Korea beats the world to $20 billion nuclear jackpot

South Korea has beaten the US, Europe and Japan at their own game to land the country's first international nuclear power project.

Korea Electric Power Corporation (Kepco) has won a contract to build and operate four nuclear reactors in the United Arab Emirates, beating out rival bids from a U.S.-Japanese consortium comprising General Electric and Hitachi, as well as a French team of GdF Suez, Areva, and Total.

Construction of the reactors alone is expected to be worth more than $20 billion, not to mention Kepco will be in the driving seat for future lucrative service contracts. This deal, announced Dec. 28, marks the first full-scale nuclear development in the Arab country.

Although Japan’s main bid failed to be accepted by the UAE government, it is nonetheless a junior partner in the Korean consortium through Westinghouse and Toshiba Power Systems. These companies apparently possess patented technologies necessary to build third-generation light water reactors.

David Adam Stott reported for the Shingetsu Institute that Japan had become the fourth major player to sign a nuclear cooperation agreement with the UAE on January 19, 2009. This followed a week-long visit by a UAE delegation, led by Muhammad al-Hammadi, CEO of the Emirates Nuclear Energy Corporation, to Tokyo in December 2008 to meet representatives of Mitsubishi Heavy Industries, visit a nuclear power plant, and tour Hitachi and Toshiba nuclear factories.

Westinghouse is to supply equipment, engineering, and fuel-service contracts to the Korean consortium. The precise value of these Japan-affiliated contracts is unclear, but is likely to be substantial.

Michael Penn

APP Nonresident Senior Fellow

Executive Director, Shingetsu Institute

This Week in Washington

EXPANDING THE AGENDA FOR COOPERATION BETWEEN THE UNITED STATES AND REPUBLIC OF KOREA. 1/5, 9:30-Noon, Washington, DC. Sponsor: CNAPS Brookings. Speakers: Richard Bush, director of the Center for Northeast Asian Policy Studies; Scott Snyder of the Center for U.S.-Korea Policy at the Asia Foundation; Heejun Chang of Portland State University; Michael Finnegan of the National Bureau of Asian Research; and Peter Beck of Stanford University. Location: Brookings Institution, 1775 Massachusetts Avenue NW.

JAPAN’S ENERGY POLICY STATUS AND ISSUES. 1/6, 4:30-6:00pm, Washington, DC. Sponsor: Reischauer Center, SAIS. Speaker: Tokio Kanoh, Member of the House of Councilors, LDP. Location: SAIS, Rome 806, 1619 Massachusetts Avenue, NW.

IRAN'S NUCLEAR AMBITIONS IN PERSPECTIVE. 1/8, Noon-1:30pm, Washington, DC. Sponsor: Woodrow Wilson Center (WWC) and and the Los Alamos National Laboratory. Speaker: Shahram Chubin, Public Policy Scholar, Woodrow Wilson Center and Non-resident Senior Associate, Carnegie Nonproliferation Program. Location: WWC, One Woodrow Wilson Plaza, Ronald Reagan Building, 1300 Pennsylvania Avenue NW, 5th Floor Conference Room.

Unhappy New Year for Hatoyama's foreign policy

A New Year, a new pessimism.

At least, that seems to be the case for Japan's editorial writers. This is surprising given the initial burst of national optimism following last August’s landslide victory by the Democratic Party of Japan (DPJ) in the House of Representatives election, ending over 50 year of Liberal Democratic Party rule.

Two conservative dailies, the Yomiuri and Sankei, bemoaned the apparently sorry state of US-Japan relations. In two editorials between Dec. 31 and Jan. 4, both newspapers castigated the DPJ and Prime Minister Yukio Hatoyama for its handling of foreign relations and exhorted the government to get a grip, before it was too late.

In its New Year’s editorial, Yomiuri editors thundered that the Hatoyama administration lacked a national strategy, risking casting Japan “adrift on the rough seas of global politics – a dreadful situation.” Sankei, in a December 31, editorial also berated the government for causing the “United States to become more distrustful of Japan.” The daily warned: “For the sake of the security and national interests of Japan, the Prime Minister should make decisions that place top priority on the Japan-US alliance.” It chided that more attention was being paid to India and its strategic interests than to Japan’s ally, the United States.

Both dailies have had long ties to the previous Liberal Democratic Party government but interestingly, a similar critical tone is present in the more liberal papers Mainichi and Asahi. The Mainichi, in a rambling January 1 editorial that even referred to the Nara Period in the 8th Century, urged Japan to engage in a “year of rebuilding,” by putting everything into overcoming a mountain of domestic and external challenges. The rebuilding would also involve savoring Japan’s cultural heritage and exporting aspects of it abroad. Yet, the overall tone was pessimistic: “The road to rebuilding the economy is long and far; doubts remain about fiscal resources to back the budget; and the government has brought on the predicament created by its mishandling of foreign policy and relations with the US.

“There must be a deepening of the US-Japan alliance, which is the axis of Japan’s diplomacy. There needs to be a recovery of the relationship of trust between the two countries that has been shaken.” The relatively liberal Asahi, Japan’s second largest daily, focused its New Year’s editorial on how to best broaden the US-Japan relationship. The focus was on cooperating on such global challenges as President Obama’s call for a nuclear-free world, global warming, and dwindling energy resources. The Asahi editors asked: “In the midst of such tectonic shifts, how can Japan help maintain peace and prosperity in the world, and play a role in stabilizing it?”

Noting that with North Korea possessing nuclear weapons and China engaged in a military buildup, the editorial was unequivocal in its support for the alliance. In language that seems to chide the Hatoyama administration for letting relations with the US slide, the daily noted that the Japanese people were satisfied with US defence of Japan, while balancing the security treaty with war-renouncing Article 9 of the Constitution. Asians were also generally pleased with the security arrangements and their stabilizing impact on the region, the Asahi added. The editorial concluded that even though US-Japan interests may not always converge, there was no other option for Japan.

The business daily Nikkei has emerged in recent months as a sharp critic of the Hatoyama administration. The editors have a long record of strong support for the alliance. Although the business daily, unsurprisingly, focused its January 1 editorial on the sorry state of the economy and the need to rebuild for future generations, it also touched on the alliance. Noting that the security treaty marks its 50th anniversary this year, Nikkei suggested there was “need to give thought to making the alliance more meaningful, taking a future-oriented perspective.”

In a companion editorial on January 3, the daily observed: “Japan-US relations are now neither ‘equal’ nor ‘close’ as Prime Minister Hatoyama wants. The cause is the prime minister’s words and actions centered on the relocation of Futenma Air Station. The alarm bell was sounded, but the prime minister did not hear it.”On Japan’s Asia diplomacy, Nikkei warned: “At a time when Japan is turning more toward Asia and away from the US, ironically, Asia is turning toward America. We fear that Japan could become isolated by this misalignment.”

In all, Japan’s mainstream press is decidedly negative toward the Hatoyama administration. There is a surprising emphasis on foreign policy, especially with the United States. A general pessimism about the future is being wrapped around a criticism of the emerging policies of the DPJ. Although opinion polls still show strong support for the new government and little support for an air base in Henoko, the major dailies do not reflect this public acceptance of the fledgling government.

Picture from here.

William Brooks
APP Senior Fellow

Bureaucrat points to pork for Futenma upset

Interviewed in the January 2010 issue of the monthly literary journal Chuokoron, former Vice Minister of Defense Takemasa Moriya (pictured) reveals much about the lengthy negotiations between the United States and Japan to close and relocate the Marine Corps’ Futenma Air Station in Okinawa.

He had been intimately involved in the process. Currently, Mr. Moriya is appealing his 2008 conviction for taking bribes from a defense equipment trader. Although the details are new about the 1996-2006 wrangle centered on the Futenma relocation that ended in agreement to build a V-shaped runway on the shores of Camp Schwab, Moriya’s real purpose in his kiss-and-tell interview seems to have been to lay specific blame on political leaders in the central, prefectural, and local governments, as well as local commercial interests – competing for contracts for land reclamation and construction of the runway – for the setting and breaking of agreements that have led to the current impasse in resolving the fate of the Marine base in downtown Ginowan City – deemed one of the most dangerous in Japan.

It is clear from Moriya’s narrative that in his mind, the security interests of Japan and the interests of residents near the base were always secondary in the minds of many of those responsible in Tokyo and Okinawa for decisions on the base relocation. He sees the US government, always negotiating in good faith, as the collateral victim, unable to close down and revert Futenma as intended and pressed always for compromises, including a drive to reduce forces in Japan and Okinawa, that would weaken its deterrent capabilities in the region.

Prime Minister Hashimoto, the main figure in the drive starting in 1996 to bring closure to the Okinawa base problem, which was sparked by the September 1995 rape of a schoolgirl by three US soldiers, comes across as well-intentioned but constantly sandwiched between the US and Okinawan interests. Moriya for the most part does not name names of those tugging behind the scenes for commercial advantage, but he does point the finger at former defense ministers Kyuma and Nukaga, as well as Okinawa governors Ota, Inamine, and Nakaima, for the string of broken agreements that have prevented Futenma from reverting to Japan. Local politicians, fronting for business interests in Okinawa, are seen as playing high stakes poker for spoils largely unrelated to the Futenma resolution.

Laying blame even wider, Moriya cites rumors of influential politicians buying up mountains that could be exploited for the lucrative land-reclamation project. Only Moriya and his colleagues at the Defense Agency (now a ministry) come across as well-intentioned in the negotiations. Moriya takes credit, for example, for convincing US negotiators, when the original plan for an offshore runway was blocked by environmentalists, to accept a land-based plan at Camp Schwab that should have been acceptable to all in resolving the relocation issue. Local interests undercut it by insisting that only a sea-based option – involving lucrative contracts – was acceptable. The eventual second compromise agreement in 2006 for a V-shaped runway along the shore of Camp Schwab (Henoko district of Nago City in Okinawa) was also blocked, this time by a lineup on the Okinawan side from the governor down allegedly to push for a more lucrative sea-based option, creating the impasse that the Democratic Party of Japan inherited when it won the August 30, 2009, Lower House General Election.

Based on Moriya’s revelations, it is no wonder that the new DPJ administration started out by seeking a review of the 2006 agreement on Futenma that continues to be rejected in Okinawa. It is up to the Hatoyama government to unravel the knot of domestic politics, but not drop national security and Okinawan interests.

Picture from here.

William Brooks
APP Senior Fellow

South Koreans show less of a cold shoulder to Japan

A century of hurt can't be cured overnight, but the last five years have seen significant healing in Japan-Korea relations.

A half-century after Japan normalized ties with the Republic of Korea in 1965, views by South Koreans toward Japanese remain negative, according to a Donga Ilbo poll released Jan. 1. The new opinion survey was conducted for the daily by the Korea Research Center to mark the centenary of Japan’s annexation of Korea in 1910. It found that emotions toward Japan are still strong among Koreans, though there has been a marked easing of feelings of dislike since their previous survey in March 2005. The survey also showed that Koreans continue to seek an acceptable apology from Japan for its colonial past.

Most Koreans are not averse to a proposed visit from Japan’s Emperor Akihito, outweighing those with negative feelings by two-to-one.

In the 2005 survey (see the Mansfield Foundation Center Asian Polls database), 63.7% of South Koreans said they disliked Japan. Only 7.8% were willing to say they liked Japan, while 28.7% took a neutral stance. Respondents to the 2005 poll were most likely strongly influenced by the controversial visits of then Prime Minister Junichiro Koizumi to Yasukuni Shrine, seen as a symbol of Japan’s past militarism. Most Koreans – 58% -- then felt that their feelings toward Japan were getting worse.

In contrast, the 2009 poll ( see Donga Ilbo’s English website) showed a marked improvement, with 35.9% saying they disliked Japan, cutting the 2005 figure in half. Those with favorable views toward Japan inched up to 10.8% (for young people up to 20, the figure was 18.1%, indicating that for this age bracket, the Japan allergy was easing somewhat). A majority of Koreans, 52%, took a neutral stand, also reflecting an apparent easing of negative feelings toward their neighbor. A mere 6.8% wanted better Korean sentiment toward Japan, and even fewer – 5.3% -- sought a review of Japan’s compensation for its colonial past.

On the question of what should be done about Japan’s past actions on the Korean Peninsula, 32.3% insisted that only an acceptable apology from Japan would resolve the issue, closely followed by 29.1% who felt joint studies by both countries were necessary to reach an accord on history. Another 25% suggested that broader cultural exchanges were the answer. In contrast, the 2005 poll found 42.6% of Koreans wanting an acceptable apology from Japan, far more than the 23.9% who wanted joint historical studies. Only 4.6% would seek Japan’s reconsideration of its compensation, and 5.5% felt that comprehensive exchanges between the two peoples were advisable.

On the touchy issue of a proposed visit by Emperor Akihito to South Korea, an impressive 64.2% of Koreans would accept it, double the 31.1% who were opposed, saying it was premature given that negative feelings were still strong. The under-20s were even more positive about the visit (70.3%), compared to their elders. The question was not even asked in the 2005 poll, perhaps because the answer then was obvious.

William Brooks
APP Senior Fellow

Is the post-crash world more protectionist?

The Centre for Economic Policy Research in London thinks so and is trying to track the trends.

To do this, the Centre set up Global Trade Alert, which is supported by the World Bank and other international organizations. GTA's mission is to "provide information in real time on state measures taken during the current global economic downturn that are likely to discriminate against foreign commerce." So far, GTA has identified over 600 protectionist measures taken since November 2008 (if I read that correctly).

Their most recent report is: The Unrelenting Pressure of Protectionism: The 3rd GTA Report: A Focus on the Asia Pacific Region. You can find a summary HERE. One finding is that "discriminatory foreign subsidies have limited the contraction of Japanese exports during the crisis."

The Coordinator for GTA, Simon Evenett, will be in Washington this week. He will be speaking at the Washington International Trade Association program on Thursday, January 7th, THE 'P' WORD: MEASURING RISING PROTECTIONISM IN GLOBAL TRADE.

Prime Minister of Japan has a Twitter feed

Prime Minister Yukio Hatoyama has started the year by opening a Twitter account AND a blog, Hato Cafe.

You can find the Twitter site HERE.

Tweet him!

Oh, not to be outdone, The Point has a Twitter account too. No, we don't quite know what the point of it is, either, but it's there for folk who do. Check it out HERE.

Eliminating nuclear threats

Eliminating Nuclear Threats: A Practical Agenda for Global Policymakers, the report of the International Commission on Nuclear Non-proliferation and Disarmament, was released on December 15th in Tokyo to the Prime Ministers of Australia and Japan, Kevin Rudd and Yukio Hatoyama, by the Commission Co-Chairs, former foreign ministers Gareth Evans and Yoriko Kawaguchi, at a ceremony at the Japanese Prime Minister’s residence.

According to the press release, the 230-page report does not suggest that nuclear weapons can be abolished soon or in the near future. It does recommend setting of a medium term ‘minimization point’ target - to be reached by 2025 - of a world with less than 2,000 nuclear warheads - a more than 90 per cent reduction of present nuclear arsenals. There are approximately 23,000 nuclear weapons now in existence.

The report was released shortly after it was revealed that the Government of Japan had lobbied the American Congressional Commission on the Strategic Posture of the United States to retain for the defense of Japan submarine-based nuclear-tipped Tomahawk Land Attack Missiles or TLAM-Ns. Some analysts were not only surprised by Japan's pro-nuclear position, but wondered aloud if Tokyo understood how inaccurate and unreliable the ageing Tomahawks were.

Interestingly, the American mainstream press has not picked up on either story: the release of the Commission Report or Japanese government lobbying for retaining nuclear weapons.

Reporting

The Lowy Interpreter

The Australian

The Sydney Morning Herald

Troubling lessons from Japan's economy

“Lost Decade” in Translation: What Japan's Crisis could Portend about Recovery from the Great Recession, by Syed, Murtaza H.; Kang, Kenneth ; Tokuoka, Kiichi by IMF Working Paper No. 09/282, December 1, 2009, 40pgs.

Supplied Summary: Is the recovery from the global financial crisis now secured? A strikingly similar crisis that stalled Japan's growth miracle two decades ago could provide some clues. This paper explores the parallels and draws potential implications for the current global outlook and policies. Japan's experiences suggest four broad lessons. First, green shoots do not guarantee a recovery, implying a need to be cautious about the outlook. Second, financial fragilities can leave an economy vulnerable to adverse shocks and should be resolved for a durable recovery. Third, well-calibrated macroeconomic stimulus can facilitate this adjustment, but carries increasing costs. And fourth, while judging the best time to exit from policy support is difficult, clear medium-term plans may help.

Later: An editorial in the Sunday, January 3, 2010 New York Times takes up on the above. The Times Editor concludes, "The White House is now pushing another mini-stimulus plan for next year. Chances are it will need to do a lot more to push reform and boost the economy. If there is an overarching lesson from Japan’s lost decade, it is that half measures don’t pay."

Public not buying Hatoyama 'didn't know' about mother's millions

Polls in late December showed a rapid drop in the popularity of Yukio Hatoyama's administration, largely attributable to the political donations scandal in which two of the prime minister’s former secretaries have been indicted over falsifying accounts for huge amounts of money from his own assets and ¥15 million a month from his mother for a number of years.

In a Nikkei opinion survey carried out December 25 and 26, the disapproval rate for the Hatoyama Cabinet soared 18 points to 42%, with the approval rate plummeting by the same amount to 50%. Similarly, in a Kyodo poll carried out at the same time, the cabinet’s support rate plunged 16.5 points to 47.2%, while non-support jumped 13 points to 38.1%.

The public apparently didn't buy the prime minister’s explanation that he had known nothing about the money, with 76% in the Kyodo poll and 75% in the Nikkei poll saying that they were “unconvinced.” Nikkei commented: “The public seems increasingly dissatisfied with Hatoyama’s political contribution scandal and his leadership.”

A Tokyo Shimbun commentary on the Kyodo poll noted: “If he continues to display a lack of leadership on the domestic and foreign policy fronts, it is certain that the public’s eye will become even more severe.” A mid-level Diet member from Hatoyama’s party, the Democratic Party of Japan, said: “There are no factors that would contribute to boosting his support rate from now on.”

While the past three prime ministers – Abe, Fukuda, and Aso of the Liberal Democratic Party – suffered a collapse in public confidence, that fate has yet to befall Hatoyama. In the Kyodo poll, 64.3% of the public wanted him to continue in office, and only 21% wanted him to resign. But other factors could add to their concern, such as his perceived lack of leadership in the handling of relocating the U.S. Marines’ Futenma Air Station in Okinawa. The DPJ and its two junior coalition parties have agreed to find an alternate site other than the current Camp Schwab in Okinawa by next May, but that may be easier said than done.

Hatoyama has tried to rule out a complete removal of the base functions to Guam, as proposed the Social Democratic Party. He cited the problem of maintaining a deterrence if the base is so far from Japan. Faced with a sharp reaction from the SDP, Hatoyama backtracked and the Guam option remains on the table.

His troubles, though, may only be beginning. Kyodo reported on December 28 that a questionnaire the news service submitted earlier in the month to every prefectural governor in Japan, except Okinawa, found zero support for moving Futenma to another prefecture in Japan. If the ruling camp is perceived as deadlocked on the Futenma issue, and the prime minister is seen as continuing to give way to the SDP, the slide in his popularity is likely to continue unabated.

Picture from here.

William Brooks
APP Senior Fellow

Largest Japanese delegation to Iraq in 20 years

Koichi Takemasa, Japan State Secretary for Foreign Affairs (pictured), toured Iraq and Jordan mid-December to enhance the DPJ government's political and economic relations.

On the 20th, Takemasa attended the Second Japan-Iraq Business Forum, which was held at Baghdad Airport. A high-level delegation of Iraqi officials, led by Prime Minister Nuri al-Maliki, greeted the 100-strong Japanese delegation, by far the largest Japanese business group to visit Iraq since the Persian Gulf Crisis of 1990.

Prime Minister al-Maliki said his country had become a constitutional democracy, and he called on Japanese firms to help with Iraq’s postwar reconstruction, saying the country presented a great business opportunity: “We want Japan to use its experience of rehabilitation from World War II.

“This forum represents a landmark in the history of investment conferences that we have held thus far… Your presence in Baghdad, at this particular time, is a very important message to terrorists who are still trying to disrupt the process of rebuilding and reconstruction through criminal bombings aimed at intimidating and preventing foreign companies from entering the Iraqi market.”

The forum included meetings between Iraqi and Japanese businesspeople and a seminar on doing business in Iraq. Thirty-one Japanese companies sent representatives.

Before heading to Jordan, Takemasa spent one evening at the Japanese Embassy compound in central Baghdad. He held separate talks with Iraqi Parliament Speaker Ayad al-Samarrai as well as the two Iraqi vice-presidents, Adel Abdul Mahdi and Tariq al-Hashimi.

After leaving Iraq on the 21st, Koichi Takemasa traveled by plane to Jordan. One of the main tasks of the visit was to meet Samir Rifai, the new Prime Minister and Defence Minister of Jordan. He also held meetings with Foreign Minister Nasser Judeh and Minister of Planning and International Cooperation Jafar Hassan, and visited the Baqaa Palestinian Refugee Camp.

The meeting with Jordan's Prime Minister Samir Rifai lasted about an hour. The Jordanian leader praised Japan's role in the peace process—especially the Corridor of Peace and Prosperity initiative, and celebrated the close relations that Jordan has traditionally enjoyed with Japan. Rifai added that Jordan was intent on implementing a number of mega-projects such as the Red-Dead Canal, a proposed railway project to link the Gulf region with Europe through Jordan and the kingdom’s nuclear power program. Takemasa responded that he prayed for the success of Jordanian economic reform plans and would strive to resolve the Palestinian issue.

It was the meeting with Minister of Planning and International Cooperation Jafar Hassan which attracted the most attention from the media. Hassan told reporters that Jordan and Japan were studying the possibility of cooperating on a number of development projects worth $104 million while noting that Japanese financial and technical assistance to the kingdom stood at $24.8 million last year. Another major topic was the issue of nuclear cooperation, with Hassan urging Japan to sign a more concrete nuclear agreement with Jordan.

At the Baqaa Refugee Camp, Takemasa visited one of the camp’s eight schools and met the four JICA volunteers working there. He also inspected the facilities of a medical clinic that had received some Japanese financial aid.

Michael Penn

APP, Nonresident Senior Fellow

Executive Director, Shingetsu Institute