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.

Thursday, February 12, 2015

Three Diplomats Walk into a Publisher’s Office…

… Or perhaps the Japanese Consulate-General in New York delivered a MOFA demarche, in order to convince McGraw Hill to remove two paragraphs from its college textbook entitled Traditions and Encounters: A Global Perspective on the Past, which states that the Japanese army “forcibly recruited, conscripted, and dragooned as many as 200,000 women aged 14 to 20 to serve in military brothels, called ‘comfort houses.” It also says that the Japanese Imperial Army "massacred large numbers of comfort women to cover up the operation.”

One wonders if the diplomats were surprised when McGraw Hill refused to oblige or when the author of those two paragraphs, Professor Herbert “Ziegler, who teaches modern European history at the University of Hawaii,” issued a protest, which in turn was supported by an impressive array of “19 academics from American University as well as Princeton, Columbia and others” who “stand with the many historians in Japan and elsewhere who have worked to bring to light the facts about this and other atrocities of World War II.” Did MOFA not learn the lesson of the full-page WaPo advertisement that Japanese nationalists bought that arguably led to the adoption of the 2007 H.R. resolution condemning Japan?

Koreans and activists and the Americans, the latter whose hearts the Abe administration wants to win over, came to the issue with different contexts—occupation and annexation, human rights, Pearl Harbor, respectively—but have largely converged on a more or less singular narrative. To challenge the facts and nothing but the facts without a compelling narrative of its own, without a roster of credible academics and activists spontaneously pleading one’s case, is like dropping cherry bombs without boots on the ground.


Regardless of where you stand, you have to admit that the Abe administration reminds one more of the Kwantung Army in Manchuria and beyond than the Imperial Navy in the Battle of Tsushima.

Wednesday, February 11, 2015

On ABC NewsRadio, Yes, around the ISIL Murders

Here it is, “the first episode,” I’ve been told.

I’ll have to trust that the producer did not edit it completely out of context, since there are few things that I dislike more than watching/hearing myself talk. My crib sheet, as usual, though it only went loosely scripted.

(1) Japan's past record on paying ransom money, (2) the international pressure Japan faces while negotiating with captors and (3) whether aid spending in the Middle East and the recent reinterpretation of Article 9 in the constitution might provoke IS to capture more Japanese nationals in the future.

(1) There is one occasion on which the Japanese government is known to have paid a ransom to private-sector terrorists. That was in 1977, when it paid a 6 million USD ransom to terrorists who hijacked a plane in Dacca that was carrying142 passengers including the five terrorists and 14 crew members, and also freed six men and women criminally convicted or charged with acts of terrorism. As you can see, the circumstances were very different. Then there are the state-sponsored terrorists—the return of the abductees and their families from North Korea in return for cash. Prime Minister Koizumi didn’t get enough credit for that in my view.

(2) There was no meaningful international pressure at all. Japan stated at the outset that it would not pay ransom money, just as all Western European countries and the United States have always claimed. But all the known Continental European hostages of Islam state have returned safely except one, who is still in ISIL hands, while all the known American and British hostages are dead except one, who is still in ISIL hands. Go figure.

But once ISIL went public with their 200 million USD demand, negotiating over a cash payment became extremely difficult for two reasons. First, backdoor negotiations became problematic. Second and more important, ISIL almost surely made the announcement to send a message, not to cut a deal. I hoped against hope that I was wrong, but subsequent developments bore it out.


(3) On the first point, about aid spending, for two reasons, I don’t think that the risks to Japanese assets have increased noticeably. First, it remains very difficult to strike at targets in Japan for tactical and logistical reasons. Second, attacks on soft Japanese targets overseas are nowhere near as effective for propaganda and recruitment purposes as attacks on similarly soft West European and American targets. That said, the more Japanese aid workers and other personnel there are in the neighborhood, the more likely it is that there will be an attack that impacts Japanese individuals, just from a statistical perspective. On the second point, about collective self-defense, which is the point of the Article 9 reinterpretation, I think that Western liberals and all South Koreans should leave the obsessing to China. But I digress. Now, maybe Mr. Abe wants to put troops on the ground in the Middle East combat zone, maybe he doesn’t. He says that he doesn’t, I don’t think he should, but I’m not worried in any case, because Komeito, the pacifist coalition partner, will make sure that it won’t happen. So, until Mr. Abe changes his mind and Komeito turns nuts, ISIL will have more important things to worry about than Japanese troops on the ground there. 

Sunday, February 08, 2015

Is Mainichi Turning into the Daily Version of Its Weekly Magazine?

Mainichi’s weekly magazine, once a staple of the waiting lobbies of banks, medical clinics, dentist’s offices and other reputable establishments, has in recent years become difficult to distinguish from the run-of-the-mill weekly tabloids put out by publishing companies large and small. Here’s what I mean:

Read the Mainichi article while it lasts if you understand Japanese; if you don’t, it’s enough for my purposes that you know that the article is written around the claim that an exchange of Kenji Goto, the murdered Japanese journalist, and Sajida al-Rishawi, a female terrorist on Jordan’s death row, had gone to the brink of being consummated, only to fall through, apparently because of dissent within ISIL.

Now, anyone following this issue outside of Japan would be wondering at this point: What about the Jordanian pilot, Moath al-Kasasbeh, whom ISIL had taken prisoner when his fighter jet went down in Syria? The writers were certainly aware of his existence, since they immediately follow this assumption by their acknowledgement of the fact that ISIL had, on the day before the exchange was supposed to occur, stated that it would not kill Mr. Kasasbeh if the journalist-terrorist exchange went through. But they make no mention of the fact that the Jordanian government demanded to no avail that ISIL produce proof that Kasasbeh was still alive before any negotiations were to be conducted, or the Jordanian government’s assertion, already known for several days before the article was published, that Kasasbeh had been killed on January 3, weeks before the Japanese crisis surfaced. Indeed there is no effort to put the Jordanian government’s demand into context, and the story goes on as if it had never existed.

Would the Jordanian government actually have gone along with the exchange if ISIL had been able to produce proof? After all, if the Jordanian government had made the exchange, ISIL would then have gained a negotiating tool that could be reused again and again. But then, if not, the Jordanian government could have been blamed for having the means to save Kasasbeh’s life yet not using them. Hard to say for me—my guess is that the Jordanian government would have held out for an exchange for both Mr. Goto and Mr. Kassbeh—and it certainly would have put King Abdullah on the horns of a dilemma. But Mainichi edited out the Jordanian angle to highlight the exchange that barely failed to materialize, or so it claims—sensationalism at its worst.

Liberal media like this leaves that much less for Prime Minister Abe to worry about. 

JA-Zenchu Reform Appears to be Proceeding on Abe Administration’s Terms

Nikkei headlined its February 7 morning edition with “Nōkyō-kaikaku Ōosuji Kaiketsu e (Agricultural Cooperative Reform Largely on the Way to Resolution).” According to the report, Abe administration will announce on February 12 that the Central Union of Agricultural Co-operatives, or JA-Zenchu for short, will lose its special legal status and become a general incorporated association. JA-Zenchu will lose the authority to audit and provide guidance to the local agricultural cooperatives. Instead, its auditing arm will be separated and must compete with ordinary auditing firms for the coop business. The National Federation of Agricultural Co-operative Associations (ZEN-NOH), its mammoth produce wholesale and input and provider arm, will be allowed to transform itself into an ordinary stock company. Local cooperatives will be encouraged to transfer their financial businesses to the Norin Chukin Bank.

I cannot claim that I got this one right—far from it, since I wrote:

“My guess is that the Abe administration will look for some form of JA devolution, taking some of the powers and money away from JA-Zenchu and giving more powers and a bigger cut of the membership fees to the prefectural cooperatives. The Abe administration could also give JA-Zenchu a cut of the inevitable TPP easement money and a role in forming and executing a response strategy.

“I cannot rule out the possibility that the Abe administration will just go ahead with its plans despite the outcome of the Saga election.”

The devil is in the details, but so far, the outcome looks much closer to the latter than the former. It is surely being made possible by the fact that individual LDP Diet members are far more intimately connected to their respective prefectural associations, which, tellingly, will be preserved. In hindsight, I should have placed more trust in the incentive devolution would have for the prefectural associations. In any case, this does not address the core needs of agricultural reform. If he takes a whack at the agricultural committees, though, that would be a meaningful break with the past, depending on how deep he cuts.


And on a totally different matter, I also said that Prime Minister Abe would not go to Yasukuni, and his second work anniversary passed without incident. His administration still has some legs, so never say never, but so far, so good.

First Rudd Goes…

So Prime Minister Kevin Rudd is offed by Julia Gillard, Gillard is whacked in the backswing by Rudd, Rudd loses to Tony Abbott, now Abbott is facing a party leadership vote that he could very well lose. Australian politics are not for the faint of heart.


One thing that Prime Minister Abe doesn’t have to worry about is an unlikely Rudd comeback in the next national election. Rudd’s sinophilia, I’ve been told from someone reliable on this matter, has been greatly exaggerated.

My Second Point, I Think, Was the Crisis around the ISIL Hostages

Looking back, it appears that it was the crisis around the two Japanese taken as hostage by ISIL. What I was able to say within what I thought were the boundaries of human decency largely aligned with the subsequent unfolding of the situation. I did not foresee the exchange twist, but I did not talk about it either (and no one else foresaw it either), so I won’t hold myself up against that part.

I (Think I) Got Three more Calls Right and One Call Wrong

If my memory serves me correctly, I got or am getting three more calls right, and one wrong.

First, I said that the TPP would move after and only after the U.S. midterm elections and that a positive outcome in the Japan-U.S. bilateral negotiation would be dictated by the Japan-Australia FTA deal. It’s certainly looking that way, and the naysayers are saying that the odds have improved. No they haven’t. They haven’t changed one bit. Those people think (or say) that they have, because they’d listened to one too many informed sources who in effect provided the illusion of action while the two sides jogged in place, ate up too much Japanese media coverage by reporters canvassing for headlines, or just hated Prime Minister Abe too much. I’m not saying that it’s a done deal; I know too little of the political dynamics in the United States to be certain of TPA and (more crucially) bicameral consent. I’ll leave those calls to experts like Paul Sracic.

I’ve been trying to remember what the second one was—it’s been on my mind for several days now, and now that I’m armed with my Jack Daniels typing this, it completely escapes my mind—so let’s go straight to the third one, which is..,

I tweeted that I would be surprised if public opinion in Jordan hadn’t turned against ISIL already as the result of the murder of the pilot although a good number of pundits thought that the monarchy would catch the brunt of the criticism. For now, things appear to be going in my direction. My call was based on my observation of human nature’s desire for revenge, augmented by a piece of conventional wisdom that was implanted in me in my preteens about an Arab predilection for eye-for-eye justice.

I got the DPJ leadership election doubly wrong, of course, when I called a Hosono win over Nagatsuma in a runoff. It was a gain for me, though, since I probably would not have noticed how poorly Natgatsuma did in the party dues-paying rank-and-file vote. The labor and teachers’ unions, who were supposed to be well-represented there, turned out to be much smaller or more pragmatic than I’d expected. The DPJ will be more right-center, at least on foreign policy, than I thought, which, according to Lully Miura’s analysis, will be a good thing for a true two-party system, if not for the diehard liberal-left.


Finally (for now), I did say that the ISIL murders of the two Japanese hostages would do little to move the needle policy-wise, and I think that Mr. Abe’s denial that he wants to send troops to the Middle East for logistic support bears this out in part, but I don’t think that it was the second call that I had in mind. 

Friday, February 06, 2015

The Thumb

For those of you who are too old or too young to remember, interviewing one’s thumb was what many a callow American correspondent in post-WW II would use for an informed source when he ran out of material. 

No, Mr. Saletan Did Not Go Nuts. But Very Careless

I interrupt my relatively post-free week to ridicule some nonsense.

William Saletan at Slate, who usually writes about technology, has a piece on the latest Islam State atrocities in which he writes:

“Japan’s prime minister is trying to amend the constitution to expand his authority to use military force. In that domestic campaign, the ISIS murders of two Japanese hostages in the last two weeks have become his most effective weapon.”

My first thought: has the normally cogent and lucid Mr. Saletan gone mad? But then I click through and find the following passage:

“Many observers suspect that Abe sees the events of the past two weeks as an opportunity to push ahead with his ambition to drastically amend the pacifist Constitution for the first time since the war, although the government denies it.”

So who are these “many observers”? Well, I assume that Reiji Yoshida, the writer, has two thumbs, so that makes it three, including his head. I am willing to begrudge Mr. Yoshida’s big toes, which makes it five.

I leave it to you to decide whether 5 = many.


Beyond that, though, Mr. Saletan fails to take into account the impact on the street, recruitment, and the IS troops on the ground. My call was based on what I understand of the local culture, is that, revenge is first and foremost on the pilot’s family, tribe, Jordanians, and local Arabs in a concentrically declining vector of rage—they’ll deal with grievances against King Abdullah later. I couldn’t see the other two being moved by much. He either missed these talking points, or omitted them because he didn’t know how to treat them. Either way, bad journalism.

Thursday, February 05, 2015

Exchange Rate Forecasts: Could Your Guess Be As Good As Nihon Soken’s?

Having too much time on my hands this morning, I had the choice of ripping into yet another Noah Smith Japan op-ed (not that I currently have a strong objection to the core piece of conventional wisdom itself that he festoons, mind you) or satisfying my curiosity as too just how good or not experts were at forecasting exchange rates. I decided to go with the latter, since I thought that it would be more useful (to you, not me; I don’t play the markets). For that, I turned to the Japan Research Institute, Limited, arguably the most reputable economic think tank in Japan, and its exchange rate forecasts during this decade (the regular ten-year one that began in 2011, not the 12-year one that began in 2010), which it posts on its website here. Specifically, I looked at its January yen/dollar and yen/euro forecasts for fourth quarters and compared them with the actual outcomes. It was not pretty.


2011 (10-12)
2012 (Oct-Dec)
2013 (Oct-Dec)
2014 (Oct-Dec)
2015 (Oct-Dec)

2011.01
2012.01
2012.01
2013.01
2013.01
2014.01
2014.01
2015.01
2015.01
2016.01
Y/$
range
 80-92
75.35-79.54
77-82
 77.8-86.8
82-89
   96.6-105.4
100-105
105.19-121.85
116-127
?
Y/$
average
86
77.35
80
81.2
85
100.4
105
114.46
123
?
Y/€
range
102-112
99.41-111.6
 92-104
99.8-114.7
100-112
131.1-145.7
136-148
134.14-149.80
138-150
?
Y/€
average
107
104.2
98
105.3
106
136.7
142
142.9
144
?

In the above chart, I’ve marked out in red the figures in the years in which there was no overlap between the forecast and the outcome ranges for the exchange rates. Four out of eight turned out to be complete duds. The yen/euro forecast for 2012 4Q didn’t turn out that well either, which I’ve marked out in yellow. Had you taken the fourth quarter of the previous year, take a five yen band, and expanded it a few yen both ways depending on if and how uncertain you were, and you wouldn’t have done much worse if at all than the JRI experts.

Incidentally, when I entered the 123 yen average forecast for 2015 Q4 in the Excel sheet that I used, it came out in red and refused to change to black, so I had to devise a workaround. Was my Office software trying to tell me something?