Sunday, October 07, 2012


Repeated incursions into Japanese territorial waters, as Tokyo defines them, is putting a severe strain on the Japanese Coast Guard, which is the agency tasked with maintaining Japan’s control over the controversial Sentaku islands in the middle of the East China Sea, known to Chinese as Daioyu.

Normally thought of in terms of rescuing sailors in peril on the sea, the coast guard in recent months has, in effect become the fourth branch of the armed forces and the first line of defense in this quasi-sea battle with boats and other sea craft from China and Taiwan.

Fortunately, the confrontations have been fought with water cannons rather than real cannons. Even so, it is putting a strain on the coast guard, which boasts about 12,000 members and about 400 vessels of various sizes and missions ranging from buoy tenders to large, ocean-going armed patrol vessels.

The 11th coast guard district headquartered at Naha, Okinawa, has nine patrol cutters, but they have been augmented by drawing on vessels from other parts of Japan. By various accounts, as much as half of the patrol force has been deployed to the East China Sea to maintain Japan’s sovereignty over the islands.

At the same time, it has been called on to handle more traditional coast guard duties. September saw the coast guard rescue 12 sailors on a Chinese freighter that caught fire in the Sea of Japan and also rescue sailors on a fishing boat that collided with a cargo ship off Japan’s northeast coast.

For several years Tokyo has been quietly beefing up the coast guard, both by acquiring newer and larger cutters but also expanding the service’s duties and loosening regulations that guide their activities. Just this summer the parliament passed a law allowing the guard to arrest alleged lawbreakers rather than have to depend on regular policemen.

It has other semi-military duties such as maintaining a special anti-terrorism squad, and its mission to guard Japanese territorial waters has greatly expanded with the advent of 200 nautical mile economic exclusion zones. Even without counting the resources surrounding the Senkaku, Japan still has far more undisputed  EEZs than China or Korea.

The Coast Guard also provides Tokyo a handy way around the country’s constitutional prohibitions on maintaining an armed force. True, Tokyo the provisions have not prevented Japan from raising a formidable military, known euphemistically as Self-Defense Forces, yet Japanese armament is a politically sensitive issue both at home and abroad.

The coast guard comes under the administration of the Ministry of Lands, Infrastructure, Transport and Tourism, not the ministry of defense, so it is possible to boost its budget without breaking the informal rule that defense spending not exceed 1 percent of gross domestic product. While regular defense budgets have declined in recent years, the budget for the coast guard has risen ten-fold in the past couple decades.

“While the [Japan Coast Guars] has a long way to go to become a fully modernized and militarized service branch, the transformation may be the most significant and least heralded Japanese military development since the end of the Cold War,” writes Richard J. Samuels of the MIT Center for International Studies, one of the few academics who has paid much attention to the coast guard.

Coast Guard commanders have more discretion to use their weapons than the navy. In fact, it was involved in the only running sea battle in Japan since the end of World War II, The incident in December, 2001,  near the coast of Kyushu pitted several cutters against a suspicious vessel thought to be a North Korean “spy” ship.

The Japanese coast guard fired warning shots to stop the ship and then fired directly into the bow. The North Koreans returned fire with automatic rifles, wounding a couple guardsmen, but did not use the ZPU anti-aircraft cannon it with which it was equipped. Eventually the Koreans scuttled the ship and all ten  crewmembers went down with it.

Tokyo was interested enough in what this vessel was up to that it took the trouble and considerable expense of raising the vessel from 90 meters of water. It is now on display at the Japan Coast Guard Museum in Yokohama. Indeed, it is virtually the only exhibit. Cannon holes are clearly visible in the bow

Besides strengthening its conventional naval power, China has also been beefing up its comparable fleet of ocean research vessels and armed fishery monitoring vessels, some of which have been deployed in the South China Sea to police its claims in that sea as well as to assert its claims in the East China Sea.

These vessels are armed with machine guns, and probably could not hold their own against some of Japan’s larger patrol vessels equipped with 20 mm or 40 mm cannon should the two sides escalate their confrontation from water cannons to something that actually involves exchanging gunfire.

However, despite their armament, coast guard vessels are not true warships. They lack the weapons, armament and sensors necessary to survive modern naval battles. They have no torpedoes, anti-ship cruise missiles, sonar or anti-submarine defenses. No cutter would last ten minutes in a battle with a modern Chinese destroyer.

Fortunately, things have not advanced that far. The main worry in the Senkaku dispute is that the Chinese or Taiwanese, or both acting together, would “swarm” the islands territorial waters overpowering the coast guard by sheer numbers. That is what the Taiwanese attempted on Sept. 24, by sending 40 fishing vessels and 12 Taiwan coast guard vessels into the territorial waters.

Still it works both ways, as Chinese and Taiwanese fishermen might prefer to actually do some fishing rather than serve as (water) cannon  fodder. Both sides seemed to welcome the approach of a typhoon early October that sent the vessels temporarily scurrying to the shelter of home ports.

So far the expansion of the Japanese coast guard has not upset Japan’s neighbors in Northeast Asia and that may be a good thing as the coast guard can perform more missions that if executed by the regular navy would be considered dangerously provocative.


Sayonara Nukes

The Japanese government in early September unveiled a new national energy policy which aims to phase-out nuclear power by 2040, but it is a policy so riddled with contradictions as to be almost meaningless as a predictor of future energy uses.

Surprisingly, the government chose not to put a number on nuclear powser’s contribution. It was widely thought that it would adopt a split-the-difference figure of 15 percent as nuclear power’s contribution to the total electricity mix. The previous plan had projected 30 percent, growing to 40 percent.

Former prime minister Naoto Kan ordered the reappraisal in the immediate aftermath of the Fukushima Daiichi disaster that began with a massive earthquake and tsunami on March 11, 2011..

Rather than set a number, it proposed a series of guidelines: 1). No nuclear power plant would be allowed to operate beyond its 40-year life span; 2). Any restarts of the currently idled plants would need approval of the newly established independent Nuclear Regulatory Agency; 3). No new plants will be constructed. If strictly adhered to, that should mean that virtually all nuclear power will be eliminated around 2040.

One of the ironies about the plan is that it will implies more, not fewer, nuclear power plants in operation at least in the short  term. That’s because Japan is very close to a zero option now. At present, only two plants are producing power; 48 other plants are idle (not counting the four badly damaged Fukushima Daiichi plants.

That means some way will have to be found to sort out which of the plants will be allowed to go back online and which ones will be slated for decommissioning. Considering the amount of flak that the government took this summer to get just two back in operation, it may not be an easy situation to manage politically.

The new policy that calls for no new nuclear power plants to be built was almost immediately contradicted by a statement that the policy did not mean new plants that were in the process of being built. On the day of the deadly earthquake and tsunami, three new plants were under construction, either in early stages or, in one case, virtually complete.

The new government seemed to be saying that work could eventually resume on these three units. Assuming they don’t come on line until, say 2014 at the earliest, and have a 40-year life span that would push the day of reckoning past 2050, a very long time span in which almost anything could happen that might change the equation.

Another anomaly in the new energy policy is its proposal to retain reprocessing of spent fuel, at least in the near future. The procedure in which usable uranium and plutonium are recaptured and recycled into new fuel would seem out of place in a nuclear phase-out scenario.

The policy statement, obviously tries to reconcile several conflicting points of view. They include public opinion, which is still running strongly against continued use of nuclear power in Japan. Anti-nuclear demonstrators keep a vigil outside the prime minister’s office to drive this home.

That is offset by concerns of business interests, led by the main business lobbying group, Keidanren, that there will not be enough power to keep the factories running without retaining at least some nuclear power capability.

There are concerns of localities that are heavily dependent on nuclear power for taxes, especially those of Aomori prefectures on the northern tip of Honshu island, the location of several important nuclear- industrial complexes, most significantly the Rokkasho nuclear fuel reprocessing center.

It is understood that prefectural concerns weighed heavily in the policy’s statement of continuing support of reprocessing. It was bolstered by implied threats that the prefecture would stop accepting spent fuel from Japan’s nuclear projects. The prefecture’s spent fuel pool is now largely full of spent fuel awaiting reprocessing.

Beyond these parochial concerns is Japan’s precarious energy situation. Massive imports of liquified natural gas have already contributed to the country’s first trade deficit in years. It is not for nothing that the country invested so heavily in nuclear power, as it has almost no fossil fuels in its own borders, much that it does import comes from volatile parts of the world.

July was the first month in more than 30 years that Japan did not import a single barrel of crude oil from Iran. Washington has been increasing the pressure on Tokyo to steadily decrease its reliance on Iranian oil as part of its increasing pressure on Tehran without doing very much to help Japan replace these lost resources. Japan was once Iran’s second largest customer after China.

U.S, Deputy Secretary of Energy Daniel Poneman has also voiced worries about how a nuclear power phase-out might rebound on other countries. If the world’s third largest economy continues to snap up fossil fuel, energy prices all over the world will be impacted, he reportedly told a high level visiting official sent to explain the new policy to Washington.

That official, Seiji Maehara, responded that Japan might set a target, but might fall short of fully committing to it. A strict nuclear phase-out would inspire fossil fuel producers to jack up prices, he said. Japan is already paying top dollar to imports tons of liquefied natural gas to keep the lights on.

Of course, to many in Japan all of this points to a need to double down on renewable energy, mainly wind and solar, which today account for a fraction of the energy mix. A major proponent is the country’s richest business man, Masayoshi Son head of Softbank. No matter what option [in the policy report] renewables must be increased in Japan at top speed, he said in August while announcing his company’s pa the country’s largest solar power project.


Return of Shinzo Abe

It is said there are no second acts in Japanese politics, but Shinzo Abe, who served as prime minister for about one year in 2006-2007, seems determined to defy that rule and win another term as premier. If he succeeds, he would be the first time a Japanese leader has made a comeback.

Abe announced he would contest the Sept. 26 primary election to lead the opposition Liberal Democratic Party (LDP). His prospects were increased when the current leader Sadakazu Tanigaki announced that he would not run for another term. He has led the party during its three years in the political wilderness.

With Tanigaki out of the picture the remaining candidates are all from the party’s conservative wing. In addition to Abe the prospective candidates are the hawkish former defense minister Shigeru Ishiba and Nebuteru  Ishihara, the son of the extremely nationalist, China-baiting Tokyo Governor Shintaro Ishihara.

This suggests that the next general election, widely predicted for the late autumn but possibly delayed until the new year, may be fought more on nationalist issues rather than on the future of nuclear power post-Fukushima, the economy and the record of the government led by Prime Minister Yoshihiko Noda.

Although polls suggest that the public is more concerned about nuclear power, it is not an issue that animates the prospective leaders of the LDP. Ishihara senior may have single-handedly shifted the debate when he sparked the current brouhaha with China by threatening to have the city buy the disputed Senkaku islands, known to the Chinese as the Daioyu.

That forced the government itself to buy three of the islands (they were previously in private hands though the islands themselves are uninhabited), for fear that under Ishihara’s purview the islands would spark repeated provocations and more antagonism, such as building lighthouses, planting the flag or establishing docking facilities.

Even so, the national government’s move was denounced in Beijing, which is dispatching more “fisheries protection” vessels to the waters around the Senkaku. Ishihara himself has proclaimed that the Senkaku should be the main issue in any general election.

Abe resigned partly for ill health in 2007 setting off the current cycle of recurring one-year prime ministers. But his cabinet was also growing unpopular for its devotion to conservative hobby horses such as revising or repealing parts of Japan’s American-written constitution instead of focusing on bread and butter issues that more directly impact people’s lives.

He was also criticized for publically doubting that Japan had forced women in occupied countries to serve in army brothels during World War II. That last thing Tokyo needs now is a reprise of the “comfort women” issue as relations with South Korea are at historic lows over another disputed island in the Sea of Japan, controlled by Korea but claimed by Japan..

Prime Minister Noda has his own contest later this month. He is opposed by three no-hopers and is expected to easily win another term as party president. There is, of course, some question whether it is a prize worth having since the Democratic Party of Japan is widely expected to lose big time. It barely has a majority in parliament now due to constant defections.

Noda is planning to visit Moscow in December – one reason for thinking that the election may be postponed until January - amid speculation that he may make some headway in another vexing territorial issue: Russia’s ownership of four Kuril islands claimed by Japan. A success here might resurrect the DPJ’s election prospects.

Of course, the most significant political development in Japan is the emergence of a new party headed by the popular mayor of Osaka Toru Hashimoto. This week Hashimoto officially went national, changing his party’s name from Osaka to the Japan Restoration Party. It has already attracted seven deputies in the Diet giving it official status.

The new political group is expected to do well in the Kansai region (Osaka, Kobe and Kyoto), but it is far from clear how well it would do in the rest of the country. Yet it could hold the balance of power, assuming that the now opposition LDP and its ally increase their number of seats but fall short of a majority.

Hashimoto and Abe would seem to make a good fit, as both are conservatives as Japanese understand the term. The Osaka mayor proposes holding a national referendum on Article 9 of the constitution, with an eye to modifying or repealing the war-renouncing clause. He is also hawkish on defending Japanese territory, ie the islands in dispute with China and Korea.

He has feuded with the local Kansai Electric Power Co. efforts to bring some of its nuclear power plants back on line, giving him an anti-nuclear power reputation. However, he hasn’t spoken much about the issue on a national level, and his prospective partners in a future coalition government are not likely to push de-nuclearization of Japan as ardently as some other politicians.

Rather, he is proposing some radical constitutional issues that may not find much support among the more traditional LDP. These include cutting the size of the House of Representatives (now 480 seats) in half, eliminating the upper house, making the prime minister elected nationally and merging the prefectures into larger provinces.

Hashimoto sees himself in grand terms as a latter-day version of the Men of Meiji who totally transformed Japan in the 19th century and turned it into a world power. That is evident in the name of his party, in Japanese Nihon ishin no Kai. The word “ishin” is the same as the word in Meiji Ishin, or the Meiji Restoration.

Some in Japan might feel Hashimoto getting ahead of himself by presenting himself as a major reformer in the mode of historical figures. But the Meiji Restoration is looked on with nostalgia among Japanese who are increasingly frustrated about the utter lack of change in modern Japan under the two main parties, and he may tap into that feeling.






Natural Gas Exports to Asia

Since the Fukushima nuclear power plant disaster last year, Japan has been importing more and more liquefied natural gas (LNG) to fuel its thermal power plants to keep the lights on and the wheels of industry moving, as one-by-one the country’s operating nuclear power plants have shut down. That could change if Japan could tap into huge American gas reserves.

As an island nation with few if any energy sources of its own, Japan has to buy natural gas in its most expensive form, as liquefied gas in refrigerated tankers (unlike /Europe which imports gas from Russia via pipeline) mostly from Malaysia and the Middle East. Consequently prices have gone through the roof. They were one reason Japan slipped into a trade deficit last quarter for the first time in decades.

Moreover, Tokyo has played ball with Washington in its obsession over tightening sanctions against Iran because of its suspected nuclear weapons program. Though Japan used to get a considerable amount of its petroleum from Iran, it has progressively curtailed imports and investments there in the collective interest of keeping Tehran from getting the bomb.

So here is a situation where the US could help out a critical ally by selling it surplus gas that it is now getting from the “shale gas revolution” created by the emergence of new extraction techniques such as “fracking”, or injecting water to pressure the gas out. It has led to an unprecedented fall in gas prices in North America.

Japan’s LNG imports now run about $16-$18 per million BTU (British Thermal Units, the standard measurement of gas commodities),. In the United States the price has fallen to under $2 per million BTU. Even if one were to add on $6 for the cost of liquefying and transporting the stuff, American imports theoretically would be less than $10. It represents a huge savings.

One of the reasons Japan pays so much for natural gas, in addition to the costs of transporting the stuff, is because gas pricing has been linked to crude oil. Back in the 1970s when Japan started importing LNG, petroleum was the main source of fuel for power generation. Linking to crude made sense then and it has become the de facto norm. South Korea and Taiwan followed suit.

Another reason: Some of the suppliers, especially in the Middle East have been using Japan’s desperate energy situation to gouge prices. This year Japanese firms importing LNG from Yemen were having to pay more than $20 for gas.

South Korea is feeling the punch of rising natural gas prices too. Last week taxi drivers in Seoul went on strike, protesting, among other things, the requirement that they use liquefied petroleum gas instead of diesel, a mandate designed to carbon emissions. The prices has risen 28 percent over three years cutting into the cabbies’ profits.

While importing natural gas from North America seems like a win-win proposal on both sides of the Pacific, there are still considerable obstacles, technical, legal and political, that have to be overcome before the gas starts flowing to Asia in significant quantities.

The most obvious impediment is lack of LNG exporting facilities in the US. Aside from one small refinery in Alaska selling gas to Asia there are no terminals in mainland US capable of liquefying gas. Being neither an importer nor an exporter, America never had a need for them. Natural gas is transmitted across North America by pipelines.

In April, Chemiere Energy of Houston received the first permit to build the first major natural gas export facility in the mainland US, located near Sabine Pass in the state of Louisiana. LNG terminal developers, many backed by major Japanese companies, such as Mitsubishi, Sumitomo and Tokyo Gas have proposed a dozen more projects, capable of supplying about 100 million tons per year in exports..

“The dawn of LNG [exports] has arrived,” wrote Neil Beverage of Sanford and Bernstein in a report.“We expect Sabine Pass [to be the first of several LNG projects to be approved in North America, which will become a major LNG exporting region,” he concluded.

That sounds optimistic, but the pathway to exports is still cumbersome. Gas sales are regulated by the Natural Gas Act, which was passed in 1938 at a time when the main aim was to husband what was then considered a scarce commodity. The easiest way forward for any potential exporter is to sell gas to a country with a Free Trade Agreement (FTA) with the US.

That’s the reason why the first exports from the new Louisiana terminal will probably go to South Korea and not Japan. In this regard Seoul has good reason to celebrate its long effort to achieve an FTA with the US. But if US gas cannot go directly to non-FTA countries, such as Japan, some countries, such as Singapore, could serve as transshipment hubs

There is also political opposition to increased exports from many different interest groups, from municipal utilities, wanting to keep prices low for their customers, to environmental groups who want to limit fracking. Others want to husband gas to run automobiles (though the infrastructure is lacking), while energy companies would be happy to see prices rise as their present rock bottom hnder further exploration.

It hardly needs saying that gas imports are now high on the agenda when Japanese leaders meet with their American counterparts Industry minister Yukio Edano says the government will lobby Washington hard to okay exports. Prime Minister Yoshihiko Noda broached the subject in his last meeting with President Barack Obama. So far the current administration is coy about further export permits.

While it may be difficult to predict whether the Obama administration will approve additional terminal permits, given the opposition from current end users and other groups, some of them critical to the president’s re-election prospects, the odds still favor additional exports. That prospect assumes that US gas prices remain low, an more so if the free-trade Republican party wins the November election.

If crude prices stay low, it may not be economical to import that much from the US. But in the long run it can’t  help but benefit Japan and other Asian countries to increase its stable of suppliers in order to assure long-term supply of gas at competitive prices.