Hiroshima nightmare haunts Japan again

Fukushima.jpg

Japanese Prime Minister Naoto Kan yesterday (13 March) described the devastating quake and tsunami, which were followed by an ongoing nuclear crisis, as "Japan's worst crisis since World War II," which was when the United States dropped atomic bombs on Hiroshima and Nagasaki.

Naoto Kan said the situation at the 40-year-old Fukushima nuclear plant remained worrisome and that the authorities were doing their utmost to stop damage from spreading (see 'Background').

The government had warned of a possible explosion at the No. 3 reactor because of the buildup of hydrogen in the building housing the reactor.

Engineers worked desperately to cool the fuel rods. If they fail, the containers that house the core could melt, or even explode, releasing radioactive material into the atmosphere.

About a fifth of the country's nuclear power generation capacity has been shut down by the disaster. Thermal plants also shut down, forcing the world's third-biggest economy to instigate rolling blackouts to conserve energy.

Almost two million households were without power in the north, the government said. There were about 1.4 million without running water.

Ruling and opposition parties have called a truce to allow the government to focus on dealing with the aftermath of the disaster.

Fear of another quake

The mood has also been darkened by news reports quoting experts as saying there is a 70% chance of another damaging tremor by Wednesday.

Some store shelves continued to be empty and many train lines were shut down as Tokyo commuters returned to work after a weekend glued to horrific images of the tsunami.

Nevertheless, there is no sign of panic in Tokyo, with main commuter trains running and crowds of office workers outdoors getting meals during the lunch hour.

Analysts say the quake may delay but not derail Japan's return toward a moderate economic recovery.

US warships and planes helping Japan's earthquake and tsunami relief efforts have moved away from the country's Pacific coast temporarily because of low-level radiation from a stricken nuclear power plant, the US Navy said on Monday.

The US Seventh Fleet, in a statement, described the move as precautionary measure.

In the meantime, markets stared counting the financial cost of the catastrophe.

The insurance cost of the quake, which hammered the northeast coastline, could reach $35 billion even before the tsunami is accounted for, said risk modeling company AIR Worldwide. That is nearly as much as the entire worldwide catastrophe loss for the global insurance industry in 2010.

A swathe of top-name Japanese manufacturers, including Sony Corp., Toyota Motor Co. and Panasonic have shuttered production lines, with restart efforts hampered by quake aftershocks.

"The economic consequences appear to be greater that we perhaps originally expected," said Tom Byrne, senior vice-president at Moody's Investor Service.

Impact on nuclear industry

Japan's battle to avert a full-scale meltdown could damage the global nuclear energy industry, derailing plans to build dozens of new power plants and forestalling any surge in demand for uranium to fuel them.

The worst nuclear accident since the 1986 Chernobyl explosion could trigger a sharp drop in shares of nuclear plant builders such as General Electric, its Japanese partner Hitachi and France's Areva, as investors reconsider the possibility of a renaissance for the industry.

However, some experts and officials pointed out at the specificity of the Japanese case, where the nuclear incident is seen as a result of the tsunami, not the quake itself.

General Electric Co. (GE.N) Chief Executive Jeff Immelt on Monday said it was too early to know what impact the nuclear power crisis in Japan would have on the nuclear power industry.

(EURACTIV with Reuters.)

"The earthquake will bring lots of things to a halt. We are going to see quite a dent on GDP, blackouts will lead to a sharp contraction of production," said Janwillem Acket, group chief economist at Julius Baer.

He estimated the damage would be felt for two quarters, but it was not likely to knock the economy back into recession.

"We know public finances are already weak, much weaker than they are during Kobe. Pressure for emergency tax hikes is there. But I don't think the economy will go back to recession."

"When we talk about natural disasters, we tend to see an initial sharp drop in production [...] then you tend to have a V-shaped rebound. But initially everyone underestimates the damage," said Michala Marcussen, head of global economics at Societe Generale.

Bank of America Merrill Lynch expects the quake-hit areas account for up to 7.8% of Japan's GDP, compared with 12.4% from the regions affected by the Kobe earthquake.

"It will take quite some time until investors' confidence in Japanese manufacturers returns. When we look back at the Kobe earthquake, it took about a week to get an overall picture of the magnitude of the damage," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities, referring to the 1995 earthquake that killed more than 6,000 people.

"At this point, it's absolutely unclear how the power cut will affect manufacturers' production and businesses."

Austria called for tests to be conducted on nuclear power stations in Europe to assess their resistance to natural disasters following a potential major incident in Japan in the wake of Friday's earthquake there.

The country's environment minister, Nikolaus Berlakovich, said he would urge the EU on Monday to carry out out "a stress test of nuclear plants". The test should include "the safety of nuclear plants in the event of an earthquake and the state of their cooling system and reactor confinement," he said.

"We want security to be reviewed or [plant] closure," Berlakovich added.

More than 10,000 people may have been killed as the tsunami triggered by Friday's 8.9-magnitude quake surged across the coastline, reducing whole towns to rubble. It was the biggest to have hit the quake-prone country since it started keeping records 140 years ago.

The earthquake was the fifth most powerful to hit the world in the past century. It surpassed the Great Kanto quake of 1 September 1923, which had a magnitude of 7.9 and killed more than 140,000 people in the Tokyo area. In more recent times, the 1995 Kobe quake took the lives of 6,000 people.

Earthquakes are a way of life in Japan, occurring on average every five minutes. Buildings by law are erected to withstand violent tremors.

But this quake was on a completely different scale, and left the country of 127 million people dazed and bewildered.

The tsunami, a Japanese word meaning "harbour wave", surged through towns and cities, bulldozing everything in its path. A large freight ship was sitting incongruously in the streets of Kesennuma in hard-hit Miyagi prefecture. A wrecked airplane lay nose-deep in the rubble of homes in the port of Sendai.

The situation was further aggravated, when a hydrogen explosion blew the roof of a nuclear reactor No. 1 at Fukushima nuclear power plant on Saturday. The authorities evacuated 140,000 people and are working desperately to avert a meltdown.

Subscribe to our newsletters

Subscribe