FOR almost a decade American officials have moaned about the presence on Pakistani soil of an important safe haven for global terrorists, and the government’s stubborn refusal to do anything about it. A succession of American generals and diplomats have complained that the colonial-era anachronism known as North Waziristan is not just a command-and-control centre for fanatics attacking Pakistan. By providing a sanctuary for them, it has also made an outright victory against the Taliban next door in Afghanistan impossible.
Pakistan has resisted all American demands to get to grips with a place that is the most likely home of what remains of al-Qaeda’s core leadership, the base for especially lethal Afghan insurgent groups and the site where jihadists hatched the most serious plot against the American homeland since 2001—the botched car-bombing in 2010 of Times Square in New York.
None of these reasons was enough, it seemed, to coax Pakistan to take its troops inside North Waziristan out of the bases where they were locked down. Frustrated, America resorted to drone strikes to tamp down the menace, making itself even more unpopular in Pakistan.
Now, at the very fag-end of the West’s 13-year combat mission in the region, America is at last getting its wish, with the launch on June 15th of Operation Zarb-e-Azb, named after a sword of Koranic legend. Although this followed an especially provocative attack by the Pakistani Taliban, the Tehreek-e-Taliban Pakistan (TTP), on the country’s busiest civilian airport, in Karachi on June 9th, the operation had been in the offing for months. It was delayed only at the insistence of Nawaz Sharif, the prime minister, on exhausting an always improbable bid to strike a peace deal with the TTP. Mr Sharif, like many other politicians, feared terrorist reprisals in Pakistan’s ill-prepared cities, and perhaps especially in his home province of Punjab.
Hostilities had in fact begun some time ago. The army prepared the way for a ground operation with air strikes against militant hideouts, which it rather improbably claims have caused no civilian casualties. Despite this, however, little had been done to prepare for the inevitable outflow of displaced civilians. Some 450,000 have fled, including many children who will be carrying the polio virus that has been rampant in North Waziristan ever since militants banned vaccinations in 2012.
American forces grumble they were given just 72 hours warning—not long enough to put in place preparations to block the retreat of militants into Afghanistan’s volatile eastern borderlands. With NATO in the final throes of winding down operations, only air power is really available anyway. Had the operation happened years ago, Western officials sigh, foreign forces could have provided an “anvil”. The Pakistani hammer could have crushed the al-Qaeda-linked extremist groups from its own country and around the world that have come to call North Waziristan home.
Sceptics doubt how far North Waziristan will really be cleaned up even now. For all the international opprobrium it has brought Pakistan, it has also provided a base for Afghan groups regarded as useful allies in Pakistan’s decades-long effort to dominate its neighbour. It is feared many of these so-called “good Taliban” have been allowed to slip away or will not be attacked. So far, though the army has bragged of killing hundreds of terrorists, particularly Uzbeks and other foreigners, it has not boasted of strikes against groups that have never attacked Pakistan: the Afghan Taliban; the Haqqani Network; and the Hafiz Gul Bahadur group.
The army claims it is determined to eliminate all terrorists of all stripes. But the motivation for Pakistan’s change of heart is not the misery North Waziristan has brought to the world but its role in the terrible rise of domestic terrorism in recent years. Yet militant groups have infiltrated themselves across Pakistan’s heartland. So, even if it is effective, the cleansing of North Waziristan will not end terrorist atrocities elsewhere in Pakistan.
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IT WAS always dangerous to be a journalist or government critic in Tajikistan. Until recently, however, the predatory and paranoid regime of Emomali Rakhmon, the president, left graduate students alone. That changed on June 16th, when Alexander Sodiqov, a Tajik political-science student in Canada who is employed by Britain’s University of Exeter, was detained by the secret police. He is being held incommunicado, but has reportedly been charged with treason for interviewing an opposition leader shortly after meeting the British ambassador, Robin Ord-Smith, at a party. He now faces up to 20 years in jail.
Mr Sodiqov was detained while conducting research in Gorno-Badakhshan, a restive, mountainous and sparsely populated region that is home to marginalised ethnic groups. It is also awash with Afghan narcotics from across the long, porous border. In 2012 government troops tried to unseat local warlords. Dozens died in what looked more like a turf battle than the anti-narcotics operation authorities claimed it to be. Last month violence flared again after a shoot-out between police and alleged drug dealers. In response rampaging locals torched government buildings, demanding a stop to the violence.
The security service, the GKNB, has tried to thwart inquiries, preventing, for example, Mr Ord-Smith from meeting local activists this month. The GKNB is suspected of controlling much of the narcotics trade. Yet it has also been financed by America, which has spent over $200m on Tajikistan’s security forces since 2001, according to the Centre for International Policy, an American NGO. That is meant to buy an ally in a tricky region, not instability.
Government critics see the treason charge, which will be difficult for it to drop without losing face, as a way of deflecting attention from the region’s troubles, by pinning the blame on concocted foreign conspiracies. The aim may also be to encourage self-censorship. A local journalist compared the atmosphere to Stalin’s terror. “It’s horrifying. Any of us could find ourselves in this situation.”
The Rakhmon regime looks to Russia for inspiration and appears emboldened by the Kremlin’s persecution of free thinkers. Immediately after Mr Sodiqov’s arrest, the security chief said foreign governments are collaborating with NGOs and “organised crime” to destabilise Tajikistan. Parliament has proposed tightening already strict laws on public protest.
For bosses in the security service, Mr Sodiqov’s brief meeting at a reception with the affable Mr Ord-Smith was enough to posit a British conspiracy. Yet Western governments are terrified of another failed state in Central Asia and worry about poorly governed Tajikistan more than most. The government’s refusal to allow questions in Gorno-Badakhshan is breeding resentment. Tajikistan’s problems are its own, not a phantom external plot.
SIX years after India and America agreed to co-operate on civil-nuclear matters both sides are still waiting for the benefits. But a decision this week by India’s government to ratify a related, long-delayed, international protocol offers some hope. The 2008 agreement was opposed both by the left (Communists) and right (the Bharatiya Janata Party or BJP, then in opposition), furious at such cosying up to America. Foreign critics argued that the civilian deal with India, which has some 100 nuclear warheads but has not signed the Nuclear Non-Proliferation Treaty, weakened the global non-proliferation regime.
In fact India’s ties with America are broadly friendly but tetchy enough to allay nationalist concerns. As for proliferation, India has a good record itself, though the deal allowed worse-behaved countries, such as Iran and North Korea, to allege Western hypocrisy. Under American pressure the 48-member Nuclear Suppliers’ Group ended its isolation of India. The International Atomic Energy Agency (IAEA) signed an India-specific “additional protocol” giving its inspectors access to India’s civil sites, though not its military ones. India’s government said on June 23rd it had at last ratified that protocol.
Yet if fears were overdone, gains are so far disappointing. India plans to tackle its chronic shortage of energy, and costly reliance on imports of fossil fuels, with a big nuclear-energy programme: some 19 working reactors, five under construction and at least 16 more planned. But expansion requires imported uranium as fuel (miners fail to extract enough from domestic deposits) plus foreign capital and expertise to build big reactors of 1,000MW or more.
Uranium will come. Australia, notably, is negotiating terms to export the fuel, ending a ban as it seeks strategic ties with a fellow Asian democracy. But big new reactors are not being built, as American, French and Russian contractors hold back. Japanese builders would in theory like to enter. A Japan-India civil-nuclear deal could be discussed when Narendra Modi, the new prime minister, visits Japan, probably in August. But its investors will wait for changes to India’s regulations.
The most serious deterrent is India’s 2010 law on nuclear liability, which puts heavy financial responsibility on suppliers and contractors in case of an accident. Legislators who drew up the liability law had in mind the chemical-plant disaster in Bhopal in 1984, when thousands died. The American firm responsible, Union Carbide, eventually paid $470m compensation, a sum they considered too small.
With his hefty parliamentary majority, Mr Modi could amend the liability law, by taking on the more strident wing of his own BJP. In parliament’s upper house he would need others’ help, but the main opposition, Congress, might agree, since in government it tried to bring nuclear investors to India. He might, too, present the change as part of a broader shift in energy policy. This would be a good moment. A national budget on July 10th is supposed to signal reforms to spur economic growth.
In September Mr Modi travels to America, where he will appeal to investors especially in infrastructure. He will be more credible if he can point to difficult decisions that his government has already taken. Acting early makes sense electorally, too. For, as the nuclear deal showed, benefits take time to accrue.
THE arrest on May 17th of a Japanese pop star, Aska, for possessing drugs would normally have attracted little attention. Yet the tentacles of the affair reach further. Aska is an acquaintance of Yasuyuki Nambu, founder of Pasona, a temporary-staffing agency. Following the arrest a tabloid newspaper splashed stories about sumptuous parties thrown by Mr Nambu in an impeccably appointed guesthouse in the capital. Besides Aska, revellers included glamorous hostesses and senior politicians from the government of Shinzo Abe, Japan’s prime minister. One was the labour minister, Yasuhisa Tamura.
Odd as it seems, the scandal is a sign that Mr Abe’s strategy to shake up Japan is at last having an impact: those opposed to his reforms are worried enough to want to try to damage their proponents. The labour market is one of the main battlefields; muckraking journalism, one of the weapons, complain Mr Abe’s advisers.
His opponents are right to fret. This week the government approved a blueprint for structural reforms. After countless false dawns, Japan may at last have the combination of political circumstance and economic exigency to make reform inevitable and, in Mr Abe, a leader with the nous to bring it about. In 2013 he launched a bold, three-part plan to pull the country from its long economic stagnation. Borrowing from a folk tale, he dubbed his changes the “three arrows”. The first was a jolt of fiscal stimulus for the economy, the second an unprecedented monetary boost through massive quantitative easing. The third is a set of radical structural reforms aimed at boosting the economy’s long-run rate of growth.
The most recent Japanese prime minister to dare attempt far-reaching changes was, in 2001-06, Junichiro Koizumi, Mr Abe’s mentor. Now, like him, Mr Abe faces a wall of resistance. Labour unions, farmers, doctors, giant corporations and their supporters among politicians and bureaucrats are uniting in opposition to change.
The third arrow is the most important, but the hardest to shoot. Fears had grown over whether Mr Abe would even try. Yet Japan’s deep-seated problems—a rapidly shrinking population, a risk-averse corporate sector, a dangerously high level of national debt (240% of GDP) that might one day provoke a crisis, and an inflexible labour market—are only worsening.
The first two stages of Mr Abe’s grand design were swiftly achieved. His fiscal stimulus of ¥10.3 trillion came a month after his return to power in December 2012. Haruhiko Kuroda, installed three months later as governor of the Bank of Japan (BoJ), promptly launched a massive round of quantitative easing to drag the economy from its long deflationary vortex. The BoJ is in sight of its goal of generating core inflation of 2% by the spring of 2015; it has now risen to around 1.25%. For a time some even argued that “Kurodanomics” was enough by itself to restore vigour to the economy.
The last arrow in the quiver
The first master plan for structural reform, unveiled last June, was a disappointment. Just before an election for the upper house of parliament in July, Mr Abe played safe. His Liberal Democratic Party (LDP) and its coalition partner, New Komeito, won a majority in both houses of parliament. Shunning the chance to be radical, the LDP slumped into lazy complacency, loth to irk powerful vested-interest groups. Disillusion with Abenomics set in. The main stockmarket index, the world’s best-performing in 2013, has fallen (see chart).
Reformists around Mr Abe harbour two nagging doubts about him. One is that he might be diverted by the nationalist agenda that marred his first, abortive stint as prime minister in 2006-07. In December he visited the Yasukuni shrine in Tokyo, where high-ranking war criminals are among the war dead honoured. For Japan’s neighbours the shrine has come to symbolise an unrepentant militarism.
The second fear is that Mr Abe simply lacks the gumption to push through sweeping changes. His advisers admit he may lack the zeal for economic reform that he has for the issues of security and constitutional change. But he now seems ready for the battle. His government’s growth strategy has swollen into a 249-item monster of mind-numbing bureaucratese. Some are merely bids for fat budget allocations for boondoggles. Yet many of the measures are aimed at the most vital parts of Japan’s economy and society.
Mr Abe’s high approval ratings are tied to the stockmarket, so he first paid attention to its investors. He promised to cut Japan’s corporate-tax rate from its current level of around 35%, first to 29% and then lower—a symbolic step long demanded by Japan Inc. He also wants to push the ultraconservative Government Pension Investment Fund (GPIF), the world’s deepest pot of savings, into taking greater risks to boost returns. The GPIF’s leadership has accused the government of cynically using it to lift the stockmarket.
Anti-reformers argued for stopping there, doing little to disrupt ordinary Japanese lives. Instead, the government is starting to tackle the so-called “bedrock” regulations holding back three important parts of the economy: farming; medical services; and the labour market. When Mr Koizumi tried to break through these rules, by, for example, allowing manufacturers to hire temporary workers from firms such as Pasona, it provoked a public backlash.
A controversial proposal of recent weeks, known as the “white-collar exemption”, seeks to tackle Japan’s culture of inhumanely long working hours and low productivity, particularly in services. Highly paid professionals, as elsewhere, will no longer earn “overtime” pay. Mr Abe wants workers paid for work, not hours. But labour unions have misrepresented the measure as a ruse to cut pay for the rank-and-file. “Salarymen” are shown on television furiously opposing it, even though the exemption will not touch most of them. Yet the plan is to go much further in labour-market reform and give firms the right to fire workers. Sacking permanent employees, still the majority of the labour force, is in effect impossible today. Unpopular as it would be, this reform would have the biggest economic impact of any.
Watchdog-whistle politics
A duel over Japan’s poor corporate governance offers further evidence that Mr Abe is making changes that count. Early this year the government quietly introduced guidelines obliging institutional investors to monitor companies more effectively. In May Yasuhisa Shiozaki, the LDP’s most ardent economic reformist, outlined plans for an accompanying corporate-governance code. Future whistle-blowers would fare better than did Michael Woodford, a former president of Olympus, who was sacked in 2011 when he discovered vast fraud at the firm. And independent directors would become near-mandatory.
The proportion of Japan Inc owned by foreigners is rising sharply (see chart), helping the reforms along. But Keidanren, Japan’s main business lobby, a generous donor to the LDP, detests the changes. Yet they would help usher in something like shareholder capitalism to Japan. The allocation of capital would improve, away from dying, zombie businesses towards innovative, growing ones.
Despite his past image as a social conservative intent on maintaining Japan’s traditional gender roles, Mr Abe’s government is to allow foreign workers to care for children and the elderly in a series of “special economic zones”, and so help women climb the career ladder. This has elicited the usual xenophobia, including from the labour minister. Mr Tamura suggested that foreign influences might damage the development of Japanese youngsters. The LDP may also change the tax system to stop penalising working wives. Millions of couples who benefit from the current system will be up in arms.
Mr Abe also seems willing to take on powerful vested interests in farming and in health care. Supporters see as among his boldest moves an attempt to overhaul Japan Agriculture (JA), a network of agricultural co-operatives that is one of the LDP’s most powerful political supporters. In health care, the government will allow patients to combine private medical care with publicly covered medicine in many more cases, rather than forcing them to forfeit their public coverage when opting for advanced treatments. That should boost advanced health care and lay the ground for increased medical tourism.
Mr Abe has also identified a number of special economic zones to experiment with the most ambitious reforms. When ministers and their bureaucrats resist making changes nationwide, Mr Abe threatens to enact them still more radically in the zones, which include Tokyo and Osaka.
“If all these measures do not represent meaningful reform, then there is no meaningful reform,” declares Koichi Akaishi, an official at the Cabinet Office. But in truth they are only a beginning. The third arrow as yet does not attack the labour market with sufficient vigour and is unlikely to carry a strong enough boost to the supply side to restore vim to Japan’s economy. Growth in GDP has leapt over the past year, and in the first quarter of 2014, the economy notched up an impressive spurt of an annualised 6.7%, but that was partly a result of a rush to buy before the rise in April in consumption tax from 5% to 8%. The tax rise is expected to exert a powerful drag on growth for the full year. The BoJ may yet unleash a second round of monetary easing later in 2014 in order to reach its 2% inflation target.
Agreement on another pillar of Mr Abe’s revival plan, the Trans-Pacific Partnership (TPP), an ambitious regional free-trade agreement, would provide a further big jolt to his plans for reform. Mr Abe’s bravery in joining the talks over the fierce opposition of JA and its LDP supporters fostered optimism about Abenomics. But talks drag on, and agreement looks distant.
Scatterguns v snipers
Some argue that Mr Abe would be better off aiming at fewer targets. Rather than go some of the way on a wide array of measures, they say, he should concentrate on a few and go the full distance. Gerald Curtis of Columbia University argues a better strategy would have been to have chosen five or so “do or die” reforms and concentrate political capital on them.
Mr Akaishi in the Cabinet Office counters that “if you want to change the economic and social structure of the country, you have to tackle far more, and in detail.” Without tighter corporate governance, for example, Mr Abe’s tax cut for businesses could allow Japanese corporations to sit on ever-larger hoards of retained earnings, rather than put the money to work. Increased labour-market flexibility demands higher levels of job creation through easing barriers for entrepreneurs. So Mr Abe has a plan to boost business creation by, for example, legalising the crowdfunding of Japanese start-ups.
Jesper Koll, of J.P. Morgan in Tokyo, compares Mr Abe’s tactics to a venture capitalist’s investments; some will fall flat, but with so many, some are bound to work. And the pressures for reform are only mounting. The country’s demographic headwind, for example, blows ever harder.
Hundreds of towns and villages are threatened with depopulation. A typical one is Yabu, an agricultural settlement of some 26,000 inhabitants set in the mountains of deepest rural Hyogo prefecture. The town is shutting down schools as its population of young people shrinks rapidly. Elderly tillers farm the land, with the average landowner in his mid-70s and usually no children ready to take on the task. Farming is on its deathbed. Abandoned, weed-filled fields are spreading along the mountainsides. In response, Yabu’s mayor, Sakae Hirose, last year applied for the city to become one of Mr Abe’s special economic zones. He will override local agricultural committees to allow companies to buy farmland for the first time. He says local powers-that-be are resisting his attempted reforms “severely”.
But young people have much to gain from Abenomics. Workers used to be protected by an expensive system of lifetime employment. But firms place new entrants on short-term, ill-paid contracts. Nearly two-fifths of the workforce now falls into this “irregular” category (see chart).
For Soichiro Takashima, the young mayor of Fukuoka, a city on the southern island of Kyushu, it is the poor prospects of Japan’s youth that Mr Abe’s reforms must improve. His generation has never seen an increase in salary, he says. And yet, he explains, it “wants to dream and succeed like our counterparts elsewhere in Asia”.
Mr Takashima’s plan for Fukuoka, another of the new special economic zones, was to allow firms to fire employees with ease in their first five years in business. He backed down after strong opposition from locals and from the labour ministry in Tokyo. For now Fukuoka will open centres to advise firms about their rights to make lay-offs. Yet Mr Abe is intent on backing reforming mayors such as Mr Hirose and Mr Takashima. He has pledged to extend reforms in the zones within two years.
The list of all Japan still needs to do after years of political paralysis and inaction is daunting. Failure is still a possibility. The BoJ is only a little over halfway towards meeting its inflation target, and it will have to do without the help it got from the yen’s depreciation last year. Households are squeezed by rising food prices and falling real incomes; people could still become fed up with Abenomics.
In for the long haul
Yet other factors support Mr Abe and his efforts at reform. Unemployment is at a low, the financial sector is healthy and corporate earnings are improving, providing a cushion for potentially painful changes. And Mr Abe has time. The opposition is in disarray. The Democratic Party of Japan, elected in 2009 on hopes of fresh thinking in politics, changed next to nothing while it was in power. It is still traumatised by its trouncing in 2012. There is no need in any case for Mr Abe to face voters before 2016. The pace of reform may look slow, says Michael Cucek, author of a wry blog on Japanese politics, but Mr Abe will be determined and unwavering.
The government has started to discuss the likelihood of his staying in power even until 2018. After that, the LDP’s rules would oblige him to step down as the party’s leader. Returned from the political dead, Mr Abe has already surprised with his born-again determination to press for far-reaching reforms. There is a good chance that he will stick to his arrows and, against all the odds, change Japan.
FOR years, Shinzo Abe, Japan’s prime minister, has been playing with diplomatic fire over a sordid part of wartime history: the herding of thousands of women across Asia into Japanese-army brothels. An investigation he ordered into a landmark apology to the “comfort women” might have helped end the controversy. Instead, it has further muddied the waters. That may indeed have been Mr Abe’s intention.
The 1993 apology, known after its author as “the Kono statement”, acknowledged the army’s role in forcing women into sexual slavery. Nationalists say the women were prostitutes who volunteered. They demand the statement’s withdrawal, while the Yomiuri, Japan’s most popular newspaper, has called for it to be changed.
On June 20th a government panel set up by Mr Abe said the facts used to draft the statement were accurate and there are no plans to change it. But the panel also revealed that it was the product of months of secret negotiations with South Korea. The diplomatic record reveals protracted discussion on the level of coercion used, with Japan implying some women may have gone to brothels voluntarily.
The Yomiuri cites the report as evidence that the Kono statement is full of problems. Koichi Hagiuda, a special aide to Mr Abe, has led the backlash, demanding that Mr Kono explain himself to the parliament, the Diet. But South Korea is also angry at what it sees it as another attempt to corrode the Kono statement’s credibility. Cho Tae-yong, a deputy foreign minister, accused Japan of “egocentrically” editing the record of what had been discussed.
In his first term as prime minister in 2007, Mr Abe raised hackles by denying there was proof comfort women were coerced. But this March, under pressure from America, which badly wants to mend relations between Japan and South Korea, he pledged not to revise the statement. On issues involving Japan’s wartime past, Mr Abe often seems torn between his nationalist instincts and diplomatic necessity.
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