Japan Lobbies for a Stronger Military: Stay Long Precious Metals in 2013
Following last Sunday’s landslide election of the Liberal Democratic Party in Japan, the incoming government of Prime Minister designate Shinzo Abe is already lobbying for, and conditioning the public for, the re-militarisation of Japan. Under the American written, Article 9 of the “Peace Constitution” written in 1946, after Japan’s unconditional surrender in 1945, and adopted 1947, Japan renounced forever maintaining land, sea , and air forces as well as military material.
ARTICLE 9. Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes. (2) To accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.
Events quickly overtook the Peace Constitution. First Mao’s murderous Communism took over mainland China in 1949. Not exactly what MacArthur’s legal team had anticipated in 1946, and depriving America of a regional ally in containing Stalin’s USSR. Worse, Mao was allied to murderous “Uncle Joe.” Then in 1950 the Korean war broke out, and the USA suddenly needed a more military concious ally in occupied Japan. In short order a 75,000 “National Police Reserve” was created using US Army surplus equipment, followed by a new “National Safety Agency” to supervise the “Police Reserve,” which in 1954 became the Japan Defence Agency, with the “Police Reserve” moving up to become the Japanese Self-Defence Forces.
To all intents and purposes, Japan got an army, navy, and air force, capable of resisting and defeating any invasion attempt by communist China or the USSR. Today Japan has the sixth largest annual defence budget in the world, with a large modern well equipped navy, and an air force that flies F-15s, 8 of which were scrambled during the week to see off one Chinese Maritime Patrol aircraft “violating” the Japanese airspace of the disputed Diaoyu/Senkaku Islands in the East China Sea. China said it was legitimately flying in Chinese airspace.
Which brings us round to why Japan now wants to move to a full aggressive military, able to fight alongside its allies under a “collective defence” doctrine, and away from Japan’s home islands. Japan wants a full military in place ahead of a future confrontation or war with China over the islands. During the election Shinzo Abe talked about changing the constitution and even thinking the unthinkable, in turning Japan into an undisclosed nuclear power just like Israel. Under “collective defense,” Japan’s forces would be able to come to the aid of US forces, should China attack US forces backing up Japan in its sovereignty dispute with China.
Back on December 15th we wrote:
Get our daily investorintel update
Japan’s new government likely faces months of China probing and testing over the islands. Mr Abe in a sop to the right of his party, has promised to build on the islands. China has claimed a sovereign right to take all measures to prevent that. Unless Mr Abe makes a humiliating U-turn right at the start of his new government, a clash between China and Japan in 2013 looks inevitable. Will China dare Japan to shoot down one of their planes? What if China shoots down one of Japan’s? None of this is priced into precious metals as we end 2012. Bankrupt America’s two largest creditors are squaring up to clash! Stay long physical precious metals, the antidote to 2013.
Gold: China v Japan Friday’s Action.
And earlier on December 6th:
Yesterday the US Senate poured gasoline on to the fire.
“The United States reaffirms its commitment to the government of Japan under Article V of the Treaty of Mutual Cooperation and Security.”
“While the United States takes no position on the ultimate sovereignty of the Senkaku Islands, the United States acknowledges the administration of Japan over the Senkaku Islands,” the bill said, adding, “The unilateral actions of a third party will not affect United States acknowledgement of the administration of Japan over the Senkaku Islands.”
Under the Japan-U.S. security treaty, the United States would defend Japan in the event of an armed attack. President Barack Obama is expected to sign the bill after passage of the House of Representatives. There is no way to Beijing, that this doesn’t look to be anything other than the USA giving a “Blank Cheque” to Japan, rather like Germany did to Austria, in July 1914, setting off World War One. China, America’s largest creditor, has to take this as an affront.
Gold: The Antidote For 2013
As of today, it doesn’t look like Japan’s new incoming government has any intention of backing down. It looks from faraway London that they are gearing up for a major clash with China, relying on America’s Blank Cheque, to make China back down. There is the very real chance for a military clash between China and Japan in 2013, if Mr. Abe goes ahead with his promise to build on the disputed islands. The sovereignty symbolism of the islands to China, is the equivalent of the Falkland Islands to Great Britain. Unlike the Falkland Islands though, the Diaoyu’s are uninhabited. There is no population to vote either way and decide the issue.
China is quite unlikely to wait around for Japan to finish rearming, so my guess is that things will start to rock and roll after the Chinese New Year is out of the way. Next year the Chinese New Year starts on February 10th, and is the year of the snake. Snake years are considered lucky for China with next year’s snake the water snake, last time out 1953 and the start of the Chinese 5 year plans. Does Japan feel lucky in 2013? Lucky or not, China and Japan are on a collision course in 2013. Yet another reason to stay long precious metals in 2013.
InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.