From Scarborough Shoal to Senkaku Islands

What’s all the ado over territorial claims these days?

The tensions over Scarborough Shoal have yet to be concluded and now Japanese politicians have jumped into a parallel controversy over the disputed Senkaku Islands to pique China.

Reports the Japan Times,

The central government will consider buying the disputed Senkaku Islands, Prime Minister Yoshihiko Noda said Wednesday, adding fuel to a fire already lit by Tokyo Gov. Shintaro Ishihara.

Noda's statement came after Ishihara dropped his bombshell Monday in Washington by revealing that the Tokyo Metropolitan Government is trying to buy the islands from its owner "to protect Japanese territory."

The hawkish governor said he was prompted to make the move as he could no longer stand the central government's "cowardice" for not taking any action against claims to the islands by China and Taiwan.

During a Lower House Budget Committee session on Wednesday morning, Noda stressed Japan's control over the islands in the East China Sea. The prime minister also explained that the government has been in contact with an island owner.

"It is as clear as day that the Senkaku Islands are an integral part of Japan's sovereign territory in light of international law and history, and Japan effectively controls them," Noda said.

And the natural response by China has been to rebuke and to apply partial gunboat diplomacy as with the Scarborough Shoal incident.

From another news report from Japan Times,

China warned Wednesday that Tokyo Gov. Shintaro Ishihara's plan to buy the disputed Senkaku Islands will not only harm Japan's ties with China but also its international standing.

"I want to reiterate that the Diaoyu Islands have been China's inherent territory since ancient times and China holds indisputable sovereignty over them," Foreign Ministry spokesman Liu Weimin told a regular news briefing, using the Chinese term for the Senkaku Islands.

"We do not wish such statements in Japan to encroach on China's sovereignty and harm China-Japan ties," Liu said. "A few politicians have repeatedly made such statements. I believe they not only damage the overall state of China-Japan relations but also harm Japan's international image."

Ishihara said in Washington on Monday that the Tokyo Metropolitan Government is negotiating with the owner of three major islands in the uninhabited chain.

On Tuesday, Ishihara added that Beijing's dispatch of fishery patrol boats to their vicinity is "halfway to a declaration of war" against Japan.

As I earlier postulated, the verbal joust over territorial claims could be about promoting the arms industry or the military industrial complex.

Last year, world military spending has been flat.

Notes the Economist,

WORLDWIDE military spending was flat in 2011 compared with the year before, according to data released by the Stockholm International Peace Research Institute, a think-tank, but this masks some significant changes. America, Western Europe and Latin America, which between them make up 65% of the global total of $1.634 trillion (at 2010 prices), all spent less than they had in 2010. This is the first time America made a year-on-year reduction since 1998, trimming its budget by 1.2% to $690 billion. To keep the total flat, there were some big rises elsewhere. Russia's spending increased by 9.3% to $64.1 billion, which may have had something to do with the build-up to the presidential election earlier this year. It is now the third biggest spender worldwide, ahead of both France and Britain. The chart below gives a sense of how much defence spending has changed relative to economic performance in the past decade for 116 countries and territories for which data are available. China, for instance, which spent $129 billion last year, has increased spending broadly in line with its GDP growth

And considering that Bank of Japan (BoJ) has aggressively been ramping up on monetary stimulus measures, a threat of war which could most likely translate to call for a domestic build up of arms that would justify more inflationist policies.

Wars has always been financed by monetary inflation, as the great Ludwig von Mises wrote in Nation, State and the Economy (p. 195)

In all great wars monetary calculation was disrupted by inflation. Earlier it was the debasement of coin; today it is paper-money inflation. The economic behavior of the belligerents was thereby led astray; the true consequences of the war were removed from their view. One can say without exaggeration that inflation is an indispensable intellectual means of militarism. Without it, the repercussions of war on welfare would become obvious much more quickly and penetratingly; war-weariness would set in much earlier.

So the blaring drumbeats of war may not only be about promoting arms sales and military spending, but about further justifications for monetary inflation.