Chapter Five
The Cost of Disaster

IMMEDIATE ESTIMATES OF material damage from the earthquake and tsunami in the Tōhoku prefectures were shocking. Destruction of livestock, housing, buildings, roads, railways, and harbours was initially estimated at ¥10.15 trillion (AU$130 billion), one-and-a-half times greater than the Great Hanshin Earthquake which devastated Kobe in January 1995. Heavy industry in the six Tōhoku prefectures operated iron, steel, and cement plants, chemical factories, pulp mills, and petrol refineries. Many were damaged and had to cease production; as did food-processing plants and factories making electronic parts, circuits, and telecommunications equipment. Tōhoku had been responsible for 12 per cent of the country’s electronic parts and circuitry, and 14.4 per cent of its communications equipment. For months after the catastrophe, in the absence of precise figures, the Japanese and foreign media predicted grim economic consequences for the Tōhoku region, for Japan as a whole, and for some of the country’s trading partners, particularly China and South Korea.

As the nation’s economists drew breath and regrouped, preliminary reports of economic performance after 11 March became available. These showed that the Japanese economy had shrunk by 0.9 per cent in the March quarter, output had fallen 3.7 per cent on an annualised basis, manufacturers’ supplies had been disrupted, and electric power to the greater Tokyo region and northern Honshu would need to be severely rationed as the hot summer months closed in. Tōhoku’s high-quality (and highly profitable) fruit and rice crops became worthless in Tokyo markets, as rumours spread that they had been dusted with radiation. Highly prized beef-cattle herds were systematically euthanased where they stood in fields deserted by their farmer owners. The fishing industry in northern Japan was crippled, with ports destroyed, fishing boats sunk or washed inland by the tsunami, and pelagic fish stocks irradiated by millions of litres of sea water that had been used in a desperate attempt to cool reactors in meltdown and then pumped out to sea. Food exporters lost markets because of consumers’ fears about radiation. Manufacturers were badly affected, as their factories along the coast were damaged or destroyed, with many of their work force either dead or gone. In the auto sector, Japan’s largest manufacturer, Toyota, suffered a fall of 99 per cent in its net profit for the first fiscal quarter of 2011 as it grappled with the dual impact of crippled production lines in Tōhoku and a surge in the value of the yen against other trading currencies.

By the end of March 2011, a bill of ¥16.9 trillion (approximately AU$211 billion) was estimated by the Cabinet Office for infrastructural cleanup and repairs in the Fukushima, Iwate, and Miyagi prefectures. Costs incurred by the nuclear meltdowns and anticipated compensation payouts to disaster victims had yet to be calculated. According to a report in the Asahi Shimbun on 15 September 2011, clean-up costs associated with radiation will be especially severe. About 2000 square kilometres of surface land surrounding the wrecked power plants needs to be removed to a depth of several centimetres. Judging from earlier unsuccessful attempts to decontaminate and remove surface soil impregnated with plutonium-239 at the Maralinga nuclear proving grounds in central Australia (contaminated during British nuclear tests in the 1950s), the chances of success at Fukushima are slim. Meanwhile, despite the best efforts of Japan Airlines (JAL) and tourist organisations to assure overseas customers that most tourist regions outside the Tōhoku region had been completely untouched by radiation, tourists stayed away in droves. Arrivals from all sources fell by 80 per cent on 2010 figures, even though JAL was offering free air tickets to selected travellers.

In October 2011, an ominous prediction was made by two Japanese magazines, the Shukan Bunshun and Shukan Diamond. As reported by Michael Hoffman in The Japan Times on 23 October 2011, the first claimed that the nation’s middle class was disappearing; the second, that the rich were leaving. These trends began before 2011, but the tsunami and nuclear meltdown only helped exacerbate them.

The Diamond interviewed one of the Japanese rich, a businessman based in Hong Kong who claimed to have no desire to return to Japan. He saw it as saturated in radiation, and prey to a wavering government that promised to lower taxes, but looked like raising them. If Japan is prone to earthquakes, many like him asked, why invest in Japanese real estate when you get bigger and safer returns in Hawaii? If taxes are to increase, why should they not move to Singapore, where taxes are low, and which already hosts a Japanese community of 20,000? Why not move to a rich country like Canada, where radiation does not stalk inhabitants? Another wealthy interviewee said that he preferred Malaysia and its lower risk of earthquakes and cyclones. In Japan, he’d be paying the highest tax rate, and for what? ‘The way politics is going, Japan’s future looks dark indeed,’ he said.

As for Japan’s middle class, the Bunshun asserted that they had been getting poorer for almost three decades. Economic stagnation over the previous 12 years had cost Japanese workers ¥220 trillion (AU$2.75 trillion) in lost and declining salaries. When the Lehman Brothers investment bank collapsed in New York in 2008, salaries plunged in both countries. Even before the collapse, the problem for workers in Japan was that corporations were cutting full-time staff in favour of part-time and temporary employees, to the point where around one-third of Japanese workers are part-time. For young people in what is still the world’s third-largest economy, it is the same as being born into poverty. A 2010 survey of wages in Aichi prefecture found that 55 per cent of male company employees in their twenties were taking home less than ¥200,000 (AU$2500) per month. Their only way to live decently on this was to rely on their parents — a stopgap solution that hobbled their advance into adulthood.

Another of the Diamond’s interviewees said that he had graduated from a national university and got a job, but only when he reached his late twenties did he take home more than ¥200,000 per month. Since then his salary had hardly gone up at all. What was life going to be like ten years from now, he wondered? His wife’s mother built a ‘two-generation home’ for herself and the couple; this was all that was saving them from poverty. A Tokyo woman in her forties interviewed by the Diamond was tied to Japan by her job as a hospital director, but sent her daughter to school in Canada, thus sparing herself worries about the girl’s long-term health. The magazine did not reveal how many Japanese it believes are involved in this kind of migration, but claimed that the financial impact of their departure is much greater than their numbers.

These are depressing stories, but they do not necessarily reflect trends across the whole of the nation. Other evidence indicates a better economic prognosis. This includes the positive attitude of local officials I interviewed in October 2011 — in Fukushima city, Soma, and Minamisōma — who were determined to rebuild and repopulate their towns. Recent economic indicators and considered government predictions were more hopeful. On 14 November, eight months after the catastrophe, the Cabinet Office in Tokyo announced that Japan’s gross domestic product had grown by 1.5 per cent in the three months to the end of September, compared to the three preceding months. The growth came after three quarters of contraction, and indicated a possible future annualised rate of growth of 6 per cent — much better than anything Japan had achieved in recent years. Exports were still depressed by economic uncertainties in the United States and Europe; nonetheless, they accounted for one-third of the growth in the third quarter of 2011. According to Yasuo Yamamoto of the Tokyo-based Mizuho Research Institute, the return to growth reflected the recovery of the supply chains, which had lifted factory output and consumption.

One of the more even-handed analyses of the performance of the Japanese economy after Fukushima came from Professor Hugh Patrick of the Centre on Japanese Economy and Business (CJEB) at the Columbia Business School. Professor Patrick has made a lifelong study of the Japanese economy, and was honoured for his work in 2010 by the Japan Chamber of Commerce and Industry. His chapter on the economic effects of Fukushima appeared in the CJEB’s annual report for 2010–2011. He claimed that, despite economic vicissitudes, and contrary to the pronouncements of doomsayers, Japan’s economy had been doing rather well. Overshadowed in the minds of many international economists by the brilliance of China’s expansion, Japan nonetheless survived the great global recession of 2008–2009, and was holding its place as the world’s third-largest economy. In 2009, unemployment was only 5.2 per cent, many companies were managing to retain most of their workers, and the economy was growing at 4 per cent. Its problems were minor compared to those of Europe, coping with a single monetary system but incompatible national fiscal policies, or the United States, trying to resolve its own basic fiscal problems and chronic underemployment while burdened by a massive defence budget and a turbulent stock market. The yen was a safe haven for currency speculators. All Japan had to do to retain its economic momentum was to pursue a near-term policy of aggressive fiscal stimulation in order to counter deflation and achieve full employment.

Patrick admitted that the earthquake and tsunami of 11 March 2011 did horrendous economic damage to the Tōhoku region, but argued that it had not done so to the rest of the country. Beforehand, the three prefectures of Iwate, Fukushima, and Miyagi were home to 4.5 per cent of the country’s total population, produced 4 per cent of its gross domestic product, and harboured 7 per cent of its fishing fleet. Only a relatively small area of farmland was inundated and made resistant to recovery by flooding sea water. Meanwhile, the stoicism, flexibility, and pragmatism of people in the affected areas had combined with government instrumentalities and emergency workers to bring things quickly under control. Evacuation to temporary shelters and then to well-constructed, longer-term housing was rapid and efficient. Infrastructure, including roads and railways, was quickly repaired. Successful efforts were made by manufacturing companies to overcome breakdowns in the production supply chains of small but essential components in their damaged Tōhoku factories. (Japan’s ‘just-in-time’ inventory system may need to be modified with a deeper resource base in relevant industries.) Except in the afflicted prefectures, unemployment nationwide had stabilised at 4.6 per cent by September 2011.

Recovery expenditures were huge, but the Japanese exchequer has deep pockets, even while running a large deficit. Within weeks of the tsunami, ¥6 trillion (AU$75 billion) was committed to remedial work. Much more was given through supplementary budgets. Deflation saw a 0.5 per cent price decline for the first six months of 2011, a tendency which persisted into 2012. But the Japanese government bond market was stable, the yen continued to strengthen, and there was no sign of a systemic crisis in Japan’s financial system.

Despite such evidence of economic resilience, Patrick conceded that the Japanese economy had been hurting in both tangible and intangible ways. Tangibly, tourism was the worst-affected industry. In 2010, there were 8.6 million tourists to Japan, mainly from China, South Korea, and Taiwan — 26.8 per cent more than in 2009. Figures in 2011–2012 were substantially lower, and it will be some time before visitors on non-essential business will feel persuaded that Japan is still a safe place to come to, especially anywhere north of Tokyo. The accommodation and leisure industries in Tōhoku were really suffering, with hot-spring resorts being the hardest hit. On the brighter side, skiing picked up during the winter of 2011–2012, not only in Hokkaido, but also in the mountains of Tōhoku.

Patrick observed that Japan’s reputation as a technically sophisticated and reliable country had also been dented, and not only in its nuclear industry. After such a catastrophic, systematic failure at one of its largest nuclear-reactor complexes, could Toshiba, Mitsubishi, and Hitachi continue to compete against Korean, French, and Russian manufacturers, and sell their nuclear reactors to overseas customers? Before Fukushima, the Japanese nuclear industry was commonly regarded by many potential customers as the most advanced and safest in the world. That reputation took a substantial blow, although the consequences have yet to be fully felt. Meanwhile, anti-nuclear advocates, including greens and trade unions in some of Japan’s export markets, were agitating for their governments to run Geiger counters over imported Japanese manufactured goods — especially motor vehicles, electronics, and white goods — when they arrived at landing docks, to ensure that consumers would not be subject to random doses of ionising radiation. Such agitation was especially strong in Australia.

By May 2012, all of Japan’s 54 nuclear-power reactors had been shut down, including those too damaged to continue to operate, those with structural problems that could be repaired, those requiring safety checks, and others needing routine maintenance or refuelling. Some economic analysts, including Yukio Okamoto (see Chapter Three) predicted that the resulting shortfall in electricity generation would have a disastrous effect on economic sustainability, let alone growth. How valid are these predictions?

The fact is that less than 30 per cent of Japan’s electricity was generated by nuclear power before Fukushima. Other sources were coal, heavy oil, liquid natural gas (LNG), and renewables, most of it pumped hydro. TEPCO operated 17 reactors: six at Fukushima Dai-ichi, four at Fukushima Dai-ni, and seven on the Japan Sea coast at Kashiwazaki–Kariwa. Despite shutting down its entire fleet after the tsunami, TEPCO was able to continue to feed electricity to most of its customers. Its other assets included 12 LNG power plants at Goi in Chiba prefecture, east of Tokyo; six units fuelled by a combination of heavy oil, LNG, and natural gas at the Anegasaki complex, also in Chiba; and 160 hydro-electric power stations, dotted around central and northern Honshu. TEPCO was also a joint stakeholder with the Japan Atomic Energy Power Company in several other nuclear reactors — with the Tōhoku Electric Power Company in the jointly owned Soma Kyodo Power Company, with Nippon Steel in the Kimitsu Cooperative Thermal Power Company, and with Sumitomo Metal in the Kashima Kyodo Electric Power Company.

On 17 March 2011, the Nautilus Institute for Security and Sustainability, based in Melbourne and San Francisco, published a preliminary assessment of TEPCO’s viability. It first looked at the damage to TEPCO’s generating assets in northern Honshu, from where the company’s main supplies of electricity were generated for the Tokyo grid. Before the catastrophe at Fukushima, TEPCO and Tōhoku Electric Power Company plants had the capacity to generate about 84,000 MW of electricity. Of this, 10,600 MW was generated by hydropower. Around 7150 MW of TEPCO’s system was taken offline following the tsunami — not only nuclear reactors, but coastal coal-fired plants (heavily damaged due to flooding), and transformer, transmission, and distribution facilities on the grid. Because of Japanese technical efficiency and resilience, 350 MW of this lost power was quickly restored.

Nautilus’s medium-term forecast was that the reactors that had melted down — Fukushima units One, Two, and Three — would not be reparable, and that damage and radiation would probably render units Four through Six irreparable as well. A total of seven TEPCO nuclear power plants and one owned and run by the Japan Atomic Power Company might also be irreparable. An unknown number of coal- and gas-fired plants which went offline on 11 March might also be irreparable, or subject to lengthy repairs. TEPCO would have to rely much more heavily on existing fossil-fuel plants in its inventory to sustain its capacity to meet power demand.

Nautilus then gave a best-case and a worst-case scenario on the future of TEPCO’s nuclear power plants. In the best case, about 4700 MW of nuclear generating capacity was gone, and would have to be replaced or otherwise compensated for by other sources of electricity. Further, because of local and nationwide resistance, 2700 MW of nuclear capacity to be developed at Fukushima Dai-ichi in the coming decade would not be built. A further 6600 MW of TEPCO’s nuclear generating capacity would remain offline for one to three years, including 3300 MW at the Kashiwazaki–Kariwa plant which was offline for inspection. 4000 MW of fossil-fuelled capacity would also be offline through the summer of 2011. Given that TEPCO’s hydro-electric power-generating capacity was virtually all ‘pumped storage’ (that is, water pumped into reservoirs by coal and nuclear energy at time of low demand, to be released through turbines at times of peak demand), virtually all non-nuclear generation would be fossil fuelled. TEPCO’s fossil-fuelled power units would be called upon to produce about 260 TWh of output through 2011, which implied a near-impossible capacity factor of nearly 100 per cent for fossil-fuelled plants available, and 81 per cent if all of the fossil-fuelled power plants that had been shut down during the earthquake were able to be restarted. But, assuming that no significant damage was found in reactors and other plants that were temporarily shut down, much of the short-term electricity shortage could be eliminated in three years.

The worst-case estimate by Nautilus assumed that all nuclear power plants in the earthquake area would be found to have significant seismic or other damage, leading to a five-year retrofit, while some fossil-fuelled plants would be found to be damaged beyond repair, and would have to be replaced by new plants, requiring several years to establish. Furthermore, because of nationwide resistance to nuclear power on safety grounds, other nuclear reactors throughout Japan would have to be taken out of service on a rotating basis for damage assessments and earthquake-resistant refits. These additional conditions would likely result in the need for many more new fossil-fuelled plants (and related fuel supplies), and a high reliance on reduction in demand, produced by energy-saving measures in factories, offices, and homes, and by possible power rationing.

At the end of April 2011, Hiroshi Hamasaki, a senior researcher in Tokyo, indicated that regulations made it quite difficult to restart nuclear reactors, whether they were damaged or not. Hamasaki compared the operational efficiency of Japanese reactors with those in other major nuclear countries, including the United States. In 2009, Japan’s 54 reactors were producing a total of 48,850 MW, or 26.3 per cent of electricity. But the rate of operation was only 64.7 per cent, which was extremely low compared to other countries. The main cause was the short operational life between maintenance periods. Under Article 54 of the Electricity Business Act, nuclear power plants must be inspected by the Ministry of Economy, Trade, and Industry (METI) at the beginning of operations, and then at 13 months after each fuel loading. In contrast, most nuclear-power reactors in the United States have an operational cycle of 18–24 months between inspections. In October 2010, the Tōhoku Electric Power Company sought to extend the period between regular inspections from 13 to 16 months at its Higashidōri power plant, in an effort to raise the operational rate to match other countries. But as Hamasaki delicately put it (in a very Japanese way), since Fukushima, it would be very difficult to obtain the understanding of local citizens to modify the law.

As it turned out, Nautilus’s bleakest scenario did not eventuate. By the end of August 2011, TEPCO had readjusted its power-plant fleet to be able to generate 56,100 MW — just enough to cover peak summer demand in the capital. Some of the power it bought from other companies, which were also able to sustain delivery to other regions of Japan. During my visit to Tokyo and Tōhoku in October 2011, I found that the country had survived throughout the summer with fewer power blackouts and less disruption than had been expected. This was due as much as anything else to the capacity and willingness of the Japanese to cut back on their power usage, which dramatically reduced demand. Japanese businessmen were quite prepared to abandon their armour of business suit and tie in favour of open-necked shirts, and many carried fans to work, which (as Dianne Takahashi observed in Chapter Two) became quite a fashion statement. Corporations imposed power rationing by reducing lighting and air conditioning in their vast Tokyo office buildings. Smaller businesses, department stores, shops, restaurants, neon-sign operators, and housekeepers throughout the country shared the burden by reducing their electricity usage. Overall consumption for the summer months of June, July, and August 2011 fell by 18 per cent. Walking down the streets of Ginza on an October afternoon was like being transported back in time to my first posting to Tokyo in the 1960s — there was an atmosphere of quiet, orderliness, and restraint. The garish and glittering neon signs had become sombre shadows of themselves.

If such a result could be achieved with only 11 out of 54 nuclear-power reactors in operation, could a case be made for abolishing nuclear power altogether? Prime minister Naoto Kan had supported such a notion; but on 26 August, after gaining parliamentary approval for legislation to tighten safety regulations for the Japanese reactor fleet, he resigned. He was replaced by Yoshihiko Noda, who is neutral, even a little positive, about the continuation of nuclear power in Japan. But Kan’s chief cabinet secretary, Yukio Edano, also a nuclear sceptic, is now Minister of Economy, Trade, and Industry, one of the key ministries driving the expansion of nuclear power. At the time of writing, Edano as METI minister wants to put a brake on nuclear power, but his officials do not. They are backed by much of Tokyo’s bureaucracy, as well as the residents of small coastal towns who have benefited enormously through tax concessions, employment, and infrastructure projects (such as the construction of roads, sporting facilities, schools, and hospitals) — financed in whole or part by the nuclear-power companies which have constructed reactors in their neighbourhoods.

And what fate awaits TEPCO, burdened as it is with huge compensation claims over the meltdowns at Fukushima Dai-ichi, and with a public climate of distrust towards the expansion of nuclear power in Japan? In a ritual move designed to take personal responsibility for the disaster, TEPCO chairman Masataka Shimizu resigned on 20 May 2011, to be replaced by managing director Toshio Nishizawa. On the same day, TEPCO reported a AU$15.3 billion loss for the financial year ending 31 March, and announced that it was scrapping plans to build two new reactors at its Dai-ichi complex. For the first time since its establishment in 1951, the company made no dividend payments to shareholders, and this raised serious questions about whether it could continue operations. It faced practically unlimited demands for compensation, which would almost certainly exceed its assets of ¥15 trillion (about AU$186 billion). Estimates of its liabilities ranged from between ¥4–25 trillion, including ¥7.8 trillion to bond holders and bank customers, who take precedence over those afflicted in the disaster — a politically radioactive order of priorities.

Before 11 March 2011, TEPCO was the cornerstone of corporate Japan, with 750,000 people, many elderly, owning its shares. It accounted for a hefty 8 per cent of Japan’s total domestic debt market. After the catastrophe, Moody’s and Standard and Poor’s cut its bond rating to junk.

Before he resigned in August 2011, prime minister Naoto Kan said he favoured a break-up of TEPCO, the sale of its assets, and the introduction of legislation to cut the stranglehold of the ten power companies that both generate and distribute electricity. Japan’s ten regional utilities monopolised the production, transmission, and distribution of electric power in Japan, generating a combined annual revenue of ¥15.7 trillion (AU$200 billion). TEPCO still supplied 29 million people with electricity in the greater Tokyo metropolitan area, but after 11 March 2011 it needed financial support from the government’s Nuclear Damage Liability Facilitation Fund to avoid bankruptcy. Big business was against deregulation, possibly because so many large firms like Sumitomo, Hitachi, Toshiba, Mitsui, and Mitsubishi supplied the utilities with heavy electrical equipment, which in turn paid high prices to reward loyalty.

After Noda replaced Kan as prime minister, and Yukio Edano became METI minister, the possibility of the break-up of TEPCO continued. Edano speculated that the company might be nationalised, and the capacity of the ten monopolies to generate and distribute electricity abolished. According to informed Japanese speculation, compiled and published by the news agency Bloomberg, the government might fold ‘bad TEPCO assets’ in with those of other operating atomic plants in Japan to create a state-run nuclear utility. But according to Shigeaki Koga, an ex-METI bureaucrat who was forced out of the ministry for publicly criticising its handling of TEPCO after 11 March 2011, any scheme to nationalise the company would mask problems that needed confronting. Koga, who by December 2011 was serving as a special adviser to the nuclear-sceptic mayor of Osaka, Toru Hashimoto, said that METI minister Yukio Edano should dismiss all senior management and liquidate TEPCO instead of using taxpayers’ money to bail it out. METI did not respond, but Edano said he would not allow the company to become bankrupt, because to do so would restrict cash available as compensation to Fukushima victims.

A further analysis of the fate of TEPCO and Japan’s nuclear future is made in the concluding chapter of this book. In the meantime, it can be seen that the country has remarkably and successfully staved off a catastrophic reduction of electricity, and more or less maintained the country’s production activities and high living standards. This is due to two dominant factors: the ability of utilities such as TEPCO to compensate for the loss of nuclear power by calling on a wide diversity of other power-generating assets, and the willingness of most Japanese to exercise discipline in energy consumption.

It is, however, too soon for the country to relax. Massive financial challenges lie ahead. Not least is the cost of cleaning up radiation in soil contaminated by the reactors. This is not confined to the caesium-137 ejected from hydrogen explosions at units One, Two, and Three at Fukushima Dai-ichi and deposited by rain on the tops of mountains in Fukushima, Miyagi, and Iwate prefectures. Gamma rays, X-rays, and neutrons from different isotopes have been found to be constantly radiating upwards from the topsoil of school playgrounds in Tōhoku and in hotspots of concentrated isotopic deposits as far away as Tokyo and the prefectures of Ibaraki, Saitama, Nagano, Gunma, and Yamagata. According to a clean-up law passed by the Diet in January 2012, concrete pits will be constructed in Fukushima temporarily to store topsoil scraped from the contaminated areas of that prefecture, before cleaning operations move on to other prefectures. The topsoil will all eventually be transported to a permanent, centrally managed storage facility (the location of which has not yet been specified). Sumitomo and IHI are among companies seeking to win decontamination contracts. This Sisyphean task is estimated to cost in the order of ¥1.1 trillion (AU$1.375 billion). Judging from the lack of success of other radiation clean-up projects such as at Maralinga, Kyshtym, and Chernobyl, it is unlikely that this will be enough.

Meanwhile, Japan’s national budget for 2012–2013 is around ¥93.56 trillion (AU$1.17 trillion) — an unprecedented amount. The general-accounts budget is ¥90.33 trillion, of which ¥44.24 trillion will be financed by a new government bonds issue, and ¥42.35 trillion by tax revenue. The outstanding long-term debt of the central and prefectural governments will increase to ¥937 trillion by the close of the 2012 fiscal year, which ends on 31 March 2013. This is 195 per cent of Japan’s GDP, a higher debt-to-equity ratio than many financially troubled countries in Europe. Apart from spending ¥3.78 trillion on reconstruction projects in the Tōhoku region, public expenditure will be severely curtailed. The budget anticipates an as yet unspecified reduction on outlays in public-works projects, national defence, and overseas development-assistance programs — and, interestingly, in the budget relating to the promotion of nuclear energy. Overall, there will be a reduction in public spending, excluding debt-servicing costs, of 3.5 per cent over the current financial year, to ¥68.39 trillion.

On 25 January 2012, Voice of America correspondent Victor Beattie reported the news that Japan had just posted its first annual trade deficit in more than 30 years — AU$32 million for 2011. Exports had shrunk 2.7 per cent as the inflated yen made Japanese exports more expensive for foreign buyers, and imports had surged by 12 per cent, due to costly fossil-fuel imports needed to compensate for closed nuclear reactors. Chief Cabinet Secretary Osamu Fujimura said that the rising yen and other factors were hurting Japanese industries: ‘There is much concern over the hollowing out of industries. As such, we need to nurture new industries through regulatory reforms and comprehensively promote policies that will strengthen our growth potential.’

The halcyon days of Japan recording large annual trade surpluses might be over, but the country continues to be endowed with enormous fundamental economic strengths. Although a lower trajectory of growth is inevitable — a declining and ageing population is increasingly drawing down life savings — the country is a long way from entering the list of mendicant states. Once it has absorbed the staggering rehabilitation costs of the Tōhoku disaster, there is no reason why the economy should not recover. If the Noda government could disengage itself from the clutches of the nuclear village, scale back Japan’s nuclear-energy program, and embark on a policy of encouraging new renewable-energy industries such as wind turbines, photovoltaic cells, geothermal, and hydro-electric plants, the economic stimulation would be significant. A whole new set of export industries could be created. Already a number of prominent Japanese businessmen have drawn up exciting and far-reaching plans to turn the entire Tōhoku corridor into a renewable-energy powerhouse.