Dictatorial Economic Interventionism

If a housewife in Japan wants more salary from his husband, she should not ask it to his boss, but to the Prime Minister. The Prime Minister Shinzo Abe on Tuesday asked economic leaders to raise workers’ salary. It is highly unusual for a prime minister to intervene in independent activities of enterprises. Hastened by the requirement of showing actual achievements, Abe is more and more involved in economic dictatorship.

“I want companies with better record to raise salary of workers,” told Abe in the meeting with top leaders of three major organizations; the Japan Business Federation, the Japan Chamber of Commerce and Industry, and the Japan Association of Corporate Executives. The answers of top leaders were something normal, such as “it depends on economic situation.”

In the annual negotiation of payments this spring, the labor unions ask to raise overall amount of workers’ salary, while employers are generally reluctant to it before confirming actual growth of their companies’ record. From a political viewpoint, however, the leading LDP needs to show actual effect of Abenomics. It is the most obvious evidence of policy success, if voters acknowledge the increase of their income. Abe wants it before the election of the House of Councillors this July. In addition, it is necessary for the economic recovery to stimulate consumption, even if the stock market rallies.

Business leaders welcome Abe’s positive efforts to get rid of deflation. Abe therefore is highly convinced in his economic handlings. But employers are still skeptical to the actual effect of his policy on economics. Political pressure from the prime minister may lead employers to incorrect decisions on their management.

Abe seems to recognize his intervention in monetary policy as successful so far. Setting two percent target of commodity price’s growth gets positive response from the market. Having pressure from politics, the Bank of Japan agreed with Abe administration to unlimitedly provide with monetary liquidity until it get the achievement. But isn’t it an interventionism?

Skepticisms against Abenomics are mainly coming from outside Japan. Among the European countries and others such as South Korea and Russia, there are growing sensitivities against cheap yen. In the meeting of budget ministers and chairmen of central banks of Group 20 in Moscow this weekend, it is likely for the parties to agree with having self-regulation on cheap currency policy. The wind of world economy is blowing against Abenomics, pushing Japan to isolation.

Limitation of Sanction

They did what they had said to do. We did, too. That’s it.

The North Korean government announced on Tuesday that they successfully did their third underground nuclear test, and the atomic bomb they used was smaller and lighter than ever. Mixed with improvement of missile technology, the compact atomic bomb means that they are reaching the ability to make a direct nuclear attack on US continental soil. It is reasonable for the government of Japan to recognize the test as more serious threat, for Japan is geographically closer to the dictatorial country than US.

What Japan can do is limited. The Prime Minister, Shinzo Abe, released a statement on the test. It accused and North Korea saying that the test, with technology of missile, was serious threat to our safety and significant challenge to international system of disarmament and non-proliferation. It also requested immediate meeting of the UN Security Council on the matter. Then, PM explained the response of the government, which was to do its best to collect information and to release appropriate information to the nation, to monitor radioactive materials in the cities in Japan, and to enhance its counter measures toward North Korea including reentry ban for the persons from the country, who are in charge of supporting North Korean officials in Japan.

Nikkei reported the details of the sanction. The persons to be denied to reentry are five vice-chairman of the General Association of Korean Residents in Japan. They are just five people, adding to the four already banned. The government also considers tightening regulation of sending money toward North Korea. It is necessary for a person to report to the Ministry of Finance when he/she wires ¥3 million or more, or brings ¥100 thousand or more out of Japan. The limitation of the money amount could be lowered. Embargo already set would be continued after the expiration in April. Those measures actually make any big difference.

Acknowledging the limitation of the unilateral sanction, the Abe administration expects concerted response of international community. But it is unlikely for China to agree with a resolution of UN Security Council with the possibility of using force according to UN Charter Chapter Seven. So, the expectation is cast on US. The general secretary of LDP, Shigeru Ishiba, on Tuesday expected more aggressive response, stating “If North Korea obtained an ability to reach nuclear missile to US homeland, US action will be stepped up.” It was not clear whether he indicated a surgical attack on NK’s nuclear site by US force. But, it is US actually to decide, not Japan.

Impenetrable Cyber World

To restore its dignity, the law enforcement section of the government of Japan arrested a male cyber specialist on Sunday. Raising the argument over human rights, the police falsely arrested four innocent people in the suspect of remote-controlled crimes of threatening massacre or blasting last year. However, the crucial clues, which led police to arrest “new suspect,” was found only in real world, not in cyber space. That showed a limit of investigation in cyber world.

The suspicion of arresting the cyber specialist was forcible business obstruction. He was charged by his commenting on a notice board website, which indicated a massacre at an event of magazine sales. For that, the criminal manipulated a stranger’s computer by using remote controlling software. The police found a history of using related code making software in his computer.

After the consecutive threatening cases last year, one man, challenging the police, sent e-mails to lawyers revealing his commitment on it. The arrested man has a history of arrested with the crime of warning a murder in 2005. Although he claimed an innocence, he was jailed, leaving antagonism against the police in his mind. The police regard the cyber specialist as the true criminal of the cases last year.

The police, however, could not find effective evidence of the crime in cyber space. A key fact was found in a memory card planted in a collar of a stray cat in a park. In it was the information no one except the true criminal could know. A man who set the card was searched depending mainly on a video public security camera recorded. While this means invasion of law enforcement power into our public life, we realized that the police could not arrest him, if he had not come out to the real world.

The National Police Agency is making great effort to deter cyber crimes. Although the agency has been assembling the specialists, ill virus increases faster than their effort. It is necessary for the agency to hire more skilled specialists from business sectors or academic sectors. But they are too careful for the leakage of private information they collected to hire outsiders of bureaucratic community. Looking for good-will hackers is also in their half way.

Japanese society is more and more separated between cyber world and real life. Young people call a man/woman who satisfied with real life “ria-ju.” For a man who are soaked in internet world, ria-ju, with high-income job, beautiful girlfriend and good health, is an object of jealousy. The arrested specialist, without close friends, liked cat and he was playing with cats at a café the day before the arrest. Cyber crime reflects social disconnection in Japan between happiness and unhappiness.

Between Mutual Compromises

Making a contrast with China, Russia seems to be positive to solve the problem around the border with Japan. President Vladimir Putin mentioned that the dispute over the Northern Territory should be solved in a form of “hikiwake,” or draw game, using his favorite judo term. It is unlikely in judo that a player offers hikiwake before a match. Behind his attitude, one can see the situation of Russian presidency, which is in need of actually playing a game. His opposite, however, looks like not prepared for the game.

Putin’s words came up in March of last year, when it was few days before he was reelected to the Russian President. In its basis, there is a situation that Russian government needed to improve the relationship with Japan. Firstly, suffered from the accident in a nuclear power plant, Japan is a big market for natural gas produced in Russia. Shale gas currently developed in North America is a threat to Russian natural gas. Russia seems to be hasted in obtaining an advantage in Japan. Secondly, Russia needs Japanese technology for adding value to their gas. Thirdly, from the perspective of geopolitics, Russia needs to maintain a good relationship with China. Putin may think that solving the territorial dispute with Japan helps stabilize Northeast Asian security environment. Lastly, he also has to stabilize internal politics for his presidency by improving the relationship with a neighbor country.

But the biggest question is what hikiwake exactly means. The basic attitude of Russia toward this issue is that returning two smaller islands, Shikotan and Habomai, to Japan should be done after two countries conclude in peace treaty, along with the line of the Joint Declaration between Japan and Russia in 1956. But in 1992, Russia made a compromise that it can return those two islands before concluding the peace treaty, and maintain negotiation over the rest of two islands, Kunashiri and Etorofu. Japan then dismissed that proposal from Russia.

It still is unlikely that Russia would accept Japan’s argument, which is to make the peace treaty with the returning of two small islands and confirm the sovereignty of the two bigger islands. But hikiwake should be located in between those two standpoints of Japan and Russia. Former Japanese diplomat, Kazuhiko Togo, pointed in his article to Mainichi Shimbun newspaper that it was no longer available for Japan to reconfirm the sovereignty of all four islands, because it meant a total defeat of Russia against Japan, a declining economic power. The compromise for Japan would be abandoning four-island-in-one-time solution.

Meanwhile, Russia needs to abandon two-island-return-before-peace-treaty solution. So, it is likely that the solution could be found around a possible proposal; making peace treaty with returning two small islands, and continue talking about the rest of two islands. Then, the explanation on sovereignty would be the biggest matter on it.

Looking Optimistic Side Only

 “I don’t swing between joy and sorrow along with ups and downs of stock market.” That has been the ordinary comment of Prime Minister on the market affected by politics. This Prime Minister is different. “Stock market proved that my policy is correct,” says Shinzo Abe. He looks so confident on his handlings of economics that he ignores the inferiority of the inflation targeting.

Encouraged by current trend of rallying in Tokyo Stock Market, Abe is getting even arrogant in his comments at the parliament. “There is no golf player who uses patter in a guard banker, being afraid of deep valley behind the green,” told Abe in a discussion at the Budget Committee of the House of Representatives, when he explained former policy as ridiculously incorrect and his inflation targeting policy as appropriate. Though one can remember Tiger Woods sometimes use a spoon in his approach shot around green, it is obviously too extreme to argue patter in a banker.

The Minister of Finance, Taro Aso, also defended Abenomics with an extreme example. “I have an experience to live in Brazil for a year. At that time, that nation suffered from hyperinflation. Prices of commodity in the morning had gotten unbelievably high in the evening. That can not happen in Japan,” in the discussion at the committee.

Although political leaders insist that there are a number of economies which introduced inflation targeting policy, all of them except Japan is targeting lower level of current price. To get rid of deflation, Japan is targeting the price to stabilize at a higher level than now. Abe names the policy “the great unprecedented effort in economic history.” Good luck, prime minister.

But, everybody now has a question; “How do you control the price when it gets uncontrollably high?” Abe’s answer is “That is the job of the Bank of Japan.” That meant he had no idea on it. Oh, are you serious, prime minister?

There are skepticisms on Abe’s inflation targeting policy. Akihiko Reizei, a Japanese novelist living in US, raises at least two points in his blog. One is the possibility of shifting US monetary policy from quantitative easing to monetary tightening. Quoting Bernanke’s skepticism on continuous supply of liquidity, Reizei indicates the end of cheap-dollar policy early in 2013. Another possibility is revaluation of Renminbi, as a diplomatic card of China toward US. If those two elements come at a time, the value of Japanese yen may be tumbling down, he warns.

The target has been changed in Abe’s words. He set the target from 2 to 3 percent last fall. Now he says 2%, and denies 3% target as too high. Currently he upholds “within two percent.” So it is crystal clear that the prime minister is thinking only raising commodity price and ignores the impact of his policy.

Let’s Defense Together

Intimidated by Chinese expansion, the Japanese Prime Minister took one step up toward militarism. PM Shinzo Abe resumed his private consultative committee on collective self-defense right. In his first administration, the point was whether the possible exercise of the right would be our war or their war, in the context of war on terrorism. This time, it is different. They are definitely talking about “our war.” The hurdle of expanding the role of Japanese force is low.

The committee, the Meeting on Rebuilding Legislative Basis of National Security, was established in 2007. Chaired by former Ambassador to the United States Shunji Yanai, the meeting was consisted of scholars, bureaucrats and a business person. Although the meeting was interrupted by Abe’s stepping down later that year, it reported recommendations for exercising self-defense right in 2008.

In the report, they listed four cases for study about activities of Japanese self-defense force. The first was whether Japanese self-defense force could counter attack when a US vessel would be attacked on international sea. The second was intercepting a missile going to US. The third was approaching and guarding other nation’s troops in international peace operation. And the last was logistic support for other nation’s troops in international peace operation. The first two were regarded as the exercise of collective defense right.

Chairman Yanai was in Washington, DC, as the Ambassador, on September 11^th in 2001. The discussion had mainly been about possible event in joint operation against terrorism with US troops. At that time, general public opinion in Japan was “Why do we have to step into US unilateral war on terrorism?” The circumstance of the discussion was not preferable to upholders of expanding Japanese force’s role.

Resumed meeting, however, takes a different approach affected by current intimidation by the Chinese. “Not only terrorism, there increases a threat of nation. We therefore consider appearances of threat not belonging to one of those four kinds of cases,” told Yanai to the press. The meeting is going to submit new report after the election of the House of Councillors, which will obviously be how Japan will respond to Chinese threat in the joint operation with US.

New Komeito, a partner of leading Liberal Democratic Party, is reluctant to discuss collective self-defense right, from the aspect of keeping Japan’s peace standards. But Chinese double standard that it started argument over Senkaku Islands after natural resource was found around the area makes Japanese general antipathy against China greater. Now, environment of the stepping up is likelier than ever.

Preparing for Threats form the Peninsula

Adding to concerns of Chinese aggression in the East China Sea and Russian fighter’s invasion of Japanese territory around northern Hokkaido islands, the government of Japan holds headache on the issue of Korean Peninsula. The leader of North Korea announced his intention of nuclear test. Turning all neighbors to enemy, the leaders of Japan more and more rely on a friend on the opposite side of the Pacific.

While Japan is struggling in the quagmire of argument on nuclear energy after the accident of the First Fukushima Nuclear Power Plant, North Korea is steadily preparing nuclear test for the third time. This time the test may have certain significance. According to the statement of a official of South Korean military, it was possible for North Korea to operate two kinds of experiment; one is plutonium type as same as former two tests, and another is highly enriched uranium. A physicist in Los Alamos indicated that North Korea might have another test of explosion of hydrogen bomb, which would produce nuclear fusion, taking advantage of other plutonium and uranium experiments.

The government of Japan is watching what is going on around nuclear test sites in North Korea, using information provided from satellite of United States. The Minister of Foreign Affairs, Fumio Kishida, consulted with US Secretary of State, John Kerry, and reconfirmed that North Korea needs to understand the consequence of unilateral intimidation of nuclear test. Japanese government also prepares unilateral sanction against North’s nuclear tests, that includes expanding the list of rejected persons of reentry. It is also planning to collect radioactive materials in the air with the aircraft of Air Self-defense Force.

There is no sign from North Korea of rethinking of the tests. Japanese government assumes that the most likely date of the test is next Monday, just because last two nuclear tests were on Monday. The fact shows crucial lack of information. The additional sanction by the United Nations would be less effective unless China’s serious cooperation can expect.

Henry Kissinger once warned Chinese leader that increasing nuclear weapons in East Asia might cause Japan’s nuclear possession. Current hawkish administration in Japan welcomes discussions not only about Japan’s militarization, but nuclearization. Who can say that there would never be an argument in Japan to have necessary nuclear weapons and technology to protect itself from obvious threat from the peninsula, while peaceful nuclear power has to be shut down because it is too dangerous for the nations.