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QUEST MEANS BUSINESS
Nuclear Meltdown Fears Grip Japan
Aired March 15, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST, QUEST MEANS BUSINESS: Radiation fears grip Japan as authorities say the Fukushima nuclear plant is still in danger.
It's a shock to the markets. Nuclear fears send global stocks plummeting.
And a ruptured supply chain. We look at how the quake is impacting Japan's key exports around the world.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
A desperate effort to prevent a nuclear disaster is continuing through the night in Japan. The operators of the Fukushima plant, power plant, say they are bringing in helicopters, they plan to pour water into fuel rods in one of the reactors to cool it down. They are-well these are the latest images we have of the crippled plant, taken on Monday before a no-fly zone was imposed.
You can see the smoke, rising there, following an explosion. There have been three blasts and the fire since the quake and the tsunami struck. A 30-kilometer no-fly zone is in place around the plant and people living within that area have been told to leave.
Fifty workers remain on site tonight. The International Energy Agency is warning that a containment vessel surrounding one of the nuclear reactors may have been damaged. A short while ago officials gave this update on the radiation situation.
(BEGIN VIDEO CLIP)
YUKIYA AMANO, DIRECTOR GENERAL, IAEA: There was some release of radioactivity following the fire on the spent fuel pond. And at one moment four mili per (UNINTELLIGIBLE) per hour was measured close to the nuclear plant in Daiichi, in connection with some other fire in Unit 4.
(END VIDEO CLIP)
FOSTER: Well, the Japanese government says radiation readings at the front gate are back to levels that won't cause harm. Earlier on Prime Minister Naoto Kan had warned the situation was critical.
(BEGIN VIDEO CLIP)
NAOTO KAN, PRIME MINISTER OF JAPAN (through translator): For reactor No. 1 and No. 3, hydrogen came out and caused a hydrogen explosion. We have also seen fire at reactor No. 4. Radiation has spread from these reactors and the reading of the level seems very high. There is still a very high risk of further radioactive material coming out.
(END VIDEO CLIP)
FOSTER: Well, Tuesday brought a sharp rise in the official number of dead, 3,373 are now confirmed to have perished. Double that are missing and shocked survivors are still enduring hourly reminders of the quake. Japan has experienced to major aftershocks and a further new earthquake on Tuesday, all with a magnitude of 6 or more.
A huge sell off is making its way from east to west around the globe. Market by market, traders are off loading shares by the bucket load, as fears grow about the unfolding nuclear crisis in particular. It began in Tokyo around 20 hours ago. Huge volumes of shares changed hands sending the Nikkei plunging by 14 percent at one point. Eventually it booked its biggest one-day drop since October 2008, at the height of financial crisis. Down more than 10 percent.
The route continued in Europe with the DAX in Frankfurt registering a 3 percent drop. Shares in Daimler were hard hit. The company has suspended production at its truck factory over there in Japan.
And U.S. markets are following suite, with Japanese companies listed in New York coming off the worst. And the Dow Jones industrial average has been tumbling by triple digits since the start of trading today. Alison Kosik is at the New York Stock Exchange for us.
Take us through, Alison.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Max, you are right. Investors continue to be rattled because of those nuclear concerns in Japan. Thankfully, though, we are off our session lows. We did see the Dow down as far as 297 points. But we are seeing investors especially dumping shares of Japanese companies that trade right here at the New York Stock Exchange. I'm talking about Toyota, shares of Sony, both seeing declines of 3 percent in those companies.
Dow component General Electric, that is dropping by a similar amount. GE designed the reactors at the Japanese nuclear plant that are posing that substantial risk of leaking radiation. The losses, we are also seeing them spreading to uranium mining companies, Denison Mines, and Uranium Energy Corp., those are the two biggest ones here in the U.S. They are down 10 and 12 percent respectively.
And insurers they are also feeling it. Shares of AFLAC are down almost 6 percent. Did you know three-quarters of their revenue comes from Japan? Some traders are telling me, you know what, this could be the start of the correction that has been batted about so long here on Wall Street, for many months. You know there has been so much optimism built into the U.S. market in recent weeks. And I'll tell you what it looks like it has taken a major disaster to change that sentiment, Max.
FOSTER: Yes, it is easy to grasp the corporate impact, isn't it, at this point? But economists, are they working out how the wider global economy will be affected by the third largest economy being so badly hit?
KOSIK: That is the big worry. You know, the big worry, Max, is that we could see a slowdown for a good period of time in Japan. I mean, sure, you have to remember we're talking about the third biggest economy in the world. And if we see that one chunk of the global economy slow down, the worry is that Japan could fall back into recession. And ultimately, perhaps, have a domino effect. Especially on the overall of recovery of the world at this point, on the economy, Max.
FOSTER: Alison in New York. Thank you very much indeed.
Well, Jim has also been looking at the impact on the global markets on all of this.
And, Jim, we need to start with Japan don't we?
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Yes.
FOSTER: Because those traders that did make it into work had an absolutely horrible day.
BOULDEN: Not a surprise, really. Just look at how the Nikkei has done over the last two days, shares down around 16 percent. And today, nearly all the 225 shares in the Nikkei were lower. I mean, and you are talking about some big numbers if we can see those companies. Like Toyota, as Alison just said in New York, as well, down. Tokyo Electric down, nearly 25 percent. Toshiba nearly 20 percent. Fuji and Toyota, I pick those out just as an example of how bad. I mean, some of these shares don't move very much during normal times, because these are big industrial stocks that don't have a lot to go either way for them. We are not looking at tech and that kind of stuff.
But here, in Europe, I thought it was very interesting, Yes, we are-we did close off of the lows. It was much worse in Paris and Germany during the day. But I picked some of these out, because you know, we looked at it, and we looked at some of the big nuclear players, yesterday, and some of the car companies. But today, look at somebody like Burberry's, OK, it was down a lot more yesterday and during the day down as much as 5 or 6 percent. It really came back. But there is this big worry about luxury goods sales, even though Japan has not been as big a player in luxury goods as it has been in the past.
PPR, there, at the bottom, down more than 5 percent. That is the owner of Gucci. Arm Holdings, who has a lot of exposure in Japan, especially for some of the chips that they design. It was down a lot the last two days. So, it did also come back toward the end of the day. But Lufthansa is an example of airlines obviously starting to cancel some flights in the area. I was very surprised to see Lufthansa falling so much, given the fact that the oil price has actually been falling as well.
FOSTER: And in terms of the impact on the global economy, huh, is it right to say that investors couldn't really get their head around it, when this first happened. But now they really realizing what a big player Japan is? \
BOULDEN: It is interesting, because if you are looking at the global impact and you are talking about, you know, how does this affect the relationship with China, which has such a big relationship, markets wise. Could this lead to another global recession? People are mentioning that.
People are talking about the oil price falling. I think that is really interesting. You see that the oil price, West Texas, Intermedia, has fallen again below $100, down some 2 percent in Brent there, you see, down another $3 today. If you think of that as showing you that people think there is going to be global demand slowing, not just demand from Japan, which is a big consumer of oil. But the fact that there could very well be a slow down across the board and so, you see the oil price falling. Earlier, CNN interviewed the CEO of Shell, Peter Voser. And this is what he had to say about the mix between switching, maybe more people switching to oil away from nuclear. Have a listen.
(BEGIN VIDEO CLIP)
PETER VOSER, CEO, ROYAL DUTCH SHELL: In the shorter term don't see a huge pressure on the volume on the supply for oil, because we have got quite a bit of spare capacity in the OPEC and I think that is what they can actually bring to the market.
In the longer term, as I said before, quite clearly the emerging markets are driving the demand. If they keep going in the same way as we have seen them actually growing over the last two years, over the next four or five years it is quite possible that we, on the supply side, can actually not cover all the new demand which is coming. Therefore you could see rising oil and gas prices over time.
(END VIDEO CLIP)
BOULDEN: So that is the debate that is going on. Are we going to see prices starting to fall, or are we going to see that demand pick up. You know, just this time last week we had been talking about so many people in equities, in gold, going into oil because it is such a strong player. And all of this is changing. It is really confusing to investors what to do now. \
FOSTER: Jim, thank you very much, indeed. The whole world then, really, looking on in particular right now on this nuclear situation that has impact on people, on businesses, and the global economy. Let's get the latest now from ground in Japan, a short while ago Stan Grant sent this report to us from Tokyo.
STAN GRANT, CNN SR. INTERNATIONAL CORRESPONDENT: (On camera): Each day, almost each hour, this nuclear emergency in Japan seems to throw up new challenges. This time the focus has been on two of the reactors, reactor No. 2, and reactor No. 4. Now, in reactor No. 2 there was an explosion. And that has raised concerns about damage to the containment vessel which surrounds the core of the reactor. And that is important because if there was ultimately a full meltdown, it is that containment process, that containment vessel, that would hold in the nasty elements, those radioactive materials that otherwise could go into the atmosphere.
Now, in reactor No. 4 there was a fire. The Tokyo Electric Company has said that they can't rule out the prospect of a hydrogen explosion, what is also worrying is that contained a pool and in that pool was spent fuel rods. Now what they are concerned about is that the water may have evaporated and those spent fuel rods may have caught on fire. That also lead to a spike in radiation around about the same time within the plant. It went to levels that we haven't seen before throughout this crisis. Levels that the authorities said posed a risk to humans. That was contained within the plant. In the hours since then the levels have come down when measured just outside the perimeter of the plant.
Now the Prime Minister Naoto Kan is warning that we could see these radioactive particles. We could see the radiation levels rising again in the coming days. Now there is an exclusion zone of 20 kilometers, 200,000 people have been moved away from there. The prime minister saying that people within a 30 kilometer radius need to stay inside, close the doors and the windows and stay out of any potential harmful contacts with these hazardous materials.
All the while the fight goes on to bring this situation under control, too cool these reactors. Now the authorities are saying they will use helicopters to fly over reactor No. 4 and try to dump water into that pool and solve the problem of these spent fuel rods. This is a situation that really is, minute-by-minute, it is hour-by-hour, and watching on people of Japan who have been through so much since that earthquake really hit here and tore through the country creating so much damage, loss of life, and also this nuclear emergency. Stan Grant, CNN, Tokyo.
FOSTER: Well since the disaster began the reactors have been a concern for authorities. Only now is it clear just how vulnerable these nuclear plants are to such a disaster. Hala Gorani recaps how it got to this point.
HALA GORANI, CNN INTERNATIONAL ANCHOR (voice over): A 9.0 earthquake hits off Japan's coast Friday. The Fukushima Daiichi Nuclear Power Plant is located in one of the hardest hit areas. The quake and tsunami knocked out regular and back up cooling systems to reactors 1 and 3. Workers begin injecting seawater and boron into the reactors to prevent a meltdown.
Saturday afternoon a hydrogen build up leads to an explosion. Blowing the roof off the No. 1 reactor building, four workers are hurt. Midday Monday another explosion tears through the reactor No. 3 building. The roof and top walls are destroyed, 11 people are hurt.
Late Monday, reactor No. 2 looses its cooling capability. Workers begin injecting seawater and boron into that reactor as well. Tuesday morning, an explosion hits the same reactor, No. 2, possibly damaging its containment vessel. And later Tuesday a fire breaks out at reactor No. 4. It had been shut down for maintenance before the quake. As of Tuesday evening the government has evacuated more than 200,000 people within a 20 kilometer radius of the plant and warned people 30 kilometers away not to go outdoors.
FOSTER: Well, the human cost to Japan's disaster is its top priority, of course, alongside the human tragedy though we are also looking at how much the world relies on what Japan makes. You will hear from an expert on what is at stake with the global economy, coming up.
FOSTER: As the scale of Japan's disaster intensifies fears for the global supply chain are mounting. Radiation worries and power outages are adding to the nightmare. That means certain products made in Japan, which the world counts on, could be at risk. Two key areas are emerging, cars and electronics. Japan is the world's third biggest maker of automobiles. The country's disaster has forced Toyota to shut down 12 plants through to tomorrow.
Honda has suffered the worst tragedy. It lost one of its people to Friday's monster quake and the human cost is paramount, but it could also have a big impact down the assembly line. Honda's Insight hybrid model is made in Japan and so it could be in short supply.
So could a key component in every PC. Japan makes up to 15 percent of the world's DRAM memory.
While most of the industrial base of Japan has been spared the worst of the disaster few plants are back up and running, or will this translate into a global problem. For more on the potential impact Ken Rogoff, former chief economist at the IMF, a leading economist is with me from CNN New York.
Thank you so much for joining us.
KENNETH ROGOFF, FORMER CHIEF ECONOMIST, IMF: Thank you.
FOSTER: Japan is a major economy so anything it suffers in terms of economics is going to affect the rest of the world, isn't it?
ROGOFF: Absolutely. It is the world's third largest economy. It is integral to the Asian supply chain. And everyone is looking at these gripping drama going on in Japan, it has huge psychological effects on all parts of the global economy that are still playing out.
FOSTER: The world is really assessing what impact this will have. And, of course, it is the rescue operation everyone is focusing on right now. But we have only just-we just heard right now from the Fed, leaving interest rates on hold, but a sign that it thinks things are stable in the United States. But actually, there is a lot of nervousness in the markets, in the global community. So something like Japan could unsettle things, couldn't it, for the United States, Europe, other economies?
ROGOFF: Well, it certainly could. I mean, normally, a tragedy like this is a huge human tragedy, but the global effects are localized. Even within Japan it would be localized. But it is happening on top of the financial crisis, the events in the Middle East. And of course, it is still unfolding. So, I think it is very open ended. Of course the Fed didn't start raising interest rates. It doesn't want to upset the apple cart now.
FOSTER: OK, and in terms of Japan as an economy. It exports a lot, doesn't it? So, when you are looking at the effect on the global economy you are looking at a break up in the supply chain more than a loss of demand, is that correct?
ROGOFF: No, it is very important say in production in China, that there are things that just won't get produced, for example, because they don't get the parts from Japan. Also, when these things happen we find out that there are things we didn't think of, where Japan may be supplying what seems like a small part, but when you don't have it, it turns out to be a big deal. You mentioned semi-conductors earlier. So, I think it is very early days to judge. It is a big economy this is like having a limb cut off from the Japanese economy. This is going to have, I think, bigger effects than any tragedy like this we've seen in a while.
FOSTER: And in terms of forecasts, what is the sort of range you have been hearing about the impact on the global economy?
ROGOFF: Well, I think the norm, the starting point, would be very, very small, like a 0.01 of percent, 0.02 of a percent, something like that. But you know it is very, very open ended. We don't know about the psychology. People are very jittery. There is lots of debt out there. Certainly if the economy were to slow down markedly, we are very, very vulnerable to that right now. And it is happening after all the uncertainty in the Middle East, which is still unfolding. So, certainly all these events are conspiring to make investors jittery. Maybe firms that were thinking of investing are going to slow down now. It is hard to know. The norm is that the small effect but it is not yet clear that this is going to fit within that norm.
FOSTER: So, just briefly it is the impact on confidence that could be the big impact?
ROGOFF: The confidence is the big question mark. I think people questioning the authorities in Japan. Questioning whether the global growth will really be so stable. We are still at a very sensitive point in the global recovery.
FOSTER: Ken Rogoff, thank you very much indeed, as ever, for joining us on the program.
Just to recap then, the U.S. Fed has just kept interest rates on hold. It says economic recovery is on a firmer footing, but it is keeping a close eye on rising oil prices. Let's get Alison's take on this.
As you expected, I'm sure, Alison. But the commentary was interesting?
KOSIK: It was interesting, but really no surprises here in the statement that I'm reading from, Max. For one, as you said the Fed leaving interest rates unchanged, with the Fed saying that low inflation is going to keep rates low for sometime, using that language, extended period, again. Though as you said, the Fed chief did mention that there is concern about rising commodity prices putting pressure on inflation. Though, once again, the concern that everyone is looking for the Fed to have about inflation, we're not seeing it in this statement right now.
The Fed also saying that spending is stronger. The housing sector remains weak. No surprise there. The long-term outlook is stable and the Fed did acknowledge that unemployment remains elevated.
Now one other thing that investors are really looking for in this statement is what will happen with QE2. You know there have been-there have been a lot of investors wondering what will happen to the markets once QE2 is pulled away at the end of June. You know there are questions whether the market is going to hit a wall. And the Fed did address that it will adjust the program as needed to best foster maximum employment and price stability. So the Fed did leave itself open to possibly a QE3. Lots of people on the floor often talking about a QE3, though that remains to be seen if that would even happen, Max.
FOSTER: QE3. Alison, thank you very much indeed.
Now coping with a growing nightmare. Japan's nuclear anxiety is deepening and the country is jolted by more tremors. If you are a boss, how do you keep your people safe in these times of crisis? You will hear from an expert next on disaster management.
FOSTER: Pictures of a new 6.0 quake that jolted parts of Japan just hours ago, would you believe. These pictures are from Shizuoka, which is southwest of Tokyo. A shaking was widely felt across the capital, as well. No tsunami warning issued, though.
Right now fears of radioactive explosion have gripped the country. Workers are battling to take control of the Fukushima Nuclear Plant in Northeastern Japan. Radiation levels spiked, but then fell back after it was rocked by a third explosion. The U.N. nuclear watchdog says there is a 30 kilometer no-fly zone around those crippled reactors.
As those radiation fears mount, Japanese and global companies are cranking up contingency plans for staff and for future operations. In the financials arena, for example, PIMCO, Black Rock, Fidelity, they are all taking action. PIMCO, the world's biggest bond fund has suspended its trading operations in Tokyo, at least for now. Black Rock and Fidelity have offered to relocate staff in Japan to the U.S. and to Hong Kong.
Some industrial companies are also offering to evacuate staff. BMW says it will move any ex-pats who wish to exit Japan temporarily. Bosch says it also leaving to its employees to decide whether to go or whether to stay. The engineering and car parts giant has about 8,000 workers in Japan. And Daimler has suspended production as well, at its Japanese truck units for the week.
Airlines also juggling with their schedules. As of today Lufthansa is rerouting all of its Tokyo bound flights to Osaka and to Nagoya. And Air France, KLM, Europe's biggest carrier has moved all of its crews out of Tokyo over to Osaka. `
I'm joined now by someone who knows all about managing this type of disaster. Robert Jensen is CEO at Kenyan International Emergency. He is with us via Skype from Houston, in Texas.
Thank you so much for joining us. It is very worrying, isn't it, for companies to know what to do. It is interesting that the companies are largely leaving it up to staff to decide. Is that the right approach?
ROBERT JENSEN, CEO, PRESIDENT, KENYON INTERNATIONAL EMERGENCY: Well, I think it is interesting. And I think it is absolutely the right approach. They are there. They know what they are concerned about. And they are the best judge of the situation as it is known.
FOSTER: OK. How can Japanese companies reassure the world that they have got this under control? Because we are beginning to get a sense from Japan that this is affected one part of the country, not the entire country. How can they reassure companies, investors, all sorts of people involved here?
JENSEN: Well, in this case I don't think they can reassure. I think the answers people are looking for, they are not going to find for several days. The fact is this is the first time we've had this type of crisis in this level of country. It is not since World War II have we seen an impact like this. And I don't think it is about reassurance. I think it is about honest communication with what the real risks are and how to manage those.
The physical impacts, I think, aren't as severe as the psychological impacts. And I think that is what is driving the market and that is what is driving businesses. Shutting down for a few days to take stock, to get an understanding of the criticality; seeing what the infrastructure can support is the best way to take care of the employees and take care of the businesses. The same time, I think the Japanese businesses need to talk to their counterparts and build a realistic expectation. You are going to see an impact, not just in the electronics, not just in cars and the batteries for the cars, things like aviation, like the Dreamliner.
There is going to be an impact that is going to spread through multiple industries. And without clear communication, and a realistic expectation, both from the Japanese government, the Japanese people, and more importantly, from its business partners, I think people are going to keep getting surprises. And I don't think we're through the worst part yet.
FOSTER: The worst thing, though, right now, isn't it -- I mean apart from the disaster, which you can assess that it is over, you can see the damage. It's an emergency operation, still, but in -- commercially, you can see where the damage is -- is this nuclear situation, isn't it, because it's impossible for companies and consultants to assess what the harm will be, because this is looming over the country. And we don't know how bad it's going to get.
So it's understandable if companies just pull out altogether for now.
JENSEN: That's a natural reaction. I think it would be a bad reaction. I think a managed withdrawal or consolidation or, more importantly, just a temporary slowdown or halt is a better response.
There is some lessons that you can learn from Chernobyl. There are some lessons that the UN has just put out in their reports. I mean we're approaching the 25 year anniversary. We have some lessons that can be learned. But this is why I don't think it's over, because we don't know what is going to happen with those reactors. And although there's still an assessment of what the damage is to actual factories or plants, I don't think people know the correct or have an accurate picture of the damage to all the infrastructure.
FOSTER: No. We're just beginning to work it out.
All right, Robert Jensen, thank you very much, indeed.
Now, after the break, more from Japan. And we'll be assessing the future of the nuclear power industry in Germany, France, the U.S. in light of the recent tragic developments in Fukushima.
FOSTER: I'm Max Foster in London.
Welcome back to QUEST MEANS BUSINESS, where our coverage of the global impact of Japan's earthquake continues.
And 50 workers left behind at a stricken nuclear power plant are battling to prevent a nuclear disaster.
There have been three blasts and a fire at Japan's Fukushima Daiichi in the past 48 hours. A 30 kilometer no fly zone is in place around the plant and residents are being told to leave the area.
The International Energy is warning that a containment vessel surrounding one of the nuclear reactors may have been damaged. Three thousand three hundred and seventy-three people are now confirmed dead in the earthquake and tsunami which hit Japan on Friday. Double that number are missing. And shocked survivors have endured major aftershocks and fresh tremors, all with the magnitude of 6 or more.
The French nuclear authorities are now placing this accident at Level 6 on the IAEA's scale of gravity. This is 1 point below the Chernobyl disaster. Japan is a country that knows better than most the harm that nuclear materials can inflict.
Our chief medical correspondent, Sanjay Gupta, has been examining the potential risks from this incident.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: We're getting a lot of new information about what's happening at those nuclear reactors and a lot of information that's pertinent to the potential health effects, as well.
This morning, we heard from the officials, saying that there was enough radiation that had been released that it could have an impact on human health. And they also said that they expect that these levels of radiation, these -- these -- the venting of radiation particles into the atmosphere would be continuing for some time.
Now, how to piece this all together, how to give it context involves looking at what this radiation is and just how high the doses are. So the numbers are important here.
For example, the number 400 millisieverts. No need to remember it, necessarily, but -- but keep in mind, this is one of the highest readings that was -- that was found today near one of the reactors. Typically, just walking around, living in most countries in the world, you're going to get a certain amount of background radiation -- a few millisieverts a year. If you get a chest X-ray, you're going to get a few more millisieverts. You get a C.T. scan, you get a couple hundred millisieverts.
Here we're talking about 400 millisieverts that was actually within the plant. As it starts to move outside the plant, outside the gates, some of that will decay, some of that will disperse. And people who are 20 to 30 kilometers away will, as a result, get a pretty low dose of radiation.
But we did hear that that -- that release had occurred. And that was one of the -- the very highest readings that we've heard from these nuclear plants.
We also heard that 175 miles away, on the USS George Washington, they started to detect above normal levels of radiation -- still very low, but above normal. They believe that also came from the Fukushima plant. So you're starting to see some distribution of the radiation levels and again, of course. The release.
When you think about protection -- and this is where a lot of the focus is right now -- you think about three things -- time, distance and shielding.
Time -- you want to reduce your time of exposure. Distance -- you want to get as far away from the exposure as possible, which is why you have the evacuation areas. And then shielding -- staying inside your home, for example. That can provide a certain amount of shielding.
There are also things like this. This is a -- a dosimeter. This is something that you carry around. It will do two things. It will sort of give you an idea of the cumulative radiation that you're receiving. And it also will alarm if there's a sudden sort of spike in the radiation around you. So some people will carry things like this.
As things stand now, 400 millisieverts. It's not a particularly high number. It should not have an impact, either in the short term or the long term, on human health. But there is a lot of waiting to be seen here, making sure those radiation levels don't get high again and making sure that surveillance can continue to be done.
So we'll be staying on top of the story and see what's happening at those reactors -- back to you.
(END VIDEO TAPE)
FOSTER: Well, about 15 percent of the world's electricity is generated by nuclear power. For many countries, nuclear energy is cheap, it generates little in the way of greenhouse gases and it ensures energy security. So it's attractive in many ways.
Take a look at this. It shows the percentage of electricity generated by the leading nuclear nations, according to the world nuclear organization. France is, by far, the biggest producer, with three quarters of its power coming from nuclear energy.
South Korea second, with 35 percent.
Japan not far behind, 29 percent.
China with just 2 percent, has 13 nuclear power reactors at present, but has more than 25 under construction.
The France prime minister has ordered safety checks on all its -- all the country's nuclear plants. Francois Fillon says France will draw all the necessary conclusions regard its own nuclear industry. Fillon did, however, say it was absurd to condemn nuclear energy following the recent explosions at the nuclear facility over there in Japan.
Well, the crisis in Japan has also sparked reviews of nuclear projects in neighboring Germany.
And Frederik Pleitgen joining us now from Berlin.
I understand they're actually closing plants down. It seems very reactive.
FREDERIK PLEITGEN, CNN CORRESPONDENT: Hi, Max.
Yes, and it's a significant number of nuclear plants that they're shutting down temporarily.
Angela Merkel held a press conference in Berlin today, where she said that Germany would also review the safety standards for all of its nuclear power plants and that the oldest of these power plants -- these are all the ones that went online at -- after the end of 1980. All of those -- those are seven plants in total -- would go offline, would shut down, as long as this review is going on. So that will be for about three months.
Now, the German minister for the environment said that he's not sure whether all of those plants will actually go back online after that review is finished. So will have to wait and see how that plays out.
But, certainly, this is a significant step in Germany. And one of the things that the government is saying is that they believe that energy prices here in this country will rise, at least temporarily, due to this shutdown of a significant number of nuclear plants -- Max.
FOSTER: Yes, Germany being the most aggressive in terms of this stress testing, if you can call it that. But this is happening across Europe, isn't it?
PLEITGEN: It certainly is. And it's very difficult, Max, to get a common European position. As you noted, Germany, on the one hand, at this point, is trying to get out of nuclear energy, although the pro-nuclear Merkel government has extended that -- the operation periods of nuclear power plants in Germany for a while.
The French, obviously, are far more pro-nuclear than the Germans are. So it's very difficult to get a common European position.
Now, there was a meeting today in the European Union. And after that meeting, the commissioner for energy, Gunther Oettinger, who himself used to be a state governor here in Germany, with a lot of nuclear plants in his state, said that both the industry here in Europe and the governments in Europe had agreed to try and foster a common stress test. He didn't say what that entails.
But let's listen in to what he had to say.
(BEGIN VIDEO CLIP)
GUENTHER OETTINGER, EUROPEAN COMMISSIONER FOR ENERGY (through translator): We want to look at the risks and the safety issues in light of events in Japan and carry out a reassessment. I think that the time has come for that and we feel that the stress test, on the basis of the European standard, is the right instrument to proceed on -- with that.
(END VIDEO CLIP)
PLEITGEN: Now, Oettinger also said that the industry had, in principle, agreed to conduct such stress tests or to develop such stress tests. And he also said that they would be employed not only within the European Union, but would also be offered to countries outside the EU, for instance, Ukraine, countries that border the E.U. -- Max.
FOSTER: OK, Fred.
Thank you very much, indeed.
Now, U.S. equipment to monitor radiation levels from Japan's nuclear reactors is expected to arrive in the country very shortly. That is according to the energy secretary, Steven Chu.
Chu also told a Congressional subcommittee that America will learn from the tragedy currently unfolding in Japan.
(BEGIN VIDEO CLIP)
STEVEN CHU, U.S. ENERGY SECRETARY: Information is still coming in about the events unfolding in Japan. But the administration is committed to learning from Japan's experience, as we work to continue and strengthen America's nuclear industry.
Safety remains at the forefront of our effort to responsibly develop America's energy resources. And we continued to incorporate the best practices and lessons learned in that process.
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FOSTER: Well, with thousands still missing in Japan, the focus is now on the mammoth task of finding survivors. In the community of Ishinomaki, one survival story has breathed new life into the mission of the rescuers. They found a four-month-old baby girl alive and well after more than three days. She's been returned to her parents, who have been waiting and worrying in their ruined house since the baby was swept away in the tsunami.
CNN's Gary Tuchman is following the rescue missions in a town where there are so many others hoping for their own happy reunions.
GARY TUCHMAN, CNN CORRESPONDENT (voice-over): The town of Ishinomaki, Japan is by the sea, but it's also now part of the sea. Much of Ishinomaki is under water because of the tsunami.
Many have died here, but hundreds of people have been marooned. Now help is arriving.
(on camera): We're with members of the army right now, trying to rescue these people.
(voice-over): We see a woman waving from her apartment window. She's desperate for drinking water, but to our surprise, doesn't want to evacuate her home. So we move on.
But most other people are very anxious and very grateful to go. For more than three days, residents have lived inside this office building surrounded by the tsunami waters. This is the pick up point for rescue.
Inside the building, tired and frightened people await their turn for their boat ride out. There is no cell service, so these people don't know how their loved ones elsewhere are doing and their loved ones don't know about them.
Buko Chiva (ph) doesn't know what happened to her parents.
(on camera): How scary has this been for you?
BUKO CHIVA: Oh, I had no words. So scared. We had panicked.
TUCHMAN: You were panicked?
CHIVA: Panicked. Very much.
TUCHMAN (voice-over): More boats are brought in so the pace of rescues can be quickened. The ride is 10 minutes long. Most of these people were not aware how devastating the tsunami has been. I asked this man what's going through his mind. He tells me he just wants to go to a safe place.
This soldier is one of dozens spending the day rowing. He says he knows the task is important, but the situation is emotionally difficult.
After they reach dry land, some of those rescued are taken to the hospital. Most of the others are able to walk off, but often without knowing where to go. After all, their hometown is under water.
Gary Tuchman, CNN, Ishinomaki, Japan.
FOSTER: Well, some other stories we're following this hour, in Libya, at least two airstrikes by pro-Gadhafi war jets have been reported. They were targeting the city of Ajdabiya in the east of the country. If Ajdabiya is retaken, it would give pro-Gadhafi forces access to roads leading to the heart of the opposition's base in Benghazi.
An opposition spokesman told CNN that forces loyal to Gadhafi have also taken control of the town of Zawara (ph) in the west, near the Tunisian border.
Security forces in Bahrain have killed at least two protesters and wounded around 150 people in the southern city of Sitra. Earlier, the king of Bahrain imposed a three month state of emergency in the island nation. It comes amid uncertainty in the Gulf kingdom after troops from Saudi Arabia and the UAE arrived to help the government calm protests.
Tickets for the London 2012 Olympics went on sale today, 500 days before the big event. 6.6 million tickets have been made available to the public for 26 separate sports. The official countdown clock was unveiled earlier in London's Trafalgar Square. It is the centerpiece of celebrations to mark the 500 days to go. It counts down in days, hours, minutes and seconds.
Now, trying to get back to normal following the earthquake, tsunami and now the threat of a nuclear meltdown -- we'll tell you how one Tokyo resident is trying to deal with the strains and stresses of the past few days.
FOSTER: To cope with the lack of food and water, the authorities in the Miyagi Prefecture have been distributing cards to the people in the shelters where they're staying. The cards can then be traded in for food.
Elsewhere, at the train stations in Tokyo, they've cut back how many trains are running, from 20 percent to 70 percent capacity. These are lines of people just waiting to get onto the platform to get onto those trains. Tokyo desperate to get back to normal. It's part of the new reality of life there in Japan after the earthquake.
And Steven Nagata is a Tokyo resident.
And yesterday, he told us about the transportation chaos there.
I spoke to him earlier today and asked if life was beginning to return to normal of sorts in the capital.
STEVEN NAGATA, TOKYO RESIDENT: Today seemed to be better. There was a lot of information about what the trains that were available were, their schedules. I think they may have increased the number of trains out there.
Today definitely had a much more normal feel to it out on the street. And I believe more people were coming into town, going into work and -- and bringing normalcy to their lives.
FOSTER: What about the shops?
Are they managing to get their stocks in?
Are the shelves filling up again?
NAGATA: Yes. We are getting more supply coming into the -- into the Tokyo area. There's still not quite as much selection and availability as we used to have. However, we've been being -- we've been getting information, we've been getting direction from the government to reduce any kind of hoarding or any kind of over supply so that supplies can start being redirected up north, where they really do need to get a lot of the basic necessities.
FOSTER: And what other difficulties are you facing in your everyday life there?
NAGATA: Well, things are certainly improving here in Tokyo. The blackouts are -- are increasing in number and we're being told that they will continue in through April. This may very well become a normal part of life for the near future.
However, on -- on a real practical level, things are getting back to a normal schedule.
FOSTER: And I get there sense there's a real drive amongst the people of Japan to try to get back to normal, to try to get back to school and work.
Is that right?
NAGATA: Well, there's a lot of uncertainty still. As we get further away from that earthquake, the chance of aftershocks is reducing. And that -- that makes it a little bit better. But at the same time, we have the -- the nuclear reactors and -- and some un -- not very good news coming from them that is adding more uncertainty to -- to everything.
And so I think one -- on one side, we -- we desperately want to find some kind of return to -- to -- to the old -- old -- old status. But I think that that's going to be a very tough challenge.
FOSTER: Because you are still suffering some -- from some aftershocks, aren't you?
But would you say it's the nuclear issue that's really dominating people's minds there in Tokyo, at least?
NAGATA: Yes, definitely. You know, the -- the aftershocks are continuing, but they're reducing. But the nuclear issue, particularly today, has really been at the top of everybody's mind.
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FOSTER: And we will continue to speak with Steven throughout the week here on QUEST MEANS BUSINESS, as he tries to get back to work and back to normal in Tokyo.
While many estimates are asserting (ph) about the potential cost of this quake to Japan's economy, the fact is, it's impossible to know at this stage. The damage to infrastructure, to industry and the scale of the loss of life are still only just emerging.
And as Emily Reuben explains, Japan's economy was already struggling even before the earthquake struck.
EMILY REUBEN, CNN CORRESPONDENT (voice-over): It's one of the world's great economies. Until recently, Japan was the world's second largest. It's now third, with a GDP of $5.3 trillion, according to the International Monetary Fund.
Devastated by the Second World War, Japan became a manufacturing powerhouse, leading the way in automobile production, electronics, creating companies that dominate the world today.
But these have been tough times. For two decades, the economy has suffered slow growth, as it struggles to recover from a crash in the late 1980s.
UNIDENTIFIED MALE: The legacy of that has been pernicious and it has been a legacy of low growth, highly indebted private sector, which took many years to get those levels of indebtedness. Now, an increasingly indebted government sector. Government debt is up toward 200 percent of GDP.
REUBEN: Japan is still one of the world's biggest exporters, but it's poor in resources and relies on imports for 80 percent of its energy needs. Last year, the IMF had Japan's growth rate at 4.3 percent.
PETER WESTAWAY, CHIEF ECONOMIST, EUROPE NOMURA: I think the one thing that they could have perhaps done differently is taken a slightly more aggressive approach to combating deflation. I think one of the lessons that other central banks around the world have taken, in the United States, in the U.K., is the way to overcome this threat of deflation is to be very clear in your communication strategy, to send a signal, we will do whatever it takes to prevent this happening.
REUBEN: Many economists were hoping this might be the year Japan's economic recovery would gather steam. Now, they're assessing the full implications of Friday's devastating events.
Emily Reuben, CNN, London.
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FOSTER: Right. We're going to check on the weather in Japan right now, because wind direction is very important around that nuclear plant at Fukushima, because it may prove critical about the damage done -- Jenny, just explain this one and what you've got.
JENNY HARRISON, CNN METEOROLOGIST: Yes, well, as you say, let's talk about the winds, but also the weather, because, of course, depending on where you are in Honshu and depending on your situation, I think both things are really playing a major part in your everyday life.
But right now in Fukushima, we've got reported a lot of clouds. There has been, actually, some snow showers in the area. The visibility has just increased up to four kilometers. The winds, you will see, are coming from the north. And they're actually, also, the winds coming from the north.
So there are the two locations. So the plant, and we know, is way out here, right on the ocean. So right now, the winds are coming from the north, which means that the wind is, as you can see, blowing in this direction, and, of course, heading across these populated areas.
Now, that area that we know that the residents have been evacuated from, which stretches 20 kilometers in radius from the center, this eclipses a number of towns, some very populated towns, as well. There's more than a few of them. You can see them showing up here. Futaba is one. And then we have Namie just further away.
And then the line beyond, this is where the residents in this particular region have been told don't go out, keep your windows closed.
And one of the cities included in this is Minamisoma. And that has a population of around 300,000 people. You can see where it is in relation to that portion of Honshu.
So, this is something we can talk about. This is a projected model -- something we've put together here at CNN to show you what would happen to a box filled with air -- nothing else, nothing radioactive, no particles, just air. This is something that NOAA has actually created over the last few months and the last few years and was used, for example, during the volcanic disruption across Europe because of the Iceland volcano.
So if you imagine you've got a box of air and you've got it in three positions, if you like. You're going to release that air, 10 minutes -- 10 matters from the ground, 150 and 300 meters.
So what this does, this model I'm going to show you, is it shows how the winds would transport that air. Remember, I'm just talking about air, nothing else, no particles, just the air.
This is what would happen to it. Bearing in mind that we're showing this in terms of what happened, the latest explosion, the incident from the nuclear power plant and where those winds, at the time, were blowing and so where this parcel of air would have traveled to.
These dots you can see along here, these are hourly intervals. And you can see the direction that air would have taken literally at the time and thereafter that that latest incident occurred.
So five hours on, you can see there, we were at 10 meters, 150, and 300 meters.
So, of course, the air taking it in different directions, different wind speeds and also slightly different directions. And then by seven hours, you can see again where it would have been.
So that air during that time would have been continuing to pass across these very populated areas. And it will have continued to push out up toward the far north.
Now, of course, what is going to happen next when it comes to the direction of these winds?
How will that affect anything going forward?
Well, this low is pushing out of the way. And it's this next one coming in that is going to be changing the direction of the winds, and hopefully for the better.
As we head through the next few hours, by the time we reach noon local time on Wednesday, the majority of the winds will be coming from the west, the northwest, about 40 kilometers an hour. That's about 27 miles an hour.
So anything at that point, any air -- imagine that box of air again -- would actually push out into the Pacific Ocean.
So as I say right now, the winds coming in a northerly direction. But they will be changing to the west-northwest as we head through Wednesday -- Max.
FOSTER: OK, Jenny.
We'll keep watching that.
Thank you very much, indeed.
Let's just take you to Wall Street to see how shares there have been affected by the situation in Japan.
There were sharp drops in many stocks with close links to Japan. But they're not down too much. Down just over 1 percent. The Fed keeping interest rates on hold today.
That's it from us.
I'm Max Foster in London.
Hala Gorani is just ahead with more from Japan.
Stay with us.