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Tuesday, April 12, 2011
Disaster toll still incalculable
Reconstruction effort, nuke crisis costs to test the administration
Although a month has passed since the magnitude 9 earthquake and tsunami crippled the Fukushima No. 1 nuclear plant on March 11, no one yet has a clear idea of when or how the radiation disaster will end.
But one thing is certain: Prime Minister Naoto Kan will have to take the lead in rebuilding 401 sq. km of tsunami-ravaged Tohoku — an area more than six times the size of the Yamanote loop — and help Tokyo Electric Power Co. compensate for the lives and industries hit by the nuclear crisis, a bill likely to amount to trillions of yen.
Strong political leadership and coordination will be required to meet such massive goals. But as the world closely watches each step Tokyo takes, critics are skeptical of the way the Kan administration is handling the crisis.
"The government's move was always one step behind," said Tadao Inoue, chairman of the Institute for Nuclear, Biological, Chemical and Radiological Defense, a nonprofit organization. "That caused the damage to spread."
Inoue was referring to the radiation being emitted by Fukushima No. 1, the leaking nuclear power plant that is contaminating vegetables and milk from neighboring prefectures. After a high concentration was detected in milk, spinach and other green vegetables, the government banned shipments last month.
But Inoue, who served as head of the Ground Self-Defense Force Chemical School, claims the vegetable contamination could have been mitigated if the government provided vital information and a warning beforehand.
"If the government gave out information on where the radiation was likely to spread and told farmers to cover their vegetables with plastic sheets, the contamination level could have stayed within the government limit," said Inoue. "It's a man-made disaster."
The government and Tepco have also drawn fire for not opening valves early on March 12 to release radiation-polluted gas so the rising pressure in the No. 1 reactor could be released.
The pressure buildup caused a hydrogen blast that blew up the reactor building later in the day, worsening the situation.
The widespread devastation and massive loss of life on top of the nuclear disaster will further test Kan's leadership.
As the survivors come to grips with the loss of loved ones, homes and jobs, experts say it is vital for the government to quickly offer a clear vision of reconstruction.
"It's necessary for the government to show a road map and take on the responsibility to restore the region," said Shigeki Yamanaka, a professor at Kwansai Gakuin University's Institute for the Research of Disaster Area Reconstruction. "But so far, it is not clear what the government intends to do."
In a news conference April 1, Kan offered hints at what he had in mind, including building coastal neighborhoods on higher ground, from where residents would commute to ports to resume work in seafood processing plants.
Making Tohoku a model in eco-friendliness was another option, he said.
Although the government faces the need to start reconstruction work soon, it must also map out a comprehensive blueprint. It created a reconstruction panel of experts and regional governors Monday.
The reconstruction will also require massive funds.
Clearing the debris, including items considered private property, such as cars, will require the central government to obtain special authority to expedite the cleanup.
Plans also call for raising the maximum amount of aid provided to people who lost their homes above ¥3 million, allowing people in the disaster zone to postpone mortgage payments and provide them with tax benefits.
Building temporary housing and allowing shelter evacuees to move in is also a big part of the rebuilding, but the process is being hampered by a lack of land and building materials.
The government has asked builders to construct 30,000 temporary housing units by mid-May and another 30,000 by mid-August. But at present only about 6,000 dwellings are going up.
"It is necessary to help local governments by allowing farmland, government-owned land and forests to be used as temporary housing sites," land minister Akihiro Ohata said April 5. "We will also ask the U.S. and European countries to provide construction materials if there is not enough."
When the town of Minamisanriku, Miyagi Prefecture, asked the prefecture for permission to build temporary housing on private property, including unused farmland, the prefecture was initially reluctant because landowners might put up resistance. It was not until this month that the prefecture gave the green light.
Yamanaka of Kwansai Gakuin University said the key to reconstruction is to balance the roles of the state with those of regional governments.
Houses and cars, for instance, are now piled up on someone's property, making it difficult for the landowner to remove the rubble.
So the government should draw up legislation to allow it to purchase the land, raise the ground level by several meters, build homes and sell them to local residents, Yamanaka said.
"Local governments and communities should be in charge of how they rebuild based on their history and background," he said. "The central government should provide untied subsidies that local governments can use at their discretion."
The government's biggest headache may be coming up with the funds to cover the long-term costs of the nuclear crisis.
According to a government estimate compiled last month, restoring housing, factories, roads and other infrastructure in the disaster-hit area will cost between ¥16 trillion and ¥25 trillion, and this doesn't include the tab for the nuclear crisis.
The figures soars above the ¥10 trillion in damage incurred by the Great Hanshin Earthquake that devastated Kobe and its vicinity in 1995, resulting in the loss of more than 6,400 lives.
A Bank of America Merrill Lynch report said Tepco could face compensation claims of up to ¥3 trillion if the nuclear crisis drags on for six months. Goldman Sachs Japan Co. estimates Tepco faces an extraordinary loss at ¥700 billion if it were to decommission all 10 reactors at the site as well as at the Fukushima No. 2 nuclear plant.
Tepco obviously will not be able to shoulder the bills by itself, triggering speculation that the utility may face nationalization. This will no doubt balloon the cost the government will have to shoulder.
Even if Kan's Democratic Party of Japan-led ruling coalition gives up key pledges, including monthly child allowance and free highway tolls, and uses reserves for this fiscal year and the last, it will only mount to about ¥6 trillion.
One idea emerging from politicians in the ruling bloc is to issue government bonds underwritten by the Bank of Japan, an action that is basically prohibited by law. However, the Public Finance Act allows the bank to underwrite sovereign debt in exceptional cases.
"Funding reconstruction costs with government bonds means passing the burden on to future generations," said Ryutaro Kono, chief economist at BNP Paribas in Tokyo. "We can't trigger another crisis (of collapsed state coffers) to deal with the disaster."
Japan already has a public debt worth about 180 percent of its gross domestic product, the highest among developed countries.
Kono instead proposed temporarily raising the 5 percent consumption tax by 1 point to fund the costs. Since an increase translates into about ¥2.5 trillion, and a four-year hike would gather about ¥10 trillion, which could be used for issuing "disaster bonds," he said.
"The entire population should support the reconstruction, and a tax hike is the answer," Kono said. "I think the public is ready to share the burden."