Editor's Note: Sheila Smith is a Senior Fellow for Japan Studies at the Council on Foreign Relations. This is her Expert Brief.
By Sheila Smith, CFR.org
Japan's unprecedented "triple disaster" on March 11, 2011–a 9.0 magnitude earthquake, tsunami, and nuclear reactor meltdowns–presented the government with its largest crisis since the end of World War II. The quake resulted in more than 19,000 dead or missing and devastation of the coastal communities of the Tohoku region. More than 340,000 Japanese have been displaced from their homes, and many will not return. Rebuilding Tohoku will cost an estimated $238 billion and will take a decade or longer.
The repercussions were felt worldwide. Global supply chains were disrupted, currency and stock markets were shaken, and the meltdowns of reactors at Fukushima Daiichi nuclear power plant raised the specter of a man-made disaster of historic proportions. Nations around the world undertook a reassessment of nuclear power, with safety a central consideration.
Japan's ability to rebound from last year's disasters will have major consequences beyond its borders. A stronger Japan bolsters the global economy. As the third-largest economy, Japan is a major driver of growth and investment. Geopolitically, Japan's recovery seems even more important as the region adjusts to the increasing influence of a rising China.
A Test of Public Confidence
The March 11 crises severely tested the government. Political leaders seemed immobilized in the face of intense public criticism. Tokyo's early crisis response was quick and effective, especially compared with the Kobe earthquake a decade and a half earlier. Yet leadership from the national government for reconstruction lagged. Contention in the parliament over legislation for the National Reconstruction Ministry, budgets, and the safety inspections of Japan's nuclear reactors slowed the national response.
The more difficult task of reimagining the tsunami-ravaged communities has yet to be concluded. It was not until February 2012 that the Reconstruction Ministry was made the official "command center" for rebuilding Japan's northeastern region.
The reactor meltdowns at Fukushima Daiichi also raised profound questions about Japan's commitment to nuclear energy. Thirty million Japanese lived within 150 miles of Fukushima in the densely populated metropolis of Tokyo. In earthquake-prone Japan, the Fukushima disaster suggested that Japan's fifty-four nuclear reactors–most along the coastline–could suffer the same fate.
Beyond the debate over the fate of nuclear power, the events at Fukushima Daiichi raised a broader question about government accountability in postwar Japan. Oversight of Japan's nuclear power plants was clearly inadequate. Risk assessment was insufficient, and preparations for nuclear accident prevention and disaster management were inadequate.
A recent independent commission reviewing the Japanese government's management of the disaster at Fukushima Daiichi reveals a nightmare scenario of indecision, bad judgment, incomplete information, and communications breakdown.
Difficult Decisions Ahead
Tough choices confront Japan's political leaders. The fate of Japan's economy remains uncertain. Last year's economic performance was clearly affected by the disasters, with real GDP loss of around 0.9 percent and the first recorded trade deficit in more than 40 years. Exports, which increased 24.2 percent in 2010, increased just 0.02 percent in 2011. Consumer spending was also anemic, increasing a mere 0.02 percent in 2011. Borrowing to fund reconstruction adds to Japan's already high national debt, which was running at 200 percent of GDP prior to the disasters. As of November 2011, the Japanese government had committed 18 trillion yen ($234 billion at the time) to a reconstruction fund, but it is likely that more funds will be needed.
To begin to address the revenue needs of the Japanese state, Prime Minister Yoshihiko Noda has insisted on increasing Japan's consumption tax. Upping the consumption tax from 5 percent to 10 percent by 2015 is a modest step toward improving Japan's fiscal health. Yet even this could cost the prime minister his job as pressures mount within his own party and opposition party leaders are rumored to be negotiating their support for the bill in return for a general election.
But it is the future prospects for the Japanese economy that are most worrisome. The IMF has already downgraded its projections for Japanese growth in 2012 from 2.3 percent to 1.7 percent. The nation's energy resources have been compromised by the loss of nuclear power, and Japan's industrial performance will depend on the government's ability to restore a stable supply. Last summer, cabinet officials openly disagreed over how safe Japan's fifty-four nuclear reactors were, and how effectively the government had overseen their management by Japanese utilities companies. As reactors were taken offline for their periodic thirteen-month inspection, localities openly challenged the government's assertion that Japan's nuclear reactors were safe. Discord among specialists muddied the waters.
Revamping the government's safety standards and oversight mechanisms for nuclear power remains the priority. Today, only two of the fifty-four reactors that supply 29 percent of Japan's energy are online. By April, there will be no nuclear power generation in Japan, and the government will need to work hard to assure local communities that their new stress test safeguards will be sufficient to ensure public safety. In the meantime, Japan depends more than ever on a volatile global energy market. Any conflict in the Strait of Hormuz would compound Japan's difficulties.
A Leadership Deficit
The events of March 11 did not redefine Japan's national policy debate, yet the crises created a serious disconnect between public needs and the national government's responsiveness. The year since March 11 has stimulated a new awareness of the need for reform in governance. Public confidence in government has been deeply damaged.
The triple disasters also revealed the costs to Japan of its protracted yet incomplete process of political change. Public support for both of Japan's major parties, the ruling DPJ and opposition LDP, has diminished, and the Upper House of parliament remains fragmented and contentious. The Supreme Court has mandated redistricting to correspond to Japan's 2010 census, which will enhance the weight of urban voters who are largely unaffiliated. Smaller splinter parties now hold the key to legislative success, and yet coalitions to date seem less about shared policy preferences and more about access to power.
Japan's challenges are many, but its priority should be to revamp the national legislative body itself with the aim of creating a system of sustained and constructive national leadership. For half a century, single-party dominance, which ended in the 1990s, concealed some of the flaws in Japan's post-war parliament. Bureaucrats had a powerful role in setting Japanese policy priorities and in sustaining the day-to-day running of the country.
Today, as Japan moves to alternating parties in power, the policymaking habits of the old system have yet to be reformed. Efforts to weaken cabinets, such as the December 2011censure motions in the Upper House, have made it virtually impossible to govern. The practice of bartering to bring down a cabinet in return for legislative compromise denies Japan sustained leadership. A thorough rethinking of parliamentary practice is long overdue, and the time has come for Japan's legislators to turn the national Diet into a serious mechanism for policy deliberation and decision-making. This is the only way in which Japan's hard decisions can be confronted.
After his election last September, Prime Minister Noda stressed Japan's politicians must put the people's needs first. He has brought unity to his ruling party, created an agenda of domestic priorities, and begun to restore Japan's diplomatic presence. His leadership finally allowed the reconstruction effort to move forward and insisted that Japan begin to confront some of its deeper structural problems. Old habits die hard, however, and for all of the prime minister's promise, Japan may again face a leadership transition in the months ahead.
Public confidence in Japan's ability to produce strong public sector leadership has been sorely tested in the year since the March 11 disasters. The worst of the crisis is behind, and yet the broader national debate over Japan's future has yet to fully develop. Like the United States and Europe, Japan will need to concentrate on domestic reforms to retain its global competitiveness. Stable and affordable energy will be the first priority, but beyond that, Japan will need to confront some hard and politically costly decisions about its priorities.
The views expressed in this article are solely those of Sheila Smith.