Tokyo Notes

Japan’s Crisis Opportunity

Arab world unrest has prompted countries to again question their dependency on oil. Japan could cash in.

Doomsayers will no doubt be pointing out that the insurrections across the Arab world—and the ensuing oil and food price hikes—threaten to knock the global economic recovery off track. So what can Japan do to help stave off such destabilizing uncertainty?

Once the unrest began, Tunisia and Egypt disposed of their brutal dictators relatively quickly. But the delusional Col. Muammar Gaddafi seems determined to maintain his grip over the Libyan people through all means at his disposal. Western powers are mulling military responses such as no-fly zones, but with its hands constitutionally tied, Japan has only been able to join in with the United States and other Western nations in deciding to implement trade and financial sanctions against Tripoli.

But Japanese trade sanctions will have little impact—Libya only exports scraps of seafood to Japan each year (although a Majirox News report states that a fall in imports of blue fin tuna from Libya, Egypt and Tunisia could see the price of sushi spiking), while trade in the opposite direction is about six-times greater and consists mainly of Japanese autos. The Finance Ministry, for its part, said it would freeze any assets belonging to Gaddafi and his family in Japan in the unlikely event any were found.

Unable to properly influence events, Japan is left with little option but to keep on supporting representative government in the region (although the current state of its own parliament is hardly a shining example of democracy).

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One thing it could consider is extending temporary refuge to some of the thousands cramming into boats to get to the nearest ports in Europe. Given its economic clout, Japan’s record on providing asylum is shameful, but it would win a lot of friends, including in Italy and Malta, if it extended its hand of friendship to a potentially huge new Arab diaspora.

While the Jasmine Revolution has been both inspiring (Egypt and Tunisia) and disquieting (Gaddafi and his hired thugs), the impact on ordinary Japanese has been minimal. Some optimism may have initially occurred following the jubilant scenes at Tahrir Square, but to many it felt like just another piece of ‘abroad’ crammed in between in-depth reports on seasonal weather fluctuations and the latest news from the pre-season baseball camps.

With geopolitical tensions doing little to stir emotions here, grumbles are more likely to be heard when people are hit in the pocket. Tensions in North Africa and the Middle East are a factor in rising food prices, but more pertinently they are contributing to rocketing oil prices.

On Monday, crude oil futures for April in New York hit their highest intraday price since September 2008, and Prime Minister Naoto Kan has instructed ministers to address what many see as a new ‘oil shock.’ The high oil prices have helped boost the yen against the dollar and have caused Japanese stocks to slump.

Motorists may complain about all this, but a more rational, long-term view suggests a less bleak picture.

Petrol is taxed more heavily here than in the United States, so the effect of more expensive pump prices won’t be felt as acutely in Osaka as it will be in Ohio. But in a world wising up to its addiction to oil, Japan could actually cash in over the long term.

Japan’s automakers are world leaders in environmentally friendly hybrid and electric cars, and sales of these vehicles could really take off if oil prices hit some of the feared highs. Japan’s high-tech industries are also ready to provide the infrastructure for greener cities. In addition, Tokyo has pushed for bigger reductions in carbon dioxide emissions than other rich nations, and in December struck a strong stance in threatening to walk away from climate talks in Mexico if emerging nations such as China didn’t do their bit. The government should maintain this posture and do everything it can to push green technologies as a way of revitalising a stagnant economy.

The electricity to power green vehicles ultimately needs to come from somewhere, and Japan’s nuclear programme puts it in a prime position. Its 54 reactors provide more than 30 percent of the nation’s electricity, with plans in place to raise this to 50 percent by 2030. Japan is also a leading exporter of this clean technology, and is looking to increase overseas sales of nuclear products and services through a government-industry body established last autumn.

The government and business leaders would do well to remember that although the first element of the Japanese word for crisis (危機) means danger, the second stands for opportunity.