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Nissan scandal has complex bearing on Japan's national interest

Diplomatic gains and losses pose bigger questions for Tokyo

The ongoing scandal at Nissan Motor presents a complex problem for the governments of Japan and France. (Right-hand image, Reuters)

TOKYO -- U.S. President Donald Trump's tirade against French President Emmanuel Macron on Nov. 13 raised more than a few eyebrows in the West, but also highlighted issues indirectly related to the national interest of Japan.

"MAKE FRANCE GREAT AGAIN!" Trump tweeted in response to comments made by Macron shortly before the U.S. president's visit to Paris, in which he denounced nationalism and proposed the creation of a European army.

Few will have been surprised by the tone of Trump's tweet, but in light of recent events, his description of Macron's "betrayal of patriotism" may well have implications for the Japanese government.

Just days later, Nissan Motor Chairman Carlos Ghosn was arrested in Tokyo on allegations of financial misconduct, in a scandal that is inextricably linked to the French president's policy agenda.

Macron had reportedly been maneuvering to turn Nissan into a wholly owned subsidiary of Renault, and have it manufacture more cars in France. The French state has a 15% stake in Renault, which owns 43% of Nissan shares.

The French president's vision for the future of the Renault-Nissan alliance appears to prioritize the domestic auto industry and job creation, with little regard for Nissan's corporate value.

Many Japanese commentators discussing the Ghosn scandal have urged Tokyo to step in to protect Japan's national interest, and the fate of the alliance has swiftly become a diplomatic issue.

Hiroshige Seko, Japan's economy, trade and industry minister attended a hastily arranged meeting on Nov. 22 with French Economy and Finance Minister Bruno Le Maire in France, where he had been staying in anticipation of the result of Osaka's bid to host the 2025 World Expo.

But the issue of Japan's national interest with regard to the future of Nissan is more complicated than it first seems.

There is no doubt that the car industry is of vital importance to the Japanese economy, and if Nissan faces the prospect of being swallowed up by Renault, there are likely to be calls for the purchase of more shares in the French company, or even stronger action.

However, the industry is also crucial for the French economy and, as Trump pointed out, Macron is struggling in the polls.

Macron, who has pledged to reinvigorate French manufacturing, has every reason to protect his country's interest in Nissan.

But protecting national interests involves more than securing economic benefits; maintaining international reputation and stature are of equal if not greater importance.

Throughout the postwar period, Japan has stressed a commitment to international cooperation.

Tokyo's diplomatic clout would be damaged if the country were seen as being driven solely by an "us first" agenda.

With the whole picture of the allegations against Ghosn still unclear, French media have raised questions regarding his sudden arrest and the motives of the Nissan management team.

Ghosn was once hailed as the savior of a seemingly moribund carmaker, and few other foreign chief executives in Japan have been as successful.

The current scandal risks Japan being labeled as a country that struggles to accept foreign business leaders.

"A clash between 'France First' and 'Japan First' policies could cause serious damage to both sides," said Masahiro Kohara, a professor at the University of Tokyo who has written on issues related to national interest.

Japan and France are two countries that are committed to principles of a free and open economy, in contrast to China's state-controlled capitalism.

"Prime Minister Shinzo Abe should have a long and constructive conversation with President Macron to ensure broad bilateral industrial cooperation that goes beyond the Nissan issue and build a partnership to work together to promote the fourth industrial revolution," Kohara said.

Tokyo and Paris have been bolstering bilateral security cooperation, bound by a common interest in ensuring peace and stability in the South China Sea.

The Macron government's push to make France the startup capital of Europe also offers significant potential benefits for Japan.

Such talk may seem idealistic, but so too did the idea of the "alliance" that powered the success of the Renault-Nissan partnership in its early stages.

In 1999, Renault proposed a form of coalition based on mutual respect as a way to salvage Nissan, which had largely been written off by the Japanese government.

The proposal was based on lessons from Renault's ill-fated acquisition of a U.S. company, which it later sold after failing to take control of its management.

At a time like this, the alliance's slogan, "Together Stronger," offers much food for thought for executives on both sides.

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