Desperate Japanese PM Shinzo Abe Visiting India
By Anuj Wankhede
14 December, 2015
Narendra Modi should relax. It is Shinzo Abe and Japan who need India – not the other way round.
Seeking to strike various deals with India, primarily the big ticket nuclear and the Bullet Train deals, Shinzo Abe will visit the national and economic capitals of India.
Most people feel that India will receive generous aid, scientific technology and knowhow from Japan and that Indians should be grateful for these favors coming as they are from a “technologically developed” nation.
Nothing could be further from the truth. Perish those thoughts of sleek bullet trains and sleek cars which could only belong to Japan. Most of the world has moved on and possess the technology, ability, money and workforce needed for building any of these infrastructures which was once almost a Japanese monopoly.
People who have not followed developments in Japan are awestruck by the absurdly cheap interest rates at which Japanese banks offer soft loans to Indian government and companies. Interest rates in Japan have been below 1% for well over 20 years now and are frequently as low as 0.1%. Even at zero interest rate, companies in Japan are not borrowing from banks to generate new capital and assets.
Japan is today a pale shadow of what it was during the second half of the twentieth century. It is economically, technologically, strategically, geo-politically nowhere near where it once ranked.
The Japanese decline started in the 1990’s and by the time the global financial crisis of 2008 came along; Japan had already been too battered and bruised to offer any semblance of a fight. Conspicuous consumption, cheap loans by banks for buying houses, cars and other assets led to a huge speculative home and stock market bubble that eventually burst in the 1990’s. The Japanese government eventually bailed out most financial institutions (just as the west would do post 2008) but could never regain the previous glory they had enjoyed.
All this has cost the Japanese people and its economy dearly. While earlier, people were assured of permanent jobs, now over one third of the workforce is temporary - or worse still, manufacturing is outsourced to other countries. Salaries and wages are stagnant.
Like India, Japan too has a fiscal deficit in its budget. While the Indian fiscal debt to GDP is in single digits, Japans fiscal deficit of over 240% of its GDP is the highest in the world and is a cause of huge concern. It clearly shows that the Japanese government is hugely overspending on financial bailouts; soft loans below borrowing costs, govt. salaries etc. and have alarm bells ringing across the globe.
From being a world leader in the 1990’s, Japan has lost out on all economic counts – low growth, low labor output/efficiency, high fiscal deficit, low disposable incomes due to stagnant wages, etc.
The Japan of today ranks among the “also-ran” club. Abe and his brand of Abenomics are trying to correct the course, but too much damage has been done and those halcyon days will forever remain memories in the Japanese people’s minds.
Economic indicators apart, a quick look at some iconic Japanese names shows the true picture.
Names such as Sony, Sharp, JVC, Nikon, Olympus, NEC, Panasonic, Toshiba, Nintendo, Casio, Fuji, were once marquee names in the consumer and/or industrial electronics market. Their advantage was in R&D investments which resulted in miniaturization of devices by using semi-conductors.
Sony - with its pocket transistor and the Walkman - or Olympus cameras, Casio calculators were legendary names. They are no longer iconic products. The companies have lost their competitive advantage and at times even used unfair trade practices like dumping excess stocks in the US markets to stifle competition. Sony is no longer the leader in televisions or in music players. The LG/Samsung duo lead in the consumer electronics space and Apple’s iPod, iPhone and iPad were too big an innovation for Japanese companies to reverse engineer and counter attack. Besides, software has never been the strength of Japanese companies who relied on economies of scale by building huge factories for the hardware. The top Japanese companies in this list bleed billions of dollar losses per year even as S. Korean Samsung and LG churn out profits. Chinese and Taiwanese companies are far more innovative and offer greater value for the price paid.
Technology is now available off the shelf or is easily reverse engineered, products are customized, massive contracting firms such as Foxconn reduce assembling costs to a fraction given huge economies of scale, and a strong Yen have together taken manufacturing of electronic and computer goods totally out of the Japanese domain.
Similarly, the shipbuilding industry is no longer dominated by Japan. The Chinese and the Koreans lead the pack here for commercial ships while the military and advanced ship market is dominated by the US and other countries. The other major industries of a nation such as pharmaceuticals, petrochemicals, food processing, military hardware do not figure in any way at the top global rankings.
In 2014, Japan lifted a ban on export of arms equipment much to the opposition of the local population.
Ever since the close of World War II, Japan has not had any full-fledged military except for the Self-Defense Force (SDF) whose mandate was only self-protection and peacekeeping activities. With its air force dismantled after WWII, no real-world experience in fighting wars and being heavily dependent on the US for its own security, the Japanese arms manufacturers are a lightweight in the global market.
Their own technology is limited to whatever has been either licensed by the US or what little R&D Japan did when the co-operation with the US over manufacturing aircrafts turned sour.
Although its industrial giants like Mitsubishi are now getting into military and arms hardware manufacturing, they are far less competitive as compared to the Americans due to lack of economies of scale. Besides, the technology available with the Japanese is largely out-dated as they only have licenses to manufacture items which the US no longer uses. In such a scenario, these industrial giants will need huge financial incentives from the government to invest in R&D, build manufacturing plants, etc. Abe’s goal is to make Japan into a giant military-industrial complex al la the West. However, the more expensive Japanese military hardware may not find many buyers from this new-comer.
To create a global name and to have some semblance of a customer list, Abe is looking to sell India the US-2 amphibious aircraft. India meanwhile can take its own military laundry list to any of the well-known and established defense manufacturers around the world and have a red carpet rolled out to them. In such a scenario, why should India explore expensive, outdated hardware from a country has no expertise in either technology transfer or logistical support?
Japan is in dire need to strengthen its own military in face of the aggression from North Korea and China. This is one reason Abe lifted the self-imposed ban on taking a proactive combat role in attacking another country even if Tokyo is not threatened. This aggressive U-turn by a relatively pacifist country is only going to increase tensions in the South Asian region and will result in more arms purchases by countries there. It is this self-created arms market which Japan is salivating about. Having India and Australia as stars on its customer list will make it easier to open doors and tap other smaller nations.
The Abe government is also pushing for a historic high defense spending of US$ 40 billion for the 2016 fiscal. What Japan is doing is opening the doors to a horrendous arms race in an already nuclear armed and tense region – all this to benefit its own struggling domestic industries.
Abe and Japan should remember that it was this sort of imperialist designs which brought atom bomb attacks on Hiroshima and Nagasaki. This time too, they are playing with fire in a flashpoint region which has four well established nuclear weapons countries which are willing to use them at will. In such a scenario, Japan can scarcely expect to be bailed out by the US without suffering collateral damage at the very least.
Against this backdrop, we have the visit by Shinzo Abe to India in December 2015. Abe comes to India offering nuclear deals with India. Make no mistake; this is only to sweeten his military designs which seek to bailout his ailing major industrial conglomerates including Mitsubishi, Kawasaki, Hitachi and Toshiba.
Hitachi is a partner with GE of the US in the nuclear energy space while Toshiba owns Westinghouse which is again American. Mitsubishi too is an old player in the nuclear energy market.
The huge - almost unmanageable – industrial conglomerates are known as “zaibatsu” in Japan.
For Japan, these zaibatsu are akin to Lehman Brothers or Goldman Sachs or JP Morgan’s of the west. They are simply “too big to fail.” If these zaibatsu fail, they will bring down the entire economy of Japan and even have serious ramifications around the globe.
Hitachi and Toshiba zaibatsu have completely failed in their consumer electronics businesses as detailed earlier and are incurring huge losses in that business. Their only hope is to get massive contracts to build new power plants using their own or their partners’ expertise.
Japanese are by and large known to be cordial and ethical people showing deep respect to others. However, the heads of the zaibatsu do not belong to this tribe and have been exposed to be serial (if not pathological) liars. Let us see the report card of some of these zaibatsu which tell the extent of lies and show that Japan Inc.’s house of soaring profits is built on nothing more than fabricated and outright criminally corrupt foundations:
The African Development Bank Group (AfDB) last month imposed penalties on Hitachi following a three-year probe into allegations of “sanctionable practices” in a power station boiler works contract. The penalties follow a September Foreign Corrupt Practices Act charge against Hitachi by the Securities and Exchange Commission (SEC), of the US, for inaccurately recording “improper payments to South Africa’s ruling political party in connection with contracts to build two multi-billion dollar power plants”. Hitachi agreed to pay $19-million to settle the SEC charges.
The AfDB investigation was carried out against two Hitachi subsidiaries: Hitachi Power Europe (HPE), based in Germany, and Hitachi Power Africa (HPA). HPA was controversially associated with the African National Congress’s Chancellor House and disappeared in early 2014 when Mitsubishi Hitachi Power Systems Africa was formally launched, following the merger of the thermal power units of Mitsubishi Heavy Industries and Hitachi.
Earlier this year Toshiba – the 140 year old electronics conglomerate manufacturing laptops, electronic chips to nuclear reactors and a "pillar of Japan Inc." – was found to have inflated profits by a stunning $1.2 billion for a whopping 7 years, with fabricated figures amounting to 30% of the company's "profits" since 2008. Toshiba's CEO Hisao Tanaka, together with five members of his senior staff had to resign. Apparently, the only reason Mr. Tanaka apologized and resigned is not because he was actually cooking books for an unprecedented 7 years - a period during which the CEO received tens if not hundreds of millions in equity and profit-linked compensation, but because he was caught. The only action he did was bow down and offered a 15 second apology.
To this illustrious list one can add Olympus Corp. which used fraudulent takeovers to hide $1.7 billion in losses over 13 years, starting in the 1990s. Its former chairman Tsuyoshi Kikukawa and two other executives pleaded guilty in September 2012 for covering up losses.
IHI Corp., Japan’s third-largest maker of heavy machinery, corrected earnings for the year ended March 31, 2007, to a loss of 4.6 billion yen, from a previously reported 15.8 billion yen profit. Chairman Ito had to step down to take responsibility and the company paid a 1.6 billion yen fine.
Hitachi, Toshiba, Mitsubishi, Olympus, IHI are just some of the names who have come out for their outright immoral, unethical and corrupt business practices.
It gets worse with nuclear power companies in Japan.
Sample these examples:
The Japanese government in 1997 filed a criminal complaint against its own nuclear development agency Power Reactor and Nuclear Fuel Development Corporation -- Donen in Japanese -- for filing a false report about a fire at a nuclear fuel reprocessing plant. The organization specialized in special Breeder reactors and the Advanced Thermal Reactor. It also owned a nuclear reprocessing facility and its activities included uranium exploration in Australia and disposal of high level waste.
The then Prime Minister Ryutaro Hashimoto said that he was "disgusted" with Denon and promised to "investigate them thoroughly and beat them into shape." After various accidents associated with the Tokaimura site, Monju plant and another asphalt processing plant; Denon was eventually disbanded in 1998 to be restructured as Japan Nuclear Cycle Development Institute which in turn became part of the Japan Atomic Energy Agency in 2005.
In what is billed as the worst nuclear accident since Chernobyl; in 1999 three reprocessing workers at the Tokaimura plant inadvertently created a critical mass of uranium, severely irradiating themselves and triggering chain reactions that continued for several hours. International safety experts were shocked to learn that the workers were pouring a solution of uranium oxide in nitric acid into a sedimentation tank -- by hand and using buckets.
In 2002 reports from the International Atomic Energy Agency (IAEA) dating from the 1990s described safety precautions at Japanese nuclear reactors as dangerously weak. IAEA inspectors visited four reactors in 1992 and 1995, finding 90 deficiencies in safety procedures. Four companies – TEPCO, Chubu Electric Power, Japan Atomic Power and Tohoku Electric Power – confessed that they concealed flaws in their reactors from government regulators.
Three reactors at the world’s largest nuclear plant, Kashiwazaki-Kariwa, shut down after a 6.8-magnitude earthquake in 2007 and fire broke out in one of the units. TEPCO initially said that the quake caused no radiation leaks, but days later admitted that 1200 litres of radioactive water had washed into the sea and several drums containing nuclear waste lost after their lids fell over.
Fukushima of course exposed all the lies told by TEPCO. They were not only blatant lies which tried to brush off earlier acts of severe omissions and commissions but TEPCO continued to lie with a straight face all throw-out the unfolding disaster. All that TEPCO did was this statement from its President: "I regret the fact we are inconveniencing all these people, I want to take this opportunity to apologize." Just another apology and TEPCO was scot free.
Abe and his government have done nothing about it and have in fact bailed out the bankrupt company besides releasing thousands of tons of toxic radioactive waste and water into the Pacific ocean. There is no clear direction on how and when the radioactive debris will be cleared or how long decontamination and decommissioning work will take or how many trillions it will cost the Japanese taxpayers.
Abe is too busy with his disastrous Abenomics, getting the Olympic games to Tokyo besides inciting South Asia towards a military race which have nuclear war implications. He is now willing to even forget that until very recently, Japan was not only reluctant but was adamant that it will not have ANY nuclear deal – including technology transfer – with India until India signs the Nuclear Nonproliferation Treaty (NPT). While India has consistently maintained that its nuclear program is purely civilian, most of the world (and tacitly, India too) admits that the Indian nuclear program is quasi civil and military. In such a scenario, Japan is giving India a thumbs-up to go ahead with its program to build more nuclear arms. This is not only unethical, but also goes against the wishes of all peace loving Japanese people who have been clamoring for a halt of all nuclear arsenals around the world. Abe and his government are back stabbing its own citizenry by agreeing to a nuclear deal with India in whatever form it finally emerges.
The lying by the Japanese government is so brazen that they not only lie to their own citizens, but also to their own brother-in-arms and ally the United States.
Following the Fukushima disaster of 2011, the Japanese government and TEPCO lied to the US military about pollution from Fukushima that US ships sailed to the most polluted waters and air to help Japan. Eight crew members of the U.S.S. Ronald Reagan sued the Tokyo Electric Power Co. in Federal Court. They claim the utility company, “a wholly owned public benefit subsidiary of the government of Japan,” misrepresented radiation levels to lull the U.S. Navy “into a false sense of security.”
What better can you expect from a bunch of pathological liars?
All the above examples prove that Japan is a spent force economically as well as technologically. It’s famed “ethical business practices” and “attention to detail” is as hollow as are their claims to have any cutting edge research to offer. All that they are doing is offering soft loans to other countries and extolling them to set up Japanese built infrastructure. Building and operating these projects will bring enormous profits to the Japanese companies. Besides, even at zero interest rate, no Japanese company is taking the money, so they might as well give it to India at sub 1% and make a small profit there too.
India should not fall into this trap and sign any nuclear deals with Japan as these deals have a very long time frame and will give Japanese government leverage to push India into making more infrastructure and defense purchases from Japan.
Anuj Wankhede is a Microbiologist, Masters in Management Studies and an avid environmentalist who believes that bigger the problem, bigger the opportunity.His interests are in the power and energy sector with particular emphasis on Nuclear Energy. He has worked with Greenpeace India as Nuclear Campaigner. He can be reached at firstname.lastname@example.org His blog is at: anmindia.blogspot.in