Saturday, May 10, 2014

Japan Updates - May 10 , 2014 --- On so many levels , Japan is one zombified clusterfark nation.......Debt , Fukushima , War mongering as distraction --- When do the people in Japan rise up , demand hard answers and attempt to find out where things stand ( before its too late ? )

Japan Debt Update: ¥1,020,000,000,000,000.00

Tyler Durden's picture

It's been a while since we looked at Japan's debt situation. Here is the dire update.
From Japan News:
Japan’s national debt totaled a record-high ¥1.02 quadrillion as of the end of March, up ¥33.36 trillion from a year earlier, the Finance Ministry said.

The central government debt, which increased ¥7.01 trillion from the end of December last year, kept rising mainly due to ballooning social security costs in line with the aging of the population.

The balance of government bonds, financing bills and other borrowing crossed the ¥1 quadrillion line for the first time ever at the end of June 2013.

The national debt stood at ¥8.06 million per capita, based on an estimated population of 127.14 million as of April 1.

Finance Minister Taro Aso said the situation has become “very severe” because of slow progress in fiscal reforms.

Of the debt, general government bonds increased ¥38.86 trillion from a year earlier to ¥743.87 trillion. Financing bills, used to procure funds for currency market intervention, totaled ¥115.69 trillion, up ¥420.8 billion.

But fiscal investment and loan program bonds, used to raise funds for loans to government affiliates, decreased ¥5.05 trillion to ¥104.21 trillion.

Long-term debt, excluding fiscal investment and loan bonds, financing bills and others, totaled ¥770.4 trillion.
* * *
So Japan's debt grew by 7 trillion in one quarter? Sure, why not. Here's why: presenting the Bank of Japan's balance sheet.

Perfectly "New", and quite sustainable, Normal.

Things That Make You Go Hmmm... Like Is Japan Totally F##ked?

Tyler Durden's picture

We have detailed the straitjacket into which the Japanese have been strapped for the past two decades numerous times in the last few years (in great detail here)  but as Grant Williams leaned back in his most comfortable chair after reading an article about proposed changes to the GPIF (Government Pension Investment Fund), Japan’s public pension fund; the thought popped into his mind - "Japan really is totally f##ked." What led him to that well-thought-out and eruditely expressed conclusion? Read on...

In an interview with CNN’s Fareed Zakaria earlier this year, Abe explained the true significance of the third arrow:
“What is important about the third arrow, structural reform, is to convince those who resist the steps I am taking and to make them realize that what I have been doing is correct, and by so doing, to engage in structural reform.”
Read that again.
Yes folks, the important part of structural reform in Japan is to convince people that Abe is correct. If he can convince them he is right, they will have engaged in structural reform.
You should be.
This is how Japan works — or doesn’t.
Immigration reform has been widely recognized as the only answer to Japan’s crippling demographic problem for well over three decades. Nothing has been done about it.
How about the “Wage Surprise” — increasing wages on a national basis — hailed by Abe as the key to lifting Japan out of the doldrums, and a key feature of Abenomics?
Markets will eventually tire of Abe’s continual promises that more is coming, so he desperately needs to somehow break the entrenched deflationary attitude in Japan.
(WSJ): In a survey of 1,000 consumers on March 29-30 by broadcaster Fuji News Network, 69% said they had not made any special purchases ahead of the sales tax rise, and 77.4% said they didn’t feel an economic recovery was under way.
Good luck with that attitude problem, Shinzo.
This week we got a look at how Abe is faring with one of his promises, that of guaranteed 2% inflation.
Core CPI (excluding food and energy) rose 1.3% in March — unchanged from the previous month and lower than analyst forecasts.
Of course, that was taken as a sign that further easing by the BoJ would be forthcoming...
And round and round it goes... until it stops.
The briefcase in Pulp Fiction ONLY works because we DON’T find out what is in it.
Abe’s third arrow can be loaded into the bow, but it can’t be fired once and for all, because if it IS fired, the game is up.There will still be continual promises of more to come, and markets may buy into that for a while; but, like all central bank-induced “boom times,” Abenomics has a shelf life, and that is nearing an end.
The changes at the GPIF are potentially disastrous, and Kuroda’s BoJ and Abe’s government are desperately trying to MacGyver their way out of an impossible situation, armed only with hollow promises and faith, when what they really need is duct tape and a Swiss army knife.
Abenomics is a plan by which to change Japanese behaviour; but as anyone who has spent any time in that wonderful, perplexing country will tell you, the Japanese do NOT change their behaviour — even when facing a demographic disaster.
Sorry, but Abenomics is actually nothing at all.

To understand why it's all smoke and mirrors... here is Grant Williams fill letter:

Japan TV: ‘Endless fight’ against radiation — Levels in home at 7,500% gov’t limit — ‘Shocking’ 62,700 Bq/kg of cesium in mushrooms… “They just stared at the numbers” — Retired Official: “This will taste great fried…When decontamination finished it will be safe for people to return” (VIDEO)

NHK Documentary, Apr. 19, 2014: Senior Brigade: Protecting an Uninhabited Town [...] the ‘Senior Brigade’, which consists of workers recently retired from top posts in local government, prepare for the day when the people [of Okuma, Fukushima] can return
  • At 23:30 in: The man’s 2 year old grandchild was born after the family left town. He didn’t want the child to grow up surrounded by radiation. His family had lived in Okuma for generations, but he told Suzuki he would not return. He wanted his daughter and grandchild to live free of fear. Radiation levels inside his house were 75 times higher than the government’s safety standard. — Homeowner: “Even if it is declared safe, I don’t think you can expect people to come back. What good would come from putting our lives in danger? I believe many others feel the same way.” — Senior Brigade: “But radiation levels will go down after decontamination.” The member of senior brigade believe the town’s residents would return one day, but they couldn’t bring themselves to try and change this man’s mind.
  • At 34:30 in: The team went to gather mushrooms […] — Senior Brigade: “This will taste great deep fried.” If the radiation counts were low they hoped to report the good news to the town’s people. — Senior Brigade: “It’s 62,700 Bq/kg. That’s 627 times the safety standard — 62,000, that’s a shocking number.” They’re waging an endless fight against an invisible enemy. [They] just stared at the numbers for a while. It was the third winter since the nuclear accident. […] Decontamination was moving ahead as scheduled […] workers were wiping off radioactive material by hand. — Senior Brigade: “They’re doing a good job.” Cleaning up the houses was a key part of the plan to lure residents back. […] — Senior Brigade: “I’m looking forward to radiation levels going down after the cleanup, when the decontamination is finished it will be safe for people to return. We can start rebuilding our lives.”

Obama resets the 'pivot' to Asia
By M K Bhadrakumar

The dust has settled down sooner than one would have thought on the US President Barack Obama's four-nation Asia tour, and the inevitable stocktaking is well under way. Obama earmarked an entire week for the trip that took him to Japan, South Korea, Malaysia and the Philippines.

Without doubt, it was a major statement of the Obama administration's strategic foreign-policy reorientation. But that statement is already lending itself to varying interpretations because of endemic geopolitical realities and priorities in the

contemporary world situation. The sharpest criticism is, interestingly, appearing in the US itself.

The salience of the tour came to be that China didn't figure in Obama's itinerary and this is at a time when Beijing has locked horns with America's key allies in the East and South Asia Seas. Clearly, China was the elephant in the room.

As the New York Times noted, "The balancing act has become even trickier because of the sharp deterioration of America's relations with Russia. Perhaps no country has more to gain from a new Cold War than China, which has historically benefited from periods of conflict between the United States and Russia."

To be sure, Obama spoke to different audiences simultaneously. On the one hand, he tried to reassure US allies of its commitment to remain supportive at a juncture when there are fears that China could exploit the prevailing international climate to become even more assertive or even belligerent on the Pacific Rim.

On the other hand, while vowing to defend the allies, the US would expect them to show restraint themselves and even insisted that Washington sought solid relations with Beijing and hoped to enlist the latter to find solutions to various issues.

Furthermore, while underscoring at all available opportunities during his tour that "we're not interested in containing China", Obama also insisted that the US is interested in China "being a responsible and powerful proponent of the rule of law" and expected that in such a role China "has to abide by certain norms."

Getting the balance right
The jury is still out whether Obama got the balance right in reaffirming America's support for allies while carefully calibrating his statements to avoid giving an impression that the US sought to isolate or antagonize China. To quote New York Times, "So far, China's reaction has been muted … China, some analysts said, is content not to pick a fight with the United States at a time when events, in Asia and elsewhere, seem to be going in its favor."

Broadly, there are two perspectives possible on Obama's Asian tour, which are not necessarily contrarian. One, this was a catch-up appearance by Obama following his failure to show up last October at the string of ASEAN-related summit meetings, especially the East Asia Summit and the Asia-Pacific Economic Cooperation.

Obama failed to attend the summits due entirely to America's domestic preoccupations over the budgetary crisis on Capitol Hill and the government shutdown.

But Obama's absence from the ASEAN-related conclaves was perceived in geopolitical terms in the Asia-Pacific, especially the Southeast Asian region, as a telltale sign of the wavering commitment in Washington to the "pivot" to Asia, which in turn spawned gnawing worries in the minds of US allies. At the ASEAN-Japan summit in Tokyo early this year, the Southeast Asian countries refused to be persuaded by the Japanese entreaties to take an open stance against China.

Indeed, the contrast couldn't have been sharper: while the government shutdown in Washington presented a picture (rightly or wrongly) of a superpower in inexorable decline and cast the US political system itself in poor light as increasingly dysfunctional, China promptly capitalized on Obama's absence by the grand unveiling of its strategy to reopen the so-called Maritime Silk Road (that has a history of over two thousand years), devolving upon a promise of massive investments by Beijing in the economies of its ASEAN partners, which America would be hard-pressed to match in sheer financial terms.

A second perspective on Obama's Asian tour builds on the above perception that the "pivot" already has lost its shine and a "reset" is in order. The heart of the matter is that the world has changed unrecognizably in the past couple of years since the former US secretary of state Hillary Clinton unveiled the "pivot" strategy in her famous article in the Foreign Affairs magazine. In retrospect, the pivot turned out to be Clinton's swan song, so to speak.

Strong on rhetoric
Clinton is no more in the driving seat when it comes to American foreign policy, and in the highly personalized business of policymaking in Washington, her absence through the past one year appears to have made all the difference to the pivot strategy. Furthermore, the original architects of the pivot strategy - apart from Clinton, Defense Secretary Robert Gates, National Security Advisor Thomas Donilon and Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell - they have all left the administration.

Having said that, there was always a question mark as to how far Obama himself genuinely felt passionate about the strategy as such or, more importantly, as regards its main thrust on "militarization", although he has been consistent in his emphasis on the crucial importance of the US tapping into the phenomenal growth of the Asian region in the world economy.

Without doubt, there is growing evidence that in his first term as president, Obama didn't really subscribe to many of the things that Clinton or Gates espoused. Indeed, he had misgivings about the "surge" in Afghanistan. Again, he chose a path ultimately on Syria that wouldn't have found favor with Clinton. (In fact, although she had left office, she still advocated US military intervention in Syria.)

Most certainly, Clinton's other pet project, the "new Silk Road" in Central Asia, has already become distant memory. There is even talk that Obama may be willing to consider a presence of fewer than 5,000 troops in Afghanistan. The opening to Iran has been almost exclusively an Obama initiative.

The point is, how far has Obama been really committed to the pivot strategy? There are no clear answers here, although conceptually and geopolitically, the strategy serves the US's long-term interests. There cannot be two opinions that Asia is a crucial arena for the US' global strategies, being a region which accounts for 40% of the world's population and a third of the world's global Gross Domestic Product (in purchasing-power parity terms).

However, as it happened, excessive attention came to be placed on the "militarization" of the pivot strategy, which instead of deterring China, held out the danger of precipitating a confrontation with China at some point. On the other hand, doubts have arisen over the long-term execution and sustainability of the strategy, given the grim reality that a fiscally-stretched US may be hard-pressed to locate the budgetary means to fund the pivot.

US allies in Asia already complain that the pivot is strong on rhetoric but lacking in substance. Indeed, the US deployments so far have been mostly symbolic. Meanwhile, the American commanders during recent Congressional hearings have been openly acknowledging that the US armed forces are being starved of resources.

For instance, in his testimony before the House Armed Services Committee in Washington last month, Commander of the US Pacific Command Admiral Samuel J Locklear said:

Budget uncertainty has hampered our readiness and complicated our ability to execute long-term plans and to efficiently use our resources … Due to continued budget uncertainty, we were forced to make difficult short-term choices and scale back or cancel valuable training exercises, negatively impacting both the multinational training needed to strengthen our alliances and build partner capacities as well as some unilateral training necessary to maintain our high end war-fighting capabilities. These budgetary uncertainties are also driving force management uncertainty. Current global force management resourcing, and the continuing demand to source deployed and ready forces from USPACOM AOR to other regions of the world, creates periods in USPACOM where we lack adequate intelligence and reconnaissance capabilities as well as key response forces, ultimately degrading our deterrence posture and our ability to respond.
While referring to the pivot strategy in Asia, General John Paxton, assistant commandant of the Marine Corps posed a key question during a recent speech, "Do we [US] have enough people and enough ships to do it?" He lamented, "We are on our way … to a less than a 300-ship navy. We are on our way to a 175,000 man Marine Corps."

According to General Paxton, the Marine Corps needs 54 amphibious ships to do its job, while current plans call for only 38, and that too is likely to shrink to 33. He asked, "With the dollars we have, and the ships we have and the aircraft we have, and the people we have, are we going to be ready to do what we need to do?"

Nuanced demeanor
In political terms, there is lingering uneasiness among US allies about the depth of Washington's resolve, notwithstanding remarks by the US President Barack Obama's hosts during his Asia tour that they were reassured by his words. To quote Narushige Michishita, a Japanese expert on security policy:
The wording of his [Obama's] statements was OK, but if you look at his demeanor and tone, he was very nuanced and trying not to get entangled in disputes with China.
This "nuanced" approach suits China fine, because it always took pains to maintain that its interests in the East China Sea are unrelated to those in the South China Sea, and vice versa. While not a mere naval strategy, China's two-fold objective is to make good its territorial claims while at the same time ensuring unimpeded strategic breakout beyond the constraints of the so-called First Island Chain that could be deemed to run from Northeast China through Japan and the Ryukyu archipelago, the Philippines and down to the Strait of Malacca.

Meanwhile, the Southeast Asian capitals are staying on the sidelines when it comes to tensions in the East China Sea, and they prefer to adopt a less direct and non-confrontational approach to China and keep tensions in check in the South China Sea.

The South Asian capitals have by and large kept a studied silence over the tensions between China and Japan. Simply put, they aren't interested in pushing the envelope in the East China Sea and would opt for a differentiated approach that serves the interests of maritime relations in the South China Sea.

Obama offered a clue to his own thinking on the 'pivot' strategy at his press conference in Manila at the fag-end of his Asia tour when he gave "the general takeaway" from his regional tour:
Our alliances in the Asia Pacific have never been stronger. Our relationship with ASEAN countries in Southeast Asia has never been stronger. I don't think that's subject to dispute.
But what followed was something quite extraordinary - the core tenets of what can probably be called by now the "Obama Doctrine". Obama held forth at some length to dispel the criticism in America regarding his foreign policy. Its application to the pivot strategy has stunning implications, and the important thing is that Obama articulated these thoughts during his Asia tour.

The bottom line, he said, is that he is being criticized at the failure to use military force, which is uncharitable because military force is something that needs to be deployed only as a last resort and it ought to be deployed wisely. Besides, he said that the American people have no interest in policies that "go headlong into a bunch of military adventures" that would have no bearing on the US's core security interests.

Obama elaborated, "[T]here are disasters and difficulties and challenges around the world, and not all of those are going to be immediately solvable by us [US]." Therefore, the prudent thing to do is to "look at what is it that is going to advance our security interests over the long term, to keep out military in reserve for where we absolutely need it." 

Obama went on to stress that military force is only one of "the tools we've got in the toolkit" and if there are occasions where "targeted, clear actions can be taken that would make a difference, then we should take them." But otherwise, it is the diplomatic track that ought to be given priority.

Obama claimed that this foreign-policy approach is paying off and "it is fair to say that our alliances are stronger, our partnerships are stronger, and in the Asia Pacific region, just to take one example, we are much better positioned to work with the peoples here on a whole range of issues of mutual interest."

He concluded that the focus, therefore, ought to be on "steadily" advancing the interests of the American people and the US's

partnerships. The stress was on an incremental approach.

Ironclad pledge
It is extraordinary that Obama spoke in this vein at the concluding lap of his Asia tour, which was being widely looked to locally for signs of a robust confirmation that America-led bilateral security relationships remained the backbone of peace and stability in the region and that was what the pivot primarily aimed at.

In a nutshell, Obama underscored that he eschewed military adventures abroad in countries engaged in messy conflicts, and wanted instead to focus more on diplomacy and trade.

This is perfectly understandable because Obama hopes to spend more time on domestic issues at a time when the economy is barely recovering and when social disparities are growing. Call it one of the vagaries of history, or the decline of a superpower, but Obama hopes to pay attention only on foreign-policy issues that affect the US's core interests.

Indeed, Syria has been a glaring example of how the "Obama Doctrine" is at work. We know that he nixed the proposal for arming and organizing vetted moderate Syrian opposition commanders - something that was collectively proposed by the then secretaries of state and defense Hillary Clinton and Leon Panetta, Chairman of the Joint Chiefs of Staff Martin Dempsey and the then CIA Director David Petraeus. Later, he chose the path to work with Russia on eliminating Syria's chemical weapons rather than embark on a military strike.

Of course, the detractors are galore - be it on Obama's approach toward the Syrian conflict or on relations with Russia and the 'pivot' strategy in the Asia-Pacific. As an American columnist Trudy Rubin wrote:

[S]ending the Ukrainian army MREs - yes, more of them - just makes us look foolish. People are asking whether, as was the case with those sent to the Syrian rebels, their sell-by date is about to expire … In Manila, Obama seemed not to recognize that China is watching. So are America's Asian allies, who have to judge whether Washington will support them if Beijing makes aggressive moves… That kind of approach will convince Moscow, Beijing and Tehran that Obama can be ignored, which will create new foreign-policy headaches. It signals a president who isn't really interested in the foreign-policy game.
Unsurprisingly, an opinion piece in the Philippine Daily Inquirer framed the big question as the US president headed home: "Is Obama pledge really ironclad?"

The fact of the matter is that the Enhanced Defense Cooperation Agreement (EDCA) signed during Obama's visit to Manila defines a new mode of security relationship between the two countries and revises the framework of the expanded presence of US forces in Philippine military bases. It is perceived by many as a counterweight to Chinese territorial expansion in the South China Sea as well as to meet the Chinese challenge to the US hegemony in Asia-Pacific.

The EDCA emanates out of a US commitment to defend the Philippines, which, in Obama's words, is "ironclad … because allies never stand alone." But how much ironclad is Obama's commitment? In a symbolic speech to Filipino and American soldiers at Fort Bonifacio last Tuesday before his departure after the overnight stop in Manila, Obama quoted from the 1951 Mutual Defense Treaty (MDT) and said the two countries had pledged to defend each other "against external attacks, so that no potential aggressor could be under the illusion that either of them stands alone." He added that the "deepening of our alliance is part of our broader vision for the Asia-Pacific."

On the other hand, Obama didn't give a categorical answer when asked after the signing of the EDCA whether the 1951 MDT would apply in case the Philippines' territorial dispute with China escalated into an armed confrontation. He sidestepped neatly and said China had an "interest in abiding by international law" and that "larger countries have a greater responsibility" doing so. Obama added, "Our goal is not counter China. Our goal is not to contain China."

Throttled in the cradle
The big question will be how China perceives the reset of the pivot strategy by Obama. While Beijing is intensely watching Obama's policies on Ukraine, given its far-reaching impact on the world order, it will be wrong to rush to judgment that China views all of American policy through the prism of the most difficult crisis of the day, rather than taking the longer view.

The coming weeks and months will show whether Beijing would choose to exploit the recrudescence of old European enmities (and America's entanglement in them, being a congenital Atlantic power), to lean hard on China's neighbors in the region.

So far, the official Chinese reaction by the Ministry of Foreign Affairs has narrowed down to a perfunctory objection to Obama's assertion that the US-Japan alliance treaty also covers Senkaku.

As for the 10-year Enhanced Defense Cooperation Agreement between the US and the Philippines, a commentary by Xinhua over the weekend analyzed that "the next few days could actually derail the implementation of the agreement", given the groundswell of opposition in the Philippine Senate and House of Representatives that their country "would not be getting much in return" for "virtually allowing the whole country to be an American military base."

The paradox cannot be lost on Beijing that although Obama is as "Pacific" an American president as could be in a long while, his presidency is still tied by umbilical cords to trans-Atlantic concerns and constrained by its involvement in the never-ending exigencies in the Middle East, Latin America and elsewhere.

In a sense, therefore, it is possible to say that Obama's tour is a valiant attempt to revert US Asia-Pacific policy to a "pre-pivot" mode - which was never going to be easy, because Obama also has to cope with the rise in regional tensions following the unveiling of the pivot two years ago. The latest standoff between China and Vietnam becomes a test case.

Without doubt, the fizz has gone out of the US' pivot strategy, as unveiled by the then secretary of state Hillary Clinton. Arguably, Beijing throttled the pivot in the cradle in 2012 on the Scarborough Shoal. The 'pivot' never really regained its verve after the US' failure to militarily intervene.

Japan's Prime Minister Shinzo Abe subsequently has tried his best to inject fresh life into the "pivot", but then came the Chinese move to create the Air Defense Identification Zone (ADIZ). China promulgated the ADIZ but then, curiously, it wouldn't enforce it. Suffice to say, Beijing has been reactive. Interestingly, Obama's Air Force One flew through the ADIZ after filing a routine fight plan.

The core issue comes down to the US' willingness to engage in a conflict with China, which could well happen if the US is bent on perpetuating its dominance of the region. But Obama understands the severe limitations in going to war with China. During his recent tour, he was throughout taking a position of strategic ambiguity when directly confronted with that question.

It is a moot point why Obama wouldn't give a blanket, all-weather commitment to protect Japan or the Philippines when he is prepared to do that in the case of North Atlantic Treaty Organization (NATO) allies. But then, the US, including the Obama administration, has never made any bones about the fact that the NATO is of pivotal importance to America's global strategies. US Secretary of State John Kerry made a pretty strong valedictorian speech at the 50th Munich Security Conference in February to emphasize the point.

Ironically, the US is better placed today in Asia than it has been in the recent decade or two and why should it upset the apple cart? China's growth is integral to the recovery and rejuvenation of the American economy. China is potentially the principal source of investment in the American economy. China's proposed reforms in the direction of opening up the financial system and domestic market are hugely attractive for the American business. China's cooperation is vital to contain the North Korea problem; to conclude an Iran nuclear deal; to stabilize Afghanistan, and so on.

Again, India has transformed as a close friend of the US and there is huge untapped reserve in the US-Indian partnership. Malaysia has turned the corner and has left behind the openly anti-American decades in its foreign policy. Myanmar is moving out of China's orbit and is manifestly eager to engage the US. Vietnam has buried the old enmities and looks at the US as a counterweight to rising China, which creates more space for Hanoi to negotiate with Beijing.

Most certainly, the specter of nuclearization of the Far East haunts Beijing as well as Washington. Again, the US too feels uneasy about the surge in Japanese militarism, as indeed China (and South Korea). As for Beijing, the burgeoning trade and investment relations with the US (and the West) are critical to the realization of China's Dream. Thus, on the whole, the US-China interdependency could become a factor of regional stability in Asia-Pacific.

Therefore, if a reasonably good case can also be made that the present Chinese leadership consists of cool, rational, thinking people, and, secondly, assuming that China has set its national priorities of reform in all earnestness, Obama is doing the right thing to initiate a reset of the pivot strategy.

Era of retrenchment
Obama is not going to compel China to accept US leadership, which he knows is an unachievable goal anyway. During the remainder of the Obama presidency, a US-China confrontation can be safely ruled out.

Besides, it isn't at all as if the US's Asian partners do not have a mind of their own and are blithely taking shelter under the American umbrella. Expanding the flourishing trade and investment ties with China is a top priority for each of them.

Obama failed to meet the principal objective of his Asian tour, which was to secure agreements on the Trans-Pacific Partnership (TPP), a US-dominated free-trade area. The TPP is facing stiff resistance from Japan and Malaysia, in particular.

By the way, not once during his Asia tour, Obama touched on China's "assertiveness", an argument that originally provided the raison d'etre for the pivot strategy. Obama's emphasis was on China's adherence to international law and an overall conduct with a sense of responsibility, which is only expected of big powers.

The notion of China's assertiveness was a flawed one in the first instance. The plain truth is that according to World Bank estimate, China is expected to replace the US this year as the world's largest economy on a "purchasing power parity" (PPP) basis. It means that very soon, China will have a bigger economy than of the US for purposes of military spending.

In PPP terms, China's economy can be 60% bigger than the US economy in a decade. Clearly, the talk about assertiveness has lost relevance. Containment of China, or the pivot to Asia, is no longer an affordable proposition, either. As a Guardian columnist put it recently, "Are Americans prepared to give up social security or Medicare in order to maintain US military supremacy in Asia?"

The heart of the matter is that paradigm shifts often take time to sink in. There is a shift in the US foreign policies taking place under the Obama presidency, which is away from its 'militarization'. David Sanger of the New York Times recently wrote, "Obama acknowledges, at least in private conversations that he is managing an era of American retrenchment."

Equally, the Asian region is rapidly transforming and while it is in need of more regional security contributions from the US, it is the resident states that are going to make the ultimate difference in the medium and long term. The economic trends are making the pivot unsustainable and the need arises for the US to negotiate more with China, promoting peace and stability by working with its allies for a regional framework that can manage tensions in the contested neighborhood.

It involves sharing power with China, which may not be easy but is becoming unavoidable and it could even have a pleasant outcome, as the end result could be more social and economic progress and reduced risk of wars.

Crimean conquest shows China the way
By Euan Graham

Moscow's annexation of Crimea and continuing tensions over Ukraine are being felt primarily as a crisis in European and US relations with Russia. Yet Russia's challenge to the international order has global ramifications that extend to East Asia. Implications for the region can be understood in terms of three broad categories: demonstration, distraction, and disruption.

Some of Moscow's East Asian neighbors may be concerned about the direct threat that a revived, recidivist Russia could turn its focus toward them. The reality, however, is that Moscow is more concerned with maintaining its territory east of the Urals than expansionist adventures. Russia's Far Eastern demographic

decline is especially pronounced, while its borders are largely fixed.

The "demonstration" value of Russia's recent actions, although indirect and contingent, carries more serious implications for East Asia. China is not the only relevant regional audience, but it is the most important given Beijing's prickly relations with the West, its budding partnership with Moscow, and rising territorial tensions with other Asian neighbors.

With the UN Security Council immobilized by Russia's permanent veto, Moscow has shown, first, that it can use undeclared military force against a neighboring state with virtual impunity, in open defiance of past treaty commitments and Western protests. Secondly, the March 16, 2014, referendum in Crimea and its rapid incorporation into the Russian Federation presented the West with a fait accompli "land grab" that poses fundamental challenges to the international order.

Irrespective of the exceptionalist arguments used to justify its actions in Crimea, Russia has set a disturbing precedent that goes well beyond the narrower objectives of its 2008 conflict with Georgia. Given the overlap of territorial disputes and diaspora populations across North and Southeast Asia, loose parallels could be drawn to justify similar strong-arm tactics.

From an operational viewpoint, Russia's success at gaining control of Crimea quickly and almost bloodlessly reflected four unusual advantages: the presence of pre-positioned forces in military bases; deep local knowledge; substantial popular support; and confusion faced by the new authorities in Kiev. Crimea is therefore not an easily transposable template for forcible takeovers.

Yet a territorial fait accompli on this scale inevitably commands demonstration value. China's Global Times, for example, drew the lesson that "It is not the ballots of Crimean residents that decide the fate of this region, it is Russia's warships, jet fighters and missiles," prompting the wider conclusion that "in the whole field of international politics (p)ower struggles instead of referendums are the decisive element".

The Global Times is not a proxy for China's official thinking; the tenor of China's interventions at the UN was more equivocal, stressing the importance of sovereignty and territorial integrity. Nonetheless, those advocating a harder line on maritime territorial claims may conclude that the Crimean crisis presents both a precedent and a window of opportunity to press China's sovereignty claims harder, especially in the South China Sea where Beijing is currently subjecting the Philippines to coercive tactics.

The takeover of Crimea has imposed tangible international costs on Russia, in the form of dented economic confidence as well as targeted sanctions imposed by the West. But in his March 17 Kremlin speech, President Vladimir Putin essentially claimed victory in his own terms, invoking the recovery of "historically Russian land" and protecting compatriots in the former Soviet diaspora.

Putin's Crimean gambit is not universally supported in Russia, as revealed by a rare anti-government demonstration in Moscow. But the Russian president has unquestionably received a boost to his domestic standing. Putin's emotive framing of Russia's intervention in Crimea as standing up to Western "hypocrisy" and "aggression" will resonate in China and beyond.

The second area of fallout concerns the risk of prolonged distraction, as Western countries devote more political resources to deal with the ongoing crisis over Ukraine. For the European Union, Russia's proximity ensures that it will divert attention that could otherwise be devoted to East Asia, stymieing Brussels' efforts to diversify its narrowly economic regional profile. For the US, a crisis in US-Russia relations is yet another problem added to a burgeoning global list of distractions from the intended "rebalance" to Asia.

The more acute risk of distraction, however, links back to the demonstration value of Russia's actions in Crimea, namely the perception that a window of opportunity has been opened by Russia's actions, within which miniature "land-grabs" can be attempted in the South China Sea at reduced cost.

Distraction aside, there is the diplomatic fallout to consider, including implications for China's partnership with Russia under President Xi Jinping. Beijing abstained from the March 15 UN Security Council Resolution criticizing the then upcoming referendum in Crimea. However, Russia's permanent veto is likely to spare Beijing's further blushes at the UN. Fallout could nonetheless spread to US-China relations if Washington and Brussels press hard for punitive action against Moscow outside the UN.

In his Kremlin speech, Putin was careful to thank China for its diplomatic support over Crimea, appealing to common anti-Western sentiments with the aim of sharpening China's choices. If Beijing elects to prioritize solidarity with Moscow over its relations with the EU and Washington, the resulting alignment could take on more than short-term significance. Cooperation with Russia is also important for China's plans to leverage economic connectivity with Central Asian states. Beijing will not want to jeopardize this.

For Japan, Crimea has already had a disruptive impact. Early in Prime Minister Abe Shinzo's second term, Russia was identified as a priority country for enhanced cooperation, Moscow being one of his earliest visits. After a slow start, Japan-Russia cooperation appeared to be yielding progress across a broad front. However, Japan, also feeling the weight of US pressure, has refused to recognize the Crimean referendum and has frozen progress on a new investment agreement, cooperation in outer space, and an accord for preventing dangerous military activities.

Diplomatic disruption could extend beyond the key bilateral ties to Russia's expanded interface with East Asia's multilateral architecture, including membership of the East Asia Summit and the ASEAN Defense Ministers Meeting Plus. Russia, sharing a land border with North Korea, also has a seat at the semi-defunct six-party talks. Moscow's role in these forums remains essentially peripheral, though its continuing participation alongside the US could prove tricky to isolate from tensions over Ukraine.

Asian countries' appetite for dealing with Moscow as a long-term energy supplier could wane in the aftermath of Crimea's annexation, as it is doing in Europe. Increased political risk associated with Russia could weigh on Northeast Asia's commercial interest in Arctic shipping routes. Moscow will have to work harder to persuade Asian partners that it is business as usual, even as the region becomes more important to Russia economically.

Abe says it is time to revise pacifist constitution

Prime Minister Shinzo Abe on Wednesday reaffirmed his resolve to change the nation’s pacifist constitution imposed by the U.S. after Japan’s defeat in World War II.
In a New Year message to the nation, Abe said: “As it has been 68 years since its enactment now, national debate should be further deepened toward a revision of the constitution to grasp the changing times. Now is the time for Japan to take a big step forward toward a new nation-building effort.”
Abe said the constitution, which limits Japan’s military to self-defense could be amended by 2020, “will have been revised” by 2020 when Tokyo hosts the Summer Olympics.
His comments come days after he enraged Asian neighbors and disappointed Washington by visiting a Tokyo shrine honoring the country’s war dead, including World War II leaders, and been seen abroad as a symbol of Japan’s militaristic past.
“By 2020, I think Japan will have completely restored its status and been making great contributions to peace and stability in the region and the world,” he said.
He added that Japan’s elevated status could possibly help Asia become a “balanced and stable region”.
Abe took power a year ago in an election landslide as Japan faced China’s increasingly assertive military posture amid a fierce territorial dispute with Beijing over Tokyo-controlled islands.
He initially focused on improving the economy with stimulus packages, mixing big-spending and easy money policies.
In recent months, he has turned to his more conservative agenda, passing a state secrecy law which critics say is a threat to democracy in Japan.
On his security policy, Abe said, “We will resolutely protect to the end Japan’s territorial land, sea and air.”
Abe has long agitated for the amendment of a key article in the constitution that limits its military to self-defense and bans the use of force in settling international disputes.
The country’s well-funded and well-equipped military is referred to as the Self-Defense Forces (SDF).
Abe has said he would like to look into making the SDF a full-fledged military, a plan that sets alarm bells ringing in Asian countries subject to Japan’s occupation in the first half of the 20th century.
In his first policy as prime minister last year, Abe said he would look to change a provision which requires a two-thirds majority in the Diet to amend the basic law.
In his New Year message, Abe said the launch of a U.S.-style National Security Council in December would help promote his “proactive pacifism” as a “‘signboard of the 21st century’ which should be borne by our country.”

Is Japan Developing a Nuclear Weapons Program?

Huge reprocessing plant could be used to stockpile plutonium for the future manufacture of nuclear weapons.

In-depth Report: 
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The Wall Street Journal published an article on May 1 entitled “Japan’s nuclear plan unsettles US.” It indicated concerns in Washington that the opening of a huge reprocessing plant could be used to stockpile plutonium for the future manufacture of nuclear weapons.
The Rokkasho reprocessing facility in northern Honshu can produce nine tonnes of weapons-grade plutonium annually, or enough to construct up to 2,000 bombs. While Japanese officials insist that the plutonium will be used solely to provide nuclear power, only two of the country’s 50 nuclear power reactors are currently operating.
The Journal article reported that Tatsujiro Suzuki, vice chairman of the Japan Atomic Energy Commission, discussed the issue last month with senior US officials, including Deputy Energy Secretary Daniel Poneman and Assistant Secretary of State Thomas Countryman.
Their message, as paraphrased by Suzuki, was: “Allowing Japan to acquire large amounts of plutonium without clear prospects for a plutonium-use plan is a bad example for the rest of the world.” In a separate article in the Japan Times, Suzuki declared: “It was an unprecedentedly severe reaction.”
According to the Wall Street Journal, Washington was concerned that other countries would follow suit. “US officials believe Japan’s neighbors, particularly China, South Korea and Taiwan, are closely monitoring Rokkasho and its possible commissioning to gauge whether they also should seek to develop their own nuclear-fuel technologies, or in Beijing’s case, expand them,” it stated.
The South Korean government is already pressing the US to alter the nuclear co-operation agreement between the two countries to allow plutonium reprocessing and uranium enrichment—technologies that can be used to produce fuel for power reactors or for nuclear weapons. While South Korean negotiators have assured Washington that Seoul is only seeking to manufacture fuel for its power reactors, senior figures inside the ruling right-wing Saenuri Party have publicly called for the country to build its own nuclear weapons to counter North Korea. Last month, South Korea acquiesced to US demands for a delay and prolonged the existing co-operation agreement for another two years.
As with South Korea, the Obama administration’s real concern over the Rokkasho reprocessing plant is that Japan is edging toward building its own nuclear arsenal. If either country did so, it would trigger a nuclear arms race in the region. A nuclear-armed Japan would dramatically alter relations in Asia, as it would be less dependent on the US militarily and more able to independently prosecute its economic and strategic interests.
Japanese Prime Minister Shinzo Abe, who took office in December, is a right-wing nationalist who has called for a “strong Japan” and a “strong military.” He has not openly supported the building of nuclear weapons, but has called for the restarting of Japan’s nuclear industry, which was largely shut down after the 2011 Fukushima nuclear disaster.
The Abe government is well aware of the deep-seated hostility in Japan, especially in the working class, to the construction of nuclear weapons. That opposition stems not only from the devastation of the cities of Hiroshima and Nagasaki by US atomic bombs in 1945, but also from the repression and crimes committed by Japan’s wartime militarist regime.
Within Japanese ruling circles, however, there has been a barely concealed ambition to have a nuclear arsenal. Japan’s extensive nuclear industry was established in part to ensure that the country had the capacity to build such weapons. Leading members of Abe’s Liberal Democratic Party (LDP) have on more than one occasion sought to open up a public debate on the issue.
Abe’s finance minister Taro Aso, a former prime minister, declared in 2006 that there was nothing wrong with discussing whether Japan should possess nuclear arms. A Japan Times article last month, entitled “Nuclear arms card for Japan,” noted that politicians who had advocated nuclear weapons, officially and unofficially, included former prime ministers—Nobusuke Kishi (Abe’s grandfather), Hayato Ikeda, Eisato Sato, Yasuo Fukuda and Aso.
During the election campaign last year, Shintaro Ishihara, who was an LDP member until last year and now leads the extreme nationalist Japan Restoration Party, declared: “It’s high time Japan made simulations of possessing nuclear arms,” saying that it would be a form of deterrent against China. He has previously insisted that Japan had to have nuclear weapons.
The same Japan Times article reported that the Japanese government in September 2006 compiled an internal report examining “the possibility of domestically producing nuclear weapons.” A Defence Ministry source told the newspaper that the secret document had been produced by the Foreign Ministry and had aroused serious concerns in the US State Department.
According to the article, the report found that it would take three to five years and 200 to 300 billion yen ($US2.2 to 3.3 billion) for Japan to manufacture nuclear weapons. A significant obstacle was the impurity of the plutonium produced in Japan’s commercial power reactors. The Rokkasho reprocessing facility, which has taken more than $US21 billion and two decades to build, would be able to provide weapons-grade plutonium. No date has been set for its start up but the Japan Atomic Energy Commission and the plant’s operator, Japan Nuclear Fuel, say it could be as early as October. However, the Nuclear Regulation Authority has indicated that safety guidelines will not be ready until December.
At present, it appears unlikely that the Japanese government has made a decision to build nuclear weapons. To do so would require ending international inspection of its nuclear facilities, withdrawing from the Nuclear Non-Proliferation Treaty and abrogating other nuclear agreements, including with the US. Yet, the issue is clearly being discussed in ruling circles and preparations are being made.
The Obama administration might not want a nuclear-armed Japan, but its aggressive “pivot to Asia” aimed at containing China, has encouraged right-wing, militarist sections of the ruling elite in countries throughout the region. Abe has already announced the first increase in the Japan’s defence budget in a decade and has declared his determination to counter, including militarily, any Chinese move to claim disputed islands in the East China Sea.
In March and April, Washington deliberately inflamed tensions on the Korean Peninsula, provocatively sending nuclear-capable strategic bombers to South Korea, supposedly to counter North Korean threats. The US sought to use the crisis to put pressure on China for economic and strategic concessions, including to rein in Pyongyang.
However, the Abe government also exploited the North Korean “threat” to deploy anti-missile systems in Japan, and establish a political climate of fear to justify military rearmament—including potentially with nuclear weapons. The US is directly responsible for creating the conditions for a nuclear arms race in Asia that would enormously heighten the danger of conflict and war.

With debt skyrocketing , Fukushima slowly killing the population and War not the panacea or distraction the Japanese Elites may seek out of desperation...... how long will it be before the people in Japan become reflective ?