June 2011

Japan Center for International Exchange

Recovering fromJapan’s Disasters
Hitoshi Tanaka, Senior Fellow, JCIEThe series of disasters that struck Japan on March
11 were of unprecedented scale, devastating communities and further damaging Japan’s already-stagnating
economy. The official death toll stands at more than
15,000 and is likely to climb well over 20,000. The economic damage has been projected to climb as high as
25 trillion yen according to the Japanese Cabinet Office.
Power outages and the resulting disruptions to production supply chains have affected business and cooled
consumption. On top of all of that, the Fukushima
Daiichi nuclear plant continues to pose a grave threat
to the surrounding communities and economies, andthe crisis there is now acknowledged as the most serious nuclear accident since Chernobyl.
Japan needs a viable national strategy for recovering from these disasters, not only for its own economic and political future but also so that it canmaintain its international presence and continue tomake contributions to the international community.
Overcoming these challenges and building Japanback even stronger in the process will require bold

action in a number of key areas: (1) the formulationand implementation of a reconstruction plan basedon strong political leadership; (2) the mobilization of
new financial resources to fund the reconstruction effort; and (3) the development of a new energy policy.
Implementing these bold actions is complicated by
the long-term challenges that already plagued Japan
before the earthquake, including questions over its
long-term fiscal health and uncertainty over the future of the US-Japan alliance in the changing regional
security environment. Policymakers must be attuned
to the long-term consequences of their actions andnot simply reconstruct systems that were already failing to meet the challenges of the 21st century prior
to the disasters. The need for timely action is clear sothat those in the hardest-hit areas can rebuild theirlives as quickly as possible, but to simply institute a
quick fix without a long-term strategy risks accelerating Japan’s ongoing economic and political downturnand will have repercussions for the region and aroundthe world.

Reconstruction Planningestablishment need to call a truce in their war and finda balance between excessive reliance on bureaucrats
and allowing sufficient expert bureaucrat input into
the policymaking process.

A strong international presence requires a strong economic base. There is an urgent need for speedy formulation and implementation of a viable long-termreconstruction plan. In the short term, a speedy reconstruction effort will stimulate demand, particularly in labor-intensive industries, which should help
boost the sluggish economy. It will also help avert an
outflow of people from the affected Tohoku region as
both jobs and shelter become more readily available,
preventing an exacerbation of the already excessive
concentration in the greater Tokyo region and otherurban areas. Taking a long-term perspective, the reconstruction plan should result in a more strategic
approach to the agricultural and fisheries industries,
one that allows long-overdue liberalization programs
to move forward without sacrificing the needs of thefarming and fishing communities as the primary goal.
Rather than using the disasters as an excuse for delaying the agricultural reforms that are needed for Japanto join the Trans-Pacific Partnership, now is the ideal
time to design a reconstruction plan that integrates
liberalization into a robust agricultural sector for the21st century.
The speedy formulation and implementation of a viable long-term reconstruction plan will require strong
political leadership and bi-partisan cooperation. There
has been an increasing sense of frustration with Prime
Minister Kan’s leadership, even from within his own
Democratic Party of Japan (DPJ), and not just from theIchiro Ozawa loyalists. Although Kan was able to defeat a vote of no-confidence against him in the Lower
House by announcing he will step down in due course,
it is still questionable if he can hold the unity of theDPJ, and the Liberal Democratic Party has pledgedthat it will not be forthcoming with full-fledged cooperation unless Kan resigns.
Expert input from bureaucrats and practitioners
is also lacking, creating the risk that reconstruction planning will not adequately reflect realities on
the ground. Stronger bureaucratic input into policymaking, as was the norm prior to the 2009 change inthe majority party, is a key potential resource in thegovernment’s efforts to produce a viable long-termreconstruction plan. The DPJ and the bureaucratic
EAST ASIA INSIGHTS

Reconstruction Financing
Given the immense costs of reconstruction, Japan willneed to mobilize new financial resources. This is acomplicated task, given that Japan was already facing apublic debt of around 200 percent of its GDP before thedisasters, and that will be compounded now as there
will likely be a tax revenue shortfall resulting from theimmediate economic impact of the disasters if adjustments to the tax code are not made. There has been
talk of issuing new government bonds and diverting
public spending from non-essential programs. But if
one steps back and looks at the bigger picture of Japan’s
efforts to achieve fiscal soundness in the long term, it
is evident that a tax increase is inevitable. Increasing
the consumption tax was already on the Kan government’s pre-disaster agenda, and the discussion needs tobe revived. A tax increase must be instituted not just tocover the immediate reconstruction costs in the wakeof the disasters but also to deal with the pre-existing
economic challenges. Without such a balanced approach toward short- and long-term needs, Japan willfind itself facing dual crises of having to cover the social welfare needs of a rapidly aging population whilestill being saddled with high public debt.

Energy Policy
The crisis at the Fukushima Daiichi nuclear power plantpresents a clear setback for nuclear energy and necessitates a complete rethinking of Japan’s energy policy.
First, there will have to be a decrease in the overall
reliance on nuclear power, moving toward a healthier
diversity of energy sources. Currently, Japan has 54
nuclear power plants, which produce nearly 30 percent of its electricity. The high reliance on this energy
source—which has proven to be dangerously fragile
in the face of natural disasters—has been exposed as aweak point. Countering this will require a new and wellthought out energy plan for the nation, with long-term
investment in renewable sources such as wind, solar,
and geo-thermal energy. In this sense, Prime Minister
2June 2011

US-Japan Relations after the Disaster

Kan’s announcement at the OECD Ministerial Meetingof his plan to increase the share of renewable energythat Japan uses is significant, but it remains to be seen
if the plan can be implemented given its huge budgetary implications. If Japan can dedicate the financial andintellectual resources that are needed to develop better
technology for renewable energy, it will have important implications not only for Japan but for countries
around the world that are facing looming energy andenvironmental crises.
Second, since the abandonment of nuclear energy
is not a practical option in the short term for Japan—acountry with few indigenous energy resources thatis struggling to secure energy resource imports in a
global energy market characterized by ever-increasing
competition for supply—nuclear energy safeguards
must be strengthened. It is encouraging, therefore,that the three major Northeast Asian nations—China,South Korea, and Japan—pledged to work jointly toward this purpose during their trilateral summit inTokyo on May 22.
Reviews of the safety of nuclear power plants had
already led Prime Minister Kan to call for the closure of the Hamaoka nuclear power plant, which sitsnear intersecting tectonic plate fault lines in a locality that is predicted as having an 87 percent chanceof experiencing a major earthquake within the next
30 years. But this is a token measure, emphasized
as an exceptional case, and it is insufficient. In a
more decisive and positive move, the Kan government announced in a report to the International
Atomic Energy Agency (IAEA) on June 7 that theNuclear and Industrial Safety Agency (NISA), which
has—strangely—been housed within the Ministry ofEconomy, Trade and Industry (METI) will be separated out from the ministry. Since part of METI’s
mission is to promote the nuclear industry, NISA’s
ability to independently regulate the safety of nuclear
power has been compromised. This lack of independence also affected the quality of scientific explanations as the nuclear crisis unfolded, and as a result,explanations from government spokespersons suchas the chief cabinet secretary and from METI andthe Tokyo Electric Power Company (TEPCO) werelacking in timeliness and coordination.
EAST ASIA INSIGHTS

During the aftermath of the disasters, the United States
extended support to Japan, and the US military conducted well-organized joint operations with the Japan
Self Defense Forces. This has demonstrated the significance of the US-Japan alliance and has positively boosted
the Japanese public’s perception of the US military andthe necessity for its presence in Japan. This close working relationship between the two allies helped to alleviate some of the tensions in the relationship, which hadcome to something of an impasse in the months prior to
the disaster, most visibly in the dispute over the relocation plan for the Futenma Airbase. While this genuine
goodwill is encouraging, it is temporary and will notnecessarily translate into solutions to the challenges facing the US-Japan alliance, which still require concerted
efforts from both countries. Policymakers on both sides
must put things in the right perspective in the wake ofthe disaster. The relocation of the Futenma Airbase, US
budget cuts, and the shifting balance of power in East
Asia all require that the United States and Japan work
closely together to find mutually acceptable long-term
solutions that are appropriate to the changing security
environment. Frank discussion at the governmental andnongovernmental levels needs to be strengthened andsustained so that we can address these challenges before
they become crises.
The challenges facing the alliance have been compounded by Wikileaks’ release of sensitive diplomaticcables. These leaks contain information from documents as recent as February 2010 on topics of significance to the US-Japan alliance such as a secret nuclear
deal, the North Korean abduction issue, the Northern
Territories, and Japan’s contingency plans for nuclear
accidents. The release of these documents, which takesensitive discussions out of context, has distorted thepublic understanding and triggered undue public criticism of diplomatic efforts. As a result, there is a riskthat diplomats will shy away from the kind of frankdiscussion they need to engage in with their counterparts on difficult issues.
◆ ◆ ◆Japan’s recovery is in the interests not just of Japan but
also of its partners around the world. As is the case
3June 2011

with most natural disasters, there are expectations thatJapan should take this opportunity to build back betterand address some of the obstacles that were standing in
the way of its economic recovery and improved foreign
relations prior to the disasters. Strong political leadership is essential to the timely development and implementation of a viable long-term reconstruction plan,but it remains elusive in post-disaster Japan. Difficult
political decisions will need to be made if Japan is tomobilize new financial resources to fund the reconstruction effort and to develop a much-needed new energy policy. This enormous task must be done taking abalanced approach to short- and long-term needs, accounting for the pre-disaster challenges Japan already
faced. If managed carefully, this crisis can be turned
into an opportunity, and while embarking on the reconstruction process Japan can rebuild not just its destroyed infrastructure but also a new national strategy
to revitalize its economy and safeguard its security.

Hitoshi Tanaka is a senior fellow at JCIE and chairmanof the Institute for International Strategy. He previously
served as Japan’s deputy minister for foreign affairs.

East Asia Insights
East Asia Insights is an occasional newsletter focusing on East Asia community building
from the Japanese perspective.
Published by: Tadashi Yamamoto, President, JCIE
Please direct any comments or questions to eainsights@jcie.or.jp.
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4© 2011 Japan Center for International Exchange

June 2011