POWER TO THE PROVINCES
Vol. 29 No. 6


KOIZUMI VS. HATOYAMA

This autumn witnessed two noteworthy changes of personnel in Japanese politics. One was Prime Minister Koizumi Jun'ichirô's first cabinet reshuffle since he took office in April 2001, which he used as an opportunity to clarify his policy agenda and to choose a set of ministers whom he could count on to implement this agenda. This was seen most dramatically in his replacement of Financial Services Minister Yanagisawa Hakuo by Takenaka Heizô, who also retained his post as state minister for economic and fiscal policy. The focus on policy made this unlike the frequent reshuffles by previous prime ministers from the Liberal Democratic Party, which were driven mainly by factional considerations. The other personnel news came from the Democratic Party of Japan, the largest opposition party, where Hatoyama Yukio won a third term as president in a hard-fought election. Hatoyama's victory was not particularly surprising, but his subsequent appointment of Nakano Kansei (widely seen as a leading representative of the old school of politics within the party) as the party's secretary general in return for helping Hatoyama get reelected shocked many in the DPJ and caused despair among the party's younger generation of legislators.

Prime Minister Koizumi used the cabinet reshuffle on September 30 to stake out his intentions both in style and in substance, making this reshuffle decisively different from those carried out by past LDP prime ministers. Prior to carrying it out, Koizumi set forth a statement of his policy priorities, declaring his intention of creating a setup for firm implementation of his structural reform program; among the key priorities he identified were (1) efforts to overcome deflation and complete the disposal of nonperforming loans in the financial sector by March 2005, (2) ongoing moves to achieve a sweeping contraction of the bloated public sector, including reform of the highway-related public corporations and preparation for privatization of the postal services, and (3) resumption of talks on the normalization of relations with North Korea. In each of these areas the prime minister had encountered differences of opinion within his cabinet or resistance from other members of the LDP; by staking out his position, Koizumi was effectively declaring that he expected all the members of the new cabinet to support his agenda.

The appointment of State Minister for Economic and Fiscal Policy Takenaka Heizô to a second post, that of state minister for financial services, was in line with this quest for policy uniformity. The previous financial services minister, Yanagisawa Hakuo, had been insisting that the financial system was not in a crisis and that there was no need to inject additional public funds into banks in order to help them dispose of their nonperforming loans. Takenaka had been taking a rather different line, asserting that banks' assets should be subject to stricter evaluation standards, that their equity capital should be increased, and that their governance should be strengthened so as to accelerate the disposal of bad loans. He also called for leaving the door open to further injections of public funds into the banking sector and even, depending on the circumstances, the nationalization of banks. Having promised to accelerate the disposal of bad loans at a Japan-U.S. summit in September, Koizumi used the reshuffle to reaffirm his determination to fulfill this pledge. In practical terms, the replacement of Yanagisawa with Takenaka represented a change of direction in financial policy to match the administration's recognition of the critical state of the banking sector.

It might seem only natural for a cabinet reshuffle to be based on policy, but under past LDP administrations this was not generally the case. Unlike in other parliamentary democracies, the normal practice in Japan was for the prime minister to replace his cabinet members en masse about once a year. Supposedly this was done to "refresh" the cabinet; in practice, however, the prime minister would assign most of the cabinet posts to the candidates put forward by the factions within the LDP, taking care to balance the appointments numerically in keeping with the strengths of each of the factions. In the case of members of the House of Representatives, ministers were generally picked from among those in their fifth terms of office; LDP members who won five elections could expect to get on the list of recommended candidates drawn up by their faction and, when their turn came, become a cabinet minister. This system produced a mass of amateur ministers with no particular expertise relevant to their portfolios and who everyone knew would be replaced after a year. As a result, policymaking was left largely to the bureaucrats, while political affairs centered on maneuvering among the LDP factions.

In carrying out the recent reshuffle, Koizumi seems to have been partly responding to pressure from within the LDP for a change in cabinet assignments to coincide with the end of senior party officials' terms of office, but he refused to accept lists of candidates from the LDP factions or to consult with factional power brokers in deciding whom to appoint. In the end, he replaced only 6 of the 17 incumbent ministers, sticking to his declared principle that ministers could not fulfill their responsibilities or display leadership if the cabinet lineup was subject to heavy turnover; Yanagisawa was the only minister with a major reform-related portfolio to be replaced. This new-style reshuffle made the faction leaders feel endangered and powerless, darkening the mood inside the LDP. This is because it marked a reduction in the role of the factions in mediating personnel matters; if Koizumi-style reshuffles become the norm, it will herald a major structural change in Japanese politics.

The precedent-breaking cabinet reshuffle is by no means the first significant experiment Koizumi has tried so far. In the spring he submitted four bills related to the reform of postal services as well as a revision of the Public Offices Election Law to the Diet without prior approval from the LDP. Under the usual system of policymaking by LDP-led administrations, government-sponsored bills are drafted through coordination among relevant committees of the LDP's Policy Research Council and government ministries and agencies. After approval by the party's Policy Deliberation Commission and General Council, bills are sent on to the cabinet, where they are approved first at a meeting of the administrative vice-ministers and then by a meeting of the cabinet itself, at which point they are submitted to the National Diet for deliberation and enactment. Closed-door meetings and unanimous decisions are the cornerstones of this process, which effectively gives each member of the LDP's General Council, for example, the power to veto any policy initiative. Critics have blamed this system for giving rise to the structure binding government ministries, LDP lawmakers, and vested interests together in an iron triangle and for rendering Diet deliberations meaningless. On top of that, the practice of requiring each item on the agenda of the daily cabinet meetings to have been approved a day in advance by the administrative vice-ministers is said to mean that the cabinet is a mere shell.

In the case of the postal and electoral bills, Koizumi broke with the custom of prior LDP approval because there was strong resistance within the party to the measures they contained. But the overall policymaking setup remains basically intact. At Koizumi's direction in his capacity as LDP president, the party's National Vision Project Headquarters in March came out with a reform proposal that called for abolition of both the LDP's prior-approval system and the setting of the cabinet agenda at advance meetings of the administrative vice-ministers, but when it released its final report in July it backtracked on these moves. Just like his structural reforms in other areas, so far Koizumi's political reforms, while pointing in the direction of change, have been progressing unevenly at best.

The main factor that enabled Koizumi to brush off pressure within the LDP for a broader reshuffle of his cabinet was the rise in his approval ratings following his visit to North Korea. Koizumi's ratings go up whenever his confrontation with the so-called forces of resistance in the LDP comes to a boil; as his ratings rise, the resistance forces have no choice but to back off. In short, the key to the prime minister's power to pursue his policy goals remains his approval ratings. In a poll conducted by the Mainichi Newspapers on October 6, 49% of respondents assessed the cabinet reshuffle positively, while 41% gave it a negative assessment; among the latter group, 60% voiced pessimism about the new cabinet's ability to promote an economic recovery. However, 64% of all the respondents expressed overall support for the Koizumi administration. An October 1-2 Yomiuri Shimbun poll, meanwhile, found 60% support for the reshuffled cabinet but 70% of respondents pessimistic about its chances of overcoming deflation. At first glance it seems strange that the cabinet's approval ratings should be so high even though the public takes a dim view of its handling of the economy. But the Yomiuri survey also asked those who supported Koizumi how firm their support was: 48% said it was strong and 38% weak. In other words, only 29% of all the respondents strongly support the administration, meaning that the base of support for Koizumi is not as firm as it might appear at a glance. Much of his support is probably due to negative factors, such as the lack of a promising candidate to replace him and the perceived ineptitude of the opposition parties.

The addition of the financial services portfolio to Takenaka's remit was welcomed outside Japan but failed to stop the decline in Japanese share prices. Fearing Takenaka's hard-landing approach would increase bankruptcies and unemployment and make the deflationary slump even worse, the market appeared to be demanding a comprehensive policy package including measures to soften the blow of Takenaka's proposed steps. Koizumi subsequently decided to postpone reimposition of the ¥10 million cap on deposit insurance on ordinary bank accounts for two years, putting it off until April 2005, and softened his opposition to the compilation of a supplementary budget and breaking through the ¥30 trillion ceiling on government bond issues. Naturally enough, this set of policy shifts has led to heightened calls for an accounting from the prime minister. And Takenaka, while enjoying expressions of support from senior officials in Washington, continued to come under fire within Japan. As an academic rather than a politician, he has been accused of lacking the clout to get his policies implemented and the political instinct to judge how far to go. So the Koizumi administration continues to face rough sailing in the critical area of economic policy. And at the same time there is a substantial pile of other business in Koizumi's in-tray, including the thorny issues of relations with North Korea and a potential U.S. attack on Iraq.

Over in the largest opposition party, the Democratic Party of Japan, meanwhile, Hatoyama Yukio was reelected for a third term as president. The goal of any opposition leader is obviously to take over the reins of government, but Hatoyama is seen by some as coveting the premiership particularly keenly because his grandfather, Hatoyama Ichirô, served as prime minister and his father, Hatoyama Iichirô, as foreign minister. Both belonged to the LDP, as did Yukio in the earlier part of his political career.

There were two rounds of voting in the DPJ's September 23 presidential election. In the first round the field was narrowed down from four candidates to two: Hatoyama and DPJ Secretary General Kan Naoto. In the runoff, Kan got more votes among the DPJ's national legislators and official candidates for Diet seats, but Hatoyama clinched a narrow victory by getting more votes among the party's rank-and-file members and supporters. A crucial factor behind Hatoyama's win was the support that he got from veteran legislator Nakano Kansei, who initially declared his own candidacy but pulled out of the race midway through the campaign. Nakano's connections with labor unions and other groups were instrumental in gathering members' and supporters' votes for Hatoyama.

The leadership race was supposed to focus on the issue of which of the candidates was best suited to lead the DPJ into the next lower house general election (which will be held no later than June 2004) as the face of the party and as the prospective prime minister of a DPJ-led government, along with the question of where each of the candidates aimed to lead Japan. Yet these issues tended to get lost as discussions turned inward and candidates sought to highlight their opponents' weaknesses. Prime Minister Koizumi's dramatic visit to North Korea took the media spotlight away from the Democrats' campaign. Also, only one of the original candidates, junior legislator Noda Yoshihiko, was a fresh face. So all in all the race failed to grab the interest of the general public. Younger DPJ Diet members were slow to decide on a single candidate to represent them and failed to focus the party's attention on the issue of handing the baton to the next generation. Among party members and supporters--the latter referring to people who gained the right to vote by paying a ¥1,000 registration fee--barely half (51%) even bothered to cast ballots.

The flap over the appointment of the DPJ's new secretary general immediately after the election was a further turnoff for the public. Nakano, the man Hatoyama tapped for the post, served as secretary general of the former Democratic Socialist Party and leads the contingent of DSP veterans who now belong to the DPJ. Even within the DPJ, which consists largely of people who used to belong to other parties, he stands out as a representative of the older generation of legislators who are strongly colored by their previous party affiliations. His selection set off a storm of complaints, particularly among younger party members, that Hatoyama made the appointment merely to reward Nakano for his support during the campaign and that the move represented a return to factionalism along the old party lines. As a result, it took over a week for the lineup of other senior officers to be settled. Two leading dailies, the Asahi Shimbun and Mainichi Shimbun, came out with editorials strongly critical of Hatoyama's choice; the former carried a title meaning roughly "Our jaws have dropped," while the latter snidely asked "Is the DPJ an LDP supporter?" In an opinion poll conducted by the Yomiuri Shimbun just after the election, only 15% of the respondents said they had high hopes for the Hatoyama-led DPJ, while 78% said they did not, and in a Mainichi poll a mere 2% of people said their opinion of the DPJ had improved as a result of the election, while 40% said it had deteriorated. In the end, the DPJ was unable to use its presidential election to present an outstanding leader to the public, to demonstrate that it had left behind its days as a disparate mass of old-party factions, or to bring fresh, young talent to the fore.

The article we present below is a concise version of Hatoyama's manifesto for the leadership campaign. In it he proposes a two-stage program for Japan's revitalization. The first stage would be a clean sweep of the structure of collusive ties among politicians, bureaucrats, and business leaders; it is essentially a blueprint for structural reform of the political system. That the DPJ has never been in power and has relatively few ties to the bureaucracy or the business world certainly puts it in a better position to carry out such reforms than the LDP. But it is ironic that in its leadership election this reform-minded party put its own unreformed structure on display for all to see.

In the second phase of his program, aimed at making Japan "a nation with dignity," Hatoyama calls for an end to Japan's dependence on the United States. Though he favors maintaining the Japan-U.S. alliance as the central element of Japan's foreign policy, he opposes passively accepting the regular stationing of American troops on Japanese soil as a permanent state of affairs. In the past Hatoyama explicitly called for a Japan-U.S. security treaty without a regular U.S. military presence in this country. Though he has avoided such explicit suggestions recently for fear that people may misunderstand him to be seeking the swift withdrawal of all American forces, his point was that, as an objective for the medium to long term, Japan should seek to modify its alliance with the United States so that it can function without the stationing of U.S. troops in Japan on a regular basis. In his official election manifesto Hatoyama also advocated formulating a basic security policy, promoting the creation of a "no war" community in Asia, strengthening local autonomy by consolidating the 47 prefectures into larger units, and promoting leadership by the private sector.

According to the scenario presented in his article and other recent pronouncements, Hatoyama's hope was to win power within a year by defeating the LDP in this October's by-elections for the Diet, confronting the Koizumi administration in the ordinary Diet session to be convened in January, forcing the dissolution of the Diet and a general election, emerging from this election as head of the largest party, and thereupon forming a DPJ-led government. But the findings of recent opinion polls cast a long shadow over this scenario. An Asahi Shimbun poll conducted on October 5 and 6 found support for the DPJ at just 5%, the lowest level ever; just 19% of people expressed a preference for a DPJ-led government, compared with 44% favoring an LDP-led administration. And in the October 27 by-elections for the Diet, the LDP held on to five of the seven contested seats, with the DPJ managing to win only one (the other went to an independent). Even taking into account the rise in DPJ support that usually occurs in the run-up to nationwide elections, there is no doubting the severity of the party's plight.

Why is the DPJ unable to oust the LDP from power? Its biggest shortcoming is probably its failure to differentiate itself clearly from the LDP. Prime Minister Koizumi's trumpeting of a reform agenda has weakened the appeal of the Democrats' calls for change. Regardless of how tardy the Koizumi administration may be in carrying out its reform agenda, and regardless of the pressing need for political leadership to cut through the collusive ties among the political, bureaucratic, and business worlds, the DPJ cannot hope to accentuate its distinctiveness merely by harping on these two points. As a party with no record of governing, what the DPJ requires above all is a leader who can present a clear, well-articulated set of policy priorities to the public. (Suzuki Toshio, journalist)

© 2002 Japan Echo Inc.


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