Posts Tagged ‘Japan’

Japan protests Russian military buildup plan in decades-old islands dispute

February 23, 2017


Thu Feb 23, 2017 | 2:20am EST

Japan has protested to Russia over its plan to boost troop strength on disputed islands, Japan’s top government spokesman said on Thursday, the latest move in a territorial row that has overshadowed ties since World War Two.

Chief Cabinet Secretary Yoshihide Suga told a news conference the government was closely monitoring Russia’s actions and analyzing information.

“If the move leads to the reinforcement of Russian military on the islands, it would be incompatible with Japan’s stance and it is regrettable as they are inherently our territory,” he said.

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Suga made the comment after media reports that Russian Defence Minister Sergei Shoigu talked about a plan to deploy a military division to the islands, including areas Japan claims as its territory, this year.

The islands in the Western Pacific, called the Northern Territories in Japan and the Southern Kuriles in Russia, were seized by Soviet forces at the end of World War Two when 17,000 Japanese residents were forced to flee.

Suga said Russia’s military plan would be on the agenda when defense and foreign ministers from the two countries are due to meet in Tokyo on March 20.

Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin met last December and struck numerous economic deals but failed to achieve a breakthrough on the islands.

Abe is expected to visit Russia this year to speed up talks to resolve the dispute and try to conclude a peace treaty officially ending World War Two hostilities.

He has pledged to resolve the dispute in the hope of leaving a significant diplomatic legacy and building better ties with Russia to counter a rising China.

(Reporting by Kaori Kaneko; Editing by Nick Macfie)

The art of the North Korean deal

February 21, 2017

SEOUL • United States President Donald Trump’s surprisingly restrained reaction to North Korea’s latest ballistic missile test has left many observers wondering what his next move will be.

Mr Trump has publicly declared that North Korea’s goal of developing a nuclear-capable missile that can reach the US “won’t happen”. But what, specifically, will he do to prevent it?

Some might advise the Trump administration to launch pre-emptive strikes on North Korea’s nuclear facilities.

But this is a dangerous and ineffective option, because North Korea would then likely retaliate against South Korea. South Koreans do not want to risk a war, so a US-provoked attack by North Korea would be catastrophic for the US-South Korean alliance.

Moreover, North Korea recently developed missiles with solid-fuel engines, which can be stowed away until just before they are launched, making it technically difficult to identify the right targets – and the right times to strike them.

Another possible response to the North Korean threat is tougher international sanctions, including secondary boycotts. But sanctions that are strong enough to make North Korea’s “Young General” Kim Jong Un think twice about his latest provocations will require China’s cooperation, and securing it will not be easy.

Earlier this month, North Korea tested a new ballistic missile.

North Korea’s latest ballistic missile is an ICBM. AFP photo


Chinese leaders might interpret overly aggressive secondary boycotts as being aimed not only at North Korea, but at China, too. And with the Communist Party of China’s 19th National Congress looming later this year, President Xi Jinping will not want to be perceived as giving in to US pressure.

We know from more than two decades of nuclear diplomacy with North Korea that, to achieve a positive outcome, the Trump administration will have to resolve two fundamental dilemmas.

And while past political leaders have preferred to sweep them under the carpet, Mr Trump’s unique, untraditional leadership and negotiating style could enable him to make progress where his predecessors did not.

The first dilemma concerns China. Any diplomatic effort to denuclearise North Korea must also alleviate China’s geostrategic concerns about the future of the Korean peninsula. For centuries, China has feared that the peninsula could become part of a chain of encirclement, or serve as an invasion route. In 1592, Japanese general Toyotomi Hideyoshi invaded the Korean kingdom to establish a beachhead for invading China. In response, China, under the Ming Dynasty, fought alongside Korea against the Japanese army.

Three centuries later, China’s Qing Dynasty fought the Sino-Japanese War of 1894 to prevent Japan from dominating Korea. And again, in the winter of 1950-1951, Chinese Communist Party chairman Mao Zedong intervened in the Korean War when the US Army crossed the 38th Parallel and advanced towards China’s border.

China’s current leaders share their forbears’ strategic concerns about the Korean peninsula, which explains their unwillingness to fully meet US demands for action against North Korea.

China simply does not want to run the risk of its North Korean buffer state imploding as a result of sanctions. And, because they understand China’s strategic imperative, North Korea’s leaders have felt free to develop their country’s nuclear programme.

Mr Trump and Mr Xi have had their first phone conversation, and may soon meet in person. My hope is that Mr Trump will live up to his reputation for boldness, and propose a grand bargain with China that alleviates its geostrategic worries about the Korean peninsula.

Unless the North Korea problem is separated from the strategic competition between the US and China, diplomatic efforts will continue to fail. So, Mr Trump could promise China that his administration will not seek regime change in North Korea, and instead offer security guarantees if North Korea denuclearises.

Alternatively, he could offer to withdraw the US’ new Thaad (Terminal High Altitude Area Defence) anti-missile system – to which China has objected – from South Korea as soon as North Korea scraps its nuclear programme.

Mr Trump could then demand that, in exchange, China cooperate wholeheartedly on sanctions and other efforts to persuade North Korea to abandon its nuclear ambitions. With such a deal in place, China’s existing proposal – denuclearisation alongside a peace treaty to bring a formal end to the Korean War – would become achievable.

But assuaging China’s strategic concerns brings us to the second dilemma at the heart of the current impasse: North Korea’s own security. In the brutal world of international relations, a small, weak and isolated country like North Korea can feel threatened by its neighbours even when they mean it no harm. To compensate for its perceived vulnerability, it strengthens its military and acquires powerful deterrents such as nuclear weapons. But this becomes a vicious circle, because its neighbours interpret its actions as a provocation, and start to feel threatened themselves.

Former US president Bill Clinton acknowledged this problem and tried to address it. Under the 1994 Geneva Agreed Framework, the Clinton administration succeeded in freezing North Korea’s nuclear activities for several years, by promising to improve US-North Korea relations. And although Mr George W. Bush’s administration consigned North Korea to its “Axis of Evil”, it also recognised the North’s security dilemma and tried to address it through the Six-Party Agreement on Sept 19, 2005.

Critics of this approach think that the US has bought the same horse twice and should focus on sanctions, while waiting for North Korea to make the next move.

But sanctions are not effective without robust Chinese support. And North Korea has taken advantage of the diplomatic pause in recent years to develop its nuclear and missile technologies. As a result, we are in a worse place now than when we started.

During his presidential campaign, Mr Trump said he would “have no problem” speaking to Mr Kim. He now has a chance to do just that, by exploring the possibility of a comprehensive deal with North Korea, based on a US security guarantee and economic incentives.

But Mr Trump should go down this road only if he is also willing to address China’s strategic concerns.

If he can strike simultaneous deals with China and North Korea, even his harshest critics will recognise his masterstroke.


•Yoon Young Kwan, South Korea’s former foreign minister, is Professor Emeritus of international relations at Seoul National University.

A version of this article appeared in the print edition of The Straits Times on February 21, 2017, with the headline ‘The art of the North Korean deal’.

China’s oil giant CNPC signs $1.77 bn Abu Dhabi deal

February 19, 2017


© AFP/File | People walk by the headquarters of the China National Petroleum Corporation in Beijing

ABU DHABI (AFP) – The China National Petroleum Corporation on Sunday secured an eight-percent share in an onshore oil concession in Abu Dhabi in a deal worth $1.77 billion, the Emirati company said.

The Chinese giant signed a deal with the Abu Dhabi National Oil Company for a stake in the Abu Dhabi Company for Onshore Petroleum Operations which operates the 40-year concession, ADNOC said in a statement.

“This will be a mutually beneficial partnership that will enable us to maintain strong production levels,” ADNOC chief executive Sultan Ahmed Al Jaber said.

CNPC chairman Wang Yilin said he hoped the deal would “lead to further opportunities to participate in the UAE’s energy sector”.

CNPC is China’s largest oil and gas producer and supplier, responsible for more than half of China’s crude oil output and 71 percent of its natural gas production, the statement said.

CNPC also has oil and gas projects in 37 countries in Africa, Central Asia and Russia, the Americas, the Middle East and Asia-Pacific, it said.

The United Arab Emirates is China’s second-largest trading partner in the Middle East, with commerce worth $60 billion in 2016.

British oil giant BP last year secured a 10 percent share in the same oil concession, while France’s Total won a further 10 percent out of the total 40 percent earmarked for foreign companies.

Inpex Corp. of Japan secured five percent and South Korea’s GS Energy three percent.

ADNOC is still looking for a partner for the remainder of the concession, the statement said.

The Emirati company produces 3.1 million barrels per day, it said.

China tells Japan that “negative” moves by Tokyo are preventing an improvement in bilateral ties

February 18, 2017

China has told Japan that “negative” moves by Tokyo on major issues are preventing an improvement in bilateral ties. But Beijing added that there are now opportunities to improve relations.

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Chinese Foreign Minister Wang Yi (above right) told his Japanese counterpart Fumio Kishida (above left) that both countries “should make efforts to bring bilateral ties back onto the right track,” the state owned Chinese news agency Xinhua reported.

“The continuous, negative moves made recently by Japan regarding major sensitive issues have caused disturbances to the improvement of bilateral ties,” Wang added, without offering details.

“Only when Japan honors its commitments and adopts a responsible attitude, thus preventing the occurrence of incidents damaging the political foundation of the China-Japan ties, can there be real improvement in relations.”

Ties between Asia’s two largest economies have long been overshadowed by arguments over theirwartime history and a territorial argument in the East China Seaover a group of uninhabited islands, among other issues.

“There are now both opportunities and challenges for improving China-Japan relations,” China’s foreign ministry paraphrased Wang as saying in a statement late on Friday.

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The disputed Senkaku islands (called Diaoyu in China) in the East China Sea, claimed by Japan, China and Taiwan

He said only when Japan honors its commitments and adopts a responsible attitude, thus preventing the occurrence of incidents damaging the political foundation of the China-Japan ties can there be real improvement in relations.

Wang and Kishida met on the sidelines of the Group of Twenty (G20) ministerial summit in Germany’s western city of Bonn.

Kishida said 2017 is a vital year for the China-Japan relations, expressing the Japanese side’s willingness to handle differences between both countries well. He said Japan would work to make events marking the 45th anniversary of the normalization of Sino-Japan ties a success, giving a boost to the improvement of bilateral ties.

Saying Japan attaches importance to the major concerns raised by China, Kishida reiterated Japan’s stance of not supporting “two Chinas,” “one China one Taiwan,” and not supporting “Taiwanese independence,” saying the stance would not change.

China this week expressed concern after Japan appeared to receive backing in its dispute with Beijing over islands in the South China Sea during a meeting between US President Donald Trump and Japanese Prime Minister Shinzo Abe.

jbh/kl (Reuters)


Tillerson Urges China to Confront North Korean Provocations

February 17, 2017

The new U.S. Secretary of State tells Chinese counterpart his country should ‘use all available tools’ to pressure Pyongyang

U.S. Secretary of State Rex Tillerson (right) and China's Foreign Minister Wang Yi walk to their seats before a meeting Friday on the sidelines of a G-20 meeting in Bonn, Germany.

U.S. Secretary of State Rex Tillerson (right) and China’s Foreign Minister Wang Yi walk to their seats before a meeting Friday on the sidelines of a G-20 meeting in Bonn, Germany. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES


Updated Feb. 17, 2017 10:53 a.m. ET

BONN, Germany—U.S. Secretary of State Rex Tillerson told China’s foreign minister Friday that his country should “use all available tools” to confront North Korea’s provocations, a State Department spokesman said, as Beijing and Washington held their highest-level meeting since President Donald Trump took office.

Mr. Tillerson and Wang Yi met for about an hour Friday morning in Bonn on the sidelines of a meeting of foreign ministers of the Group of 20 leading industrialized and emerging nations.

Their meeting came nearly a week after North Korea conducted a missile test into the Sea of Japan, the first such test since Mr. Trump was sworn in. Mr. Tillerson and his Japanese and South Korean counterparts on Thursday condemned the test and vowed a tougher international response.

Tensions between Beijing and Washington were lowered last week after Mr. Trump called Chinese President Xi Jinping and affirmed the U.S. commitment to the “One China” policy that grants diplomatic recognition to China but not Taiwan. Mr. Trump had previously said the U.S. might not honor the policy unless China made concessions on trade.

In addition to discussing the North Korean threat, Mr. Tillerson appeared to raise some of Mr. Trump’s campaign criticisms on Friday, said the State Department spokesman, Mark Toner.

“Secretary Tillerson and Minister Wang noted the recent call between leaders and discussed efforts to advance bilateral cooperation while addressing differences in a constructive manner,” Mr. Toner said. “The two also discussed the need to create a level playing field for trade and investment.” ‎

The meeting came as Mr. Tillerson wrapped up a quick visit to Bonn on his first overseas trip as secretary of State.

Mr. Tillerson’s appearance at the G-20 meeting, billed officially as a discussion of sustainable development goals and meant to be a preparatory session for summit of the group’s leaders in Hamburg in July, drew most of the attention here, as foreign ministers were eager to speak face-to-face with the new U.S. chief diplomat and seek clarification on the Trump administration’s positions.

Mr. Tillerson attended a meeting Friday morning of ministers from 10 countries that oppose President Bashar al-Assad’s regime in Syria. German and French officials said afterward that he backed efforts by the United Nations to find a political solution to the nearly six-year war there.

“Everyone committed to it, especially also the new members in this round such as our American colleague. He was very engaged in the debate,” said German Foreign Minister Sigmar Gabriel.

Diplomats present at the meeting seemed cautiously optimistic about their ability to work with Mr. Tillerson and the Trump administration.

French Foreign Minister Jean-Marc Ayrault said Mr. Tillerson reaffirmed that the U.S. wouldn’t support the lifting of sanctions on Russia until the implementation of a cease-fire agreement in eastern Ukraine. The accord was reached by the leaders of Ukraine, Russia, France and Germany, and signed by pro-Russian separatists in 2015 in the Belarusian capital Minsk.

There appeared to be differences, however, over the Iran nuclear deal and the Mideast peace process.

Mr. Ayrault told reporters after his meeting with Mr. Tillerson on Thursday that he was concerned about the Trump administration’s move away from a commitment to a two-state solution to the Israeli-Palestinian conflict. He also said that Mr. Tillerson gave him the impression that Washington wanted to scrap the Iranian nuclear deal and start from scratch.

Mr. Tillerson later denied that he gave that impression.

The new secretary of State said little, if anything, about how his conversations with foreign diplomats at the G-20 gathering went.

He told reporters Friday at the start of a meeting with the Italian Foreign Minister Angelino Alfano—his last bilateral meeting after more than a dozen engagements in the course of two days—that he had a lot of feedback to bring back to Mr. Trump but wouldn’t share it until he did so with the president.

“Met a lot of people, made a lot of new friends,” he said. “It was a full schedule.”

Write to Felicia Schwartz at

Trump’s Currency Complaints Hit Unexpected Targets

February 17, 2017

Top-five trading partners China, Japan and Germany brush them off; Taiwan and Switzerland seem to be paying heed


Feb. 17, 2017 3:47 a.m. ET

HONG KONG—U.S. President Donald Trump’s accusations of currency manipulation appear to be reaching an audience he may not have primarily intended.

Mr. Trump vowed on the campaign trail to revive American manufacturing, in part by taking a hard line on Chinese trade practices and labeling the country a currency manipulator. Since taking office, the president has accused both China and Japan of consistently devaluing their currencies,…

Mr. Trump vowed on the campaign trail to revive American manufacturing, in part by taking a hard line on Chinese trade practices and labeling the country a currency manipulator. Since taking office, the president has accused both China and Japan of consistently devaluing their currencies , while his top trade adviser Peter Navarro has accused Germany of benefiting from what he termed the “grossly undervalued” euro .

All three countries, which rank among the U.S.’s top five trading partners, have brushed off the Trump administration’s claims.

“No one has the right to tell us that the yen is weak,” Japan’s finance minister Taro Aso told parliament on Wednesday, following last weekend’s meeting between Mr. Trump and Prime Minister Shinzo Abe . Japan hasn’t directly intervened in currency markets since 2011 following a major tsunami and resulting Fukushima nuclear disaster.

“The charge that Germany exploits the U.S. and other countries with an undervalued currency is more than absurd,” Jens Weidmann , the president of the German central bank, said earlier this month.

China hasn’t directly commented on Mr. Trump’s criticisms, but most analysts say Beijing recently has been propping up the yuan by selling foreign-currency reserves rather than looking to weaken it.

Still, some smaller economies look like they are taking notice, notably Taiwan and Switzerland. The U.S. Treasury found in October that both had engaged in persistent, one-way currency intervention, essentially by buying foreign currencies like the U.S. dollar and selling their own to maintain weak exchange rates.

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Analysts say the central banks of Switzerland and Taiwan are now stepping back from those activities, perhaps to avoid closer scrutiny from the Trump administration. The upshot: The Swiss franc has advanced nearly 2% against the U.S. dollar this year, while the new Taiwan dollar has surged 5.3%. Both have outperformed the euro and yen since the U.S. election in early November.

Taiwan’s central bank bought $500 million in foreign currencies in the fourth quarter, well below its quarterly average of more than $3 billion since 2012, according to Khoon Goh , head of Asia research at ANZ in Singapore, who said he suspects it is stepping back from “currency-smoothing operations.” The central bank said it doesn’t comment on currency policy.

For the first nine months of last year, the Swiss National Bank /quotes/zigman/1379668/delayed CH:SNBN +0.12% intervened heavily in currency markets to slow the franc’s rise, spending an amount roughly equivalent to its current-account surplus for the period, J.P. Morgan/quotes/zigman/272085/composite JPM -0.76% analysts note. Over the following four months, the scale dropped to around two-thirds of the surplus.

“It’s not an entirely fanciful suggestion that the SNB might be tapering intervention in order to the guard against the risk of being cited by the U.S. Treasury as a currency manipulator,” the analysts wrote in a note.

The Swiss National Bank declined to comment.

For the U.S. to label an economy a currency manipulator under the current law, it must have a large trade surplus with the U.S. and a hefty current-account surplus and persistently intervene in the currency in one direction. As of October, no economies met all three criteria.

Recent comments from officials in South Korea, which the Treasury has flagged for its hefty trade surplus with the U.S. and its current-account surplus, suggest they’re similarly eager to avoid U.S. ire, says Govinda Finn , senior analyst at Standard Life Investments in Edinburgh. The Korean won has surged 5.2% against the dollar this year.

But any gains in the Korean and Taiwanese currencies due to U.S. political pressure may not last, he said: “On a longer-term horizon, there’s a pretty strong case to say both of those currencies can and will weaken as the authorities look to support their economies.”

Jenny W. Hsu contributed to this article.

Write to Saumya Vaishampayan at

How Can America Take Control of the South China Sea?

February 16, 2017

A simple playbook to prove China is all bark and no bite over its disputed islands.

How America Can Take Control in the South China Sea

Rex Tillerson, the former ExxonMobil chief who just became the new U.S. secretary of state, might not be causing the same level of global disruption as his boss, President Donald Trump. But in his Senate confirmation hearing on Jan. 11, he sent shockwaves through the China-watching community, vowing: “We’re going to have to send China a clear signal that, first, the island building stops and, second, your access to those islands also is not going to be allowed.”

These remarks instantly gave rise to a global consensus that spanned hawks in China to doves in the West. An editorial in the Global Times, a prominent mouthpiece for Chinese nationalists, warned: “Unless Washington plans to wage a large-scale war in the South China Sea, any other approaches to prevent Chinese access to the islands will be foolish.”

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Former Australian Prime Minister Paul Keating also reacted angrily, saying: “When the U.S. secretary of state-designate threatens to involve Australia in war with China, the Australian people need to take note. That is the only way Rex Tillerson’s testimony that a ‘signal’ should be sent to China that ‘access to these islands is not going to be allowed’ and that U.S. allies in the region should be there ‘to show backup’ can be read.” From Beijing to Sydney, a consensus formed — Tillerson’s position has no basis in international law, is tantamount to an act of war, and does not make strategic sense. In short, opponents argue, the posture the new U.S. secretary of state proposed is legally baseless, politically dangerous, and practically ineffectual.

This consensus rests on the belief that China is both willing and able to go to war over serious provocation. But this misreads Tillerson’s proposal and misunderstands the complex realities of the South China Sea. A naval blockade is not the only way to achieve Tillerson’s objectives, and China has a large stake in avoiding war with the United States in the region.

To see this, we need to use a “whole of capabilities” lens that is less U.S.-centric. From this perspective, Tillerson’s suggestion would not boil down to a military blockade as most commentators assume. Instead, the United States and its partners potentially have at their disposal a full spectrum of actions including diplomatic negotiations and economic sanctions and kinetic constraints that, directly or indirectly, can prevent further island building and Chinese militarization of those islands.

One such action is targeted sanctions against individuals and companies that support, facilitate, or participate in Beijing’s illegitimate operations in the South China Sea. The bill introduced by Sen. Marco Rubio last December exemplifies this approach. It would impose asset freezes and travel bans on people and entities who “contribute to construction or development projects” in the contested areas and those who “threaten the peace, security or stability” of the South China Sea or East China Sea. It would also prohibit actions that may imply American recognition of Chinese sovereignty over the contested areas in these seas and restrict foreign assistance to countries that recognize China’s sovereignty there. These primary sanctions could be augmented by secondary sanctions against those who do business with the offenders. The Rubio bill may or may not be adopted, but targeted sanctions remain an important tool to indirectly cause changes in China’s behavior.

A more direct option would be for the United States and its partners to borrow a page from China’s own playbook and emulate its “cabbage” tactic in denying Beijing’s access to the South China Sea islands.

A more direct option would be for the United States and its partners to borrow a page from China’s own playbook and emulate its “cabbage” tactic in denying Beijing’s access to the South China Sea islands. The cabbage tactic consists of wrapping contested islands in multiple layers of Chinese military and paramilitary power. Like the Chinese cabbage, the anti-China cabbage would also have three layers, surrounding the targeted islands with private civilian boats in the inner circle, followed by law enforcement vessels in the outer circle, all protected by warships over the horizon.The anti-China coalition couldn’t match China’s use of paramilitary maritime militias in such operations. But it could invite civilian volunteers to man the first line of defense. Rather than shooting down Chinese aircraft and mining Chinese ports, the coalition can use drones — both unmanned aerial and underwater vehicles — launched from civilian and coast guard ships to seal off the entry to China’s airstrips and harbors on the fake islands.

Contrary to common belief, these actions can be fully consistent with international law. If China does not recognize your rights to freedom of the seas, you have the right to restrict China’s freedom in return. The Permanent Court of Arbitration award from last July, which is now an integral part of international law despite Chinese rejection, has ruled as illegitimate China’s “nine-dash line” claims in the South China Sea, its occupation of Mischief Reef, its denial of access to Scarborough Shoal, its island building in the Spratlys, and its harassment of others in the Philippine exclusive economic zone (EEZ).

But the court does not possess the tools to enforce its rulings, so it’s up to the members of the international community to act on behalf of the common interest and to induce China to comply with its obligations. Fortunately, international law allows countries to conduct countermeasures against wrongful acts. As James Kraska, a professor of international law at the U.S. Naval War College, has argued, challenging China’s rights to access its artificial islands is consistent with international law. After all, it’s fair game to do to China what China has done to others.

Many are concerned that regardless of its legality, blocking China’s access to its occupied islands would amount to an act of war and risk armed conflict as a response. This fear is overblown, however. When China blocked others’ access to the disputed Scarborough Shoal and Second Thomas Shoal, nobody called it an act of war and no armed conflict ensued. Taking a leaf from China’s own book, the cabbage tactic of access denial would mute the casus belli and discourage Beijing from going to war.

Still, there is concern that, driven by the pressure of nationalist public opinion and in an effort to maintain national image and domestic legitimacy, Chinese leaders may escalate the conflict and engage in war with the United States. But as Jessica Weiss, a leading expert of Chinese nationalism, found in her study of China’s nationalist protests, nationalist public opinion is more of a tool in the government’s hands to signal resolve than a driving force of Beijing’s assertive foreign policy. A more recent analysis by Alastair Iain Johnston, a professor of Chinese foreign policy at Harvard University, also comes to a similar conclusion, showing a decline of nationalism among ordinary citizens since 2009.

As the weaker party and the party that depends far more on traffic in the South China Sea, China actually has a larger stake in avoiding war in this region than the United States does. Indeed, avoiding large-scale conflict is one of the imperatives of China’s long-term strategy in the South China Sea. China has become more aggressive in recent years because of a U.S. deterrence deficit in the gray areas between war and peace. Beijing’s preference for gray-zone activities is also a testament to the working of nuclear and conventional deterrence. The trick of avoiding war while getting China to comply with international law lies in a two-pronged approach that skillfully combines the strengths of sticks with those of carrots while neutralizing their weaknesses.

In considering conflict over the islands, we don’t have to imagine China and the U.S. military as the only parties involved; a full range of actions and players exists, including sanctions, negotiations, regional countries, and international civil society. It might be tricky in the current diplomatic climate, but in the best possible world, the combined effect of actions on this full spectrum has a good chance of persuading China to comply with international law, especially if it involves a concerted effort of the United States, major powers such as Japan and India, and regional states such as the Philippines and Vietnam.

Commenting on Tillerson’s remarks, Philippine Foreign Secretary Perfecto Yasay said: “If [the United States] wants to do that, they have the force to do so, let them do it.” A cabbage approach to deny China’s access to Scarborough Shoal or Mischief Reef would be more legitimate and effective if it involved the Philippine Coast Guard and civilian volunteers from the Philippines and other countries. Southeast Asian states often hedge between America and China with a tilt toward the one that is more powerful and more committed to them. If the Trump administration increases U.S. presence in the South China Sea, is committed to defending the Philippines as much as Japan and South Korea, and refrains from criticizing Manila’s domestic agenda, it could sway the pragmatic President Rodrigo Duterte to back the United States.

Targeted sanctions against Chinese persons and companies involved in projects in the South China Sea would also be much more effective if they were supported not only by the United States but also by other major economies and regional states. With its large state sector, China is particularly vulnerable to targeted sanctions. Its construction and development projects in the South China Sea have involved several large state-owned companies that are eager to make profit abroad. If designed cleverly, sanctions could hit hard big companies such as China National Offshore Oil Corporation, which moved a giant oil rig to drill in the Vietnamese EEZ in 2014; China Southern and Hainan airlines, which fly planes to the artificial islands; China Mobile, China Telecom, and China United Telecom, which operate communication networks on the disputed islands; and China Communications Construction Company, which dredged sand to build artificial islands in the Spratlys — thereby creating an incentive inside China to drop its illegitimate claims in the South China Sea.

Signaling a readiness to prevent Chinese island building and restrict China’s access to the fake islands is the logical response if the United States really wants to restore deterrence in the South China Sea. Part of the failure to put a limit on China’s expansion lies in the myth of an ever-looming war with China, which makes the use of logical deterrents unthinkable. This creates a self-restraint that is not only unnecessary but also strategically disastrous.

Photo Credit: At the top, a Philippine navy frigate. Photo by TED ALJIBE/ Staff



 (President Trump says U.S. will respect “One China” policy.)

Japan’s SoftBank to buy US investment firm for $3.3 bn

February 15, 2017


© AFP/File | Japan’s SoftBank is to buy US asset manager Fortress Investment Group for $3.3 billion
TOKYO (AFP) – Japan’s SoftBank said Wednesday it will buy US asset manager Fortress Investment Group for $3.3 billion, as it moves to hire experienced money managers before launching a major technology investment fund.

The mobile giant said it was paying $8.08 a share for New York-based Fortress, a 39 percent premium on its February 13 close price.

Fortress is a global investment firm with 1,100 employees and $70.1 billion in assets under management as of September last year, according to a joint statement.

SoftBank said the firm’s top management would stay in place and it would continue to operate independently under its umbrella.

“We look forward to benefiting from its leadership, broad-based expertise and world-class investment platform,” said SoftBank chief executive Masayoshi Son.

Son was among the first business people to meet Donald Trump after his November election victory.

SoftBank’s founder pledged to invest $50 billion in business and job-creation in the United States, winning praise from the then-president-elect.

Son later said the money would come from the $100 billion technology investment fund he is setting up with Saudi Arabia’s sovereign wealth fund and other partners, a move announced in mid-October.

The Japanese billionaire plans to use the SoftBank Vision Fund to invest heavily in the “Internet of Things,” artificial intelligence and robotics.

SoftBank, which is little known outside Japan, has gone on an acquisition spree over the years. It paid $22 billion for 80 percent of US mobile carrier Sprint in 2013 and more recently announced the $32-billion purchase of British iPhone chip designer ARM Holdings — raising concerns about its debt-heavy balance sheet.

SoftBank shares rose 1.58 percent to close at 8,670 yen in Tokyo on Wednesday.

SoftBank has said it will put up about $25 billion for the Vision Fund over the next five years, while the Saudi public investment fund’s contribution could reach $45 billion.

SoftBank is aiming to close the first round of investment in the Vision Fund by the end of this month, Bloomberg News reported, citing people familiar with the matter.

US tech giants Apple and Qualcomm, as well as Oracle chairman Larry Ellison will invest $1.0 billion each in the fund, Bloomberg said.

Toshiba reports $6 billion loss — “This impacts the viability of the company.” — Chairman steps down

February 14, 2017

The logo of Toshiba Corp. are seen at the company’s facility in Kawasaki, Japan February 13, 2017. REUTERS/Issei Kato
By Makiko Yamazaki | TOKYO — Reuters

After a day of delays and confusion, Japan’s Toshiba Corp (6502.T) said on Tuesday it expected to book a $6.3 billion hit to its U.S. nuclear unit, a writedown that wipes out its shareholder equity and will drag the group to a full-year loss.

Hours earlier on Tuesday, the battered conglomerate rattled investors by failing to release its earnings on schedule, saying initially it was ‘not ready’ and then announcing later it needed more time to probe its Westinghouse nuclear business after internal reports uncovered potential problems.

The figures eventually released were numbers that have yet to be approved by its auditor and Toshiba cautioned investors that a major revision was possible. Fully audited numbers are now not due till March 14 after the firm was granted a reprieve for its formal filing by Japanese regulators.

Toshiba also said in a statement it could push harder to raise capital, including selling a majority stake in its memory chip arm. Previously, it had sought to sell just under 20 percent of its prize business.

“Finally now people are starting to recognize that internal control problems, the accounting issues and governance issues are very real and no longer abstract,” said Zuhair Khan, an analyst at Jefferies in Tokyo.

“They  impact the viability of the company.”

Shares in the group slid 8 percent, putting the company’s market value at 973 billion yen ($8.6 billion), less than half its value in mid-December. Just under a decade ago, the firm was worth almost 5 trillion yen.

It also announced the first top-level departure since the nuclear problems were uncovered in December: chairman Shigenori Shiga, a former Westinghouse boss brought in to the top role last year after a $1.3 billion accounting scandal in 2015 shook up Toshiba’s upper ranks.

Toshiba said it expected to book a 499.9 billion yen ($4.4 billion) net loss for the nine months to December, and a 390 billion yen net loss for the full year.

It also ended 2016 with negative shareholder equity due to the 712.5 billion yen nuclear writedown – a charge that was first flagged in December last year.

Toshiba said it would withdraw from nuclear plant construction overseas. Reuters reported this month that Toshiba was seeking at least a partial exit from ventures in Britain and India, a blow to both countries’ nuclear plans.


In an earlier, separate statement, Toshiba outlined concerns at its Westinghouse business, the U.S. nuclear unit bought from the UK government a decade ago.

Internal reports, Toshiba said, suggested controls at Westinghouse had been “insufficient” and it needed to look into whether senior managers at Westinghouse exerted “inappropriate pressure” during discussions over a U.S. deal to buy the company at the heart of its cost overruns, it said.

“We judged that it would take about a month for external lawyers … to conduct these further probes and for the independent auditors to review the results,” Toshiba said.

A source briefed on the matter said Toshiba had not been able to immediately secure the approval of its auditor, PricewaterhouseCoopers Aarata. The source asked not to be identified because he is not allowed to talk the media.

PricewaterhouseCoopers Aarata declined to comment, citing client confidentiality. Toshiba declined to comment on the audit process.

For a graphic on Toshiba businesses, click here

(Reporting by Makiko Yamazaki, Taiga Uranaka, Taro Fuse, Ayai Tomisawa, Tom Wilson and Naomi Tajitsu in Tokyo, Jane Chung in Seoul and Rishika Sadam in Bengaluru, Umesh Desai in Hong Kong; Writing by Tim Kelly; Editing by Clara Ferreira Marques and Edwina Gibbs)


Toshiba chairman quits over financial losses — Impacts UK and France nuclear

February 14, 2017

BBC News

Shigenori Shiga

Mr Shiga stepped down “to take management responsibility for the loss.” REUTERS

Toshiba chairman Shigenori Shiga has resigned, hours after the Japanese conglomerate revealed details of a multi-billion dollar loss.

Earlier Toshiba had delayed issuing its results, but it then said it was set to report a net loss of 390bn yen ($3.4bn) in the year to March 2017.

The company said it expected to take a 712.5 billion yen ($6.3bn, £5bn) writedown at its US nuclear business.

The situation has led some analysts to warn the company’s future is at risk.

Mr Shiga was stepping down “to take management responsibility for the loss”, the firm said.

Shares fell by as much as 9% on Tuesday and have lost about 50% since late December, when it first warned about the extent of the problems.

Chip deal

The losses are linked to a deal done by its US subsidiary, Westinghouse Electric, when it bought a nuclear construction and services business from Chicago Bridge & Iron in 2015.

Assets that it took on are likely to be worth less than initially thought, and there is also a dispute about payments that are due.

It has already announced plans to sell off part of its profitable memory chip business to raise funds. It is the second largest chip maker in the world, behind Samsung.

The company is still struggling to recover after it emerged in 2015 that profits had been overstated for seven years, prompting the chief executive to resign.

UK plant in limbo

The question marks over the future of Toshiba’s nuclear business could affect a planned new power plant in Cumbria in the UK.

Toshiba has a 60% stake in NuGen, a joint venture with France’s Engie which has the contract to build the Moorside plant. It is estimated that the plant will eventually provide as much as 7% of the UK’s energy needs.

However, in a statement, NuGen said: “NuGen acknowledges the announcement that Toshiba’s review into the future of its nuclear power business outside Japan is complete and that it remains committed to developing NuGen’s Moorside Project.”

An artist's impression of Moorside nuclear plant

The Moorside nuclear plant on the Cumbrian coast is due to open in the mid-2020s. NUGEN

Earlier, the GMB union had asked for early clarification on the project’s future. Its senior organiser for Sellafield, Chris Jukes, said: “Brexit should be a perfect opportunity to demonstrate conclusively a better way for nuclear in West Cumbria.

“For 70 years Whitehaven has been a hub for nuclear. The West Cumbria area needs the regeneration a new plant would bring.”