Challenging Times for Japan

The announcement this week of the postponement of the Tokyo Olympic Games sets Japan up for unprecedented challenges politically, economically, logistically, and facing a public health crisis precipitated by the novel Covid-19 pandemic.

The International Olympic Committee and the Japanese government had put on the brave face for a number of weeks amid concerns for athlete’s safety, hoping to weather the storm of growing calls for the postponement of the Games due to the outbreak of Covid-19 pandemic.

The president of the International Olympic Committee, Thomas Bach and Japanese prime minster Shinzo Abe finally bowed to pressure from the Athletes, Sports Federations and National Olympic Committees to postpone the games until the summer of 2021.

The Olympics have avoided postponements several times previously, even following the terrorist attacks of 9/11 and another attack during the 1972 Munich Olympics. The announcement of the postponement marks the first time in history the Games have been postponed owing to a public health crisis.

There will be real world implications and hurdles for the Japanese government following this decision. This will likely have political, economic and logistical ramifications for the nation of the rising sun.

Japan has spent more than 12 billion US dollars on the event. Sponsors and broadcasters have spent huge sums marketing and advertising. There are now questions being asked as to how these huge investments would be recouped.

At a time when Japan’s economy is already stumbling, the delay of the Olympics could deal a serious blow to the economy. In a report early this month, SMBC Nikko Securities Inc. projected that a cancellation of the Games would erase 1.4 percent of Japan’s economic output.

It is being wondered who will foot the bill for the additional costs of the leases and maintenance of facilities and venues.

Jiro Yamaguchi, professor of political science at Hosei University in Tokyo, muses that the postponement “could be a political burden because the government must make additional expenditures for the preparation of the Olympic Games during an economic crisis”. He further adds: “the Olympic Games might be a liability rather than a political opportunity for prime minister Abe”.

It is now left to be seen if the bets made by Japan´s prime minster Shinzo Abe that the Olympic Games would be a boost for the Japanese economy through tourism and consumption; and Japan´s public health policy in the face of the Covid-19 pandemic – would prove to be wise.

Tobias Harris, an expert on Japanese politics at Teneo Intelligence in Washington recons it will be a “grand farewell a few months before Abe´s set to leave office”.

That is if all the variables at this precarious point manage to coalesce nicely in 2021.

In all of this, it must not be lost on us that the reason for the postponement of the Games was due to a public health crisis that resulted in a loss of confidence for the safety of the athletes, officials and spectators.

The narrative from sceptics is that Japan has supressed potential Covid-19 cases by deliberately under testing its population.

Gerald L. Curtis professor emeritus of political science at Columbia University reckons prime minister Abe “has been playing a kind of Russian roulette, betting that the virus won’t suddenly spike and giving the public a false sense of security by not testing large numbers of people. If his luck runs out and the virus spreads, he won’t be prime minister when the Olympics come to Tokyo next year.”

Japan is no stranger to very serious setbacks, and recovery stories. In 2011, Fukushima was the site of the Nuclear disaster following a Tsunami. Still recovering from that misfortune nine years ago, the Prefecture was supposed to be the location for the start of the Olympic Torch relay. It would have been a symbolic testament to Japan’s powers of recovery from adversity. A resource it would still have to deploy going forward given the postponement of the Olympics and the logistical hurdles that has created.

The Tokyo Olympics Organising committee has had to extend the employment of 3,500 workers for another year. These workers were due to return back in the Autumn to Corporate Sponsors from whom they were “seconded” by the Tokyo Organising Committee.

Sales of Olympic Village into Apartments would have to be re-evaluated. Renovation plans put on hold; and contracts for prospective buyers re-examined. Hotel bookings have been thrown into disarray with the postponement – potentially leaving a seismic financial and logistical void – made even worse for them by an almost certain drop in tourism from the Covid-19 Pandemic.

In the face of these multiple uncertainties, however daunting they may sound, Japan has a history, resources, human capital and resilience of rising to the occasion when the chips are down. Providing the global pandemic does not get disastrously worse in 2021, one could make a bet that Japan, against all odds, would find a way round these head winds.