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Legacy of Fukushima could hurt Japan’s Olympic opportunity

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TOKYO — Shinzo Abe’s joy at winning the 2020 Summer Olympics for Japan must have been deeply personal. His grandfather, Prime Minister Nobusuke Kishi, brought the 1964 Olympics to Tokyo. That event confirmed Japan’s phoenixlike rise from defeat in the Second World War. Its bullet trains, avant-garde stadiums and neon-lit skyline advertised a country and an economy prepared to take the lead in Asia and indeed the world.

Pundits are already predicting a similar rebirth for Abe’s Japan after two decades of deflationary malaise. Economist Robert Feldman of Morgan Stanley MUFG Securities thinks that the games could provide Japan with a boost similar to that enjoyed by Britain, which hosted the 2012 Summer Games in London — roughly 0.7 percent to 0.8 percent of gross domestic product over seven years, or about 3 trillion to 4 trillion yen ($30 billion to $40 billion) on a value-added basis. With the first of the prime minister’s reform "arrows" — monetary easing from the Bank of Japan - already showing results, an Olympic spending spree could juice the fiscal stimulus that represents the second arrow.

What about the third arrow, though? So far, despite a lot of talk about deregulation and structural reform, that projectile has remained in the quiver. The really tantalizing question about Tokyo 2020 will be whether the games can help push through the politically challenging reforms that will determine whether Abenomics works or not, and whether Japan rises from the ashes again.

The first and most obvious test will be how Abe’s government handles the disaster in Fukushima. The two-and-a-half years after a giant earthquake precipitated the worst nuclear crisis since Chernobyl have been lonely ones for the prefecture’s almost two million people. They have been summarily neglected, condescended to and left in harm’s way by officials in Tokyo with other things on their minds.

Abe staked Japan’s Olympics bid on his pledge to clean up the still-leaking Fukushima nuclear plant. "Given the cascade of revelations about the Fukushima fiasco, it is surprising that Tokyo won," says Jeff Kingston, head of Asian studies at the Tokyo campus of Temple University. "Delegates bought Abe’s reassurances that the situation will be resolved before then. Now he has to deliver and under greater international scrutiny."

Abe certainly doesn’t want his Olympics mocked as the only ones to issue commemorative Geiger counters. Japan now has no choice but to come clean about the severity of the contamination, look overseas for expertise and solutions, and devise an ambitious cleanup plan. Indeed, the 2020 deadline gives Abe the excuse he needs to nationalize Tokyo Electric Power Co., which owns the plant. As I wrote last week, the prime minister could also use the games as an excuse to spread the "Bilbao Effect" to the rural Tohoku region, which includes Fukushima, where more than 100,000 people still live in temporary housing.

The most influential Olympics have always been those that provide a catalyst at an ideal moment: Think about the 1988 Summer Games in Seoul, which fueled South Korea’s transition from autocracy to democracy, and Sydney 2000, which, pre-Group of 20, highlighted Australia’s place as a global power. The 2020 Games happen to coincide with Abe’s push to open up Japan, both through lowering trade barriers and getting Japanese themselves to engage with the outside world after decades of looking inward.

Robert Whiting, the Tokyo-based author of several books about sports and politics, thinks the games will complement Abe’s efforts. "It will further help to globalize Japanese, in line with Abe’s goal or vision of making Japanese more international-minded and active," Whiting says. "People will be focusing more on learning English to prepare for the Olympics, and parents will be more oriented toward having their children learn the language as well."

Japan’s lack of English proficiency is perhaps the most obvious symptom of the nation’s cultural insularity. As Abe points out, English has become the lingua franca of business, science and the Internet. The longer Japan resists the need to improve its communication skills, the more it limits its potential.

The Olympic boost could also give Abe the political cover he needs to deregulate an economy badly in need of some supply-side shock therapy. Big changes are always easier when economic optimism is on an upswing. A groundswell of public support would help Abe steamroll the vested interests standing in the way of freer trade, increased immigration, upgrades to corporate governance, and tax tweaks that promote entrepreneurship.

It worked for Kishi in 1964, when he used the proud inauguration of the bullet train to launch a major infrastructure spending drive. It might just work for Abe in 2020.

 

William Pesek is a Bloomberg View columnist.

 

— Bloomberg

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