The Retreat Begins

"Economically and socially, it is not an exaggeration to say that Japan now faces a historic turning point." So said Premier Kakuei Tanaka at the opening of the Japanese Diet early this month. He was not exaggerating. Since then, Japan's economic crisis, created by the energy shortage, has only grown worse. As Japan Times Editor Masaru Ogawa brooded editorially, it may turn out that "the Japanese economic giant has only feet of clay." Moreover, the political repercussions threaten to engulf Tanaka himself, and even raise the worrisome specter of a resurgence of Japanese nationalism.

The Arab oil squeeze has hurt Japan far more than any other major industrial country. After the U.S., it is the largest petroleum consumer in the world. Unlike the U.S., however, Japan must import all of its oil. About 84% of it comes from the Middle East: 43% from Arab nations and the rest from Iran. Thus, Japan was an obvious target when Saudi Arabia and the sheikdoms decided to turn off the pipeline spigots. Being forced to change its traditionally neutral policy in the Middle East toward a pro-Arab stance was particularly humiliating for a nation in which saving face is synonymous with preserving honor.

Panic Buying. Beyond the economic crisis, the political paralysis of the Tanaka government has created a crisis of confidence in it. Housewives have indulged in a wave of panic buying of such potentially scarce items as sugar and soap. Some experts fear that when the real crunch comes early next year, particularly if there are severe food shortages, Japan could be plagued by consumer riots.

The industrial picture is equally gloomy. The government has revised its projected growth rate from 10.7% downward to 6%, but forecasts of zero or even minus growth abound for 1974. Last week's announcement by the Arab countries that they intend to cut oil pro duction another 5% in January could lead to a disastrous 20% to 30% shortfall in deliveries. Yoshiya Ariyoshi, chairman of the Mitsubishi-owned N.Y.K. shipping line, calls the situation an economic Guadalcanal-"the point of farthest advance where the steady retreat began." Like many other businessmen, he considers a depression a real possibility.

Surprisingly, the government has thus far shied away from any really stringent controls. Critics say that Tanaka has spent more time defending his past record than giving his confused people any clear idea of where he intends to take them. Japan has not even taken the sort of voluntary measures adopted in Western Europe or the U.S., like Sunday-driving bans and weekend closing of gas stations.

Late last month, Tanaka appointed Takeo Fukuda, his old rival for the Liberal Democratic leadership, to head the powerful finance ministry. Fukuda, an apostle of fiscal orthodoxy, has so far done little to check the feeling of governmental drift. Although his appointment was widely praised by business leaders, it has failed to quell intraparty squabbling. "All they seem to care about is how it will affect the Upper House elections in July," said one Western diplomat last week.

Unhappily, the bureaucracy is no more unified than the political leadership. "The MITI [Ministry of International Trade and Industry] is at sixes and sevens," says one insider. The professionals of the Foreign Ministry are of two minds about the wisdom of having dispatched Deputy Prime Minister Takeo Miki on a good-will mission to the Middle East last week to curry favor with the oil-producing countries. They fear that the trip will not only strain relations with the U.S. but also invite further Arab demands, including the breaking of diplomatic relations with Israel.

Natural Reaction. Social scientists, meanwhile, worry that the oil shokku will spark a wave of xenophobia. The insular Japanese have traditionally tried to shield themselves from dependence on outside influences. Yet one thing the energy crisis has driven home is a bitter awareness that Japan is almost totally dependent on the outside world. In the past, Tokyo sought to evade the dependency issue with a low-posture diplomacy designed to stay on good terms with everyone, while relying on the U.S. nuclear umbrella for security. The Nixon shokkus of 1971-an abrupt about-face in policy toward China and tough monetary measures aimed at Japanese imports-made it clear that Japan could no longer automatically rely on the U.S. to protect its interests; the energy crisis has suddenly shown that economic prowess is not enough. As a senior government official confided to a friend last week: "Diplomacy without force does not work."

Says Psychologist Kazuo Shimada:

"As far as the Japanese are concerned, they had been sitting still when bang came the blow from the outside in the form of this oil crisis. It's a natural reaction for them to begin to hate foreigners in consequence-particularly Nixon and Kissinger. Many older Japanese are convinced that [Nixon and Kissinger] are behind it all. They recall the fact that on the eve of the Pacific war, Washington placed an embargo on petroleum and scrap-iron exports from the U.S. to Japan, prompting Pearl Harbor."

The feeling of diplomatic impotence has inevitably led to rumblings that Japan should become militarily self-reliant. Tanaka himself last week let slip the observation that "there are things that do not use oil, like nuclear submarines." Such musings are not new, of course, and it is not likely that Japan would soon act to become a nuclear power. Both the Socialist and Communist opposition, as well as the moderate core of the Liberal Democratic Party, are strongly opposed to nuclear weapons. Moreover, Japan's constitution permits it to maintain only defensive forces.

A more ominous possibility is that the present drift in political leadership will strengthen the power of the extreme right or the extreme left. Tadeshi Yamamoto, director of the Japan Center for International Exchange, believes that the first result of the economic crisis will be an increase in left-wing strength in the election next July. After that, he warns, there will come a powerful right-wing backlash from the Sei-rankai (literally, Blue Storm) faction of the Liberal Democratic Party. It was the rise of a similar group at the end of World War I-when the country also faced a severe economic crisis-that marked the advent of militarism in imperial Japan.

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