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There are those moments when you feel "this could only happen in Japan". One was when 20,000 elevators about 13,000 by Hitachi and 7,000 by Toshiba - stopped in Tokyo in the big quake 3 weeks ago. Not that they automatically stopped, all but 19 correctly at closest floor with open doors so that nobody was trapped, but that internet was full of complaints why it took Hitachi and Toshiba several hours to get them all working back again. Could they not perform quicker as, after all, it was Saturday evening and thousands of people were out and got stuck in restaurants in top floors of high rise buildings? And what about those 19 that did not work as they should? Shouldn't all elevators be equipped with emergency water just in case you got stuck inside? And, after consuming water, it would surely be good if they had portable toilet for the follow-up emergency. There seemed to be no limit to demands from the public. As they say: "This is Japan!"

Things are a bit different in neighboring countries. When the big river cruiser suddenly turned over in a bout of wind drowning most of its passengers in China, the most important media follow-up seemed to be how to give more exposure to the Prime Minister resolutely leading the rescue work - even if those caught inside were all drowned long before he got there. In face of raging criticism from the public, the CCP Central Committee issued a directive to step up efforts - not to rescue or finding reasons but - to control public opinion. As in the Korean ferry case, the ship seemed to be designed for profit - to maximize the number of customers it could take on instead for safety, yet navigating treacherous currents. As in Korea, here, too, miraculously, the captain and his crew were among the few survivors. To this moment, have not heard any official report as to how such a big boat could suddenly turn over with such tragic consequences. If the weather really was as bad as the captain claimed, he obviously should not have taken it out there in the first place.

In Korea, it was found and widely publicized that the official controls for building and operating commercial ships had been lax and now are supposedly being tightened up, but with the new MERS case its seems the same story about the health controls there. How could such lethal virus spread from a single source so widely and rapidly? It turns out that the original carrier visited four well known hospitals coughing and sneezing before he was taken in, where after it took government two weeks to properly inform the public and three weeks to come up with the names of the hospitals where it had spread. Moreover, Korea has still traditions of families of patients not just visiting hospitals whenever but often even staying there to look after their loved ones, sleeping in same room, feeding and washing them, changing bed clothes etc. While experts say MERS virus does not travel that easy from human to human and that Middle-East, its place of origin, is still much more dangerous place to visit than Korea today, it was another political blow to the already unpopular president, who had to cancel her state visit to Washington in order to appear daily in television in workman outfit "resolutely leading" the control campaign, just like her Chinese counterpart.

Coming on heels of countless other accidents and scandals, these incidents don't reflect well on Korea, which supposedly had already won its long term quest to become equal to Japan in economy, global business and local living standards. It does not help that its flagship companies have lost some of their shine, too. Hyundai cars and Samsung phones were supposed to offer quality to match Toyota and innovation to match Apple at an affordable price, but these goal posts seem now more far off again while new Chinese brands have caught up with Koreans from the down side. Korea's overwhelming focus on China looks today wrong strategy, too, with slow demand and intense competition with the locals prevailing there now. At Samsung, the main focus today seems to be keeping the giant "chaebol" firmly in family control despite minimal shareholding for safe transfer from founder to his children.

With this background, it is easier to understand President Park's policy to keep bashing Japan and refusing to meet his neighbor leader unless Abe comes up with new apologies and condolence money in the "comfort women" case. As there are no real territorial twists, the two countries are "same side" ideologically and there is a long history of practical business co-operation, this policy seems strange, but it seems a sure fire success that unites the otherwise divided Korean suffrage. Being "anti-Japan" is a long time fad with the most recent polls still showing over 70% of Koreans think Japan is "untrustworthy", yet Koreans tourists flocking here in hundreds of thousands. Unfortunately, such public abrasiveness seem to have exhausted Japan, where Korean popular culture, drama, music and food, has been highly popular for long time and this has been reflected in opinion polls. Now, the most recent poll shows some 70% of Japanese also think Korea is "untrustworthy".

The 50th anniversary of Japan-Korea diplomatic relations next week is becoming a political test rather than a celebration. Despite long history close together - back in 1965 ROK was a military dictatorship under current president's father and Japan was a freshly rising economy with its first Olympics and a liberal democratic government led by current PM's grandfather - any mutual ceremony is off and the focus is now on whether the two leaders will at least participate in reception organized by their respective embassies. According government sources, Abe has said he will accept invitation from Korean Embassy in Azabu - not far from Finland's - IF President Park will attend similar party at Japan Embassy in Seoul. Prestige seems the key word, not friendship.

All this seems even more unnecessary today when relations with China, where serious disagreements on territorial and ideological issues prevail on bilateral, even global basis, show some early signs of thaw on practical level. It seems China has finally decided to keep political feuds and practical co-operation apart from each other, something Japan has long time wished. When Toshihiro Nikkai, one of the LDP leader veterans, led 3000 member strong (!) Japanese delegation to Beijing last month, they got audience from President Xi himself, who opinioned that relations with Japan were "worth cherishing". The continuous flak from China Foreign Ministry spokesman has has clearly toned down and there has been several minister level meetings in finance, travel and environment. In the first mentioned, another LDP veteran and ex-PM Aso opinioned that while Japan will not join China's Asian development bank AAIB "for the time being", there are good possibilities to work together using experience of Asian Development Bank (ADB), that is majority controlled by USA and Japan. In fact, fresh analysis and news of early European influence at AIIB show that this new venture has the potential to avoid becoming just a new finance channel for China's geopolitical ambitions and huge state industry's internationalization. Instead of collaborator, it could become competitor to China's state banks that are geared to Beijing's giant New Silk Road project. Time will tell how it will all turn out. The news that China is likely to invest billions into EU's new infrastructure fund, when the European nations themselves seem tightfisted, show anyway its ambitions to even wider geopolitical reach.

Things really don't look that good in Europe these days with Ukraine battling heating up again for summer, Russia ramping up its military harassment in Baltics, NATO planning to place over 1000 tanks and trucks there for quick mobilization and Greek financial crisis approaching full crash like a runaway train with neither side giving in on their demands. It is said that only EUR 2 billion of requested spending cuts separated the two parties, when IMF and EU ran out of patience with the scheming Greeks and broke off talks. The 1Q.GDP growth for the whole area was just +0.4% up from the Oct-Dec quarter with Spain showing fastest recovery at +0,9%, but for instance Finland retracting -0,1%, only slightly less than Greece at -0,2%. The new Finnish government has achieved a "national agreement" on salaries, working terms and taxes and now looks to start implement its plan for EUR 4 billion public spending cuts. It will be difficult but as some commentators said, how can Finland demand that Greece puts its house in order if it cannot do the same at home. Surprisingly some of the cuts will come of education, pretty contradictory remembering earlier policies emphasizing importance of knowledge, invention and well trained young work force for the small country. In fact, just before the elections all parties publicly promised never to cut back in this area. Looks like Greek government will stick to its election promises better whatever the consequences.

Back in Japan, the final economic figures for the 1Q.GDP were corrected up as expected with business investment activity proving pleasantly much better than first estimated. The total growth from Oct-Dec quarter was now put at +1,0% which means +3,9% annual speed. Few people expect that this can be maintained through the year, but the 1Q figures confirm Japan climbed up already then from the short "technical recession" last year brought about by the VAT rise. April-June quarter might not turn much further up from Jan-March, but definitely well up year-on-year from April-June last year when the private consumption sank unforeseen -19% following the VAT rise.

One element in building back the economy is sufficient steady energy supply with its financial and environmental parallels. With nuclear reactors all still in standstill imprisoned by the public resentment and green activists, the government has been loath to come up with future projections and plans as to how the future should look like. It had to break the silence when Prime Minister had to announce Japan's commitments to CO2 emission cuts in the G-7 meeting that was held in Germany last week. The overall energy plan by METI says Japan should maintain 20-22% share of the total supply for nuclear, just slightly less than renewable energies that would reach to 22-24% according to METI. Fossil fuels would continue to make more than half of the supply according to the plan with especially repulsive coal painted at 26% the biggest energy source, bigger than the less polluting and recently rapidly grown natural gas.

Unexpectedly, the plan was a big disappointment for the environmentalists, who maintained that government should aim for much higher share for the renewables as well as for LNG to prevail over coal among the fossils. METI counters that, anyway, this would be a big stepdown in nuclear (earlier over 30%) and step up for renewables (earlier next to nothing except for hydro power), where wiped aside. Be it as it may, it's all about Targets, while in reality, the nuclear share remains zero and fossils command much bigger hold today pumping up the emissions and weighing heavily for negative trade balance.

Calculated based on this formula, Japan's emission cut targets were met with similar murmur of disappointment in Germany last week. While EU is pledging to cut its emissions by 40% from 1990 level by 2030, Japan's plan calls for only -18% from 1990 to 2030. That it was "dressed" as 26% cut from 2013 to 2030, same percentage as USA's pledge to reduce emissions from 2005 to 2025 did not impress either others, who knew well that Japan's emissions actually continued to rise during the so called Kyoto Protocol time and rose even more from 2011-12 when the nuclear plants were all closed. It was all far off the 50% cut talks from PM Hatoyama at his time, no matter if we all knew that gentleman made more irresponsible promised to left and right than any prime minister in Japan history. What most comments failed to take notice of was that, measured in volume instead of percentages, Japan's already very energy effective economy made for only 4% of global emissions, while USA and China, the two biggest polluters still relying on big energy input for each dollar or yuan of their output, count for 40% of global emissions.

As Winston Churchill once noted: "There are lies and big lies. And then there is statistics." Politicians and other opinion leaders surely make good use of this old statement.

Timo Varhama  
Tokyo, June 16, 2015   

Previous Columns

4 June 2015
Security and Finances: Pensions, Companies, Banks, Olympics, FIFA

21 May 2015
Economy Back on Track, Record Profits at Big Companies

11 May 2015
Spring Events: Odaiba Rock, Shibuya Sex, Capitol Hill, White Hall and Red Square

22 April 2015
Elections, Elections - Finland, Japan, Around the World

30 March 2015
Sakura: beautiful, but just for a short, fleeting moment

16 March 2015
Better late than never - Japan moves slowly

2 March 2015
Three struck out, three more in doubt - Abe's ministers under attack again

19 February 2015
Spring, Sibelius, Chocolate, Budget and Big, Bad Putin

5 February 2015
Reform Work Starts - Energy, Farming and Food on Wish List

26 January 2015
Terror strikes, plenty work, sad memories wait

15 January 2015
Watching AKB, Eating Mochi, Spending JPY 96 Trillion - Japan Off to Better 2015 After So-So 2014

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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