(Updates with Ishihara comment in the 11th paragraph.)
July 19 (Bloomberg) -- Japan’s rebuilding is lagging behind the nation’s responses to the Tokyo earthquake of 1923 and Kobe’s 1995 disaster because of political infighting, the head of the reconstruction committee said.
“The obstacle to reconstruction is politics,” Makoto Iokibe, the chairman of the government-appointed panel, said in a July 15 interview in his Tokyo office. “It’s absolutely crazy,” Iokibe, 67, said.
The March 11 earthquake and tsunami that left more than 20,000 people dead or missing should be serving as a catalyst for reinvigorating the world’s third-largest economy, according to Iokibe. Instead, politicians are focused on the future of embattled Prime Minister Naoto Kan rather than reconstruction, the adviser said.
Kan, who faces calls to resign from opposition lawmakers and also within his own party, has said that he will step down once the crisis is contained. It includes power shortages and the aftermath of the world’s worst nuclear accident since 1986. Kan’s government will compile this month a basic reconstruction plan based on suggestions by Iokibe’s committee.
Iokibe is a historian, professor emeritus at Kobe University, and the president of the National Defence Academy, which trains cadets for the defence force.
Broad plans for rebuilding were proposed in three days after the Great Kanto Earthquake, which destroyed Tokyo and Yokohama in 1923, Iokibe said. Shinpei Goto, the home minister, played a key role in those efforts. After the most recent disaster, disruptions have included Ryu Matsumoto quitting a week into his job as reconstruction minister.
According to Iokibe, the speed of the current response also lags behind that after the Kobe quake.
Political wrangling saw Kan this month scale back a second extra budget for rebuilding to 2 trillion yen ($25 billion), only half the size of the first one. The government expects restoring the country to cost as much as 12 trillion yen over five years, including building solar and wind power stations, the Asahi newspaper reported July 16, without saying where it got the information.
In an additional complication, the government may run out of money as early as October unless a bill authorizing bond sales is passed before parliament closes at the end of August, Finance Minister Yoshihiko Noda said July 5.
Established in April, Iokibe’s committee recommended last month that Kan consider temporarily raising some taxes to pay for rebuilding while avoiding adding to the world’s largest public debt burden. Higher income tax and increases in some smaller levies, such as for cigarettes, may be “the best mix,” according to Iokibe. Sales-tax revenue may be needed to fund social welfare costs rather than reconstruction.
Tokyo Governor Shintaro Ishihara in an interview said Kan has shown poor leadership and faulted the government for failing to boost taxes to pay for reconstruction.
The approval rating for Kan’s cabinet fell to a record low of 12.5 percent last week, a 9.4 percentage point drop from June, according to a Jiji Press survey. About 70 percent of respondents in an Asahi newspaper survey published on July 12 said Kan should step down by the end of August.
Japan’s economy, plagued by deflation, has grown less than 1 percent per year in the past decade.
Losing Its Edge
The economy is “losing competitive edge,” Iokibe said. “If a frog is boiled slowly, it will be boiled until it’s dead but if it gets some shocks before then, the frog will jump out and save his life.”
The March 11 disaster can serve as the jolt that “awakens a nation which is currently going downhill slowly,” he added.
Gross domestic product contracted for the two quarters through March 31 and a rising yen threatens to restrain a rebound from the disaster by eroding exporters’ profits. At the same time, industrial output is bouncing back and the central bank said July 12 that “economic activity is picking up with an easing of the supply-side constraints caused by the earthquake disaster.”
--Editors: Paul Panckhurst, Lily Nonomiya
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