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.”