AFP

Japan’s prime minister on Wednesday called for a push to revive the country’s nuclear power industry in a bid to tackle soaring imported energy costs linked to the war in Ukraine.

Such a move could prove controversial, after the 2011 Fukushima disaster led to the suspension of many nuclear reactors over safety fears.

Like many countries, Japan — which is aiming to become carbon neutral by 2050 — has faced a squeeze on its energy supplies since Russian forces entered Ukraine six months ago.

The nation has also sweltered through record-breaking temperatures this summer, with residents asked to conserve power wherever possible.

“Russia’s invasion of Ukraine has vastly transformed the world’s energy landscape” and so “Japan needs to bear in mind potential crisis scenarios”, Prime Minister Fumio Kishida said at an energy policy meeting.

Japan should consider building next-generation nuclear reactors, he said, while the government will discuss bringing more nuclear plants online and extending the service life of reactors if safety can be guaranteed.

Kishida called for “concrete conclusions by the end of the year” on the topic, which remains a sensitive one after a deadly tsunami in March 2011 caused a meltdown at the Fukushima plant, the worst nuclear disaster since Chernobyl.

Eleven years on, 10 of Japan’s 33 nuclear reactors are back in action, although not all are operational year-round, and the country is heavily dependent on imported fossil fuels.

The national nuclear safety watchdog has approved in principle the restart of seven more reactors, but those moves often face opposition from local communities.

– ‘All it takes’ –

“In addition to securing the operations of the 10 reactors that are already back online, the government will spearhead an effort to do all it takes to realise the restart” of the others whose safety has been approved, Kishida said.

The prime minister, who joined the meeting remotely after testing positive for Covid-19, also urged policymakers to consider “constructing next-generation nuclear reactors equipped with new safety mechanisms”.

Before the Fukushima disaster, around a third of Japan’s power generation came from nuclear sources, but in 2020 the figure was less than five percent.

Japan’s government has overhauled and strengthened nuclear safety standards, and wants nuclear power to account for 20 to 22 percent of electricity production by 2030, as part of efforts to reach carbon neutrality.

Tom O’Sullivan, a Tokyo-based energy consultant at Mathyos Advisory, said building next-generation reactors in Japan would be a “major step”, because “all the current reactors are conventional ones”.

Bringing more existing nuclear plants online will need to be approved by local governors, which could prove “politically challenging”, O’Sullivan told AFP.

“But again, there’s a different environment now after the Ukraine war,” he said. Polls in recent months also show that public opinion may be softening towards the use of nuclear power.

“I don’t think it’s just the electricity costs. It’s the reliance on Russia, for natural gas, oil and coal… the Japanese public have really woken up to that,” O’Sullivan said.

Japan has imposed sanctions on Russia over the war in Ukraine along with other G7 countries, and the government has pledged to try and reduce its energy dependence on Moscow.

The price of Japanese shares related to nuclear power surged in afternoon trade as local media reported the possible plans, with Tokyo Electric Power ending up 9.96 percent and Mitsubishi Heavy Industries jumping 6.85 percent.

Turkey’s top business association has confirmed receiving a letter from the US Treasury warning of possible sanctions if it continues doing business with Russia.

Washington is growing increasingly alarmed that the Russian government and businesses are using Turkey to evade Western financial and trading restrictions imposed in response to the Kremlin’s invasion of Ukraine six months ago.

Turkish President Recep Tayyip Erdogan and Russian counterpart Vladimir Putin agreed to step up economic cooperation at a summit in the Black Sea resort of Sochi earlier this month.

Official data show the value of Turkish exports to Russia between May and July growing by nearly 50 percent from last year’s figure.

Turkey’s imports of Russian oil are ballooning and the two sides have agreed to transition to ruble payments for the natural gas exported by the Kremlin-tied giant Gazprom.

US Deputy Secretary of the Treasury Wally Adeyemo paid a rare visit to Ankara and Istanbul in June to express Washington’s worries that Russian oligarchs and big businesses were using Turkish entities to avoid Western sanctions.

NATO member Turkey — on good terms with both Moscow and Kyiv — has tried to stay neutral in the conflict and refused to join the international sanctions regime.

Adeyemo followed that up with a letter to Turkey’s TUSIAD business association and the American Chamber of Commerce in Turkey warning that companies and banks were in danger of being sanctioned themselves.

TUSIAD said in a statement on Tuesday that is has passed on the letter to Turkey’s foreign and finance ministries.

The letter’s contents were first reported by The Wall Street Journal this week.

– ‘Risk of US sanctions’ –

“Any individuals or entities providing material support to US-designated persons are themselves at risk of US sanctions,” Adeyemo wrote.

“Turkish banks cannot expect to establish corresponding relationships with sanctioned Russian banks and retain their corresponding relationships with major global banks as well as access to the US dollar and other major currencies.”

The economic cooperation agreement sealed by Erdogan and Putin includes a deal for more Turkish banks to start processing Russia’s Mir payments system.

Turkish officials have not formally responded to Adeyemo’s letter.

Broader cooperation with Russia could help support Turkey’s ailing economy in the runup to next-year’s general election.

Erdogan has previously argued that Ankara cannot join Western sanctions on Moscow because of Turkey’s heavy dependence on Russian oil and natural gas imports.

“Our economy is such that imposing sanctions on Russia would harm Turkey the most,” Erdogan’s foreign policy adviser Ibrahim Kalin said in June.

“We have taken a clear approach. Right now, the Westerners have accepted this.”

Asian markets were mostly lower on Wednesday as investors await news on the next US interest rate hikes.

With the Jackson Hole meeting of central bankers this week, focus is on what US Federal Reserve chief Jerome Powell will say about plans to tackle high prices — with many fearing officials could send the economy into recession in its battle to rein in inflation.

The Fed “is probably going to use this weekend to reiterate the fact that rates have more room to climb because they really want to bring inflation down,” Kelvin Tay, Asia-Pacific chief investment officer at UBS Global Wealth Management, told Bloomberg TV.

Central banks face a delicate balancing act between battling inflation, with Russia’s war in Ukraine sending energy prices soaring, and avoiding recession.

“With European gas prices continuing to trade at record highs, investor anxiety is growing that a combination of central banks raising rates and higher energy prices will tip the global economy into a long recession,” said CMC Markets analyst Michael Hewson.

Wall Street ended mostly lower, and key markets in Asia followed suit.

Tokyo started in positive territory but the upward drive was short-lived.

“Lingering worries over US rate hike plans weighed on the market,” said Hiromi Kanamaru, senior strategist at Daiwa Securities.

Tokyo closed down 0.5 percent and Hong Kong, Shanghai and Taipei also fell while Seoul, Sydney and Wellington rose.

The decline continued in Europe, with London down 0.4 percent in opening deals while Frankfurt and Paris were both off 0.2 percent.

“Asian markets have turned risk-averse ahead of the Jackson Hole meeting,” Natixis economist Gary Ng said.

“Hong Kong and China stock markets continue to perform weaker than Asian peers as they face higher uncertainties.” 

– Euro hits new 20-year low –

The euro tumbled to $0.9901 — a new two-decade low — on Tuesday but later clawed back losses as the greenback was hit by poor US economic data.

The dollar had strengthened this week ahead of a speech Friday by Powell, as markets speculate that the Fed will continue to tighten its monetary policy.

Higher interest rates boost the American currency as they make dollar-denominated debt more attractive to investors.

But the euro also has been weighed down by a gloomy outlook for the eurozone economy with energy prices soaring.

– Key figures at around 0830 GMT –

Tokyo – Nikkei 225: DOWN 0.5 percent at 28,313.47 (close)

Hong Kong – Hang Seng Index: DOWN 1.2 percent at 19,268.74 (close)

Shanghai – Composite: DOWN 1.9 percent at 3,215.20 (close)

London – FTSE 100: DOWN 0.5 percent at 7,446.95 

Euro/dollar: DOWN at 0.9947 from 0.9951 

Pound/dollar: UP at 1.1824 from 1.1813

Euro/pound: DOWN at 84.12 pence from 84.23 pence

Dollar/yen: DOWN at 136.49 yen from 136.79 yen

West Texas Intermediate: UP 1.16 percent at $94.82 per barrel

Brent North Sea crude: UP 1.37 percent at $101.49

New York – Dow: DOWN 0.5 percent at 32,909.59 points (close)

China has announced it is investigating several executives at state-owned property companies, in another blow to a key sector already struggling with slowing sales, angry customers and heavily indebted developers.

Authorities said in separate notices on Tuesday that they were investigating Zhuang Yuekai, chairman of C&D Real Estate, and Shi Zhen, chairman of C&D Urban Services.

They are also looking into Liu Hui, deputy general manager of Shenzhen Talents Housing Group, and Tang Yong, a former chairman at China Resources Land.

All four were “suspected of serious violations of discipline and law”, the notices said, providing few details.

The language used in the announcements, however, typically indicates impending graft charges.

“This is a continuation of China’s crackdown on corruption, from government agencies to financial institutions, and to state-owned enterprises,” said Ting Meng, senior Asia credit strategist at ANZ Bank.

As sentiment in the sector is already weak, this news will “further suppress market confidence” and increase concerns about the internal governance of some state-owned firms, she told AFP.

The investigations come ahead of the ruling Communist Party’s 20th National Congress, at which President Xi Jinping is widely expected to be anointed for an unprecedented third term.

Xi has championed an anti-corruption drive since coming to power, taking down big-name detractors, and observers expect him to use the months leading up to the meeting to cement his grip on power.

The probes follow a regulatory crackdown on some of China’s biggest tech firms.

Authorities have also in recent months announced investigations into figures in the semiconductor industry, including minister for industry and information technology Xiao Yaqing.

Regulatory chiefs, insurance giants, security officials and financiers have faced censure or prosecution under the anti-corruption drive, but it is rare for a minister to be targeted while still in office.

The vast majority of people who have been investigated for corruption in China were eventually convicted.