from Capitol Hill, Tokyo listens. And it so happens that Mr. Abe is looking to visit Washington in May, during the Golden Week Diet break. That means that he will deliver his 70th anniversary speech there, most preferably in Congress, as his grandfather Nobusuke Kishi and political mentor Junichiro Koizumi did. That, more than anything else, will dictate what he will say.

If all goes well, Mr. Abe will deliver a speech that will pass muster with Congress—where a single member could put a hold on a House/Senate appearance—which in turn will be deemed acceptable in China and perforce in South Korea. And a subsequent trilateral—and eventually bilateral with Mrs. Park—will come off. And the investment climate will see a modest improvement; the geopolitical relationships somewhat less, particularly with regard to Japan-China.

3. The Unified Local Elections (The impact on the national political process)
There will be little impact on the national political process since the high-profile elections by and large feature strong incumbents and/or candidates who enjoy bipartisan support. But is that all that matters in the Unified Local Elections? And isn’t there a May vote that can have a greater impact on national politics?

Only 10 out of the 47 prefectural governor’s offices are scheduled for the upcoming Unified Local Elections in April. (The others dropped out one by one over the years as death and resignations (bribery charges being an uncomfortably common cause) took their toll. In only two of those—Hokkaido and Oita—is the DPJ supporting candidates to oppose the LDP-supported incumbents. It is improbable that the Hokkaido challenger. The Oita challenger does have a fighting chance, since he is the incumbent mayor of Oita City, the capital of the prefecture and by far its largest city. Remember that one big reason for the LDP loss in the recent Saga gubernatorial was the fact that its candidate had been a small-town, if successful, mayor in a prefecture where local connections still matter very much.

But that’s it. The best-case scenario for the DPJ is one out of 10. The DPJ is reportedly also having difficulty fielding large numbers of candidates for the prefectural and municipal assemblies, much as it had to refrain from contesting many House of Representative seats in the December election even where the Japan Innovation Party (JIP), its temporary ally of convenience was not putting up its own. And speaking of the JIP, its prospects do not look much better either, as party head and Osaka Mayor Toru Hashimoto’s act is wearing thin on the national stage. The recent cabinet and subcabinet member scandals have taken more luster off the Abe administration, but the situation is such that the DPJ and JIP could take a modest loss in the assemblies, bundle it with a victory in the Oita gubernatorial and credibly claim more than a moral victory.

But none of the plausible outcomes will sway national policymaking in a significant way. Much is made of the connection between the power of the agricultural voting machine and its effect on agricultural reform and TPP. But the Abe administration never did come to grips with the core issues of agricultural reform—essentially a legal framework that encourages land hoarding and discourages corporate farming; I will be happy to hold forth in more detail—settled for cosmetic devolution to prefectural cooperative associations from the national federation Zenchu and tinkering with the membership of the prefectural agricultural commissions, where the local decision-making powers are concentrated.  As for TPP, the deal is largely in place. All that is needed are TPA and the approach of the U.S. election season to remind the parties to cut the final deals against a looming deadline. U.S. pushing back the TPA timeline makes it that much easier for the LDP to skirt the issue during the April elections in Japan.

Let’s talk about a more interesting vote, a vote that will have a material impact on the realignment prospects of the opposition. Here, I am referring to the May 17 Osaka City referendum on the Metropolitan Osaka initiative that Mayor Hashimoto is pushing. The initiative will essentially divide up the city of Osaka into special wards, much like in Metropolitan Tokyo, and spilt the current municipal powers between the prefecture and the newly-created special wards. Hashimoto’s star will be further diminished if the initiative is voted down. That in turn will strengthen the hands of the more opposition-minded Diet members, who are more inclined to seek accommodation with the DPJ. (Hashimoto is more kindly disposed toward the national ruling coalition for tactical, strategic and ideological reasons.) The effect will not become evident immediately, but it will offer a glimmer of hope to the DPJ and most other forces seeking to construct a viable alternative to the LDP-Komeito coalition. And my understanding is that the initiative does not have the support of a majority of Osaka residents.

4. Quo Vadis, O Abe?  (How much longer will Mr. Abe ride high in the polls? The September LDP President election? Who will be the next prime minister?)
a) The Abe administration will rumble along around 50% in the polls unless something happens that attaches the hard-to-eradicate stench of incompetence and/or unlikability on it. But can anyone foresee discontinuities on a more than random basis?
b) Maybe someone like Taro Kono will stand, just to avoid reelection by acclamation. But will it matter?
c) If the LDP rules of the game are followed in 2018 and the political landscape has not been swept by some tidal wave, it will be Shigeru Ishiba’s to lose. But will Mr. Abe have a say in this?

a)      The Abe administration has seen some recent erosion of public support due to ongoing series of political financing scandals that have already claimed three cabinet members, two right before the December election, another more recently, as casualties, and some real-world consequences in the form of delays in the legislative schedule. (It may seem silly, but in the highly ritualized world of Japanese parliamentarian process, tie lost is hard to regain, even if it may still seem like an administration’s heaven to the Obama administration.) If this continues, it will become a little harder to move forward with Mr. Abe’s legislative agenda. But only a little. Beyond the time lost, the LDP will not waver (to the extent that it does not already put a brake on his most ambitious initiatives), and Komeito will continue to accept what it can swallow, and only what it can swallow.

The numbers will begin to edge up slowly once the scandals have played out sufficiently for the media to let go, and the economy finally gives the appearance of returning to a firm upward trajectory on all fronts, not just for the major corporates and their stakeholders. But always make room for discontinuities. For example, if the prospective May speech is well-received in the United States—fingers crossed—look for a meaningful bump on the scale of the political scandals, but on the upside.

b)      Either way, barring some political catastrophe that robs Mr. Abe of legitimacy, it is difficult to foresee a serious candidate challenging him in the September LDO leadership election. The main possibilities—Shigeru Ishiba, Fumio Kishida, and, though a stretch, Sadakazu Tanigaki are coopted with attractive sinecures and will see no upside to staging a challenge. (Now the incumbent, do not think that Mr. Abe will placate opponents with attractive consolation prizes, as he did the last time around.) No, Yoshimasa Hayashi is not a serious candidate, since he has failed to secure a Lower House seat, and he now has the MAFF portfolio back again. I can see someone like Taro Kono offering token resistance, but only because there will be no consequences for him.

c)      The four heads of the LDP that followed after Junichiro Koizumi stepped down essentially went down the roster of candidates considered viable for the job in the order of their political strength. All but the last became prime minister except for the last, Mr. Tanigaki, who was too weak to resist once the DPJ blood in the water excited other, more powerful candidates including Mr. Abe, who wound up winning. Mr. Ishiba by contrast has much greater political capital than Mr. Tanigaki and thus unlikely to be denied his place in the chronological order of political things.

Is there no way that Mr. Ishiba can be denied? For that, we must look to Mr. Abe’s own ascent to the prime minister’s office in 2006. His only previous cabinet appointment was less than a year as Chief Cabinet Secretary right up to his election as prime minister. Before that, he had spent a year as secretary-general of the LDP but resigned when the LDP suffered a setback in the 2004 House of Councilors election. There was no way that he could have become prime minister at the time without the unconditional support of Prime Minister Koizumi, who was going out on a high note and more over was the virtual head of the most powerful faction in the LDP. That faction, not coincidentally, was Mr. Abe’s faction, and it is even more powerful now. Could Mr. Abe be in a position to engineer such a transition himself? Will he be inclined to do so? Hints, one way or the other, will be available after the September LDP leadership election, when he should be tweaking his cabinet and party appointments. Stay tuned.

Friday, March 06, 2015

Interesting but Ultimately Useless Piece of Academic Work regarding U.S. Public Opinion on Negotiations with Iran on Its Nuclear Program

“But the fact that Americans are responsive to a wide array of considerations [regarding a final deal with Iran on its nuclear program] suggests that they will scrutinize the final terms of the deal and be responsive to even subtle considerations.”

From the Monkey Cage.

Untrue. The “the fact that Americans who are [willing to sit still long enough to follow arguments about are responsive to a wide array of considerations regarding a final deal with Iran on its nuclear program] suggests that the rest of the 300 million, give or take a few, will not] scrutinize the final terms of the deal and [will certainly be ignorant of any] subtle considerations.”

Tuesday, February 17, 2015

Mainichi Scoop on ISIL Embezzler? Think Again

Today (Feb. 17), the Mainichi website uploaded a remarkable report from its Cairo correspondent, citing a Syrian antigovernment activist as the main source. Specifically, an Egyptian official of ISIL charged with collecting donations in Deir Ez Zour province in East Syria reportedly disappeared. The report also says that there is information (情報もある) that the Egyptian absconded to Turkey taking approximately 1 billion Syrian pounds in donations.

I always get suspicious when a Japanese newspaper comes across unsourced “information.” (Likewise, when something “becomes known (明らかになった),” it usually means, “We’ve been scooped!” But I digress.) In fact, the “information” given here looks suspiciously like it was summarized from this English-language report dated February 3, which in turn gives as its source an Arabic report (Feb. 2) that cites yet another news site.

Mainichi’s story is more than two weeks old. And it’s not giving credit to a key source. And its “Syrian antigovernment activist” (in Cairo?) adds nothing of value to the English-language report.

Monday, February 16, 2015

What If the New Minsk Agreement Takes?

It can happen. It’s really up to Russia. The separatist rebels surely want more, and they are more likely than not to take Debaltseve. But if they do, the Ukrainian military leaves the premises, and the Ukrainian government decides to maintain the “ceasefire,” there will be an opportunity for Russia to take a breather and tend to its own wounds while capping EU and US (and Japanese wink-wink) sanctions and the cost of subsidizing the rebel territory economy. In the meantime, it will always have the option of unleashing the rebels again if it finds the direction the Ukrainian government is taking with regard to the EU and NATO not to its liking. I have to wonder if the Poroshenko administration will be willing and able to cut losses—I am reminded of the Japanese mindset before and during WW II—but who knows?

Now what in the world does that have to do with Japan? Well, if the ceasefire holds, the Putin visit to Tokyo will happen. Not much substance to come of it ultimately, I’m sure, unless the ceasefire holds long-term, but it will put Prime Minister Abe’s marker on the table.

Friday, February 13, 2015

Here I Am Ranting at Yet Another “The Atlantic” Report, This Time on Superannuated Japanese Businesses

I judge a publication by what they write about things that I know something about or have a feel for. If they get it right, I give it the benefit of the doubt regarding things that I do not know and have no feel for. The Atlantic? People who have been reading my blog for some time may remember my take down of a piece on the Japanese Tea Party. If that called for a big fat F, this one…  

This Atlantic report states that Japan “is currently home to more than 50,000 businesses that are over 100 years old. Of those, 3,886 have been around for more than 200 years... But in the past decade, some of Japan’s oldest businesses have finally shut their doors. Last month, the roughly 465-year-old seafood seller Minoya Kichibee filed for bankruptcy, which came after the news last year that the 533-year-old confectioner Surugaya met a similar fate. In 2007—after 1,429 years in business—the temple-construction company Kongo Gumi ran out of money and was absorbed by a larger company. Three companies going bust doesn’t quite make a trend…”

They sure don’t. At this rate, it will take the last of the companies more than 200 years old another 13,000 years or so to fold. But then, this should be no surprise if between “1955 and 1990, only something like 72 Japanese companies went bankrupt.” Let me quote at more length.

“So if they made it 500 or even 1,500 years, why would any of these companies collapse now? The most compelling explanation has to do with how the Japanese government has changed the way it treats struggling companies, according to Ulrike Schaede, a professor of Japanese business at U.C. San Diego. Historically, Schaede says, Japanese banks helped out even the most hopeless businesses without a second thought. “Between 1955 and 1990, only something like 72 Japanese companies went bankrupt. The reason was that the banks were supposed to bail them out,” Schaede says.
Then, in 2000, Japan passed its first Chapter-11-like bankruptcy law, and four years later, rewrote 1922 laws concerning corporate liquidation. This changed the default fate of troubled businesses. “Non-performing companies no longer receive help from lenders unless they have a solid plan for change,” Schaede says.

Something must have lost in transcription, because 6,468 businesses with 10,000,000 yen or more in total debt went bankrupt in 1990 alone, according to Tokyo Shoko Research. Coming at the end of the bubble economy years, this actually marked a 24-year low, down from the post-WW II peak of 20,841 in 1984. The figure jumped to 10,723 in 1991 and largely kept climbing through the (first) lost decade to 18,769 in 2000, peaking at 19,164 the following year.

It is also only a half-truth that “in 2000, Japan passed its first Chapter-11-like bankruptcy law.” The 2000 Civil Rehabilitation Act replaced the Composition Act, which, its defects notwithstanding, had long provided non-liquidation options for bankrupt businesses and their creditors, together with the still very much in use Corporate Reorganization Act. More damning to the point being made in the article, Kongo Gumi never went through formal bankruptcy procedures. Instead, its business was bought outright by the Takamatsu Corporation, where it apparently thrives as a subsidiary, building and repairing temples and the like the old-fashioned way.

The conventional wisdom that banks kept zombie companies on the prowl during the first lost decade appears to have considerable truth to it, but bankruptcy numbers and the legislative record that the article relies on do not support it. To be fair to the writer, that is not the only reason that he gives for the (three) old companies folding. Let me quote at length again.

Even if bankruptcy legislation is the most logical theory of why these companies finally folded, it’s not the only plausible one. It’s also worth noting that Japan’s cultural norms have eroded quite a bit in recent decades, which turns out to be a problem for a company selling traditionally-prepared squid guts. “Japanese Millennials are not that interested in really traditional Japanese culture as compared to their grandparents or parents,” says William Rapp, a professor business at the New Jersey Institute of Technology. “As the old population dies off, there is just not enough demand that is able to sustain such firms.”

Japan has also started to take a different stance toward marriage, adoption, and inheritance. “It's also likely become harder to recruit young men to enter a small firm under the presumption that they will marry the president's daughter,” says Mike Smitka.

There’s plenty of truth to the first point, but does it hold true in the cases cited above? The article makes much of Minoya Kichibee’s “salted squid guts using a 350-year-old recipe,” but Minoya Kichibee is even better known to the discerning Japanese gourmet for its high-end fish paste products. In fact, it is the high-end nature of its preserved food product lineup that forced it to seek protection under the Civil Rehabilitation Act, as routine corporate gift-giving (where, incidentally, fish paste products were the safe choice over the not-so-universally-popular salted squid guts) dwindled in the post-bubble years. Meanwhile, cheaper fish paste products, salted squid guts and other aquatic animal body parts as well as pickled plums (another item in Minoya Kichibee’s product lineup) continue to line the shelves of supermarkets.

As for building and repairing temples (and shrines, don’t forget them), most of the new edifices that have been going up are steel-and-concrete, faux-traditional contraptions, where conventional construction companies have a cost advantage. But Kongo Gumi probably could have continued in its original form if it had not been lured into real estate speculation during the bubble years, particularly if it had decided to downsize and return to its traditional construction roots, as it was ultimately forced to do in 2007.

I cannot find enough information on Surugaya to judge one way or other, but in two out of three, it is at best only a half-truth that “there is just not enough demand that is able to sustain such firms.”

As for the other point, I have no argument with the statement that it has “also likely become harder to recruit young men to enter a small firm under the presumption that they will marry the president's daughter.” Suffice to say, though, that this was irrelevant in the cases of Kongo Gumi and Minoya Kichibee, since they were both being headed by the family scion at the time of their fall. Again, I could not find the relevant information on Surugaya.

So there you are. The general points that the article makes may very well be true. But the three examples it employs do not make the case for them. Moral of the story: When you write about something that you do not understand, do your homework. Otherwise, a straightforward update of the Bloomberg piece that the article links to (and refers to, bizarrely as a Businessweek item) would have been of more utility.