Cannot Accept Defeat

The government of Indonesia announced that it would introduce high-speed railway system between Jakarta and Bandon from China. Japanese bullet train, Shinkansen, was dropped in the competition. Since the deal offered by China was actually unrealistic, requiring no financial burden from Indonesian government, Japanese government rejected recognition that Japan was a loser. The fact is, however, that Japan lost a crucial business opportunity which was also important in terms of international relations in Southeast Asia.

In the competition on Jakarta-Bandon Train, Japan and China were final candidates to export their high-speed train system. But, both offers were simultaneously dropped, because the cost for construction was too expensive for Indonesia. Indonesia announced that it changed the plan to semi-high-speed train with max speed of less than 250km/h. It is likely that China has still been seeking the deal with Indonesia, while Japan gave it up holding its offer with Japanese yen loan to Indonesian government.

The decision of was announced from State Minister for National Development Planning, Sofyan Djalil, to Japanese Chief Cabinet Secretary, Yoshihide Suga, in Tokyo on Tuesday. In his press conference on Tuesday, Suga looked frustrated with the issue being called Japan’s defeat. “It is rather than being defeated…because that was completely unbelievable for Japanese government, asking no financial burden or debt guarantee to Indonesian government,” told Suga to the press. Suga said that he expressed regret to Sofyan in the meeting.

Even how Japan accuses Indonesia, it lost a deal valuable for several trillions yen in a country with the fourth greatest population in the world. China tried hard for building bridgehead on a highly potential market at any stake, offering technology transfer, development of train building factory in Indonesia and construction of aluminum refinement factory necessary for making train body. Although necessity of imagining unpredictable was a lesson of Great East Japan Earthquake, Japanese government again failed in doing that.

The defeat may affect economic policy of Shinzo Abe administration, which has been focusing on exporting infrastructure. Japanese companies realized competitiveness in price of Chinese infrastructure. It will be important for Japanese infrastructure to take advantage of rich experience in foreign market, good reputation for quality or safety and fast construction within a set period. But it is unclear whether Japan brand can always meet demands of clients.

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Not Get Rid of Deflation

While Prime Minister Shinzo Abe stressed his determination to improve economic situation of Japan, business leaders were not so optimistic on their future. Short-term Economic Survey of Enterprises in Japan in September, operated by Bank of Japan, revealed that the index of business conditions of major manufacturers was exacerbated for the first time in these three quarters. Unfortunately enough for Japanese economy, main element of economic slowdown was not in Japan, but in an uncontrollable place called China.

The index of major manufacturers in September was +12, reduced by 3 points from June. 11 types of manufacture out of all 16 claimed that their business situation was worsened. Exporters of industrial machines were affected by negative impact of steep decline of Chinese economy. The index firmly indicated the dependence of Japanese economy on its neighbor economic giant.

On the other hand, major non-manufacturers have positive expectation to near future. The index of them marked +25, increased by 2 points from previous quarter. 8 types of non-manufacturers, including hotel, restaurant or office landlord, expected improvement of their business. Retailers are counting on great purchasing power of Chinese travelers, making Japanese economy more dependent on China.

Kyodo News ran an article that BoJ started considering further monetary easing to support price in the markets. The bank recognized a possibility of delay in reaching the goal of targeted inflation, caused by slower recovery of Japanese economy with weak productivity stemming from Chinese economic slump. Still upholding the goal of price rise by 2%, BoJ had to lower its goal of +0.7% price hike in FY 2015 and +1.9% in FY 2016, which was set only a few days ago.

One of the most optimistic was Abe. In his speech in New York this week, Abe promised that he would completely get rid of deflation. “The deflation mindset that long haunted Japan, we have now shrugged off,” declared Abe in a meeting at Broomberg headquarters. He was confident in reaching the goal of +2% price hike, holding new goal of ¥600 trillion of gross domestic products in 2020. To achieve it, Japanese economy will need to keep 3% of annual nominal growth, which makes business leaders skeptical on Abenomics.

There must be a few reasons to have optimistic view on Japanese economy. Economic slowdown may be extended long, further damaging Japanese economy, and finishing of monetary ease in United States can suck money up from emerging economies. Who except Abe can hold positive view?

Peripheral Proactive Pacifism

Prime Minister Shinzo Abe reiterated in general debate of annual General Assembly of United Nations how Japan had been contributing maintenance of peace and security in the world. So, what is he doing in the future? On a major stream of refugees from Middle East to Europe, he only offered financial support to related countries, putting direct contribution behind. What Japan needs to uphold is not proactive pacifism, a concept to justify political agenda to take back pre-war regime, but actual framework to eliminate the network of extremism.

True intention of Japan to appeal its contribution to international peace and security is apparently to obtain a ticket to be one of the permanent members of U.N. Security Council, regardless a fatal antagonism against United Nations seventy years ago. “The Japanese are a people who view, and will continue to view, the two letters ‘UN’ as having a certain glimmer,” told Abe in his speech. The statement was followed by these words; “Holding aloft the flag of ‘Proactive Contributor to Peace based on the principle of international cooperation,’ Japan is determined to undertake Security Council reform in order to transform the United Nations into a body appropriate for the 21^st century, and then, as a permanent member of the Security Council, carry out its responsibilities in making still greater contributions towards world peace and prosperity.” For Abe, U.N. looks like inappropriate for the 21^st century.

To implement what he called proactive pacifism, Abe offered $810 million of assistance for refugees and internally displaced persons in Iraq and Syria as tripled number from the amount last year. To Lebanon, he implemented $2 million in new assistance measures, which included collaboration between development and humanitarian actors. Abe also pledged $2.5 million of humanitarian assistance to Serbia and Macedonia, where great number of refugees and migrants are flowing in.

However, Abe did not refer to acceptance of refugees to Japan itself. According to a report of Mainichi Shimbun, Japanese government approved only 11 applicants for refugees out of 5,000. Ratio of approving refugee was less than 1%. Because Japanese government so strictly interpreted “possibility of persecution” as a definition of refugee that it could not directly contribute international effort to help displaced people.

Abe reiterates that he hopes Japan to bloom in the center of the world. In which international issue, anyway, is Japan located in the center of the world? If it were nothing more than buying status of permanent membership of Security Council, the Japanese people would not be proud of the concept.

Obscure Selection of Sports

Tokyo Olympic Organizing Committee announced five sports would be recommended to add to the list of the event in 2020. They were baseball/softball, karate, skateboarding, sports climbing and surfing, all of which are currently popular in young people in Japan. Having been annoyed with scandals over plagiarism of official logo or resignation of Minister in charge of sports, the committee is eager to rebuild nationalistic enthusiasm on the international sports event.

President of International Olympic Committee, Thomas Bach, has been promoting Olympic reform called Agenda 2020, which included initiative of host country to propose adding new sports in Olympic games. IOC had been concerned on a reality that only a few cities in the world was offering candidacy for hosting Olympic, mainly because of financial reason. There also was a notion that traditional sports games did not attract young people.

TOOC received requests from twenty-six sports organizations to add their sports on the list and selected the eight out of them. After consideration of international popularity or population of players, bowling, squash and martial arts were dropped. Karate or sports climbing survived the selection, even though popularity in the world or basis of scoring was not necessarily established.

Having twenty million players in the world, squash was not chosen for Olympic game. “Why a game with high evaluation of IOC was not chosen?” told the president of Japan Squash Association. While TOOC stressed transparency of selection process, leaders of sports organizations complained. While one of the boarding members leaked information that baseball/softball was hopeful, reasons of picking or dropping each sports were not announced. It is doubted that there was deals between TOOC and IOC in the selection.

Skepticism to the members of TOOC is basic disturbance in preparation for the Olympic. The president of TOOC is former Prime Minister and political mentor of Shinzo Abe, Yoshiro Mori. While he established friendship with Russian President, Vladimir Putin because of judo experience, or has been known as a player of rugby football, Mori is not an advanced player in national level in both sports. Secretary General, Toshiro Muro, is former Vice-minister of Ministry of Finance, who had mostly been nothing to do with sports community. Wikipedia introduces his hobby as painting. Member in charge of the selection is Fujio Mitarai, former President of Japan Business Federation, or Keidanren.

It is fair to say that TOOC is an organization led by former leaders from politics, bureaucracy and business sector, topping the social pyramid of Japan. Having experienced scandals stems from collusive relationship among those three, including Lockheed Scandal or Recruit Scandal, Japanese people are fundamentally careful in trusting the leaders.

Fall of Constitution Watcher

Cabinet Legislative Bureau has long been working as an organization in executive branch for watching policies that were made by Ministers who were also have status as lawmakers under parliamentary cabinet system of Japan. According to a report of Mainichi Shimbun on Monday, the bureau changed constitutional interpretation over collective self-defense, which had been kept for over four decades, in one day. In the background was pressure from Shinzo Abe administration. It is a significant disturbance on legal stability by politics.

Dubbed as “watcher for Constitution,” CLB worked for judging constitutionality of policies and making opinion to Cabinet. The report revealed that CLB received draft of cabinet decision for new interpretation of Article 9 of the Constitution from National Security Bureau on June 30^th last year. A CLB counselor in charge of constitutional legislation replied to NSB that CLB did not have any opinion on that next day, the same day which Abe Cabinet decided that exercising collective self-defense was constitutional.

CLB Director General, Yusuke Yokobatake, testified in a committee in the House of Councillors this June that constitutionality of exercising collective self-defense was discussed. The report proved that CLB discussed major change over interpretation of Article 9 was made one day. It is highly doubtful that long-lived interpretation that exercising collective defense is unconstitutional, because it exceeds minimum use of force allowed by Article 9, was overwritten in such a short period of time.

In addition, CLB left no document about the process of discussion. When CLB made judge for a policy, counselors would make a document about discussion with bureaucrats in ministries. Public Records Management Act mandates executive organizations to leave documents for reviewing process for decision-making or achievement of policy. Some experts questioned the handling of this issue in CLB.

One thing obvious was that Prime Minister Abe had been enthusiastic for reinterpreting Article 9. Targeting to CLB from the beginning of second term of his administration, Abe replaced CLB Director General to a person who had been close to his idea. Although strength of CLB had been based on independence from politics in constitutional interpretation, bureaucrats in the organization including Yokobatake were daunted by political intervention by Abe.

It is necessary for Japanese people to review relevancy of voluntary check on constitutionality of policies made mainly by an organization under Cabinet. As Abe boasted, it is judicial branch that mainly interprets the Constitution of Japan. Cabinet decision for exercising collective self-defense must be judged by the Supreme Court anyway. Having said that, final decision has to be made by the sovereign people.

Disappointing Outcome of Great Powers Summit

Japanese policy makers must have disappointed with the outcome of summit meeting between United States and China in Washington D.C. on Friday. While two leaders spend much time to address problems in cyber security, there was mostly no progress over territorial dispute in South or East China Sea. It should be questioned whether Japanese security policy, excessively dependent on U.S., has been correct.

U.S. media, actually more excited with first visit of Pope Francis or abrupt resignation of House Speaker John Boehner at the time, focused on cyber security as the most important result of U.S.-China summit between President Barack Obama and Chinese President Xi Jinping. New York Times reported that two leaders pledged “that their governments would refrain from computer-enabled theft of intellectual property for commercial gain.” The paper introduced the agreement as “first concrete steps” of them.

It is not a concrete step, in fact. Even how top leaders share a notion on harmfulness of cyber attacks, governments cannot control every cyber activity done by private actors. “Well, it is a matter of both nations, not governments,” China can say. Xi generalized the issue, saying “China and United States are two major cyber countries and we should strengthen dialogue and cooperation.” It is obvious that Chinese government will not take effective measures against cyber attacks. To be sure, U.S. has been lazy in deterring Chinese advance with passive attitude on arms buildup or inappropriate value of Renminbi in the first decade of this century.

On territorial issue in South China Sea, Obama tried to show himself as taking firm stance against unilateral change of status quo. “I conveyed to President Xi our significant concerns over land reclamation, construction and the militarization of disputed areas, which makes it harder for countries in the region to resolve disagreements peacefully,” told Obama in the joint press conference with Xi.

But, Xi was not interested in what Obama meant. “Islands in the South China Sea from ancient times are China’s territory. We have the right to uphold our own territorial sovereignty and lawful and legitimate maritime rights and interests,” said Xi. The U.S. leader needs to realize that China is committing not only cyber theft, but territorial theft. If U.S. leaves Xi’s reasoning alone, he may start saying that the western half of Pacific Ocean is China’s territory from ancient times.

U.S.-China relationship directly or indirectly affects Japan. As long as U.S. interest in South and East China Sea is limited to some principles like freedom of navigation, the Japanese have to take a close look at how serious U.S. is about Japanese interest in East China Sea.

Olympic Erodes Administration

After a series of scandals that caused broad skepticisms over handling of preparation for Tokyo Olympic 2020, Minister of Education, Culture, Sports, Science and Technology, Hakubun Shimomura, offered his resignation to Prime Minister Shinzo Abe on Friday. Abe accepted it and decided to replace Shimomura in the shuffle of Cabinet members early October. Abe will lose one of his close colleagues in his Cabinet, marking visible decline of his administration.

In his press conference on Friday, Shimomura reported that he told Abe to be stepping down as a Minister, taking responsibility of swollen spending for construction of new stadium in Tokyo. Although Abe said that the problem would not worth stepping down, he hoped Shimomura to continue his job until already planned shuffle of the Cabinet.

At the competition for New National Stadium for Tokyo Olympic was ¥130 billion in 2012. But, with introduction of brand-new architecture designed by Zaha Hadid or inflation in materials for construction, estimated cost got accumulated as high as ¥252 billion. Receiving booing from the public, frustrated with centralized development in capital area in Japan, the government discounted the cost to ¥155 with Abe’s initiative. A third party committee for investigation reported that Shimomura was responsible for the confusing process of determining cost for the stadium.

Abe and Shimomura have been close colleagues in a fraction in Liberal Democratic Party, called Seiwa Policy Study Group, established by former Prime Minister Takeo Fukuda. To raise Jun-ichiro Koizumi for the president of LDP, Abe and Shimomura worked as leaders of the campaign office, asking LDP lawmakers and related organizations support for Koizumi. From the beginning of Abe administration, Shimomura has been supporting Abe as Secretary or Minister. Abe must have hesitated in approving Shimomura’s offer to stepping down.

But, Shimomura had too many scandals to remain in the Cabinet. Earlier this year, illegal donation from some educational organizations to Shimomura was reported. Although Shimomura denied its illegality, the opposite parties targeted him as unworthy for Minister on Education. He also made controversial speech or policy, such as supporting a decision of local government to remove a comic book critical against atomic tragedy in Hiroshima from libraries or considering abolition of liberal art division in national colleges.

It may be fair to say that Abe wanted to remove uncertainty from his Cabinet. But, firing his close supporter apparently indicated decline of political power of Abe. People are watching who can compensate the loss of Shimomura in Abe Cabinet.