Monday, April 28, 2008

Remember the Arc of Asian Democracies?

Forget the Asian Arc of Democracies.

The “Arc of Democracies”, you may remember, was a bruited alliance of India, Australia, Japan and the U.S. based on their presumed shared values as democracies and the fact that, geographically, they seemed to form an arc around authoritarian China, extending from India in the west, through Australia and on to Japan, with the US as its backstop.

The arc proposal was most strongly promoted by Australia’s long-serving prime minister John Howard and Japan’s former prime minister Shinzo Abe with the enthusiastic backing of the George W Bush administration in Washington.

The initiative, born about a year ago, did not survive, well, democracy. It only took two elections, one last July, where the opposition captured the upper house of Japan’s parliament and a general election in Australia last November, and Shinzo Abe and John Howard were history.
And so was the Arc of Democracies.

The new Australian Prime Minister Kevin Rudd repudiated the concept not long after taking office. At a newly launched “strategic dialogue” with China in February, Foreign Minister Stephen Smith said Canberra would no longer participate in the quadrilateral dialogue involving India, Japan and the US.

The Australian prime minister also made clear his opposition to the landmark bilateral security agreement that his predecessor signed with Japan in 2006. It was Tokyo’s first bilateral security agreement with a country other than the U.S. All of this leaves a pretty big missing piece in the arc.

I don’t see the other countries along the arc being too concerned about its demise either. In Japan forming “strategic alliances” was a peculiar obsession of former prime minister Abe and the nationalists on the right wing of the Liberal Democratic party. The current PM, Yasuo Fukuda, doesn’t seem to share this enthusiasm (although that might change if he is replaced by the hawkish former foreign minister Taro Aso.)

It was inevitably doomed by the enormous magnetic pull of China’s economy. Nobody in Asia really wants to be party to something that seems aimed at “containing” resurgent China. Said one Indian observer: “Japanese political leaders may be excited by the idea of joining hands with democratic India for promoting a new Asia, but Japanese businessmen feel more comfortable being in authoritarian China.”

The Japanese investment in China dwarfs the amount of money invested in India. For their part, Indian intellectuals and academics seem to be far more interested in China than they are in Japan; they are fascinated by another large developing nation that is growing rapidly and the lessons India can learn from it, while the Japanese economy treads water.

Of course, Australia’s Rudd is a famous Sinophile who speaks Mandarin and served in China as a diplomat. He puts the main emphasis on his country’s growing economic ties with China while downplaying India. On his first trip abroad as prime minister, Rudd visited Beijing, following stopovers in Europe and the U.S. while bypassing Japan, a slight that was noted in Tokyo. He was the first foreign leader to visit China since the disturbances in Tibet.

The Rudd government has also irritated the Japanese by taking a more high-profile stand against Japanese whaling activities in the Antarctic. To make smooth things over, the Australian PM has hastily scheduled a trip to Japan in June before participating in the G-8 Summit held this year on the island of Hokkaido.

Meanwhile, he has managed to irritate the other side of the arc by reversing a decision of the Howard government to sell uranium to India. A rejection of this sort makes it hard to nurture a closer relationship on the strategic level with New Delhi. .

That is the trouble with these so-called leagues, or arcs, or communities of democracies. They are democracies, and policy can be changed in a day at the whim of the voters. That’s why Republican Presidential candidate John McCain’s vague talk about forming new “League of Democracies” and excluding countries like China will probably go nowhere.


Sunday, April 13, 2008

To Hell with the Format War

Toshiba has bigger fish to fry.

Don’t waste time shedding any tears over Toshiba’s losing out to Sony in the next generation high- definition DVD format war. The electronics giant is moving boldly into other fields. Increasingly, the electronics giant is putting its business emphasis on the worldwide revival of nuclear power.

Of course, Toshiba has long been active in constructing nuclear power plants in Japan. Now it is moving into other countries and investing in the full spectrum of the nuclear fuel cycle, from the mining of uranium to fuel fabrication to nuclear power plant design and construction.

Toshiba’s first major new nuclear initiative came two years ago when it purchased the Westinghouse Corp from British Nuclear Fuels for $4.2 billion. That gave the company access to the Westinghouse-designed light water reactor type that is a staple of nuclear power production worldwide.

The acquisition meant that Toshiba is competitive in the construction of the two most popular versions of light water reactor plants in current operation, boiling water reactors (BWR) and pressurized water reactors (PWR). Virtually all of France’s extensive nuclear power comes from Westinghouse-designed plants built under license.

Since moving under the Toshiba umbrella, Westinghouse has receive billions of dollars worth of orders for new plants in China. And now it is moving into the reviving and potentially very lucrative American market for nuclear power plants. Major power utilities in the United States have been discussing plans to build more than 30 or more new nuclear power plants, and Toshiba is well-placed to meet those needs by promoting orders for its own advanced BWR and the Westinghouse PWR.

In March the company formed Toshiba America Nuclear Energy Co. to boost orders for its PWRs and BWRs in the US. The same month it teamed up with the Texas-based NRG Energy, which has plans to build two new nuclear power plants. Meanwhile, Toshiba said this month that it expected to receive orders for four new Westinghouse-designed plants, two each from Scana Corp. in South Carolina and Southern Corp. in Georgia.

These would be the first nuclear power plant orders in the US in nearly 30 years. Nuclear plant construction came to a virtual halt in a miasma of safety worries, stemming from the 1979 Three-Mile Island accident, and horrendous construction cost-overruns.

But the nuclear reactors vendors, such as Westinghouse, have not sat idly by during this extended down period. Westinghouse has developed what it calls its AP1000 design which has enhanced safety features and is constructed in a modular design mode that, the company says, reduces costs and construction lead times.

Meanwhile, Toshiba is moving to secure stable supplies of uranium. Last year it acquired a 22.5% stake in a consortium led by the Marubeni Corp. to develop two uranium mines in Kazakhstan. The deal gives it the rights to up to 600 tons of uranium annually. Toshiba thus becomes the first nuclear-power plant manufacturer to participate in a project to develop uranium mines.

Japanese electric power utilities view Kazakhstan as the new uranium El Dorado. Whereas Japan now imports only about 2% of its uranium from the central Asian country, it is estimated that by 2015 it will be buying 20-30% from making Kazakhstan one of its primary suppliers if not the leading supplier. Japan now imports most of its uranium from Australia and Canada.

The Kazakhstan uranium project was a fruit of a big Japanese trade mission to Astana, the Kazakh capital, about a year ago led by the Minister of Economy, Trade and Industry (METI), Akira Amari. He took with him about 150 government and industry officials.

Three major deals were concluded at the meeting of which the most far-reaching was the venture between the Marubeni Corp., Tokyo Electric Power Co. (TEPCO), Chubu Electric Power, and Tohoku Electric Power and Kazatomprom, the state-owned atomic power company.

The project is for the development of the Kharasan 1 and Kharasan 2 uranium mines in southern Kazakhstan. They are expected to yield about 5,000 tons of uranium per year by 2014 when they are in full production. Of this, the Japanese are entitled to 2,000 tons, or about 20 per cent of the country’s 2005 consumption. The projects are in the production-testing stage.

Kazakhstan produced 6,637 tons of uranium in 2007, a more than 20 per cent increase over the 5,281 tons produced the previous year. It aims to produce 15,000 tons annually. It has proven reserves of about 1.5 million tons, or about 19% of the globe’s total proven reserves.

Toshiba has striven to cement its “strategic partnership” with Kazakhstan by letting it in on its valuable Westinghouse property. It announced that it is reducing its stake in Westinghouse from 77% to 67% and selling it to Kazatomprom, the state-owned nuclear company, for about $540 million.

The company is reportedly also negotiating to purchase Nuclear Fuel Industries, Japan’s largest maker of nuclear fuel assemblies and the only company in Japan that makes fuel for both pressurized and boiling water reactors. That acquisition would place Toshiba in all areas of the nuclear fuel cycle from mining uranium, making it into fuel and designing and building the power plants that burn it.

But, of course, Toshiba isn’t the only Japanese giant wanting to cash in on nuclear power’s revival. Mitsubishi Heavy Industries (MHI) has teamed up with the French nuclear monopoly Areva to market and build new nuclear power plants. In March it announced plans to build new nuclear power plants in Europe using the Areva- designed European Advanced Pressurized Water Reactor. It is the first foray by a Japanese firm into the European nuclear market.

More agreements worth several billion dollars with MHI to supply reactors with fuel were signed April 11 while France’s Prime Minister Francois Fillon was in Japan for a short visit. His mission was heavily weighted toward nuclear power cooperation. He brought with him Anne Lauvergeon, chief executive officer for Areva.

After meeting with Japanese Prime Minister Yasuo Fukuda, Fillon and his entourage flew to northern Honchu to inspect the Rokkasho nuclear fuel reprocessing plant, built in part with French technology. It is expected to go into commercial operation next month.

Japan is planning to build thirteen new nuclear power plants. The National Advisory Committee for National Resources and Energy predicts that nuclear power’s share of electricity production will increase from the current approximately 20% to nearly 50% by 2030.

Sunday, April 06, 2008

McCain is a Brat

Does it Matter?

The presumptive Republican Party presidential nominee, Sen. John McCain, has embarked on a biographical tour to highlight the places and early personal experiences that have helped to shape the kind of person he is and the kind of president he might be.

Everyone knows, of course, that he is the son and grandson of four-star admirals and that he had a distinguished career as a naval aviator himself before leaving the service to enter politics. What people might not know, or not fully understand, is that McCain is a brat.

In using this term, I’m not casting aspersions on his behavior as a youth. I’m simply using the common vernacular given to those of us who are sons and daughters of professional soldiers, sailors and airmen (subspecies: army brat, navy brat, etc.)

Americans have elected many veterans to the presidency; we have elected a few professional soldiers, such as Dwight Eisenhower. But we have never elected a brat; McCain would be the first. The last army brat with presidential aspirations was Gen. Douglas MacArthur. What makes brats different?

For one thing we brats have very little sense of roots, although perhaps as a way of compensating, a greater sense of the nation as a whole and, to an extent, the world. The easiest way to flummox a brat is to ask the simple question: “Where are you from?”

Usually we stammer out something like, “Well, um, I moved around a lot as a kid.” McCain wasn’t even born in the United States. He was born on a base in what was then the Panama Canal Zone. It doesn’t have quite the down home ring of Plains, Georgia or Hope, Arkansas.

Moreover, few civilians realize that growing up in the military, not to mention simply being in the military, is, or was when I was growing up, the closest thing one will come to pure socialism in America.

Nationalized health care? We’ve had it from the year one. As a teenager living on an air force base in Japan, I even had my teeth straightened at U.S. tax payer expense. Housing (better known to us as “quarters”) is provided free of charge – and pretty nice for admirals - or, if we have to live off base, is subsidized with a housing allowance.

Food is subsidized as well. Well into retirement, my parents believed it worthwhile to drive 50 miles from their Florida retirement home to McDill AFB to stock up on groceries at the commissary, by passing the civilian super market next door.

Schooling is free too, of course, through the defense school system abroad or through local public schools in the U.S. - with the localities reimbursed by the federal government for the property taxes we don’t usually have to pay.

Here in Japan, where I live, I tune into state-run radio ( AKA the American Forces Radio Network) which is blessedly free of commercial advertising, but has plenty of nanny-state appeals to stop for school buses, obey Japanese driving-while-drinking laws and generally behave as a good citizens.

McCain’s parents sent him to an expensive private school in Virginia (where he stopped to praise teachers during his biographical tour) but saved on college expenses as he attended Annapolis, one of the tuition-free service academies, as many brats do following in their parent’s footsteps.

Many of these perks were meant to compensate for the generally low base pay in the pre-volunteer army period. They may have changed in the years since I’ve been out of uniform. But that is irrelevant in McCain’s case as he, like me, grew up in the 1950-60s era military.

Does any of this matter?

Sen. Barack Obama’s teenage years in Indonesia attending international schools has been thought worthy of comment, so one might think that McCain’s formative years are also worthy of remark. McCain himself has said that his tour was meant to illuminate for the voters, “places that had a significant role in shaping who I am.”

The brat culture is a significant aspect of the American experience, not very well understood by civilians. It certainly played a part in shaping McCain into the person he is, and on the whole, probably for the better.

Todd Crowell is the son of a career air force officer.