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Japan’s nuclear exports carry risks and rewards

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The Diplomat

While Prime Minister Shinzo Abe’s electoral victory in October has generated plenty of debate regarding prospective constitutional change, another highly controversial issue — nuclear power — has largely escaped attention despite being touted as a significant electoral issue.

Although initially returning to power in 2012 at the height of post-Fukushima anti-nuclear sentiment, Abe has promoted nuclear energy as a pillar of his economic agenda at home and abroad. Indeed, despite the industry’s diminishing domestic prospects, his return to office signals the continuation of policies promoting Japanese nuclear technology abroad as a means of addressing the nation’s trade deficit, ironically a product of the suspension of most of Japan’s own reactors.

Nuclear exports contribute significantly to the pursuit of Japan’s foreign economic and political goals in strengthening key bilateral relationships and opening up investment opportunities with emerging economies. Certain agreements, however, arguably risk implicating Tokyo in international proliferation controversies or potential future industrial-environmental disasters, while the long-term financial benefits of nuclear power investments are also uncertain.

Furthermore, some analysts contend that Japanese society’s traditional “nuclear allergy,” including its nuclear nonproliferation principles, is facing steady erosion under sustained internal and external pressures. Tokyo has been criticized for backtracking on past professions of anti-nuclear principles, considering that this year’s version of its annual U.N. motion advocating for the elimination of nuclear weapons critically omitted any mention of a landmark treaty concerning the banning of such capabilities. As such, the signs indicate that Japan will persist with nuclear exports despite the myriad risks to its international reputation and global security generally.

On the one hand, recent civil nuclear agreements with India and Turkey have benefited Japan’s economic interests and strengthened important bilateral relationships. Tokyo signed its first post-Fukushima export deal with Ankara in 2013, a $22 billion agreement for the construction of the latter’s second reactor complex at Sinop on the Black Sea. Turkey had specifically sought Japanese nuclear expertise because of a shared seismic vulnerability and desire to develop an indigenous energy baseline. In return, the agreement boosted Japan’s investment prospects in Turkey and contributed to positive global perceptions of Japanese nuclear technology. Upon its formalization in 2015, the agreement saw the elevation of the bilateral relationship to a “strategic partnership,” enhancing Japan’s regional credibility as a development partner.

More recently, the civil nuclear agreement between Japan and India has further accelerated the convergence of mutually shared “political, economic and strategic interests” between the two, particularly as part of broader efforts to counter growing Chinese socioeconomic influence in the region. Indeed, the deal figures in a longer history of bilateral infrastructure and economic projects which, apart from supporting this common interest, have opened up investment opportunities for Japanese businesses in India’s developing economy.

On the other hand, both deals carry significant risks for Tokyo. Many of Turkey’s largest earthquakes have occurred uncomfortably close to the Sinop site, and seismic safety assessments conducted by Japanese government-commissioned research firms have produced questionably optimistic results. The European Parliament has already called on Turkey to abandon the construction of another reactor complex at Akkuyu due to the risk of a serious industrial-environmental disasters, and there is arguably a similar risk at Sinop. An accident there would present Tokyo with complex moral and legal questions, and discredit Japanese nuclear technology.

Meanwhile, as a nonsignatory to the Nuclear Non-Proliferation Treaty, the ambiguous nature of assurances from the Indian government that Japanese technology will not be used to produce nuclear weapons is worrying, as is the lack of legal definition around the circumstances in which Japan may justifiably abandon the deal. The agreement has been criticized as a further deviation from Japan’s traditional nonproliferation principles, on top of the uncertain strategic dimensions to Japan’s own nuclear program and the aforementioned omission from its U.N. motion.

Prospective agreements with Saudi Arabia could potentially further undermine these principles. While the Japan-Saudi Vision 2030 initiative signals the former’s intention to figure prominently in the latter’s economic and energy transformation, Riyadh’s rivalry with Iran and ambitious civil nuclear aspirations have seen it identified as a candidate for nuclear breakout. A Japan-Saudi nuclear deal could be interpreted as a double standard given the international community’s efforts to constrain Iran’s own nuclear aspirations, and could complicate Tokyo’s attempts to rejuvenate its economic relationship with Tehran and diversify its own energy portfolio.

The long-term economic benefits of nuclear exports are also uncertain. Japanese firms face significant competition for construction contracts from international competitors, including China, Russia, France and South Korea. While joint ventures with rivals are not uncommon — the Sinop project is shared with a French firm — some companies fear that extensive collaboration, particularly with Chinese firms, will compromise their competitive edge and damage future prospects.

Indeed, the financial integrity of Japanese firms such as Toshiba and its subsidiary Westinghouse are already under scrutiny. Existing agreements may also be canceled: In November 2016, Vietnam pulled out of a deal with a conglomerate of Japanese firms worth $11 billion due to safety fears and spiraling construction costs. More cancellations would see the vast sums of yen spent on project campaigns struck out as further financial losses. Without a strong domestic demand to fall back on, many companies may find that the balance between financial risks and rewards of overseas nuclear power projects will tip increasingly toward the former.

From any perspective, there are clear and substantial risks in the Abe government’s persistence with its nuclear export agenda. However, though its future prospects remain unclear amid domestic and international controversy, the economic and foreign policy utility of nuclear technology and a growing demand for atomic energy around the world would suggest that Japan will persist with its export program for the foreseeable future.

Tom Corben is an international relations and Asian studies graduate from the University of New South Wales, Australia. © 2017, The Diplomat; distributed by Tribune Content Agency