Asia Program

March 2012

Policy Brief
The Shifting Tectonics of Japan One Year After March 11, 2011
by Lully Miura and Joshua W. Walker
In spite of the March 11, 2011 earthquakes, tsunami, and Fukushima nuclear accident, Japan remains overwhelmingly stable. At the heart of the 3/11, as it has become known, anniversary is a uniquely Japanese paradox: a resilient people yet ineffective political leadership. Stability and strong human ties, or what Japanese call Kizuna, in society remain the greatest driving force for Japans recovery. Japan is the third largest economy in the world, an open and matured society, the oldest democracy in Asia, but is still as enigmatic to the rest of the world as it was one year ago. The question now is: will the Japanese people continue to endure further decline and frequent changes of government without substantiated reforms in the next decade? Although 3/11 still affects Japan, especially in the Tohoku region, a discussion of the long-term impact of 3/11 and reevaluation of the nations recovery efforts is needed. The authors of this report, an American and a Japanese scholar whose expertise lie in foreign policy and political science, conducted a series of interviews with key Japanese political leaders to understand the main lessons learned and themes from 3/11 one year later. The devastation of 3/11 narrows Japans policy options and further converges the position of the two major political parties, the Democratic Party of Japan (DPJ) and Liberal Democratic Party (LDP), toward both an internationally consolidated pro U.S.-Japan alliance security policy and a domestic progrowth/pro-globalization economic policy in spite of their unconsciousness or unwillingness. This reluctant consensus toward reforms and adaptation to the new reality is challenged both within and between these political groups, delaying the much-needed changes and reform in Japan now that the immediate crisis has passed. Political and economic confusion in the first few months of 2012 seem to suggest that the developed world, particularly Europe, face many similar challenges to Japan although for very different reasons. Economic decline, slow actions by leadership, and a lack of accountability undermine a stable societys future, as unfortunately is seen now in many developed countries, just like Japan last year. This is an insiders report on the devastating tragedy of 3/11 and how it has changed and not changed Japan, with critical lessons for the rest of the world.

Summary: Japans magnitude 9.0 earthquake and ensuing tsunami on March 11, 2011 was the worst in the island nations recorded history. It devastated the northern region of Japan known as Tohoku and caused one of the worst ever nuclear accidents. 3/11, as it has become known, has been labeled the gravest crisis that Japan has encountered since World War II. Yet even in its darkest moment, Japans resilience and collective response shone. In a culture esteeming patience, respect, and stoicism, the Japanese people were uniquely suited to adapting post-3/11. But the Japanese government has remained stubbornly resistant to change, despite the tectonic plates that have shifted both figuratively and literally.

1744 R Street NW Washington, DC 20009 T 1 202 683 2650 F 1 202 265 1662 E info@gmfus.org

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The 3/11 Disaster The magnitude 9.0 Tohoku earthquake was one of the most devastating natural disasters ever recorded in any industrialized country. Nearly 16,000 people died immediately and almost 3,500 are still missing.1 The natural disasters cost to Japan was 16.9 trillion, not including the damage from the Fukushima nuclear accident. The tsunami washed away the eastern coastline of Miyagi and Iwate Prefectures in Tohoku, which forced over 380,000 people out of their homes. In addition, the resulting meltdown at the Fukushima Daiichi nuclear power plant, managed by Tokyo Electric Power Company (TEPCO) led to the evacuation of approximately 150,000 people. One year later, many families from Fukushima still live apart from each other, to at least spare mothers and children from radiation. The accident at Fukushima Daiichi was as severe as the Chernobyl disaster of 1986 in terms of its magnitude. However, radioactive material released from the reactor was only about one-seventh the level of Chernobyls. One of the key reasons that Fukushimas radioactive release was smaller than Chernobyl was because the nuclear reactor fire wasnt prolonged, although the reactors buildings had exploded. But these two nuclear accidents share another common characteristic; there were human mistakes that worsened the severity of the accident. In Fukushima, the earthquake cut external power supplies and the subsequent tsunami washed away the emergency power supply system, which led to eventual meltdown. However, according to the Interim Report of the Investigation Committee, there were human errors, misjudgments, and miscommunications made by the reactor operators, local headquarters, Nuclear and Industrial Safety Agency (NISA), TEPCO head office in Tokyo, and the prime ministers office.2 As further proof, a recently concluded independent investigation by the Rebuild Japan Initiative Foundation, headed by Dr. Yoichi Funabashi also points out that Prime Minister Kan himself created chaos.3 Rep. Banri Kaieda, who was the head of
1 2

the Ministry of Economy, Trade, and Industry (METI) during the crisis, said that it was remarkable there was no immediate loss of life among the workers in the power plant considering the severity of the accident. He expressed regret that the government did not release the radioactive material-spreading forecast sooner in order to facilitate a more effective evacuation. In addition, he regretted that his government was slow to notify foreign embassies and the general public of the dumping of contaminated water with low levels of radioactive material into the sea. The current status of Fukushima Daiichi is still one of meltdown, and the exposure of fuel was severe, but the contaminated water is now being handled by a cleanup system developed by U.S. and French companies. Yet the path to complete decontamination is far from over; current government estimates for full decommission is 40 years. Based on information from a series of interviews with senior Japanese leaders in power on March 11, 2011, the main problem in the handling the Fukushima accident was a lack of creative thinking and immediate crisismanagement measures. Rather, every responsible person/ institution followed the usual bureaucratic procedures for more normal accidents or earthquakes rather than taking the initiative to deal with the extraordinary set of circumstances they were confronting. A lack of leadership and the tendency to escape responsibility by respecting the formality of due process doomed more innovative solutions that in hindsight could have been successfully implemented. Miscommunication and delays in action, including releasing critical information, was not the cause, but the effect of disaster changing from natural to manmade. The argument made in the immediate aftermath for the establishment of a Japanese Federal Emergency Management Agency (FEMA) and information sharing system among the governmental institutions, TEPCO, and the nuclear reactor site, was too little, too late and only focused on institutional change. The most important change needed in Japan post-3/11 is not in institutions but in individuals to deal with future crises.

Nikkei Newspaper, January 1, 2012.

The most serious error was misjudgment of the operational situation of isolation condensers for cooling the reactor and poor handling of alternative water injection systems. For the English summary of interim report, see http://icanps.go.jp/ eng/111226ExecutiveSummary.pdf
3 It also points out that TEPCO wanted to completely evacuate their personnel from the site, abandoning the nuclear reactors, which the prime minister forbade. The government was playing down the situation to the public and allies, rather than risk having to evacuate Tokyo.

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Post 3/11 Japan International Cooperation 3/11 necessitated the biggest joint rescue and recovery mission operation in the history of the Japanese Self Defense Forces (SDF). Shortly after the earthquake, over 100,000 personnel, almost the half of SDF, was mobilized to the Tohoku area. The SDF conducted search and rescue missions, coordinated the operation to deal with the nuclear disaster, and spearheaded the delivery of aid missions. Japan and the United States launched a massive joint military initiative called Operation Tomodachi, the largest cooperation since the aftermath of World War II. The United States dispatched 20,000 troops, including special forces trained to deal with nuclear disaster, 20 ships, including the aircraft career USS Ronald Regan, and over 160 aircraft, including UAVs to track radiation. The scale and speed of the operation surprised both the Japanese government and SDF. In addition to the overwhelming support from the United States, many other nations from Europe, China, and even Kandahar, Afghanistan, offered their immediate assistance. The outpouring of support and offers of support, including military personnel from Australia and Korea were unprecedented. International cooperation, however, is not easy for Japan. The lessons learned post-3/11 are significant and revealing. The need for on-the-ground interpreters, effectively distributing tasks, and relaxing normal bureaucratic procedures are all areas for further improvement. Given the global environmental dimensions of Fukushima Daiichi, Japan cannot simply return to isolationist or domestic narrowminded tendencies. Drifting debris from the tsunami will reach Hawaii in early 2013, and water contaminated with low levels of radioactive material released into the Pacific Ocean will be reaching the west coast of North America in three years. Domestic Politics 3/11 hit Japan at the height of the early spring political season. Prime Minister Naoto Kan was weathering the opposition LDPs attack during a political scandal involving donations from foreigners. The scandal added salt to the wounds of the ruling DPJs setbacks since taking office in the autumn of 2009. The first DPJ prime minister, Yukio Hatoyama, had an erratic approach towards foreign policy, including creating a major crisis over a U.S. base in Futenma, which had already shaken international confidence in the government. At the same time, various financial scandals over Hatoyama and DPJ Secretary General Ichiro Ozawa made the frequent change of governments seem like dj vu for a Japan that had only recently emerged from the LDPs domination of power without strong Prime Ministers or political leadership from 1990s, with the exception of the Koizumi days. Despite these DPJ problems, the LDP couldnt find its edge nor could it benefit from the governments mishaps. In the immediate aftermath of 3/11, a political ceasefire was agreed upon. The hope was that the disaster would wash away the tendencies to engage in irresponsible populist partisanism and instead act in the national interest. This was a new experience for the fledgling two-party system of Japan. Both the DPJ and LDP came together as the rest of Japan was unified in disaster, until poor leadership and a lack of coordination by Prime Minister Kan spoiled the spirit of bipartisan cooperation. First, Kan called LDP President Sadakazu Tanigaki and asked him to become his vice minister, hoping to secure a national unity coalition. President Tanigaki almost immediately turned Kan down given that there were no prior negotiations or groundwork on which to build such a unity government. Rep. Yoshihide Suga, Chairman of Party Organization and Campaign Headquarters, LDP, pointed out that it was, a disagreeable move that the DPJ proposed a coalition with the LDP without reconsidering their campaign Manifesto, which promised a lot of spending.4 The DPJ tried to bring the LDP into a plenary discussion before the formal session of Diet began, even before they agreed within their party about what to do for the recovery and how to budget for it. As a result, it failed, further adding to the Kan administrations problems of mismanagement and recovery planning at the time. At the beginning of June 2011, Kan faced the possibility of an internal revolt. To forestall a vote of no-confidence, he promised his imminent exit. After benchmarking the recovery efforts and nuclear reactor accident management, Kan tried to make a case for prolonging his administra4

Mainichi Newspaper, June 10, 2011.

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tion. He suddenly, and without explanation, overturned the nuclear reactor safety declaration by METI Minister Kaieda, ordering ministers to introduce a stress test as a pre-condition for resuming reactor operation on July 6. He also declared the pursuit of a nuclear reactor free country, without presenting any specific alternatives or even discussing the idea first among his colleagues and party members. This blatant and populist approach to saving his job was much criticized by many politicians of both the DPJ and LDP. Budget Issues 3/11 was a severe challenge for the Japanese government, in which political leaders and massive bureaucratic system could not effectively pave the way to recovery. This inability is reflected best in the budgeting process and the establishment of the Reconstruction Agency. The recovery and reconstruction was initially delayed in Tohoku because of the need to agree on a supplementary budget. An already weakened Kan administration, with its poor handling of the planning process, couldnt break through the political deadlock in Tokyo. The national budget for 3/11 recovery efforts was first estimated at between 16 to 25 trillion. Based on the consensus and estimates, the Kan administration announced plans to spend 23 trillion over a 10-year period at the end of July 2011. However the first two supplementary budgets passed were relatively small (4.153 trillion and 1.9988 trillion, respectively) reflecting Prime Minister Kans limited political capital and the difficult political environment. In August, the major parties jointly agreed upon the source for the recovery and reconstruction supplementary budget, a special government bond. In order to do so, the ruling party agreed to reconsider the massive spending plan. Each secretary general of the three major parties in the Diet (DPJ, LDP, and New Komei) agreed not to appropriate a budget for the elimination of highway tolls in FY 2011, to reconsider the plan of exempting high school costs, reforming the individual (household) income support system for agriculture, and to reduce the child allowance.5 This agreement
5 This three-party agreement was established thanks to the devoted efforts of three nextgeneration leaders, including three secretary generals Katsuya Okada of DPJ (former president of DPJ), Nobuteru Ishihara of LDP, and Yoshihisa Inoue of New Komei with LDPs chairman of Policy Research Council at that time, Shigeru Ishiba (former minister of defense).

demonstrated that some elements of the major political parties could find areas for cooperation and bipartisan consensus. The pressure on Kan to step down finally forced his announcement at the end of August. Initially with five contestants, the DPJ presidential election ultimately came down to a race between the Ozawa group-backed Banri Kaieda and a joint factional candidate, Yoshihiko Noda. Noda won out. Kan was replaced by the Noda administration, which introduced a third supplementary budget of over 12.1 trillion to the Diet. This finally passed in November. The most difficult part was finding a revenue stream, which the government worked out through a total increase of 10.5 trillion spread over increased income, corporate, and residents tax. The fourth and last supplementary budget introduced to the Diets ordinary session came in January 2012 for 2.5 trillion. Distrust between the DPJ and LDP became definitive as soon as the three-party agreement was withdrawn by the DPJ. The prospective minister of state for national strategy, economic and fiscal strategy, Motohisa Furukawa, and newly introduced Deputy Prime Minister Okada took the lead on the integrated reform of taxation and social security, making this the hot-button issue for the Diet and the Noda administration. Rep. Suga of LDP scornfully dismissed the possibility of raising the VAT from 5 to 10 percent, pointing out the DPJs dishonesty in breaking the original agreement with supplemental spending plans such as three new Shinkansen train lines. The initial founding spirit of the DPJ, which was to destroy the grip of old bosses driven by special interests, was partially fulfilled. But what replaced old politics most directly was money scattering policies skewed towards individual families and farmers. The DPJ has turned out to be a bigger spender than the LDP had been, both in the new and old type of public spending. Japanese politics now is in a deadlock between a desperate DPJ administration, which wants to fight the next election from the moral high-ground based on its 3/11 response, and an opposition that is loath to budge on any reforms that may benefit the ruling party.

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Surprisingly, after so many scandals and mistakes made by various DPJ governments, including now three unelected prime ministers, the LDP does not seem able to take full advantage. According to a February 2012 survey, only 24.9 percent of the public support the LDP, while 22.5 percent support the DPJ.6 Despite the LDP leaders bets that the DPJ will lose in the coming election because of their handling of 3/11 they also have to deal with negative perceptions of not positively contributing as an opposition rather than being a party of no. If much needed internal reforms are to be neglected or postponed, LDP may very well turn out to be like Britains Conservative Party from 1997 to the early 2000s. Reconstruction Agency and Japanese Bureaucratic Incrementalism The Reconstruction Agency was finally established in January 2012 following the recommendation of an advisory panel for reconstruction planning. Hiroya Masuda, former governor of Iwate Prefecture in Tohoku and former minister of internal affairs and communications, pointed out that, This was not the time to introduce another agency and layer of bureaucracy in Tokyo.7 He says it should have been established immediately after the crisis in order to build a strategy, coordinate various stakeholders, and closely oversee the enforcement of its plan. In addition, the head of the agency should have been a political leader with a direct line to the prime minister and experience and skills in recovery management along with the strong legal authority to mediate between the various stakeholders. Instead, the DPJ administration picked Tatsuo Hirano, a safe man who wouldnt put his foot in his mouth.8 As Rep. Yosuke Kondo (chief deputy secretary-general and deputy chairman of the policy bureau of DPJ) explained, The Kan administration lost its momentum to bring in sincere intra-governmental cooperation.9 As time passed, creative ways of thinking
6 ANN survey on February 11-12, 2012. http://www.tv-asahi.co.jp/hst/poll/201202/ index.html

about overcoming cumbersome bureaucratic process and inertia waned rapidly. Fights over jurisdiction and governmental interagency inefficiencies took over. As a result, the government turned down private companies with great ideas and generous offers to help. Despite these disappointments, there were some signs of change in the recovery process and nuclear accident investigation. A bipartisan movement created by mid-level and young politicians to put pressure on party elders was launched in the wake of 3/11.10 Coalition members from the DPJ were opposed to Kan but were not necessarily from the core of Ozawas group. The coalition strongly pushed both parties to follow the three-party agreement, to redefine the rules and laws for the nuclear accident, and to establish a third party committee to investigate the handling of the nuclear disaster in the Diet.11 There are some independent movements within the ruling DPJ to change the current course of politics. Mabuchi, who was beaten by Noda in the DPJs presidential election in August, claims that the vicious circle of irresponsibility undermines Japanese politics. Mabuchi, a conservative pro-market politician, points out that the current DPJ is no different than the LDP of the past. His supporters are the discontented elements of the ruling party, offering internal opposition and incentives for future change. Washing Away Old Japan The 3/11 disaster has thus far not drastically changed Japanese society. In both its foreign policy as well as domestic economic reforms, Japan has remained remarkably resistent to change. Regrettably, even though massive foreign aid and cooperation were given to Japan from various countries on 3/11, the amount of overseas development assistant (ODA) distributed by Japan wont be increasing. Rather, it will decrease due to budget constraints, forecasts Vice Minister
10 In the middle of May, Shinji Tarutoko (chairman, Standing Committee on Fundamental National Policies in House of the Representatives) and Yorihisa Matsuno (former deputy chief cabinet secretary) in the DPJ and Yoshihide Suga and Taro Kono (former chairman of the Standing Committee on Foreign Affairs in House of the Representatives) in the LDP organized a bipartisan coalition to meet on the national crisis. 11

http://jp.reuters.com/article/jpopinion/idJPTYE82401Z20120305?pageNumber=1&vir tualBrandChannel=13848
7 8 He was appointed after the resignation of two ministers: Ryu Matsumoto, minister for reconstruction in response to the earthquake, and Yoshio Hachiro, minister for METI, in response to misbehavior. Hirano is a relatively safe man, according to Natsuo Yamaguchi, chief representative of New Komei (at the press interview on July 5, 2011). But Hirano also sent the wrong message to the public. See MSN Sankei News on Oct. 18, 2011. http://sankei.jp.msn.com/region/news/111018/fks11101819090004-n1.htm 9

January 18, 2012.

The last proposition was realized in December 2011, thanks to the efforts of Rep. Suga, Rep. Yasuhisa Shiozaki (former chief cabinet secretary) of LDP and Rep. Matsuno of DPJ. There are three investigation committees for the Fukushima Daiichi nuclear accident and crisis management: the government committee, the Diet committee, and the private committee (Independent Investigation Commission on the Fukushima Daiichi Nuclear Accident).

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for Reconstruction Yoshinori Suematsu (former special advisor to the prime minister).12 Most surprisingly, almost all the politicians we interviewed said 3/11 had virtually no effect on Japans long-term strategy. By examining the three traditional keys to Japanese strategy the Japan-U.S. alliance and security policy, tax and social security reform, and economic growth and free trade in relation to 3/11 a picture of Japan one year later emerges. Japan-U.S. Alliance and Security Policy The alliance with the United States was deepened substantially by close military and diplomatic cooperation in the aftermath of 3/11, with opinion polls showing a historic favorability rating for the United States. However, the proalliance sentiment did not drastically increase, especially in directly affected local areas, according to Councillor Yoshimasa Hayashi.13 Part of the reason for this is the fact that the greatest assistance to Japan was not always visible to the public.14 Many pro-alliance politicians, such as Rep. Suga, point out that the Kan administration did not explain to the public how much Japan was being helped by the United States, and even accuse the government of concealing that fact. DPJ Rep. Kondo confirmed this view, which has found greater traction since Kan left office. The U.S. Embassy has launched efforts to directly extend its support to the people of Tohoku, such as the transformation of the TOMODACHI Initiative into a private-public partnership umbrella organization aimed at supporting Japans recovery and at enhancing economic and cultural ties between the two countries more broadly. Rep. Hiroshi Ogushi, Parliamentary Secretary of Cabinet Office, says it is now widely accepted in the DPJ that the alliance with the United States is the only viable option for Japan in contrast to early discussions in the DPJs tenure about a turn towards an East Asian Community.15 The United States strong diplomatic support during tension between Japan and China over the Senkaku islands in autumn of 2010 contributed to pushing a once-reluctant DPJ towards fully embracing the alliance. The DPJs first prime minister, Hatoyama, tried to adopt a more independent policy from the United States, which failed after discussions over moving an U.S. Marine base in Futenma dominated the security policy of Japan. The subsequent Kan administration took a more traditional approach, but still maintained a cool distance from the United States. This attitude partly contributed to the lack of communication between the government and the United States shortly after 3/11. The virtue of the alliance became particularly apparent in comparison to the reactions among Japans neighbors over the disaster. China sent a rescue force to Tohoku only to withdraw quickly in fear of nuclear radiation. A Korean newspaper used the headline Japan Sinks,16 as neighbors mobilized to not buy Japanese made merchandises because of safety concerns. In other security policy fields, fundamental changes can be seen as well. In a remarkable shift, a formerly controversial policy against arms exports was reversed with little fanfare in order to co-develop defensive weapons with other countries and reduce defense spending. In addition to enhancing the SDFs own armaments, this new arrangement allows the armoring of new partners for future peace-keeping operations. Problems encountered during the Japan-U.S. alliance response to 3/11 including delayed information sharing and bureaucratic hurdles for coordination for joint operation, are being studied to avoid them in the future. New partnerships are being sought, particularly those that can strengthen bilateral U.S. cooperation within a trilateral framework, such as the recently signed maritime security cooperation with India and ongoing cooperation with Australia and Korea. The Noda administrations international policies already show signs of change from previous DPJ policies. Foreign Minister Genbas timely visit to Myanmar shortly after the visit of U.S. Secretary of State
15 16

12 At the forum hosted by Policy Alternatives Research Institute (PARI) of the University of Tokyo on Dec. 10, 2011. http://pari.u-tokyo.ac.jp/eng/event/smp_rep111210_eng.html 13

Interview with Yoshimasa Hayashi, member of the House of Councillors, acting chairman of Policy Research Council, January 17, 2012. A public survey conducted by Cabinet Office last year shows the highest ever favorability of the United States, 82 percent, 2.1 points up from 2010. Although, the rate of those who think the Japan-U.S. relations are in a good state improved just 0.4 points. (In the 2010 survey, the rate dropped from 81.8 percent in 2009 to rose to 73.0 percent, then 73.4 percent in 2011).

Interview with Hiroshi Ogushi, January 18, 2012.

14 The editor of the Nikkei newspaper praised the U.S. contribution and argued in his editorials that the Kan administration must tell the public more about the virtue of the alliance.

The South Korean daily JoongAng Ilbo used this phrase as a headline on March 12, 2011, inspired by a science fiction novel. The newspaper admits that it was inappropriate and used the new headline, Cheer Up Japan, on December 27, 2011. See http://english.kyodonews.jp/photos/2011/12/133881.html

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Clinton and cooperation with United States sanctions on Iran are only the two most recent examples of a revitalized Japan-U.S. alliance. Tax and Social Security Reform In order to regain long-lost fiscal order, the Japanese government has had to identify not only the revenue source for reconstruction bonds but also naturally increasing social security spending. There seems to be an unpopular yet mounting consensus among politicians that a consumption tax (VAT) increase cannot be avoided any longer in Japan. However, political deadlock has not allowed the Noda administration to push this reform through the Diet. The DPJ is attacked for proceeding toward VAT reforms while neglecting the previous three-party agreement. Minister Motohisa Furukawa took the lead on the integrated reform of taxation and social security and the proposed gradual increase plan of VAT to 10 percent (from 5 percent) by October 2015, but faced strong backlash from opponents of the plan, not just from the LDP but many within the DPJ, including the Ozawa faction and former Minister for METI Kaieda. Opposition to a VAT increase is centered around two arguments: 1) it might further worsen the economy, and 2) it is against the DPJs Manifesto. As Your Partys Secretary General Kenji Eda pointed out, when the LDP raised the VAT income from 3 to 5 percent, there was an inverse growth effect on the economy.17 Supporters point out that any initial dampening of the economy would be offset when the fiscal outlook improves as a result of stimulated government spending. Regardless of the economic facts, the truth is more of a political one. Opponents do not want to hand the Noda administration any victory before an election campaign. The governments debt will reach 1,000 trillion at the end of FY 2011 while only 44 trillion of special bonds have been sold this year. Prime Minister Junichiro Koizumi set a 30 trillion ceiling rate for a year, and the Fukuda administration sold 25.4 trillion in 2007. After the Lehman financial shock, Prime Minister Aso sold as much as the current administration. The DPJ increased the special bonds rate even before 3/11 and now 44 trillion has become the de facto ceiling, which is considered too high by most experts.
17

According to an IMF report published on January 24, 2012, even a doubling of VAT, will not be sufficient in itself to put the debt ratio on a downward path.18 The main cause of increasing debt is not 3/11 but an aging population requiring increased social security spending. The Ministry of Finance recently projected that they are envisioning a 16 percent VAT in Japans future to cover this increased spending. However, the real number necessary is estimated to be closer to something around 25 percent, plus a decrease in personal benefit and entitlements.19 Economic Growth and Free Trade 3/11 has provided the impetus to push for more economic growth. The DPJ has many aggressive redistributionists as well as strong pro-growth leaders, such as PM Noda and Maehara. In addition, there are some people who used to be members of the Democratic Socialist Party backed by labor unions of large industry. These represent Japanese corporatists with strong motivation for economic nationalism. Many of the younger leaders, such as Mabuchi and Kondo are also pro-growth. Kondo, for example, defines himself as a conservative politician arguing that economic growth is of the utmost importance for Japan today. He proposes various deregulation, priority investments, and joining the TransPacific Partnership (TPP).20 3/11 gave politicians like Kondo new momentum. The TPP is one of the hottest topics in Japanese politics. There is a strong opposition movement from farmers and the Japan Agricultural Cooperatives, known as Nokyo, backed by politicians and commentators who appear in the media to stoke protectionist fears. The investor protection mechanism within the TPP would protect companies from industrialized countries from the risks of a sudden change of business conditions in developing countries, so the pact itself would not be harmful to Japan. If the neutrality of the arbiter TPP court is in question, that can be argued once Japan enters the negotiation process. The argument for de-industrialization has little basis for support. Japan would largely profit if it joined and would be disadvantaged if it
18

IMF Fiscal Monitor Update, As Downside Risks Rise, Fiscal Policy Has To Walk a Narrow Path, January 24, 2012. http://www.imf.org/external/pubs/ft/fm/2012/update/01/ fmindex.htm

19

The Column, Keiichiro Kobayashi, October 31, 2011. The Canon Institute for Global Strategy http://www.canon-igs.org/column/macroeconomics/20111031_1117.html Interview with Kondo, January 18, 2012.

Interview with Kenji Eda, January 17, 2012.

20

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did not. Both Japanese consumers and Japanese companies would benefit from deregulation. Furthermore, entering the negotiation process of TPP does not commit Japan to anything other than keeping its options open, but the Noda administration has been cautiously downplaying its move towards joining TPP to avoid strong criticism. In addition to the TPP, a gradual promotion of individual economic partnership agreements is ongoing with Canada and the EU. The DPJ has become more and more similar to the LDP in regard to its policy and style of political leadership. It is, in fact, more of an ideological melting pot than the LDP ever was. The divide in Japan is now clear. It is between the forces of reform that combine a realist security policy with domestic economic reforms and opens itself to the global society and old factions of politics and bureaucracy backed by special interests. Tohoku Today Far from the politics of Tokyo, the Tohoku area one year later is showing signs of revitalization thanks to massive reconstruction public works projects. However, debris remains scattered across the coastline where destroyed villages and cities now are being planned and reconstructed. In these destroyed areas, the only business is reconstruction, leaving most women and white-collar workers unemployed. Clouds of fear cover the uncertain future of Fukushima Prefecture, where people are still exposed to nuclear radiation. The government and central ministries have repeatedly explained that there is no immediate risk or effect to human health from exposure to the current radiation levels, however, the criteria are not yet clear. More importantly perhaps, the psychological problems from a constant fear of the unknown have devastated people in this region. Agriculture in Fukushima is in danger of extinction, many people here only use bottled water, and the birth rate has dropped significantly because of the evacuation of pregnant women. TV programs across Japan now frequently broadcast new cleaning techniques for water and soil contaminated with radioactive materials, but remains oddly silent on the continuing voluntary evacuation or resettling of Fukushima. Although the central government is paying for local aid and sustaining the current economy in the short-term, the long-term plans of resettlement are strictly avoided in these towns and cities. As a result, severe frictions between local citizens, people, and governments have become commonplace, a new phenomenon for Japan.21 Putting Japan into Perspective The tragedy of 3/11 has made it clear that Japan stands at a crossroad. The choices ahead are either a continuation of two decades of status-quo decline or an emphasis on regeneration to rebuild Japans economy and society. Despite experiencing one of the worst tragedies in the developed world, and one of the worst economic performances over the last decade, one could still argue that Japans economy and society is much more stable than that of Europe and less divided or polarized than the United States giving it some natural advantages for regeneration. The Japanese economy did not enjoy any of the high growth rates most advanced economies experienced before the 2008 financial crisis. The globalization dividend fueled by new technology, new markets, and high leverage, was not the main story in Japan. Instead Japans focus has been on cleaning up after the bubble economy and trying to eliminate privileged special interest groups one by one to make its domestic economy more productive. As the world economy faces a new normal, the developed world, particularly Europe, is beginning to look much more like Japan. Relatively small economies like Ireland initially took full advantage of globalization and the effects are now beginning to show throughout the euro zone. On the other hand, Japanese banks remain less leveraged and Japanese companies less global. As a result, today many top European and U.S. banks are visiting Japanese banks for capital and Japanese companies are on a buying spree for the first time since the late 1980s. Despite a year of tragedy, Japan today is enjoying relative stability. Unfortunately this current stability is no guarantee of longterm growth and many Japanese fear it may simply be the calm before storm. Japan has a well-crafted system of deception and a notorious lack of accountability, which has fooled its citizens from seeing the risk that it has continuously built up. Therefore, it is unsurprising to see the lack of urgency in the Japanese government and domestic industries. If the government continues to avoid the necessary structural
21

According to the testimony by the leader of a mothers organization from Fukushima during the House of the Representatives session on Dec. 2, 2011.

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Policy Brief
reforms and rely on short-term fixes, the most global and successful companies will continue to leave the country, taking with them the best minds and their exporting ability, which Japan desperately needs to fully recover from 3/11. Signs of change are already evident, most significantly, at the local government level. Voters with mounting frustration have rallied to leaders such as Toru Hashimoto, former governor of Osaka and current mayor of Osaka.22 Having successfully taken on both the central and municipal government as a self-proclaimed maverick, Hashimoto is now building up a nationwide political movement. Challenging long-lasting taboos in Japan, such as the abolition of the House of the Councillors, decentralization of power coupled with consolidation of prefectures, drastic cuts in the salary of public servants, elimination of political party grants, and taxation reform on properties, Hashimotos movement has proved particularly attractive in the current Japanese political environment. The fact that even Your Party, a mainstream political party in the Diet, is integrating its activities and policies with Hashimoto further demonstrates his populist appeal. Moreover, the movement seems to be spreading, with Shintaro Ishihara, Governor of Tokyo and a well-known conservative, now said to be cooperating with Hashimoto. Despite building momentum, few believe that these movements will take over the central government or Diet. The fundamentals of the Japanese establishment are stubbornly strong and a true collapse either in political systems or the economy is unlikely, particularly on the scale of Greece or Italy. However, in a post-3/11 climate of frustration with the central government and main parties, this new movement could gather further momentum in the next general elections, particularly if it secures a sizable position in the House of Representatives and builds a coalition with one of the two major parties. In the short term, Japan does not appear likely to change dramatically. Entrenched special interests have been exposed throughout the last year, but women, immigrants, and the younger generation still suffer disproportionately without any representation as the government continues to serve its main constituents. The DPJ, initially positioned as
22 Hashimoto tried to absorb Osaka citys power and jurisdiction into Osaka Prefecture. In order to do so, he quit his job as governor and run for mayor. Hashimoto and his ally won their elections for mayor and governor in a landslide.

the enlightened left claiming to represent this segment, has failed to deliver on its commitments. In childcare reform, healthcare reform, labor reform, equalizing public and private sector pay, and many other proposed changes, the DPJ has made more pragmatic choices catering to the needs of special interest with strong representation given the political realities of Nagata-cho (the political center in Tokyo). The Future On March 11, 2011 the world witnessed an event that would have shaken the core of any nation. The spirit of the Japanese, particularly those most effected in Tohoku who patiently endured the cold and freezing weather combined with the threat of dangerous radiation levels without any significant incidents of panic or chaos, is a case-study in national dignity and strength. However, the need for change and reform within the central government to earn and reflect this dignity has never been more acute. Building on the attention and sympathy currently being directed toward Japan on the tragedys one-year anniversary requires a coherent national and international response moving forward. The government of Prime Minister Noda has a chance to provide a level of coherent leadership that it has thus far lacked given the complexities of the Japanese political system. One of the reasons why Japan hasnt changed is because the society is much more homogenized than any other developed country; it does not have a driving force for change. In other words, any stakeholder can veto a change that would hurt their special interest. The socially weak are left to suffer, even though they are comparatively better off than in many other developed countries. The hope now is that the often-quoted double meaning in the characters (kanji) for crisis or opportunity and danger will ring especially true for the former at this moment in Japans history. The danger for Japan is that after the one-year anniversary passes, complacency and depression will replace the resolve and national unity pledged in the immediate aftermath of the crisis. The political incentives to become further insulated and isolated run in the opposite direction of Japans national interest. Growth through closer ties with the developing world and greater competition at home offer the best future for Japan. Political leadership is necessary to pursue this path, but without

Asia Program

Policy Brief
it, Japan risks another decade of relative decline even without another tragedy. 3/11 by itself has not automatically changed Japan though it has exposed its citizens strength while exposing Tokyos weakness. Having already shown the world its resilience in the face of a historic natural disaster, the Japanese have the chance to rebuild a stronger nation with the help of an international community that is tied to Japans own recovery. Japans recovery will be slow, but with strong leadership, coherent national purpose, and strategic vision, the Japanese can come out of this better in the long term. The authors wish to thank the following individuals for granting interviews and taking time to share their views: Mr. Kenji Eda (Your Party), Member of the House of Representatives, Secretary General of Your Party; Mr. Yoshimasa Hayashi (LDP), Member of the House of Councillors, Acting Chairman of Policy Research Council of LDP, ex Minister of Defense and Finance; Mr. Banri Kaieda (DPJ), Member, Chairman of the Standing Committee on Financial Affairs, the House of Representatives, former Minister for METI (Ministry of Economy, Trade and Industry); Mr. Yosuke Kondo (DPJ), Member of the House of Representatives, Chief Deputy Secretary-General and Deputy Chairman of Policy Bureau of DPJ, former Parliamentary Secretary for METI; Mr. Sumio Mabuchi (DPJ), Member of the House of Representatives, former Minister of Land, Infrastructure, Transport, and Tourism; Mr. Hiroshi Ogushi (DPJ), Member of the House of Representatives, Parliamentary Secretary of Cabinet Office; and Mr. Yoshihide Suga (LDP), Member of the House of Representatives, Chairman of Party Organization and Campaign Headquarters of LDP, former Minister of Internal Affairs and Communications (alphabetical order). The final views are the authors alone.
About the Authors
Lully Miura is a researcher at the Policy Alternatives Research Institute (PARI) of the University of Tokyo. Joshua W. Walker is a Transatlantic Fellow at the German Marshall Funds Asia Program based in Washington, DC.

About GMFs Asia Program

The German Marshall Funds Asia Program addresses the implications of Asias rise for the Westin particular, how Asias resurgence will impact the foreign policy, economic, and domestic challenges and choices facing the transatlantic alliesthrough a combination of convening, writing, strategic grants, study tours, fellowships, partnerships with other GMF programs, and partnerships with other institutions. Led by Senior Fellow for Asia Daniel Twining and Transatlantic Fellow Andrew Small, the programs initiatives include the Stockholm China Forum and India Forum, seminars and other activities in Japan, a Japanese fellowship program, Asiarelated panels at GMFs flagship events at Brussels and Halifax, and a paper series on transatlantic approaches to wider Asia and on deepening cooperation between democratic Asia and the West. For more information see http://www.gmfus.org/asia.

About GMF
The German Marshall Fund of the United States (GMF) is a nonpartisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm.

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