Big Talk

Trump’s Presidency is an Opportunity for Constitutional Reform

Member of the House of Councillors Satsuki Katayama is a politician with a conservative viewpoint and reliable, practical skills as well as ample bureaucratic experience in the Ministry of Finance. She also devotes efforts to disaster preparedness as acting chairman of the Liberal Democratic Party’s Policy Research Council. Toshio Motoya spoke with Katayama about the reasons for Donald Trump’s victory and the consequent path Japan should take.

Japan should promptly convey its views to Trump, who has already started taking action

(M) Thank you for joining me on Big Talk today. I have looked forward to talking with you.

(K) Me too. Thank you for having me.

(M) The Award Ceremony for the 9th Annual “True Interpretations of Modern History” Essay Contest will take place at the Meiji Kinenkan on December 8, the day that World War II was started. The winner of the first contest was Toshio Tamogami, then chief of staff of Japan’s Air Self-Defense Force. I believe that started a trend of growing conservatism in Japan, so I feel this essay contest has great significance. This year’s Grand Prize winner is Toshio Nishi of Stanford University’s Hoover Institution. His essay was highly evaluated because it pointed out how history is written by the victors, not only regarding the Supreme Commander for the Allied Powers (GHQ) after World War II, but also the currently mainstream “Satsuma and Choshu historical viewpoint” that praises the Meiji Restoration. Shoichi Watanabe, head of the Judging Committee, and all the other judges agreed unanimously to give his essay the prize. The Award Ceremony party will be attended by approximately 1,200 guests. As of today, 25 National Diet members and 14 ambassadors to Japan have said they will come. I think it is quite unusual for so many foreign ambassadors to attend a private party.

(K) I think they view you as a hotel magnate who is like a Japanese ambassador. APA Hotel is a Japanese landmark even in foreign countries.

(M) We now have 40 hotels in North America and the grand opening of APA Hotel & Resort Tokyo Bay Makuhari, which will be expanded to 2,007 rooms, is on December 7. APA Hotel & Resort Yokohama Bay Tower, which boasts 2,400 rooms and is of the largest scale in Japan, will be opened in 2019. We are working very hard (laughs).

(K) I am sure you would get along with President-elect Donald Trump. When a new American president is inaugurated, around 5,000 staff members are replaced including civil servants and managers at private-sector businesses. In general policy cannot be determined until this transition process is complete, but that is not the case with Trump. I think he will act based on his business experience since he has no political experience. Rather than waiting on human resources, he is already expressing himself on Twitter and YouTube. That is why I think Japan must promptly reach out to him to express itself and resolve any misunderstandings. First, I think we must tell him that Japan makes proper contributions to safety through its host nation support (colloquially referred to as the “Sympathy Budget”).

(M) Trump is a businessman, so he may use the business method of starting the negotiations by presenting difficult conditions and then seeing how the other party reacts.

(K) He graduated from the famous Wharton School of the University of Pennsylvania, so he must have received a good education.

(M) I feel that he has his own way of thinking, but he speaks recklessly on purpose to draw the attention of the media. At first I supported Republican candidate Marco Rubio in this election because he is young, well versed in Japan, and even takes Japan’s side on the Senkaku Islands issue. Yet he lost out to Trump, after which I continually said that Trump’s presidency would be a shock to Japan yet also a good opportunity for it to become capable of independent self-defense. For that reason, I suddenly received a congratulatory telephone call from Minister for Reconstruction Masahiro Imamura when it became clear that Trump had won (laughs).

(K) Is that so? I am from the same faction as Imamura.

(M) Yes, the Toshihiro Nikai faction. I feel like it is a flourishing faction right now. I have to say that it was a great move by Prime Minister Shinzo Abe to appoint Nikai as secretary-general.

(K) Abe said Nikai has an amazing ability to decide and take action on things.

(M) Nikai doesn’t fit with Abe in all ways. Nikai has strong ties with the pro-Chinese faction and Komeito Party and is also said to be close to Governor of Tokyo Yuriko Koike. I think Abe’s purposeful selection of Nikai was quite magnanimous.

(K) I see that as a difference between the first and second Abe administrations. He probably couldn’t stay in power for three terms (nine years) if he doesn’t skillfully utilize various people.

(M) Constitutional reform will take time and cannot be completed at one fell swoop. Even though two thirds of the Diet members are in favor, they cannot agree on which items to amend. I think we should set a precedent by revising items that everyone can agree on, like the preamble, and then take on full-scale amendment on the second try.

(K) I agree entirely.

Tax incentives should encourage private enterprises to construct disaster-resilient facilities

(M) Trump’s presidency has increased the momentum towards Japan needing the ability to protect itself. I think this will make constitutional change easier. Considering that, I am glad that Trump won. If Hillary Clinton had won, “Japan bashing” like when Bill Clinton was president might reoccur.

(K) Hillary Clinton is a bureaucratic figure who isn’t very appealing. I think she lost not because she is female, but because people thought nothing would change if she won.

(M) She didn’t appeal to many women. There was a rumor that Saudi Arabia donated massive amounts to the Clinton Foundation, but the biggest impact was the FBI’s announcement 11 days before the election that it would re-open the investigation into her e-mail. It reported two days before the election that Clinton had done nothing illegal, but it couldn’t have investigated hundreds of thousands of e-mails in that short time, so this conversely caused trouble and led to a rapid loss of trust.

(K) Regular Americans questioned how this couple, who were lawyers from Arkansas, gained so much wealth. Trump was easier to understand on that point.

(M) He declared bankruptcy multiple times but always achieved successful comebacks.

(K) Trump won over the regular people, the so-called “grassroots conservatives.” The gun control-opposing National Rifle Association is seen in Japan as a dangerous organization, but Americans believe that self-defense is only natural and that the right to bear arms is a fundamental one. On the other hand, I was shocked by President Barack Obama’s support for legalizing gay marriage. We must recognize the rights of LGBT people and cannot allow discrimination against them, but outright marriage is a somewhat different level. American conservatism, which is founded on Protestant moral values, has somewhat come to a standstill.

(M) I used to have a house in California’s Huntington Harbor, an exclusive residential district. A canal was dug to create a small island connected to the mainland by one bridge. Thieves don’t target these houses because they would have to flee via this bridge. Americans prioritize security, so safe houses have greater value. This is opposite of the common wisdom in Japan, where people prize houses on major streets. I had a Jewish friend in the U.S. who taught me ways of thinking about finance that didn’t exist in Japan at that time, such as housing circumstances, down payment investment interest, nonrecourse loans, and specific purpose companies (SPC). We discussed a joint building construction business in which each party would put down 10% and the remaining 80% would be nonrecourse loans, but I concluded there was nothing we could do to hedge the foreign exchange risk and didn’t end up investing. Still, I learned a lot. Afterwards, the Japanese bubble burst and bad loans appeared one after another. You created the SPC Act to deal with this, and I have utilized it in my business.

(K) I am happy to hear it has been useful. When I worked in the Ministry of Finance, after the bubble burst I studied things such as Chapter 11 of the U.S. Bankruptcy Code. We introduced civil rehabilitation and Real Estate Investment Trust (REIT) systems to Japan, which helped revive the Japanese real estate industry.

(M) I was able to implement several major projects at the same time by creating an SPC and acquiring large amounts of financing using small personal funds for major projects. Financial institutions hesitate to lend a lot of money to a single company, but they invested simultaneously in several projects centered on the SPC. These were nonrecourse loans, so I wouldn’t lose anything beyond the personal funds I invested. I was able to leverage this mechanism for a series of large projects.

(K) Just like when I was a bureaucrat, as a politician I have been involved in various projects. I became acting chairman of the Liberal Democratic Party’s (LDP) Policy Research Council in September, and I was involved in making policies when I worked in disaster preparedness and reconstruction. Disaster preparedness is of the same level of importance as safety guarantees. Right now, private enterprises see no business value in building disaster-resilient facilities like tsunami towers, which is why there are so few of these facilities. We have begun considering a tax-incentive scheme to encourage corporations to build disaster-resilient facilities.

(M) I have advocated for the construction of seaside “disaster prevention condominiums” since directly after the Great East Japan Earthquake. These six-story condominiums made of reinforced concrete should be built perpendicular to the coastline at intervals of 200 meters to minimize the impacts of tsunamis. They should have exterior emergency staircases so anyone could evacuate to the roof in the event of a tsunami. The distance of 200 meters would ensure that they could run up these stairs even if a tsunami was approaching. Compared to building massive embankments, I think these condominiums would be effective because they cost less and are revenue sources. It is more efficient for fishermen to live on the shore than on high ground.

(K) I think so, too. You should come discuss this at the LDP Headquarters for Promoting the Establishment of the Disaster Resilient Japan. I don’t think politicians are very knowledgeable about actual building usage. Multi-story parking garages are not usually built in rural areas due to the abundance of land, but parking garages with four or five stories could serve as disaster-resilient facilities.

(M) I think they would have to be made of strong, reinforced concrete instead of fragile steel beams.

(K) I have no doubt that Trumpnomics will have a seismic effect on the world, but I wonder if it won’t revive the Japan-U.S. trade friction of the past. Automotive and other Japanese corporations already employ many people at their production bases in the U.S. where they manufacture American-made cars with an 80% American local content ratio.

(M) I think Trump lacks a sufficient understanding of that. He said he will make Japan pay 100% of the costs for the U.S. Forces, Japan, but he doesn’t realize that it is essential for American hegemony in the Pacific Ocean. The USFJ don’t just protect Japan; they are stationed here because the U.S. is afraid that Japan might become a major military power again. By all rights, Japan should be able to bill the U.S. for base land rent.

(K) James N. Mattis, the former commander of U.S. Central Command, is Trump’s pick for secretary of defense. Mattis has clearly stated that the USFJ will be maintained. Meanwhile, I think the U.S. will step back from its role as the world’s policeman after becoming an oil exporter through shale oil development.

(M) The U.S. no longer has to depend on the Middle East for oil. We can view Trump’s victory as an explosion of these feelings because there is no other explanation for more than 50% of white women choosing Trump, who repeatedly made reckless remarks that were very discriminatory against women.

(K) I was involved in selling off NTT stock owned by the government in 1999, the peak of the 1990s IT bubble. The handling charges were immense due to the sale price of 1.6 trillion yen, so I talked with top figures at eminent financial institutions including foreign-capital companies. They told me many things about the IT industry, and I felt that its lack of substance would someday be exposed. Just as I expected, the bubble ended up bursting. Afterwards, structured bonds were revealed as lacking substance when Lehman Brothers went bankrupt. Substantial measures should have been taken after the 2008 economic crisis, but the U.S. kept printing dollars and is unable to break free from the thinking that it is a champion. I think regular people are tired of this. They just want normal jobs and aren’t concerned about being the king of the world.

(M) I also think this was influenced by the changing racial makeup of the U.S., which is being transformed from a white to a colored nation. This was symbolized by Barack Obama, the first black president who likely made the whites feel a sense of doubt. There are many possible factors in Trump’s win, but I am glad for his victory because it puts power in the hands of the Republican Party, which is historically friendly with Japan.

(K) Trump apparently looks up to President Ronald Reagan.

(M) Reagan was originally ridiculed as a third-rate actor, but survey results say he is now viewed as the second greatest president after Abraham Lincoln. I do think he did a great thing in helping end the Cold War.

(K) I agree.

(M) It cannot be helped that history is written by the victors. However, today in Japan anyone who speaks out in a way that differs from the masochistic historical view implanted by the U.S. and other Allies, in Japan and across the world, is labeled as a “historical revisionist” and excluded. Yet in the academic world, including the study of history, it is common sense to steadily change the way of thinking when new knowledge comes to light. I find it very strange that people refuse to revise history alone.

(K) That is because you are an opinion leader of the Japanese conservative movement, and are also known as a major Abe supporter.

(M) It is just that my way of thinking closely resembles Abe’s. I do not give suggestions to Abe like the recent scandal in South Korea (laughs).

(K) Based on the uproar to impeach President Park Geun-hye, the Japanese government has halted negotiations with the South Korean government on a currency swap agreement. If steps are taken to create an obligation of gratitude from Park Geun-hye, they will have adverse effects on maintaining a friendly Japan-South Korea relationship in the future. The General Security of Military Information Agreement (GSOMIA) between Japan and South Korea is a measure against North Korea, so it was concluded quietly. Park Geun-hye is not qualified to be president and lacks the characteristics needed to protect the safety of roughly 50 million South Korea citizens. This was clearly shown by how she dealt with the sinking of the MV Sewol. The citizens have taken notice of this, her approval rating has fallen to 2%, and people are demanding that she step down.

(M) I agree.

Japan must have offensive weapons for enhanced deterrence

(K) Japanese people are also under the yoke of World War II, including their historical awareness. That is why safety and self-defense are taboo subjects. People were angry about the defense budget cuts when I was budget examiner for defense in the Budget Bureau, but I consulted with uniformed personnel to determine an efficient budgetary allocation in detail. In consideration of safety, we even increased the equipment for Japan Self-Defense Forces (JSDF) members sent to Iraq. We must also sufficiently equip the JSDF in South Sudan, where public order is deteriorating.

(M) JSDF officials are put in danger by the current constitution because weapon usage is restricted by the legitimate self-defense requirement, just like police officers. Many people must understand this issue so we can move forward on constitutional change. Looking at the current state of affairs in East Asia, the American nuclear umbrella is an illusion and Japan is the next probable target for a nuclear attack. Japan could not acquire nuclear arms due to domestic and international dissension, but I always insist that we should at least introduce a nuclear sharing arrangement like Germany and Italy.

(K) I took part in negotiations with the U.S. multiple times during my time at the Ministry of Finance. Republican government officials were easy to deal with because they clearly specified their minimum requirements and points of compromise to present common ground.

(M) I think the Trump administration is a good opportunity for Japan. Offensive weapons are the most effective form of deterrence, but they are limited by the Japanese constitution. Shields aren’t enough for self-defense; one also needs lances. That is why we must reform the constitution as soon as possible.

(K) The English term “preemptive attack” is incorrectly translated into Japanese as “sensei kogeki.” It should be “mizenboshi-teki kogeki,” which means “preventative attack.” This should be fully recognized as a method for self-defense when no other means are available. We need stealth aircraft for that reason, which is why Japan decided to deploy F-35s.

(M) There are also F-35s capable of vertical takeoffs and landings, although Japan will not purchase any. If we combined these with Izumo-class helicopter destroyers, they could be operated like aircraft carriers. Offensive preparations of this sort provide deterrence.

(K) Constitutional change is the simplest approach to that end. Japan has long believed that water and safety cost nothing, but this is a superstitious belief. Protecting citizens’ lives, as well as the country’s land and territorial waters, are the most important duties of a national government. To accomplish this, Japan has had to depend on the Japan-U.S. Security treaty in the past and certainly will in the future as well, but our people need a better awareness of self-defense.

(M) I agree. At the end of the interview, I always ask for a “word for the youth.”

(K) Japan is a wonderful country with exemplary citizens, but its geographical fate is to be located between the U.S. and China. I think we can make correct decisions about the future if we are constantly focused on this.

(M) Thank you for sharing such an interesting discussion with me today.


Satsuki Katayama
Born in Saitama Prefecture in 1959. After graduating from the University of Tokyo’s Faculty of Law in 1982, she entered the Ministry of Finance. She studied abroad at the École nationale d’administration (ENA) in France and earned her CSE in 1984. She left the ministry in 2005 after serving in positions including head of the Management Office, Housing Finance Management Organization, Small-to-Medium Finance Section, Banking Bureau and budget examiner for defense, Budget Bureau. She was elected to the House of Councillors for the first time in 2005 and was the top Liberal Democratic Party (LDP) winner for nationwide proportional-representation constituencies in the 2010 House of Councillors election. Her positions have included LDP deputy secretary-general for the House of Councillors and parliamentary secretary to the Minister for Internal Affairs and Communications. She earned roughly 400,000 votes in the 2006 House of Councillors election as well, making her the top female winner for all parties. She became acting chairman of the LDP Policy Research Council in September 2016.