To be or not to be? Japan’s Olympics Dilemma

[Illustration by Salvatore Giommarresi]

As the summer looms closer, the Japanese government must make the final decision over whether or not it will hold the Summer Olympic Games in Tokyo. The occurrence of the Games, originally due to take place from 24 July to 9 August 2020, was put into question with the onset of the coronavirus pandemic in early 2020. The Japanese government eventually opted to postpone the Games by one year to the summer of 2021 – the first time in Olympic history that the Games have been postponed, rather than cancelled.

With the COVID-19 pandemic still raging on, however, domestic opposition has grown to holding the Olympics as planned; 61 percent of the Japanese public indicated that they want the Games to be postponed or cancelled altogether in a February 2021 Yomiuri newspaper poll. Despite this, a complete cancellation of the Summer Olympics would result in greater economic fallout for the country’s already stagnant economy, and thus the government is likely to persist in its determination to hold the Games as planned, until the prospect of cancellation becomes inevitable.

What Are the Costs at Play?

According to a September 2020 study by the University of Oxford, the 2020 Tokyo Olympic Games are already the most expensive in Summer Olympic Games history – and that estimate was given well before the Games are set to take place. From an initial estimated cost of $7.3 billion when Tokyo won the bid to host the Games in 2013, Tokyo’s spending is at $15.84 billion, according to the Oxford numbers. Even this number is understood to be lower than the actual amount though, with audits by the Japanese government over the past several years putting costs to be at least $25 billion. Several billion more in costs are expected with the one-year delay, and the revenue made is sure to be complicated by ongoing coronavirus restrictions.

The Tokyo 2020 Organizing Committee announced on March 20th of this year that overseas spectators will be banned from attending the Games this summer, in an attempt to lessen pandemic risks. Given that roughly 600,000 tickets for the Olympics and 30,000 for the Paralympics were sold to overseas spectators, this decision is certain to deflate revenue expectations. It has been estimated that if the number of spectators is reduced by half, the Japanese economy will lose about $12.6 billion, and up to $21.6 billion if there are no spectators at all. Meanwhile, there is a predicted loss of about $40.6 billion if the Games are cancelled altogether. Such prospects create considerable and persistent uncertainty over how the Summer Olympics in Tokyo will be carried out, as any of the aforementioned actions will incur significant losses for the Japanese economy.

Japan’s Dilemma

Many may wonder why the Japanese government has been so insistent on holding the Games, in spite of its one-year cancellation amidst the COVID-19 pandemic and mounting public pressure. Since winning the bid in 2013, the 2020 Summer Olympic Games were seen as a great opportunity to bring economic growth to Japan, as well as long-lasting social, economic, and cultural benefits. For a country facing decades of economic stagnation, hosting the Summer Olympics gave hope that Japan’s status as a world economic powerhouse could be revitalized.

Following World War II, Japan experienced tremendous growth, and by the 1980s, it had become the second largest economy in the world, after the United States. However, hopes of Japan achieving global superpower status diminished following a period of economic stagnation in the 1990s, known as the Lost Decade, and the economy still has yet to return to high levels of growth similar to those of the 1980s. Subsequently, events like the 2008 Great Recession and 2011 Tōhoku earthquake and tsunami had critically affected the Japanese economy in a negative manner. Along with the onset of population decline from 2015 onwards, such factors have raised further doubts of Japan experiencing a significant economic revitalization.

That being said, Japan still has the third largest economy in the world (China having surpassed it in 2010), and retains significant reserves of soft power through the popularity of Japanese video games and anime. Given this, as well as Japan’s popularity as a tourist destination, hosting the 2020 Summer Olympics presented the perfect opportunity to capitalize on such factors. It is also hence understandable as to why the Japanese government wasn’t too reserved in its spending in preparation for the Games. However, now with the continuance of the COVID-19 pandemic changing the whole manner in which the Summer Olympics will be held, the Japanese government must decide what the most efficient method going forward will be for the costly burden that the 2020 Summer Olympics has become.

What Will Happen Now?

Both the Japanese government and International Olympic Committee have been unwavering in their insistence to hold the Summer Olympics as planned this year. Although, it should be noted that they were similarly insistent last year to hold the Olympics that summer even after the COVID-19 pandemic was initially declared by the World Health Organization, only relenting to delay it after countries such as Canada and Australia threatened to pull out. Yet as for now, there is no significant international pressure to delay or cancel the Games, with leaders of the G7 even issuing a statement of support for the Summer Olympics to go on as planned. Aside from any major further outbreaks of coronavirus, it is likely that the government will sideline public opposition and continue to push ahead with its plans to hold the Games this summer.

That being said, the government’s efforts to still hold the Summer Olympics will at best mitigate the economic losses incurred by the Japanese economy throughout this whole ordeal. At this point, with the ban on overseas spectators and continuing uncertainty over the state of coronavirus restrictions this summer, hopes that the 2020 Tokyo Olympics would serve as a way to revitalize Japan’s staggering economy have all but disappeared.

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