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Japanese warships in PH near disputed waterway

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Japanese submarine Oyashio docks at a port of the former US naval base in Subic bay, on April 3, 2016. Two Japanese destroyers and a submarine docked at a Philippine port April 3, near disputed South China Sea waters, where Beijing's increasingly assertive behaviour has sparked global concern. / AFP / TED ALJIBE

SUBIC BAY FREEPORT ZONE — Two Japanese destroyers and a submarine docked at a Philippine port on Sunday near disputed South China Sea waters, where Beijing’s increasingly assertive behavior has sparked global concern. Manila is seeking to strengthen ties with Tokyo as tensions mount over the disputed waterway, almost all of which is claimed by China. Japanese submarine Oyashio and destroyers JS Ariake and JS Setogiri docked in the Subic port Sunday for a routine visit at a sprawling former US naval base just 200 kilometers from a Chinese-held shoal. “The visit is a manifestation of a sustained promotion of regional peace and stability and enhancement of maritime cooperation between neighboring navies,” Philippine Navy spokesman Commander Lued Lincuna said. The Ariake was equipped with an anti-submarine helicopter, according to an AFP photographer at the scene.

Crew members of Japanese submarine Oyashio stand on the deck as they arrive at the former US naval base in Subic bay, on April 3, 2016. Two Japanese destroyers and a submarine docked at a Philippine port April 3, near disputed South China Sea waters, where Beijing's increasingly assertive behaviour has sparked global concern. / AFP / TED ALJIBE

The port call came on the eve of war games between the United States and Filipino soldiers in the Philippines, which is seen as a showcase of a long-standing military alliance that the Philippines is counting on to deter China.
Seriously outgunned by its much larger rival China, the Philippines has turned to allies like the United States and Japan to upgrade its armed forces in recent years.
In February, Japan agreed to supply the Philippines with military hardware, which may include anti-submarine reconnaissance aircraft and radar technology.
Tensions in the South China Sea — through which one-third of the world’s oil passes — have mounted in recent months since China transformed contested reefs into artificial islands capable of supporting military facilities.
Aside from the Philippines, Vietnam, Brunei, Malaysia and Taiwan also have overlapping claims.
Japan and China are locked in a separate dispute over an uninhabited island chain in the East Sea.
The Philippines has asked a United Nations-backed tribunal to declare China’s sea claims as illegal and the government expects a decision this year.

Ship carrying 331kg of weapons-grade plutonium, enough to make 50 atomic bombs, leaves Japan for US

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A ship carrying up to 331kg of weapons-grade plutonium has left the port in Ibaraki Prefecture in Japan for the US, where the material will be downgraded. The amount of plutonium carried by the vessel is enough to produce up to 50 nuclear bombs.

The nuclear material is being carried by an armed British vessel, operated by Pacific Nuclear Transport, and its exact route has been kept secret for security reasons. The purity of plutonium is so high that it could be easily used to make advanced nuclear weapons.

Two vessels, equipped with naval guns and other sophisticated protection, flying British flags had arrived at Japan's coastal village of Tokai earlier. The transfer of plutonium onto the vessel itself takes several hours, reported Japan's state-backed broadcaster NHK news. The shipped plutonium consignment was mostly bought from the UK and some from the US and France. The ultimate destination of the cargo is the Savannah River Site in South Carolina.

The shipment — as part of the counter-terrorism deal between Japan and the US agreed in 2014 during a nuclear summit — is aimed at easing concerns over Japan's vast stockpile of plutonium. Japan possesses about 47 tonnes of plutonium — enough to make as many as 6,000 atomic bombs — located both inside and outside the country, apart from the latest shipment.

Tokyo purchased plutonium from the West in the 1970s for nuclear research and further created the material by reprocessing spent fuel from power facilities. However, except for two nuclear plants, all such reactors have been shut down after the 2011 Fukushima nuclear disaster. Neither Japanese officials nor the US embassy in Tokyo has officially commented on the shipping due to the sensitivity surrounding the matter.

The US environmental group Savannah River Site Watch has expressed concerns on why such materials need to be brought to America. The group's director Tom Clemens urged the US authorities to "reassess its position at the summit and push hard for Japan to cease reprocessing and plutonium stockpiling due to the proliferation threat those programs pose".

TWO BRITISH SHIPS ARRIVE IN JAPAN TO CARRY PLUTONIUM TO US

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Japan-Qatar Ties Help Fund Rafale Order

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PARIS — Japanese banks drew on close commercial ties to Qatar when they lent funds that helped Doha pay last year’s down payment for Rafale fighter jets and missiles worth €6.3 billion ($6.8 billion), financial specialists said.

A bank loan to Qatar, a nation rich in oil and gas reserves, signaled an economic shift for the Arabian Gulf nation and its strong business ties to Japanese lenders and construction companies.

“Qatar can borrow relatively cheaply on the international bank market as there is huge collateral with the Qatar sovereign fund,” said Stéphane Audrand of the consultancy Sylmaris. There is also long-term collateral with Qatar’s export energy contracts.

The sovereign fund is valued at $256 billion, according to the Sovereign Wealth Fund Institute, which specializes in institutional investors.

"The relations between Qatar and Japan are unique, focused on construction and LNG," said Sash Tusa, analyst with equity research firm Agency Partners.

The two countries have shared interests, with Japanese companies working on construction projects for the 2022 World Cup soccer tournament in Qatar, which supplies liquefied natural gas to Japan, he said.

Qatar paid the deposit for the Rafale deal Dec. 16, finally putting into effect contracts signed eight months earlier on May 4. A down payment is usually 15 percent of the total amount.

The order included 24 Dassault Aviation fighters and 12 options, and guided weapons from MBDA and Safran’s Sagem. The French Air Force will also train Qatari pilots and maintenance personnel.

Japanese banks lent Doha funds for the down payment, said a French executive and a financial specialist who declined to be identified.

Qatar expects its economy this year to fall into a $12.8 billion budgetary deficit, representing 6 percent of gross domestic product, according to the CIA World Factbook. “Low oil prices have dampened the outlook,” the report said.

That budgetary upset comes after several years of strong growth, which delivered an estimated 2015 average income of $145,000, the world’s highest average income, according to the report. Japan is Qatar’s leading trade partner, accounting for 25.3 percent of exports, followed by South Korea's 18.8 percent and India's 12.7 percent.

The Qatari bank loan reflects a steep fall in oil prices. The benchmark Brent crude oil hit a 12-year low of $27.10 on Jan. 20, Reuters reported. The oil price has since risen but that firmer path was partly due to talks by energy producers to freeze production in a bid to prop up prices.

Japanese banks have major business interests in Qatar, which is building transportation and infrastructure projects for the World Cup.

A consortium led by Mitsubishi Heavy Industries won an order estimated at some ¥400 billion (US $61.5 billion) to build a subway in time for the soccer tournament, Japan Times reported Feb. 21. Consortium partner Thales will supply the signaling system, while Hitachi will handle train maintenance.

Last year, Thales also won a security contract for Qatar Hamad port, a large commercial facility which will also be the site for a naval base.

In early January, Qatar closed a $5.5 billion syndicated loan, arranged by six banks including three Japanese lead lenders: Bank of Tokyo-Mitsubishi UFJ, Mizuho, and Sumitomo Mitsubishi Banking Corp, Reuters reported. Qatar National Bank, Deutsche Bank and Barclays helped arrange the five-year loan, expected to carry a margin of 90 basis points over London Interbank Offered Rate.

A basis point is 1/100 of a percentage point.

Qatar had previously hoped to raise $10 billion with a smaller margin of some 80 basis points, International Financing Review reported.

“The expected slowdown in the Qatari economy is likely to be seen as short-term risk, unlikely to deter Japanese bank lenders, which hold large amounts of cash and are looking for borrowers,” Audrand said.

The Japanese banks can offer low-cost financing as they draw on ample funds, with the Bank of Japan injecting cash in a quantitative easing policy in a bid to boost the sagging economy.

Japanese banks have shown some public concern on lending on weapons, as indicated in a ban by Bank of Tokyo-Mitsubishi UFJ on lending to builders of cluster bombs, but there is greater pressure on European lenders.

“European banks are under tight regulatory control on credit risk and deeper scrutiny under corporate social responsibility,” Audrand said.

That may have made it hard for French banks to lend to Qatar for the Rafale as there is geopolitical risk, with tension rising with Iran and the Islamic State, he said.

US banks were unlikely to have funded the Qatari order as that would likely displease Boeing, a competitor to Dassault in the fighter market, the financial specialist said.

Qatar seeks acquisition of 73 F-15E Strike Eagle fighters, with 36 in a first tranche, US Senate Foreign Relations Chairman Bob Corker has said. The White House is expected to decide soon whether that deal will go ahead, as the Defense and State Department support for the request.

Doha announced in June a planned order for four Boeing C-17 transports.

Qatar is seen as a large arms market, announcing in 2014 a plan to buy two Airbus A330 multirole tanker transport aircraft and 22 NH90 helicopters.

France hopes to sell a planned DCNS air defense frigate, while Nexter has pitched the Véhicule Blindé de Combat d'Infanterie (VBCI), an infantry fighting vehicle, to Qatar, which is reportedly looking for 200 to 600 units.

The Qatari deal with France includes MBDA Mica air-to-air and Meteor long-range, air-to-air missiles, Scalp cruise missiles, and Sagem's armement air-sol modulaire (AASM), a powered smart bomb, French defense officials said.

Islamic State forces are active in the Middle East and there is also rising tension with Iran, which is close to Russia. Moscow has authorized delivery to Teheran S-300 surface-to-air missiles in a deal reported to be worth $800 million and which previously had been suspended.