Radiation spreading from Japan’s crippled Fukushima plant threatens to derail Prime Minister Shinzo Abe’s efforts to revive nuclear power and deliver the lower energy prices needed to power his economic reforms.
As Abe prepares for a trip tomorrow to the Middle East where he will promote sales of nuclear technology, the atomic industry at home is reeling. Japan’s nuclear regulator said this week that a new radioactive water leak was the most serious incident at the Fukushima Dai-Ichi plant since the March 2011 accident that devastated the site.
The latest setback may stoke public anger over Fukushima, undermining Abe’s efforts to restart some of Japan’s 48 idled atomic plants and boost nuclear exports — elements of his plan to drive an economic revival. Abe, who must decide whether to proceed with a sales-tax increase, is counting on re-opening the installations to help reduce energy imports and fuel growth in consumer confidence and corporate earnings.
“Abe’s getting to the hard stuff of structural reform and deciding whether to increase taxes,” said Jeff Kingston, professor of Japanese politics at Temple University’s Tokyo campus. “Revving up the reactors is crucial to Abenomics.”
To date, Abe’s popularity has been buoyed by the initial success of his economic plan, which included fiscal and monetary stimulus that helped drive down the yen 15 percent since he came to power in December, boosting exporters’ earnings and economic growth. Still, the weaker yen has inflated the cost of importing fuel, making a nuclear restart critical to preventing soaring energy costs and the possible sales tax increase from choking the recovery.
Biggest debt
Abe inherited a pledge to raise the sales tax to 8 percent from 5 percent in April to help tame the world’s biggest debt at almost 240 percent of gross domestic product. The tax increase could lead the economy to contract an annualized 4.3 percent in the second quarter of next year from growth of 4.6 percent in the previous three months, according to the median forecast of 34 economists surveyed by Bloomberg.
Prior to the Fukushima accident, nuclear power supplied more than 25 percent of Japan’s electricity. Now, all but two of the country’s 50 reactors are idled for safety checks following the 2011 earthquake and tsunami that crippled the Fukushima station in the worst nuclear accident since the 1986 Chernobyl disaster. Many of the 160,000 residents evacuated from the area have not returned and some agriculture and fishing bans remain in effect around the site.
An investigation by the plant’s owner, Tokyo Electric Power Co (9501), after this week’s announcement that 300 tons of contaminated water had escaped, showed no further leaks, Hiroki Kawamata, a spokesman for the utility, said yesterday.
Public opposition
Chief Cabinet Secretary Yoshihide Suga said Aug. 21 the government “would do its utmost” to stop the Fukushima leak as soon as possible.
Japan’s Nuclear Regulatory Authority labeled the new spill “serious,” and questioned the ability of Tepco to deal with the crisis. The leak was ranked as category three on a scale set up by the International Atomic Energy Agency. The initial 2011 meltdown at Fukushima is in the highest severity category of seven on the International Nuclear and Radiological Event Scale, the same as Chernobyl.
Even before news of the new leak, a majority of the public was against restarts, according to a Kyodo News poll taken July 13-14, with 51 percent opposing and 40 percent in favor of reviving Japan’s nuclear program. The latest revelation could further sway sentiment against nuclear power, according to Koichi Nakano, professor of politics at Sophia University in Tokyo.
Abe approval
“The Abe government may be tempted to shrug its shoulders and say that things are under control now, and keep pushing to restart plants,” Nakano said. “That could be a very misguided approach in terms of a popular backlash and international criticism if the leakage is shown to be even more serious.”
Abe’s approval rating stood at 54.2 percent in a JiJi News survey last week. He’s held above 50 percent since taking power in a landslide election in December.
The prime minister’s bid to revive the economy comes amid signs of a recovery in Asia and Europe. China reported foreign-direct investment rose 24.1 percent in July, a sixth monthly gain. Final German numbers for second quarter GDP today may confirm 0.7 percent growth, more than economists initial forecasts, while the U.K. releases final GDP data, after a preliminary report showed a 0.6 percent expansion, twice the pace of the first three months. The U.S. also reports new home sales figures for July.
Nuclear exports
Apart from backing a return to nuclear power, Abe has made exporting nuclear technology a component of his economic plan and has been a pitch man for companies such as Toshiba Corp. (6502) and Mitsubishi Heavy Industries Ltd. (7011) On his Aug. 24-29 trip to four Middle East nations, Abe will offer “cooperation in the nuclear safety field” in Kuwait and Qatar, according to a briefing paper on the tour
Trade Minister Toshimitsu Motegi agreed to promote nuclear cooperation with Saudi Arabia on a visit in February, while Japan previously signed a memorandum of nuclear development with Kuwait. Abe and French President Francois Hollande agreed to deepen cooperation on reactor exports in June.
Tepco stock was down 4.9 percent as of 11:50 a.m., while Mitsubishi Heavy gained 2.4 percent and Toshiba jumped 4.5 percent. This compares with a 2.2 percent rise in the Topix index of stocks.
“Phasing out nuclear power would devastate Japan’s plans to become a major nuclear exporter,” said Kingston. “It would also put a damper on the growth strategy.”
Abe said this month that Tepco alone isn’t up to the task of containing the nuclear disaster.
“It’s a grave matter that the government has left Tepco to deal with the situation,” Taro Kono, a deputy secretary general of the ruling Liberal Democratic Party, said in an interview yesterday. “Decommissioning the nuclear plants, compensation issues and the contaminated water are all issues beyond Tepco’s management capacity.”
