December 2013

No.

7

Recent Articles from the Tokyo Foundation Website

www.tokyofoundation.org/en
Leadership
Development
Dispatches from
Ghana: “We Are
Not Here to Be
Popular”
From Promise to
Reality: Kisumu
Leadership andDevelopment
Conference
Responses to AntiSemitism in PreWorld War II South
AfricaThe Myth of China’s
Financial Time Bomb
Why Myanmar Matters
Ensuring the Future of the Liberal
International Order in East Asia

Japan’s Agriculture
and the TPP
Structural Shift inJapan-China Relations

JAPAN PERSPECTIVES
Recent Articles from the Tokyo Foundation Website
No. 7, December 2013

CONTENTSINTERNATIONAL AFFAIRS

Why Myanmar Matters: Ensuring the Future of the Liberal International
Order in East Asia ..................................................................................................... 3
Tsuneo Watanabe
China and the Trans-Pacific Partnership ............................................................. 11
Paul J. Saunders
ECONOMYJapan’s Agriculture and the TPP ........................................................................... 14
Yutaka Harada
Raising the Consumption Tax Rate ...................................................................... 26
Shigeki Morinobu
POLITICS & GOVERNMENT

Structural Shift in Japan-China Relations ............................................................ 30
Katsuyuki Yakushiji
VIEWS ON CHINA

The Myth of China’s Financial Time Bomb ......................................................... 37
Takashi Sekiyama
China’s Remarkable Renewable Energy Advances ........................................... 43
Kunio Takami
China’s Struggle for Civil Society: A New Perspective on
Social Development ................................................................................................ 48
Junko Oikawa

PARTNERSHIP WITH ACUMEN

Dispatches from Ghana: (2) “We Are Not Here to Be Popular” ...................... 53
Junko Tashiro
VOICES FROM THE SYLFF COMMUNITY

From Promise to Reality: Kisumu Leadership andDevelopment Conference ......................................................................................
Mari Suzuki
National Policy in the Local Context: Exploring the Influence of “Guest”
Workers in Fernie, British Columbia ...................................................................
Laurie Trautman
Responses to Anti-Semitism in Pre–World War II South Africa .....................
Myra Ann Houser
Armed State-Response to Internal Ethnic Conflict in Sri Lanka .....................
Sreya Maitra Roychoudhury

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71
76
81

INTERNATIONAL AFFAIRS
November 6, 2013

Why Myanmar Matters
Ensuring the Future of the Liberal International Order in East Asia
Tsuneo Watanabe

Myanmar has become a new frontier for cooperation among Japan, the United States, andEurope under President Thein Sein’s initiative for democratization and market reform.
Senior Fellow Tsuneo Watanabe notes that Myanmar’s trajectory will have an impact on
the future regional order, testing whether Chinese aspirations for national rejuvenation cancoexist with the interests of neighboring countries and the larger international community.
The Japanese government has demonstrated new thinking, recently collaborating with adomestic NGO to facilitate the process of ethnic reconciliation in the country.

T

he global policy community sees East Asia as a prosperous and stableregion, an engine of economic growth, and the locus of business opportunities. The region’s development began with Japan’s “economic miracle” of the 1960s and 1970s, which was followed by rapid growth in South Korea, Taiwan, Hong Kong, and Singapore in the 1980s, China in the 1990s, andIndia in the 2000s. Members of the Association of Southeast Asian Nations(ASEAN), such as Indonesia, Malaysia, and the Philippines, have also recently
been growing steadily. The latest business “frontier” in Southeast Asia—fordeveloped economies like Japan, the United States, and the European Union—
is Myanmar under President Thein Sein’s initiative for democratization andmarket reform.
An interesting aspect of the current Myanmar boom among businesses indeveloped economies is Myanmar’s own decision to wean itself from an exclusive diplomatic and economic relationship with China. The closed, military government is now taking steps toward becoming a more open and democratic society and economy. Analysts view these moves as part of President Thein Sein’s
strategic calculation to maintain an appropriate distance with China, which had
Tsuneo Watanabe
kyo Foundation.

Senior Fellow and Director of Foreign and Security Policy Research, To-

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INTERNATIONAL AFFAIRS
virtually monopolized economic relations with Myanmar over the past 20 years.
Naturally, the Myanmar case has attracted the interest of Western observers because it offers hints regarding the shape of the future liberal international
order in the light of the structural power shift in Southeast Asia, prompted by
China’s rise. The Obama administration’s initiatives to engage positively with
Myanmar are part of its “rebalancing” policy toward the Asia-Pacific, whichemphasizes its relations with Southeast Asia, as a region where US administrations had not spent much political capital following the retreat from the Vietnam War.
In the face of the Asian financial crisis of 1997, which dealt a body blow tomost Southeast Asian economies, Washington’s commitment was regarded asminimal, while Japan’s New Miyazawa Initiative provided huge financial support. This was a case in which Japan-US coordination broke down. The UScommitment to addressing disputes in the South China Sea was also minimal
in 1995, when China built structures on Mischief Reef, over which the Philippines also claims sovereignty. The United States now appears ready to seriously address issues pertaining to the future governance and order of Southeast
Asia, where participants are worried about the consequences of China’s rising
economic and political influence. Myanmar is definitely a case offering a
glimpse of the future shape of the regional order, where the forces of China’s
rise and US rebalancing interact.
Dreams and Anxieties
New Chinese President Xi Jinping has vowed to achieve the “Chinese Dream”
of great rejuvenation of the Chinese nation. This is a vague slogan with many
connotations, and has invited myriad interpretations. Xi himself ascribes four
meanings to the slogan: a strong China, a civilized China, a harmonious China,
and a beautiful China. He has also vowed to achieve the “two 100s”: a moderately well-off society by 2020—the 100th anniversary of the Chinese Communist Party—and a fully developed nation by 2049—the 100th anniversary of
the People’s Republic. Although the slogan does not contain any aggressive
elements, countries embroiled in territorial disputes with China in the South
China Sea are worried that they may be trampled upon as China forges ahead
toward its dream.
For example, Vietnamese scholar Nguyen Hung Son points out that China’s neighbors are wondering whether Xi’s “Chinese Dream” can really coexist

4INTERNATIONAL AFFAIRS
with their own. 1 China has grown very assertive in territorial disputes with its
neighbors in the South China Sea. In addition, China does not respect many
international rules, such as the United Nations Convention on the Law of the
Sea (UNCLOS) and the Declaration of Conduct (DOC) over the South China
Sea, although China is formally committed to them. Nguyen states that China
pursued a moderate and cooperative approach to these issues in the past, butthat its attitude has changed as a result, he believes, of the relative decline of
US strength and Japanese economic power.
Japan, too, shares such worries, owing to tensions over the Senkaku/
Diaoyu Islands in the East China Sea, as does the United States and the European Union. Chinese assertiveness is a concern not just for the regional orderbut for international rule- making in the East Asian region, where the West has
extensive business and economic interests.
In this context, the Obama administration’s rebalance toward Asia is resisted by China and warmly welcomed by its worried neighbors. At the same time,
Japan and other US allies and friends are aware of the United States’ limited
financial resources and political capital, and they grew concerned when Washington began seriously contemplating intervening militarily in Syria to oppose
the Bashar al-Assad regime’s use of chemical weapons. However, it would not
be constructive for East Asian nations to restlessly fret over the fluctuating balance of power between the United States and China. It is not the US goal to antagonize China through containment or encirclement, nor would that be in theinterest of Japan or the EU. On the other hand, US power is still regarded as aneffective tool in inducing China to be a more cooperative player in regional
rule-making and in hedging against China’s arbitrary exercise of power against
asymmetrically smaller neighbors.
It is the imperative of the international community—particularly the EU
and Japan—to work with the United States to create a stable Southeast Asian
environment where all actors, from small to large, respect common rules andenjoy the fruits of peace and prosperity. The EU has an advantage in dealing
with China since it does not have a territorial dispute or direct conflict with
China while being an influential economic and trading partner. By working
with countries sharing vital interests, Japan, too, needs to proactively support
the shaping of the regional order.
1 Nguyen Hung Son, “Can the Chinese Dream Coexist

with Other Dreams?: Views
from Vietnam” (in Japanese), in Gaiko (Diplomacy) published by the Ministry of Foreign Affairs of Japan, July 2013, pp. 36–37.
5

INTERNATIONAL AFFAIRSJapan’s New Approach to Assistance for ASEAN
For Japan, stability in the South China Sea and the ASEAN region is criticallyimportant for its own security and prosperity. Japan is still heavily dependent
on the sea lane from the Gulf region through the Strait of Malacca and theSouth China Sea to the East China Sea for imports of energy resources criticalto its economic survival.
In the past, Japan’s vital interests were protected by the US military presence. Although this fact has not changed, Japan has gradually begun to cooperate more fully with US and regional efforts to stabilize the Southeast Asian
region, which can be a choke point in the energy flow to Japan and wherecountries share Japan’s interests in tempering China’s territorial aggressiveness.
Japan plans to provide capacity building to Southeast Asian countries suffering from a wide maritime capability gap with China, which has rapidly increased the number of patrol ships, surveillance vessels and aircraft, submarines, and fifth generation jet fighters. Japan has been providing official development assistance to ASEAN countries throughout the post–World War II period. This was regarded as a form of war reparations for Japan’s military aggression in the 1930s and 1940s.
Recently, Japan has found a new rationale for its assistance to ASEAN nations: to help them reduce the economic and military gap with China—a country to which Japan has also provided substantial economic assistance in the
past.
During the Japan-ASEAN Summit Meeting in November 2011, then Prime
Minister Yoshihiko Noda pledged $25 billion to promote projects for enhancing ASEAN connectivity. In the Japan- Mekong Summit in April 2012, Japan
offered $7.4 billion over three years to help five Mekong states build up theirinfrastructure.
The Japan Self-Defense Forces (SDF) have actively participated in joint military exercises for humanitarian assistance and disaster relief in Southeast Asia,
including the US-Thai Cobra Gold joint/combined exercises since 2005. In July
2011, Japan joined, for the first time, the joint maritime military exercise with
US and Australian forces in the South China Sea off the coast of Brunei. And in
spring 2012, the SDF joined the US-Philippine joint military exercises called
Balikatan.
In addition, Japan is helping to directly strengthen regional maritime security capabilities by providing patrol vessels to Southeast Asian countries. In
December 2011, the Noda administration eased Japan’s self-imposed re6

INTERNATIONAL AFFAIRS
strictions on weapons exports. Japan is still committed to not exporting weapons to other countries, although exceptions have been made in the past for Japan’s alliance partner, the United States. Now, exceptions are being made incases that contribute to peace and advance international cooperation.
Japan is planning to provide the Philippines with patrol vessels for its coast
guard and maritime communication systems using its official development assistance (ODA) budget in the coming years. Contributing to ASEAN’s capacity
building in such a manner is a new approach for Japan.
Japan’s mainstream assistance to ASEAN has traditionally been for economic development, and this is a policy that has the support of all political parties. However, assistance for capacity building in the security arena was quite
controversial among liberal opposition parties. Now aware of the tough reality
faced by Southeast Asian nations in dealing with an assertive military giant,public opinion has gradually changed. Many scholars have begun to address
this new frontier, calling on Japan to offer direct assistance to enhance developing countries’ security capacity, although Japan still avoids transferring combat
weapons.
Importantly, Japan’s new approach is coordinated with US policy in Asia.
At the two-plus-two meeting in April 2012, Japanese and US foreign and defense ministers agreed on joint cooperation to assist other Asian countries’ security efforts. The agreement is as follows:
The Ministries confirmed the great importance of working together topromote peace, stability, and prosperity in the Asia-Pacific region, and enhancing effective, efficient, and creative cooperation. In this context, theUS government plans to continue to help allies and partners in the region
to build their capacity with training and exercises. The government of Japan, for its part, plans to take various measures to promote safety in theregion, including strategic use of official development assistance, for example through providing coastal states with patrol boats. 2
Although China may be irritated by such cooperation, it is an important
step toward creating a stable regional balance by enhancing the security capacity of the region’s states. The EU has a part to play in such efforts as well, as
2 Secretary ofState Hillary Clinton, Secretary of Defense Leon Panetta, Minister for
Foreign Affairs Koichiro Gemba, and Minister of Defense Naoki Tanaka, Joint Statement of the Security Consultative Committee, April 27, 2012.
7

INTERNATIONAL AFFAIRS
many EU countries are experienced in providing capacity building assistanceto Middle Eastern and African nations.
The Challenge of Myanmar
The situation in Myanmar is an omen of developments that could influence
regional rule making over the long term. Its political and economic structures
are far from stable, however, and there is no guarantee that the process of democratization advanced by President Thein Sein will not be reversed.

The lower house of Parliament in the capital of Naypyidaw, Myanmar. (©Htoo Tay Zar)

The initial challenge will be whether Myanmar can amend its constitution, under which the military is granted 25 percent of all parliamentary seats andthree important ministers—the internal minister, border management minister,and defense minister—are appointed by the supreme commander of the national military. Since a constitutional amendment requires the approval of a 75
percent-plus-one-seat majority in both houses of parliament, it remains a highhurdle. Opposition leader Aung San Suu Kyi is now cooperating with the Thein Sein government in seeking an amendment. One litmus test will be how
steadily democratization proceeds in the next election, scheduled for late 2015.
A critical task for the international community regarding Myanmar will be toshare its notions about and technical knowledge of establishing a healthy civil-

8

INTERNATIONAL AFFAIRS
ian-military relationship through the process of democratization and economic
development.
The second challenge will be to address the ethnic conflict from which
Myanmar is still suffering, even after 25 ethnic groups signed a ceasefire
agreement with the military government in 2007. The Karen and Shan (Myanmar National Democratic Alliance Army) continue to fight the central government in the east of the country. Small, armed ethnic Rohingya groups are active in the west. Ethnic conflicts are a grave matter that could derail Myanmar’s economic and democratic development. Economic assistance, combinedwith reconciliation support, from the international community will be a criticalfacilitator.
In this area, Japan has demonstrated new thinking. To facilitate the reconciliation process, the government is collaborating with an NGO that has been
assisting ethnic minorities in Myanmar for decades. The Nippon Foundation—
one of the largest nonprofit, philanthropic organizations in Japan (which also
helped establish the Tokyo Foundation)—has been providing food and medical
assistance to ethnic minorities since 1976. In February 2013, the Japanese government appointed Nippon Foundation Chairman Yohei Sasakawa as special
representative to help achieve ethnic reconciliation in Myanmar. Sasakawa was
the sole observer at the first official peace talks between the Myanmar government and the United Nationalities Federal Council—an alliance of 11 ethnic
militias—held in Thailand in February 2013. That the chairman of a Japanese
NGO would be granted government status to facilitate such a reconciliation
process is a new development. This shows that collaboration between the Japanese government and NGOs in the international arena has been growing inareas such as in advancing disarmament, demobilization, and reintegration(DDR) activities in Afghanistan and Africa, and Japan’s civil society can henceforth be expected to make further contributions to expanding the role of civilsociety throughout East Asia.
Myanmar faces enormous challenges, however, and addressing them is beyond the task of any one NGO or foreign government. Sasakawa has stressed
the critical importance of the international community’s continued economic
support for Myanmar’s ethnic minorities, many of whom are suffering fromextreme poverty. This can play a key role in the domestic reconciliation process
and abet the country’s democratic development. 3 Such a role may be identified
3 Interview with Yohei Sasakawa, “Toward Reconciliation with Minorities and Ending

Poverty: Issues in the Current Democratization Process in Myanmar” (in Japanese),9INTERNATIONAL AFFAIRS
as a common mission for the civil societies of Japan, the United States, and Europe.
Japan-US-EU Trilateral Cooperation
The international community’s role in helping Myanmar meet the challenges ofreconciliation, democratization, and economic development must be considered wisely. One dilemma would be an excessive emphasis on business development in urban areas, as this could widen the gap between the rich, urban
majority and the poor, rural minority. In this context, the international community’s continued assistance to rural, minority areas is of critical importance.
Formulating a common strategy and enhancing coordination among Japan, theUnited States, and the EU in their assistance would be a symbolic model casein supporting the steady economic and peaceful development of Myanmar andother ASEAN countries. Such trilateral cooperation, moreover, would not conflict with China’s rise in the region, as long as all actors share the common goalof a stable and prosperous East Asian region. The process itself may contributeto creating a rule- based and liberal international order throughout East Asia.

Reprinted from “Unlocking the Potential of the US-Japan-Europe Relationship,” a collection of papers written for Trilateral Forum Tokyo 2013, co-organized by the Tokyo
Foundation and the German Marshall Fund of the United States.

Gaiko (Diplomacy), published by the Ministry of Foreign Affairs of Japan, July 2013, pp.
51–56.
10

INTERNATIONAL AFFAIRSOctober 17, 2013

China and the Trans-Pacific PartnershipPaul J. Saunders

Parties to the negotiations on the TPP should not ignore China’s concerns that the TPP
and other major international trade agreements represent attempts to economically “contain” China’s rise. Aiming for inclusive, rather than exclusive trade pacts, argues Paul
Saunders, would make not only economic sense but political and strategic sense, too.

Notwithstanding President Barack Obama’s decision to remain in Washington to manage ongoing budget and debt talks with Congress, theAsia-Pacific Economic Cooperation summit in Bali appears to haveproduced modest progress toward the Trans-Pacific Partnership trade agreement. Success with TPP would be a major accomplishment for the UnitedStates, Japan, and other participating countries and could produce substantial
economic and strategic benefits.
Nevertheless, its participants should also take care to avoid potentiallycounterproductive unintended consequences, particularly in their relations
with China.
China’s new President
Xi Jinping had an opportunity to shine in Mr.
Obama’s absence and by
all accounts he did. Press
reports from the summit
describe other APEC
leaders jockeying for opportunities to interact
Group photo of APEC leaders with their spouses. (© APEC
with Xi—as well as a2013)
unique and massive media center to promote Beijing’s role and perspectives. As a result, many dePaul J. Saunders
Project Member, Tokyo Foundation’s Contemporary American Studies
Project; Executive Director, Center for the National Interest (Washington, DC).

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INTERNATIONAL AFFAIRS
scribed the event as a diplomatic victory for China’s leaders, and perhaps it
was.
But whatever warm glow Mr. Xi may have felt in his hotel suite following
the final day’s events is likely tempered by growing anxiety about the TPP’s
progress. Although it is the world’s second largest economy and recently became the number one trading nation, China could face significantly greater
competition from TPP members if the agreement is realized. TPP participants
make up over 40% of world trade, while China is responsible for about 10% of
global merchandise trade and around 5% of the international market in services.
Worse from China’s perspective, TPP is not the only major international
trade agreement currently under negotiation. The United States is simultaneously pursuing the Transatlantic Trade and Investment Partnership with theEuropean Union—and the EU represents approximately 19% of world trade. Ifboth TPP and TTIP are successful, America would be at the center of a global
free trade system accounting for 60% of international trade, without even considering Washington’s other existing trade pacts, most notably with South Korea and Mexico.
Setting aside America’s current political dysfunction, the success of these
two agreements could reinvigorate both the US economy (and, of course, thoseof the others involved) and Washington’s international leadership. It would
also demonstrate compellingly Washington’s power to attract partners, despite
its occasional mistakes—a power that China still lacks.
Maintaining Openness
Creating TPP and TTIP at the same time could well look like—from China’s
perspective—a form of economic containment, particularly because commentators in Asia, Europe, and the United States are all describing the agreements as
not only economically important but strategically necessary in managing China’s rise. As a result, if the two trade agreements are not handled carefully,
they could contribute to a dangerous backlash in China that might undermine
their strategic benefits.
From a historical perspective, major powers that feel increasingly isolated
have generally looked for new allies and partners to strengthen their political,
economic, or military position. With this in mind, China is likely to seek partners outside TPP and TTIP—and looks like it is already doing so. This is mostevident in Beijing’s increasingly active efforts to cultivate Moscow and its expanding engagement in Central Asia and the Middle East.
12

INTERNATIONAL AFFAIRSAt the same time, the United States is disengaging in Central Asia—as thewar in Afghanistan winds down—and appears likely to reduce its energy imports from the Middle East, a key component of the US role there. A new Silk
Road linking the Middle East, Central Asia, and China—an idea that currently
seems to have wide support from not only these nations but also the UnitedStates and Europe—could promote this kind of integration, especially if Moscow and others successfully develop the Eurasian Economic Community.
The critical question for the major economies participating in all of theseventures is whether they will be inclusive or exclusive. Inclusive new groups
that lower barriers and expand trade could energize the global economy, forming large and important building blocks for worldwide trade liberalization.
Conversely, however, exclusive and competitive groups could lead to growing
trade tensions while giving away the potential benefits of wider and deeper
economic integration. That path would likely heighten political tensions aswell—and the consequences could be costly for all.
With all of this in mind, it is quite important for the United States, Japan,
and others discussing the TPP to ensure that any eventual agreement is clearly
open to new members, including China. This not only makes economic sense—by expanding the boundaries of freer trade and prosperity—but political andstrategic sense too.
Eventually bringing China into the TPP could require one of the most complex and difficult trade negotiations in history—not to mention challenging
work in Beijing to meet the agreement’s appropriately high standards—but
would be well worth it. Until then, leaders in the United States and other parties to the talks should more clearly state this goal and look for ways to takesmall steps toward it.

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ECONOMY
November 21, 2013

Japan’s Agriculture and the TPP
Yutaka Harada

Japanese agriculture is in a dire state, and misguided agricultural policies are partly toblame, states Senior Fellow Yutaka Harada. He sees promise, though, in that some sectors
have demonstrated potential for growth even under such circumstances. Japan’s participation in the TPP should benefit many farming households, inasmuch as their income is reliant on a healthy economy as a whole.
Introduction*
Many Japanese industries are perceived to be strong, active, and competitive in
the global market, but agriculture is usually considered an exception. For years,
the farm sector has sought protection from international competition, subsidies,and favorable government treatment, and it has been largely successful in getting them until now. In spite of these privileges, Japanese agriculture is in aperilous state, and most farmers oppose any movements toward free trade.
Japan has free trade agreements (FTAs) and economic partnership agreements (EPAs) with many countries, but their ratios of trade liberalization are
low—around 85% or 86%—with the unliberalized items basically being agricultural products. 1
Japan decided to join the negotiations for the Trans-Pacific Partnership(TPP) in March 2013 and has been participating in the talks since July 2013. For
the TPP, the United States and other member countries are believed to be seeking liberalization ratios of 96% or higher. 2
The Japanese government is believed to be interested in protecting rice,
Yutaka Harada
Senior Fellow, Tokyo Foundation; Professor, School of Political Science andEconomics, Waseda University.
* This manuscript was prepared for the Chicago Council on Global Affairs conferenceon ”Frontiers of Economic Integration,” in Chicago, Illinois, on October 29–30, 2013.
1 See Harada and the Tokyo Foundation (2013), p.18, Chart 2.
2 Liberalization rates of FTAs between the United States and other countries are higher
than 96%. See Harada and the Tokyo Foundation (2013), p.18, Chart 2.
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ECONOMY
wheat, beef and pork, milk products, and sugar, but if it protects them all, theliberalization ratio will only be around 90%. 3 This would mean that the goal of
the TPP—to achieve high-level trade liberalization—will not be realized.
The Japanese government is now reportedly trying to persuade powerfulagriculture lobbies to accept liberalization in exchange for new subsidies. The
main lobbies, the Japan Agricultural Cooperatives, actively opposed joining the
TPP negotiations until March 2013 and are now trying to reduce the liberalization ratio and to get more subsidies by arguing that Japanese agriculture has
been seriously damaged and that Japan’s food self-sufficiency rate has drastically declined.
This paper will examine whether the arguments advanced by the agricultural lobbies are legitimate or not. I will first explain the dire state of Japanese
agriculture. Second, I will illustrate that even under such circumstances there
are some areas with potential for growth. Third, I will show how Japan’s agricultural policies have hindered the sector’s development. Fourth, I will propose alternative policies that should better promote its development. Fifth, I
will explain that Japanese farming households already depend on sectors of theeconomy other than agriculture and that their income will not stabilize even if
agriculture is protected; it will thus be important that the Japanese economy asa whole prospers. Finally, I will offer a conclusion.
The State of Japanese Agriculture
The annual value added in Japan’s agriculture sector is 4.6 trillion yen (about
46 billion dollars). Agricultural imports are 5.8 trillion yen, sales total 8.2 trillion yen, 4 and the agricultural budget (which can be thought of farm subsidies)is 2.2 trillion yen. 5 Domestic prices of agricultural products are 1.516 times
3 The number of tariff items for rice, wheat, beef and pork, milk products, and sugar(including starch) are, respectively, 58, 109, 100, 188, and 131, or a total of 586 items. In
addition, Japan has not liberalized fishery products and plywood (248 items) andfootwear and leather products (95 items), bringing the total to 929. The total number oftariff items would be about 9,000, giving a liberalization rate of about 90%. See “TPPjiyukaritsu 90% cho” (TPP Liberalization Rate to Be 90% or Higher),” Nihon Keizai
Shimbun, October 4, 2013.
4 Figures in this section for 2011 and 2012 are from the “Basic Statistics” page of the
MAFF website (http://www.maff.go.jp/j/tokei/sihyo/index.html) unless otherwise
stated.
5 MAFF, “Norinsuisan Yosan no Kosshi, Heisei 24 Nendo” (Outline of the MAFF
Budget FY 2012), http://www.maff.go.jp/j/budget/2013/pdf/00_01_kettei.pdf.
15

ECONOMY
higher than the international average, according to the OECD, 6 which can belikened to 51.6% tariff protection.
At a glance, the situation seems absurd. Agricultural consumption in Japanis 10.4 trillion yen (4.6 trillion yen in domestic production + 5.8 trillion yen in
imports). Domestic farmers thus meet only 44% of total consumption, despite
receiving 2.2 trillion yen in subsidies and benefitting from 51.6% tariff protection. The domestic value added would be only 3.0 trillion yen (4.6 trillion yen /1.516), moreover, if calculated using international prices. Subtracting the 2.2
trillion yen in subsidies from this amount would then leave only 0.8 trillion yen
in real value added by domestic producers—equivalent to just 0.17% of Japan’s
470 trillion yen GDP.

The plight of domestic agriculture can also be seen when we look at individual farming families. According to the Ministry of Agriculture, Forestry and
Fisheries, the farming population in Japan is 2.53 million, and there are 1.50
million farms, but their agricultural sales are only 500,000 yen (approximately
5,000 dollars) on average. And as shown in Table 1, among the 1.50 million
farms, 878,000 claim sales of less than 1 million yen per year; the average
household income in Japan, incidentally, is 5.48 million yen.7
6 OECD,

Producer Support Estimate by Country, http://stats.oecd.org/Index.aspx?DataSetCode=MON20123_1.
7 Ministry of Health, Labor, and Welfare, “Kokumin Seikatu Kiso Chosa” (Basic Survey
16

ECONOMY
The number of family-owned farms ringing up annual sales of more than 7
million yen is just 171,500 (the sum of the three right-hand figures in the firstrow of Table 1). Since Japan’s average household income is 5.48 million yen,sales of 7 million yen may not be a lot, but it is a level at which a family can afford to be engaged in farming on a full-time basis. This means that there are
only 171,500 full-time farming households, and the rest are farming only on apart-time basis.
The average age of farmers is 65.8 years old, and the ratio of 65-and-overworkers to the total agricultural population is 61.8%. Fields and rice paddies
that have been abandoned and are no longer cultivated total 400,000 hectares(Japan’s arable land is 4.5 million hectares), while another 1,100,000 hectares lie
unused owing to the government’s gentan policy of reducing rice cultivationacreage. Japanese agriculture is in a state of collapse. One is led to conclude
that Japan’s agriculture and agricultural policies are extremely inefficient andpeculiar.
Potential for Growth
Despite these dire conditions, there are some areas with potential for growth inJapanese agriculture. Figure 1 shows the shares of sales by scale of farm. In thecase of broilers (chicken), farms with sales of more than 10 million yen (100,000
dollars) accounted for 98% of total sales. Similarly, the shares claimed by farms
with sales of more than 10 million yen were 97% or higher for eggs, pork, andmilk cows.
By contrast, the shares were 39%, 51%, and 63%, respectively, for fruits, rice,and vegetables. Relatively low shares were also seen for beef, wheat, flowers,
beans, and potatoes.
The figures suggest that large farms were dominant for those agricultural
products—like broilers, eggs, pork, and milk cows—that lend themselves tolarge-scale production. There is less economy of scale for fruits, vegetables, andflowers, and the means of working around such disadvantages—such as using
foreign workers or hiring workers only during the harvest season—are currently unavailable. There are considerable potential economies of scale for rice,wheat, beans, and potatoes, but such potential is not realized at present.

on National Life), 2012.
17

ECONOMY

Wrong Policies
Why has Japanese agriculture been unable to develop? One possible culprit isgovernment policy that has discouraged farmers from taking advantage of
economies of scale.
For example, agricultural cooperatives sell seeds, seedlings, pesticides, andfertilizers in small sizes and lots, provide financing for agricultural machines,
and purchase the harvested products. In short, it is thanks to Japan’s agricultural policy and the availability of such services that farming can be performed
on a part-time basis.
Additionally, pooling a number of lots to achieve economies of scale anddecrease production costs is difficult because farmers are reluctant to lend theirland. This has to do with the fact that Japanese farmland, if certain conditions
are met, can be converted to other uses. Once converted, houses, supermarkets,and infrastructure—such as roads, railroads, and public facilities—may bebuilt on the farmland, pushing up land prices tenfold or more. Another reason
for the reluctance is that tenant rights are strongly protected in Japan.
MAFF has sought to concentrate farmland by providing subsidies to landowners, but enticing them to lend, when they might get a much higher price by18

ECONOMY
converting the land for other uses, would require too much money. Such a policy would also be problematic from the viewpoint of ensuring equity between
land owners and people without land.
Instead of providing subsidies, MAFF should increase the landholding tax.
The real estate tax on farmland is currently very cheap, practically zero. This
prompts landowners to hold on to their farmland even if they do not farm,waiting for market values to rise before selling it. If the real estate tax is raisedat the same time that tenant rights are weakened, lending would become amore attractive option, and landowners might become more willing to lend.
MAFF should also stop its gentan policy of reducing the acreage under ricecultivation. Farmland concentration would be hindered if farmers have to reduce their acreage. It is contradictory for MAFF to argue that agriculture must
be protected to increase the food self-sufficiency rate while at the same time
guiding domestic production lower with its acreage reduction policy.
If the real estate tax on farmland is raised, tenant rights are weakened, andthe policy of reducing acreage under cultivation is abolished, there is no question that farmland would become more concentrated. As mentioned above,
there are only 171,500 farmers in Japan who sell more than 7 million yen of agricultural produce each year. With total farmland in Japan being 4.5 million
hectares, the size of the average farm is about 26 hectares.
This is less than one-sixth the US average of 160 hectares. Large-scale farming is not always suitable for vegetables and flowers, while poultry, pork, andbeef production is not land-intensive. This suggests that rice fields would beslightly larger than average, probably in excess of 30 hectares.
According to MAFF, the cost of rice production is 22,185 yen per 60 kilograms for farms between 0.5 and 1 hectare, but 13,086 yen when farms are between 3 and 5 hectares, 11,848 yen for 10 hectare farms, and 11,080 yen forfarms of 15 hectares or more. 8 The price of imported high-quality rice produced in California has been estimated to be 9,631 yen per 60 kilograms byProfessor Shoichi Ito of Kyushu University. 9 The price differential is thus nolonger a crucial issue.
Many Japanese argue that crop production in Japan has a disadvantage
compared to such countries as the United States, Canada, and Australia, whereland is more abundant, but the important thing is not the area of arable land
8 MAFF,“Nosanbutsu Seisanhi Tokei (Statistics of Agricultural Production Costs),”
2011.
9 Quoted from Yamashita (2013), p. 236.
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but the area of arable land per farmer. The area per farmer will increase if thenumber of farmers decreases. The area is 160 hectares in the United States now,
but it was 60 hectares in 1930 10 —including ranches, where a few cowboys
could manage huge areas of land. The increase in the area per farmer is the result of children and grandchildren moving to the cities.
In the case of Japan, the government has tried to keep farmers from moving
to the cities and to have them continue farming for political reasons. Japan’s
leftist parties are very weak now, but they once presented a formidable opposition force, with the chance that they might take power in the 1970s and early
1980s; indeed, they did take power in several large cities in the 1970s. Rural
areas are the power base for the Liberal Democratic Party of Japan, and they
tried to keep farmers in those areas and to continue farming, even if the farms
were on a small scale.
What Can Be Done?
In order to correct the shortcomings of Japan’s agricultural policy, it is important to have an understanding of MAFF’s distorted system of protection for
agricultural products. Tariff rates for flowers are zero, those for vegetables
range from 3% to 9%, and those for fruits are between 10% and 20%. By contrast, tariffs are extremely high for konjak (devil’s tongue) potatoes, rice, tapioca starch, butter, sugar, wheat, potato starch, and skimmed milk, being 1700%,
778%, 583%, 360%, 328%, 252%, 234%, and 218%, respectively. Between the two
extremes are processed tomatoes, beef, and oranges, which, respectively, are20%, 38.5%, and 20% (40% during the seasons when mikan, or Japanese tangerines, are harvested). The tariff rate for pork is 4.3% when the import price isunder the break-even price of 393 yen per kilogram, while the difference between the import price and break-even price becomes the tariff rate when theimport price is higher than the break-even price. As you can easily imagine,
many importers falsely claim import prices that are higher than the break-evenprice, and some of them are caught by custom tax offices.
Why should the tariff rate for konjak—which has very few or no calories—
be higher than that for high-calorie potato starch? From a food self-sufficiency
viewpoint, these rates make little sense.

10 US Census Bureau, “Statistical Abstract of the United States, Bicentennial Edition,”various years.
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Additionally, many unprotected agricultural sectors have been growing
while heavily protected ones have not. As shown in Table 2, sales of vegetables,
fruits, and flowers are 2.1 trillion yen, 0.7 trillion yen, and 0.3 trillion yen, respectively. Sales of rice, wheat, and potatoes, meanwhile, are only 1.8 trillion
yen, 0.04 trillion yen, and 0.06 trillion yen, with sales in unprotected sectors
now being larger than in protected ones. Unprotected sectors are those that canstand on their own feet, increase sales, and make profits, while the protected
sectors have been losing sales and continue to depend on protection from thegovernment.
What this suggests is that Japanese agricultural policy has not been working well. MAFF spends a lot of money on agriculture, but the sector has notbeen growing; independent farmers who do not rely on this chaotic agricultural policy, though, have increased their sales and lowered costs. Some operatelarge farms, while others, by developing high-quality products, have managed
to increase sales despite their small lots. It is individual initiative that is driving
the growth of Japanese agriculture, so perhaps the government should stop
intervening. Joining the TPP is the first step to eradicating this irrational agricultural policy.
There is a lot of political pressure to change the present policy, but the gov21

ECONOMY
ernment can still use the income support system for individual farmers to easethe pressure. Many argue that this system of subsidies to small farms only delays the concentration of arable land, but a large portion of the subsidies goesto big farms. In rice production, for instance, 67% of the subsidies go to farms
with annual sales of more than 5 million yen. For almost all other products,
80% are earmarked for relatively large farms. Still, some might criticize that theremaining 20% of the budget going to small farms hinders the expansion of
economies of scale, but considering that the MAFF budget has generally beenspent so ineffectively, this is a very small amount.
Government finances are very constrained right now, but agriculture in
Japan is a small industry. The value of Japan’s agricultural production is only
4.6 trillion yen, with unprotected sectors accounting for approximately 60% of
total sales. This means that production in the noncompetitive sector is 40% of
the 4.6 trillion yen, or 1.8 trillion yen. Even if the prices of these noncompetitive
products decline by half after the TPP comes into effect, the government canstill afford to make up the 0.9 trillion yen shortfall in farmers’ revenues withfresh subsidies.
Additionally, while lower prices for agricultural products represent a loss
for farmers, they would be a gain for consumers, so Japan as whole would lose
nothing. But some would still argue that the government has no money for additional subsidies. I believe that the government can easily squeeze 0.9 trillion
yen from its 100 trillion yen annual budget, but there may be a better way tofinance such subsidies.
The consumption tax is scheduled to be raised from the present 5% to 8% in
April 2014 and to 10% in October 2015. It has been argued that higher taxes
should be exempted for daily necessities like food, but if Japan joins the TPP
and liberalizes agricultural products, food prices can be expected to decrease,and so there would be no reason to exempt the hike for foodstuffs. Some argue
that the consumption tax on food should be exempted for low-income families,
but these same people seem strangely unconcerned about having to pay higher
food prices to protect farmers.
If an exemption is made for foodstuffs, this would mean a 19% reduction in
consumption tax revenues. 11 A 1-percentage-point increase in the consumption
tax has been calculated to produce revenues of 2.5% of GDP, that is, about 2.5
trillion yen. Thus, a 2-point hike generates 5 trillion yen; since 19% of 5 trillion
yen is 0.95 trillion yen, the government can secure the needed revenues for
11 Harada and the Tokyo Foundation (2013), pp. 127–30.

22

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subsidies to affected farmers with a 2% hike in the consumption tax by simply
avoiding an exemption on foods.
Farm Sector Depends on Japan’s Overall Prosperity
MAFF statistics show that there are 1.50 million family-operated farms, butthey sell only an average of 500,000 yen’s worth of agricultural products eachyear, as I mentioned. Farmers in the Edo period may have led self-sufficient
lifestyles, but farmers cannot live on such incomes in modern times. They needto sell their produce to purchase products for modern life. (Actually, commercial agriculture is said to have flourished even in the Edo period.)
MAFF’s estimates of farmers’ incomes by size of field are summarized inTable 3. The ministry surveyed 1,603 agricultural households about their agricultural and subsidiary incomes and pension revenues. It selected relatively
large farms for its sample because it wanted to know the situation of larger
farms. Family-operated farms measuring more than 5 hectares account for only
5.5% of the total, 12 but they made up 44.7% of the MAFF sample; in short, thesample is not an accurate reflection of the overall situation, leading to an overestimation of agricultural income, but this is the only available survey of agricultural household incomes.

12 MAFF’s ”Nogyo Kozo Dotai Chosa” (Survey on the Structure and Dynamics of Agri-culture), 2013. Sum of Hokkaido and other prefectures in “Keiei Kochi Menseki
Kibobetsu Noka Su” (Number of Agricultural Families by Size of Cultivated Field).

23

ECONOMY
The table shows that the average agricultural income of Japanese farms is
only 0.5 million yen per year. “Agricultural income” means sales minus costs.
Half a million yen is only about 5,000 dollars. Obviously, this is not enough tolive on in modern-day Japan, even if it is overestimated. Then, how do they
live? The table shows that the average income from side jobs is 1.9 million yen
and average pension revenue is 2.1 million yen. Total income, including fromagriculture, is 4.5 million yen. This is how they survive.
The average age of Japanese farmers is 65.9 years old, as I mentioned above,so they are more often than not pensioners.
For small farms, the share of pension benefits to total income is quite large.
The average pension income for households with farms measuring less thanhalf a hectare is 2.5 million yen, and their agricultural income is minus 0.1 million yen. So, one might say that small farmers are basically pensioners who cultivate their land as a hobby.
The figures suggest that for the average farmer, the most important consideration in making a living is to secure a steady income from a side job and toreceive pension benefits. Getting a stable side job will become easier if the Japanese economy is growing, and for this, Japan’s best option would be to open
its doors wider to the global market and to seek further trade liberalization.
And what are the most important considerations in receiving pension benefits? Since benefits are paid from the contributions of the working-age population, then it follows that Japan needs to be prosperous with many job opportunities. For this, too, Japan should seek liberalized global trade. In short, Japanneeds the TPP to ensure its own prosperity.
Large farms seeking to expand will not be hurt by the TPP, so the trade
pact might be effective in rectifying just those aspects of Japan’s agricultural
policy that have plagued the country to date.
Inasmuch as the lives of agricultural households also depend on a prosperous Japanese economy as a whole, it is not enough to limit imports of certain
products if one is serious about protecting the country’s farmers.
Conclusion
In this paper, I have tried to show that Japanese agriculture is in a perilous
state. Despite this, a small number of farms have become big producers claiming a major share of total production. If the government does not hinder theiractivities, agricultural productivity could rise, and Japanese agriculture can becompetitive. In fact, around 60% of the farm sector is already internationally24

ECONOMY
competitive. Misguided agricultural policies have been in place for years
aimed at preventing the number of agricultural families from declining, and I
have made a number of proposals that could improve the situation. Finally, I
noted that the financial stability of many farming households depends on Japan’s overall prosperity. In short, Japan needs the TPP to ensure its own prosperity.
References
Harada, Yutaka, and the Tokyo Foundation. 2013. TPP de sarani tsuyokunaru
Nihon (Turning TPP to Japan’s Advantage). Tokyo: PHP Institute.
Yamashita, Kazuhito. 2013. Nihon nogyo o hakai shita no wa dareka (Who Destroyed Japanese Agriculture?). Tokyo: Kodansha.

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November 8, 2013

Raising the Consumption Tax Rate
Shigeki Morinobu

The “three arrows” in the Abenomics program of economic expansion are helping lift Japanout of decades of paralyzing deflation. In recently announcing that he would go ahead witha scheduled consumption tax hike in April 2014, Prime Minister Abe also outlined a ¥5
trillion package of measures designed to mitigate the negative impact of higher taxes. Whilelauding the unpopular decision to raise the consumption tax, Senior Fellow Shigeki
Morinobu believes the fiscal stimulus package is a waste of fiscal resources that could jeopardize the administration’s target of “halving the annual deficit by fiscal 2015.” The following article is reprinted with permission from Chuo Online.
1. The decision to raise the consumption tax rate should be appreciatedOn October 1, Prime Minister Abe officially made a cabinet decision to raise
the consumption tax rate to 8% in April next year.
The Japanese economy is emerging from the prolonged deflation, partly
due to the effects of the “Three Arrows” consisting of the “bold monetary policy” of the Bank of Japan, the “flexible fiscal policy” and the “growth strategy tostimulate private investment.” On the other hand, the fiscal situation remains
to be the worst among the developed countries, with the primary balance in a
deficit of 6.4% of GDP and an outstanding public debt of 190% of GDP in
FY2012. If the confidence of the market in fiscal sustainability becomes shaken,
it could have a huge impact on the economy and on people’s lives through therise of interest rates and the like.
As for reform of the social security system, moreover, it has been pointed
out that fiscal resources need to be directed toward enhancing policies in order
to assist the child rearing of the working generations.
I would frankly give a high appraisal for officially deciding to raise theconsumption tax rate with this timing from the viewpoint of fiscal consolidation and enhancement of social security.
Shigeki Morinobu

26

Senior Fellow, Tokyo Foundation; Professor, Chuo University.

ECONOMY
2. Generous economic stimulus measures will leave problems
At the same time as the decision to increase the consumption tax, economic
policy measures totaling ¥5 trillion were decided—comprising tax credit forcapital investment, measures for low-income earners, additional spending on
public investment, and the like—in order to mitigate the negative impact on
the economy due to the rise of the consumption tax rate. The increased revenue
from the consumption tax will be about ¥8 trillion. Although it is only for one
year, the increased expenditure of ¥5 trillion has given an impression that the
Abe administration is placing low priority on fiscal consolidation. Regarding
its contents as well, a lot of problems exist for the use of fiscal resources as themeasures include additional public investment of about ¥2 trillion under theguise of building national resilience and the Olympic Games. We should be
careful about formulating a budget with the approach of “deciding the total
amount at first,” which could incur moral hazard as we have seen in diversionof the budget for reconstruction from the earthquake disaster to other uses. We
should not forget its origin that discussions on the rise of the consumption tax
rate started as part of the Comprehensive Reform of the Social Security andTax Systems.
Since such waste of fiscal resources could jeopardize the attainment of the
Abe Administration’s fiscal target of “halving the primary balance deficit by
FY2015”—which is also an international commitment—it will be strictly
watched by the market going forward.
3. Reduced tax rates should not be introduced
The biggest issue of the consumption tax after its rise is whether to introduce a
reduced tax rate for food. The agreement among the ruling parties states that,“we aim to introduce it at the time of raising the consumption tax rate to 10%,”scheduled to be decided by the end of this December.
The biggest issue for introducing a reduced tax rate is how to cover the accompanying revenue loss. If a reduced tax rate of 5% is introduced for food, it
will result in the revenue loss equivalent to the revenue from about 1% consumption tax rate, as food accounts for around 20% of total expenditures.
Those who advocate for introducing a reduced tax rate must show as well how
they intend to secure fiscal resources of ¥2.5 trillion, equivalent to the revenue
from the 1% consumption tax rate. Assertion of a reduced tax rate without alternative revenue is merely an empty, impractical theory.
27

ECONOMY
Second, a reduced tax rate will benefit high-income earners more, andtherefore, it will not contribute to measures for low-income earners or resolving regressivity. As high-income earners spend more on food, a reduced tax
rate will not be a measure for low-income earners, but rather a preferential
treatment for the rich after all.
Last, we should bear in mind that European countries with reduced tax
rates are facing serious problems due to the emergence of business models
which did not exist when they introduced VAT in the 1960s. The issue is thedistinction between eat-in service (for the standard tax rate) and take-out food(for reduced tax rates). They are distinguished by the temperature in the U.K.,
while by the number of items in Canada—we cannot say either is working. It
will depend on future discussions as to how we will distinguish them in Japan,
but it will certainly increase the burdens on consumers, businesses, and tax authorities in the end. Although changes in the reduced tax rates are advocated in
EU, it will be politically difficult to reduce or abolish them once they are introduced.
Japan, which is witnessing such cases, should avoid introducing reduced
tax rates at the 10% consumption tax rate, leaving aside cases where the tax
rate exceeds 10%. Measures for low-income earners can be implemented efficiently with a simple tax refundable tax credit which has been introduced in
Canada. For the Canadian type tax credit, please refer to the following essay(in Japanese): http://www.tkfd.or.jp/research/project/news.php?id=963
4. The next step is reduction of the corporate tax
The issue for the whole tax system will be the reduction of the corporate tax.
While abolishing the increased tax for reconstruction ahead of the schedule
will be discussed at the same time, the special corporation tax for reconstruction is originating from the thinking that Japanese people as a whole shouldshare the burden of necessary reconstruction from the earthquake disaster; andtherefore, it is based on different logic, which will not directly lead to invigoration of the Japanese economy through reduction of corporate tax burdens. It
should be fully discussed because we also have the issue of the balance withexcess burdens on the income tax and the local inhabitant taxes.
Even after abolishing the special corporation tax for reconstruction aheadof schedule, the effective tax rate of the Japanese corporate tax will be several
percentage points higher than it is in other countries. This is undoubtedly oneof the reasons for the hollowing-out of the Japanese economy, including local
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areas, and we can expect a significant impact if the effective corporate tax rate
is reduced. In that case, it would be important to create a route through which
the benefits of corporate tax reduction could flow into households. We cannot
say that corporate CEOs have been managing effectively. After reducing thecorporate tax, they are expected to improve corporate governance and raise
productivity, and then use the gain for increases in employees’ income anddividends.
With the limited resources for reducing tax rates, it is important to implement a fundamental corporate tax reform, including review of special taxation
measures, review of the tax base of local taxes such as the fixed assets tax, andreinforced taxation on loss-making corporations and religious corporations.
The benefits of economic growth by Abenomics should be delivered widelyto the nation (as increased tax revenue) and Japanese people (as increased income); the government and companies should not fail to work toward that end.

Reprinted with permission from Chuo Online (http://www.yomiuri.co.jp/adv/chuo/
dy/opinion/20131105.htm).

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December 2, 2013

Structural Shift in Japan-China Relations
Katsuyuki Yakushiji

Prickly relations between Tokyo and Beijing are nothing new, but the current squabble over
the Senkaku Islands makes the previous two decades look like a honeymoon. Katsuyuki
Yakushiji discusses the underlying structural changes that have turned the tiny Senkakus
into a powder keg.

Relations between Japan and China have hit a new low. The countries’
top leaders do not even exchange smiles or handshakes at international
conferences, let alone lay plans for state visits. Diplomats are denied
contact with major government figures in the host country except at ceremonial occasions. Senior Japanese officials euphemistically call it a “strategy of endurance.”
Although the immediate cause of this diplomatic dysfunction is the dispute
over the Senkaku Islands in the East China Sea, the underlying source of tension is much deeper and more difficult to address.
Nostalgic for the Nineties
Of course, this is not the first spat between Tokyo and Beijing in recent history.
In the 1990s, President Jiang Zemin—whose uncle died fighting the Japanese
during World War II—missed no opportunity to bring up Japan’s wartime aggression. He routinely complained that the Japanese government had neveroffered a proper apology, and Tokyo countered each time that it had alreadydone so. Despite these simmering tensions, though, diplomatic relations continued to move forward.
Indeed, the two governments were able to build on progress made at thebilateral level to embark on such multilateral frameworks as the Japan–China–
Katsuyuki Yakushiji
Senior Associate, Tokyo Foundation; Professor, Toyo University. Former editor of the Political News Department and editorial writer, Asahi Shimbun, and former
chief editor, Ronza magazine.
30

POLITICS & GOVERNMENTSouth Korea trilateral summit, first held in 1999 at the initiative of Prime Minister Keizo Obuchi. This meeting, held almost annually for the next decade, provided an opportunity to deliberate North Korea’s nuclear program and otherkey issues affecting the Northeast Asian region as a whole.
Progress slowed dramatically during the administration of Prime Minister
Jun’ichiro Koizumi. The issue then was the prime minister’s annual visit to
Yasukuni Shrine beginning in 2001, the year he took office. The Chinese government strongly protested the visits on the grounds that, by paying his respects at a shrine that enshrines class A war criminals, the prime minister was,in effect, condoning the militaristic and expansionist policies of the past. During Koizumi’s five years in office, state visits between the two countries cameto a halt. Even so, both governments managed to take advantage of APEC
meetings and other multilateral frameworks to maintain some form of bilateraldialogue at the top, and trilateraltalks between Japan, China, andSouth Korea were never completely suspended.
One of the first things Prime
Minister Shinzo Abe did uponsucceeding Koizumi in 2006 was
to visit China. Abe and President
Hu Jintao issued a joint statement
calling for efforts to build a “mutually beneficial relationshipbased on common strategic interests,” and relations improved almost overnight. Abe left office after barely ayear, as did the next two prime ministers, Yasuo Fukuda and Taro Aso. But
despite the rapid turnover in Japan’s top leadership, the two countries continued to make diplomatic progress, including an agreement for joint development of gas reserves in the East China Sea. Two major factors account for thisupturn. First, Japan’s top leaders refrained from visiting Yasukuni Shrine. Second, the hardline Jiang Zemin was replaced by Hu Jintao, a proponent ofstronger relations with Japan.
Stormy Waters
Sometime after the Democratic Party of Japan unseated the Liberal Democratic
Party in 2009, things took a decided turn for the worse. Tensions began to rise
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sharply in September 2010, after a Chinese trawler deliberately rammed a Japanese Coast Guard patrol vessel in the East China Sea near the disputed
Senkaku Islands. Japanese authorities arrested and detained the ship’s captainon charges of obstructing officers on duty, and Beijing reacted furiously, denouncing the arrest and suspending all high-level exchanges with Japan.
When Japan continued to hold the ship’s captain, China retaliated by blocking exports of rare earth metals to Japan and detaining four Japanese corporate
employees who were visiting China on business. Eventually Japanese officials
decided to release the captain without indictment and send him home, but by
then Beijing’s rabid response—mobilizing the state apparatus at all levels andapplying pressure in sectors unrelated to the issue at hand—had alreadycaused consternation around the world.
Then, after a brief lull, came the series of events that have brought relations
to their current deplorable state. In September 2012, the cabinet of Yoshihiko
Noda decided to purchase three of the Senkaku Islands. The government
moved to nationalize them after learning that Tokyo Governor Shintaro Ishihara, an outspoken hawk on China policy, was planning to purchase the disputed islands, incorporate them into Tokyo Metropolis, and build wharves andlighthouses on them, regardless of the consequences for Japan-China relations.
Noda met personally with the governor to confirm whether these were indeed
Ishihara’s intentions, after which the central government went ahead with thedecision to nationalize the islands in order to avert a worst-case scenario.
Noda explained that the purpose of the purchase was to ensure the “peaceful and stable management of the islands” over the long term. But Beijing
erupted in indignation, calling such a unilateral move “illegal and invalid.”
Since then, China Coast Guard vessels have been dispatched to the islands onan almost daily basis, often making incursions into Japan’s territorial waters.
Japan, meanwhile, has a fleet of Coast Guard vessels on hand to patrol the waters on an ongoing basis. As Japanese and Chinese coast guard ships face off,
both countries’ naval vessels are keeping close watch from outside the disputed area.
Chinese aircraft have been encroaching on Japanese airspace more frequently, causing Japan to scramble its jet fighters in response. In short, Japanand China are locked in a tense standoff over a group of tiny, uninhabited islands in the East China Sea.
In late November 2013, moreover, China unilaterally announced an air defense identification zone over broad areas of the East China Sea, including the
Senkaku Islands. Needless to say, this ADIZ overlaps that already established32

POLITICS & GOVERNMENT
by Japan, and it also intrudes into a South Korean–claimed ADIZ. China maintains that planes flying into this airspace must comply with Chinese orders andinform authorities of its flight plan, warning that any aircraft failing to follow
such rules will face emergency defense measures taken by the military. Tokyo,
Washington, and Seoul have all voiced serious concern over Beijing’s action as
unnecessarily heightening tensions in the region.
While the squabble has all the appearance of a typical territorial dispute,
China’s first attempt to claim the Senkaku Islands dates back only to the early
1970s—when a UN survey revealed the strong likelihood of oil reserves in thevicinity. Before then, China never disputed Japan’s sovereignty over the islands. The Senkakus have remained under Japan’s control during this time,
and the Japanese government maintains that there is no territorial dispute.
Why, then, have the islands suddenly turned into such a bone of contention? Even allowing for the volatility of Beijing’s relationship with Tokyo overthe past two decades, it seems clear from the intensity of the current conflictthat the dynamic of the Japan-China relationship has fundamentally changed.
Historical Issues and the Murayama Statement
Until the 1990s, the periodic escalation of tensions between Japan and China
almost invariably revolved around historical issues. Every so often, politiciansfrom the LDP’s hawkish, nationalistic wing, including top party officers andcabinet ministers, would come out with remarks that sought to justify Japaneseaggression against China in the 1930s, claiming, for instance, that Japan wasforced to invade China in self-defense or that Japanese expansion in East Asiaand the Pacific liberated the region’s nations from Western imperialism. Eachof these outbursts was followed by an indignant backlash from China and atemporary deterioration in bilateral ties.
However, the Japanese government has long since made its position clear.
On August 15, 1995, Prime Minister Tomiichi Murayama issued a statement,with the unanimous approval of the cabinet, that leaves no doubt as to Tokyo’s
official stance on the issue of Japan’s imperialist and wartime aggression. The
statement “On the Occasion of the 50th Anniversary of the War’s End,” also
known as the Murayama statement, reads in part as follows:
During a certain period in the not too distant past, Japan, following a mistaken national policy, advanced along the road to war, only to ensnare theJapanese people in a fateful crisis, and, through its colonial rule and ag33

POLITICS & GOVERNMENT
gression, caused tremendous damage and suffering to the people of many
countries, particularly to those of Asian nations. In the hope that no such
mistake be made in the future, I regard, in a spirit of humility, these irrefutable facts of history, and express here once again my feelings of deep remorse and state my heartfelt apology. Allow me also to express my feelingsof profound mourning for all victims, both at home and abroad, of that history.
In this statement, the Japanese government explicitly acknowledges andapologizes for the aggression of the past. Moreover, subsequent cabinets havecontinued to honor this statement, reaffirming its substance and often quoting
it verbatim.
Changing Dynamic
However, much has changed since 1995. At the time of the Murayama statement,
Japan was still the world’s second largest economic power, and its security environment was relatively stable thanks in large part to the Japan-US alliance. Confident in its superiority, Japan could afford to be tolerant and magnanimous, andthe public was largely immune to the appeal of narrow-minded nationalism.
After the start of the new millennium, however, the bilateral power balance
gradually shifted. Japan’s economy remained mired in the protracted slump
ushered in by the collapse of the economic bubble, while China’s economy
grew by leaps and bounds as the “Reform and Opening up” policies bore fruit.
In 2010, China finally overtook Japan in gross domestic product to become theworld’s second-largest economy.
A similar shift has occurred on the security front. Owing largely to fiscal
constraints, the Japanese defense budget has remained virtually unchanged
since the 1990s at about 5 trillion yen. Meanwhile, China’s defense budget has
quadrupled over the past decade to 16 trillion yen (2012), as Beijing has pursued a policy of rapid military expansion and modernization.
The heady mix of high-paced economic growth and military modernization
has boosted China’s self-image as a major power. Its behavior toward its
neighbors—not only around the Senkaku Islands but also in disputed areas of
the South China Sea—has become high-handed, producing growing friction. In
Japan, resentment of China’s imperious approach to international relations iscompounded by its having been overtaken as the preeminent regional power.
The result has been a marked rise in anti-Chinese nationalist sentiment. A
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hawkish, hard-line stance toward China has become more prominent, whilecalls for bilateral friendship and cooperation have become subdued.
This trend was vividly apparent in the results of a public opinion survey on
foreign relations conducted in October 2012 by the Cabinet Office. In thatyear’s survey, only 18.0% of respondents indicated that they felt friendly toward China, while 80.6% answered that they did not. Asked about their perceptions of the Japan-China relationship, a mere 4.8% characterized it as good,while 92.8% said that it was not good. It cannot be entirely coincidental thatShinzo Abe, a noted hawk, was elected president of the LDP in September thatsame year and went on to become prime minister following the LDP’s landslide in the December 2012 election.
The agenda that Abe has sought to advance since taking office a second
time would probably, in previous years, have been have rejected by more
moderate forces in his own party. Abe has outlined the need to amend theConstitution, or at least to change the government’s constitutional interpretation to permit participation in collective self-defense. A new National Defense
Program Guidelines are being drafted with a view to beefing up Japan’s defenses around the Senkakus and other remote islands. And he is laying the
groundwork to establish a Japanese version of the National Security Council.
At some level, each of these initiatives is aimed at China. And today, owing to
the strained bilateral relations and widespread anti-Chinese sentiment in Japan,
Abe has the entire LDP behind him.
The US Factor
But China and Japan are not the only parties involved here. The United Statesis also a crucial part of the picture. Japan cannot hope to face down China except as a partner in the Japan-US alliance. Yet Washington is working actively
to build a stable relationship with Beijing.
The three-way Japan-China-US relationship cannot be reduced simply to
the Japan-US alliance versus China. The United States does not want to turn
China into an enemy; it wants to incorporate the country into a US-led international order. This is the strategy underlying Washington’s haste to conclude
negotiations for a Trans-Pacific Partnership and its strong insistence on freedom of navigation and respect for international law in the South China Sea. It
goes without saying that Japan is a key component of that strategy.
China, however, is not content to become part of a US-led international order. Instead, it is doing its utmost to expand its own sphere of influence. As a35

POLITICS & GOVERNMENT
consequence, competition is heating up as China challenges the US hegemonyin the region. The rising tension between China and Japan must be understoodin this context.
As the foregoing suggests, the reason relations between Japan and China
have become so dysfunctional and difficult to repair is that the source of tension is much larger and deeper than the immediate cause. This also means isthat, until the establishment of a new regional order that acknowledges China
as a major power—a process that is sure to take some time—any improvementin Japan-China ties is bound to be fleeting.

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October 1, 2013

The Myth of China’s Financial Time Bomb
Takashi Sekiyama

The role of China’s “shadow banking” sector in financing extravagant local development
projects has led financial pundits to warn of a Chinese financial meltdown with global
repercussions. Research Fellow Takashi Sekiyama puts the issue into perspective, evenwhile sounding a more measured warning regarding the need to control moral hazard.

In recent months China’s financial system has become the focus of much
hand wringing around the world. Of particular concern is the flow of highinterest credit from the so-called shadow-banking sector to the provinces,where it is funding ambitious construction projects deemed unlikely to pay off.
The worry is that, as China’s economic growth slows and these development
schemes start to go bad, the entire financial system will collapse, potentiallytriggering another global financial crisis.1
Certainly the Chinese economy is losing steam. The 7.6% growth recordedin the first half (January–June) of this year was below expectations. When interbank lending rates skyrocketed in June, some observers were quick to declare that the prophesied financial Armageddon was at hand. 2
Since then, however, China’s interbank lending rates have settled down. In
the real economy, employment has bottomed out, and there are signs of a recovery on the horizon.
Are the fears of a Chinese financial crisis justified? Is shadow banking as
serious a threat to China and the world economy as some have suggested? Below, I will attempt to show that the anxiety has largely been misplaced.
Takashi Sekiyama
versity.

Research Fellow, Tokyo Foundation; Associate Professor, Meiji Uni-

1 See, for example, Sara Hsu, “China Engineers a Credit Crisis to Deleverage Shadow

Banking,” East Asia Forum, July 15, 2013, http://www.eastasiaforum.org/2013/07/15/china-engineers-a-credit-crisis-to-deleverage-shadow-banking/.
2 See, for example, Shen Hong, “China Cash Squeeze Gets Tighter,” Wall Street Journal
Online, June 20, 2013, http://online.wsj.com/article/SB10001424127887324577904578
556873653324066.html.
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VIEWS ON CHINA
China’s Shadow Banking Sector in Perspective
The term “shadow banking” is apt to conjure up some kind of financial underworld whose very existence poses a fundamental problem. But this somewhat sinister term merely denotes any form of credit intermediation fallingoutside the realm of traditional bank deposits and loans. The fact is that activity of this sort plays a major role in financial systems around the world.
Figure 1. Scale of Shadow Banking System as Percentage of GDP (2011)

Sources: Financial Stability Board (BIS) and JP Morgan.

Figure 2. Estimates of China’s Shadow Banking System (Year-End 2012)
Source of Estimate

Assets (RMB)% of GDP

Notes

JP Morgan

36 trillion

69

Not adjusted to eliminate double
counting of WMPs,* trusts, etc.

Goldman Sachs China

24 trillion

45

Total borrowings

Deutsche Bank

21 trillion

40

Total borrowings; adjusted toeliminate double counting of
WMPs,* trusts, etc.

Credit Suisse

23 trillion

44

Adjusted to eliminate double
counting of WMPs,* trusts, etc.

*Bank-issued wealth-management products.
Notes:
1. “Shadow banking” in China encompasses every channel of credit extension outside of traditional bank lending, including wealth-management products (WMPs) issued by commercial
banks, trust products, investment products offered by brokerage firms, leases, trust loans, privateloans, and so forth.

38

VIEWS ON CHINA
2. Since some of the proceeds from banks’ WMPs are funneled into trusts and financial products
offered by brokerage firms, adjustments are required to avoid double counting when estimating
the total size of the market.

Even so, has China’s shadow banking system grown too large for the economy’s good? The answer appears to be no. To be sure, the scale of China’s
shadow banking sector is difficult to gauge with any precision, and this lack of
certainty is one of the factors that has bred anxiety among some market watchers. But estimates published by major global financial firms range between 40%
and about 70% of GDP (see Figure 2), and even if we consider the high end,
70% of GDP would put China roughly on a par with Japan, whose shadowbanking sector is quite modest by international standards (see Figure 1).
Core Strength in China’s Banking Sector
Still, some are concerned about the risk to China’s financial system from theflow of capital into the ambitious, often-unprofitable development schemes of“local government financing vehicles,” companies created by local governments to carry out costly projects. If these LGFVs began defaulting in large
numbers, might not the entire banking system collapse?
When a local development project fails, someone has to cover the loss, be it
the investors whose money
financed the project, thebanks that channeled thefunds into the project (directly or indirectly), or the local
government that is the de facto borrower. The reason China’s financial risk is minimal
at this point is that the big
banks and the government
have more than adequate caBank of China building in central Hong Kong.
pacity between them to cover(©Slices of Light)
such losses.
China’s commercial banks are among the world’s strongest. The average
capital adequacy ratio for China’s 17 major banks is 12.9%, a level that would
allow them to absorb a huge amount of bad debt and still remain on a soundfinancial footing. According to the results of a banking sector stress test carried
39

VIEWS ON CHINA
out by the People’s Bank of China, even if 30% of outstanding wealthmanagement products failed, and the major banks absorbed the entire loss,
their capital adequacy ratio would fall only 3 percentage points on average; all
17 would maintain a ratio of 8% or better. 3 This means that even with a significant rash of defaults, resolution should be possible without wiping out investors or triggering a credit crunch that could deal a blow to the financial system
as a whole.
Figure 3. Source of Funds for Debt Repayment by LGFVs
Amount Repaid (RMB)% of Total

Local government treasury

120.6 trillion

33.3

New debt

73.9 trillion

20.4

Subtotal

194.5 trillion

53.7

361.0 trillion

100

Total from all sources

Source: National Audit Office, People’s Republic of China.

Figure 4. Estimates of Local Government Debt in China
Source of Estimate

Total Debt (RMB)% of GDP

12.9 trillion

25

20.0 trillion

39

15–18 trillion

35

Orient Securities

11.4 trillion

22

Haitong Securities

13.0 trillion

25

Fitch Rating
Xiang Huaicheng,former minister of financeDong Dasheng,
deputy auditor general

The spike in China’s interbank lending rates this past June was treated bysome as a dire omen prefiguring the imminent collapse of the shadow banking
People’s Bank of China, “China Financial Stability Report 2013,” http://www.pbc.gov.cn/publish/english/959/2013/20130813151434349656712/201308131514343
49656712_.html

340

VIEWS ON CHINA
system and the real estate bubble. In fact, it was a transient phenomenon that
occurred when some small and medium-sized banks that were using interbank
loans for repurchase agreements experienced a liquidity crunch just as demandfor cash was peaking as a result of seasonal factors. It had nothing to do withthe risks of shadow banking; indeed, China’s interbank lending rates havebeen stable ever since.
Deep Pockets in the Public Sector
It is true that many of the development projects undertaken by LGFVs aremoney-losing ventures. Although the LGFVs are supposed to repay their debt
from profits accruing from land transfers and post-development business operations, a recent survey by China’s National Audit Office revealed that lessthan half of the funds for debt repayment come from project profits. One-third
come from government allocations, and another 20% come from new borrowing, as seen in Figure 3. This has raised concerns that China’s local governments are facing imminent bankruptcy as debts begin to mature.
Here too, the risk has been drastically overstated. The National Audit Office is still in the process of gauging the full extent of local government debt,
but even the highest estimates put it at no more than about 40% of GPD, including borrowing by LGFVs (see Figure 4). And with China’s national debt atonly 23% of GDP, even if every LGFV project currently underway were to go
bust, local and central government debt combined would still amount to justover 60% of GDP. This is scarcely an unsustainable level of debt given that the
Chinese economy—downturn notwithstanding—is expected to grow at an annual rate of 7%, fast enough to double in scale every 10 years. Under these
conditions, central—and potentially local government—bond issues could easily cover the costs of resolution. 4 (Japan, by contrast, has amassed public debt
amounting to more than 200% of GDP even while remaining mired in slow
economic growth.)
The Real Problem with China’s Shadow Banking Sector
Thus far, there has not been a single instance of Chinese investors taking a net
4 At present, China does not allow local governments to issue bonds as a rule. LGFVs

developed as a way to circumvent the prohibition against such borrowing by local
governments.

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VIEWS ON CHINA
loss on wealth management products or trust products. In my view, however,this points to the real danger associated with shadow banking in China: moral
hazard.
There is a widespread belief among Chinese investors that any investment
in a quasi-governmental entity or a product issued by a state-run bank is covered by a tacit guarantee, even though such investment products are not insured. China’s investors are confident that the government and big banks together will cover any loss of principal—which is precisely why funds have continued to flow into WMPs and similar investment products, even as observers
around the world have sounded the alarm over their risks. Confident that the
big banks or the government will come to the rescue in a pinch, people feel free
to invest in such financial products without worrying about the inherent
risks—the very definition of moral hazard.
As we have seen the risks posed by the shadow banking system and local
government debt are still quite manageable. That said, however, if nothing
were done to address the moral hazard, money from Chinese investors would
keep pouring into risky and ill-conceived projects. And in such a case, the crisis
some have been forecasting prematurely would not take very long to materialize.
This is precisely why China’s financial authorities have been tightening
regulations of the shadow banking sector since late last year. Henceforth, some
LGFV loans will doubtless be allowed to default, and the banks, local governments, and individual investors involved will all be obliged to take a loss.
For the reasons I have explained, the disposal of bad debt is unlikely to
precipitate anything resembling an economic meltdown. But the repercussions
will doubtless be felt inside and outside of China in the form of falling stock
prices and a further slowdown in economic growth as the local development
frenzy loses steam. While this is a genuine risk for which we need to be prepared, there is probably no need for panic.

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VIEWS ON CHINA
December 9, 2013

China’s Remarkable Renewable Energy
Advances
Kunio Takami

While environment-related news from China today tends to focus on the country’s polluted
air and water, great strides are also being made in the use of renewable energy. Kunio
Takami, who heads a Japanese nonprofit that has been involved in reforestation activities
in China for over two decades, reports on the surprising advances being made to power
China’s industry with wind and solar energy.

As executive director of the NPO Midori no Chikyu Nettowaku (Green
Earth Network, GEN), I have been involved in reforestation activities
in the city of Datong in China’s Shanxi Province since 1992, and I now
spend more than three months out of the year in the city. Our earliest projects
were in Hunyuan County some 70 kilometers southeast of Datong, which took
more than four hours to reach by bus until the middle of the 1990s.

A Barren Wasteland
One of the most difficult places to pass was near the township of Dangliuzhuang, especially following the summer rains. Although the roads were
paved, a lack of funding and technical expertise meant that many had little
more than a layer of blacktop. When it rained, groundwater would erode thesoft soil, and given the steady stream of overloaded coal trailers that travelledon these roads, it did not take long for the blacktop to be torn to pieces. So often, the bus we were riding in would get stuck in the mud, and we would all
have to get out and push.
This was the lowest part of the Datong basin, and since there is no river tocarry off the rainfall, the water usually just sits there until it evaporates. This
leaves behind carbonate salts of calcium, potassium, sodium, and magnesium,and the ground surface turns white as it dries. Needless to say, salt damage is
Kunio Takami

Executive Director, Green Earth Network.

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VIEWS ON CHINA
widespread. At first glance, it might seem that this flat expanse of land, wherewater is plentiful, would be rich and fertile. But with alkaline levels about pH 9,
there are no crops that will grow here.
The Japan International Cooperation Agency once provided assistance foran agricultural experiment to improve the soil quality here, but I do not knowwhat became of it. There was also a project to replace roadside poplar trees
with willows, which are much more salt hardy, but even the willows refused totake root.
Route S203 is a main artery in Shanxi Province, connecting Datong withpoints south. This route was finally paved with steel-reinforced concrete in thelate 1990s, after which our travel time from Datong to Hunyuan was shortened
to just over two hours.
The “Coal Capital” of China
Datong has long been called the “coal capital” of China and until recently was
the largest coal-producing center in the country. Economic growth in recent
years has been accompanied by the construction of small- and medium-sized
power plants throughout China, but prior to that, the Datong No. 1 Power
Plant produced all electricity supplied to Datong itself and the Datong No.2
Power Plant produced electricity for Beijing and Tianjin.
The No. 2 Power Plant was initially completed in 1988 with a capacity of
1.2 million kilowatts and produced 7 billion kilowatt hours annually. The facilities were dramatically expanded thereafter, and by 2009 they had a capacityof 3.72 kilowatts and produced 20 billion kilowatt hours annually.
On my earliest visits to Datong, I never went anywhere without my video
recorder, since everything I saw or heard was so new and unusual. One day inautumn 1992, as I was shooting images of the No. 2 Power Plant, a man cameup to me and said: “All the electricity goes to Beijing. All we get in Datong is
the pollution.”
Well, here is a man with something interesting to say, I thought, and asked
him to speak to the camera.
What he said instead was, “We, the citizens of Datong, are honored to beable to contribute to the welfare of our nation.”In those days, the air pollution in Datong was hellacious. Wherever you
went, it smelled of smoke, your eyes watered, and your throat became sore. In
the winter, when the temperature on the ground was lower than in the air, thisthermal inversion would trap the smoke just above ground level. Sometimes I
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VIEWS ON CHINA
would go to neighboring villages, and when I returned to Datong, it looked
like the city was capped with a black dome of air pollution.
Coal at the time was used for fuel in every home in Datong for both cooking and heating. Presumably, the No. 2 Power Plant had at least a smoke
treatment system of some sort, but the city nonetheless became a symbol ofChina’s air pollution problems, no doubt contributing significantly to themixed feelings Datong residents have toward Beijing.
This past winter, news reports of extreme air pollution levels in cities
around China alarmed many Japanese residents, who feared that the pollutants
would eventually reach Japan’s shores. An outbreak of avian flu in China at
the same time further added to the impression that everything undesirable
came from China.
The truth of the matter, though, is that air quality in Datong has improved
dramatically over the past several years. Perhaps the single biggest factor has
been that the fueled burned in Datong has switched from coal to natural gas.
Many also credit Datong’s sister-city, Omuta in Fukuoka, Japan, for its cooperation in addressing environmental issues. Looking over my most recent photosof Datong following my return to Japan, I was surprised to see how blue thesky appeared. That said, the pollution in other major cities of Shanxi appears to
be growing worse.
Hills Lined with Wind Turbines
Datong lies in northern Shanxi Province, near the Great Wall of China stretching atop the range of mountains bordering Inner Mongolia. One of the peaks inthis range is the 2,144-meter-high Cailiang Mountain; GEN has been implementing several reforestation projects in the foothills south of the peak, including the experimental “Magpie Forest.”
From this forest, wind turbines began being spotted along the ridges of thefoothills near Cailiang from around2012. The number of visible turbines
varied from place to place, and I had no
idea how many had actually been built.
In the spring of 2013, on a flight from
Datong to Beijing, I counted no fewer
than 30 turbines. But as soon as we
passed over that group, another clusterof turbines came into view.
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VIEWS ON CHINA
There is an old saying that the wind in Datong blows but “once a year”—
starting in the spring and lasting continuously until winter. What is more, it
blows in the same direction—the northwest—so Datong is an ideal location forwind turbines. Given this region’s long history with coal-fired power plants,though, I had never imagined that wind power would take hold.
But things change. The city of Datong comprises four districts and sevencounties, many of which are bounded by mountains. And starting around 2010,
they began building wind turbines on nearly any and every hill they could find.
It was around this same time that China zoomed past the United States as theworld’s largest producer of wind power, and I suspect that they did it bybuilding wind turbines all around the country.
Rarely are there villages or farmhouses among these mountains, meaningthat low-frequency wind turbine noise and other problematic side effects are
not an issue there. The other side of the coin is that there are few existing roads
available for construction and maintenance. But obviously, the China of today
can find a way to overcome such hurdles and get things done.
Megawatt Solar PowerIn 2012, with the opening of a new highway stretching from Datong to Lingqiu,
travel time to Hunyuan was cut to less than an hour. Lingqiu, which took atleast seven hours 20 years ago, was now a two-hour drive away.
In March 2013, I drove down RouteS203 for the first time in years, and justas I reached the area where the salt
damage is worst, I noticed that thefields to the east were shining. Stopping
the car, I grabbed my camera and ran tosee what it was. Sure enough, it was afield full of solar panels.
Reading a placard, I learned that
this was the first part of a multiple-phase plan; for now, the facility covered
56.6 hectare and would produce 20 megawatts, or annual production of 26.78
million kilowatt hours. The project was being undertaken by GCL-Poly Energy
Holdings at an investment of 220 million yuan. Once phase one of this projectis operational, it would result in annual savings equivalent to 8,100 tons of coaland cut emissions of carbon dioxide by 22,108 tons, sulfur oxides by 168.4 tons,
and nitrogen oxides by 57.1 tons. Given that the land is worthless for agricul46

VIEWS ON CHINA
ture and too soft to support the structures necessary for an industrial complex,
it is ideally suited as a solar power station, especially if you consider that it gets
little rainfall, and the sunlight is quite strong.
GCL-Poly has close ties with the military and is also active in trade and realestate. From its headquarters in Hong Kong, the company markets its solar
panels not just in China but also in Vietnam and Singapore. How, though, dida panel manufacture become involved in the construction of a solar power station?
Apparently it hopes to build a polycrystalline silicon plant on the premises
using power generated by the solar power station and then using the silicon
produced there to build more solar panels, ultimately developing what it calls
a “self-sustaining industrial model.”Plans have been drawn up through phase five, and now with Taiwan’s
Foxconn Technology Group joining the project, the Datong solar plant could be
producing 500 megawatts or more, which would make it the world’s largest
solar power station.
In August 2013, Datong hosted Solar Decathlon China. This international
competition was launched by the US Department of Energy and has been held
five times at locales in the United States and Europe; this was the first time theevent was held in Asia. Perhaps the time has come for this once smoke-infested
inland city of Datong to emerge as China’s leader in renewable energy.

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VIEWS ON CHINA
September 26, 2013

China’s Struggle for Civil Society
A New Perspective on Social Development
Junko Oikawa

Although the Chinese government continues to resist democratic reforms, many civic groups
are pushing the boundaries of citizen involvement. Junko Oikawa explores the significanceof these developments for Chinese society and Japan-China relations.

China is changing rapidly at the societal level, and one crucial barometerof change is the relationship between civil society and the country’s
one-party authoritarian government. In the face of unprecedented social and economic diversity, the government is struggling to reconcile competing interests. China today faces a host of mounting problems, from rising discontent of over evictions and seizure of land to problems relating to pollution,
labor abuses, food safety, and ethnic unrest in the “autonomous” regions. With
protests and dissident movements proliferating around the nation, maintaining
social stability is clearly the number one challenge facing China’s leadership.
Despite the control that the government and the Communist Party of China
continue to exert over society, increasing attention has focused on voluntaryaction by citizens and civic groups to advance individual rights or the welfareof the greater community. In the following I would like to explore the development of civil society in China, including the recent clampdown by authorities, as a lens through which Japan can gain new insights into Chinese society.
The Rise of Gongmin Shehui
Political scientist Yu Keping, deputy director of the CPC’s Central Compilation
and Translation Bureau, has written extensively on civil society. As Yu explains it, the concept of civil society implies both “involvement by citizens inpublic issues” and “limitation of state power by the citizens.” Civil society is asort of “community” located somewhere between the government and private
Junko Oikawa

48

Visiting Academic Researcher, Hosei University.

VIEWS ON CHINA
sectors and formed independently by citizens who awaken to their legal rights
and join together to defend such rights.
Interest in volunteerism and other forms of community involvement rose
rapidly in the wake of the Great Sichuan Earthquake of 2008 and the Beijing
Olympics, held later that year. Although major obstacles still confront anyone
seeking to establish or maintain a public interest organization truly independent of government or party control, the role of nongovernmental and otherpublic-interest groups in Chinese society expanded rapidly. The Internet contributed substantially to this trend
by diversifying the channels for
public discourse. As of June 2013,
China had an estimated 600 million Internet users—more than
44% of its population. With citizens’ consciousness of social issues and modes of engagement
evolving rapidly, many discovered ingenious new uses for theInternet as an organizing tool. The owners of this “nail house” refused to obey an
Growing civic and taxpayer eviction order, thwarting plans for a shopping mall.
awareness erupted in a variety of (© Zhou Shuguang)
civil rights (weiquan) campaigns,
as citizens began to take ownership of issues requiring action. This phenomenon awoke keen interest in the concept of “civil society” (gongmin shehui),among academics and journalists.
Meanwhile, however, the rapid proliferation of organized movements began to alarm the government. In January 2011, officials responded by banningthe use of the term gongmin shehui in the media (although gonggong shehui, or“public society,” has frequently popped up in its stead). More recently gongmin
shehui appeared among seven topics of instruction banned from university
classrooms under a policy directive issued in May 2013. Like “universal values”
and “freedom of the press” (also among the banned topics), the Chinese leadership has come to view “civil society” as a loaded term with politically sensitive implications.
Xu Zhiyong and the New Citizens’ Movement
But banning the word has not stopped private citizens from making forays into
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VIEWS ON CHINA
this new frontier. One of the most noteworthy experiments is the New Citizens’
Movement, led by Xu Zhiyong.
Born in 1973, Xu Zhiyong first rose to prominence in connection with thedeath of Sun Zhigang in 2003. Sun Zhigang was a young man from rural Hebei
who had found employment in the city of Guangzhou. On March 17, 2003, Sun
was picked up by police and detained for failing to produce proper identification. Shortly afterwards, he was beaten to death at a detention center. The incident ignited a firestorm of criticism online, together with a challenge from legal
scholars, who questioned the constitutionality of a longstanding regulation authorizing police to detain and repatriate undocumented migrant workers in thecities. In an epoch-making victory for citizens’ action in China, the government
bowed to the combined pressure of public indignation and critical media coverage and repealed the regulation. Xu Zhiyong was one of the three legal
scholars whose open letter to the National People’s Congress Standing Committee was said to have been instrumental in getting the regulation repealed.
In the wake of this triumph, Xu and his colleagues set up Gongmeng, or theOpen Constitution Initiative—an NGO dedicated to the use of legal and judicial means to protect the civil rights of socially disadvantaged persons. Xu also
held the position of lecturer at the Beijing University of Post and Telecommunications until recently, but he was barred from teaching in 2009, when authorities decided to crack down on Gongmeng. At that time Xu was arrested anddetained on charges of tax evasion, although he was released after about amonth.
Xu’s next major project was the creation of the New Citizens’ Movement,
dedicated to the development of a “just and happy civil society” “ruled by democracy and law,” with “freedom, righteousness, love” as the new national
spirit. 1 The group has lobbied for equal educational opportunities and an end
to discriminatory enforcement of the household registration (hukou) system. In
recent months, some members have even taken to the streets, calling on public
officials to disclose their assets. One of the most interesting features of the
movement is its strategy of urging supporters all around China to hold simultaneous dinners once a month to discuss social problems facing their communities. The emphasis on convivial dinner parties, as opposed to confrontational
demonstrations or rallies, struck a chord with the public and captured media
attention as a promising new model of civic involvement.
Activities of this sort are clearly sanctioned by Article 35 of the Constitution
1 http://xuzhiyong.org/2013/07/29/1315.htm.

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of the People’s Republic of China, which states that “citizens of the People’s
Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession, and of demonstration.” But in a state where the will of theparty trumps the rule of law, social campaigns and citizens’ groups are constantly subject to police surveillance and interference. On April 12 this year, Xu
Zhiyong was detained once again as he was preparing to attend a symposiummarking the tenth anniversary of Sun Zhigang’s death. He was then placed
under house arrest without due process before being formally charged on July
16 with disrupting public order. According to human rights observers, at least
15 other activists connected with the New Citizens’ Movement were detained
during roughly the same period.
Supporters responded with a petition protesting Xu’s arrest. Launched bysome of China’s most prominent voices for democratic reform—including renowned economist Mao Yushi, who has persistently lobbied for political reform, and veteran journalist Xiao Shu, a longtime human rights advocate—thepetition collected signatures from more than 2,000 supporters inside and outside of China by the end of July. Email solicitations and supporter websites andblogs have played an important role in rallying support and gathering signatures. But the updates and informational materials posted on these websites
highlight the grim realities confronting the New Citizens’ Movement.
Popular support for the New Citizens’ Movement is mixed at best. Some
activists have criticized the movement’s nonaggressive approach to building acivil society as naïvely unrealistic, given the situation in China today. Be that as
it may, the recent string of arrests and detentions epitomizes the unfolding
struggle between private citizens and government authorities over the development of civil society in China. While the powers that be may pay lip service
to the rule of law and constitutional government, their treatment of citizens
who actually try to exercise their civil rights bespeaks a very different reality.
Paths to Responsive Government
Some time ago I had an opportunity to talk to Xiao Shu about his hopes for social activism in China. He explained his belief that the path to democracy lies
not in pro-democracy protests like the 1989 Tiananmen Square demonstrationsor the Arab Spring but in focused efforts to resolve specific social problems.
Xiao also stressed the importance of profiting from the experience of citizens’
movements in Japan. He spoke fervently of his determination to learn more
about the roles played by Japanese citizens’ groups and media organs in focus51

VIEWS ON CHINA
ing attention on such problems as industrial pollution and contaminated blood
products.
Of course, a simple comparison between Japan and China may be misleading, given the differences between our countries’ political and social systems.
While Japanese civil society may appear highly developed from the perspective of Chinese activists facing harsh government repression, Japan, too, hasmany problems that remain unaddressed. Still, the basic questions facing Chinese activists today are universal issues, applicable to any society regardless ofcountry, era, or political system: Can changes in people’s beliefs and behavior
have a real impact on their country’s laws and systems? What forms of pressure should citizens bring to bear on their government to advance civil rights
in various arenas? And can the power of the private sector be harnessed tobuild a healthy, reciprocal relationship between the government and the people? From this perspective, it seems to me that a closer examination of gongmin
shehui in China can also raise important questions about the state of civil society in Japan.
As readers will have gathered from the emphasis of this article, my focus ison the role of private citizens in the formation of civil society. I believe that we
can gain a better appreciation of the changes gradually overtaking Chinese society by shifting our focus from the party and the government to emerging
trends in the civic sector. I am also hopeful that, at a time of deeply troubled
relations between Tokyo and Beijing, approaching bilateral tiles from the perspective of civil society may open the door to deeper mutual understanding
and new possibilities for cooperation.

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PARTNERSHIP WITH ACUMEN
November 1, 2013

Dispatches from Ghana(2) “We Are Not Here to Be Popular”
Junko Tashiro

In November 2012, Junko Tashiro traveled to Ghana under an Acumen Global Fellowship to help launch a social venture aimed at empowering smallholding rice farmers. In her second report, Tashiro describes the nearly overwhelming challenges she
faced on her arrival and the life-changing experiences by which she learned to surmount them.

Iawoke to the unfamiliar sight of a blank, white concrete ceiling. I ached allover and could barely move; my body felt like lead. My head throbbed,
and my mind was in a fog. As I lowered my gaze, I noticed the IV tubing
taped to my arm. Beyond my feet, I could see an open window with a green
screen. There was no curtain, nor any hint of a breeze coming through it. Outside, it was dazzlingly bright; inside, the air was stifling. The smell of rubbing
alcohol filled the small hospital room.
On the last Sunday in November, just 10 days after arriving in Ghana as an
Acumen Global Fellow, I had been taken to the local hospital in the town ofSogakope, my post for the next nine months. It was a public hospital and fairly
large for rural Ghana. But because it was the weekend, not a single doctor wason duty.
A nurse walked in. “Oh, you’re awake,” she said. “I’m afraid the doctors
aren’t here today, so we can’t really examine you or provide treatment. But I’mgoing to give you an emergency injection of quinine 1 before it’s too late, in case
Junko Tashiro
Tokyo Foundation–Acumen Global Fellow for 2012–13. Has worked at
McKinsey & Co. Received a BA in international relations from the University of Tokyo and an
MPA in economic development and management from Columbia University.
1 Despite its sometimes serious side effects, quinine is still frequently used to treat se-vere falciparum malaria, which is common in Ghana and other parts of West Africa.
Severe falciparum malaria is a particularly lethal form of malaria that can worsen rapidly if not promptly diagnosed and treated.
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PARTNERSHIP WITH ACUMEN
you have malaria.” The nurse quickly produced a syringe, and I watched theglinting needle approach. Without thinking, I pushed her hand away.
The following morning I was transported to a modern clinic in Accra,
where a blood test revealed that I was suffering not from malaria but fromsome unexplained systemic inflammation. The doctor assured me I would recover with a week of treatment and bed rest.
It was a miserable way to start my assignment. The more my colleagues
worried over me, the more embarrassed I felt. This is what it means to feel likecrawling into a hole, I thought.
Overwhelmed
A week and a half earlier, I had arrived at the GADCO Farm office in Sogakope
at the end of a two-hour taxi ride from Accra. The tiny office was at the top of astaircase tacked onto a large warehouse filled withbags of agrichemicals and fertilizer. Feeling a bit
nervous, I knocked on the door, but the noise emanating from the workshop set up in one corner ofthe warehouse made it difficult to hear. I pushed
the door open to see several staff glance up fromtheir work, then immediately go back to what they
were doing. They had no idea who I was, nor did
they seem very interested.
“Hi, how are you doing, everyone,” I began.
“I’m Junko, and I’m going to be working as a member of the GADCO team starting today. I’ve been
sent here to launch the Copa Connect program to
The GADCO farm warehouse.
promote collaboration with smallholders. I lookforward to working with you all!”A few of them returned my greeting or raised their hands a bit awkwardly.
It was soon apparent that no one really knew who I was or what I was doing
there. The main reason was probably that GADCO’s senior executives overseas—the people to whom I reported—did not have a chance to formally inform the local team of my arrival.
The whole concept of sourcing from smallholders was foreign to the local,
nucleus farm operations team, and Copa Connect meant nothing at all to them,as the program was completely new and I was the sole team member. Apartfrom that, the all-male staff was probably confused by the idea of a non-local
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PARTNERSHIP WITH ACUMEN
woman suddenly entering their midst in the capacity of a senior manager.
Long after I had introduced myself, some of them remained under the impression that I was either an outside consultant or someone sent from Human Resources, or possibly a short-term intern dispatched by a GADCO investor.
I felt it was important to integrate myself into the local team, but I also felt
pressured to get down to work as quickly as possible and prove myself
through deliverables. This was not a case of pressure from my supervisors
overseas; I simply felt that the best way to win the local team’s trust whilebuilding the support I would need to launch the new program successfully
was to start accomplishing my mandate.
The naked truth, though, was that I knew next to nothing about the ins andouts of rice cultivation and the circumstances of smallholders in Ghana, not tomention GADCO’s nucleus farm operations and team dynamics. Moreover, I
was struggling to adjust to the Ghanaian climate and establish my own living
and working environment in Sogakope, where there was so little access to thegoods and services that I had taken for granted all my life. And yet, it was obvious that nothing would happen unless I got to work visiting farms, talking topeople, and gathering information.
That said, none of this could be done without
help from the local team. I hesitated to ask for theirsupport, as almost everyone was already extremely
busy, working seven days a week (there are noweekends off for farmers!). My compunctions grewby the day until I was agonizing over every question or request, however small.
As the stress mounted, I found it more andmore difficult to cope with my surroundings. The
office was so cramped that if seven or eight people
showed up, there was no more space. Each time theelectricity went off, the temperature inside the ferroconcrete building soared, making it hard to thinkstraight or work efficiently. Occasionally I saw col- Visitors to Sogakope are welcomed by Tigo, one of Ghaleagues collapsed at their desks. One of the biggest na’s three major cell phone
challenges for me was the lack of sanitary facilities. carriers and the operator of
As there was no running water in the office, one the country’s biggest mobile
was obliged to do one’s business on the ground out- money system.
side the warehouse. For privacy, there were threepanels of corrugated metal, about neck high, that left one’s back exposed to55

PARTNERSHIP WITH ACUMEN
view. Overcoming my embarrassment, I brought this problem up with my supervisors overseas and some local team members. They all urged me to permit
myself more flexibility in my work routine and do whatever I needed to do so I
would be able to work effectively; after all, the mission was the most important
thing. Noting that other team members also came and went, and that it was not
the sort of work that demanded my presence in the office each day, I resolved
after the first week to appear at the office only when I had a particular reason
to go in. Preoccupied with getting things done, I put efficiency ahead of otherimportant priorities.
Friction and Courageous Conversations
During week two, I spent two or three days conducting a field study in a distant village accompanied by another GADCO manager. Returning to the company compound on Friday evening, I
walked into the kitchen and was confronted by one of my colleagues. “Hey, why
didn’t you tell me you were going to thefield today? You should have asked for mycompany since you’re new here.” After
pausing for a few seconds, he added, “Hasit ever occurred to you that as you try to
make your own situation better, you might
be making everyone else’s worse? I have to
put up with a lot, too, you know. Why
should you get special treatment?”Those words stung. I went back to mybungalow and curled up on my bed in ablanket, oblivious to the oppressive heat.
My colleague’s words echoed in my mind,
though I inwardly protested that that had
never been my intention.
When I awoke the next morning, my face was burning, my body was shivering, and the ceiling was spinning above me. I was stricken with nausea andabdominal cramps and I could not function normally. The next day I was taken
to the hospital. I had wanted so much to get off to a flying start—just like asprinter at the starting blocks in a crouching position. But I lost my balance and
Women threshing rice at the village
where I conducted a field study soon after
arriving in Ghana. A woman told me that
she and the others went out in the field
before sunrise and worked until sundown,when they returned home to cook and dohousework. Lacking access to threshingmachines, farmers have to remove thechaff by pounding, which damages ordestroys many of the rice kernels, drastically eroding the value of the harvest.

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PARTNERSHIP WITH ACUMEN
fell hard. Perhaps I simply did not have enough “muscle”. Or then again, perhaps I had pushed myself too hard too fast, approaching it as a sprint insteadof a marathon. In any case, here I was in a hospital bed, with so much left to do.
During the week or so that I spent convalescing in Accra, I immersed myself in reports and studies to learn more about rice cultivation and Ghana’s riceindustry. I also began reviewing the preliminary data I had gathered during
my first field study and figuring out how the Copa Connect concept would
function in practice. As soon as I was well enough to go out on my own, I
hailed a taxi and began calling on nonprofits and other Accra-based organizations that had knowledge to share about smallholder sourcing programs. Most
important of all, however, was the time I spent reconsidering my approach tointerpersonal relations and resolving to make a fresh start.
I thought back to the Adaptive Leadership retreat I had attended during
the second week of the Acumen Global Fellows fall training in New York. Oneof the key takeaways had been the importance of empathy. Adaptive leadership, we learned, involves putting yourself in other people’s shoes—
understanding the circumstances and values underlying their attitudes andconsidering what those people stand to lose by interacting with you and agreeing to a shift in course or change in environment. With all of that in mind, youneed to identify common long-term goals and hold “courageous conversations”
regarding the means of achieving them together. In retrospect, these seem likeobvious prerequisites for building sound relationships with anyone. But after
analyzing the clash with my new colleague in that context, I came away with a
new resolve to empathize more and understand others better, even while keeping my own emotions in check.
(In the end, that colleague later made an invaluable contribution to the implementation of the pilot as a key member of the Copa Connect team, spending
several months working with me to improve the lives of smallholders in Ghana.)
Navigating Conflicts
This is not to suggest that the rest of my mission was free from friction. In fact,
as in any process of substantive change, conflicting interests and values collided repeatedly. At various times I found myself at odds with my colleagues, thepartner organizations and investors supporting the program, and senior government officials with vastly greater knowledge, experience, and influence—and sometimes even with the very farmers for whom the program was conceived. These conflicts also often played themselves out as internal struggles
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PARTNERSHIP WITH ACUMEN
within me. In time I learned to focus on communicating and sharing my mission and goals with others by consciously entering into the process of “courageous conversation,” as we had been taught to do in New York.
One of the most frustrating obstacles I encountered while working in Ghana—and one I encountered a great deal—was the issue of “entitlement,” or entrenched privileges. In Ghanaian society it is hard to accomplish anything at allwithout an official title and its associated privileges. Actions that encroach on
people’s vested interests will not be regarded in a positive light, even if thegoal is correcting existing inequities. If an initiative in some domain bears fruit,
the person whose title appears to give him jurisdiction over that domain insistson taking all the credit. The higher up the hierarchy one goes within a given
community or organization, or within the academic community or society as awhole, the more conspicuous this trend becomes.
This happened when I was working to implement a pilot program withthe cooperation of some small, independent farmers enlisted in one of thelocal irrigation schemes sponsored by
the government. From the beginning,the manager who had been put incharge of this irrigation scheme wasintent on securing his own interests bycontrolling the farmers’ access to Copa
Connect. He insisted that the farmers enlisted in his scheme had no need of aprogram like Copa Connect because they already had sufficient resources andservices—though in fact, we knew from previous interviews with the farmers
that the scheme he managed was performing very poorly owing to major problems with water-supply management and market access, and that it was particularly remiss in providing services and assistance to farmers.
The scheme manager claimed that the farmers were under his jurisdiction,and that even if any of them did want to participate, the final decision lay withhim. If Copa Connect wanted to deal directly with the farmers, we would firstneed to submit a contract for his approval. I tried repeatedly to establish ameaningful dialogue with this scheme manager, but he seemed incapable ofgetting beyond his own interests.
Ghanaian society is extremely hierarchical, far more so even than Japan’s. It
places a high premium on seniority and has a pronounced tendency towardauthority. With this in mind, I decided to see if we could get the negotiations
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PARTNERSHIP WITH ACUMEN
moving by talking to the scheme manager’s superiors and bringing their influence to bear. Once we had their backing, the scheme manager quickly changed
his tune, and the program began to move forward. While appearing to cooperate on the surface, he would sometimes still resist our initiatives. The scheme
manager’s support was a prerequisite to the program’s success, but I began tofeel that continued negotiations with him would get us nowhere. I wondered if
we might not be better off focusing on another irrigation scheme for our pilot;
if we could showcase its success, then this scheme manager might abandon his
irrational resistance. But to give up on this particular irrigation scheme for thetime being would have meant letting down the farmers with whom we hadalready met—and abandoning my own conviction that it was the farmers’ rightto choose, not the scheme manager’s.
I also came into conflict with one GADCO manager who was unable tokeep his ego from interfering with the pilot launch. This manager was over 10
years older than me and a major figure in his native village, for which he wasacting as our liaison. Out of his eagerness to recruit as many participants as
possible, he often made promises to the farmers off the top of his head and informed them of “decisions” that we had yet even to discuss. This consequently
led to confusion and later undermined the farmers’ trust in our company. He
was also full of ideas about spin-off projects but for that very reason had a tendency to neglect his assigned job. Occasionally he even failed to show up for aplanning meeting or a field visit because he was off following up on some side
issue that had snagged his attention. As project leader, I spoke with him on
several occasions about aligning with the goals of Copa Connect, work priorities, the dos and don’ts, and other matters related to liaising with the community, but nothing ever changed, and my frustration mounted.
Apparently, the frustration was mutual. One weekend, unable to containhis resentment, he ranted at me over the phone for 45 minutes. His basic complaints were that I, a newcomer, had refused to listen to him despite the factthat he, with his extensive experience and knowledge, knew all the answers,
and as a result the entire project was headed in the wrong direction; that I was
stealing his job; and that I was trying to claim all the credit. His anger continued to build, peaking around harvest time, when he spewed forth his vitriol infront of the farmers who were busy harvesting and shipping their yields, goingso far as to try to stop the truck that I was riding.
This might have been a perfect occasion for initiating a “courageous conversation.” But in the end, I was only able to do little more than just express
my anger and regret honestly and collide with him head-on. I might have59PARTNERSHIP WITH ACUMEN
lacked patience, but I also felt strongly that his priorities were misplaced, andthat the importance and urgency of our work simply did not permit us towaste time and labor on people’s individual egos.
Not Here to Be Popular
I had always been eager to demonstrate my values on the ground and neverimagined that delivering on that professional aspiration—or merely executing
in the field what I previously considered simple tasks—would subject me to somuch friction. Often I felt as if I were walking into the wind’s eye all alone toward some impossibly remote goal. At such times, it was the support of theother nine Global Fellows that helped keep me going. While the location andcontent of their projects varied, they had come face to face with similar problems and struggled with the same feelings, and their words of advice and encouragement were invaluable to me.
One of the most important words of wisdom I received came from Natalie,another Global Fellow. She had been assigned to the town of Gulu in northern
Uganda, which is recovering from more than two decades of civil war, and wassupervising an office staff of 35, as well as 50 buyers, in a program to source
organic produce from 40,000 smallholders in the region. She was struggling to
improve the efficiency of the
supply chain and institute systems to improve communicationand teamwork so as to achieve
her goal of improving the lives ofsmall farmers by growing a keysocial enterprise in a community
scarred by war—and in that process she was meeting with friction from many directions. But asMeeting up with the nine other 2013 Acumen Global she reminded me, “We’re not
Fellows, as well as Global Fellows Manager John here to be popular.”
McKinley and Global Fellows Associate Andrea
Much of the time, we will feel
Atehortua, at the mid-year meeting in Kenya, Aprilalone and embattled. But when2013.
we remind ourselves of why weare here, we can see where our priorities should lie. However alone we may
feel, however strong the opposing current may feel, and however often we
may stumble, we need to get back up again and keep going.
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PARTNERSHIP WITH ACUMEN
These lessons are best summed up by the Acumen Manifesto:
It starts by standing with the poor, listening to voices unheard, and recognizing potential where others see despair.
It demands investing as a means, not an end, daring to go where markets have failed
and aid has fallen short. It makes capital work for us, not control us.
It thrives on moral imagination: the humility to see the world as it is, and the audacity
to imagine the world as it could be. It’s having the ambition to learn at the edge,
the wisdom to admit failure, and the courage to start again.
It requires patience and kindness, resilience and grit: a hard-edged hope. It’s leadershipthat rejects complacency, breaks through bureaucracy, and challenges corruption.
Doing what’s right, not what’s easy.
Acumen: it’s the radical idea of creating hope in a cynical world. Changing the way theworld tackles poverty and building a world based on dignity.

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VOICES FROM THE SYLFF COMMUNITY
October 22, 2013

From Promise to Reality
Kisumu Leadership and Development Conference
Mari Suzuki

Last August civic leaders and public officials from Kisumu County, one of the semiautonomous entities established under Kenya’s new democratic constitution, gathered tolearn what they can do to build a government that works for the people. Mari Suzuki, theTokyo Foundation’s director for leadership development, offers a first-hand report on thisseminal conference, organized by former Sylff fellow Otieno Aluoka with the support of theFoundation’s recently overhauled Sylff Leadership Initiatives program.

K

enya today is in the midst of a historic transition, the most importantchange the nation has experienced since achieving independence fromBritain 1963. In 2010, Kenya adopted a new constitution centered on
democracy and devolution of power. In 2013, the nation’s newly establishedsemi-autonomous counties held their first-ever elections to select representatives to the national legislature under the new constitution.
For such democratic institutions to function as they were intended, however, it is vital that voters and officials understand the principles of the new system and their role within it. This was the aim of the Kisumu Leadership andDevelopment Conference, held on August 26–27 with funding from the Tokyo
Foundation’s Sylff Leadership Initiatives support program, administered inconjunction with the Ryoichi Sasakawa Young Leaders Fellowship Fund. The
following is a report on the background and outcomes of the conference, which
I attended as a representative of the Tokyo Foundation.
Sylff and the Kisumu Initiative
Sylff is a fellowship program established by the Nippon Foundation and administered by the Tokyo Foundation with the aim of “nurturing future leaders
Mari Suzuki

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Director, Leadership Development, Tokyo Foundation

VOICES FROM THE SYLFF COMMUNITY
who will contribute to the common good of humanity, transcending the confines of nationality, religion, and ethnicity, even while respecting differences inculture and values.” Since its establishment in 1987, Sylff has grown into a fellowship program encompassing 69 institutions of higher education in 44 countries, benefiting more than 15,000 students.
One key feature of Sylff is that it follows through with fellowship recipientseven after graduation. The Tokyo Foundation’s Sylff support programs provide ongoing assistance designed to help former Sylff fellows grow into effective leaders who can make a positive contribution to their own societies at the
local or national level. One such program is Sylff Leadership Initiatives (SLI),
which supports various social action projects initiated by current or former
Sylff fellows. The Kisumu Leadership and Development Conference was thefirst project selected for an SLI award since the program was relaunched inmodified form in February this year.
The Kisumu conference wasorganized at the initiative ofOtieno Aluoka, a 1999 Sylff fellow at the University of Nairobi
in Kenya. Since graduating,Aluoka has worked as a governance consultant to international organizations and foreign
governments in Nairobi. At thesame time, he has been deeply
involved in community action in his native Kisumu, to the west of Nairobi. The
networks Aluoka built in both regions helped make the Kisumu leadershipconference possible.
Kenya’s new constitution is a groundbreaking charter that seeks a wholesale reform of the political process. The aim is to move the nation from a system oriented toward preserving a balance of power among Kenya’s 40-odd
ethnic groups to one focused on long-term problem solving via democratic
processes. Yet the majority of Kenyans continue to vote along strictly ethniclines. Aluoka realized that Kenyans had to begin casting their votes on the basis of the candidates’ policies, rather than their ethnicity, if democracy was tofunction properly in Kenya. And for this to happen, elected politicians had tobegin rewarding their constituents in undeveloped areas by representing theirinterests at the national level and working on their behalf to promote development.
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VOICES FROM THE SYLFF COMMUNITY

Sugarcane is transported to a mill for pro- Village women walk with baskets balanced on
cessing.
their heads.

With this in mind, Aluoka decided that the best way to contribute to the development of Kenyan democracy was to organize a conference of county-level
politicians (all of whom are new on the job), local officials, and community
leaders to enhance their understanding of the new constitution, and the role oflocal leaders within the new system. It was the first such conference ever heldin Kisumu—located far from the capital in Nairobi—where democratic reforms
have been slow to take hold.
Historical and Political Context
To better appreciate the significance of the Kisumu conference, we should takea moment to establish its historical and political context. The chronology below
lists the major historical milestones leading up to the promulgation of Kenya’s
new constitution.
Brief Political Chronology
Kenya gains independence from Great Britain; early constitution provides for multi-party parliamentary system and elected provincial assemblies.
1966 Kenya become de facto one-party state; provincial assemblies abolished.
1982 After attempted coup d’état, National Assembly officially declares
Kenya a one-party state. Country is divided into eight provinces underprovincial commissioners, who are appointed by the president.
1991 Constitution revised to permit multi-party elections and limit presidents to two terms.
1963

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VOICES FROM THE SYLFF COMMUNITY
2002
2007

2010

President Daniel arap Moi steps down after 24 years in office; movement for constitutional reform picks up steam.
Presidential election held under new election law. In post-election violence, some 1,500 Kenyans are killed and tens of thousands are forced
to flee their homes.
New constitution enacted with the aim of preventing further violence,
devolving political power to local districts, protecting the rights of minorities, and solving long-term problems.

Government under the New Constitution
Previously, Kenya was divided into eight provinces, which were under the direct control of the central government. The new constitution (specifically, Article 11) provides for the devolution of power to the local level. It divides thecountry into 47 counties, each of which has a locally elected governor and deputy governor. (Governors are typically male, while deputy governors are mostoften female.) Elections and lawmaking are governed by the rules of multiparty parliamentary democracy. The constitution also features special provisions designed to guarantee that marginalized groups, such as women, disabled persons, and youth, have representation at the local and national levels.
Kenya’s 47 counties are each divided into anywhere from 2 to 12 constituencies, depending on their population, and each constituency is further divided into 5 wards. Each ward elects a representative to serve on the county assembly, which works with the governor to govern the county. In addition toward representatives, each county assembly has six nominated members chosen to represent marginalized groups. Members are also selected as necessary
to ensure that neither male nor female members control more than two-thirdsof the seats in any given county assembly.
At the national level, Kenya has a bicameral Parliament made up of the
Senate and the National Assembly. The Senate consists of 67 members. Of these, 47 are elected from each county by direct ballot. In addition, 20 seats are reserved for marginalized groups: 16 for women, 2 for youth, and 2 for the disabled. These are filled by party nomination according to each party’s share of
the vote.
The National Assembly consists of 349 members. Of these, 290 are electedby popular vote, one from each constituency. Another 47 seats are filled by
women elected from each county. Finally, 12 members are selected by party
nomination to represent the disabled and other marginalized groups.
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VOICES FROM THE SYLFF COMMUNITY
Figure 1. Kenya’s Bicameral Parliament

Senate67 members

National Assembly
349 members

47 directly elected(from each county)

290 directly elected(from each constituency)

16 party-nominated women
4 others nominated by party

47 directly elected women(from each county)
12 others nominated by party

The legislators elected from counties and constituencies around the country
gather for parliamentary sessions in Nairobi, where they represent the interestsof their respective districts while participating in important decisions regarding budget allocations. Kenya’s least developed counties are entitled to allocations from an “equalization fund” amounting to 0.5% of state revenues, but
only on request. How much a county receives hinges largely on the efforts of
its representatives in Parliament.
Kisumu and the Leadership Conference
Kisumu County is located in western Kenya, far from the nation’s capital. (Tothe southwest, in neighboring Siaya County, lies the village of Nyang’oma
Kogelo, birthplace of Barack Obama senior.) The city of Kisumu, on the shoresof Lake Victoria, has historically functioned as a major center of East Africancommerce. Because of its location along Africa’s largest lake, the area is ideallysituated for fishing and fishprocessing, but the central
government has long controlled key concessions on
the lake, and economic development has left many of
the inhabitants behind. Fishing, sugarcane farming, andrice farming are the county’s
principal industries. Kisumu
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VOICES FROM THE SYLFF COMMUNITY
has long been riven by a fierce political rivalry between the Luo and Kikuyu
peoples, and these ethnic tensions erupted into deadly violence following thecontroversial outcome of the December 2007 presidential election.
Kisumu Leadership and Development Conference was held on August 26
and 27 at a community complex in Chemelil ward in Muhoroni, one of Kisumu
County’s seven constituencies. The conference drew more than 150 participants, including members of the Kisumu County Assembly, various community leaders from each constituency (including representatives from the farming
and fishing industries, business, nonprofit and civic organizations, research
entities, the legal profession, the teaching profession, women’s groups, and soforth), and members of the Kisumu County Executive Committee, as well as anumber of legal experts and civil rights experts from Nairobi. The region’s ethnic plurality was also on display at the conference: Along with the Luo, whomake up the majority of the district’s population, the Kikuyu, Kalenjin, Nandi,
and other ethnic groups were well represented.
The plenary sessions featured talks by scholars, members of the Kisumu
County Executive Committee, a National Assembly member (from neighboring Siaya County to ensure neutrality), and others regarding the principles of
the new constitution and the political and administrative systems it established.
Each of the speakers fielded numerous questions from the audience. In
breakout sessions devoted to healthcare, education, transportation, water, andlaw and order, participants discussed the issues facing Kisumu and what must
be done to resolve them.
By the end of the two-day conference, the groundwork had been laid for
future meetings by citizens interested in formulating concrete proposals ineach area and submitting them to the county government. Equally significant
was the bonds newly forged among the county’s civic and economic leaders,many of whom met for the first time. Participants from diverse sectors pledged
to work together to make the new constitution’s promise a reality.
A number of the conference participants provided positive feedback regarding the event and its significance. The following is a sampling.
Teresa Okiyo, a research officer at the Kenya Agricultural Research Institute, noted that very little information had reached Kisumu regarding the new
constitution and the process of devolution, and she praised the conference forhelping participants see what they needed to do to make their voices heard ingovernment. (Okiyo has studied paddy farming in Yamagata Prefecture undera Japan International Cooperation Agency training program.)
Dr. Rose Kisia, Kisumu County Executive Committee member in charge of67

VOICES FROM THE SYLFF COMMUNITY
commerce, tourism and heritage, called the conference an important first stepthat had made Kisumu a model for other counties to follow.
Legal Resources Foundation Trust director Janet Munywoki, who arrived
early in the morning on the first flight out of Nairobi, noted that she had traveled to Kisumu at her own expense, convinced of the importance of such aground-breaking conference. She stressed the need to hold similar gatherings
throughout Kenya.
Significance and Impact
Returning to Nairobi after the conference, I had the opportunity to speak withJohn Smith-Sreen, director of democracy, rights, and governance for USAID(US Agency for International Development) in Kenya. Noting that the new
constitution had been 10 years in the making, Smith-Sreen stressed the importance of the next three to five years in laying the groundwork for a functioning democracy.
Political instability, corruption, and inefficiency have long stunted Kenya’s
growth and development. Fair democratic elections and the devolution of
power to the counties are critical to the nation’s future economic growth. This
is why American, British, Canadian, European, and UN agencies are actively
involved in supporting Kenya’s reforms. USAID has placed special emphasis
on promoting effective coordination between the state and the counties. But
another key task is to ensure that civil-society organizations are informed
about the new constitution and to encourage their political participation at the
local level.
By promoting public understanding of devolution and helping to forge
linkages between the county government and the local citizens, the Kisumu
leadership conference has made an important contribution to the local community and Kenyan society as a whole. It is a contribution made all the moresignificant by the fact that it occurred when it was most needed. In this periodof sweeping change for Kenya’s government, society, and economy, the nation
has scant resources to spare for such consciousness-raising efforts. This is why
Otieno Aluoka’s initiative was such an effective use of SLI funds.
A Role Model for Young Leaders
Otieno Aluoka, who successfully organized the Kisumu leadership conference
using a Sylff Leadership Initiatives grant from the Tokyo Foundation, has an
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VOICES FROM THE SYLFF COMMUNITY
excellent understanding of the
Sylff mission to “nurture future
leaders who will contribute to thecommon good of humankind.”
Aluoka has been actively involved in the Sylff network for 14
years, ever since receiving a fellowship at the University of Nairobi. In March 2008, in the wakeof the violence precipitated by theDecember 2007 election, Aluoka
submitted an article titled “Kenya’s Post-Election Violence” to the Sylff website, in which he argued eloquently
for the need for stronger legal and judicial institutions to create a just society in
Kenya.
An anthropology major at the time he received his fellowship, Aluoka put
his education to good use, subsequently devoting himself to law studies at the
University of Nairobi. More important, he has used the fruits of these academic
labors not merely to lift himself up but to build a better society. This is precisely the outcome envisioned by the Sylff program, and it is this impulse that SLI
and other Sylff support programs were designed to encourage. Listening to thelively and passionate discussion among participants at the Kisumu conference—described by Aluoka as the starting point for the devolution of power inKisumu County—I was struck by how closely his initiative dovetailed with the
purpose of the Foundation’s Sylff support programs. This was truly money
well spent.
By supporting the activities of Sylff fellows after they go out into society,
SLI complements the fellowship program in an important way, defining Sylff’s
long-term aims and expectations and encouraging concrete social action. As
the program continues, the success stories of people like Otieno Aluoka will
provide inspiration for other Sylff fellows and contribute further to leadershipdevelopment around the world.
Leadership development is a long-term undertaking. But the young leadersthat the Sylff program has nurtured over the years have continued to grow,and last August I was able to watch as one of those leaders made an importantand timely contribution to his nation’s development during a period of political and social transformation. I am hopeful that Otieno Aluoka’s example will
Otieno Aluoka at the Kisumu leadership conference.

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serve as a stimulus and encouragement to young leaders in Kenya and aroundthe world.
Postscript
Following the conference, Otieno Aluoka compiled a list of proposals based on
the discussions held at the conference and submitted them to the Kisumu
County Executive Committee on September 9, with the cooperation ofChemelil ward representative Joseph Osano, who has pledged to push for theiradoption. Issues and ideas raised at the conference received coverage in threeof Kenya’s national newspapers, and they are already beginning to influence
policy makers at various levels.

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November 12, 2013

National Policy in the Local Context
Exploring the Influence of “Guest” Workers in Fernie, British Columbia
Laurie Trautman

How do national immigration policies influence local communities? Laurie Trautman, ageographer who received a Sylff fellowship from the University of Oregon in 2012, explores
how “guest” workers in rural resort economies in the United States and Canada are reshaping local labor markets and community dynamics. In the summer of 2013 she conducted fieldwork in British Columbia, Canada, using a Sylff Research Abroad award, andhere she highlights some of her preliminary findings.

T

he importation of foreign labor is becoming an increasingly common
strategy used by advanced industrial economies to maintain global
competitiveness. While guest worker programs are designed to importforeign workers on a temporary basis, such policies have a lasting impact on
local economies and communities. Despite these impacts, the bulk of literatureon immigration has largely overlooked guest workers, who are perceived ashaving little long-term influence in the communities in which they work.
While guest worker provisions have been a major source of conflict in the
United States since World War II, recent Canadian immigration policies havemade a decisive shift away from an emphasis on multiculturalism towards a
strategic focus on meeting temporary labor needs. As these changes are occurring, they are producing fundamentally different results that have yet to be extensively examined and compared. Yet, as comprehensive immigration reformis pending in both the US Congress and Canadian Parliament, it is essentialthat the changing nature of immigration policy—and guest worker programsin particular—is systematically and thoroughly analyzed in a cross-national
context.
Laurie Trautman
Sylff fellow, 2012 (SRA recipient, 2012), University of Oregon, where she
is a PhD candidate in the Department of Geography. Her research is focused on understanding
the implications of national immigration policies on local places.

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This article explores the influence of guest worker policy on both the local
labor market and community interaction in the Canadian resort town of Fernie,
British Columbia. Based on qualitative interviews conducted during the summer of 2013, this project aims to provide a better understanding of this understudied, yet increasingly controversial, element of immigration policy.
This research is part of a broader dissertation project that links national
policy discourse and community experience to understand how guest worker
policies are evolving in different national contexts in the United States andCanada—a critical issue given current debates over immigration reform inNorth America.
At the national level, this project analyzes narratives in the United States
and Canada over nation, race, and labor, as reflected in federal legislation since1990. At the local level, qualitative and in-depth research in two case-study“receiving” communities (Fernie, British Columbia, and Sun Valley, Idaho)
shed light on how these national dynamics intersect with local economies,
leading to a new understanding of the influence of guest workers on local labormarkets and social interaction.
Case Study of Fernie, BC
The town of Fernie is located in the Elk Valley of southeast British Columbia
and has a population of roughly 6,000 and an economy highly dependent on
amenity-based tourism. With a high cost of living, small population base, andseasonal fluctuations in labor demand
mirroring the tourist season, Fernie isunable to meet its labor needs locally.
In the past several decades, Fernie’s
reliance on importing labor fromabroad has continued to increase.
At the same time, the cost of living
in Fernie has skyrocketed alongsidesecond home ownership, which has
also created an increased demand for
low-wage, low-skilled service-sector Fernie Art Depot.
jobs. The result is an extremely tightlabor market for low-wage labor in a rural location with a high cost of living,which has pushed many local businesses to develop retention strategies ranging
from a free ski pass to medical benefits. However, for particular positions, some72

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businesses have gone beyond established channels of recruitment and turned to
the Temporary Foreign Worker Program (TFWP) to meet their labor needs.
During my research time in Fernie, I conducted 44 interviews and two focus groups with employers, employees, community members, and government
officials in order to assess how the presence of temporary foreign workers(TFWs) is shaping the local labor market and community dynamics. I was also
involved in participant observation and analyzed local media publications todetermine how these dynamics were represented both spatially and socially.
I found that, while most employers relied on workers coming with a working
holiday visa (primarily from Australia
and New Zealand), a small handful of
employers are turning to the Temporary
Foreign Worker Program as the tourist
season is extending to include both winterand summer seasons. Up until just a few
years ago, most employers were able to （© ferniefix.com）
meet their labor needs during the peak
winter season with young workers coming for the ski season with a working
holiday visa, who would then leave in spring, when most businesses either goon vacation or reduce hours. With the demand for labor beginning to switchfrom a peak season in the winter to more year round needs, employers aresearching for a more stable and longer term labor force which, ironically, they
are able to find through the TFWP.
Unlike the working holiday visa, which does not tie workers to specificemployers, workers coming on the TFWP need to establish employment prior
to obtaining a visa, and thus solidify a relationship with an employer who
essentially sponsors them. Upon arrival, they are in a committed relationshipwith their employer. In Fernie, TFWs are occupying specific positions in thelabor market that have become increasingly difficult for employers to fill—
namely housekeepers, chefs, and fast food workers. At this time, several fast
food restaurants and cleaning companies are employing TFWs from the Philippines, establishing a division of labor along both national and racial lines.
Preliminary Findings
As part of my broader dissertation project, I am analyzing 20 years of national
policy discourse in both the United States and Canada. A recurrent theme in73

VOICES FROM THE SYLFF COMMUNITY
both Parliament and Congress is the exploitation and victimization of guest
workers, who are often described as being “unfree labor.”
This sentiment is echoed in academic literature, much of which highlights afear that as Canadians increasingly rely on workers with temporary status who
have few avenues to permanent residency, “a US-style underclass defined by
precarious status and labour market vulnerability” may be emerging (Goldring
et al, 2009: 257).
A preliminary analysis of my findings
illustrates that TFWs in Fernie are not victimized by their status, nor do they lackagency, which complicates the overriding
sentiments evident in both political discourse and academic literature. In fact,
they are able to negotiate the immigration
system through the relationship with theiremployers to remain in Canada beyond theoriginal duration and purpose of their visa.
In some instances, TFWs obtain residency
and move into higher paying positions.
This is surprising, as technically speaking,there is no path to residency for low-skilled Help wanted.
TFWs.
I also found that workers coming on a working holiday visa will utilize the
TFWP as a strategy to remain in Canada after their visas expire. Thus, while
the TFWP is constructed as a national policy aimed at addressing temporary
and acute labor market shortages, in Fernie it is actually a strategy used byboth employers and foreign workers to achieve stability and long term employment relationships. For employers, it fills a chronic labor shortage, and for
employees it is often a path to longer-term residency. Both of these outcomesare almost the polar opposite of the stated purpose of the policy.
Despite the agency on the part of TFWs, there remains a real materiality to
the different categories of TFWs and “international visitors” on a working holiday visa (WHV), which is evident at the local level. TFWs in Fernie are increasingly Filipino, while those on a WHV are almost exclusively young, white,and middle class. Those on a WHV have both social and labor market mobility,
as they are able to change employers and come to Fernie with enough disposable income to enjoy the amenities. Above all else, they are not visibly different
from the local population.
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On the contrary, the geographic and labor market mobility of Filipinos
coming as TFWs is extremely limited both by their employment in low-wage
positions, their commitment to their sponsoring employer, and perhaps by
their obvious position as “minorities” in this small, rural mountain town. This
quote from one interviewee highlights this lack of mobility:“People say that there’s this big Filipino community that’s growing, but I
don’t really see it, it’s not out there, you don’t see them walking around, hanging out at the bars and coffee shops, so I don’t know. They might be serving
you a coffee when you drive through Tim Horton’s, but that’s about it.”
The preliminary findings from this case study will be compared with research in Sun Valley in the United States, in order to assess how guest worker
policies are influencing both labor markets and community dynamics in different national contexts. The final stage of this dissertation project will analyze
national policy discourse in the United States and Canada since 1990, comparing how “guest worker” policy is constructed within the context of broader
immigration objectives.

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September 26, 2013

Responses to Anti-Semitism in Pre–World War
II South Africa
Myra Ann Houser

Myra Ann Houser is a specialist in African history who received a Sylff fellowship fromHoward University in 2012. She conducted research in South Africa using a Sylff Research Abroad (SRA) grant from May to July 2013, collecting archive materials on antifascist activities during the twentieth century. Here, she describes the Jewish community’s
perceptions of the growing anti-Semitism movement in pre–World War II South Africa.

Prior to the mid-twentieth century,
South Africa was regarded as
one of the most Jewish societies
in the world. For about a century after
1820, it experienced a high degree of
religious freedom, and the prevalenceof white settlers in the region made it
an attractive place for Jews searchingfor new homes. It possessed a highpopulation of Jewish individuals, most- University of the Western Cape.
ly of East European descent, who hademigrated, in most cases, to avoid anti-Semitism and persecution in Europe.
Within the Union of South Africa, particularly following the Second South
African War, however, politics between English- and Dutch-descended whiteSouth Africans created divisions and distinctions within society as they jostled
to gain political control, and the country’s large Jewish population often became the targets of hostilities. Manifestations of growing anti-Semitism include
the 1937 mandate by rightist South Africans that the “Jewish problem” besolved and boycotts of Jewish businesses.

Myra Ann Houser
Sylff fellow, 2012 (SRA recipient, 2012), Howard University, where she
is a doctoral candidate. Her research focus is on twentieth-century southern African liberation
movements and their transnational interactions.

76VOICES FROM THE SYLFF COMMUNITY
Such hostilities increased during the 1930s and 1940s, as South Africa’s radical right became ever more tightly bound to and admiring of European fascist
regimes. Nationalists in conservative “brotherhood” organizations, such as theOssewabrandwag and Broederbond, discovered that individuals sharing theirideals—such as Adolf Hitler and Benito Mussolini—had risen to positions of
power. The nationalists became ever more admiring of them and made pilgrimages to Europe in order to hear speeches by and meet with those whomthey idolized.
There is evidence that some Jews viewed South Africa as a proverbial city
on a hill prior to their repression during World War II. In a 1936 letter to Interior Minister J.H. Hofmeyer, the secretary of the South African Jewish Board of
Deputies cited the country’s history of religious tolerance:
South Africa has a proud past of having liberally treated those who havebeen compelled for reasons of religious or racial persecution to leave theirnative land, and seek a new country imbued with a spirit of justice. A great
many South Africans proudly claim descent from the Huguenots, whowere themselves refugees in a situation similar to those arriving from Germany 1.
A follow-up letter to Prime Minister J.B.M. Hertzog later that year indicatedthat South African Jews had voiced numerous complaints regarding theirharsh treatment by both teasing civilians and the political authorities, who subjected them to increased bureaucratic harassment as nationalism increased
within government and officials placed increasing immigration restrictions 2.
Though the letter mentions no specifics in terms of what it calls “harsh treatment,” it does allude to growing discontent among the country’s Semitic population and states that many who had come to this new land in search of calm
and to avoid persecution now found themselves being harassed by both neighbors and state authorities. This presumably would have increased by 1938,
when South African officials were following the policies of the Europeans they
admired in enacting stringent anti-immigrant laws and severely limiting the
1 “South African Jewish Deputies Board Secretary to J.H. Hofmeyer, June 2, 1936,” Brit-ish Jewish Board of Deputies Papers, Reel 66, United States Holocaust Memorial Museum, Washington, DC.
2 “South African Jewish Deputies Board Secretary to J.B.M. Hertzog, October 13, 1936,”
British Jewish Board of Deputies Papers, Reel 66, United States Holocaust Memorial
Museum, Washington, DC.
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number of Jews coming in to the country 3. As the Broderbond and Ossewabrandwag became increasingly enamored with fascist governments, their antiSemitic propaganda also grew.
A government reply to the first letter mentions “anti-Jewish activities” during “the past two years” and assures SAJDB that it is monitoring the situation.
It did not, however, provide further context for the situation 4. These gaps canbe filled in using family papers, interviews, and memoirs. These deeply personal documents chronicle the micro-aggressions that South Africa’s Jews experienced during this period, and several place the incidents—such as boycott
campaigns and efforts at spreading libel against Jewish community leaders—within the larger context of international fascism. A number of documents directly compare the situation in South Africa to
Holocaust-era or pre-Holocaust-era Europe.
Joan Marshall’s 2005 memoir Darling Mutti
shares a slightly different perspective of Jewish immigrant life in South Africa. Marshall’s
parents had come to the country in 1936 andreceived work papers. They became active intheir large social circle, and their main experiences with anti-Semitism were during theirearlier years, when they lived in Germany.
They also corresponded regularly with family
members in Germany and were well aware ofdevelopments in that country, but they did
not refer very much to anti-Semitism in theirSouth African troop debris in theSouth African lives 5.
Namib Desert from World War II.
Much like the Marshalls, the Rahlyn Mannfamily benefitted from privileges of material comfort and social connections inwhite South Africa. Mann, the only Free State woman to be deployed to Europe as a postwar social worker, told an interviewer that she did not experience any overt anti-Semitism as a child. She did, however, experience a senseof being different from her peers. Mann was one of few Jewish students in her
primary school and the only one in high school. She thus left school early on
3 Joan Marshall, ed., Darling Mutti (Jacana Media, 2005), 23.

4 “Minister of External Affairs to Secretary of the South African Board of Jewish Depu-

ties, August 19, 1936,” British Board of Jewish Deputies Papers, Reel 66, United States
Holocaust Memorial Museum, Washington, DC.
5 Marshall, 1–23.
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Fridays to prepare for Sabbath, in contrast to most of her peers, who remainedin class for the duration of the week. Mann also told her biographer that she
fought hard for Hebrew to be included as a matric subject, not taking for
granted that her peers and educators would find it as interesting or important
as she did. Mann eventually said that she chose to enlist in the Red Cross as aSouth African citizen rather than as a Jew, placing her pride of country aheadof her feelings of awkwardness 6.
Milton Tobias, on the other hand, felt more subjected to anti-Semitism than
Mann did. He recalls that, prior to Germany’s Nazification and its growing ties
with South Africa’s radical right, he “hardly ever” experienced negative feelings. Following the outbreak of World War II, however, he said that antiSemitism was “all around,” manifesting itself through micro-aggressive slurs
and taunts, as well as through government policies that were unfriendly toward the nation’s Jewish population. After going to war as a Union soldier inthe Royal Air Force, Tobias returned to South Africa thinking about his Lithuanian grandfather and great-grandfather in the light of the concentration
camps he had seen. He recalls thinking of the similarity between their situationand his, which though not as dire as that of people living inside the camps, wasnonetheless marked by discomfort and oppression 7.
Anti-Semitism in South Africa did not begin with World War II. Taffy Adler has traced it to at least the beginning of the twentieth century, when Jewish
workers began migrating to the country and its mines as industrialization increasingly brought together people from different races and backgrounds 8. According to Adler, many white collar workers who left Europe due to physicalthreats or verbal taunts found themselves among the working class in South
Africa. Jewish workers in the country were thus subjected to both the microaggressions and class-based policies that they sought to leave behind. The harassment became more pronounced as World War II approached, and a rightist
movement arose that claimed paradoxically to be “anti-immigrant” and “antinative” (or, less paradoxically, pro-Afrikaner).
My dissertation has evolved to incorporate the subsequent oppression of
6 Rahlyn Mann, interviewed by Barbara Linz, Sydney, Australia, April 16, 1996, USC

Shoah Foundation Collection, United States Holocaust Memorial Museum, DVD.

7 Milton Tobias, interviewed by Padigail Meskin. Durban, South Africa, December 1,

1995, USC Shoah Foundation Collection, United States Holocaust Memorial Museum,DVD.
8 Taffy Adler, “Lithuania’s Diaspora: The Johannesburg Jewish Workers’ Club, 1928–
1948,” Journal of Southern African Studies, 1979, 6.1, pp. 70–92.
79VOICES FROM THE SYLFF COMMUNITY
socialism as well, as I believe—based on my long-standing interest in WorldWar II—it is important to examine the interactions between these early twentieth-century developments. During the 1930s and 1940s, a number of Jewish
individuals—having become aware of the marginalization occurring in South
Africa’s racist structure—began lobbying for change. This would continue, as
orthodox Jews began turning to radicalism during the apartheid era. It is imperative, therefore, to understand this period as being pivotal in the country’s
history and protest tradition, and I will attempt a further examination of this
topic as part of my dissertation and, I hope, during my scholarly career.

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September 20, 2013

Armed State-Response to Internal Ethnic
Conflict in Sri Lanka
Sreya Maitra Roychoudhury

Sreya Maitra Roychoudhury, a Sylff fellow at Jadavpur University in India, conducted
research in Sri Lanka using a Sylff Research Abroad (SRA) award. The purpose of her research was to observe the realities in Sri Lanka and deepen her insights into the “securitization” of two armed states—India and Sri Lanka—which is the central theme of her dissertation. Her report below makes clear that the purpose of her research was fulfilled and thatthe visit to Sri Lanka has become an important asset in writing her dissertation.

I

arrived in Colombo, Sri Lanka, on November 1, 2012, for a field trip essential for my doctoral dissertation, which examines the historical causes andthe implications of armed state responses to select internal ethnic conflictsituations in India and Sri Lanka andcritically analyses their efficacy.
I have been fortunate to receive
mentoring and support at Jadavpur
University, India, where I also had theopportunity to apply and be selected
for a Sylff Research Abroad award
from the Tokyo Foundation at a very
opportune moment of my PhD research. This was not only because my The University of Colombo, which hosted
nascent ideas on state approaches to Sreya during her field research.
insurgency very much demanded thefilling in of ground-level realities but also because Sri Lanka is currently at avery critical juncture of its political history.
National security and socio-political stability can be significantly undermined by violent internal conflict or insurgency in any country. While authoriSreya Maitra Roychoudhury
Sylff fellow, 2007 (SRA recipient, 2012), Jadavpur University,
whose dissertation examines the “securitization” of two armed states: India and Sri Lanka.

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tarian regimes unilaterally use their military to combat such challenges, modern democracies have historically sanctioned the deployment of armed forceson a short-term basis only by declaring them as “emergencies.” Within thepurview of international relations, the latter approach has been delineated by
the “securitization theory” à la the constructivist paradigm founded by the
Copenhagen school.
India and Sri Lanka have labored to establish consolidated democracies inSouth Asia, never experiencing any spell of total military rule or a civil-military
regime, unlike some of their neighbors. Multi-ethnic democracies are expected
to handle internal conflicts with the structural norms and practices of a democratic order. India and Sri Lanka have behaved exceptionally and tackled theseby active securitization through much of the post-independence period.
Existing literature does not highlight the reasons for the continuance of
conflict zones, and there is hardly any comparative empirical work on the subject. Moreover, insecurities and rebellions persist in most cases, like in India’s
Northeast, Jammu and Kashmir, and, until 2009, in Sri Lanka. Additionally,
due to India and Sri Lanka’s geographic contiguity and ethnic overlap, the impact of Sri Lanka’s internal conflict has been deeply left by India.
The deployment of the Indian Peace Keeping Force in 1987 and its subsequent failures, together with the cross-border operations of the Liberation Tigers of Tamil Eelam and the assassination of Indian Prime Minister Rajiv Gandhi in 1991, have created mistrust, inducing excessive caution in bilateral interactions.
During my month-long stay and extensive interaction with the intelligentsia, activists, and local population in Colombo, I came across a societythat has suffered deep scars in its socio-political and economic fabric due tothe prolonged war of the state against an ethnic community. However, it wasalso stated by many quite unequivocally that any challenge to the sovereigntyof the state—democratic or authoritarian—must be legitimately resisted withthe sanction of force and the armed machinery of the government. Detailed
studies and opinions have revealed that the unyielding stance of the leadersof the separatist group precluded any scope for meaningful, peaceful reconciliation.
In the present situation, Sri Lanka has transcended war but not the conflictsituation, as underlying grievances of the Tamil community continue to simmer. While ground-level opinions, observations, and reports substantiate theargument that the heavy-handed securitization approach of the state has combated militancy and terrorism with unprecedented success, it is quite clear that82

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it also has further fragmented the already linguistically divided society, alienating the minority Tamils and establishing a “Sinhala state.”
The field trip was significant in enabling me to collect primary data to corroborate the historical-sociological approach I had chosen for my study to gain
an in-depth, comprehensive understanding of a seemingly terrorist-politicalproblem in Sri Lanka. The instrumental role played by the monopoly of theSinhala language in consolidating ethnic fissures is a much observed phenomenon in Sri Lanka’s history and politics.
The field trip rendered an unmediated exposition into the incremental unfolding of this phenomenon by the ruling political leaders through the turbulent decades (especially the late 1950s, 1960s, and 1970s) and the subsequent,almost obvious deepening of the majority-minority ethnic divide, the virulent
manifestation of which was the Tamil demand for secession and autonomy espoused by violent outfits like the LTTE.
The sole documentation of much of the parliamentary debates and official
proceedings under the presidency (since 1976) in Sinhala and the conspicuous
absence of their translation in English and Tamil languages at the National Archives of Colombo was, to my mind, a significant indicator of the calculated
steps taken by the ruling elite to use “language hegemony” in asserting Sri
Lanka as a Sinhala state, thereby fuelling the ongoing ethnic politics of thetimes.
Moreover, the informal and formal interactions at the local level rendered it quite evident
that even in postwar Sri Lanka, the most sympathetic Sinhala vis-à-vis the Tamil autonomy
movement would not voice any explicit statement against the present process of increasing
the geographic isolation of the Tamils in thenorthern and eastern provinces and the conscious effort to maintain the presidency’s directcontrol over them by abstaining from establishing functional Provincial Councils.
To my mind, the potential for renewed conflict between communities cannot be ruled out, At the National Archives of Colombo.
much less so because of a strong Tamil diaspora that continually foments a sense of marginalization. Any meaningful resolution of the internal conflict situation thus requires fundamental changes in theconstitution to include greater accountability of the president, the devolution83VOICES FROM THE SYLFF COMMUNITYof power to Tamil representatives at the local level, and the rebuilding of asense of trust between the ethnic communities that have been brutally eroded
and lost in the ravages of the war and the unilateral, authoritarian style of governance.
While the operational political systems of India and Sri Lanka differ (parliamentary versus presidential system), they could actively engage throughcommon multilateral forums like the South Asian Association for Regional Cooperation (SAARC) to articulate state responses beyond securitization
measures that can be implemented to resolve their respective insurgencies on asustainable basis.
Even though Sri Lanka is a consolidated, democratic nation in South Asia,
my field trip rendered stark the realities and nuances of administrative functioning that transpires in a presidential system, as compared to the parliamentary model of India. Divergences in the operational political realities of Sri
Lanka, issues in the functions of the constitution, and aspirations of the people
were rendered clear only in the course of my studies at the local level. Other
interesting and related facets of society like education, community development, and the changing role of the military in postwar Sri Lanka also became
vivid, providing a comprehensive overview.
Being an endowed fellow, the credibility of my research was instantly recognized by the interviewees and interested researchers and students.
My research is focused on providing a systematic explanation for the warthat prevailed, prescribe ways to avoid the military option on a prolonged basis, and guarantee basic human rights and security to citizens. The insights I
gained on the Tamil separatist movement in Sri Lanka also helped me to build
a comparative study of armed approaches to insurgency in two democracies,
keeping in mind the differences in their operational dynamics.
I also seek to explore possible state responses beyond the military optionthat can be implemented by the democratic, multi-ethnic countries of India and
Sri Lanka to resolve their respective insurgency issues on a sustainable basis.
This would hopefully enhance bilateral ties and move regional peace keeping
initiatives in South Asia a step forward.

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