The 2020 Tokyo Olympics – Hopes and Challenges

DANIEL ROARTY

While the excitement, energy, and what some even deem “euphoria” in Japan over Tokyo’s selection to host the 2020 Olympic games have yet to subside, time is beginning to open up the complexity of Japan’s hosting of these games. After all, us Korbel Report writers spent two years in the only city to ever be awarded an Olympics only to later decline, so many of us have heard the arguments for why Coloradans chose this course of action. While Tokyo’s 2020 games could prove to be financially and spiritually fulfilling for Japan, issues such as the continuing crisis in Fukushima, Japan’s massive public debt, and tense regional relations must be dealt with ensure a successful event.

Numerous factors came to Japan’s aid in being selected for this event. First among them was Japan’s Olympic pedigree – this will be Tokyo’s second hosting of the Olympics, while Japanese cities Sapporo and Nagano have both hosted a Winter Olympics. Second, Tokyo’s modern infrastructure, already delivering millions of passengers a day, reassured the Olympic committee of the logistics of a Tokyo Olympics. Third, the Tokyo government waved a $4.5 billion war chest of funds already allocated to hosting an Olympic game, which is over 50 percent of the estimated $8 billion needed. Forth, problems in other candidate countries proved a boost to Japan as a safe choice for a host – Spain’s lingering economic malaise and the question of Turkey’s instability amid protests proved harmful for each of these countries’ bids. While concerns about the ongoing Fukushima crisis lingered, the Olympic committee apparently felt more confident in Japan’s ability to handle this crisis compared with Turkey and Spain’s handling of their respective problems.

Tokyo’s selection could have a positive economic impact in both the short and long term. In the long term, hosting the games could have a $40 billion dollar economic benefit for the country, not just by boosting spending on construction and tourism related facilities, but also by improving consumer morale and unlocking increased consumer spending. This morale might already be shifting to impact the short term: consumers in Tokyo already claiming that the excitement over Olympics could make them spend more and businesses optimistic about the impact of the games. Additionally, share prices in construction, real estate, and retail have already felt a windfall from the selection, though this rally is expected to subside amid profit-taking.

Even amid the optimism over these games, Japan has a number of challenges it must confront to ensure a successful hosting. Recent news about further leakage of radioactive water from the Fukushima facility raised fresh concerns about the safety of a 2020 Tokyo Olympics. Japanese Prime Minister Shinzo Abe flatly stated that the Fukushima facility “is not going to be a problem in anyway in seven years’ time.” Among the ways Japan intends to deal with the leaks is a $320 million “ice wall” that will freeze soil around the facility to prevent water from either entering or escaping. This plan was announced just before the Olympic decision and could have positively impacted Tokyo’s chances. Still, this plan is not scheduled to be completed until 2015, leaving two years before full implementation and continued risk of escalation. Additionally, there is some concern among Tohoku residents about whether or not their region will be positively impacted or if Olympic preparations will distract from reconstruction efforts.

Amid the continued cost of reconstruction, some analysts see the games negatively impacting Japan’s massive public debt. As mentioned, Japan will have to spend around $8 billion for construction and improved infrastructure for the games, which is only a fraction of the estimated economic benefit. However, this $8 billion is only an initial estimate (earlier estimates have already risen from $5-6 billion). The 2014 Sochi games were estimated to cost $12 billion, but spending has ballooned beyond $50 billion. Likewise, the cost of London’s recent Olympics skyrocketed from estimates of near $4 billion to over $14 billion. Something similar could occur if Olympic euphoria unleashes a greater-than-expected wave of pork-barrel spending, worsening Japan’s already intense cost to service its debt. Additionally, the expected windfall from the Tokyo Olympics is a lower percentage of GDP than the boosts generated by the 1964 Tokyo Olympics or the 1998 Nagano Olympics.

Finally, regional tensions over history and island disputes could cloud the success of these games. Soon after the announcement of Tokyo’s awarding, partisans from both sides took to the internet to air their opinions – Korean nationalists wondered about the possibility of Mount Fuji exploding before the games while Japanese nationalists openly dreamed of China and Korea boycotting the games. Additional barbs were traded, with some Korean nationalists calling Japan a “war criminal country,” while Japanese nationalists accused Korea of never being able to move beyond a World War II mentality. In China, an internet poll revealed that, among 70,000 respondents, only 19 percent celebrated Tokyo’s awarding, while nearly 50 percent would have preferred Turkey or Spain (this could be interpreted both positively or negatively, though).

In contrast to the nationalistic squabbling taking place in corners of the internet, Japanese and South Korean Olympic officials have pledged to cooperate in coordinating the 2018 Pyeongchang Winter Games with the 2020 Tokyo Summer Games. Both sides see a great opportunity to forge an “Asian Era” in the games through cooperation and collaboration. The Chinese government first declined to comment on the games, but later passed on congratulations to the Japanese. Chinese state media issued a qualified congratulations to Japan, essentially saying that Japan should “learn how to behave” to ensure success and pointed to continued visits to the controversial Yasukuni Shrine as evidence of continued militarism. (One wonders how many of China’s neighbors would respond to this criticism in light of South China Seas disputes.) This was after another state media company erroneously reported Istanbul as the winner.

The continued tensions with neighbors raises the possibility of the Olympics being used as a staging ground for claims or grievances. South Korean activists have used many sporting events as stages to air grievances against Japan, and it is possible that the 2020 Olympics will see more of these protests. On one hand, the world’s attention to the games could give activists a greater audience to which demonstrate their claims; on the other hand, such acts could be considered against the spirit of the games and could discredit the motivations of the activists. In any case, the greater attention that will be paid towards Japan running up to the games should be a force motivating Japanese politicians away from nationalistic acts that could provoke neighboring countries.

With seven years until the 2020 games and not even one year into the Abenomics experiment, a lot could happen to shape the outcome of these games. While only a few years ago many analysts had written Japan off as an area of interest, the Tohoku/Fukushima disasters and reconstruction, Senkaku/Diaoyu Island dispute, Abenomics, TPP negotiations, and now the 2020 Olympics have reinvigorated interest in the archipelago. Certainly not all of these are positive points of interest, but optimism and forward momentum are increasingly returning to counter Japan’s long economic malaise. One Yoko Kurahashi, who went to high school across the street from a 1964 Olympic venue, sees the games as a means of recovery from years of deflation and the recent disasters. While watching hundreds of Tokyo residents celebrating with streamers and balloons, she offered that “from here on, things will get better.”

Daniel Roarty is a recent graduate of the Josef Korbel School of International Studies, with an MA in Global Finance, Trade, and Economic Integration and concentrations in East Asian Affairs and Political Risk Analysis. He is now based in the Washington D.C. area.