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 AOYAMA VIEW

 Anniversaries, updates, fallacies and deception

Last Sunday marked the seventh anniversary of East Japan 2011 triple catastrophe. 7,000 people continue to live in prefabricated temporary homes that were supposed to last only a few years and over 70,000 live elsewhere in Japan away from their home towns. Many are unlikely to ever return even if the gigantic reconstruction work has built back most of the tsunami damage. Public housing for those who lost their homes has been 90% completed while roads and railways are all back except for a 20 km stretch next to the crippled nuclear plant. It's not just infrastructure and higher seawalls, but whole towns have been raised up. Rikuzentakata, one of the hardest hit, will stand 12 meter higher than before. In any other country, they would have simply moved the town to higher ground nearby.

In Fukushima, 99% of ther polluted area has been cleaned up, but the crippled nuclear power plant remain years away from its clean-up and decomission. Only unscatched rods from one reactor that survived better than others have been removed and removal of the melted debris in 3 other reactors is scheduled to only start in 2021. The expensive ice wall that cost billions has proved only half-succesful to prevent contaminated water leaking out of the ruins and soon there's no more room for new holding tanks that now number 850. The water they contain is all cleaned up except for tritium which is not that harmful and experts say it can be safely let out, yet the local fishermen continue to resist that. As often in Japan, decision is postponed until it becomes a must.

Past weekend was also the 73rd anniversary of Tokyo fire bombing where some 100,000 people were burned alive in the huge fire that destroyed most of the city, a calamity as terrible as the atomic bombings 5 months later, yet much less known. There's no big memorial or museum like in Hiroshima and Nagasaki, only a small stone monument in Sumida Park, Taito-ku, where a ceremony was held with Prince Akishino and his wife Kiko-sama in attendance.

We Finns celebrated last year the 100th anniversary of our declaration of independence in a big way. It was educating to read again how the dramatic events unfolded month by month to finally culminate into the December decision. In contrast, it's been eerily quiet this year about the bloody civil war that started soon after and resulted into 32,000 dead and thousands of losers ending up in concentration camps. Happily, our Baltic neighbors can celebrate their 100th independence anniversary this year after following Finland's example without ensuing any war.

Finland established its diplomatic relation with Japan as soon as its foreign services got organized and the selected new Ambassador could travel here: instead of 9 hour flight today it took him 3 months by boat. Hence, we can celebrate that issue only next year while Sweden celebrates this year already 150th anniversary of ties to Japan. Our neighbors were here from the very beginning as this year marks also 150 years from the Meiji Restoration when Japan opened up to the outside after 250 years of seclusion. Makes you think it was not that long time ago, after all.

This week we celebrated the 35th anniversary of Finnair's first direct flight to Tokyo. In fact, it was The First Ever direct flight connection from Europe, quite an achievement at the time, and it took other airlines almost 10 years to do same. Some of us here are old enough to remember the unique experience of flying over North Pole as Soviet Union did not accept flying over its territory. Other airlines joined only after Soviet system collapsed and flights over Siberia were allowed to all. Who could have imagined in 1983 that the one weekly flight back then would grow into big business it is today: this summer we'll see 38 weekly flights from Japan to Finland! Once in Helsinki, thousands of passengers then transfer to Finnair's European flights – a second boost for the company's business. Good on you, Finnair!

UPDATES
While we are looking back, let's update a few issues from last column. Firstly, Japan's Oct-Dec economic growth was corrrected to 1.6% annual from the initial 0.5% estimate – a big change and not the first time here. Especially corporate investment proved higher this time: companies are now adding automation where ever they can to escape from the increasing lack of staff. One example: major convenience store chains are now spending big to install RFID tag readers for self-service checkout. This means that labels on all of their 40 billion annual products will be equipped with such tags. RFID was a growing start-up business for my old Finnish company 10 years ago and we knew the breakthrough in Japan retail would happen one day, but unfortunately the company did not have patience to wait and sold off the unit.

January trade balance was over JPY 600 billion negative, but fresh data show that the current account was about as much positive, in fact highest ever January surplus since the March 2011 catastrophe. The primary income account that reflect the earnings from overseas investments alone came to JPY 1.5 trillion, six times what it was in January last year and the highest in any January since 1985. This should give confidence that things are still looking good for Japanese business despite growing problems here and there.

Financial Service Agency suspended two of the much maligned crypto currency exhanges and gave "serious warning" to third one, who "lost" over USD 500 million customers money. In reaction, the owners of the company will pay all the money back from their own pocket. Shows what these guys are making from their scheme – they seem sure they ccan get it all back if they are allowed to continue.

Meanwhile, as speculated, Nissan has started talks with the French government to buy its stake in Renault, a touchy subject in France where government still owns numerous big industries. If the new president is brave enough to allow this happen, that would prepare the way for full merger of the alliance partners, No.1 car maker in the world last year. Yet, he is reportedly already under fire for letting GE buy Alstom SA, the maker of the TGV trains, a national pride, so guess any deal will take awhile. Meanwhile, another French state company Areva managed to settle EUR 3 billion claim from Finnish power company for scandalous building delay of nuclear reactor for small money. Olkiluoto 3 is expected to start finally in 2019, 10 years behind schedule.

TECHNOLOGY AND CHINA
I'm sure many people here wouldn't mind letting foreigners take over Kawasaki Heavy, one of the makers of Shinkansen trains, after its latest quality scandal: wheel chassis on a high-speed train was close to collapse and derail "thanks" to Kawasaki's quality control mistake. 144 trains made by the company were identified with similar fault and remain in traffic until new parts can be installed to them all.

JR itself has harbored bad feelings about Kawasaki ever since it exported Japan's famous high speed train technology to China for small gains, giving start to the huge industry that the buyers there turned it into. Recall well how JR top people were shocked that one of company’s suppliers would give away their hi-tech secrets. At the time, JR had big plans of its own to export the technology to "safe" countries like USA. Now such plans face tough Chinese competition everywhere.

There's a story in the Bible about selling your birth rights for a pittance, so Americans should know it well, yet big US tech behemots have been the leaders in giving away just about anything for the right to do business in China. One young tech billionaire even taught himself Chinese and jogged in Beijing pollution for cameras without mask to please CCP and get operation license for his company. It still remains barred from China, considered "dangerous" for what people can read on it.

Hope the New Mao's smuggly power grab for lifetime last week under complete media blackout and unforeseen wave of internet censorhip finally ended Western fantasies that economic progress will ultimately lead to democracy, free speech and enterprise in China. Ironically, with the currrent regime and inward political atmosphere in USA, the traditional spokesman for those values, the brash move went almost unnoticed.

THIS WEEK'S TRUMP
Instead, the U.S. president grabbed the global headlines last week himself with two brash moves of his own. First, in a moment's irritation or insanity, he tweeted - from his bedroom probably - that he'll raise import tariffs on steel and aluminium to please his voters in Pennsylvania - with little undestanding that they would actually hit U.S. neighbors and friends instead of his long acclaimed target China. Then, just days later after his assistants had tried their best to obfuscate the misshit, Trump surprised his own ministers as well as the South Korean messengers in his office by accepting off-the-cuff an invitation to meet from the North Korean dictator. Solemnly sworn strategy isolation with the rest of the world until concrete signs of change in North was turned over in seconds when seeing an opportunity for grand publicity.

It was shocking but hardly surprising from the self-loving self-promoter, who is supremely confident of his own skills: for him it's clear only he can overcome the complex obstacles and North's opaque double that have eluded all others for decades. His minders must be now in panic to see their boss running head first into a crucial meeting with no advance frame work and little knowledge of what his talks can lead to. There's less and less of them, though, in Trump's one man, one vote White House: now he fired his Foreign Minister, one of the few "adults" left there, for speaking against such unprepared meeting. The substitute from deep Mid-West is a devoted Trump yes-man and sworn North Korea hater. Way to go!

For those who expect another "Peace in our time" moment, I recommend to go see the new Churchill movie to get back to reality. (Another reason to see it is the fantastic masking that makes Gary Oldman to look like his character by Japanese artist who got Oscar for it.)

Aoyama view is that for Trump such meeting is firstly an escape from porn queens and Putin meddling, secondly a PR event to "look presidential" and raise popularity. The rest of us are left to worry what will come out of this as we know how easily he can be led by nose through sheer flattery. We worry even more for what will happen if he comes back home empty handed: pushing That Button for North Korea like he has thretatened repeatedly would be more likely than pushing anothet Tweet button.

For the Young Leader, securing face-to-face meeting on equal footing with US president is huge win, more than his father and grand father ever mustered, something that will cement his power among his party cadres and whole nation. Kim has guided the whole affair deftly according his own manuscipt all the way from his speech through the Olympic spectacle to using South as his personal letter bearer to Trump. After winning the Olympic derby 4-0, he is now 1-0 in his first Big League match even before it has started. For South president Moon things look also pretty good for now: he won US president to his side and, even before eventual Kim-Trump meeting, he will go to history books himself as only the third South president ever to meet North leader. It does not matter if this meeting neither achieves actually anything.

ABE’S WEEK OF HORRRORS
For Japan and especially Prime Minister Abe, it's a shocking letdown to be left out of loop and doubts are growing Japan will end up even worse-off if Trump manage to secure some compromise with Kim to freeze his missiles from reaching USA in line with his “America First” thinking, never mind what happens to Japan. Ironically, the South letter bearers would then end up in North's firing line even worse than Japan, exposing the foolishness of Moon's short term play.

Like Trump, Abe-san is also in deep trouble at home today. The Moritomo land deal scandal that he thought to have buried behind, is back to haunt him: demonstrators are clamoring for his resignation outside Parliament and inside there Opposition is boycotting all normal work to focus attacking government every day in live-tv. The fires re-ignited from Asahi Shimbun's scoop that the sales documents presented by the Land Ministry were doctored to cut off Mrs. Abe's name – and a few others, too. In flying terms, it looks like government's plane is smoking badly and the flames are approaching the Chief Pilot. Rumors have started to circulate Captain Abe might eject out by not seeking re-election for LDP's president coming autumn, after all. Instead, he could throw his weight behind another likeminded person, presumably ex-Foreign Minister Kishida, who would take the reins and carry on his agenda instead. The talks what to do must run heated behind the curtains in the LDP headquarters next to the Parliament.

Like his US buddy, Abe-san will excuse himself out from the daily grind with a trip to Washington to "cordinate Japan's policy with USA" with regard to North - quite a challenge as it seems Trump has no lasting policy at all. In full coat turn to follow Trump, he is also seeking his underlings to fix a meeting with Kim for himself, too. That would help him to look grand again and not just dumped by Trump. Just wonder why Kim would be interested to meet him.

Once in Washington, Abe must also try to implore Trump for lenience to Japan in the steel tariff issue. It has become clear that they are just instruments for blackmailing U.S. allies to concessions in other trade matters and security agreements and any exceptions are decided by presidential whims. It seems Trump has now totally given up any pretention that his "America First" will follow international rules and mutual agreements, but rather opts for the law of the jungle, ie. sheer Big Bully power to bend those with less power to its will. Until now that role was reserved to China.

We sure live confusing times today.

Timo Varhama  
Tokyo, March 16, 2018  


Previous Columns

5 March 2018
"WHILE WE WERE WATCHING OLYMPICS..."

26 February 2018
"Korean Olympics: sports shine, politics stink"

14 February 2018
"Korea: Murky Politics and Big Business Behind the Sport Spectacle"

4 February 2018
"It's "smile time" in politics, Olympics, economics and business"

23 January 2018
"Moomin crisis, panda frenzy and Olympics turned into political farce"

12 January 2018
"Heisei 30 looks good: share prices soar, PM rides high "

20 December 2017
"Look back at 2017: commotion around Japan, but steady and safe here"

11 December 2017
"Missiles, footballers and fishermen from North - Big spending on child care to get more mothers working"

28 November 2017
"Foolish things sell in retail, but sports are to be serious"

20 November 2017
"Making China Great - with Gaffes, Platitudes and Bullying"

10 November 2017
"Good news week: Finland business grows, EU trade deal gets cleared, Nikkei hits new heights and Trump visit goes smoothly"

20 November 2017
"Making China Great - with Gaffes, Platitudes and Bullying"

1 November 2017
"Japan: Endless Discovery"

21 October 2017
"Power play in Japan and elsewhere - some potentially serious, some not"

10 October 2017
"Abe's useless snap election sparks big changes he did not count on"

26 September 2017
"North Korea boost Abe popularity - opportunity to extend his rule"

7 September 2017
"Kims'allah, Japan is OK and doing well"

28 August 2017
"From North Korea's missiles to Turku Terror and US Navy Mishaps"

17 August 2017
"Raining cats and dogs, missiles and threats, but strong sunshine in economy"

27 July 2017
"Forests, floods, fish and consumer prices - stories too good and data too bad to be true"

21 July 2017
"From Cool Finland to Hot Tokyo: A Round-Up of Recent Happenings"

26 June 2017
"Anniversaries and Memories: Finland, Japan, USA."

19 June 2017
"Rainy Season in Japan, Political Storms in Europe"

8 June 2017
"Trump impact spreads - Japan struggles with workforce issues"

30 May 2017
"Taormina to Tokyo: Heavyweights and fashionable ladies"

"New Missiles, Diet Debates, Yet Big Business in Big Profits - Down on Ground Challenges Remain Basic and Simple"

9 May 2017
"Golden Week, Special Trains, Luxury Spending, Even North Worries Makes for Good Business"

20 April 2017
"North Korea, USA both worry Japan - Koike worry Abe and LDP even more"

5 April 2017
"Spring, Sakura and New Year Start in Japan - Commotion, Tensions Rise Around the World"

27 March 2017
"Questions Unanswered, Unasked – Lifestyle and Surveys Bring Light"

21 March 2017
"Finland in Focus: Friendship, Dictionary, Music, Food - Even Elevators?"

13 March 2017
"Uncertainty Increases Around Japan - At Home Rebuilding Uncompleted in 6 Years - Abe Popularity Takes a Hit."

3 March 2017
"Book Readers, Police Jokes, Nerdy Napoleon and Poison Scare"

24 February 2017
"Populism, Ignorance and Isolationism Leads to Mayhem and Mess"

16 February 2017
"Golf Diplomacy, Chocolate Festa and Hokkaido Deams-Come-True"

9 February 2017
"Tokyo overcoming winter, business changes, political battle and Trump threats "

2 February 2017
"Warm Feelings in Japan, Wild Winds from USA"

20 January 2017
"Ready for Rooster? It will be a wild ride!"



About the Columnist

The columnist is a Japan veteran among Finnish business, our Chamber ex-president and today Member of the Board of Trustees.
After running a major Finnish industry company's Japan business for over 20 years, he is now Senior Associate in a strategic consulting company.

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