Ukrainian Week published its interview with me

The interview was conducted before the earthquake hit Japan on March 11.

Russia is now in a hurry to restore its influence before China becomes a super power - World - Ukrainian Week

March 15, 2011
Viktor Kaspruk


Russia is now in a hurry to restore its influence before China becomes a super power

Japanese political analyst Kosuke Takahashi talks to the Ukrainian Week about current geopolitics in the Asia-Pacific region

-Mr. Takahashi, Japan's territorial dispute with Russia has prevented the two nations from concluding a post-World War II peace treaty. Russian government having assumed an increasingly aggressive posture regarding the country's territorial dispute with Japan in recent months, the question naturally arises, Why?

- The biggest reason is that Russia now has a long-term national strategy mentioned in the new Russian Military Doctrine, which was approved in February 2010. By 2025, China is expected to become the world’s largest economy surpassing the US. If that situation becomes true, China will occupy the West Pacific and the US will occupy the East Pacific as a natural step of power balance. Russia needs to have some strong footing in the East Asia, going into the West Pacific. This is why Russia is now aggressive regarding the issue of those disputed islands.

- The victorious Soviet Union acquired the islands as well as the southern half of Sakhalin Island (the northern half was already Soviet territory before the Second World War) as justly deserved spoils of war?

We Japanese don’t think so. But the tricky thing is that at the February 1945 Yalta Conference involving Stalin, Roosevelt and Winston Churchill, the US and Britain are said to have acceded to the Soviet plan to invade and occupy these Japanese lands as a reward for Soviet participation in the war. So it’s hard for Tokyo to criticize such secret agreement made in Yalta, which involved the US, Japan’s current biggest ally. If Japan criticizes Russia now, it means Japan also criticizes then US foreign policy.

- Moscow and Tokyo agreed in their joint declaration of 1956, which restored their diplomatic relations, that the Soviet Union would return the disputed islands to Japan upon conclusion of a bilateral peace treaty. Whether it is possible in general to agree with Russia?

- Yes, Russia agreed the return of two smaller islands in that declaration of 1956 and has kept saying so. But Japan will not accept the return of just two smaller islands.

- Ironically, the Russian leaders’ visits to the disputed islands demonstrate Moscow’s commitment to develop the long-neglected economy of the Russian Far East, including the southern Kurils…

Yes. As I said above, this is Russia’s long-term strategy. The Southern Kuril Islands are very significant militarily.

But theescalation of a long-running territorial dispute between Japan and Russia is sending relations between the neighbours to their lowest point in decades and may lead to new areas of tension in northeast Asia.
The dispute relates to four islands that Japan calls the Northern Territories and Russia the Southern Kurils. The Soviet Union annexed Kunashiri, Etorofu, Shikotan and the uninhabited Habomai islets after the Second World War, fomenting a dispute that has prevented the two nations from concluding a post-war peace treaty.

The Pacific Fleet is tasked with protecting the Southern Kurils.

The islands' rich mineral and fishing reserves and strategic position make them a valuable prize. The straits between them do not freeze during winter, allowing Russia's Pacific Fleet to access to the Pacific Ocean from the Sea of Okhotsk.

Similar, that Medvedev is combining the political advantages of playing a nationalistic card ahead of 2012 elections with an awareness that Japan's new defence policy focuses on meeting Chinese territorial ambitions in the East China Sea.

- Upcoming elections - in 2011 for parliament and in 2012 for the presidency - make it especially difficult for Russian politicians to make major concessions to Japan. Medvedev's political team is concerned that he lacks the hard-line credentials that make Prime Minister Vladimir Putin and his coterie so popular. But with the president unwilling to sacrifice improving ties with the United States and NATO or Russia's important relationship with China at the nationalist altar, confronting Japan over the Kurils represents the safest alternative?

- Yes, Russia has China in East Asia now. China is Russia’s third-largest trading partner. Japan is Russia’s 11th trading partner. For Russia, Japan’s attractiveness especially in terms of economic ties is declining.

-Russian policymakers are also annoyed that the Democratic Party of Japan (DPJ), which is in power for the first time in its history, has not changed Tokyo's policy toward the islands, despite expectations that it would make more concessions than previous Japanese governments?

- The DPJ government is still fresh and politically venerable and weak. It cannot make any concession especially before April 2011 local elections, including Tokyo gubernatorial election. This is the same situation as Russian politicians who will have the state Duma (lower house) elections at the end of this year, to be followed by a presidential election in the spring of 2012.
- The Japanese government's strained ties with other key countries may also explain Moscow's harder line? Russian officials have calculated that the Japanese government cannot respond strongly to Moscow's moves given its current strained relations with China and North Korea, and lingering tensions with South Korea?

- No. Japan and South Korea’s relations are becoming much better, as they started talks on military cooperation already. China and Russia are strengthening their ties against the US, Japan and South Korea. This is the most recent security situation in East Asia.

- The Russia-Japan territorial dispute escalated shortly after the Sino-Japanese confrontation over the Senkaku Islands - referred to as the Diaoyu Islands in China - became more acute?

- Yes, Russia is aiming to take advantage of Japan-China conflicts. One of the motivating factors for Moscow could be Japan's new defense policy for the next decade, adopted by the government last December. Tokyo plans to reduce Cold War-era equipment and organizations, especially the Japan Ground Self-Defense Force (JGSDF) personnel in Hokkaido prefecture, the northernmost part of Japan facing Russia. Under its new policy, Japan plans to boost security around the Nansei Islands in Okinawa prefecture in the country's south, and in the East China Sea near China and Taiwan, a move that is apparently aimed at countering China's growing naval power.

- Another likely explanation for Moscow's growing assertiveness regarding the islands is that Russia is succeeding in raising its profile in East Asia more generally, even without resolving its dispute with Japan?

- Compared with China, I do not think Russia is succeeding in doing so. Rather it’s losing influence in East Asian affairs such as North Korea’s nuclear issues. So Russia is now in a hurry to restore its influence before China becomes a super power in this region.

- Mr. Takahashi, Russia has little incentive to change its approach to the island dispute, and many reasons to maintain its tougher stance?

- At least until after 2012 elections in Russia, there will be no progress. And if Russian economy becomes bad in coming years, for example, led by a sharp fall in oil and gas prices, then it might rely on Japan’s money and technology by giving Tokyo some concession regarding those islands. Otherwise it would be really hard for both nations to solve this issue.

Political scientistKosuke Takahashi, a former staff writer at the Asahi Shimbun and Bloomberg News, is a Tokyo-based expert, who writes in both English and Japanese. He visited the Northern Territories, the disputed lands between Russia and Japan, in June 1998 as representative of the Asahi Shimbun and reported on the situations there. He currently works for Asia Times Online and Jane's Defence Weekly as Tokyo correspondent and Nikkei CNBC (news television channel broadcast in Japan)as TV commentator. He graduated from Columbia University's Graduate School of Journalism and the School of International and Public Affairs as a dual master's degree student.

On March 20, the biggest full moon since March 1993 will occur

On March 20 in Japan (March 19 in the US), the biggest full moon since March 1993 will occur. It’s called a super "perigee moon.” The tide will come in more than usual. People on the coastline hit by tsunamim, just in case, better watch the tide .

日本時間の3月20日(米国時間19日)は1993年3月以来の満月の大きさとなる。その分、大きな満ち潮となる。津波被害にあった海岸地域の方々、ぜひ頭に入れておいてください。

A list of Twitter hashtags on Japan earthquake

#jishin : 地震情報(info on earthquake)

#j_j_helpme : 救助要請(a call for help)

#hinan : 避難情報(info on evacuation)

#anpi : 安否確認(safety confirmation)

#311care : 医療支援(medical support)

(My latest story for Asia Times) Record-high yen assaults Japan

Very, very good news. This afternoon I just got a phone call from my relative in Miyagi Prefecture. He and his mother survived. I was pretty much relieved to hear they are safe.

Mitsunori Goto, 48, my relative, who survived the earthquake one week ago, said his car was swept by the tsunami but he managed to escape alive. At that time, he was in Ishinomaki City of Miyagi. He gave me a phone call today. He is a former SDF member.
Also, my late grandma's house located in Tome City of Miyagi did not collapse during the earthquake. My mother and I always go to this house every Obon season around mid-August.

Here is my latest story for Asia Times. I criticized speculative FX trading, which took advantage of nuke fears in Japan.  Cheers, Kosuke

Record-high yen assaults Japan
 By Kosuke Takahashi

TOKYO - Greed and fear move markets, one popular proverb on Wall Street says. Speculative market players, taking advantage of greed and fear, are now assaulting Japan, seeking to gain in the wake of the country's worst recorded earthquake, subsequent big aftershocks, massive tsunami, tremendous loss of life and nuclear panic.

With nuclear fears on the Fukushima Daiichi nuclear plant rising, speculators are aggressively buying the Japanese yen amid　cat-and-dog surging demand for the currency, pushing up the yen to a record post-World War II high of 76.25 to the US dollar on early Thursday in Tokyo. The yen at this level will likely hit the profitability of Japanese exporters such as Toyota and Sony in coming months, although it can help lower prices of imported crude oil and other raw materials.

Why do speculators buy the yen, instead of selling it, as geopolitical risks of Japan on nuclear radiation are rising and the Japanese economy is expected to slow down in coming months due to massive earthquake damage?

The prevailing notion in the markets is that global money managers and hedge funds, as well as Japanese mom-and-pop investors, are increasingly seeking to reduce investment risk due to the global downturn in stocks, and that those investors are unwinding so-called yen carry trades, which under less volatile financial times allow traders to capitalize on Japan's ultra-low interest rates to buy higher-yielding assets in Australia and elsewhere.

But the real reason is not a simple yen-buying based on risk aversion. They are actually taking big speculative risks to bet on the yen's further rise by buying it. They simply buy the Japanese currency, as they think that people want to buy the yen in times of emergency world-wide.

Yen-buying and losses in the stock markets started to pile up late morning New York time on Wednesday after European Union Energy commissioner Guenther Oettinger warned of "further catastrophic events" in the coming hours in Japan, saying they "could pose a threat to the lives of people on the island".

He said that one of Japan's nuclear plants was "effectively out of control", and that the situation could continue to deteriorate. Europe's energy chief later played down his warning, as his spokeswoman said his comments were based on media reports, his personal fears and so forth after the comments alarmed global financial markets.

Then, losses in the stock markets and yen-buying accelerated after the United States Embassy in Japan urged American citizens living within 80 kilometers of the quake-hit Fukushima nuclear power plant to evacuate as a precautionary measure.

Nuclear pundits around the globe have mentioned Japan’s possible nuclear crisis as being equivalent to the 1986 Chernobyl accident. They seldom mention a basic but important fact. Unlike Chernobyl, Japan managed to automatically shut down all the nuclear power reactors in Fukushima immediately after the earthquake on March 11. This is quite different from Chernobyl.

"The yen is being bought as nuke fears are exaggerated abroad," said Yuji Saito, director of the foreign exchange department in Tokyo at Credit Agricole Corporate & Investment Bank. "By taking advantage of those exaggerated fears, speculators aimed to trigger massive stop-loss orders of yen-buying at the level of a previous record-high of 79.75 yen against the dollar. They succeeded in doing so by triggering those stop orders amid very thin trading between New York and Tokyo times."

Saito said now that speculators had finished hitting another record-high of the yen against the dollar, they fear intervention by the Japanese authorities in the currency markets by selling the yen, and have already started to sell the yen by riding on possible future intervention by the Ministry of Finance and the Bank of Japan.

"Crucially, FX [foreign exchange] carry positions have likely been wiped out, without a severe jump in volume, so overall, conditions for risk appetite/releverage actually appear to be reasonable and there will be investors with strong interest in buying cross-JPY," UBS wrote in a report on Thursday. "Of course, if the news flow deteriorates yet again, the market could yet turn, but overall last night's price action seems very FX-specific and stops/barriers driven than any indication of fundamental fear-induced deleveraging."

Expectations are rising that central bank officials and the Group of Seven finance ministers will decide to assist Japan's recovery efforts and also approve, or at least understand, Japan's currency intervention at an emergency meeting by phone on Friday. The Group of Seven is composed of the United States, Japan, Germany, France, the United Kingdom, Italy and Canada.

"Japan will be forced to sell US Treasuries if it really needs the costs of its reconstruction," Saito said. "This would be severely damaging to the US. So I think the world led by the US will help Japan this time."

As of January 2011, Japan holds $885.9 billion of US Treasuries, the second-largest holder, following China's $1.15 trillion.

Kosuke Takahashi is a Tokyo-based Japanese journalist. He is a regular TV commentator at Nikkei CNBC in Tokyo. He previously was a currency reporter for Bloomberg News in Tokyo under the pen name of Kosuke Goto.

(Copyright 2011 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Greed and fear move markets..

Nuke fears are exaggerated abroad. Unlike the 1986 Chernobyl accident, remember that Japan managed to shut down all nuke plants in Fukushima immediately after the earthquake. This is a basic fact and quite different from Chernobyl.

Well, some people need such fears, especially market players on the Wall Street, as greed and fear move markets...