Germany's N-policy flip-flop may blunt its industrial edge
Germany's decision to abandon nuclear energy is a monumental policy shift that might threaten the competitiveness of German industry.
The country's coalition government decided Monday to abolish all of its 17 nuclear reactors by 2022. Older nuclear reactors built before 1980, which have already been taken off the grid, will remain offline permanently. The remaining nine reactors will be phased out when they complete their life span of 32 years.
In 2002, Germany's then center-left coalition enacted a law to phase out nuclear power. In a U-turn from this policy last autumn, the current center-right coalition government, led by Chancellor Angela Merkel, decided to extend the lifetimes of the country's 17 reactors by an average of 12 years. This was based on the judgment that Germany would not be able to meet its power demand using only natural energy sources such as wind power.
The latest policy change--only about half a year after the previous reversal--spells out in black and white the profound impact the ongoing crisis at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant has had on the German people. In local elections held after the Fukushima nuclear crisis started, the antinuclear Green party made huge gains while the coalition parties tasted defeat.
Nuclear power is a key energy source for Germany and accounts for more than 20 percent of the country's power generation. To make up for the power shortage that will result from ditching nuclear energy, Germany plans to build additional thermal power plants for the time being and expand the use of natural energy sources in the long run.
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Uncertainties abound
But this envisioned course is full of uncertainties.
Wind-power generation, which Germany plans to boost, is concentrated in northern parts of the country, including the Baltic Sea coast. Building power transmission networks to carry the generated power to southern parts of the country will require massive investment. Natural energy sources could become more costly if implemented on a wide scale.
There are fears that the supply of natural energy sources could be unstable--a problem peculiar to them.
That is why German industrial circles are worried that dumping nuclear power could blunt manufacturers' competitiveness. Germany is a locomotive for the European economy. If German businesses lose their competitive edge, there are fears the entire European economy could be affected.
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Reliance on N-power remains
Germany can turn off the switch on its nuclear power because it can import electricity from neighboring countries not separated by sea. In fact, Germany already imports electricity from France, which relies on nuclear power generation for 80 percent of its power supply, and the Czech Republic, where old Soviet-type nuclear reactors still operate.
Although Germany has decided to abandon nuclear power generation, it will rely on electricity generated by nuclear power. The country is said to be still trying to sell its nuclear power technology. This is undeniably opportunistic.
The global trend is for many countries, including China and India, to turn to nuclear power to meet their growing energy demand.
Japan is an island nation, so its situation is different from Germany's. Japan cannot import electricity from neighboring nations.
The most realistic option Japan has for maintaining industrial competitiveness is to use nuclear power plants by improving their safety.
Grand coalition cabinet requires DPJ concessions
To create a temporary, nation-saving cabinet through a grand coalition, both the ruling and opposition parties must expedite their preparatory efforts.
The secretaries general of the Democratic Party of Japan and the Liberal Democratic Party are now in step with each other over the grand coalition idea.
The latest development came as Prime Minister Naoto Kan expressed his intention to step down in the not-too-distant future, removing an obstacle to realizing cooperation between the ruling and opposition parties.
Katsuya Okada, the DPJ secretary general, said, "It is desirable to create a structure where ruling and opposition parties cooperate within a certain time frame," to deal with such important issues as post-disaster restoration and integrated social security and tax system reforms.
Nobuteru Ishihara, Okada's LDP counterpart, also indicated his positive stance toward the formation of the grand coalition, on the premise of the two parties reaching an accord on such policy issues as national security.
This is a significant development. A grand coalition could make Japan's politics functional again.
Under the divided Diet, neither the DPJ nor the LDP has the strength or agility to tackle the issue of post-disaster restoration on its own.
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A historic opportunity
Both the ruling and opposition parties need to create a powerful political system in which to make plans based on a hard look at what things will be like 10 years from now. They need to promote such key policies as integrated social security and tax system reforms, deepen the Japan-U.S. alliance, and push participation in the Trans-Pacific Partnership free-trade accord. Neither camp should miss this chance to form a grand coalition.
Before realizing a grand coalition, there are several challenges that need to be tackled.
First, it is essential for participating parties to agree on key policies. In order to do so, the ruling DPJ should make major concessions.
On policy issues, the DPJ must drastically review its manifesto for the 2009 lower house election. It must withdraw its dole-out policy measures, including the distribution of child-rearing allowances and the income compensation program for farming households.
It is also important to create a system in which bureaucrats could be used efficiently, by amending the DPJ's "initiative by politicians" policy that only serves to exclude bureaucrats.
It is also necessary to promptly rebuild a channel of mediation between the central government and disaster-affected local governments by reviving the practice of holding administrative vice ministers' meetings.
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A challenge for Kan's successor
Within the DPJ, Diet members who support former party leader Ichiro Ozawa continue to oppose any review of the party manifesto. Anyone who would succeed Kan as prime minister will need the political clout to join forces with opposition parties, while simultaneously holding back such intraparty opposition.
For a grand coalition, a clear time frame is needed. It will be necessary to dissolve the grand coalition once solid foundations for "nation-saving efforts" have been laid, and to seek the judgment of the people by dissolving the lower house for a general election.
The DPJ has an obligation to show first a road map for solving all these issues.
It may be only logical for Kan to step down at an early date to enable the DPJ to live up to this obligation.
To compile the second supplementary budget for fiscal 2011, and decide the issue of how to finance it, more full-fledged negotiations between the ruling and opposition parties are needed. Lame duck Prime Minister Kan should not linger in managing the administration.
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