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Island troubles

Row with China calms but lingers. Wargames with US unlikely to help. Nobel prizes. A yen for a weaker yen. Monkey caught but Hooters to be let loose.

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Top News: The dispute over the uninhabited Senkaku (Diaoyu to the Chinese) Islands looks unlikely to go away, even though it has been declared officially over following a meeting of the two country’s leaders in Brussels. Prior to the 25-minute confab in a corridor at the Asia-Europe meeting in the Belgian capital, China had demanded an apology over the detention of a fishing-boat captain, while Japan had refused and was demanding China pay for the damage to the coast guard [Japan’s de facto navy] ships the captain damaged when he rammed them. The release of the captain raised questions of political pressure and judicial independence in Japan. And the handling of the whole incident has damaged the popularity of Prime Minister Naoto Kan. China had refused a request to meet the Japanese Ambassador Uichiro Niwa to discuss the detention of four Japanese workers in China, in apparent retaliation for the fishing-boat captain. The four have now been released but China says it plans to increase patrols around the islands, which Taiwan also claims as its own.  

Japan and the United States are reportedly planning joint war games in December that will simulate the recapture of an invaded island in the southern seas in the vicinity of Senakaku — a move likely to be seen as very provocative by China. Meanwhile, the U.S. military has increased its research funding to universities, laboratories and other institutions in Japan in recent years, hoping to secure advanced technology for use by its armed forces.

As if one territorial dispute wasn’t enough, Japan’s long-running row with Russia over the Kuril Islands (known as the Northern Territories in Japan) has also been flaring up again recently. 

The decision to finally indict political heavyweight Ichiro Ozawa of the ruling Democratic Party of Japan over a long-running funding scandal, shortly after he was defeated in an intra-party leadership race that could have crowned him prime minister, is unlikely to help the government’s popularity. Some are now predicting this is the end of the road for Ozawa, but the "Shadow Shogun" has shown remarkable resilience in the past.

In what seemed to many a rare piece of good news, two Japanese scientists shared the Nobel Prize for Chemistry with an American, for work on binding atoms that has applications in fighting cancer, protecting crops and in electronics. 

Money: Japanese companies are concerned the spat with China could lead to a boycott of Japanese goods, while some have claimed that China has been deliberately slowing down the handling of Japanese goods at its ports. While the Mainichi newspaper ran an editorial saying that China buying large quantities of Japanese Government Bonds wasn’t worrisome, shortly afterwards it was revealed that China had sold a record 2 trillion yen ($25 billion) of Japanese assets in August. Initial speculation linked the sale to the diplomatic row between the Asian giants but it appears most of the bonds China had purchased were short-term instruments.

The yen has risen more than any other major currency since the start of the financial crisis in 2008, and the Bank of Japan says it has done more than any other central bank to weaken its currency.  The Bank spent over 2 trillion yen on the first currency market intervention in 6-and-a-half years in September when the dollar dropped below 83 yen. Although the intervention temporarily weakened the yen to 85 to the dollar, it was back to the same level within a couple of weeks. And despite the Bank of Japan effectively cutting interest rates to zero, the yen hit a new high against the greenback, breaking the 82 yen level by Oct. 8.

Some Japanese firms are using the strength of the yen to step up overseas acquisitions, and the strong currency did not dissuade the record numbers of foreign tourists who visited Japan in August.

Elsewhere: A monkey believed to have been responsible for at least 100 attacks on people in Shizuoka Prefecture has been captured. Authorities were so concerned about the spate of attacks that they had offered a 200,000 yen ($2,500) reward for capturing any monkey that got inside a building. It now appears that a single primate responsible for all the attacks.  

As if the government didn’t have enough on its plate, cabinet minister Renho has been criticized for modeling inside the main parliament building for Japanese Vogue. The former TV presenter and model, who goes only by her first name, has apologized, though she did receive permission to hold the fashion shoot.

Japan is to continue the process of assimilation of American culture that began with the post-war occupation, when the country’s first branch of Hooters opens in Tokyo in November.