JIN-219 -- Does Japan Really Have No Choice?

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J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News
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Issue No. 219
Wednesday, March 19, 2003
Tokyo

CONTENTS

++ Viewpoint: Does Japan Really Have No Choice?
++ Noteworthy News
- Regional Banks Charge for Deposits Made by Coins
- Over Half of Aozora Bank's Employees Says Yes to Cerberus
- NTT East to Cut Fiber Rates by 20 Percent

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++ Viewpoint: Does Japan Really Have No Choice?

Just after US president George W. Bush announced that Iraqi president
Saddam Hussein and his family had exactly 48 hours to leave or face
war, Japan's prime minister Junichiro Koizumi said it would be
appropriate for Japan to "support" the US if the country uses force
against Iraq. He said US military action could be justified even
without further UN resolutions.

Tokyo on Tuesday seemed oddly business-as-usual. Japan's
"support" for US actions was no surprise, as influential politicians
here have recited their mantra -- the importance of US-Japan
cooperation -- over the past few days. The stock markets initially
seemed to have taken the announcement as a positive move. On March 18,
the benchmark Nikkei average was up 1.05 percent, or 82.82 points, to
7,954.46, after hitting a week's high of 8,081.17 earlier in the day. The
broader Topix, which includes all first section listings on the Tokyo
Stock Exchange, was up 0.82 percent to 783.56.

The following morning, however, Tokyo's markets plunged.

Perhaps we are not alone in wondering what it really means for Japan
to offer its support for US military actions. Japanese government officials
have reportedly said that Japan's contributions to the war will be limited
to such activities as support for refugees, evacuation of civilians,
reconstruction of "postwar Iraq" and mobilization of the Self-Defense
Forces to guard US military facilities in Japan -- at Washington's
request.

Since the current peacekeeping cooperation law limits Japan to
peacekeeping activities directly under the auspices of the United
Nations, Japan's support needs to be non-militaristic, unless it adopts
dramatic new legal measures. If these proposed activities are
non-militaristic, couldn't Japan do without openly declaring its
"support" for US aggression?

Japan's problem is not whether to support the US or not: it's
the absence of any thoughtful political debate or discussion of such a
critical issue. Until last week, Koizumi said he didn't know what
he would do in the face of Washington's increasing disenchantment with
the UN. Asked by Ichiro Ozawa, the Liberal Party leader, whether
Japan would support US military action in the absence of a UN resolution
authorizing such action, Koizumi last Thursday said he wouldn't know until
it happened. "I will think about it by considering the situation and the
atmosphere when the time comes."

We wonder what sort of thinking Koizumi gave to the question of
Japan's position on the eve of war. How deeply did he consider the
situation and atmosphere? For when Washington suddenly claimed that
diplomatic means inside the framework of the UN had been exhausted,
Koizumi and his people shifted their position to fall directly into
line with the US. At the end of last week, the Japanese government
started saying that Iraq had already missed its chance to fully comply
with current UN resolutions.

In the meantime, the popularity of the Koizumi cabinet has gone south
with the speed of a Shikoku-bound shinkansen. According to an opinion
poll by the Asahi Shimbun in February, the percentage of those who
expressed their support for the Koizumi cabinet dropped to 44 percent.
A Kyodo News poll conducted this past weekend showed an even steeper
drop of support for Koizumi -- down to a record low 41 percent. Even among
those who said they support the cabinet, about 50 percent said they are
dissatisfied with the way that the government is handling the Iraq
crisis. Among those who didn't support the cabinet, about 80 percent
expressed their dissatisfaction with the cabinet's measures toward
Iraq.

There have been some anti-war demonstrations in Japan over the past
two weeks, but the country thus far seems to have remained disturbingly
quiet. Old school Japan hands may say that this is yet another example
of "shikataganai" (we-have-no-choice) sentiment. Koizumi himself called
the Bush administration's decision to go to war "yamuoenai" (anguished
but inevitable). But is it fair for him to say that Japan has no choice
when he hasn't really proffered, discussed or debated any other options?

We are reminded of the embarrassing remarks made by the Bush administration
this past fall, comparing a future postwar Iraq to the postwar Japan of 1945.
According to the administration, America would rebuild and democratize Iraq
in the aftermath of war -- exactly as it did in Japan. The ignorance of the
comparison was quickly exposed and decried, but it's worth revisiting now. For
the current state of Koizumi's brand of democracy -- a democracy without debate;
a democracy of silent acquiescence -- may be exactly what the Bush administration
has in mind after its bombs have demolished Baghdad.

-- The editors

Sources:
Reuters
http://www.reuters.com/financeArticle.jhtml?&storyID=2395998&newsType=
tokyoMktRpt&menuType=worldIndices

Nikkei.com (Japanese)
http://www.nikkei.co.jp/news/main/20030318AT3K1802O18032003.html

Asahi.com
http://www.asahi.com/english/politics/K2003031700236.html

Asahi.com (Japanese)
http://www.asahi.com/special/shijiritsu/TKY200302280230.html

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++ NOTEWORTHY NEWS
(Long URLs may break across two lines, so copy to your browser.)

** Regional Banks Charge for Deposits Made by Coins

In Brief: Some regional banks in Japan are now charging commissions
for deposits made with coins in a desperate effort to earn more yen.
According to the Asahi Shimbun newspaper, Akita Bank now charges 210
yen for deposits of between 301 and 500 coins, 315 yen for 501 to
1,000 coins, and 525 yen for more than 1,000 coins. Other regional
banks, including Nagano Bank, have introduced similar charges.

Commentary: The soundness of Japanese regional financial institutions
has been a source of headaches for the Japanese government. Regional
financial institutions -- including cooperative financial institutions
and shinkin banks -- hold more than half of the nation's bad loans.
Small businesses are the real losers of this latest attempt by the
banks to make money.

Source:
Asahi.com
http://www.asahi.com/english/business/K2003031800449.html

Links:
"The Year Ahead" (J@pan Inc's January 2003 issue)
http://www.japaninc.com/article.php?articleID=973

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** Over Half of Aozora Bank's Employees Says Yes to Cerberus

In Brief: The Nihon Keizai Shimbun on Tuesday reported that 53 percent
of Aozora Bank's employees want Cerberus to buy the bank's shares from
Softbank. As troubled Softbank plans to sell its shares, several
financial institutions, including US buyout fund Cerberus and Sumitomo
Mitsui Financial Group, have expressed their interest. A bank
employees' association conducted the survey.

The Financial Services Agency has expressed its concerns about a
foreign firm -- especially a buyout fund -- buying a large chunk of a
bank.

Source:
The Nihon Keizai Shimbun, the morning edition, March 18, 2003

Link:
"Sumitomo Mitsui Banking Eyes Stake in Aozora Bank," J@pan Inc,
February 2003
http://www.japaninc.com/article.php?articleID=1007

** NTT East to Cut Fiber Rates by 20 Percent

In Brief: NTT East announced Tuesday that it would slice monthly rates
for its B Flet's fiber-optic Internet connections by about 20 percent.
That would bring the company's family package down from 5,800 yen to
4,500 yen. Also, for customers applying before the end of June,
installation charges, usually 30,000 yen, will be cut in half, the
Nihon Keizai Shimbun reported.

Commentary: NTT East is competing with the deep pockets of Tepco and
other utilities for dominance in the market for fiber-optic Net
connections. A big, fat price war between NTT and Tokyo Electric Power
Co. (Tepco) would be nice. As wireless guru Daniel Scuka recently said
in his weekly Wireless Watch newsletter, Japan is "the coolest and
lowest-cost place on Earth from which to surf the Web."

Source:
Nikkei Net Interactive (subscription required)
http://www.nni.nikkei.co.jp/AC/TNKS/Nni20030319D18JFA22.htm

Link:
Wireless Watch No. 93
http://www.japaninc.com/newsletters/index.html?list=ww

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STAFF
Written and edited by J@pan Inc staff (editors@japaninc.com)

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