Compromise in East China Sea a test of leadership

The incoming Prime Minister of Japan Shinzo Abe will face a number of significant challenges, including some that appear intractable.

He must deal with the terrible aftermath of the earthquake and tsunami that devastated so many communities along Japan’s eastern coastline in March 2011.

This includes the crippled Fukushima nuclear power reactor that leaked radioactive material into the surrounding region and beyond.

While the Fukushima reactor has largely disappeared from international headlines, the situation on the ground remains challenging.

Chairman of Japan’s Nuclear Regulation Authority Shunichi Tanaka said recently:

Workers have been obliged to respond with highly stopgap measures. Many devices, such as a purifier for radioactive water, have been installed with no time for sufficient design considerations and safety screenings. The situation surrounding the decommissioning process is volatile, so there is a need for constant reviews in securing safety.

The challenge of managing this issue would have confronted whomever became the national leader of Japan, as it relies on nuclear experts to plan the way forward.

Mr Abe will also be faced with reinvigorating the Japanese economy which has struggled through decades of sluggish growth.

The new Prime Minister has signalled that he intends to take a more radical approach to that of past administrations.

He intends to work with the Bank of Japan to establish an inflation target of 2 per cent and is prepared to use what he described as “unlimited” stimulus.

Economic commentators have interpreted Mr Abe’s comments as meaning he intends to print large amounts of Japanese currency to reverse deflationary pressures on the economy.

There are risks associated with this approach, however Mr Abe must believe that it is preferable to allowing Japan to continue down the same road it has taken for more than 20 years.

Another issue fraught with difficulty is resolving territorial disputes with China, South Korea and Russia.

The most pressing of these is the dispute over the island group named by the Japanese as the Senkakus and by the Chinese as the Diaoyus.

Prime Minister Abe said during the recent election campaign that Japan would not concede “one millimetre” of its territory to China.

While China’s new leader Xi Jinping has not responded directly, China has increased its presence near the uninhabited islands and recently flew a government aircraft overhead.

Japan responded by scrambling F-15 fighter jets.

This dispute represents a serious flashpoint and there is a high risk of miscalculation.

During my recent visits to Japan and China I have been struck by the militant rhetoric of officials in both countries in our discussions about the islands.

Both Japan and China are deadly serious about their respective territorial claims and neither appears prepared to compromise.

Much more is at stake than the oft-presumed motivation of gaining access to the seabed for energy and resources exploration.

The dispute is patently a matter of national pride for both countries, and is steeped in the complex history of an ancient rivalry.

China’s increasing military might has clearly unsettled large sections of Japanese society, and seems to many in Japan reason enough to pave the way for changes to the pacifist Constitution adopted in the wake of World War II.

Mr Abe has already signalled that he intends to pursue changes to s.9 of the Constitution which restricts the ability of Japan to deploy its armed forces.

Despite the constitutional restrictions and a declining defence budget, Japanhas still managed to develop a significant military capability and it would be a mistake to assume that Japan does not have the capacity to respond to a military challenge.

On a previous visit to Beijing I was warned by a Chinese official that once a nation places a foot on what he termed “the ladder of escalation” it is often impossible to climb back down, which can lead to conflict.

This could equally be applied to the Senkaku/Diaoyu islands dispute and nations around the world are urging both sides to avoid putting a foot on that “ladder of escalation”.

While the economic fallout between the world’s second and third largest economies would be reason enough to prevent a conflict, the politics of this issue are highly volatile.

With new political leaders in both Japan and China the rising nationalist sentiment in both countries will make it increasingly difficult to find a compromise, but that will be the ultimate test of their leadership.

During my discussions with officials in both countries I noted that both referred to the potential role of United States in ensuring that there not be an escalation of the dispute.

Ultimately a peaceful compromise must be seen as being the interests of the Japanese and Chinese people, and not a sign of weakness.

Australia must continue to urge two of our important trading partners and friends to find that compromise, as the alternative would represent a serious threat to the peace and stability of our region.