In Japan’s Shoes

In 2006, a high level meeting took place between Zhu Zhixin, vice chairman of China’s National Development and Reform Commission, and Jun Hamano, vice minister for economic and fiscal policy (Cabinet Office) to discuss the consequence of the 1985 Plaza Accord where Japan was forced by the United States to rapidly increase the value of the Yen versus the USD. ¹ Many economists have argued the rapid rise of the Yen, by 200%, from 1985 through 1987 created an asset bubble, and after bursting, resulted in a serious recession; hence the 1990s have been labeled as Japan’s Lost Decade.

What precipitated the Plaza Accord was the value of the dollar rising dramatically as a result of Pual Volcker, then FED chairman, raising interest rates to deal with the stagflation crisis in the 1970s. The U.S. thought the over-valued USD made American products less competitive around the world, especially automobiles. It attributed the trade deficit in the early 80s to the Japanese and Germans “undervaluing” their currencies.

The rapid rise in Yen didn’t make any difference to the trade deficit. Hisane Masaki, a Tokyo-based Japanese journalist, explains what followed:

Japanese exports to the US did not decline despite the Plaza Accord, however. And trade friction lingered and “revisionism” gained strength in the US, prompting the country to take a new tack on bilateral trade issues. ²

Trade disputes continue to escalate into the 90s, as Hisane Masaki went on:

The tenacious US demand – and Japan’s rejection – for Tokyo to set numerical targets for imports of American auto parts also brought the two countries to the brink of an unprecedented tit-for-tat trade war the following year. The US decided to slap a prohibitively high tariff of 100% on imported Japanese luxury vehicles under Section 301 of the Trade Act of 1974, and Japan filed a complaint with the World Trade Organization (WTO) against the US measure. ³

Japan then brought the U.S. to WTO on the grounds Section 301 was illegal and won the case. This marked their departure from the past where Japan quietly acquiesced to American demands. Trade tensions continued with the U.S. persistent in various attempts to adjust domestic Japanese policies to buy more American goods. There is not much news about that tension anymore, because it is swept under the carpet for now as the U.S. media switches full attention to the deficit with China.

Another contributing factor is Japanese auto-makers opening more factories inside the U.S. and hiring American workers. This way, companies like Toyota continuing to take market-share away from Detroit, generates less of a political backlash.

During my trip to Japan in 2010 I had a chance to speak with some of my Japanese friends about the Lost Decade. For them, Japan is clearly the junior partner who is constantly pressured to comply with U.S. demands. They also recall the U.S. placing heavy tariffs on Japanese-made DRAM’s, and the result of that shifted market-share to the Koreans, where Samsung dominates today. They also lament the fact that Japan is neutered politically on the international stage, because Japan’s aids (financial) are frequently under the wings of America.

They also point out the fact that the older generation, those Japanese who saw the dramatic rise and reconstruction following the end of World War II, see America fondly. For them, from the ravage of war to where Japan is at today, it is nothing short of a miracle.

And, therein lies the difference between the two generations in their views toward America. One group saw occupied Japan’s rise and the generation after that saw Japan’s wings constantly clipped.

In 2009, and for the first time in modern Japan, Yukio Hatoyama of the Democratic Party of Japan (DPJ) won. He would draw intensive criticism at the start with his Op-Ed in the New York Times, titled, “A New Path for Japan.” In it, he rejected the American-lead “unrestrained market fundamentalism and financial capitalism.” ⁴ He also favored stronger normalization with China and pushed for an East Asian Community:

I believe that the East Asian region, which is showing increasing vitality, must be recognized as Japan’s basic sphere of being. So we must continue to build frameworks for stable economic cooperation and security across the region.

He was also blunt in forecasting the end of a uni-polar world:

I also feel that as a result of the failure of the Iraq war and the financial crisis, the era of U.S.-led globalism is coming to an end and that we are moving toward an era of multipolarity.

Yukio Hatoyama created a crisis in Washington and condemnation from the U.S. media was immediate. At an August 31 White House press briefing, a reporter directly addressed the issue, saying, “Japan wants closer relations with China and Russia. Is the US-Japan alliance going to change as a result?” ⁵

As it turned out, the Op-Ed in the New York Times was edited by the paper to dilute his argument:

In justice to Hatoyama, the New York Times op-ed piece was actually translated from a much longer essay carried in the September issue of the Japanese monthly magazine Voice, and the Times abridged the piece in a manner that highlighted the most sensational and potentially disturbing passages while missing the piece’s overall thrust. In the original essay, Hatoyama put his dream of an East Asian Community in a broader historical context by referring to the ideas of Count Richard Nikolaus Eijiro von Coudenhove-Kalergi, whose pan-Europeanism helped pave the way for today’s European Union. ⁶

In my opinion, the August 2009 Op-Ed by Hatoyama shook the foreign policy hawks in the United States. Two decades of trade fight with the U.S. have given the Japanese a taste of what the future holds. Given China over-taken the United States as Japan’s largest trade partner, there was genuine worry in Washington of the growing importance of the region to Japan. If in the future the United States suddenly declined rapidly, Japan would be stuck in a vulnerable position. Japan cannot place all eggs in one basket. In parallel to the U.S. military alliance, it must at the same time seek commune with her immediate neighbors.

Fearing such a move would upset the balance in the Pacific, hawks within the U.S. immediately began to agitate. That Op-Ed was the trigger for the eventual Asia ‘Pivot’ policy from the Obama administration.

The sinking of the South Korean naval ship Cheonan
On 26 March 2010, South Korean (ROK) naval ship, Cheonan, was sunk 1.9 km off the southwest coast of Baengnyeong Island. This happened during a joint military exercise between the United States and South Korea. If one look up the location of Baengnyeong Island, one would realize this is within sight of North Korea, and certainly well north of the 28th parallel. These exercises, conducted on a regular basis, is extreme provocative against the DPRK. How are they to tell if any of the exercises is real invasion?

What was interesting was key findings by South Korea concluding there was no torpedo; that the sunken Cheonan was the result of an accident. That story would take a turn following an “international” investigation.

Stephen Gowans, from the blog, “what’s left” laid out his analysis ⁷:

While the South Korean government announced on May 20 that it has overwhelming evidence that one of its warships was sunk by a torpedo fired by a North Korean submarine, there is, in fact, no direct link between North Korea and the sunken ship. And it seems very unlikely that North Korea had anything to do with it.

That’s not my conclusion. It’s the conclusion of Won See-hoon, director of South Korea’s National Intelligence. Won told a South Korean parliamentary committee in early April, less than two weeks after the South Korean warship, the Cheonan, sank in waters off Baengnyeong Island, that there was no evidence linking North Korea to the Cheonan’s sinking. (1)

South Korea’s Defense Minister Kim Tae-young backed him up, pointing out that the Cheonan’s crew had not detected a torpedo (2), while Lee Ki-sik, head of the marine operations office at the South Korean joint chiefs of staff agreed that “No North Korean warships have been detected…(in) the waters where the accident took place.” (3)

Notice he said “accident.”

Defense Ministry officials added that they had not detected any North Korean submarines in the area at the time of the incident. (4) According to Lee, “We didn’t detect any movement by North Korean submarines near” the area where the Cheonan went down. (5)

When speculation persisted that the Cheonan had been sunk by a North Korean torpedo, the Defense Ministry called another press conference to reiterate “there was no unusual North Korean activities detected at the time of the disaster.” (6)

A ministry spokesman, Won Tae-jae, told reporters that “With regard to this case, no particular activities by North Korean submarines or semi-submarines…have been verified. I am saying again that there were no activities that could be directly linked to” the Cheonan’s sinking. (7)

Rear Admiral Lee, the head of the marine operations office, added that, “We closely watched the movement of the North’s vessels, including submarines and semi-submersibles, at the time of the sinking. But military did not detect any North Korean submarines near the country’s western sea border.” (8)

North Korea has vehemently denied any involvement in the sinking.

Subsequent to that, an ‘international’ investigation team was assembled, comprised of the U.S., South Korea, Australia, and the U.K.. The South Korean government on May 20, 2010 declared it was a North Korean torpedo that sunk Cheonan, reversing the earlier conclusions drawn by the South Korean military and intelligence.

A huge chunk of the South Korean population refused to believe the later announcement.

Subsequently, Russia was given evidence to analyze and concluded there was not enough evidence to fault the DPRK. China also refused to blame the DPRK.

With 35,000 troops occupying Japan, it is clear which country gets to call the shots. In June 2010 Hatoyama would resign – barely nine months into office. Hatoyama won the election partly on the promise to close a U.S. military base on Okinawa. Now that tension has dramatically heightened with the Cheonan sinking, he was unable to get the base closed.

Losing grounds on Kurile Islands
Japan suffered another lost, one, that in my opinion, contributed towards the resignation of Seiji Maehara, the Foreign Minister, on March 6, 2011. Publicly, he resigned due to accepting donation from a Korean national. Most countries have laws banning officials from accepting foreign donations directly or indirectly. For example, Obama was forced to return some donations in 2008 for this same reason. Maehara’s receiving of 250k Yen is paltry, which like Obama, he could have given it back to dodge the issue.

On November 1, 2010, former Russian President Dmitri A. Medvedev visited one of the southern Kurile islands which Japan also claim. Medvedev was the first ever Russian leader to visit that territory. While on it, he promised military expansion and more economic development there to further entrench Russia’s hold, further sealing off Japan’s claim. ⁸

On December 8, 2010, the U.S. and Japan staged the largest ever military exercise in the Sea of Japan, with more than 34,000 Japanese and 10,000 American troops, along with about 400 planes and 60 warships participating. Two days prior to the exercise, Seiji Maehara flew over the southern Kurile Islands. ⁹ This must have been an over-all agitation within Asia, and also a response to the Medvedev visit.

During the day of the military exercise, the Russian Pacific Fleet interrupted it ¹⁰:

In what Japan said was an unprecedented show of force two ‘submarine hunter’ Ilyushin-38 jets from Russia’s Pacific Fleet circled the biggest joint US-Japanese military exercise in history for several hours in an apparent attempt to gather intelligence.
The incursion was deemed so serious that the exercise was temporarily halted and F-15 fighter jets scrambled to intercept the Russian planes.

Was Medvedev’s visit triggered by all these planned joint military exercises between the U.S., Japan, and South Korea? If Japan is part of this East Asia agitation, then Russia wants to show it can take aggressive actions too. Or, was it the other way around, where the exercise was a response to the visit? It is hard to know.

The fact of the matter is that Russia doubled down on the Kurile Islands, making Japan’s hope to gain control more remote.

An over reach: arresting of Chinese fishing boat captain, Zhan Qixiong
2010 was a tense year in East Asia. On September 7, two Japanese Coast Guard vessels collided with a Chinese fishing trawler near Diaoyutai/Senkaku Islands. The Japanese Coast Guard decided to arrest the trawler’s captain, Zhan Qixiong. Japan’s unilateral action to prosecute Zhan was see by the Chinese government as extremely provocative. It meant Japan unilaterally rejected China’s and Taiwan’s claim to the islands.

What was interesting was the Japanese government refusing to reveal the full video of the incident from their own Coast Guard. Hawks within Japan accused their government weak and didn’t want to embarrass the Chinese with the video. The video was in fact so sensitive such that only a limited Japanese lawmakers got to see it and only in limited and edited clips according to The Japan Times ¹¹:

On Monday, a limited group of lawmakers from the ruling and opposition parties were allowed to view six minutes and 50 seconds of edited footage taken by the coast guard.

YouTube’s office was actually raided by Japanese authorities after the full video was leaked. The Japanese government was determined to take it down.

Peter Lee at the Asia Times paper concluded it was Maehara who “poured oil on troubled waters” and agitated the incident ¹²:

Japan’s hawkish minister Seiji Maehara can take a lion’s share of the credit or blame for blowing up the incident. The Japanese newspaper Asahi reported the timeline as follows – Maehara was still Minister of Land, Infrastructure, Transport and Tourism – in charge of the Coast Guard – at the time of the incident, he was appointed foreign minister on September 21.

Immediately after the trawler collided with Japan Coast Guard vessels on Sept 7, Maehara called Coast Guard Commandant Hisayasu Suzuki and told him, “The captain of the Chinese fishing boat must be arrested.”

Maehara also called Chief Cabinet Secretary Yoshito Sengoku and told him, “It is better to persist with a resolute attitude against China.”

At first, China responded calmly.

Reflecting back on that time, a Chinese government source said, “By sticking to a calm response, China was trying to encourage Japan to release the captain on its own accord.”

But Maehara refused to back down.

He told close aides: “The prime minister’s office was hesitant so I had to make the decision to arrest the captain. There was no mistake in the handling of the matter.” [1]

In this context, it is rather ironic that Japan would demand diplomatic engagement of China in the South China Sea while simultaneously foreswearing it over the Daioyutai/Senkaku Islands.

It was also interesting that the Diaoyutai/Senkaku story is not simply a matter of Japan standing up to the big Chinese bully.

By distance, geography, and history Taiwan has the best claim on what it calls the Tiaoyutai Islands, which Japan acquired during the course of some imperial skullduggery during the 1870s, and it responded to the incident by vociferously advancing its interest.

President Ma Ying-jeou, who has played the Tiaoyutai card his entire political career, dispatched 12 Coast Guard vessels to shield a boat of Taiwanese activists that made a symbolic approach within 19 miles of the island on September 15.

The Japanese Coast Guard warned them off. Taiwanese media reported:

On several occasions the Kan En No. 99,” which means “Showing Grace” in the Chinese language, was just two meters from being rammed by Japan’s patrol ships. [2]
Taking into consideration the aggressiveness of the Japanese Coast Guard, it is easy to understand how frustration, fear, and anger might have combined with poor seamanship and bullheadedness to produce Captain Zhan’s collision.

After Captain Zhan’s detention was extended – and it appeared he would soon be indicted in a Japanese court – China went ballistic, both in the public and official spheres.

Beijing canceled scheduled negotiations with Japan over undersea oil and gas deposits. It also canceled bilateral talks on airline flights and requested Chinese travel agencies not to accept applications for tour groups to visit Japan – scuppering two initiatives that Maehara had championed as tourism minister.

China allegedly cut off exports of rare earth oxides to Japan and detained four Japanese citizens in Shijiazhuang, capital of North China’s Hebei province, for espionage-related activity, apparently as retaliation. Three of the men were released on Thursday but one remains in Chinese custody.

Judging from the Asahi article, Prime Minister Naoto Kan was not pleased that his term had begun with a major diplomatic dust-up courtesy of Maehara and his patron, Democratic Party of Japan (DPJ) secretary general Katsuya Okada.

Okada and Maehara are the two most powerful proponents of a strong US alliance within the traditionally leftist and non-aligned DPJ.

As exchanges with China became more heated, Maehara recklessly upped the ante by pulling in the United States.

The Japanese government is aware of how weak their claim to Diaoyutai-Senkaku Islands, and it was only due to ambiguity for which the U.S. handed control of Okinawa to Japan that Japan tries to maintain grip to the disputed territory today ¹³:

China’s claim to the islets is based on the “discovery” of unclaimed territory and derives from a range of Chinese governmental contacts and references going back to 1372. Japan’s claim is also based on the “discovery” of supposedly unclaimed territory, despite the fact that official Japanese documents, several of which were unearthed by Taiwan scholar Han-yi Shaw, demonstrate that the Japanese government was well aware of China’s historic claim when it began to take an interest in the islets in 1885. During the subsequent decade, contrary to the assertions now made by Japan, its officials not only failed to complete surveys of the islets necessary to confirm their alleged unclaimed status, but also recognised that the matter “would need to involve negotiations with Qing China”. To avoid China’s suspicion, Japan chose to conceal its intention to occupy the islets “until a more appropriate time”. That time came in January 1895, when Japan, by then on its way to defeating China in their 1894-95 war, adopted a Cabinet decision that theislets were Japanese territory. Yet even that Cabinet decision was not made public until after the second world war.

In this climate, Maehara betrayed what Hatoyama hoped to accomplish. Antagonizing China in such a strong way pushes Japan towards the U.S.-Japan military alliance as a single-track strategy. Remember, Hatoyama openly espoused this concept of an East Asian Community. By positioning Japan to be friendly to either side of the Pacific is a hedge, especially if there is a sudden and rapid decline of the United States. Former National Security Adviser to Jimmy Carter, Zbigniew Brzezinski, has always said, a rapid decline in American power would send the world scrambling for realignment and is likely to be accompanied with violence and chaos before a new equilibrium is established.

Dokdo-Takeshima Island and Comfort Women
Besides China and Russia, the other major neighbor is South Korea whom Japan still struggles despite their alliances with the United States.

Dokdo Island (or Takeshima Island), sits in the middle of the Japan Sea, between Japan and South Korea, is the source of frequent demonstrations on both sides. The Japanese government has named a holiday after Takeshima so younger generations of Japanese do not forget Japan’s claims. In response, some South Koreans have cut off their fingers in protest to this holiday. South Korean text books give ammunition to their children in return.

The other issue is of course the Japanese government whitewashing her colonial atrocities in the 19th and 20th century. This is reflected in Japan’s text books and in fact the source of tension between Japan and all other Asian nations she invaded. Japanese leaders also visit the Yasukuni Shrine from time to time to appease the hawks within Japan and draws protests all over Asia.

Finally, there is the “Comfort Women” atrocities where colonial Japan forced Korean women into sex slavery during their rule from 1910-1945. At their 1000th weekly protest, the victims erected a Korean woman statue in front of the Japanese Embassy in Seoul, calling it the “Peace Monument.” ¹⁴

How much longer should Japan be occupied?
Besides trade, there are other forms of disputes between Japan and the United States too. More than 60 years have already passed since the surrender of Japan. The natural question is how much longer should Japan tolerate American occupation? 40 more years? 100 more years? 1000 more years?

The Japanese view of the Hiroshima and Nagasaki bombing is increasingly one that of overt use of force. (Though for countries invaded by Japan, they were more than happy to see Japan’s troop withdrawal quickened by these two instances of nuclear bombs.)

Japan is also made to pay for part of the U.S. military expenses, termed as “host nation support.” From Okinawan’s perspective where a huge chunk of their island is allotted to the U.S. military, it is creating a rift between them and the rest of Japan. Okinawans rightfully feel over-burdened by the military alliance. This is also exacerbated by the misbehavior of the U.S. marines stationed there. In 2008, a U.S. marine was detained for allegedly raping a 14-year old Okinawan girl. Culturally, Okinawans were closer to China. The region belonged to Qing Dynasty China and was usurped by Japan in 1968.

Japanese leaders know the longer the U.S. military bases remain on Okinawa, then greater the rift will build between the Okinawan identity and the rest of Japan.

Hatoyama won the 2009 election partly on the ticket to close a U.S. base on Okinawa. That issue is a political hot potato within Japan.

In Conclusion
While I do not wish to paint a gloomy trend for Japan, especially with trade and cultural ties generally expanding for the whole region, the country does face many challenges. The U.S.-Japan military alliance alone clearly is not the panacea for all the disputes that exist between Japan and her neighbors.

As I argued, Maehara was likely forced out for being too belligerent and misaligned with what Hatoyama envisioned. I think Hatoyama’s vision did create a crisis in the foreign policy community within the U.S., especially within the more hawkish camp. The U.S. military has never left Asia, and why the ‘pivot’ all of a sudden? U.S. trade and investments in the region continues to grow.

The ‘pivot’ was triggered by a fear that Japan may drift closer to Asia. Hatoyama’s Op-Ed was the earth-shaking wake-up call that set in motion all the agitation that we saw in 2010.

The March 11, 2011 Tohoku earthquake and subsequent tsunami, followed by the Fukushima nuclear power plant meltdown brought all the 2010 excitement to a halt – as least as far as Japan is concerned.

Where Japan heads next will be interesting to watch. And, no kidding, whichever way it turns, Japan will be walking with really uncomfortable shoes.