on the World Today

JAPAN’S new premier, Tanzan Ishibashi, is the son of a Buddhist priest and for many years was editor of the Oriental Economist until he became Minister of International Trade in the Hatoyama government. During the Occupation he had served a brief and unpleasant period as Minister of Finance in the oshida cabinet but was forced to resign when he was “purged.” It is well known that he strongly opposed certain of the economic policies of GHQ, and whether he was right or wrong at least he had the courage of his convictions. Despite a reputation for being unorthodox he is a practical man, and it is believed that his basic policy will be little different from Hatoyama‘s.

Domestically he advocates what he has termed a policy of “balanced expansion,” by which he apparently means government spending to promote employment, and modernization of plant to increase production and to make Japan more competitive in world trade. He has stated that he will encourage overseas investment, particularly in Southeast Asia, in order to produce further trade, and an increased expenditure on defense, with emphasis on air power.

He will try to work out a trade agreement with the U.S.S.R., but he is realistic enough to know that despite propaganda and pacts there is little hope for much trade in that direction. When he was Minister of International Trade and Industry, he sent trade delegations and fairs to Red China, and he has said he is ready to accept a Red China trade mission.

Haggling the factions

How to hold the dissident yet powerful factions of his party together is the first and most difficult of the domestic issues facing Ishibashi. Here, his known stubbornness and inclination to go it alone may be liabilities rather than assets, as Japanese political skins are very thin, and powerful opponents easily hurt.

It is not the Japanese nature for political losers to bury their hatchets and coöperate. Japan’s political history is f3raught with the continual emergence of splinter parties, the creation of innumerable factions. Because of the apparently democratic method of election of Ishibashi, there were high hopes that the Liberal-Democrats would finally act together, but these hopes were soon dashed when the Kishi group demanded cabinet posts because they lost, and the Ishii group demanded cabinet posts because they helped Ishibashi.

Thus bitter haggling between the factions developed as they fought each other for the plums of office. On his election Ishibashi promised that he would choose the right man for the right post, despite faction, but he was forced to appease his opponents and had to appoint Ikeda as Finance Minister and Kishi as Foreign Minister. Kishi was a member of the Tojo cabinet, and although he is said to desire closer relations with the United States, he also advocated closer ties with the U.S.S.R.

The press predicts that this three-headed cabinet composed of men of diverse opinions will not last long. Some quarters are already calling for a general election.

Ishibashi will undoubtedly press for revision of the Constitution. The big problem here is that the Constitution contains the famous idealistic clause renouncing war forever, and furthermore, it forbids the creation of any armed forces. Clearly MacArthur could not live up to such idealism, and in 1954 he sanctioned the creation not of an “army,” but of a “self-defense force.” However, under the Constitution it is extremely difficult to justify any great expansion of this force, or to provide modern weapons on land and sea and air, or to subscribe to the UN charter which, morally at least, requires each member nation to provide troops for overseas action if necessary. So long as the Socialists hold more than one third of the scats in the Diet there is no hope of passing a revision, since that requires a two-thirds majority vote.

The new premier’s next internal problem is that of the Communists. After their defeat in the last election, the Communists were rather subdued. But this year, with the signing of the pact with the U.S.S.B., the Soviet Embassy becomes fully accredited. The Japanese are aware that the local Communists will gain great moral, and probably financial, support thereby. They expect stepped-up activity in social agitation, in propaganda, and also in industrial and military espionage. While the danger is apprehended, the means to cope with it are sadly inadequate and new regulations and organizations are needed. But factionalism within the several government bureaus hampers concerted effort and prohibits a unified policy.

Japan and the U.S.

Ishibashi’s announced foreign policy is for the furthering of amicable relationships with the United States, but he has already made it clear that he thinks there is need for a “readjustment" of relations.

While the announced policy is proWestern, Japan is not missing any chances elsewhere. In cold fact, its immediate position is that of the skillful acrobat who is used to straddling fences. For instance, Britain and France were publicly and officially condemned for their move against Fgypt by former Foreign Minister Shigemitsu, who carefully failed to condemn the Soviets for their actions in Hungary. The Soviet pact was swallowed whole and with no real effort by the negotiators to decide the question of the Southern Kuriles; nor was there any condemnation of the oppressive fishery agreement forced upon Japan, nor of the continual imprisonment of fishermen by the U.S.S.R. On the other hand, attempts were made to demand the return of Okinawa and the Ryukyus.

Though Japan is wooing Red China, Ishibashi has stated that he will not push recognition now but will concentrate on the improvement of economic relations with Red China. Socialists are outspokenly in favor of recognition, a view also shared by many conservatives.

Japan’s alignment with the West is still a matter of self-interest, taking all the American aid obtainable but playing along with others who may conceivably emerge topside. The attitude appears to be that perhaps it is wise to appease the tiger.

Japan’s boom

Japan is en joying considerable prosperity. Foreign trade is booming and exports for the past year reached a new post-war high. Japan’s dollar holdings have increased and the value of the yen is stable. Industrial production is up 19 per cent over last year and is expected to go higher.

Shipyards are booked for four to five years ahead with over four million tons of orders on hand, mainly for foreign account. Shipping has profited from high freight rates, and every company in the trade is scrambling to build new tankers and fast freighters. Steel plants and heavy machinery makers are also booked so far ahead that they are turning down new domestic and foreign business. Building construction is booming; the chemical industry is enjoying a prosperity never experienced before; department store sales are 20 to 30 per cent higher than last year; in the amusement field Japan produced five hundred motion pictures in 1956, an all-time record.

Last year most companies declared handsome dividends, and there was greater capital expansion and investment in new plant in 1956 than ever before. The tight-money policy was relaxed and the stock market reached an all-time high in December —so high that the Bank of Japan warned Kabuto-cho (Japan’s Wall Street) not to permit excessive credit and promptly increased the margin requirement. The farmers, except for Hokkaido, have had two bumper years in succession and have money to spend on luxuries.

Despite high prices (Tokyo continues to have the highest cost of living for foreigners except for Mexico City), despite an appalling lack of adequate accommodations, frightful roads, and overcrowded and uncomfortable rail facilities, the tourist trade has continued to increase and is expected to bring in about $90 million during 1957.

This year Japan will install its first nuclear reactor with U.S. aid, build its first jet planes, also with U.S. aid, extend its transpacific airline to a global airline, increase its steelmaking capacity with World Bank loans, and increase its hydroelectric potential with U.S. aid.

On the foreign front Japan has some real cause for congratulation in her entry into the United Nations. The pact with the U.S.S.R. also has been propagandized as a victory for Japan, and while it does undoubtedly put a period to an unpleasant international status, it is hardly an unmitigated blessing. However, taken together the membership in the UN and the pact with the U.S.S.R. at least reinstate Japan as a sovereign nation and one of the leading world powers.

Population pressure

Despite prosperity, there are latent factors which forbid unalloyed optimism. As a result of the war, Japan lost 46 per cent of its territories and has shrunk to 142,380 square miles, about the size of the state of california. Of this area only 14 per cent is cultivable, the rest being mountainous. In this small territory Japan has a population of more than 90 million.

While birth control has begun to bring down the birth rate, the life extension program has also proved successful. Thus the increase in population is about one million per year. While the government has earnestly promoted immigration to Brazil and to other countries, the exodus is negligible compared with the rapid increase. The population problem is the basic source of most of Japan’s troubles.

There is an ever present struggle for even the necessities of life. Competition is severe in every endeavor and in every business, especially in foreign trade, and no matter what controls are instituted or export associations formed, there are always the dissenters who find ways of cutting prices. This frequently results in accusations of “dumping” from overseas, causing further international complications and ill will.

Suez begins to hurt

The first reaction to the Suez and Middle East incident was indicative of this aggressive competitive spirit. It took the form of smug satisfaction that the troubles of others would redound to the benefit of Japan, since the Japanese saw a chance to capture the greater part of the profitable Southeast Asia trade. On more sober reflection some Japanese are now beginning to fear that the closing of the Suez Canal may do more harm to Japan than was earlier realized. Oil shipments from the Middle East, where Japan gets the majority of the 77 million barrels of oil it must import each year, have been delayed, and t he cost of oil has greatly increased. Gasoline and kerosene prices have been raised, and kerosene is getting scarce. The government has prepared an emergency budget to cover the higher freight rates, but refineries will be faced with losses and probably reduced shipments, which will force cutbacks in production.

Thus, although Japan’s freight and tanker companies may earn additional profits, most other major industries will suffer, since Japan’s industry depends on the import of bulk commodities. The majority of Japan’s imports and exports are carried in foreign bottoms, and the result is a corresponding loss of foreign exchange.

The China market

The great increase in world freight rates naturally causes Japan to turn to the China mainland for coal, iron ore, salt, soybeans, and other bulk commodities. In order to pay for these commodities it must sell manufactured goods, but most of the goods Red China desires are on the restricted list. Nevertheless, China is a natural market for Japan, and there will be continuous pressure to export items now forbidden and to promote this trade. The great hopedfor trade with Southeast Asia will not be easy to develop since there still are the vexing problems of reparations to be settled and since trade with Southeast Asia actually decreased during 1956.

The fact is that Japan‘s productive capacity is limited. It is already strained, leaving little room for further production of those goods which are in demand. Increased production depends upon new plant and that takes time and money. Despite the official position that Japan welcomes foreign investment, potential American investors find that the “climate” is not really hospitable and, though a form of lip service is paid, usually the bureaucrats find means to circumvent, delay, or deny all but the very few forms of foreign investment which they favor.

Thus, while there is prosperity and the new year opened auspiciously, Japan faces new responsibilities abroad and considerable confusion at home. How the new leadership will handle these problems can seriously affect Japan’s relationships with the free nations, her status in Asia, and her position among the world powers.