Japan's removal of ban on collective self-defense signals fascism emergence, escalates tension, stirs international unease

Japan's move escalates regional tension, signals fascism emergence: foreign experts

Foreign analysts and scholars have harshly criticized a resolution passed by the Japanese cabinet on Monday to allow it a larger military role in Asia, saying it will escalates regional tensions and is a sign of fascism emergence.

The resolution, which allows Japan to exercise the right to collective self-defense by reinterpreting the pacifist Constitution, greenlights Japan to take military action to defend other countries even though the nation itself is not under attack, marking a major overhaul from Japan' s postwar security policy.

"Japan is changing," warned Shada Islam, the director of Brussels-based Policy, Friends of Europe in a written interview with Xinhua.

The move is part of Japanese Prime Minister Shinzo Abe's drive to transform Japan into a "normal country" when it comes to defence and security, said Islam, adding that he has also pushed through a law to strengthen control of state secrets, created American-style National Security Council, and lifted Japan' s self-imposed restriction on exporting weapons.

Abe's so-called "proactive pacifism" is clearly not popular at home and he has had to abandon his original plan to secure direct constitutional revision -- but this move should reassure the United States that Japan is taking on some responsibility for its own defence, she said.

Public opinion in Japan will continue to act as a brake on some of the Abe's more ambitious plans, so Abe will have to carefully balance his policies, she said, adding that the resolution "will certainly not enhance security and could increase tensions in northeast Asia."

It is absurd for Japan to allows collective self-defense, said Enes Begicevic, a journalist from Bosnia and Herzegovina, adding that Japan's move will lead to regional instability.

"This constitutional change is both historic and worrying as it moves one of the pillars which has maintained the balance of peace in East Asia since the end of the Second World War," said Augusto Soto, professor of ESADE institution of Ramon Llull University and Director of Dialogue with China Project.

This measure could have the effect of destabilizing Asia and the Pacific and this is understood by an important part of public opinion in Japan which is against the Abe administration. However, this opinion does not have the political power to stop the Japanese government's initiative, he said.

In the face of this situation China could launch a political offensive in order to try and convince Japanese public opinion that the announced measure goes against Japanese interests, he advised.

"The new interpretation of the constitution that Japan's cabinet has adopted now may do little good to the security situation in the Asia-Pacific region," Angel Maestro, a Spanish columnist of the Financial World and a expert on asian affairs.

Japan's neighbors may worry this is the sign of a new rise of the fascism in Japan's Political Arena. These countries may strengthen their defense forces as insurance against the possibility that Japan has chosen an expansionist foreign policy as it did during the Second World War, which would raise tensions in the region and escalate conflicts that already exist, he said.

"I think it may increase the historical mistrust that Japan already faces from its neighboring countries, especially China and Korea, about its military intentions," said Piin-Fen Kok, Director of China, East Asia and United States Program with the EastWest Institute.

It' s up to Japan to explain clearly to its neighbors why it is doing this, and why this is good for regional and global security. Japan also needs to provide assurances to its neighbors that it will not revert to its militaristic past, Kok said.

"Collective self-defense is a compromise born from Shinzo Abe's political will, who leads a group of people that don't represent the mainstream of Japanese politics," Professor Axel Berkofsky, senior associate research fellow of Italian Institute for International Political Studies (ISPI) has told Xinhua.

"It is funny to say that Japan should regain the respect of the world. It was just saying: It's a weak commitment, a political move, a dream, a vision of Abe himself," he added.

- Xinhua (Editor:Wang Xin、Huang Jin)

Japan’s removal of ban on collective self-defense stirs international unease

The Japanese cabinet has approved a resolution that would allow the country to exercise the right of collective self-defense by reinterpreting the Pacifist Constitution.

The resolution sets three conditions that would enable exercise of the right including "clear danger" to the lives of its people due to armed attacks on Japan or "countries with close ties".

The move is an overhaul of Japan’s exclusively defense-oriented security policy after World War II and over half of Japanese are against it.

Chinese Foreign Ministry spokesman Hong Lei said that China is opposed to Japan's pursuit of its domestic political goals by deliberately inventing a "China threat", and urged Japan to respect the legitimate security concerns of its Asian neighbors and deal prudently with relevant issues. He said that Japan must not undermine China's sovereignty and security interests, nor should it harm regional peace and stability.

Japan’s removal of the ban on collective self-defense comes at a time of strained Sino-Japan relations, said Yuan Yang, a researcher with the Academy of Military Sciences of PLA. According to Yuan, China’s rapid economic and military development is the motive behind Japan’s move to constrain China.

Yuan Yang believes that lifting the ban on collective defense would ease certain restrictions on the Japanese military forces and might lead to gradual expansion of its military capability.

Yuan points out that Japan’s emphasis on "countries with close ties", rather than confining itself to its allies, increases the possibility of conflict between China and Japan. There is now the possibiltiy that the two countries might clash over issues related to third parties as well as the Diaoyu Island issue and other issues in the East China Sea.

Zhou Yongsheng, a professor with the China Foreign Affairs University, has also noted that the most serious consequence of removing the ban on collective self-defense might be a military alliance betweeen Japan and countries like the Philippines and Vietnam.

Faced with this situation, China needs to show the world that with peaceful development as its basic state policy, it will never pose any threat to other countries. It should try to unite all peace-loving forces, especially peace forces in Japan, to prevent these Japanese government moves. But China also needs to make it clear to the world that with its own strengthened military forces, it has nothing to fear from the provocative actions of other countries. - (People's Daily Online)

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Dim global growth prospects in 2013

The year 2012 is coming to a close, leaving behind many problems. Most are man-made originating in politics.

Yet, sadly, there are no major political leaders who have the credibility, charisma and strength of character to garner the needed political resolve to set their own nations or the world on the righteous path of sustainable growth.

The re-election of US President Barack Obama helped a little. As I write, even if he is able to persuade opposition Republicans in Congress to a deal to avoid the looming “fiscal cliff” (self-inflicted arrangement involving US$600bil of indiscriminate tax hikes and “sequester” cuts in military and welfare spending, bringing on a 3% reduction in 2013 fiscal deficit), the resulting cuts and taxes will invariably become a drag on growth estimated by most to be at least 1% of gross doemstic product or GDP in 2013.

The downside risk to global growth is likely to be exacerbated by the spread of the ongoing austerity to most advanced nations. Thus far, the recessionary fiscal drag has been centred on the eurozone periphery and United Kingdom. Latest indicators point to it spreading to the eurozone's core (including Germany and France) and Japan.

This only confirms the International Monetary Fund (IMF)'s contention that excessive front-loading of fiscal austerity will “dim global growth prospects in 2013.”

The recent near simultaneous leadership changes in China, Japan and South Korea offer East Asia a fresh opportunity for reconciliation after a period of tension.

The region's three biggest economies now appear to be confidently over the hump following the Tokyo and South Korean elections last week and Beijing's leadership “jockeying” resolved by last month. But, realistically, they continue to face headwinds from a stumbling world economy.

North Korea's rocket launch last week adds to regional uncertainty. So does continuing unrest in Syria and the Middle East.

Critical to the well-being of nations is how they will use this opportunity to get their ties back on track.

Enter 2013

The year 2013 is a big step following a tough year. To me, six events had dominated:

(i) Europe held the world's fate in its unsteady hands for most of the year. It took the European Central Bank (ECB) president Mario Draghi's promise “to do whatever it takes to save the euro” to rid the sting out of the crisis, with a later pledge of “unlimited” bond buying;

(ii) The impact of the war in Syria and Morsi's uneasy presidency in Egypt;

(iii) Leadership transition in four of the world's five largest economies, with “elections” in United States, France, Japan and China ushering promises of new approaches to politics and policy making;

(iv) Serious political disputes in the East Asia seas;

(v) recent massive anti-Putin unrest in Russia; and

(vi) Serious transformation moves in Myanmar.

Today they still continue to dominate. For the moment, it is too soon to tell what their politics will bring in 2013. But one thing is for sure: Global business gloom has deepened since the third quarter of 2012 and is likely to persist.

I think there are some important lessons.

First, investment risks have turned more political. US businesses today have more than US$1 trillion in cash reserves and committed facilities awaiting investment. For them, the nightmare is Washington staying gridlocked, four days before falling off the “cliff.” Hopefully, like before, the “game of chicken ends at the last minute.”

Second, even a small economy like Greece (barely 2% of eurozone economy) can have a material impact on global business sentiment as the “Grexit” drama showed.

Third, the European episode pointed clearly that governments can't cut and grow. One of the important takeaways from 2012 is that it is critical to always focus on the big picture and not be grappled by event risks as these come and go.

As a US civil rights activist once said: “For all its uncertainty, we cannot flee the future.” So as we step into 2013, nations just have to embrace risks and learn to manage and live with them. Scurrying away will not help.

OECD slashes forecast

Paris-based rich nations' think-tank OECD (Organisation of Economic Co-operation and Development) said in mid-December that its composite leading indicators (CLIs) point to widely differing growth outlooks among its 34 member states.

Signs are of a modest pick-up in United States and the United Kingdom, slowdown in Canada and Russia, and deepening recession in the eurozone (including significant slackening in Germany and France) and in Japan, and possibly Brazil.

OECD's CLIs are designed to provide early signals of turning points between economic expansion and slowdown, based on extensive data that have a reliable history of signalling changes in activity.

Overall, barring worst fears won't come to pass, combined OECD GDP will only rise 1%1.5% in 2013, not much change from 2012, with a modest pick-up to 2%2.5% in 2014.

Not unlike IMF's forecast, OECD growth will only expand if eurozone deals seriously with its political and debt crisis, and the United States finds a timely credible path to avoid the “cliff.”

Absent such actions, world growth would slide into another downturn, with deepening recession in the eurozone periphery, and contraction or stagnation at the core and related advanced nations. What's needed is “very careful policy steering”.

Eurozone manufacturing kept contracting in November for a 16th month. Data show signs of recession extending into 2013 as policymakers struggle to come to grips with the crisis. For businesses and investors, the October Markit survey concluded that in 2013 companies can expect challenging sales and profits, causing many to focus on cost cutting.

Eurozone: ECB slashed its forecast for the eurozone in 2013, signalling another difficult year ahead. Echoing the IMF, it now expects growth of between shrinking at 0.9% to a growth of 0.3% next year (minus 0.5% in 2012).

The level of uncertainty was reflected in its first attempt to forecast 2014 at 1.2%. “Gradual recovery should start later in 2013” (GDP shrank 0.1% in the third quarter of 2012).

As the eurozone slipped into recession for the second time in four years, Germany's growth slowed down to 0.2% in the third quarter of 2012 (0.3% in the second quarter); expectation is for it to expand 0.4% in 2013 (from 1.6% in 2012). However, Germany faces a “favourable environment on the back of expansionary monetary policy”. Expect some revival later on in the second half of 2013, following better-than-expected jump in investor sentiment in December.

Industrial output in Germany fell 2.4% in October (minus 1.6% in September); France reported a 0.6% drop while Spain and Portugal had increases of 1.2% and 4.8% respectively.

“France is facing conditions much worse than Germany it's fast becoming aligned with its southern neighbours of Spain and Italy.” Germany, given its openness, cannot “prosper alone; it has a particular interest in the welfare of its partners”.

Nevertheless, eurozone's peripheral shows little sign of recovery: GDP continues to shrink because of fiscal austerity, euro's excessive strength and severe credit crunch. Already, social and political backlash against more austerity is becoming overwhelming with strikes, riots, violence and rise of extremist politics.

They just need growth. Another year of muddling through only revives old risks in a more virulent form in 2013 and beyond.

The United States: Growth in United States remained anaemic at 1.5%2% for most of 2012. Political and policy uncertainties abound. Fiscal worries are centred on four key areas: taxes, spending, stimulus and borrowing.

The United States needs:

(i) A package exceeding US$1 trillion in revenues over 10 years and set in motion a tax reform process in 2013 to limit tax deductions and lower rates for businesses and individuals;

(ii) A package of spending cuts with less generous social benefits, health spending reductions and cuts in selected mandatory programmes, including military;

(iii) Some short-term stimulus measures, especially on infrastructure projects and on education and R&D; and

(iv) Raising the debt ceiling now.

Already, with continuing impasse even at this late hour, forecasters are downgrading growth expectations for 2013. “It's a dangerous situation,” says Nobel Laureate P. Krugman. “The opposition is lost and rudderless, bitter & angry as it lashes out in the death throes of the conservative dream.”

All this is happening at a time of significant game changes boosting the outlook:

(a) Housing is recovering;

(b) Manufacturing re-engineering is underway;

(c) The third quarter 2012 growth is up 3.1% (1.3% in the seconbd quarter), with consumer spending rising 1.6% and unemployment down to 7.7%, its lowest since 2008;

(d) Pent-up demand is awaiting to be unleashed upon clarity on the future fiscal pathway; and

(e) New future in energy transformation, especially from low cost shale oil and gas.

But first, the daunting task to regain business and consumer confidence needs to begin now. Because of continuing uncertainty, consensus forecast chances of 24% for greater than 3% growth in 2013, same as chances of a recession.

On the whole, they expect growth of 2.3% in 2013, better than three months ago. But, this won't materially help the 12 million jobless. Even by 2014, unemployment is unlikely to be lower than 7%.

East Asia and Pacific (EAP): World Bank's December update places growth in China and developing East Asia at 7.5% in 2012 (against 8.3% in 2011) in the face of weak external demand.

Growth in EAP is still the highest among the developing world and constituted 40% of global growth, but is set to recover to 7.9% in 2013.

EAP (excluding China) will grow 5.6% in 2012, 1% higher than in 2011 due mainly to a rebound of activity in Thailand, strong growth in the Philippines, and relatively modest slowdown in Indonesia and Vietnam. Malaysia held a steady course.

For the entire region, easy fiscal and monetary policies supported growth. Next year, the region will benefit from continued strong domestic demand and the mild expected global recovery, especially in the second half of 2013.

I agree with the World Bank that most EAP nations have retained strong underlying macroeconomic fundamentals and should be better able to withstand external shocks. But many risks remain, including open vulnerabilities in the eurozone that could readily lead to renewed financial market volatility, and global slowdown: The United States falling off the “cliff” resulting in a loss of growth push for EAP; potential hostility arising from political territorial tensions in the Asian seas; and fallout from unexpected developments in Syria and the Middle East.

However, the robust growth in services this year reflects strong domestic support derived from continuing rising incomes. As these trends gather strength, services can be expected to emerge as a new growth driver in EAP.

For the region, latest business sentiment surveys have turned positive for the fourth quarter of 2012, reversing two consecutive quarters of declines, while global uncertainties remained the biggest concern for the region's firms.

China is expected to grow by 7%-9% in 2012 (9.3% in 2011), the lowest since 1999, due mainly to lower domestic demand growth reflecting the 2011 stabilisation measures. World Bank expects China to expand 8.4% in 2013 fuelled by fiscal stimulus and faster effective implementation of large investment projects.

Indications are the recent slowdown has now bottomed out: The third quarter 2012 GDP rose 7.4%, below the historical trend and the lowest in 14 quarters, but its quarter-on-quarter growth reached a 9.1% annual rate in the third quarter of 2012. Growth is, however, expected to slacken to 8% in 2014 as productivity and labour force growth tail off.

Consumer prices will likely continue to fall, averaging 2.8% in 2012, but will rise moderately to 3.3% in 2013 as growth picks up and the lagged effects of easy monetary policies in the second half of 2011 take hold.

China's policy challenge is to balance the trade-off between supporting growth and reforming. But, priority remains at implementing targeted tax cuts, health and social welfare spending and large-scale social housing to support consumption.

What, then, are we to do?

Geopolitical uncertainties will engulf 2013. Consumers, corporate and investors are bound to remain cautious and risk adverse even scared.

But prospects in EAP look bright and the region continues to have ample fiscal space to counter the impact of external shocks.

Much of the global uncertainties are still being generated in Europe. It's messy there right now, but the recovery of Europe will come some day.

Today, the ratio of stock market value to GDP averaged worldwide at 80%. In peripheral Europe, this ratio ranged from 23% in Greece to 38% in Portugal akin to where Asian counterparts were in 1998. Italy's total stock market value is today about the same as Apple's.

R. Sharma of Morgan Stanley made these and other insightful comments in the Financial Times, with this refrain: Is Italy worth no more than Apple? Food for thought.

Look at it this way. We all have to keep the perspective in approaching 2013 in order to avoid our own self-made “cliff.”

WHAT ARE WE TO DO
BY TAN SRI LIN SEE-YAN

 ● Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who speaks, writes and consults on economic and financial issues. Feedback is most welcome; email: starbiz@thestar.com.my.

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