Spirited Away

Why Shinzo Abe's visit to a Tokyo shrine could make his lousy relations with Beijing much worse.

Prime Minister Shinzo Abe's Thursday visit to a controversial Tokyo shrine has pissed off friends and foes alike. The government of South Korea, which was occupied by Japan from 1910 to 1945, was furious; a spokesman said, "We cannot withhold regret and anger over the visit" to Yasukuni Shrine, which honors Japan's war dead -- and a few of its internationally-designated war criminals. The U.S. Embassy in Tokyo even released a statement saying "Japan's leadership has taken an action that will exacerbate tensions with Japan's neighbors." But no capital was more incensed than Beijing. 2013 was already a bad year for Sino-Japanese relations, with disputes over a mutually-claimed island chain and both side's militarization. Abe's shrine trip could make things much worse.

China's Foreign Minister Wang Yi said Abe had pushed Japan in an "extremely dangerous" direction. Also in its statement, China's Foreign Ministry employed an expression it often uses to chide Japan: "stay focused on the future and grounded in history." The word used, jian, means mirror, and the expression conveys an unrealistically optimistic hope, as if the reflections of the past are clearly visible in the present.

The Chinese protest Yasukuni visits and the Japanese proceed to visit anyway because both sides believe their actions are righting history. To oversimplify an incredibly complicated subject, many Chinese view Japan as stubbornly unapologetic for invading their country during World War II. Japan, or so the thinking goes, has not yet been made to pay for its crimes. (And they think the return of the Diaoyus, the disputed island chain in the East China Sea, which Japan administers and calls the Senkakus, would be a step in the right direction.)

For their part, the Japanese feel China has overreacted to their misdeeds and now demands appeasement. It's an important debate, with worrying parallels to Germany's angst over its treatment after World War I. And the shrine itself, an exquisitely manicured garden in a wealthy part of Tokyo whose name ironically means "pacifying the nation," has become an unlikely flashpoint in this struggle.

Yasukuni contains three different elements, two of which the Chinese, South Koreans, and some Japanese find extremely objectionable. Its uncontroversial aspect is its history as a shrine of Shinto, one of Japan's major religions. According to its website, Yasukuni was established in 1869 "to commemorate and honor the achievement of those who dedicated their precious lives for their country." Like every country, Japan honors its war dead. More than "2,466,000 divinities," are enshrined there, the souls of men who perished in all Japanese wars since 1853.

Of these men, it's 14 who incited the controversy: Japan's "Class A" war criminals, including Tojo Hideki, Japan's prime minister during World War II. Class A is the most serious designation, and the 14 enshrined in Yasukuni represent fully half of the total convicted after World War II. Many Japanese objected to the 1978 decision to include these men: Emperor Hirohito, who had formerly visited the shrine, stopped going after the Class A war criminals were included; his successor has never visited.

The first prime minister to visit after the Class A criminals were enshrined was Yasuhiro Nakasone in 1985. "After he saw the regional reaction -- which was quite negative, Nakasone said it's very important for me to have good relations with China and South Korea, so I won't go again," said Jennifer Lind, an associate professor at Dartmouth College focusing on East Asian security issues. The issue died down again until Junichiro Koizumi, a popular Japanese prime minister who served from 2001 to 2006, made it an annual habit, sending relations with China into a tailspin. In a meeting with Koizumi in November 2004, then Chinese Premier Wen Jiabao reportedly urged him to "correctly handle the problem of the Yasukuni Shrine" by "staying grounded in history, which is correctly dealing with history, the cornerstone of Sino-Japanese relations for generation after generation" -- a patronizing remark from a country with notoriously inaccurate views of its own history.

The Chinese didn't like Koizumi's visits, but they appeared to understand his motivations, said Michael Auslin, director of Japan studies at the American Enterprise Institute. They had a regularity to them that provided a ballast to the relationship. Abe, who succeeded Koizumi, stopped visiting the shrine, probably as an attempt, mostly successful, to improve relations. However, Abe continued to argue that Japan was wronged by the United States after World War II. In 2006, during his first stint as prime minister, Abe said the 28 Class A war criminals are "not war criminals under the laws of Japan." He allegedly views the International Military Tribunal for the Far East, the U.S. body which convened the trial, as "victors' justice." (Abe's grandfather Nobusuke Kishi, Japanese prime minister from 1957 to 1960, was himself accused, but never indicted, of Class A war crimes for his role as minister of Commerce and Industry in the 1940s.) It's a view that probably gets less sympathy than it should. "If the United States had lost World War II, and Harry Truman, Gen. George Patton and Gen. Dwight Eisenhower [leaders of the U.S. war effort] had been declared war criminals, the United States would have said, 'That's absurd!'" says Lind. "When you try on that argument for size, it sounds less ridiculous."

The other controversial aspect of the shrine is its museum, the only institution I saw in Tokyo that rivaled Beijing for its propagandizing and revisionist retelling of World War II. A description in the museum makes the inaccurate claim that during World War II's bloody Wuhan campaign, the Japanese "took perfect care to secure the safety of residents and historical and cultural monuments." Most problematic is the description of the Nanjing Massacre, when Japanese troops  brutally massacred hundreds of thousands of Chinese in December 1937. Without mentioning the atrocities, the description claims the commanding general kept "strict discipline," and that the defeated Chinese "were completely destroyed." When I visited in early September, on a trip to Tokyo sponsored by the nonprofit Sasakawa Peace Foundation, the museum was playing a movie entitled "We Will Not Forget," about "our current history and war history, based on historic fact." Lind called the museum "truly disturbing."

Koizumi would time his visits to the shrine to coincide with historically significant days. In April 2013, during a spring festival associated with the shrine, Abe declined to visit but sent cabinet members, as well as the ceremonial offering of a branch from a cypress tree. The Chinese and South Koreans were still furious. "In his mind, Abe thinks he did everything he could to improve relations with his neighbors over his first year in office. The worrying thing about Abe is that he may feel relations among the three countries couldn't get any worse," said Auslin. Abe's refusal to honor the Chinese and stay grounded in their problematic view of history could be very dangerous. Auslin added, "I think he's basically saying, 'This is how I'm going to act. Get used to it.'"

With Angela Kubo in Tokyo.

Isaac Stone Fish


Iran's Turkish Gold Rush

At the center of Turkey's corruption scandal is a "gas for gold" scheme that the Obama administration dragged its feet on stopping.

Turkey's Islamist government is being rocked by the most sweeping corruption scandal of its tenure. Roughly two dozen figures, including well-connected business tycoons and the sons of top government ministers, have been charged with a wide range of financial crimes. The charges ballooned into a full-blown crisis on Dec. 25 when three ministers implicated in the scandal resigned, with one making a dramatic call for Prime Minister Recep Tayyip Erdogan to step down as well. An exhausted-looking Erdogan subsequently appeared on television in the evening to announce a Cabinet reshuffle that replaced a total of 10 ministers.

The drama surrounding two personalities are particularly eye-popping: Police reportedly discovered shoeboxes containing $4.5 million in the home of Suleyman Aslan, the CEO of state-owned Halkbank, and also arrested Reza Zarrab, an Iranian businessman who primarily deals in the gold trade, and who allegedly oversaw deals worth almost $10 billion last year alone.

The gold trade has long been at the center of controversial financial ties between Halkbank and Iran. Research conducted in May 2013 by the Foundation for Defense of Democracies and Roubini Global Economics revealed the bank exploited a "golden loophole" in the U.S.-led financial sanctions regime designed to curb Iran's nuclear ambitions. Here's how it worked: The Turks exported some $13 billion of gold to Tehran directly, or through the UAE, between March 2012 and July 2013. In return, the Turks received Iranian natural gas and oil. But because sanctions prevented Iran from getting paid in dollars or euros, the Turks allowed Tehran to buy gold with their Turkish lira -- and that gold found its way back to Iranian coffers.

This "gas-for-gold" scheme allowed the Iranians to replenish their dwindling foreign exchange reserves, which had been hit hard by the international sanctions placed on their banking system. It was puzzling that Ankara allowed this to continue: The Turks -- NATO allies who have assured Washington that they oppose Iran's military-nuclear program -- brazenly conducted these massive gold transactions even after the Obama administration tightened sanctions on Iran's precious metals trade in July 2012.  

Turkey, however, chose to exploit a loophole that technically permitted the transfer of billions of dollars of gold to so-called "private" entities in Iran. Iranian Ambassador to Turkey Ali Reza Bikdeli recently praised Halkbank for its "smart management decisions in recent years [that] have played an important role in Iranian-Turkish relations." Halkbank insists that its role in these transactions was entirely legal.

The U.S. Congress and President Obama closed this "golden loophole" in January 2013. At the time, the Obama administration could have taken action against state-owned Halkbank, which processed these sanctions-busting transactions, using the sanctions already in place to cut the bank off from the U.S. financial system. Instead, the administration lobbied to make sure the legislation that closed this loophole did not take effect for six months -- effectively ensuring that the gold transactions continued apace until July 1. That helped Iran accrue billions of dollars more in gold, further undermining the sanctions regime.

In defending its decision not to enforce its own sanctions, the Obama administration insisted that Turkey only transferred gold to private Iranian citizens. The administration argued that, as a result, this wasn't an explicit violation of its executive order.

It's possible that the Obama administration didn't have compelling evidence of the role of the Iranian government in the gold trade. However, the president may have also simply sought to protect his relationship with Ankara and didn't want to get into a diplomatic spat with Erdogan, who he considers a key regional ally.

If the administration didn't feel that the sanctions in place at the time were sufficient to take action against Halkbank, after all, it could have easily shut down the gold trade by amending its executive order. But at the time, Turkey was also playing a pivotal role in U.S. policy in Syria, which included efforts to strengthen the more moderate opposition factions fighting President Bashar al-Assad's regime.

It's also possible, however, that the Obama administration's decision had less to do with Turkey, and more to do with coaxing Iran into signing a nuclear deal. In the one-year period between July 2012, when the executive order was issued, and July 2013, when the "golden loophole" was closed, the Obama administration's non-enforcement of its own sanctions reportedly provided Iran with $6 billion worth of gold. That windfall may have been an American olive branch to Iran -- extended via Turkey -- to persuade its leaders to continue backchannel negotiations with the United States, which reportedly began as early as July 2012. It could also have been a significant sweetener to the interim nuclear deal eventually reached at Geneva, which provided Iran with another $7 billion in sanctions relief.

Indeed, why else would the administration have allowed the Turkish gold trade to continue for an extra six months, when Congress made clear its intent to shut it down?

This brings us back to the current corruption drama in Turkey. The ruling Justice and Development Party (AKP) has been claiming that it is a victim of a vast conspiracy, blaming everyone from Washington to Israel to U.S.-based Islamic cleric Fethullah Gulen for its woes. Some Turkish media have pointed a finger at David Cohen, the Treasury Department's undersecretary for terrorism and financial intelligence, who happened to be in Turkey as the news began to break. Erdogan even raised the possibility of expelling the U.S ambassador to Ankara, Francis Ricciardone.

But if the charges stand against the panoply of well-connected figures fingered, the AKP will have only itself to blame. While the gas-for-gold scheme may have been technically legal before Congress finally shut it down in July, it appears to have exposed the Turkish political elite to a vast Iranian underworld. According to Today's Zaman, suspicious transactions between Iran and Turkey could exceed $119 billion -- nine times the total of gas-for-gold transactions reported.

Even if the Turkish-Iranian gold trade represents only a small part of the wider corruption probe, the ongoing investigation could provide a window into some nagging questions about the relationship between Ankara and Tehran. Perhaps we will finally learn why the Turkish government allowed Iran to stock up on gold while it was defiantly pursuing its illicit nuclear program -- and whether the Obama administration could have done more to prevent it.