Kan Faces `Katrina Moment' as Earthquake, Nuclear Crisis Test Leadership
Japanese Prime Minister Naoto Kan
Jiji Press/AFP/Getty Images
Naoto Kan Japan prime minister.
Naoto Kan Japan prime minister. Source: Jiji Press/AFP/Getty Images
March 11 (Bloomberg) -- Japanese Prime Minister Naoto Kan, U.S. President Barack Obama and Nouriel Roubini, founder of Roubini Global Economics, speak about the 8.9-magnitude earthquake that struck Japan and unleashed a seven-meter-high tsunami that killed hundreds of people as it engulfed towns on the northern coast. This report also contains comments from Francisco Blanch, global head of commodities research at Bank of America-Merrill Lynch; Scott Brown, chief economist at Raymond James & Associates Inc., and Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. (Source: Bloomberg)
Three days ago, Prime Minister Naoto Kan was fighting for his political life. Now, the success of his government may hinge on how he responds to what he calls Japan’s biggest crisis since the end of World War II.
The March 11 record earthquake in northeastern Japan struck hours after Kan, 64, had begun attempting to defuse a scandal over a political donation he received. He mobilized 100,000 troops and pledged an emergency-spending package to cope with the quake, the ensuing tsunami and two hydrogen explosions at a nuclear power station.
A bungled response could draw the kind of criticism heaped on President George W. Bush for his fumbled reaction to Hurricane Katrina, which ravaged the U.S. Gulf Coast in 2005. An effective job might lift Kan’s prospects, as it did those of Queensland Premier Anna Bligh, who coped with the aftermath of Australian floods and a cyclone last month.
“This is Kan’s Katrina moment,” said Jun Okumura, a consultant at the Eurasia Group risk consulting firm in Tokyo and a former Japanese trade official. The premier has weeks to show “he’s not such a poor leader after all. The thing going for him now is that the opposition can’t be in opposition.”
Kan pledged at least 200 billion yen ($2.4 billion) to cope with the 8.9-magnitude quake and sought an extra spending package that won the support of the Liberal Democratic Party, the biggest opposition group. Sadakazu Tanigaki, leader of the LDP, said post-earthquake funding will be needed and his party “will cooperate with all our might.”
‘Worst Crisis’
Tanigaki yesterday called for a temporary tax to pay for relief efforts, a proposal that Chief Cabinet Secretary Yukio Edano said “can’t be ruled out.”
Millions remain stranded without water or power and more than 310,000 people are in evacuation centers. Officials said the death toll may top 10,000. More than 100 aircraft and almost 60 boats have been deployed to transport injured people and supplies, and 13 countries have dispatched relief teams.
“Our country faces its worst crisis since the end of the war 65 years ago,” an emotional Kan said yesterday in a nationally televised briefing. “I am convinced that working together with all our might the Japanese people can overcome this.”
The reaction so far is “light-years better” than the response to the 1995 Kobe earthquake that killed 6,400 people, when Japan initially turned down offers of aid from countries including the U.S. and the U.K., said Jeff Kingston, director of Asian Studies at Temple University’s Tokyo campus.
‘Nuclear Fallout’
“Kan has shown the public a resolute and compassionate leader,” Kingston said. “But the nuclear fallout could turn political if all assurances turn out to be wishful thinking.”
Today’s blast at the Fukushima power station’s No. 3 reactor came as workers battled to prevent a nuclear meltdown. The cooling systems failed at the plant’s No. 1 and No. 3 reactors after the earthquake and it stopped working today at the No. 2 reactor, the Yomiuri newspaper reported, citing information received by Fukushima prefecture.
Kan, who faces dissent within his Democratic Party of Japan, has repeatedly rejected calls to resign and become the fifth straight premier to last no more than a year. Failure to set a path for reining in a public debt close to 200 percent of gross domestic product has spurred credit-rating firms to lower Japan’s sovereign grade or put it on notice for a cut.
Stocks Fall
Japanese stocks fell the most in more than two years. The Nikkei 225 Stock Average tumbled 6.2 percent, adding to the 1.7 percent drop on March 11 as the earthquake struck less than 30 minutes before the market closed. The yen weakened 0.1 percent to 82.07 per dollar as of 8:15 p.m. in Tokyo.
Some of the nation’s largest manufacturers, including Sony Corp. (6758), Honda Motor Co., Nissan Motor Co. and beer maker Sapporo Holdings Ltd. (2501) shut down facilities in northern Japan.
While the lower house of parliament on March 1 passed Kan’s record 92.4 trillion yen budget for the year beginning April 1, the opposition has refused to compromise on bills authorizing 44.3 trillion yen in deficit bonds.
Before the quake struck, Kan was fielding questions in parliament over a donation that may have been made by a non- Japanese resident, the same alleged violation that prompted the resignation of his foreign minister. A March 7 poll showed the premier’s support at less than one voter in four.
Every Two Hours
Bush’s approval rating fell in the wake of Hurricane Katrina amid dissatisfaction with his response to the disaster. Bligh’s popularity, by contrast, has soared. Her direct speech and command of detail as the crisis unfolded -- she held press conferences every two hours until about 10 p.m. in the first few days of the Queensland floods -- won her plaudits and reversed her low popularity.
The satisfaction rating among voters for Bligh is 60 percent, compared with 25 percent at the end of last year, the Sunday Mail reported Feb. 20, citing a Galaxy poll of 800 voters. No margin of error was provided.
The disaster will “take the heat off Kan,” Aurelia George Mulgan, a Japanese politics professor at the University of New South Wales in Canberra, Australia, said by phone. “But if he fluffs it, then he’s gone. He was gone anyway, but this provides him with an opportunity to rescue his administration.”
To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
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