Japan: After the Tsunami, Little Has Changed

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James Whitlow Delano / Redux

Visiting the small fishing port of Onogawa, on Japan's northeast coast, three weeks after the terrible earthquake, tsunami, and nuclear accident of March 11 this year was like visiting the worst of all war zones. But, amid the extraordinary piles of debris, of houses crushed like matchboxes, of cars piled on the roofs of four-story buildings, there was a positive spirit. Visiting six months later, Onogawa felt rather different, and sadder.

It would be going too far to say that the same now applies to Japan as a whole. But there is some truth to it. After the disaster, which left 15,000 dead, about 5,000 officially missing, a huge swath of Japan's northeast coast devastated, and the Fukushima Daiichi nuclear-power plant in critical condition, the country was in shock but responded essentially by rolling up its sleeves and getting on with dealing with the disaster.

Just as Onogawa on April 2 was full of ordinary people trying hard to help, whether by directing traffic, working at evacuation centers, or wielding shovels, so the immediate response among policymakers, businessmen, and economists in Tokyo was brave talk of how Japan had rebuilt itself after disasters before and that it would now do so again. Terrible as it was, March 11 was even spoken of as an opportunity for change and reform, the sort of liberalizing reform that had been postponed or plain blocked for the past two decades.

Up on that coastline, the work of clearing the debris has been impressively fast. So has the erection of temporary housing for the hundreds of thousands of people displaced by the tsunami and by the radiation leakage from Fukushima Daiichi. The factories making high-tech parts for the auto and electronics industries, whose closure caused severe disruptions in the supply chain for manufacturers all over the world, have reopened and restarted production extraordinarily quickly. Not all are yet fully operational by any means, but most beat their initial timetables for resuming output by two to three months.

Even so, visiting Onogawa again at the end of October produced a somewhat empty feeling, just like the town itself. Only one noticeable new building has risen from the debris: an ice-making plant, given priority so that the town's remaining fishing boats could get back to work. Otherwise, the sight of a middle-aged man staring out to sea said it all. This is a town waiting to see whether the old life can really be resumed there. This is a region where levels of clinical depression are rising.

Virtually the only sign of continuity with the days before March 11 is a Japanese naval ship moored far out in the bay. It is there in case of attack by North Korean forces on the nuclear-power plant that is just outside Onogawa. That plant was undamaged by the tsunami and quake, though it has yet to be restarted. But the North Korean threat is still taken seriously.

In Tokyo, another unfortunate sign of continuity helps explain why the mood has become flatter during the past half year, even though the Japanese economy now finds itself in a period of recovery. The continuity is in politics, where the disunity, factionalism, and constant maneuvering for position that had prevailed before the disaster has been quick to resume.

Ideas that in the aftermath of March 11 political forces would coalesce in a spirit of national unity have quickly been shown to be just dreams. Japan has already performed its annual ritual of changing prime ministers, replacing the former grassroots activist, Naoto Kan, with a studiedly dull ex-finance minister, Yoshihiko Noda, in September, barely five months after Kan tried the Churchillian approach of describing the disaster as Japan's worst crisis since 1945.

Noda faces a daunting inbox of issues. He has to finance the reconstruction of the northeast coastal region despite Japan already having gross public debts equal to 200 percent of GDP (insolvent Greece's are "only" 150 percent). He has to come up with a new energy strategy for a country that had relied on nuclear power for 30 percent of its electricity-production capacity, in which all but a handful of its 54 reactors are now sitting idle, and in which public opinion is still skeptical about nuclear safety.

Moreover, he has to do so at a time when the crippled nuclear station at Fukushima Daiichi has still not been fully stabilized, when suspicion of official data about radiation leakage and about the condition of the plant has grown, and when the regional monopoly that owns Fukushima Daiichi, the Tokyo Electric Power Corp. (TEPCO) is more or less bankrupt.

Fortunately, perhaps, relations with Japan's main ally, the United States, are better than they were under either of Noda's predecessors, when they were damaged by indecisiveness and political wrangling over the future of one of America's main military bases on the southern Japanese island of Okinawa. That dispute has still not been resolved, but the combination of generous American relief assistance after March 11 (known as Operation Tomodachi, or "friend") and a switch back by the ruling Democratic Party of Japan to more positive rhetoric toward the U.S.-Japan alliance has smoothed things over.

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Almost a year after the tsunami, Japan’s mood is different, and sadder. James Whitlow Delano / Redux

Noda is, in truth, a return to the old Japanese style of leadership, one that was typical during the 1990s but also even in the go-go 1960s and '70s: a fairly low-profile, consensus-seeking politician as prime minister, one whom the party bosses do not want to become too grand, too powerful, or too charismatic. If he does become, in the old Japanese proverb, a nail that sticks up, he will soon get hammered down.

Such a style of leadership is not going to achieve great leaps forward, nor bring in big, visionary plans for the remaking of Japan. Yet that has never really been the Japanese way of doing things, save perhaps for one period in the 1860s and '70s when the emperor-led government was restored amid American pressure to open the country up to trade and foreign investment. At other times, the country has been governed by consensus, moving forward in a crablike fashion, bringing in reform gradually, as if by stealth.

If reform happens at all, that is the sort of change to watch for during 2012. This approach has already been typified by the announcement in mid-November by Noda that Japan would join America's Trans-Pacific Partnership negotiations for freer trade in the region. This boosted Japan's relations with the U.S., and encouraged other Pacific Rim countries, including Canada and Mexico, to bid to join the TPP talks. But Noda couched Japan's participation in a fog of ambiguity.

Farm lobbies remain powerful in Japan, because they are vocal and well-organized but also because the electoral system still gives disproportionate weight to rural constituencies. They are fiercely opposed to the TPP, because they rightly assume that among the biggest trade concessions Japan will be asked to bring to the negotiating table will be the opening up of agricultural trade.

So Noda deliberately failed to promise explicitly to the U.S. that he is willing for farm trade to be included in the talks. He wants to defer that domestic fight for as long as he can.

He looks likely to be taking the same approach to the country's huge fiscal problems. In the past, Noda has advocated raising Japan's consumption tax (known as sales tax in many other countries) from its existing rate of 5 percent to help cut the budget deficit and start reducing the public debt. The OECD official think tank in Paris has urged Japan to raise it in stages to 20 percent, the level typical in European countries. And a government study produced in June when he was finance minister also proposed a sharp rise in the tax.

Yet many members of Noda's own party fear that a sharp rise in tax could lose them the next general elections for the main, lower house of the Diet (Parliament) that may well occur next year. Many economists also fear that raising the consumption tax will hit economic growth, although in the third quarter the first spate of relief and reconstruction spending, combined with resumption of output by damaged factories, gave Japan stronger quarterly growth, at 1.5 percent, than that being seen in either America or Europe.

So Noda is softening his language and his proposals, floating the idea of raising the tax but not until 2014 or even 2015. He is waiting to see whether consensus can be formed for a long-term fiscal reform by avoiding the immediate pain of tax hikes.

Although Japan's public debt is the world's highest as a ratio to its GDP, the country can probably afford to defer fiscal reform because its borrowing costs remain the world's lowest. This is thanks to the fact that more than 90 percent of the debt is held domestically by Japanese financial institutions and households and to the less rosy fact that the country is suffering falling prices, or deflation.

Both of those factors could change, especially as Japan's aging population reduces its level of personal savings and financial assets even further. But there is no sign of it changing just yet, so Noda can continue to buy time.

In energy policy, he and the rest of Japan's governing elite are also hoping to buy time. The immediate public response to the nuclear accident at Fukushima Daiichi was to turn hostile to Japan's continued use of nuclear power to generate electricity given the risks posed by earthquakes and tsunamis. Such risks are hardly new, and the technology in use at Fukushima Daiichi was 40 years old and so less safe than the latest nuclear plants. But still, hostility grew.

At times, Japan has been governed by consensus, moving forward in a crablike fashion, bringing in reform by stealth.

The country's big businesses, including, but not only, those supplying nuclear equipment, immediately started lobbying hard for Japan to retain nuclear power, claiming it offers cheaper and more reliable electricity than fossil fuel or renewable alternatives. Only younger mavericks, such as Masayoshi Son of the Softbank telecom firm or Hiroshi Mikitani of the Rakuten e-commerce company, spoke out against this. Mikitani even quit the Keidanren, the country's biggest business federation, in protest at the conservatism of his fellow business leaders, albeit with no lasting effect.

Ironically, the pro-nuclear case has been weakened by Japan's success in coping with forecast electricity shortages in the Tokyo area during the summer. TEPCO, which serves the world's largest conurbation (an area which accounts for 40 percent of the country's GDP) warned of blackouts.

In the end, there were none, thanks to concerted efforts at energy conservation by consumers, along with some increased supply by private companies who had previously kept electricity capacity in reserve. Now TEPCO is complaining that unless electricity demand revives, it will be unable to make the profits sufficient to restore itself to solvency. It does not want conservation to be permanent.

So the nuclear issue has been deferred. Noda probably hopes that gradually public opinion will regain its faith in nuclear so that he can at least get the country's existing plants restarted. It may, for despite the fears provoked by the Fukushima Daiichi accident there is little direct evidence of damage to human health from radiation. However, there is ever-present evidence of damage to the lives of those living near the plant, who have been forced to evacuate with little idea of how soon, if ever, they might be able to move back and resume their lives.

Japan is trying to feel its way slowly on this energy issue, as on the questions of fiscal reform, market liberalization, and even of how best to rebuild devastated communities. The more profound issue that is being thought about, not just at the government level but also in households across the land, is one that is anyway not susceptible to quick dramatic decisions. It is the question of how to think about risk in a modern, developed society.

Throughout its history, Japan has lived with natural disasters, with the danger of death and destruction that they bring, and the need to rebuild afterward. Living with risk has been part of Japanese culture. The deepest shock of March 11, however, came from the reminder that modernity has not eliminated that risk.

Naturally, many Japanese, like many Americans and Europeans, wanted to believe that affluence could reduce those risks to a minimum. The tsunami showed that that was wrong. But what to do about it—how to reduce the risk of another such shock—that is a much harder puzzle to think through. It could take a decade or more before we can gauge what the Japanese solution will be to that puzzle. If indeed they know themselves.

This essay was published in Newsweek International's Special Edition, 'Issues 2012,' on sale from December 2011-February 2012.