Daily Yomiuri

Benefits of Parading with Bush

Cecille Isidro — Mon, 21 Jun 2004 00:00:00 -0400

Fort Knox, Ky. used to be the most carefully guarded site on the planet because it held the massive gold bullion reserves that backed the value of the U.S. dollar. Those days are over as the dollar now floats freely against other currencies, and Fort Knox is no longer necessary. But the currency of global leadership does have value. The newest most guarded site in the world was not far from Kentucky--it was the small coastal resort named Sea Island, Ga., where Group of Eight leaders from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States met to discuss some of the world's most intractable problems.

While platitudes and promises of charity and aid to developing nations regularly emanate from these conventions of rich nations, they mostly serve as a date on the annual calendar for world leaders to stage photo opportunities so their citizens perceive them to be worldly and important because of their association with prime ministers and presidents of other great powers. It is always fun to see the eight heads of state or government casually walking together as if such a stroll happened every day, having their photos taken by the press for global distribution. This year, Prime Minister Junichiro Koizumi was the most animated of the eight, walking next to U.S. President George W. Bush with arms dramatically gesticulating as he spoke--apparently with great passion. Maybe they were discussing baseball.

In truth, the G-8 sessions are gatherings that remind powerful nations of their responsibilities to poorer nations, also serving as a notice to those not in the club that the eight are very rich and very powerful, while the United States is king of the hill. If one searches for G-8 through the Google search engine on the Internet, the impressions the world has of this smallish gathering are incredibly diverse. If one looks carefully one sees that it is not only the G-8 that gathers at the talks, but many other countries as well. None of the other national leaders, however, appear in the published group photos of G-8 summit talks.

This year the leaders of Algeria, Turkey, Afghanistan, Iraq (the newly appointed President Ghazi al-Yewar), Yemen, South Africa, Ghana, Nigeria, Senegal and Uganda all traveled to the deep South to hang out with Bush and his rich nation colleagues.

Some of these nations were there seeking debt relief--particularly the African nations, who left disappointed that the rich did not do much to make the African continent less poor. Others were there seeking concessions on AIDS drugs and other medical assistance, and the United States offered a further 500 million dollars toward the cause. Unfortunately, the nation's earlier pledge has not been received in total. Some were there because of Bush's need to score points for his focus on Middle East reconstruction and civil society development--so the embattled former warlord Hamid Karzai came from Afghanistan as well as the thus far unelected new president of Iraq.

Among the highlights, Yemen's president declared the G-8 summit talks a stunning success. The G-8 applauded the U.N. Security Council's unanimous support of the transfer of sovereignty to Iraq's next government. From afar, North Korea protested the G-8's continued resolve to oppose nuclear proliferation. France told the United States to stop acting as if the North Atlantic Treaty Organization was its own private military reserve and that it had little chance of pulling NATO troops into Iraq.

In terms of public relations, Japan--which had the least at risk in the summit--really did the best. Koizumi was complimented on getting Japan's economy going and dealing with North Korea well, but he still received cold treatment from the United States on the Kyoto Protocol and admiration from other countries for continuing to push the treaty.

There is a growing movement--still in its infancy--to move China into this club. Much of the world's economic action is now in China, and it makes a great deal of sense to bring China in, especially as Russia has far less economic luster. On the other hand, there is a backlash growing toward China's emergence as a power center in the world and many argue that entry to forums such as the G-8 should require democratic national reforms first. In addition, Bush's neoconservative allies are suspicious of China and can easily constrain their enthusiasm about bringing potential rivals into forums mostly dominated by U.S. interests and objectives.

In the end, this year's G-8 summit produced little to spark the imagination and make us think that global poverty would be lessened in any real terms. Yet parades of nations are probably good things to have--at least there is someone whispering in the U.S. president's ear that other leaders and nations should be accorded the dignity of recognition by the United States and other G-8 leaders.

Nationalism: Old News or New Worry?

Cecille Isidro — Tue, 09 Dec 2003 00:00:00 -0500

In his "Notes on Nationalism," George Orwell writes, "the nationalist not only does not disapprove of atrocities committed by his own side, but he has a remarkable capacity for not even hearing about them."

For nearly the first half of the 20th century, nations around the Pacific lived in fear of Japan's formidable military machine and regional hegemonic pretensions. In the latter half, they dreaded a return of unconstrained and aggressive Japanese power.

Japan's unwillingness to address in some broad cathartic manner the cruelty of its wartime deeds has kept the specter of Japan's empowerment as a rearmed "normal nation" something that many Asia-Pacific citizens feared more than welcomed.

Many observers today--including Eugene Matthews, a former senior fellow at the Council on Foreign Relations who is now president of international educational firm Nintai--argue that Japan's trademark pacifism is being supplanted by a new robust nationalism, and that Washington and the world need to adjust to both the opportunities and problems of this trend. Matthews made these points in an important essay titled "Japan's New Nationalism" in the November/December 2003 edition of Foreign Affairs.

It is true that Japan's nationalism is becoming more evident and obvious to the world. What is not clear, however, is if Japan's nationalism is a new phenomenon, or if the rest of the world is only now awakening to a Japanese nationalism that has been brewing for decades, if not longer.

What is misunderstood is that Japan, even in its most strident moments of extreme pacifism, has had a strongly nationalistic citizenry, struggling with a deep need to be unique and powerful and to matter in the world. What should concern observers now is not a supposedly new Japanese nationalism but rather the radicalization of an otherwise stable and healthy Japanese nationalism that increasingly resents the ongoing subordination of its sovereignty and interests to its former conqueror and Cold War ally, the United States.

Current discussions on Japan's nationalism often engage in a shallow and intellectually thin treatment of the subject, overlooking deeper questions: What is nationalism? When does one see it? When does one not? Mr. Matthews suggests that Japan's sinking of a North Korean fishing vessel in December 2001--quite possibly a spy ship or covert smuggling operation--is evidence of a new nationalism in Japan. Others point to Japan's launch of a fleet of self-built spy satellites and its willingness to send material, ships and Self-Defense Forces troops abroad for contingencies far beyond its borders as manifestations of a nation that is ready to cast off past constraints on its military role and identity. In addition, nearly all who comment on Japan's new nationalism point to the now cliched, saber-rattling spear-carrier for unconstrained and crude nationalism, Tokyo Gov. Shintaro Ishihara. Ishihara is important, but he is not new.

What has recently brought Japanese nationalism to the fore has more to do with American presumptions about how the Japanese should feel about their own interests and circumstances than it does with the strong and ubiquitous nationalistic currents that have long been agitating Japan's national character. During the first Gulf War, Americans convinced themselves that Japan should be as worried about Saddam Hussein's invasion of Kuwait because of Japan's dependence on Middle East oil. But Japan's national ambivalence in that conflict rested on Japanese confidence that its ability to buy oil from Iraq and other Middle Eastern nations would not be undermined.

The answer to the future of radical, rather than sensible, Japanese nationalism depends on the manner in which the United States responds to Japan, North (and South) Korea and China. The terrorism unleashed in Washington, New York and Pennsylvania on Sept. 11, 2001 deeply buried any illusions of runaway globalization and the end of the nation-state.

After 9/11, U.S. President George W. Bush demanded loyalty oaths and clear declarations from leaders around the world on which side--America's or the terrorists'--they chose to be. Unlikely nations such as Libya, Sudan, China, Russia, Yemen and even Syria chose to side with America. After 9/11, borderlessness belonged to transnational terrorists who thrive in dozens of languages and scores of nations despite a hostile intelligence environment.

In response, America led the way among all nations reasserting its security priorities, bolstering borders, impeding the flow of people and investment, reversing globalization and reestablishing the nation state as the primary fixture of 21st-century global order.

Thus Japan's nationalism, brewing for decades beneath a cosmetic veil of pacifism, seems to be going with the flow of the return of the nation-state. It would be incorrect to argue that Japan's recent nationalistic flirtations have anything to do with 9/11. If there has been any impact at all, 9/11 has only helped to slightly accelerate a trend that was already well under way.

Japan has not rushed into a role of global military activism despite sinking a mystery ship, despite passing temporary anti-terrorism legislation, and despite passing legislation permitting Prime Minister Junichiro Koizumi to send about 1,000 SDF troops to help stabilize post-Saddam Iraq--each of which is a relatively small-scale, low-cost arrangement, far more trivial than the 13.5 billion dollars financial contribution Japan made in the first Gulf War.

Japan was in fact the only nation on the planet that directly taxed its people to pay for removing Saddam Hussein from Kuwait. Japan's prime minister is skilled at manipulating symbols of a Japan empowered on the world stage: intelligence briefings at Bush's Crawford ranch, and a fairly quick response to U.S. Deputy Secretary of State Richard Armitage's admonition to "show the flag" after Japan sought direction from the United States in how to respond to the 9/11 tragedy. But the bottom line for Japan's actions is that they continue to be militarily small--trivial, in fact, when it comes to a substantive contribution to stabilizing Iraq.

Whether or not Matthews is right about the time line, he is correct that nationalism is no longer hiding in Japan, as it is not in many other nations. America needs to be sure that it uses its power and influence to permit the healthy development of national identity and nationalism in Japan, stepping back and reducing American over-extension in Japan and in Asia. Japan needs a new constitution. It needs to figure out a way to participate in both military and civil society-building excursions around the world. In fact, it largely already has. In many ways, Japan's civil society-building competencies are far more developed than America's.

The combination of Japan's desire to be more self-governing combined with a United States that on the one hand applauds Japan's emergence as a military power and at the same time recognizes fears in Asia about Japan's increasing military power is a toxic mixture. America has not and should not snuff out the natural evolution of Japan's nationalism. America cannot be the cork in the bottle, but its attempt to be such will radicalize many Japanese. Instead of the advocate for American interests and power Koizumi has turned out to be, the United States may face in the future a slew of prime ministers whose legitimacy is determined by the intensity of their anti-Americanism.

Koizumi Needs Fiscal Shot to Ring Round the World

Cecille Isidro — Wed, 23 Jan 2002 00:00:00 -0500

There are episodes in history that deservingly draw our attention--some very small in scale, but major in impact. In U.S. history, one such moment at the start of the Revolutionary War has come to be known as "the shot heard round the world."

Another such momentous event recently appeared in Japan, which wrecked by a decadelong economic malaise and the potential threat of a financial implosion, saw the Nikkei Stock Average rise on a day that it should have plummeted.

After the tragic Sept. 11 terrorist attack on the United States, Tokyo's stock index rose, baffling those who noticed and were not otherwise glued to the visual images of airplanes crashing into skyscrapers.

Why did the Nikkei move up? What could explain the breath of life in an otherwise flat and dreadfully stale Japanese economy?

Prime Minister Junichiro Koizumi and his colleagues of the Liberal Democratic Party should have called a Diet hearing to investigate. Or perhaps the prime minister's economic policy czar, Heizo Takenaka, should have attempted some explanation as to why Japan's stock index seemed to power past the shock of the day's earlier traumatic events.

What triggered this shiver of hope was the bankruptcy of Japan's third-largest retailer, Mycal Corp. Rather than prolonging by sleight of hand its insolvency, Mycal forced a real and transparent reconciliation of its deteriorating assets and accumulating debts.

In contrast to the life support that the government and several lead banks continue to apply to Daiei Inc., Mycal's action earned the applause and support of markets. This is the shot that should ring loudly through the halls of Nagatacho and Kasumigaseki, and frankly, throughout Japan.

However, Koizumi, despite his slick veneer as a reformer and rhetoric that he would protect "no sacred cows," has thus far utterly failed to make market forces his friend in changing the course of the nation's economy.

Many who interact closely with the prime minister report that though he has one of the keenest political minds in contemporary Japanese history, he is not very "numerate." He does not follow numbers and does not really understand the dynamics of an economy.

As but one example, misunderstanding his advisers, Koizumi originally told the nation he had a three-year plan for disposing of the country's nonperforming loan (NPL) problems.

But he later revised this to seven years after being corrected by his NPL disposer-in-chief Hakuo Yanagisawa, state minister in charge of financial policy.

Nonetheless, the positive shock generated by Mycal's bankruptcy was not lost on all of the prime minister's close advisers--particularly Hideichi Okada, a personal aide drawn from the senior ranks of the Economy, Trade and Industry Ministry.

Okada gave Koizumi access to a couple of clever economic realists from both the Diet and the private accounting sector who convinced the prime minister that economic confidence could be significantly strengthened if the lessons of Mycal's bankruptcy were applied to Japan's major borrowers. Koizumi was on their side for at least two days before changing course again.

Focusing on the worst NPL cases would require the government to abandon the command economy tactics advocated by Yanagisawa. His current approach is to generate a total figure of nonperfoming loans, divide that number by seven (for seven years), and then write one-seventh of the nation's bad debt off each year.

In the meantime, to better calibrate and understand the full scale of the problem in the domestic financial sector, Yanagisawa is playing the role of a good bureaucratic chief--asking for an expansion of his budget, a broadening of his powers and a massive expansion of his inspection team.

At best, however, Yanagisawa's plan is disingenuous and a distraction from real problem-solving as it fails to account for the ongoing accumulation and compounding of bad loans beyond current levels.

His plan also rests on the notion of informally dispersing bad debt target levels--to the domestic financial sector--allowing them only to write off a certain limit of NPLs each year.

In other words, Yanagisawa has constructed a framework in which the government will essentially be directing banks to write off some loans, but then to misclassify other parts of its portfolio until the next year's bad-debt targets are dispersed and approved.

Very few seem to be noting that Yanagisawa seems to be putting the government in the position of being a party to the ongoing fraudulent management of loan portfolios.

The beauty of the Mycal bankruptcy and the so-called 30 Worst NPLs Plan is that the government and private sector can acknowledge that the resolution of the nation's debt problems will take years to resolve, but that this strategy will clear the worst cases off the books first.

Markets rise and fall based not on current conditions, but on future projections. If the nation steps forward to work out the most bleak parts of its bad-debt portfolio, markets may believe that this bodes well for sound economic decisions in the future.

Yanagisawa's annual allotments of bad-debt write-offs also could be overwhelmed by other unforeseen, unmanaged bankruptcies, compelling even more strident government guidance to the banks that are dishonest about the true state of their loan portfolios.

Just as markets can spiral down, triggering further cascading spirals downward, they also can spiral upward. If the nation worked harder to get market forces on the side of reform, stopped trying to convince the world that the nonperforming loans will disappear by some unrealistic date, and worked to resolve the worst cases first, confidence might return on the basis of a brighter future down the road.

Such a boost would stir new investment, drive consumption and potentially kick-start the economy, thus bestowing on those at the helm of state the deserved accolades as "reformers."