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Wednesday, Aug. 3, 2011

EDITORIAL

Compensation law is flawed

The Diet on Friday enacted a law for compensating victims of the nuclear accidents at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant. Early this month the Diet is expected to pass a related bill to establish a state-backed entity that provides financial aid to Tepco for its compensation payments.

Once this takes place, full-scale compensation payments will become possible. So far, Tepco has paid compensation on a provisional basis. Tepco and the government must strive to ensure that every victim is fairly compensated.

At present, people who have chosen on their own to evacuate their homes without being ordered to do so to avoid potential radiation hazards are not eligible for compensation. Chief Cabinet Secretary Yukio Edano, however, said that they will become eligible if it is proven that their evacuation was necessary due to the crisis.

A panel within the education and science ministry will establish compensation guidelines for people and firms that have suffered financially due to rumors or fears that their products may be contaminated with radioactive substances.

Its other task will be to establish compensation guidelines for livestock farmers whose cows fed on contaminated rice straw. The scale of compensation, already large, may become even larger because rice paddies may have been contaminated, rendering the rice grown there unmarketable. Tepco must do its utmost to fulfill its compensation obligations.

In the compensation scheme, the government-backed entity will get zero-interest-rate bonds from the government as well as funds from Tepco and other power companies.

No ceilings will be imposed on the total amount of compensation, but when Tepco runs short of funds the new entity will cash the government bonds and give the proceeds to Tepco. The law also includes a clause that states that the government can provide funds when it deems necessary.

The compensation scheme suffers from a number of serious flaws. First, there is no provision to prevent Tepco and other power companies from passing on some of their compensation obligations to their customers by raising electricity rates.

Second, no limit has been placed on the amount of taxpayer funds that can be poured into the scheme.

Third, the scheme exempts Tepco shareholders and banks with ties to Tepco of their responsibility, even though as part-owners of Tepco it is only fair that they shoulder a portion of the compensation burden.

The government and the Diet have an obligation to the people to revise the compensation scheme to remedy these flaws.



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