Luxembourg tax dodgers leaked; Japan’s history wars claim scalp; Abbott’s hairy-chested adviser. By Hamish McDonald.

Japan and China agree to disagree

Japan’s Prime Minister Shinzo Abe (left) meets Chinese President Xi Jinping in the Great Hall of the People during the APEC forum in Beijing this week.
Japan’s Prime Minister Shinzo Abe (left) meets Chinese President Xi Jinping in the Great Hall of the People during the APEC forum in Beijing this week.

The body language said it all in Beijing at the Asia-Pacific Economic Co-operation summit: the pained expression of the leaders of Japan and China as they steeled themselves for
a handshake for the cameras. The scowling Shinzo Abe and Xi Jinping could barely look each other in the eye.

Just getting them together was a diplomatic achievement. But is it now peace in our time? The Japanese and Chinese emerged with different translations and interpretations of the four points of agreement worked out beforehand by veteran officials. Beijing said the two countries have different “positions” on the Senkaku/Diaoyu islands; Tokyo said different “views”. Chinese analysts say Japan has at last given ground to recognise the islands’ ownership is in dispute; Japanese officials that it merely refers to China’s incursions into the water and airspace around the islands.

Meanwhile, Chinese incursions have settled down into one every fortnight for a couple of hours, suggesting Beijing sees this as the new normal. While the two sides have agreed to “address history straight-on”, Abe has refused to promise that he won’t again visit the Yasukuni Shrine, where Japan’s war leaders are venerated along with other war dead.

Having achieved emperor-like pre-eminence, is Xi now ratcheting back the “assertiveness” that’s marked his two years at the top? Perhaps we’ll learn more as leaders continue via Myanmar to Brisbane this weekend for the G20 summit, for landmark speeches by Xi as well as Barack Obama.

1 . Luxembourg tax dodgers leaked

While the dramatic Obama–Xi targets for carbon emission reduction will make Abbott look like yesterday’s man in Brisbane, floundering treasurer Joe Hockey has meanwhile been handed a parcel of stinking fish ahead of the G20, where he and Abbott were hoping to push the idea that faster global growth through cutting trade barriers and domestic deregulation is the answer to all our problems.

The idea that the unchained private sector can be trusted to do the job is looking a bit shaky after the revelations that 343 big companies, including some big ones in Australia, have channelled profits through Luxembourg on the advice of accountancy major PricewaterhouseCoopers (PwC) to save hundreds of billions of dollars in tax. Hockey had been thinking of a G20 agreement to crack down on transfer-pricing, but it’s doubtful he had anything like this in mind and certainly not its being undertaken by the Coalition’s big business mates here.

Trade Minister Andrew Robb will also find it harder to sell the Trans-Pacific Partnership Agreement (TPP), even if the new Republican majority in the US senate gives Obama the fast-track negotiating powers to clinch it with the 11 other intending members. The Republicans are all for trade deals that enhance corporate power, but a Democrat president and the labour and environmental-health lobbies worried about the TPP would surely be seeking a quid pro quo on the tax front. The same pressure will intensify here. The troubles of America’s biggest corporations in China also suggest access for Australian companies, under the long-awaited Free Trade Agreement that Abbott and Robb hope to clinch with Xi in Canberra next week, might hit hidden Chinese walls.

The Luxembourg exposé is a separate leak from the earlier trove of corporate and individual tax-haven activity handed to the Washington-based International Consortium of Investigative Journalists. Over the past few months, the consortium has orchestrated a detailed study of the 28,000 pages from the European principality, by 80 journalists in 26 countries. It is all out now, but “leaks beget leaks”, as ICIJ director Gerard Ryle told me this week. “I spent part of yesterday looking at a very interesting Luxembourg tax ruling involving one of Australia’s biggest companies,” he said. “It was not a client of PwC.”

2 . Japan’s history wars claim scalp

Any day now, the president of the company that publishes the most liberal of Japan’s big newspapers, The Asahi Shimbun, is expected to resign, in a move that will further what political analysts such as Temple University’s Jeff Kingston call the “mainstreaming” of right-wing reaction under Shinzo Abe.

The Asahi recently admitted that it had got it wrong with reports in the 1980s and 1990s about the involvement of the Imperial Japanese Army and Navy in forcing women to work in so-called “comfort stations” for the troops during the Chinese and Pacific wars. It turned out that testimony by a former soldier was false. That this testimony was only part of massive evidence implicating the Imperial forces in conscripting Asian women and some Dutch civilian internees into military brothels doesn’t matter for Japan’s ultra-nationalists, who include some members of Abe’s cabinet. They say the whole “comfort women” accusation is now discredited.

The emboldened nationalists, egged on by right-wing newspapers such as Sankei Shimbun, hope to knock out the influence of the Asahi, a pacifist voice in the new Japan since it emerged from censorship in 1945. The campaign recalls the News Corp hounding of the ABC and Fairfax here for perceived mistakes and bias, but in Japan it’s much more serious. Last month, threats by right-wingers got Sapporo’s Hokusei Gakuen University to fire lecturer Takashi Uemura, a former Asahi journalist, who had explored the comfort women issue in ways they didn’t like. The national broadcaster, NHK, under a board installed by Abe, ordered its English-language service not to mention the Nanjing massacre or the comfort women. Working through the netto uyoku (right-wing netizens), the extremists are spreading their intimidation further.

Abe’s history games cause deep concern among Japan’s foreign friends who see them diverting Japan from its generally positive global role, in particular poisoning relations with Korea and China. Earlier this year in Washington, Richard Armitage, the neocon figure, said it was unconscionable to deny the violations against the comfort women. Now Hugh Cortazzi, a former British ambassador, has written in protest. “In the eyes of Japanese right-wing nationalists, the only crime committed by Japan’s military leaders was that they failed,” he said in The Japan Times. “Japan’s image and prestige abroad is suffering as a result of the apparently growing influence of extremists in the Japanese government. It is very much in Japan’s national interest that the revisionists are discouraged from propagating their historical lies and that Japanese democratic processes are not threatened by extremist anti-democratic individuals or groups.”

3 . Hairy-chested Abbott adviser

What to make of the emergence of retired major-general Jim Molan as an influential defence adviser to Abbott, and as a Liberal senate hopeful? 

Molan is a classic “biffem” general, reminiscent of Brigadier Ben Ritchie-Hook in Evelyn Waugh’s Men at Arms, or perhaps William Westmoreland, the US general replaced in Vietnam for asking LBJ for even more troops. Molan’s spell as operational commander of 300,000 US troops in Iraq seems to have left him entirely out of step. Instead of throwing more men into dodgy American wars, the Australian Army’s approach, developed exquisitely by Peter Cosgrove for his political master John Howard, was to make a big noise about joining the coalition of the willing, and do the minimum possible in the safest part of the conflict. The more recent and costly Afghanistan campaign is a lesson against changing.

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This article was first published in the print edition of The Saturday Paper on November 15, 2014 as "Japan and China agree to disagree".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.

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