Unlikely to go critical - on TCI vs. Macquarie

I opened up today's Asahi Shimbun to page 2 and saw, on the left side, a special article promising to explain how foreign investment in power companies poses a threat to the nation, while a much larger foreign ownership stake in the operator of Haneda Airport does not.

Aha! Finally, an explanation of the government's bi-polar reaction to two attempts by foreign funds to buy large stakes in major elements of the nation's vital infrastructure--on the one hand decrying the frenzied attempts to prevent the Australian fund Macquarie Airports from purchasing just over 19% of Haneda Airport's operating company--while at the same time serving The Children's Investment Fund (TCI) with a cease-and-desist order to prevent it from purchasing more than 9.9% of electrical power company J-Power--on the grounds that TCI's holding more than 10% of J-Power would pose a threat to public order.

As if owning the airport closest to the center of Tokyo does not affect national security and public order.

Eagerly, I zipped through the piece. "At last," I thought, "someone will explain the government's schizophrenic behavior so I will not have to try to make sense of it myself.

Here is the Asahi Shimbun's explanation of the difference:

"First there is the procedure involved. In the case of the airports, criticism has come out saying that they are trying to rewrite the rules after the fact, which is leading it to be called 'choosing between Rock, Paper and Scissors after your opponent has shown his hand' (ato dashi janken). On the other hand, in the case of J-Power, the law is already in existence.

It is also said that in the case of power generation, there is a great worry that it will have an impact on the lives of the citizens. J-Power has 67 thermal and hydroelectric facilities and is in the midst of building a nuclear power plant in Aomori Prefecture. Then again, TCI insists that in the case of the nuclear power plant and vital main facilities, it will defer invoking its rights as an owner."

The article then notes that other OECD countries protect their electrical generation and power grid through limits on foreign ownership. The sole example given is America's 1994 Act on Foreign Investment. The article claims the Act, known as "Exon-Florio," is the "strictest law in the world on foreign investment"-- because it requires an confirmation from the President that the acquisition of over 10% of an American company by a foreign entity does not threaten U.S. national security.

That's it. That's The Asahi Shimbun's exoneration of the government's inconsistent responses to the two situations.

A lot of "it is said that"..."there has been criticism saying that" buck passing.

The Asahi Shimbun. The thinking man's and thinking woman's paper. The feisty iconoclast, the voice of liberality. The skeptic's refuge.

I am going to go bang my head on the desk for a while.

* * *

The reason METI did not want to have TCI messing with J-Power obviously has nothing to do with national security. That argument does not hold water in light of the Haneda gyrations.

So what is the reason?

One possibility is that METI has a lot it wants to hide as regards the power market. The research of Paul Scalise of Oxford indicates that if TCI gets the opportunity to examine J-Power's books, it will find out why electricity is so costly yet power companies profits so small--and probably flee in a panic.

TCI would find out that money-making opportunities in power generation evaporate away not because of the incompetence of venal power company managers or an insufficiently competitive power market--but because of "Citizen Bandits and Conformist Revolutionaries."

And if Mr. Scalise could hurry up and finish his thesis, I would have the freedom to explain what I mean by that phrase.

Later - In comments, the mighty Chris checks in with a professional opinion.