This Is A Drill

Against basic prediction of few days’ moratorium, North Korea launched a missile over the sky of Okinawa to South China Sea in the Sunday morning as soon as moving the schedule of the test. While Japanese government denounced the North’s unilateral behavior in nuclear development, no deterrence worked against the despotic state. Happy enough for Japan, it resulted in a drill, whether or not successful.

The missile, which North Korea asserted earth observation satellite Kwangmyongsong 4, was launched from Tongchang-ri site on 9:31 a.m. The rocket dropped its launchers on East China Sea, passing over Okinawa and its neighbor islands, and touched down on South China Sea. “We cannot tolerate the forced launching of missile by North Korea, in spite of our repeated request to refrain from it. Following nuclear test, this missile launching obviously violated the resolutions of United Nations. We will decisively deal with it, cooperating to international society. We will also make every effort to maintain safety of our nation and keep the people relieved,” told Prime Minister Shinzo Abe to the press.

So, were the Japanese people relieved with the measures of Japanese government taken against the intimidation? First of all, the news of missile launching was announced to the people in Okinawa and its neighbor islands few minutes later through an alert system called J-alert. Speakers set in the forty-one cities and towns in Okinawa Prefecture noticed the people with loud voice that a missile was launched from North Korea.

How was the missile defense? Japanese government laid two-layered defense; SM-3 anti-missile system loaded on an Aegis vessel and surface-to-air missile system called Patriot Advanced Capability-3. Both systems were not activated this time, despite destruction measures order from Minister of Defense, leaving a question over their reliability. Here is a scenario: American satellite early warning detects the launch, Japanese ground radar system follows the missile, SM-3 attempts destroying it in outer space and PAC-3 will strike it near the ground after the failure of SM-3. No one is sure about the technology so far.

Can Japanese government avoid the recurrence? “We will further reinforce our cooperation with United States, South Korea, China, Russia and the international society,” told Chief Cabinet Secretary, Yoshihide Suga. Japan with U.S. and South Korea, is requesting new resolution against the North’s nuclear and missile test to U.N. But, China is still reluctant to lay economic sanction. It is mostly hopeless for Japanese government to have strict sanctions against North Korea, even how it enhances its independent sanction. It was proved that Japanese government could do only a few things against nuclear development of North Korea in the drill over missile launching.

Leaning on Amendment Again

It is highly unusual for a Prime Minister of Japan, whose status is endorsed by Constitution of Japan, to insist on amending provisions of the Constitution. Prime Minister Shinzo Abe repeatedly showed his eagerness to amend the Constitution in the discussion of the Diet. On the most controversial Article 9, Abe has been ambivalent on determining his stance. After all, he looks to be supportive for any changes available.

Interpreting his words, Abe seemed to like to have Japanese Force, not satisfied with self-defense force. “There is an argument that the situation, in which seventy percent of constitutional scholars suspect self-defense force to be unconstitutional, should be eliminated,” told Abe in the discussion in Budget Committee of House of Representatives on Wednesday. He indicated that the Article 9 had to be amended, because self-defense force had been unconstitutional, in spite of official interpretation that SDF was constitutional as minimum force for defending the nation.

Section 2 of Article 9 determines that land, sea and air forces, as well as other war potentials, will never be maintained. The draft of new constitution made by Liberal Democratic Party in 2012 requires National Defense Force headed by Prime Minister for maintaining peace and independence and protecting the nation. “Leaving obsolete Section 2 of Article 9 untouched,” told Chairwoman of LDP Policy Research Council, Tomomi Inada, “makes constitutionalism nominal.”

Followed by such conservative power as Inada, Abe proceeds to create an environment for constitutional amendment. For him, it was irresponsible for politics not to take initiative for constitutional amendment. Abe thinks that most people in Japan want to change their constitution and he is responsible for making it happen. Historiography of LDP has been that Constitution of Japan was posed by occupation force of United Nations and the Japanese need to have their own.

On the other hand, Abe admits that changing Article 9 has not received enough support from the public. It was based on the notion that the coalition partner Komeito embraced overwhelming opposition against changing Article 9. Constitution of Japan is obsolete, amendment is one of the biggest issues for coming election of House of Councillors, but changing Article 9 is still not realistic. Those are what Abe understands so far.

There is confusion. Constitutionalism is a concept stemming from rule of law. Amending constitution with unilateral idea that the constitution became obsolete would not be interpreted as constitutionalism. If an administration thinks that rule of Emperor should be resumed in the future, it will be possible in the reasoning of Abe. There is no sign of emergency for Japan to have mightier force to defend itself.

Reliable Foreign Capital

The decision making process took a sudden turn a week ago. Japanese electric appliance maker, Sharp, decided on Thursday that it would give the highest priority to negotiation with Hon Hai Precision Industry in Taiwan for introducing management support. While the likeliest partner had been Innovation Network Corporation of Japan for reorganization of Sharp a week ago, Hon Hai turned over the race with ambitious deals. One of the Japanese top runners in the technology of household appliance is going to be under control of foreign company.

In the meeting of board of governors on Thursday, it was reconfirmed that human resource for Sharp’s reorganization would mostly be provided to the negotiation with Hon Hai. Hon Hai reportedly offered ¥700 billion for taking Sharp over. If the deal successfully stands, it will be the biggest acquisition of Japanese manufacturer by foreign capital.

The most viable plan, with engagement of Ministry of Economy, Trade and Industry, had been the offer of ¥300 billion from INCJ with ¥350 billion of financial support from two mega-banks, Mitsubishi Tokyo UFJ and Mizuho. But, the biggest inferiority of the plan was to separate the section of liquid crystal display from Sharp and transfer to Japan Display Inc. Integration of two major producers of liquid crystal display may take certain period of time for examination over anti-trust regulations. There were also negative arguments in Sharp over dissolution of its business.

In the meeting with board members in Sharp on January 30^th, Hon Hai Chiairman, Guo Tai-ming, offered ¥600 billion and maintenance of employment, denied partial sales of the businesses, and did not require additional financial support. To the reorganization plan of INCJ, there were criticisms from overseas on exclusion of foreign capital or governmental support for private company with tax money. Sharp had been demanded making a fair decision.

Consolidated financial report of Sharp from April to December 2015 marked ¥108 billion of deficit, jumping up from ¥7 billion in the same period of the previous year. Sharp had to settle the discussion as soon as possible. Hon Hai had to win the deal to take a great step to be an international appliance company, getting rid of an image of subcontractor of Apple. Sharp had to be one of the most preferable targets to diversify its business.

There still exists in Sharp a negative image on Hon Hai, remembering a failure of investment in 2012. Some regret about outsourcing of advanced technology of Sharp out of Japan. “It is inevitable in capitalism, anyway,” told one worker for Sharp in TV report. It can be a defeat of Japanese industrial model in dynamism of international businesses.

Working for Self-restraint

After notification of North Korea for launching test of ballistic missile, which it was argued to be satellite, Shinzo Abe administration has been busy for showing how to deal with that. While Japanese government made diplomatic effort to stop the test, Ministry of Defense was preparing for shooting down the missile. As long as the behavior of North Korea is determined in the context of international relationship among great powers, the efforts in Japan does not seem to be working.

International Maritime Organization released the plan of North Korea for launching “earth observation satellite Kwangmyongsong” on Tuesday. The day for the test was set between 8^th and 25^th of this month. The vehicle will be flying southward from Korean Peninsula and dropped on the east side of Luzon Island, Philippine, in South China Sea after passing over the sky of Sakishima Islands, Japan. It would mostly be the same course the North took in the missile test in 2012.

Prime Minister Shinzo Abe expressed serious concern on the behavior of North Korea. “It actually meant to launch ballistic missile and would violate the resolutions of United Nations Security Council. It should be a significant intimidation to security of Japan,” said Abe in the discussion in House of Representatives on Wednesday. He stressed the importance of cooperative effort to request North Korea’s restraint.

Minister of Foreign Affairs, Fumio Kishida, met with U.S. Ambassador to Japan, Caroline Kennedy, to reconfirm close cooperation including South Korea. Vice-minister of Foreign Affairs, Akitaka Saiki, visited Ambassadors from Russia and China in Tokyo to ask the North self-restraint. However, Japanese diplomats should have known that North Korean regime would not follow their advice. Even how Chinese spokesperson denounces North’s unilateral action against threat of United States, China is reluctant to deliver an additional sanction by United Nations.

Minister of Defense, Gen Nakatani, announced that he issued an order to destroy, in case the missile would fall in Japanese territory. Receiving the order, Japanese Self-defense Force started deploying Patriot Advanced Capability 3 missiles on islands of Miyako and Ishigaki. But, it is unclear whether the missile from North Korea will fulfill the condition to use Japanese anti-missile system.

The important point for Abe administration is approaching to a situation, in which Japanese government can exercise collective self-defense right. Whether Japanese force could shoot a missile was one of the focusing points in the discussion over constitutionality of collective self-defense right. It is unclear whether Japan will actually shoot the North Korean missile down.

Disillusion about Candidates

Newspapers in Japan reported Iowa caucus as disillusions of voters about a Democratic female candidate who had been the top runner and GOP billionaire who reiterated eccentric gaffes. Hillary Rodham Clinton failed in impressing American voters her invincibility based on established political dynasty. Lagging behind of a Hispanic conservative, Ted Cruz, Donald Trump was not so popular in Hawkeye State as Japanese media had been indicating. It is possible for United States Presidential race will keep on going against Japanese expectations.

Asahi Shimbun focused on advance of extremism. “Voters’ frustration against existing politics such as gap between the rich and poor appeared to be supports for the candidates with radical opinion rather than the centrists in each party,” elaborated the paper. It reported that the election started in unprecedented division and confusion in America, raising segmentation in GOP with conservative, moderate and Trump and in Democrats with leftist and centrist.

But, the result was not so simple. Good fight of Bernie Sanders does not mean a defeat of Clinton. Although polls indicated advantage of him in next primary in New Hampshire, Sanders does not have a clear vision for winning the ticket. Having said that, it is possible that Clinton had to win in Iowa with only a slight margin, not because she was a centrist, but because her personality failed in addressing some difficult issues like emailing classified information through her private email account.

Another question would be whether Cruz was an extremist. Although Cruz had been holding strong position against President Barack Obama, it was too early to say that the victory of Cruz was an advance of extremism. The policies upheld by Cruz, such as small government or opposition to gun regulation, may be categorized in traditional GOP conservatism. Considering eccentric populism shown in Trump campaign, the result of Iowa caucus can be a sober conclusion of the voters after enthusiastic discussions.

Mainichi Shimbun reported that another GOP winner was Marco Rubio, who caught up with Trump. “He secured central position among centrist candidates by winning the third place close to the second in conservative Iowa,” said the paper. But, the third place means a loser to the other two. Affected by American media in quadrennial enthusiasm, Japanese news organizations are vividly reporting the election of new conceptual world leader. However, the result of Iowa caucus was a reasonable choice as former presidential elections had been.

Chain Reaction of Commercial Banks

Commercial banks in Japan began to take defensive measures against Kuroda bazooka volume 3. Few days after the announcement of Bank of Japan to introduce negative rate policy, commercial banks lowered their inertest rate of deposit as in a chain reaction. Although Tokyo Stock Market rallied on Monday, situation of volatile international economy showed no sign for optimism. It is not clear whether the depositors are turning on consumption.

Yokohama Bank and Hachijuni Bank decided to lower the annual interest rate of fixed deposit for one year or shorter from 0.025 to 0.020. The rate became the same as that of ordinary deposit. Depositors cannot have any advantage of choosing fixed rate, which rate has been always higher than ordinary deposit.

Resona Bank reviewed its rate of fixed deposit for two to five years to annual 0.025% with reduction of 0.005% or 0.025%. Sony Bank, specialized to internet banking, dropped the rate of ordinary deposit from annual 0.020% to 0.001%. With Sony’s rate, ¥100,000 deposit for a year can produce only ¥1 of interest. Providing no benefit with the depositors, bank account becomes wallet. Shizuoka Bank closed its campaign for fixed deposit with interest of 0.330%, which had been scheduled until the end of February. All of those actions were made in a day. It is possible that mega banks are following the trend.

The interest rate of long-term debt is declining. In Tokyo market, national bond rate temporally marked record low of annual 0.050, caused by active buying of investors who predicted higher price with lower rate in the future. Daiwa Asset Management announced on Monday that it would stop application for some funds, which would be operated with national bond. It is likely that interest rate of housing loan will be further lowered.

With expectation to exporters like steel or machine makers, Tokyo Stock Market recovered its vigor with ¥17,865 of Nikkei Average. However, stock price of major banks significantly dropped by over 5%. Even Japan Post Bank declined to the lowest, since the listing to TSM last November. One economist indicated a possibility that negative rate policy would cause three megabanks losing their net income by 5 to 10%. Before the introduction of the policy on February 16^th, investors are foreseeing what is happening in the future.

It is a common notion that commercial bank is circulatory organ of Japanese economy and megabanks are too big to fail. Deterioration of profit of commercial bank may lead to burden on depositors. As long as no preferable target for investment is found, depositors may turn their back to the banks and keep money in their wallet.

Negative in Details, Optimistic in General

Frustrated with each issue, supporters for Prime Minister Shinzo Abe are increasing. Recent polls showed certain growth of supporting rate of Abe Cabinet, exceeding over fifty percent. Money scandal of a Minister added negative image of on the Cabinet. Not so many people wanted constitutional amendment this summer. But, more people thought that Abe has been making good jobs than in the last poll.

In the poll operated by Kyodo News Agency last weekend, supporting rate of Abe Cabinet marked 53.7%, increasing by 4.3 points from the poll last month. In the poll of Mainichi Shimbun, the rate was 51%, jumping up by 8 points from the last poll. Support for leading Liberal Democratic Party also showed apparent growth. It was 34% with rise of 5 points in Mainichi poll.

Many must have expected that supporting rate for Abe would decline with money scandal of former Minister in Charge of Economic Revitalization, Akira Amari, who was one of the closest aids of Abe. But, both polls showed that people did not connect the scandal to responsibility of Abe who named Amari, while they were overwhelmingly thought that Amari should have stepped down. In Mainichi poll, 67% of the recipients realized that Amari had not explained well about his scandal, and one half of them thought Abe’s choice of the successor, Nobuteru Ishihara, was not supportable.

Meanwhile, the polls showed that people were not enthusiastic on amending the Constitution of Japan, which Abe raised as a major issue in the election of House of Councillors this summer. 46% of the recipients in Mainichi poll did not expect that the amendment power would occupy two-third majority, which would be needed to take initiative. Kyodo poll showed that six out of ten in independent voters opposed constitutional amendment, as 32% of LDP supporters were also negative on it. Supports were outstanding in young agers, while more than a half of women opposed it.

On an unpopular trade issue, Trans-Pacific Partnership, even the supporters of leading parties sent negative message. 75% of Komeito supporters and 65% of LDP supporters thought that the bills for approval of TPP should not be passed in current session of the Diet. 64% of the supporters of Abe Cabinet did not insist on the passage in this session.

One positive element for Abe administration was diplomacy. Abe was successful in making basic agreement to settle comfort woman issue with Republic of Korea. While most people did not expect it to lead to final solution, 65% approved the effort of Abe administration. It was also apparent that most people did not respond negatively to volatile economy, being seen from the beginning of this year. The Japanese look generally optimistic to their future.