USING CRISIS TO ROLL BACK REFORM

Up through February this year, Prime Minister Asô Tarô was vexed by abysmal support ratings in popular opinion polls. Since late March, however, his cabinet’s numbers have taken a slight turn for the better. Regular surveys carried out by Asahi Shimbun show that the percentage of respondents who support the prime minister fell to 13% in late February, but this figure showed fresh signs of life beginning in March, and by mid-April it had recovered to 26%. This is still low, though, and the Liberal Democratic Party remains in a tight spot as it approaches the September deadline for the next House of Representatives election.

Asô has the Nishimatsu Construction scandal to thank for his rebound. On March 3 the Tokyo District Public Prosecutors Office arrested a secretary to Ozawa Ichirô, president of the opposition Democratic Party of Japan, on suspicion of breaking the Political Funds Control Law; a formal indictment followed on March 24. The charges were that the secretary had falsely recorded donations from Nishimatsu as coming from other political organizations.

Ozawa remained DPJ president for a while, but in response to a surge in public demands that he step down, on May 11 he announced his resignation. The DPJ will elect a new president on May 16. Hatoyama Yukio, the party’s secretary general, and Okada Katsuya, a former president, have announced they will run.

Even before Ozawa’s resignation, the affair had not dealt a fatal blow to the main opposition party. The mid-April Asahi Shimbun poll found support for the DPJ as a whole to have slipped from 26% in late February to 21%, while support for the LDP remained steady at 25%. However, in response to a question on which party respondents would vote for in the proportional representation districts if the contest were held today, 32% opted for the Democrats, versus just 27% for the LDP. Furthermore, 41% stated their hope for a government built around the DPJ, considerably more than the 29% who wanted to see the LDP remain at the core of Japan’s government. Support for the DPJ is likely to rebound with Ozawa’s resignation and the election of the new president. With the low ratings for Asô’s cabinet, it is clear that the DPJ maintains its edge over the Liberal Democrats in the struggle to take the helm following the general election.

The most important factor for Asô is still the policies his cabinet puts forward. Dealing with the ongoing economic crisis is the issue on which the prime minister has focused on above all others, but even in this area he has failed to advance measures that earn him support from the electorate. At the end of March his cabinet’s budget for fiscal 2009 (April 2009–March 2010) made it through the Diet. Soon afterward, on April 10, he announced an additional stimulus package amounting to ¥15.4 trillion—the largest in history—to counteract the crisis.

The severity of the economic conditions Japan now faces does make it necessary to boost public spending. But the content of Asô’s stimulus measures and the way they were assembled show clearly that Japanese politics remains enmeshed in two problems that I have identified in the past: the prime minister’s lack of real leadership and the traditional disposition of the LDP. Asô left no sign that he himself was guiding the process of drawing up these latest plans, and with the exception of some minor details like subsidies for purchases of energy-efficient vehicles, the cabinet’s measures lack any special characteristics to set them apart from previous stimulus plans. As a result, they largely reflect the LDP’s traditional approach to pork-barrel spending, making it doubtful whether they will truly give the economy the sort of stimulus it needs.

As in previous stimulus plans, the Asô cabinet’s latest measures place heavy emphasis on public works spending. Such spending can in some cases lead to economic revitalization, but the current proposals contain no focused spending on large-scale infrastructure projects that would boost efficiency of the national economy as a whole, such as drastic expansion of Tokyo’s Haneda Airport. As a result, it appears that the LDPwill use economic crisis measures to distribute pork with its eye on the upcoming general election.

In the April 2009 issue of Japan Echo, I argued that not only was structural reform slowing down under Prime Minister Asô, its course was even in danger of being reversed entirely. These latest economic measures make it clear that the government is turning its back on the reform course in its spending priorities under the high-sounding name of counteracting the economic crisis. But the Japanese people have seen through to the problems at the heart of Asô’s economic policies. The same April survey shows that just 25% of respondents approve of the proposed measures, while fully 60% do not. The prime minister’s stimulus plan will not help him to rebuild any real support for his cabinet.

At this stage, I believe we can state that a reversal of the reform course has gone beyond being merely a danger; this backpedalling is now actually taking place. Symbolic of this is the cancellation of the sale of the Kanpo no Yado inns managed by Japan Post Holdings. These facilities had been bleeding red ink for years, and Japan Post was planning to unload them to Orix Real Estate in April this year. In February, however, Minister of Internal Affairs and Communications Hatoyama Kunio stepped in to stop this deal from going through. The reason for his objection was that Miyauchi Yoshihiko, chairman of Orix, also served as president of the Council for Regulatory Reform, an advisory group to the prime minister. There Miyauchi had been a proponent of privatizing the postal services. In his article we carry in this section, Inose Naoki blasts this governmental intervention as unreasonable, in addition to explaining how many criticisms leveled at structural reform are misguided. In the other article below, Mikuriya Takashi takes a look at the LDP from a different angle than that I have taken, providing a helpful analysis of the difficult situation in which the party now finds itself. (Takenaka Harukata, Associate Professor, National Graduate Institute for Policy Studies)

© 2009 Japan Echo Inc.