 Welcome, everyone. Welcome back to my show, Looking to the East, our twice monthly review of what's going on in Asia. We have a very special program that we do periodically with two of my friends and two related people to my university, Kansai Gaida University. We'll be covering a number of economic and political issues in the show. So if you're looking for a perspective on what's going on in Japan in particular and how Japanese people are looking back at the United States, please stay tuned for the duration of the show. I want to introduce to you our guest today. First guest is in Paris, France. So it's quite late in the evening for him. It's Dr. Paul Scott and I know Paul from his previous engagement at Kansai Gaida University. He's also a professor in Europe right now. So Paul, thank you so much for joining the show. And thank you for inviting me. Yeah. And then we have a graduate from Kansai Gaida University Asian Studies program as I was as a student, an undergraduate student, Jiri Masteki. And Jiri is a partner at Kitama Partners Law Firm in Osaka, which is one of the major firms in the Osaka area. And frankly, a success story when it comes to graduates from Kansai Gaida University. Jiri, thank you so much for also joining today. Thank you. It's a pleasure to be with you. Great. So we have a number of items, topics that we discussed in advance of the show. The first one is just in general, what is your perspective? And maybe I'd start with you Paul because obviously you spent many years in Japan and following Japanese politics. But now for the last few years, you've been living in Europe and looking at Japan from that perspective. So we have a Prime Minister Kishida and recently we had the unfortunate event of the former Prime Minister Abe being assassinated, which really impacted the Japanese public and also Japanese politics. Kishida seems to be buffeted by a number of different issues as a result of the popularity of his cabinet and also of him has remained quite low. So Paul, what is your view or your assessment of the struggles of the Kishida administration? And maybe if you don't mind looking into the crystal ball, do you think he'll survive? I'm not sure if it's the struggles of the individual Prime Minister Kishida or actually the struggles of the Liberal Democratic Party, which has always, despite its stewardship over the Japanese economy, almost nonstop since 1955, has always been plagued by corruption, has always been plagued nonstop by scandal. And the popularity of Japanese Prime Ministers has rarely been high. I mean, he's started off high, sort of 63% and now down to 40. Japan has, when I taught at Kansai Gaidai, taught of course on Japanese politics. And I asked if anyone could name the Prime Ministers of the last year, or I think they're about six, you know, they get an A for the class and oh my goodness, one student almost got all six of them. So the problem is the problem of a challenge of Japanese democracy. I mean, usually, and I don't want to say it's normal to have a politics of alteration, we have a party in power and then one out of power and, you know, Republicans and Democrats, which is normal. So one party democracy. The opposition is weak. Only 97 seats in the lower house. The LDP still has 261 from the last election. So despite the fact that they're corrupt, it is the inability of the opposition to amount to successful campaign. So Kishida, you know, could come and go and it could be someone else and someone else. We could have a repeat to a couple of Japanese Prime Ministers in the next couple of years. Yeah. So if he was to be replaced, then given the strength of the Liberal Democratic Party in the Congress or the diet, that it would probably be internal power struggles that would potentially take him out and have someone else replace him, I would say. That's what's so interesting. And I want, you know, to come in on this that even in a in a very strong one party, if you want to call it very strong majority party democracy, there usually is debate. You could say that there's democracy within the within the party. Exactly, Stephen, what you're talking about. I don't see that. Okay. I don't see that in Japan. I see a very, very conservative, you know, seniority based party. And there's not going to be an Obama type figure. And, you know, very positive towards, towards the former President and Senator from actually challenging his own party. Amazing. Absolutely amazing that he could win the election, the nomination, excuse me. So I don't see that happening within the LDP. So self reforming. I mean, because she does cleaned out his cabinet in part and purged it. But you can even say, you know, could put in more women, but, you know, they're very conservative, very status quo women. So gender really doesn't make much of a difference there. Although it's nice to see as a photo opportunity. Right. Yeah. Jerry, what do you think you're in Japan? You're reading about this every day. Sure. Well, you know, of course, we've been, you know, rocked here in Japan by a recent assassination of former Prime Minister Abe. You know, his, if we sort of take a historical perspective, you know, I would disagree that there has been a few actually strong, very popular Japanese Prime Ministers. Nakasone was one of those, Koizumi was one of those, argue Abe was one of those, of course, all in the LDP. I would agree, of course, that the LDP is is basically, you know, the ruling party of Japan. And while there have through the years been certain other parties which have exercised some sort of, you know, counter pressure, it hasn't really, you know, changed Japanese politics to a multi-party democracy. I would totally agree with that. Now, back to the assassination, however, you know, I've right after the assassination, I live in Nara, which is where the assassination of a former Prime Minister Abe occurred. My son actually goes by side IG station where it occurred every day to go to school. It was shocking. You know, I think a lot of people at the time felt that, oh, well, this is sort of a JFK moment from the American perspective anyway. This is sort of a JFK moment, you know, for Japan. I don't, living here and seeing things as they're unfolding, I don't necessarily think that's going to be the case. Actually, historically, if you look at Japan, it's been a while, 86 years precisely. But in the 20s and 30s, you had acting as well as former Prime Ministers assassinated, you know, through political violence, primarily right-wing and the alternationalist movement that had them back then. So, political violence, while certainly shocking, I think, certainly to modern sensibilities and the way it was done, is not something that's going to fundamentally change the country. What is interesting is going forward, you know, the relationship between the LDP and, you know, various elements, again, the Unification Church, which was, you know, the part of, you know, the reasoning, at least according to the assassin for the assassination of former Prime Minister Abe. So, you know, as far as the future, we'll sort of see how it goes. But I would agree that the LDP, if there is going to be any sort of change in Japanese politics or direction, it's going to be internal. It will be as a result of an internal struggle within the LDP. Yeah, so one of the observations that I made, and I saw in other locations as well, after the assassination that Abe, despite being in the former Prime Minister, you know, camp, he was no longer directly in power, still controlled the largest faction of the Continental Party, the LDP party, and was somewhat putting breaks or influencing Kashida's policy. So, even though he was not in the forefront, he certainly had tremendous power. But now he's gone. So, that creates a kind of internal tension on who will lead that particular faction and how whoever that new leader is will influence the Kashida agenda, which Abe and Kashida did do or did have different agendas in terms of how they looked at Japan. Abe is considered to be more conservative, more nationalistic to some extent. Yeah, I think, go ahead, Jerry. Oh, sorry, yeah. Look, it seems that Kashida, when he came in, had essentially three major things to deal with. It was the COVID crisis and the planned reopening of Japan. It was the economy, of course, with the rising prices falling in and the geopolitical issues around Taiwan and various other things. Unfortunately, he doesn't, you know, whatever faction he may be from, I don't think the public perceptions that he has handled any of these areas particularly well. And again, that's actually, that's not just, I think, the internal or domestic view, but internationally, I think as well, particularly with regard to COVID and the reopening of Japan or the non-reopening of Japan. Yeah, that provides an interesting, nice segue. Thank you, Jerry, for helping me out in my role here as moderator to our next topic. Yeah, and that is this incredible depreciation of the yen over the last six or seven months. So before the show, we talked about the dollar yen raping one dollar, one US dollar to 143 yen, whereas within a year, it was down in the one, what, 108, 105 range? So it's been a 30, 35% depreciation, which makes me feel poor, guys. I don't want to end base salary and put it in the dollars. You know, maybe I should be applying for a government aid. You know, that's a joke because obviously it doesn't really affect prices in Japan as far as I can tell, maybe other than like the price of gasoline. But on the flip side, from the external perspective, Japan is now on sale. The euro, the dollar goes so much further than it did, you know, just within six to 12 months ago. Japan hasn't fully opened to international tourism, but I'm sure as soon as they do, people are going to get their calculators out and go, Japan is now cheap. So anyway, Paul, how is this being interpreted or how are you viewing from Paris? I know you're planning a trip to Japan and it's now 30% cheaper than it was six months ago. So for you personally, this is a bonus. This is 1985 all over again, or even 1945, all over again, where the Americans set the end dollar exchange rate at 360, all stories about why they did 360 because it's a circle and 360 degrees. But of course, to make Japanese exports cheaper, never ever thinking that Japan would develop competitive products. And then that gets into a job, that becomes that becomes the political problem of trade of trade imbalances, and maybe even a type of bigger thy neighbor. You know, everyone wants a currency advantage. So this this will eventually in the bank of Japan will have to intervene, I think, and to to stop this and reverse. So this is a political this is becomes it always becomes a political problem. Exactly, you know, Toyota is making a fortune. Every one yen difference translates in hundreds of millions of dollars a profit. And it's exactly what you're saying, Steve, that, you know, by, you know, sitting on my backside, and, you know, you know, go into sleep and waking up the next day, suddenly, I'm 10% richer. And I did nothing to do that. And that's again, back to 1985, with the plaza courts and, you know, people, there's advantages and disadvantages for Japan. And of course, for the international community as well. So for the for the yen to be at its present value is again to repeat myself, is a political problem. And it's all political economy. Of course, yeah, these are it's all interrelated. The primary reason I've read that this is occurring is that the Fed in the United States in order to defeat inflation has raised interest rates significantly and is continuing to do so. And the Bank of Japan has done nothing has done has not raised interest rates at all. So you have this huge interest rate differential between the US rates and the Bank of Japan. So clearly, all you're right, this is a political issue. Ajiri, I know you were very passionate about this when we were discussing this. Right. Well, look, I think the reasoning and why this is happening is exactly as you're saying, I think most economic analysts agree, it's the mover toward higher interest rates in the United States. So, well, why does that create it? Well, that because investors, you know, who want to invest, for example, in bonds, they'll get much higher return on their investment with higher interest rates. Right. So they'll be investing more in US nominated or dollar denominated assets, which creates, you know, the imbalance. And therefore, you have the dollar, you know, relatively strong despite inflation in the United States, whereas the yen compared to dollars is just plummeting. The problem is that, as you said, also, Steve, the federal, well, in response to the Federal Reserve's interest hikes, the Bank of Japan has, it's not that they've done nothing, they've decided not to raise interest rates. They still want to keep interest rates at their current levels. And, you know, that it's going to be kind of a risky game because the Fed in the United States has, you know, signal that they're going to continue to raise interest rates. And so if the Bank of Japan's response is to, again, make the decision not to raise rates in Japan, well, then, you know, it seems that the currency gap is going to get even wider. Yeah, that's my question to you guys. And so, you know, if that happens, look, again, as Professor Scott said, it's good and bad. Record corporate profits in Japan. That's not necessarily filtered down, you know, to employee salaries and things like that. But, you know, Japanese companies, at least in exports, are doing quite well. The question is, at what point do you go beyond, you know, that threshold where it, the yen dollar imbalance is so great that it actually starts to hurt, you know, the Japanese economy. We'll see, you know, and I'm sure that only time will tell. But it is something that at least those of us who are living in Japan and seeing our, you know, the value of our money, you know, sort of go down the drain, it's becoming quite concerning. And also, you know, what the markets and risk analysis hate more than anything, it's uncertainty. And we have too much uncertainty. I mean, COVID, you know, the COVID recovery was not as fast as people felt in this higher inflation rates that was not predicted. But then you add in Ukraine, there's, how is that going to end? And I don't have a clue on how that's going to end. There's so many different scenarios from nightmare to something a little less than nightmare ending could be very positive as well to Taiwan. And Taiwan is not dealing with Russia. There's so much interdependency there. And, you know, I lived in Taiwan for three years. I work for the Taiwan Foundation for Democracy. I'm very more than sympathetic. Taiwan is a democracy and incredibly successful. They are also the largest chip manufacturer in the world. And we know that some countries like India are hedging their bets, so to speak, and trying to produce chips just in case there's disruption. But there's too much uncertainty and exactly what Judy is talking about as an investor. Where's the safe haven on this? Yeah, that's the key point, Paul. And also, thank you for, as Jerry did, transitioning us to the end. Yeah, you know, I can turn my mic off. You guys are getting better at this. Thank you. But that's a very interesting perspective. Jerry mentioned there were three challenges for Kishida. This is obviously the third one. And although Japan will make statements and try and take a leadership role when it comes to the international politics within the Asia region, and certainly I think America is encouraging Japan to be more proactive about it, I don't know that Japan's actually made any progress towards establishing a clear perspective on Taiwan and so forth. So also, we were running a little bit out of time here, but I'd like you guys to think about this in terms of what's actually happening in Ukraine. When the invasion first occurred and actually on shows that we did together, we all thought that, oh, now China's going to watch that and Russia wiping out Ukraine will encourage them to potentially be more aggressive towards Taiwan. But the news as of the last, what, two to three weeks is that Ukraine is actually kicking Russia out. So it's turning, it's looking like and many are predicting that Russia is going to lose this war. So, Jerry, I know you're very passionate about this as well. So what do you think? Yeah, you know, it's doing so well. Does that discourage China, do you think? Look, I think it very well made. And I think that is, you know, certainly very positive development, you know, and letting authoritarians know around the world that, you know, they can lose and they can be put in jeopardy by alliances of democratic countries. The issue, I think, or maybe the difference is probably a better way, is that the situation in Europe is not the same as the situation in East Asia. I think particularly, I think a lot of Western, if you look at a lot of Western news sources, they often very much like to compare Taiwan and Ukraine is sort of the same sort of thing. Look, there are some similarities, but there are also some huge differences. They're in here, and this is where Japan's, Japan is in a rather difficult position, both political militarily vis-à-vis Taiwan. There is no EU equivalent in East Asia. There is no NATO equivalent in East Asia. So countries in East Asia, like Japan, like South Korea, who may have very strong worries and objections regarding Taiwan are a bit more hamstrung and rely much more on, you know, powers like the United States to deal with this, whereas there's more of a collective response in Europe in the Ukraine crisis. Paul, do you agree with that? I agree absolutely. The Americans, the US Congress and the American people are willing to send billions, and France and Germany are not sending a lot of, are nowhere near matching the American commitment. Great Britain. Or the UK commitment. Yeah, and as far as, you know, I just, you know, have these figures off the top of my head, but as far as, you know, percentage of GNP that even the US is spending to support Ukraine is, you know, 0.24 percent. I mean, it's not even, it's about a quarter of a percent of GDP. It's not that much money. So we could send more and exactly, you know, whether what Mr. Putin's response would be to a military loss and, you know, to put this over to Taiwan, how do you say no to an authoritarian? I mean, how do you give an authoritarian bad news? And this is the great advantage of a democracy. And that's where China sees our disputes. And I'm being really forceful here as a weakness and this absolutely a strength. Well, whatever I think about the Republicans and all of that Fox News stuff, you know, fabulous. Good. There's dissent. There's alternative opinions. There's criticism. How do you do that with Xi Jinping? So the danger in China is, you know, you have to be very careful of believing your own propaganda. And who's going to dissuade him from thinking that he can do this and persuade him, be careful of having a war with the United States. We're not weak. Yeah, interesting. I'm not a war monger, please. I'm not, you know, I'm not saying, you know, don't, don't, but don't test us. And the nightmare scenario is American and Chinese soldiers and sailors are killing each other. And how does that stop? I don't know. I don't know. Sinking an American aircraft carrier or damaging one, 6,000 men and women on those. How do you contain that? And there's no detente. Even during the worst days of the Cold War, we were speaking to the Russians for the Soviet Union. Yeah. And it's very dangerous now, because we're demonizing. And where's the dialogue? And so I don't like the mood in the United States so much in the Congress from both parties. Where is this leaving? I'm not talking about Ukraine, because also there should be discussions about, about exits and how does this end and what are our goals? I don't think there's been enough talk there, but for Taiwan, President Biden just on Saturday said he's, he's going to defend Taiwan and bring in the US military. The White House walked that back, but he said it explicitly twice and he said it before. So how does China read this? Who's in charge of US foreign policy? It's always the president. Yeah. So we're unfortunately out of time, but that last, last comment that you made, Paul, who is this guy who's our president now? I'm not used to this. Is this some kind of character change that's occurred with him? Or maybe he has the freedom now to be more direct in terms of how he's communicating to Putin? Certainly, that's no longer nuanced. He's just saying, you know, don't do anything stupid. And now he's telling China that as well. So maybe a topic for us to discuss in a future show. Well, that would be a great topic. Yes. Yeah, towards 2024. Yes. All right. Well, we'll do that guys. And thank you so much for participating today. As usual, the time has flown by. Regarding the issue that Jerry mentioned briefly, the relationship between the unification or Mooney Church and the Abe Jiminto, his party and the many, many members of the party who also had relationships with this church. This is still a major political issue. And one of the issues that's dragging down the Kashida and Jiminto party. And it is a topic that I'll be covering in two weeks on this show with Michael Penn, who was a journalist who actually broke the story that this mysterious church that was related to Abe and was the motivation for the assassination was the unification church. He was the first person to actually publish that. So that'll be in a couple of weeks. So that's a wrap. Thank you so much, Paul and Jerry for participating in this show. Thank you. Really appreciate your perspectives. Thank you for the viewers for tuning in. And I look forward to seeing you guys in a couple of weeks. So that's a wrap for now. Aloha.