Wednesday, 10 November 2010

Japan needs space, no space given

After President Medvedev's visit to the Kurils, or Northern Territories a few days ago on the back of China's protest in the East China Sea, Japanese people and policy makers got even more rattled. Not withstanding the legality or otherwise of claims (see me here), it is clear that everyone needs to calm down and stop being provocative.

In that regard, a big 'Thank You China' for sending another survey ship into disputed areas.


This is just dumb. The fact that the Chinese survey ship turned around and left once requested by the JCG shows that China is at least a little sensitive to the fact that it can ill afford another run in Japan. But if these type of events increase, another 'accident' is almost guaranteed.



Monday, 8 November 2010

More thoughts on Senkaku video

There is an awful lot in the videos are there implications. I am stilling trying to sort it all out - I will try to focus on three questions here:

1/Why did JCG initally act to repell the MinJinYu?
2/Was JCG action illegal?
3/Does Japan's act constute a challenge to the status quo?

1. JCG initially warned the MinJinYu that it was in Japanese Terrority and to retreat. If the MinJinYu were within Japan's EEZ it would be permitted to fish without a permit subject to Japanese regulation. If the MinJinYu were in Japan'ss EEZ then the JCG can board and inspect/detain etc.

But the Minjinyu was within the Joint Measure area.

The JCG's action therefore is strange as only China could act (or give permission, more*) against the Minjinyu for breach of fishery. The point is that the JCG did not ask to inspect, they asked the Minjinyu to "move along please." This is part of Japan's posture of demonstrating "effective control" over the islands.

Normally, when asked by a JCG boat with a Mk44 Bushmaster II 30mm autocannon the fishing boat leaves- because that is Sane even though it acknowledges JApan's effective control.

CAptain Zhan is however out of control - and rams the JCG boat. Now this puts the JCG in a bind. In order to continue to demostrate effective control, they have to arrest the Minjinyu for "interfering with official duties" of the JCG, i.e. public safety on the sea.

But in order to do so, the Japanese side will want China to acknowledge its effective control by giving permission to arrest the Minjinyu. The 12 hour wait before the arrest is likely due (in some part) to the Japanese side trying to get the Chinese to grant approval - only to be rebuffed. China would not acknowledge that, would not want to be seen allowing the Japanese to arrest its citizen in its (PRC's) territory. China has to say no.

Now what will Japan do? Capt. Zhan's action has tested the informal situation of Japan's effective control. The decision Japan makes here to arrest or not to arrest determines whether or not Japan really believes the Senkaku Sea area is its territory or not, as such it has formalized the informal and unspoken situation of competiting interpretations in Beijing and Tokyo - something probably neither side was happy about (China did not need another dispite after ARF).

Thus Japan decides to arrest, without China's permission, in order to maintain the situation of effective control.

in answering the above three therefore,

1/Why did JCG initally act to repell the MinJinYu? In order to maintain effective control

2/Was JCG action illegal? Not if the area is actually Japanese EEZ, but under current understandings probably yes. Although, illegal does not mean unreasonable!

3/Does Japan's act constute a challenge to the status quo? Yes. Although China's not giving permission to arrest and subsequent protest means that the status quo is unchanged by Japanese de facto challenge.

The sad thing is that this could have been handled so much better by both sides. Japan could have not arrested Zhan and detained him with permission from the Chinese by saying (privately) that although something needs to happen to Zhan, it does not consitute challenge to status quo. China knows about deterence. Japan can not simply let a boat which ramms its officials to get away. An understanding was possible here - at least with hindsight.

random thoughts over, back to work.

Tuesday, 2 November 2010

TPP vs the Farmers:

In recent weeks, Kan Naoto has sounded out the possibility of Japan joining the TPP.

Today, the GOJ declared that an Agriculture Reform Promotion Headquarters would be set-up within the National Strategy Office. Together with other reforms to this Office, it is clear that Kan is gunning to run through this office the painful reforms necessary to get Japan on the TPP bandwagon and open up the Japanese economy.

Yamada and other pro-Agriculture voices within the DPJ aside, Kan at least seems determined to push it.

http://www.asahi.com/politics/update/1102/TKY201011010535.html?ref=rss


Monday, 1 November 2010

Dietmen view video of Senkaku collision

The Japanese Diet today saw the video taken by the coast guard of the collision. see, http://www.asahi.com/politics/update/1101/TKY201011010172.html

At least the first collision at 10.15am seems to be a deliberate "attack" act. The Japanese Yonakuni (1350t) is nearly 10 times the size of the Chinese fisher (166t). Damage taken by the Yonakuni is to the aft of the boat belie a Japanese "attack" on the fisherboat (Bin Pu Yu, I think).

The second collision is harder to say, as the Fishermen were clearly running home with a Japanese boat in pursuit. There is a chance that Japanese boat "Mizuki" tried to cut off the BinPuyu. Again, the marking suggest differently (drag in wrong direction) but I am not a forensic analyst. It is likely however that the Binpuyu could have either steered to avoid or simply decelerated to avoid the collision.

The 11 hours wait between stopping the boat and arresting the captain also suggest that the MOFA were involved, as initially thought. The decision potentially an act of Maehara Seiji.

The location of the collisions is also revealing, as is the site of the formal arrest. The decisions here suggest that Japan clearly thought it had authority although see, http://www.eastasiaforum.org/2010/09/30/china-japan-trawler-incident-japans-unwise-and-borderline-illegal-detention-of-the-chinese-skipper/

Thursday, 21 October 2010

Maehara scraps the 1978 understanding

Foreign Minister Maehara scraps the 1978 informal understanding (with Deng Xiaoping) over the Senkakus.

Ai ya~

http://www.asahi.com/politics/update/1021/TKY201010210259.html

Tuesday, 19 October 2010

Yasukuni calms situation (reverso-land post)

Event: 66 Japanese Diet-men go to the Yasukuni Shrine (19OCT2010)11am.

Argument and Significance: This is likely to inflame China nationalist passions by conflating territory and history issues in Sino-Japanese relations. This will impact on ability to reach a political conclusion to the dispute (dragging it on).

Analysis: As Anti-Japanese protest continue to rock China (esp. Sichuan province), the decision of a number of Japanese Diet-men to visit the Yasukuni Shrine today is likely be have negative effects.

The first and most important is simply that it puts unneeded pressure on the Chinese Gov't which already calling for calm.

Secondly, it undercuts Japan gov't's own message of remaining calm, both to its own citizens and to the Chinese side.

Lastly, by conflating history and territory issues, Japan is making it easier for the East China Sea to go from a failed attempt at a 'Sea of fraternity' to an outright 'Sea of Hostility.' The Sea of Hostility is most likely to be of an unofficial nature initially, but no doubt Chinese nationalists and Japanese nationalist will be getting in their boats soon. While China has been preventing such boats from launching thus far, the CCP's ability to continue doing so is uncertain.

Thursday, 14 October 2010

Senkaku flare up prospects: China pressures Google?

While the Senkaku issue has mostly blown over, the possibility for it to flare up is marked.

Firstly, today the Diet Budget committee agreed to view the footage of the actual collision - although no decision is yet made on whether to release it. I imagine it will be released however, in time and one way or another. The timing of that decision counts, too early and flare up is possible.

Secondly, Japanese media reports that China has asked Google to list the Senkaku islands under two names, the Japanese one and Diaoyutai (chinese name) - in light of the apparent territorial dispute.

After Google's fight with China over access to the market and freedom of speak, the company has less to lose by saying no but absolutely nothing to gain either. Google will probably dual list the island on google maps as asked.

Lastly, the rare earth export issue is still not resolved. This one is really bizarre and the world needs to know what is going on here.

http://www.asahi.com/politics/update/1013/TKY201010130515.html?ref=rss

Monday, 11 October 2010

AMRO, a Thai Head?

Bandid Nijathaworn, the Bank of Thailand's (Central Bank) deputy governor for monetary stability, will resign in order to position himself for a bid as the head of AMRO - the CMIM's secretariat. Being as Thailand initially championed the idea (Chiang Mai Initiatives says it all) but was denied the secretariat due to (continuing) internal civil unrest, it is conceivable that Thailand could win the post of Governor (or whatever) of AMRO as fair dues.

That said, without Thailand firmly behind Bandid (unsure how much time PM Abhisit Vejjajiva has to push his country-man forward) and not being a greater contributor to the fund than other tier 1 ASEAN members, his chances are little more 50:50. Expect to see other challengers come forward.

Friday, 1 October 2010

Senkakus, Japan public rattled

I am still thinking through this months East China Sea issue. But for the time being some observations on Japanese public's view on the issue.

It is no longer just the usual right-wing hacks which are calling China a threat and demanding a more robust response to China’s rise, but now also the main stream which is moving into an anti-China mood.

Newspapers: The left of center Asahi Newspaper run nearly five pages of its Saturday issue with the focus on Japan’s failure to stand up to China. Yomiuri has been averaging about the same of the last week, although less hawkish that than Asahi.

TV: The popular movie director Beat Takeshi joined the chorus on Newscaster on Saturday 25th, leading discussion on China as threat together with his guests. Newscaster probably matters more for public opinion than NHK in certain sections of the less educated in Japan. Interviews with Japanese reveal that most are unhappy with their government's handling, and would prefer an more robust response in the future. Statements of fear and anxiety towards China also are shown from everyday Japanese.

Street-level observations: At train stations and on the Shinkansen, electronic billboards flash the latest news about the Senkaku islands and people stop to look and voice concerns.

Official: Official results of Japan’s public sentiment towards major countries is due out in December and no major media have yet conducted an emergency poll. (still looking).

The results of a (highly unscientific) poll conducted in China on Sino-Japanese relations which revealled 93% of Chinese think the tension will be long term is being reported as news. A feed-back loop of 'they hate us, so we can not trust them' is starting up in japanese media.

Wednesday, 15 September 2010

FTAs trigger anti-dumping

Prusa and Teh have just done the number crunching to show what was suspected all along -that FTAs trigger anti-dumping disputes between non-members. Data replicated below and link.


Table 1. Antidumping activity by FTA status

Target Country
Non-FTA Country
FTA Country
Pre-FTA
506
370
(58%)
(42%)
Post-FTA
3554
375
(90%)
(10%)


http://www.voxeu.org/index.php?q=node/5515


At this stage however, Prusa&Teh have not disaggregated their data, and there is clearly alot more here. I would be interested to see the pattern of disputes and FTAs in the Asia Pacific, in any case.

It seems that FTAs really do run trade and politics concerns together - at some stage it will be asked whether this is rational. FTA as an investment policy anyone?

Saturday, 11 September 2010

Australia: not worth it

Japan's Cabinet Office which runs the Foreign Policy Opinion Polling has had its budget slashed.

One of the unfortunate results is that polling on Japan's popular sentiment towards Australia will not be conducted this year - or subsequent years.

Currently only five countries are identified for specific treatment; America, China, Korea, Russia and India. Australia and New Zealand are not specified, instead being called 'pacific countries'.

This comes as a blow for those interested in Japan-Australia relations, and alternatives will have to be found.

Thursday, 26 August 2010

Japan's priorities shifting?

Yesterday (25-08-2010), Japan's Foreign Minister Okada issued a new policy to shift 100 diplomats from the developed countries to new emerging countries. The re-focus away from traditional western powers towards the likes of India, South Africa, Brazil and Turkey will be manifested institutionally in the creation of a "Emerging Countries Bureau" at the Ministry of Foreign Affairs.* In particular, the Japan's embassy in the EU (economic branch) is to have its numbers reduced to make way for increases elsewhere.

Citing the development of the G20 as a forum in which emerging powers are holding great sway Okada said, "as a power shift in the world economy occurs, so too does the Ministry staff. Moving quickly is very important."**

There is also movement to bring in the influential (but not ministry-level) institutions of JETRO, JBIC, and JICA under Foreign Affair's control by bundling them in with the other embassy functions.

See article here.

* Not the first Bureau that Okada has set up, also the 'FTA Promotion Bureau' has been significant.

** "世界経済のパワーシフトに応じて、外交の人員も変えていく。迅速に行っていくことが非常に大事"

Wednesday, 11 August 2010

Status and Saving

The house-hold saving rate in the US is soaring, up from about 1% prior to the crisis to nearly 6.4% this quarter. Without dwelling too much on whether this is sufficient, the mechanics of why the rate is changing is worth thinking about.

Indeed, a crisis is usually associated with growing debt. No doubt the US government is doing so on behalf of households, but it does not follow necessarily that the household sector saving rate would automatically increase. Indeed, in a globalized world it is possible that US government, firms and households might all opt to save less.

I am beginning to think that house-hold rate increase in the US is only in part a rational response to economic conditions (i.e. increased uncertainty), rather a more sociological phenomena. To whit, people are starting to save as an expression of their status, identity and morality.

Whereas before, as the US became a society of leisure and consumption became a conspicuous marker of status, the new marker of high status is reserved to 'saving.' Saving can be thought of as conspicuous in terms of the goods and services foregone. Saving is now a marker of moral fiber (aka high status) whereas before it was scoffed at. Indeed, as one bank ad claims, "saving is the new spending."


(Quite why a bank is promoting this, and people following another avenue for thought).

Moreover, the new savers are not in general the lower class I imagine - but rather aspirant middle class. These new savers in the US are also likely to be well educated and highly skilled, circumstantial evidence for which might be found below.


My thoughts concluded, saving as a social activity? The concept certainly challenges the rational model and suggests that there is an extra social variable in determining when the US pulls itself out of its current economic problems.

Thursday, 5 August 2010

I dug this chart out of data360 looking for something else, it shows the cost of torts relative to the US economy.



At nearly 2%, the US has to be the world's most litigious society.

Australia seems be heading the same way, discussion of tort costs outstripping GDP growth (no evidence on the site). Peter Gordon's blog further quotes from the Fin Review a comparison with other countries (2004);

Denmark 0.4
UK 0.6
France 0.8
Canada 0.8
Japan 0.8
Switzerland 0.9
Spain 1.0
Australia 1.1
Belgium 1.1
Germany 1.3
Italy 1.7
U.S. 1.9

Interesting, eh?

Thursday, 29 July 2010

The US, ASEAN and China: a new alignment emerging?

In November of last year, President Barack Obama pledged that he would be a “Pacific President.” While the audience in Suntory Hall may have wondered about the content of that statement few in attendance doubted the sincerity or conviction of the President. As relationships between the US, ASEAN and China have been re-drawn, especially after latest series of ASEAN hosted diplomatic meeting in Hanoi, the meaning of a Pacific President is starting to become clearer. Three sites of change in particular warrant special mention; the East Asia Summit, the South China Sea and the Korean Peninsula. In all three cases, the United States and ASEAN states are becoming closer, while China is finding itself distanced from decision-making. Put more directly, the early 21st century phenomena of China-ASEAN relations being closer that US-ASEAN is reversing itself.

This realignment can firstly be seen in the United States advancing its claim for a seat at the East Asian Summit. Last week the US received an expression of general support from the Foreign Ministers after the Informal Consultation Meeting and Singapore’s Foreign Minister George Yeo later indicated that ASEAN has already decided to include the US in the EAS. Hilary Clinton’s determination to return to Vietnam in October for the EAS together with Obama being scheduled to attend the next year’s EAS in Indonesia suggests that the US is confident that its accession is assured over the medium term. As a part of this process, ASEAN Ministers also welcomed the decision to include the US in the first ASEAN Defence Minister's Plus with Eight Dialogue Partners scheduled for October.

Unsurprisingly perhaps, the only player to not greet increased US involvement in the region warmly was China. China’s Foreign Minister Yang Jiechi was quoted as saying that China "took notes with open attitude" of the ASEAN proposal for an expanded EAS and "look[ed] forward for consultations" with ASEAN on subject (the Nation, July 22). But while China is dissatisfied with the direction the EAS is taking; this is a battle it already knows it has lost. As Wu Jianmin (a member of the Foreign Policy Advisory Group) observed last year, ‘We know that China could not stop the US if it really wants to join the EAS.’ Indeed, according the declaration establishing the EAS, membership is determined by ASEAN alone – and while China is influential it simply can not veto a proposal (unlike in UNSC).

Moreover, China has seen the US and ASEAN draw closer on an issues of major interest to it, the territorial disputes in the South China Sea. Secretary of State Clinton’s identification of this issue as a “pivot” of regional security brings the United States back as a player after more than a decade of diplomatic passivity (to China’s notable discomfort).

The emerging US-ASEAN-China realignment can also be seen in Clinton’s proposal (together with 12 other Asian nations, including the host Vietnam) for a dispute resolution mechanism to be established. Such a mechanism would build on (or over) the 2002 Declaration on the Conduct of Parties in the South China Sea signed between ASEAN and the PRC. This Declaration can essentially be interpreted as a response to the 1992 ‘Law on the Territorial Waters and continuous Area‘, and reflects an agreement to shelve the issue rather than resolve it – hence the lack of a dispute resolution mechanism. ASEAN efforts to move from ‘shelving’ to ‘resolving’ this issue have been systematically thwarted by China, and so it unsurprising that China would again register dissatisfaction. China’s Foreign Minister Yang Jiechi noting, “turning the bilateral issue into an international, or multilateral one, would only worsen the situation and add difficulties to resolving the issue.” (WSJ China rebuts Clinton). Perhaps Yang meant to add “for China.”?

China’s 1947 Map: basis of the South China Sea Claim: fat dotted lines as limit of territory.

Lastly, this re-alignment can be seen in US-South Korea relations and posturing in the ARF over the sinking of the South Korean corvette, the Cheonan. Again China and the US found themselves in opposite corners over this issue, China reportedly working to remove references to the sinking as a North Korean attack. This disagreement over wording caused adoption of the Chairman’s statement to be delayed a day. Korea’s growing frustration with China’s role in diplomatically supporting the North has, similarly to ASEAN, caused South Korea to look to its traditional security provider, the US. This week’s war games off the Korean peninsula, while clearly focussed on the North, have caused concerns in Beijing. Yet notwithstanding the repositioning of the nuclear powered aircraft carrier the George Washington on the East side of the peninsula, the US and Korea have been willing to disregard China’s warnings. Intriguingly, Japanese officers are observing the joint U.S.-Korean exercises.

In conclusion, a realignment is underway in East Asia. Increasingly, ASEAN (and Korea) are moving closer to the geographically distant US, while China is finding itself surprising distant from its neighbours.

Fedfail Australia - RB Success!

Further to the previous post on the US federal reverse failing its own targets, and a comparison to the Australian experience. This graph show inflation back within the target zone. Which together with Australia's unemployment rate of nearly 5% indicates a 'Fed (rb) success.'


Graph from Peter Martin's Blog.

Thursday, 22 July 2010

Klassic Krugman: Fed Fail!

An amusing graph by Krugman, with even more amusing assumptions.

It is called the FedFail index, and shows how far core economic indicators (inflation and employment) are from the Fed's targets. It is calculated by "1.3* ABS(unemployment – 5) + 2* ABS(core inflation – 2)." And looks like:



Having read through Rudebusch (San Fran Reserve)'s letter, I understand very roughly were Paul is getting the weightings of 1.3 and 2 for inflation and employment. But there is clearly a value judgement implicit in these weighting - i.e. employment more important than inflation. An unsurprising value judgement given Paul's politics perhaps, but something to be leery of.

Additionally, it is likely that the target for inflation and employment at the Fed has shifted - and it seems clear that they are more interested in reigning in inflation than employment.

If I get truely bored this weekend I might try to knock one of these up for Australia, see how we stack up.

Sunday, 18 July 2010

Tachi Agare Australia!

In response to the ALP's "going forward" rhetoric the Liberal Part have come up with "standing up Australia."

May I be the first to welcome "Tachi Agare Australia."


Saturday, 17 July 2010

CMIM : Phillipines an equal.

When the CMIM was declared in December of last year a political decision was made regarding each countries' contribution and multiplier. Essentially a three tier system was set up for the multiplier (the multiplier determines how many times more than the contribution a given country can access). The multiplier also determines were one stands as a giver or taker of resources and is negetively correlated to contribution - it is therefore a marker of a rule giver or taker for the CMIM as a whole.

Those with a multiplier of 1 could not extract more from the CMIM that they put in. China, Japan and Korea as the suppliers of the international public good are on this top tier. On the other extreme are the undeveloped ASEAN members (the CLMV plus Brunei) which have a multiplier of 5.

Then there are the developed ASEAN-5 members (Indonesia, Malaysia, Singapore, Thailand and the Philippines) with multipliers of 2.5. Until May, the ASEAN-5 countries contributed 4.77 billion, except the Philippines (3.6). However, at the ASEAN Finance Minister's meeting in Tashkent saw this be revised (paywalled). The ASEAN-5 (with 2.5 multipler) now have a uniformed contribution of 4.5 billion, with the Phillipines commiting more and the other pairing back their commitments.

This represents a victory of sorts for ASEAN cooperation. As "the four other ASEAN founding states had agreed to an interim arrangement to temporarily cover part of the Philippines’ obligation to the fund, pending sufficient levels of gross international reserves (GIR) to cover this regional commitment, a BSP officer explained yesterday." On the other hand, the fact that the other ASEAN countries had to reduce their commitments demonstrates that the NEA:SEA 80:20 split rule is still in force. Certainly neither China or Japan would want to reduce their commitments - while ASEAN is still more interested in what they can get out of the CMIM than what they can put in.

Before the Phillipines could agreement to expanding its commitment, it was important the its reserves be in a healthier position. Thus it was only after "The country’s GIR rose to $47 billion as of end-April, enough to cover 9.3 months of imports of goods and services. It is also equivalent to 11.8 times the country’s short-term external debt based on original maturity" that the commitment could be made. But it is worth noting that the Philippines can only source 11.38 billion from the CMIM, enough to help in the event of short-term liquidity shocks or balance-of-payments difficulties but far from what would be needed to decouple from the IMF

Just a thought but as the CMIM pact does not require an upfront transfer until after a swap request has been approved, I can not see why the Phillipines was not in position to start at 4.55 from the outset.

h/t the emerging scholars who encouraged me to restart this project

Friday, 28 May 2010

Whaling: No news is good news.

Today the Australian government decided to take the Japanese government to the ICJ over the issue of research whaling.

As the Australian reported, both Smith and Okada as Foreign Ministers emphasized the importance of not letting the issue affect the bilateral relationship. While this decision is no doubt a little foolish strategically - as Lowy's Cook noted today- this folly is offset but the genuine lack of interest in the issue by Japan as I have suggested earlier.

Evidence for this is the fact that 'Australia takes Japan to ICJ over Whaling' did not break on the main page of the Yomiuri Shimbun's online top stories for any length of time (3 hours perhaps), and was pushed out by the 3pm update by events in Franch, Iran and the NPT. There was a short piece by Singapore based journalist Okazaki (lifted from reuters sources I imagine) noting only the facts. Fishing around Yahoo news garnered few extra reports, three.

No doubt an opinion will be forthcoming, but I suspect that the focus will be events in court surrounding the Acid Milk Attack by Peter Bethune. I have not seen any television reporting of it yet.

Perhaps this event will prove a game-changer in the bilateral relationship between Japan and Australia. But it still seems unlikely to me.

Tuesday, 20 April 2010

Chiang Mai Inititative: now in Singapore

Despite its name and its origins lying in Thailand, the Chiang-Mai Initiative Multilateralization will have its surveillance mechanism, and the attendant secretariat, housed in Singapore.

For Thailand this is a bitter pill to swallow, as since 2000 (when the CMI begun), Thailand was the assumed country to house the secretariat. Political instability has cost Thailand dearly again, as this set-back is more than simply embarassing. Unlike the failure to successfully host the East Asian Summit in late 2008 (a farce that saw the EAS rescheduled four times), failure to win the secretariat will cost Thailand influence in the region. The secretariat would have attracted finance and central bank officials to Thailand, and been a site at which Thailand local officials could interact with the region more widely. Instead, Singapore has reinforced its position as a financial hub.

It will be interesting to see how the surveillance mechanism (so-called ASEAN-plus-three Macroeconomic Research Office or AMRO) will work, it is scheduled for activation in May of next year. Already Zheng Xiaosong, Director General of the International Department at China's Ministry of Finance has noted that, "we should prevent it [AMRO] from intervening in other countries' internal affairs, because the so-called monitoring function is, in other words, only a supervision or performance tracing role in order to provide necessary consultation to relevant countries," - suggesting that China still is - at best - disinterested in developing a rigorous surveillance mechanism, with all problems that brings with it.

Monday, 5 April 2010

Japan’s political vacuum, some thoughts.

The Yomiuri Shimbun has just released the results of its latest public opinion poll. Questions included “Do you support the DPJ”, and “who is the most suitable as Prime Minister.” Even though the DPJ (together with its coalition partners) holds a super-majority in Diet, and is therefore theoretically in a position to push through any and all reforms it sees fit, slipping popular support threatens to undermine the psychological basis for successful political leadership. Recall that former PM Koizumi’s ability to go over the head of his own party and directly appeal to the Japanese people was crucial to allowing his reforms to be successfully passed. Thus, the answers to the current polling questions are important in charting where the DPJ goes from here. The chart below summarizes the last six months; the blue line is “do not support Hatayama Cabinet.”



As you can see, the DPJ has fallen from a high of 75% support (red) to 33% and the blue line of “do not support” has gone from 17% to 56% - implying that most Japanese have gone from optimism to pessimism about this administration (see also here). That was certainly the feeling on the ground last month, but why?

The poll result supports Tobias Harris’s argument that the problem with the DPJ and its popularity is Hatoyama himself. In response to the question, “who is the most suitable as Prime Minister?”, Hatoyama name comes not first, but sixth. Indeed, even more bitterly for the DPJ, the opposition LDP Masazoe Yoichi comes first at 29%. This result gives Masazoe further ammunition in his struggle to become Leader of the Opposition against the incumbent Tanigaki. Hatayama even scored lower than his Foreign Minister Okada, Transport Minister Maehara, and Deputy Minister Kan but none exceeded 10% approval in any case.

There are various causes of this decline, but management of the Global Financial crisis seems not to be one of them. Rather domestic issues such as the corruption scandals plaguing the DPJ (focused mostly on Ozawa but Hatayama himself is also under scrutiny) are center stage. Problems relating to the relocation of the US military base at Futenma are also important, as is postal savings reform.

But overall the problem is a lack of “getting things done” – indeed 44% of Japanese cited this as the biggest problem of the Hatoyama administration. So rather than focusing on a project such as the East Asian Community which may or may not “succeed” (and how to even measure that), Hatayama’s next few months ought to focus on getting a clear success. Given his domestic situation, there are opportunities and risks for other countries wishing to cooperate with Japan, but overall Japan’s biggest contribution to East Asia will be to get its ship back in order.

Tuesday, 30 March 2010

Stern Hu: Limits of the evolution

Coming back to Australia I see how big the Stern Hu corruption charge is, and while no new information is presented here, I will chip in my three cents on China’s Law, Australian identity and the interaction between these two.

Chinese leadership subscribes to the rule by law, rather than the rule of law. The concept of individual rights versus the state is not well established and the basis of western law, that justice be done and be seen to be done is also a principle that has not yet penetrated China. Hence not allowing Australian representatives sit in on hearing as guaranteed under the Consular agreement of 1999.

More than this, China does not distinguish between the state and market in quite the same clear cut (if somewhat artificial manner) of the West. While at the same time, there exists an underlying fear that outsiders, and their even more contemptible Chinese proxies like Hu, will steal Chinese wealth. The first expression of these feelings in modern China might be traced back to the “Three Anti” and “Five Anti” movements of the early 1950s, which targeted westerns and made a ‘sin’ out of “stealing state economic information”.

These ‘old’ ideas seem to have survived in Chinese law. I suspect that the reason for this is the evolutionary nature of change, which allows atavistic traits to survive by dint off their highly infrequent lack of expression – a fact brought on by lack of challenges. For an evolutionary approach to improving Chinese law to work more and more intense interaction with the outside world is necessary – and this is coming. But at the same time, the Chinese side must be willing to let die those laws which do not pass the justice test. Without justice being done, and being seen to be done, it will hard for China and Australia to build a trusting relationship, a relationship pretty valuable to both sides and for the region more widely.

Monday, 29 March 2010

Lowy Linkage

Lowy Institute's Malcolm Cook and I had an exchange on the state of Japan-Australia relationship. Linkage here,

http://www.lowyinterpreter.org/post/2010/03/17/Japan-Australia-relations-Signs-of-damage.aspx

http://www.lowyinterpreter.org/post/2010/03/23/Japan-Australia-relations-just-fine.aspx

http://www.lowyinterpreter.org/post/2010/03/24/Australia-Japan-relations-are-not-fine.aspx

A good exchange of ideas, and informative for all and sundry. Hurrah.

Thursday, 18 March 2010

Reflections on the JIIA Syposium on East Asian Community.

Yesterday (17th) at Prince Hotel the Japan Institute for International Affairs convened a symposium on East Asian community. With the opening speech delivered by Hatoyama himself, and a promise to broadcast the entire proceedings both domestically within Japan and overseas, the event was quite high profile. I will discuss the significance of the symposium, and then reflect on some of the speeches and discussions.


Significance of the symposium:


The presenters themselves represented the cream of Asia’s Track II diplomacy. A point underlined by the fact, in addition to handshakes with the PM, Foreign Minister Okada will meet with the international academics after at dinner. Thus, the conclusions of the symposium will find a place (at least informally) in the policy-making process of Japan, and perhaps more broadly.


And interesting side point, there was a similar symposium at Aoyama Gaku-in on Friday (12th) last week on East Asian community. This symposium was also populated with high level academics, such as Korea’s former Ambassador to the US Han Sungjun and China’s former Ambassador to France Wu Jianmin and Japan’s former Ambassador to the United Nations Taniguchi Makoto. There are simply too many high-level academics in Tokyo this week for sheer coincidence. This Friday meeting was a really by and for Japanese-only affair with most presentations in Japanese, although English translation was provided. Indeed, I was the only white person in the room who was not a presenter, suggesting that the outputs will only travel as far as Japan.


The nationality of the presenters at the JIIA symposium was also interesting and deliberate. First up, the representatives of Northeast Asia, Shiraishi Takashi (Japan), Gong Ro Myung (Korea), and Wang Li Zhou (China). With Hassan Wirajuda otherwise engaged, Tommy Koh (Singapore) was the only representative from Southeast Asia. Then came the ‘others’, TJ Pempel and Ezra Vogel (US), Rajiv Sikri (India) and Peter Drysdale (Australia). The consensus in the group of academics was clearly in favor of the East Asian Summit as opposed to the ASEAN+3, even Wang (China) was careful to note the value and significance of the 16 party grouping.


Hatoyama’s speech:


Hatoyama’s speech was good, but not ground breaking. That Hatoyama would chose to come (he was unable to come to the Friday meet at Aoyama) to this meeting is significant. It is a symbol that he continues to be interested in the EAc idea and is serious about promoting it. While no major policy shifts were announced, he did make clear his determination to “break open” Japan and pursue a kind of regionalism that will impact on Japan and the Japanese rather than an abstract elite level sort of regionalism. This implies a determination to trump local interests, particularly the agricultural lobby, in the pursuit of Japan’s greater economic and political interests in the region.


Panelist’s Discussions:


Shiraishi Takashi, is never bad to listen to. Shiraishi revealed that the Hatoyama administrations had recently approved of a plan to propose a regional scientific and technical community be established at the East Asia Summit. Another part of Japan’s efforts to lift the significance of the 16 party group and assert its leadership no doubt, but a valuable contribution no less. Shiraishi also identified the biggest problem of the East Asia Summit as the lack of any ‘big’ success. In contrast to the ASEAN Plus Three which will activate of the 24th the Chiang Mai Initiatives, the EAS has managed only a series of moderate, non-headline grabbing initiatives such as the ERIA. I could not agree more.


Gong Ro-myung, put together a simple presentation focusing on one issue – regional security cooperation. Or more accurately, the lack there of. Gong stated that all the initiatives in East Asia on technical issues, economic and non-traditional security (pandemics, disaster relief, piracy etc) was not spilling over into cooperation in security. He contrasted this to the European experience, and urged the regional governments to let spill over occur. This idea is interesting because it suggests that security cooperation would be a nature occurring phenomena arising from other initiatives but that regional governments are actively preventing it. I imagine he was thinking about the North Korea issue, but this point is true to an extent also in Southeast Asia.


Tommy Koh, was challenged by Funabashi Yoichi (Asahi Shimbun) about the whether the ASEAN deserves to sit in the drivers seat of regional integration. Koh noted that the ASEAN position as driver is due to default, acknowledging that ASEAN not the best driver (ie hardly ideal) for integration but the only one that all were comfortable with.


ASEAN was also challenged by Vogel, who asked Koh is ASEAN was perhaps not up to the task of managing a real crisis (I think security is what he had in mind). In defending the honor for the ASEAN, Koh responded (revealing for first time apparently) by relaying a story about cyclone Nargis and Burma. In the aftermath of the cyclone, the military Junta in Burma initially turned down offers of international food aid, causing additional unnecessary hunger, disease and suffering for its people. ASEAN members confront the Burmese foreign minister (on Buddha’s birthday as the story goes) and demanded that he call his masters and tell them that Burma’s decision not to accept aid is harming the reputation of ASEAN, and that Burma must accept international aid. Like, in the event of Tsunami, ASEAN head of states were able to call each other immediately to coordinate response and help set up an international pledging conference.


While interesting, I do not think Tommy Koh’s response actually answered the question – or answered it indirectly. Managing cyclones and tsunami, which are both natural disasters, can be considered crisis management. But I feel the question was about security, and Koh’s deft side stepping of the issue merely re-enforced the view that ASEAN was in fact not up the task.


All in all, a highly interesting symposium. Thanks go to Yuzawa Takashi for setting up and the participants.

Sunday, 28 February 2010

Japan-India and Japan-China: Evidence of competition positive but mixed

It is often suggested that Japan's growing relations with India are due in part to a desire to balance China's influence. Specifically, that during the Koizumi administration, failure to secure top level meetings with China's leaders (due to Koizumi's Yasukuni Shrine visits), drove Japan to build up its relationship with India (and Australia).

A close look at high level meetings reveals that this explanation is flawed.

Source: MOFA Homepage, India and China Basic Information (Japanese).



In particular, the years 2005, 2006 and 2007 saw less visits to China than would be expected. These years too also saw Japan and India sign onto a strategic framework with the US and Australia which clearly is driven by concerns at some level about growing Chinese power. To an extent we could characterize these years as the "balancing" years.

But it is also clear that this pattern is a aberration, the correlation between high level visits to China and India is high. And with the exemption of the years cited above, Japan-India and Japan-China high level visits move in virtual lock-step. Indeed, 2008-09 saw both sets of meeting fall back to the pre-Koizumi levels and balance.

This suggests that continual, long term interests, both strategic and economic, is what motivates Japanese top level diplomacy, and that striking a balance between China and India is one of those interests. While the short term of Koizumi is noticable, acting overly interested in one or either party is just not good diplomacy in the long term.

Sunday, 21 February 2010

Another transition: China overtakes Japan as ‘more trustworthy’ financially. Another hit for Japanese identity.

According to the Weekly Economist (Japanese publication, not the UK one), Japan’s sovereign risk is now estimated to be higher than that of China. In other words, the financial world trusts China more than Japan. That has to hurt.

The insurance premium on Japanese Government bonds rose to .71% in the CDS market as opposed to China’s (.64%) in Jaruary, reflecting the perceived rise in Japan’s sovereign risk. At the same time, major credit rating agency Standard and Poor’s has reappraised Japan’s long-term government bonds down from stable to negative.

This is yet another blow to Japan’s national identity as economic leader of Asia.

The Japanese, and the rest of the world, are waiting for when, not if, China finally overtakes Japan, (as nearly happened last year). Indeed, as Shirashi Takeshi eloquently points out in January’s Chuo Koron, Japan’s politicians are less and less couching Japan’s role in the world as that of an economic leader.

With the partial exception of Koizumi’s general policy speech (Shoshin Hyomei Ensetsu – a set piece annual speech), the most recent Prime Minister’s of Japan have progressively moved from an economic identity for their nation (Keizai Taikoku). In his general policy speech, Abe studiously avoided the economy, talking about an idealized ‘beautiful’ Japan. This shift is also true of Fukuda and Aso. Hatoyama’s policy speech last year also holds to this trend, starting off by stating that Japan can contribute in more areas than the just the economy – and talking even about how Japan needs Asia (not the other way around). His speech was even titled “Japan as a bridge”, i.e. an (in-itself useless) road connecting two places which are (in themselves) important.

It is clear that the transition with China is impacting on Japan’s identity – make a good thesis topic. Eh, Kai?

Friday, 19 February 2010

Yuan as leader, but a race to the bottom?

If M. Ariff is correct, and Malaysia and Thailand find that they have no choice but to peg their currencies to the RMB in order not to be disadvantaged as the USD falls, then the race to the bottom is on in East Asia. I doubt it comes to that, but in the event that it does, it will be the end of East Asia's chances of financial regionalism. A switch to RMD would be the biggest story in international political economy since the USD took over from the pound Stirling as the world reserve currency.


Pegging to the dollar is simply a "begger-thy-neighbour" policy. It is important to note that these distortions will not just damage the US, but also each countries' regional neighbours. Thus, the pain will be felt door in Indonesia if Malaysia pegs to the RMB, in the form of lost export market share and therefore higher unemployment. If Malaysia or Thailand were to peg to the RMB, it could potentially trigger others to do likewise in order to avoid the pain.


Pegging to the USD is simply opting out of the region, and pegging to the RMB would have similar effect. If more economies start to proxy dollarize via a peg to the RMB, exchange risks would come down and exports would go up. East Asian central banks would lose control of the interest rate lever and the US would start piling on more debt.

Due to this, gone would be the incentive to see financial risks and burdens be distributed throughout the region on market basis, as each country sets about politically manipulating its exposure. Gone too then would be the precious trust which underlies the international economy.

China peg's is simply no longer a domestic concern - as if it ever were. The solution is not for others to peg to China but for China to either move to a basket of currencies that actually includes more than the USD (it current "basket" adopted in 2005 is really all USD) such as the Yen, Euro and etc or to go with a pure float.

To realise the insanity of the situation imagine what would happen if the US started to peg to the RMB as its sovereign right?

Friday, 12 February 2010

Japan’s China policy: No re-adjustment towards Beijing.

Much has been made of late about the possibility of Japan drawing closer to China. I suggest that on the major issues, Japan’s China policy is unchanged under the DPJ, and unlikely to change.

Firstly, on the question of history, Hatoyama is unlikely to make major changes here. According to the Japanese Ministry of Foreign Affairs, Hatoyama has no plans to visit Nanjing this year, and as far as MOFA is aware there is no plan for an apology of any form. Indeed, after rumors broke that there might be a “Hatayama to Nanjing, Hu to Hiroshima” swap this year, the only country not to check-in with the MOFA’s China desk about whether or not it were true was China itself, being aware that this was a dreamt up story by the French but accepted even in Japan. Yet as the recent conclusion of joint historical research by China and Japan reveals, major differences still remain in official interpretation of events. It seems unlikely that Hatoyama would visit Nanjing when the basic question of how many were killed still remains unsettled.

Secondly, on the issue of trade, Hatoyama is little different to the LDP. Hatoyama has proposed further research to be conducted into a Japan, China, Korea trilateral free trade agreement. And while this time it is official government-level research, there are no promises on the Japanese side and not much enthusiasm. No doubt a part of the reason for the elevation to official level is that the academics whom had conducted the informal research since 2001 had simply run out of areas to research.

No surprise that even now Hatoyama appears to looking for wiggle room by suggesting an investment treaty, (although a quick look at the way in which Hatayma handling Futenma suggests that wiggle is Hatoyama’s natural state). Indeed, post-LDP Japan’s real interest remains such an investment protection pact be signed either in addition, or even instead, of an FTA with China.

Of course, in any discussion of Japan’s FTA’s the agricultural issue is important – and the Ministry of Agriculture, Farming and Fishery has hardly changed its position. The MAFF is continuing to oppose any deal with China which includes agriculture (with China being Japan’s second largest supplier of food import, this rather nixes a deal unless the PM comes out clearly in favor). Of course, the establishment within the MOFA of a new FTA promotion facility is viewed generally an attack on the influence of the MAFF in FTA policy making (with the MAFF already on the backfoot) – but the target is more likely to be Australia than China at least for the time being. Indeed, Hatoyama’s administration remains positively appraised of Australia and might well be looking for new ways to further institutionalize the relationship.

Thirdly, in the field of security, Hatoyama has made no major changes. The issue of natural resource exploration by China in the East China Sea remains problematic. Foreign Minister Okada has raised Japan’s concerns with his opposite Yang Jiechi twice already, most recently on January 17th at which time Okada stated that “he would like to enter into negotiations to conclude international agreements promptly, and expressed desire for Minister Yang's cooperation and for him [Jiechi] to issue instructions to enable substantive progress to be made going forward, in contrast with the lack of progress so far.”

From the perspective of the Japanese Ministry of Foreign Affairs, this reflects a continuation of the China policy set out by the LDP in 2008 under “the Mutually Beneficial Relationship Based on Common Strategic Interests" Joint Statement. Under this Joint Statement, a commitment was made to resolve or at least ameliorate the political problems caused by Chinese exploration in East China Sea. Of course, the DPJ is still keen for military exchanges and the like to continue, but Japan’s posture on these core national interests has hardly softened.

Taken together, the Hatoyama administration has thus far changed little in Japan’s policy towards China.

Wednesday, 3 February 2010

Taiwan: Think further

America's sale of PAC3 Patriot Missiles to Taiwan is stirring up trouble. Excellent article by Leigh Moses here. Highly, highly recommended.

In my mind, I see the decision to go ahead with this sale as a least in part motivated by US concerns about Chinese power. Obama I think has lost patience with the Chinese already, being a liberal (and a socially-conscious lawyer) he seems more concerned about justice than order. The negative position of the Chinese at the COP15 Summit also probably a factor in turning Obama into a China skeptic.

But Obama concerns with justice over order might cause greater injustice still if Moses is correct and the sale of arms to Taiwan tips the domestic balance power away from the CCP towards the PLA in China.

Tuesday, 2 February 2010

BRICs or briCs: perspective

One of these things is not like others.




China is larger than the other three "BRICs" countries put together.

Can we please just put China in a catagory of its own. It is just not like anything else.

Thursday, 28 January 2010

Japan’s public perception of China: Are things on the mend with Hatoyama?

In my previous post I discussed Japanese popular sentiment and some of its internal contradictions. Here is a Chart I have generated from the National Polls, conducted by the Cabinet Office on various questions. This question is “Do you trust China?”, or perhaps, "do you feel China is a trustworthy country."

Chart first, discussion later.



What I think I see here is the marked effect of Hatoyama’s victory on Japanese public opinion towards China. Hatayama was elected in August, and assumed office on September 16th. The polling for the 2009 Cabinet Office Public Opinion Survey was carried out October, (15-25th). With all the rhetoric fresh and without actually having done anything, this is almost ideal timing to see what the effect of a regime change is on public perceptions. Of course, we must not discount the fact that Aso managed, dispute himself, not to cause any major trouble in the Sino-Japanese relationship and kept it on an even till. But this he inherited from Fukuda, and neither Abe, Aso or Fukuda between them the three of them were able to improve public opinion towards China, with trust at historic lows since the Koizumi period.

Digging into the data a little more, some interesting trends come out. Firstly, compared to last year, the overall improvement of little of 8% is a little misleading. The improvement is larger, because if we disaggregate the “Do not trust (at all)” and “Do not trust, rather than trust” then we see that movement toward the latter. Secondly, the big shift was not where it mattered. The 20 to 30 year old shifting 5%, in other words the “average” adjustment. The big shift was in the 50-60, and 60-70 year olds who already tended to have a higher trust. The recovery, in other words, has not returned Japan back to pre-Koizumi times, even among the section of the population most likely to make a difference in Japan’s future policy.

Raw data can be found here.

Thursday, 21 January 2010

Anecdote: Only in Japan, I hope.

In Japan, where marriage itself is an institution under threat, a new phenomenon of actors taking the place bridesmaids, best-men, friends and family in wedding ceremonies is increasing.


The demand is great enough that some companies specialize in providing actors to stand in at Wedding. One such company “Wedding Assist”, said every year sees more demand. It already has 30 actors as members of staff. Another “freelancer” took over one hundred jobs as a stand-in friend last year.


These actors are often given quite specific instructions, such details of how they met the wife (it is normally women who request actors) and what to say. In some cases, actors requested to give a speech, to bless the marriage. In one case, the company was asked to provide actor to play the parents, brothers and sisters of one woman – the whole family.


Often the actors are hired by one party (the bride) without the knowledge of the husband. One woman confessed that she had hired actors because she could not fill her quota of friends for the wedding ceremony. She felt so embarrassed that she could not tell her husband, and instead hired actors. She had changed jobs so many times that she had lost all connection to her friends. Another woman said that after she quit Uni her friends circle had collapsed.


These women had no time for a hobby, or religious service, and no social network outside of work or Uni. But in a society under economic pressure those networks are failing. A society on the edge, the isolation of Tokyo and other big cities in Japan is truly turning out some strange social phenomena.


This was inspired from the late night news story about marriage in Japan. Not normally an area I care much about, but it chimed with my experiences of Japan. The story was called “Muen Shakai”, perhaps translated best as “A Society Without Social Bonds (Friends).”

Tuesday, 19 January 2010

Pro-China, Pro-Yasukuni, Half Japanese.

In this month’s issue of Voice, a public poll was conducted looking at, among other things, Japan’s China policy. Polling on three questions in particular are quite interesting for what they say about the Japanese ability to both desire a friendly relationship with China and a prominent place for Yasukuni in the national psyche without seeing a contradiction in these goals.

Firstly, the numbers. In response to the question, “do you agree with the new Administration’s China policy; East Asian community, and East Sea Joint Development etc.”, half of respondents agreed and 35% disagreed. This shows again that after a few scary years under Koizumi, most Japanese still want a closer, “warmer” political relationship with their largest neighbor.

In response to the question “should the PM visit the Yasukuni shrine on August 15 [Remembrance Day]”, again half of respondents agreed. Despite the fact that China has made it very clear that improvement in the political are dependent on the PM not setting foot in the Shrine, still half of Japanese prioritize the PM’s ceremonial role as mourner in chief.

More intriguing, in response to the question “Should a seperate facility be created to allow for formal mourning of the war dead?” I.e. should the Yasukuni Shrine lose its monopoly on war bereavement and division of state and religion be restored? Answer, 58% opposed. Most Japan view the Yasukuni Shrine itself, in and of itself, as special – thereby preventing the promising work around that Koizumi had aired before being boxed into a corner.

Hatoyama clearly is trying to take the Japan-China to the next level. This can be seen in his symbolic displays in various international fora, the recent 600 man delegation to China and more recently rumors of Hatoyama to Nanjing – which if it occurred to involve a formal apology and the possible beginnings of real reconciliation between Japan and China. While all and sundry must be aware that Hatoyama will not be visiting Yasukuni in any formal capacity (he has promised this much) – underlying Japanese sentiments about the Shrine will complicate any reconciliation effort with China that Hatoyama’s administration might attempt.

Saturday, 16 January 2010

Haiti Earthquake, China and Japan

The recent and terrible earthquake in Haiti has revealed an interesting development in Japan's reporting of China.

On NHK TV News, the role of China in the international rescue effort is attracting more attention than that of Japan's own. The use of words such as "China arrived first and quickly put up its national flag" is unnecessarily evocative - creating the image of China stretching out its power world-wide. Japan it seems, really has China on the mind.

Of course, to an extend that is justifiable. China's role in Haiti is probably larger than Japan's. In fact, China had (before the quake) over one thousand riot police in Haiti to assist the UN Peacekeeping Operation (MINUSTAH) compared to Japan's presence of zero boots on ground. In fact, some of the Chinese PKO police (4 apparently) are currently missing - and are likely dead.

Japan has offered a cheque to Haiti (worth $5 mil.) and a S&R team.

Any wonder the Japanese are feeling in awe of China?

Tuesday, 5 January 2010

ERIA: Centrality, Odd men out, and quest for regional “research” leadership.

Previously, Malcolm Cook at the Lowy Interpreter and I briefly exchanged notes on the Economic Research Institute for ASEAN and East Asia (ERIA) and its meaning in the broader East Asian context. I should like to continue those thoughts here, arguing that the story of ERIA neatly encapsulates the story of East Asian regionalism. I will show that ERIA’s formation is not a sign of strength of East Asian regionalism but another yet manifestation of the contest for centrality in East Asia between China and Japan.

The order of the title is no accident. I tend to believe that without a clear central leader, it is impossible to define regional membership (let alone borderline cases like odd men in). Indeed, contestation over the borders of the region (such as in East Asia today) is a good indication that the position of central leader is itself contested (chiefly between China and Japan). Under these conditions, any field even the esoteric (almost irrelevantly so) field of semi-formal research into economic regionalism acquires a political connotation.

So, what is ERIA? From a technocratic point of view, the ERIA is a research body designed to help with policy development and coordination in East Asia. But politically, it represents a Japanese leadership bid in response to China’s growing influence in the field of regionalism research. Specifically, Japan’s concerns were raised by China bid to house the Network of East Asia Thinktanks (NEAT) – an idea based on the recommendation of the East Asian Study Group (the first annual conference of which was held in China in 2003).

In response, Japanese policy-makers started to propose alternative groups to carry out research. Japan first pushed for the Asian Development Bank to take on this role, but meeting US resistance (and no doubt limited, if any, Chinese support at the ADB’s Board of Executives), shifted its attention to the ASEAN+3 research groups where Japanese research institutes were doing well. However, neither provided the leadership dividends Japan was after – the only option then was to start up its own “independent” research institution. Enter ERIA stage right.

Building on then Economy, Trade and Industry Minister Nikai’s proposal for a 16 party FTA, Japan’s former PM Abe called for the creation of ERIA at the 2007 ASEAN+3. ERIA was to be a research clearing house and policy coordination facility – a sort of OECD for Asia, minus the Charter and all the western legalistic trapping. At the 3rd East Asian Summit in 2008, the ERIA idea was approved unanimously – and debate shifted on where to base the secretariat.

Not withstanding the fact that Japan was to provide the money (and most of the brains) for this enterprise, ASEAN insisted on deciding amongst itself where to base the ERIA. The intense diplomacy among ASEAN nations for the privilege of housing the ERIA only subsided when the decision was made to temporary house in the ASEAN secretariat in Jarkarta, Indonesia. Thus while officially the ERIA is only temporary in Jarkarta, the green light has gone ahead to build it its own building, something of a fait accompli for Indonesia although unlikely to garner the kind of trust ERIA will require to do its work.

I am inclined to believe that this outcome reflects not so much a weakness in ASEAN as in Northeast Asia. If ERIA was to be an OECD for Asia, then it ought to be based in a Paris-equivalent city in Asia (i.e. the capitals of either China or Japan), which Jakarta (despite being very nice) simply is not. If, on the other hand, the goal of the ERIA was to boost Japan’s presence in southeast, this outcome makes more sense (Japan would likely lose political points for insisting the ERIA be based in Tokyo, better to pawn it out to ASEAN).

In fact, Japan’s influence on ERIA was clear from the outset. Firstly, Japan offered to fund the organization through its first ten years to the tune of 10 billion yen over ten years. Secondly, ERIA was established with institutional links to the Japanese External Trade Research Organisation (JETRO). The Chairman of JETRO Watanabe Osamu has carefully played down any Japanese influence within ERIA, even as it negotiated with ASEAN members were to establish the secretariat.

Unsurprisingly, the ERIA came to support the METI’s and JETRO’s position on the merits of the 16 party Free Trade Area, (known in Japan as Comprehensive Economic Partnership East Asia, CEPEA). No surprise either that Australia, New Zealand and India have stepped forward to pitch additional monies and more importantly legitimacy to the organization – often visibly and vocally supporting ERIA as something of a hat tip to Japan. These countries would be the major beneficiary of such a trade area, and perhaps just as crucially, are keen to shed their status as “odd men” and gain acceptance as a true regional member – something Japan just might be able to provide.

P.S. One of the effects of ERIA foundation was to put pressure of the NEAT process. In fact, the NEAT itself was hardly a success. NEAT is not an international institution of the same level as the ERIA, it does not possess its own headquarters, research staff or budget and is more or less an alliance of academics with good political connections. Indeed, the 2007 report entitled “Future Direction of NEAT” prepared by Thailand notes, “NEAT activities do not governmental support and are now facing possible competition from other newly established mechanisms like Economic Research Institute for ASEAN and East Asia (ERIA).” Additionally, the Japanese CEAC seems to have taken over running the NEAT, and the whole agenda there is shifting. It seems likely therefore that ERIA will win out as the lead research body in East Asian regionalism.