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Interview with Edward Lincoln on Japanís parliamentary elections

Interviewer: Eben Kaplan
Interviewee: Edward J. Lincoln, Director, Center for Japan-U.S. Business and Economic Studies, New York University
September 12, 2005

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When Japanese parliament failed to pass a postal-service reform bill on August 8, Prime Minister Junichiro Koizumi dissolved parliament’s lower house and called for snap elections, held September 11. The risky political move paid off, with Koizumi’s ruling coalition turning a slight majority into more than a two-thirds majority. But the election “has far fewer implications for the acceleration of reform than appeared to be the case in the election rhetoric,” says Edward J. Lincoln, a Council senior fellow in Asia and Economic studies.

What’s the significance of Prime Minister Junichiro Koizumi’s victory in yesterday’s election?

My impression is that it matters less than the American press has portrayed it to represent. This election supposedly was about reform, in which Prime Minister Koizumi established a very strong but very general position saying that he and his party—the Liberal Democratic Party [LDP]—supported reform. That appears to have been a very successful message with the voters. Nevertheless, I believe the real significance as far as what happens now that the election is over, is that it has far fewer implications for the acceleration of reform than appeared to be the case in the election rhetoric.

What changes do you think we will see within Japan ?

There’s one change that’s very clear. The driving force for having this election was the failure of the upper house of the national legislature—the Diet—to pass Koizumi’s bill to privatize the postal system; both postal services and the postal savings, and postal life insurance aspects of the post office. That bill had failed. He then dissolved the Diet, held this election, and with the outcome of this election, his party and its coalition partner—the [Buddhist-led New] Komeito [Party]—now have enough votes in the lower house that it is guaranteed they will get this through. Even if the upper house, which was not up for election, votes against the bill once again, the lower house has the constitutional ability to override that with a two-thirds vote, which the LDP and Komeito now have. So, it’s pretty clear the postal reform bill will go through.

The campaign focused heavily on domestic issues, specifically on post-office reform. Will there be any impact on Japan’s foreign policy?

Very little. I noticed, for example, that Koizumi avoided going to the controversial Shinto shrine that honors Japan’s war dead in Tokyo on August 15, which is the anniversary of the end of World War II and a date when many politicians visit the shrine. He had said for the last year that as prime minister he would go whenever he felt like it, and no amount of protest [over war crimes in World War II] from [South] Korea or China would stop him from doing so. He didn’t go this time, and I believe he didn’t go because he perceived that this wasn’t good for election politics in Japan. He’d already nailed down the right wing and didn’t need to risk antagonizing voters in the middle of the political spectrum. Coming out of this election over the next year, my guess is that he will follow a relatively moderate foreign policy toward neighbors with whom Japan has had a bit of a rocky relationship the last couple of years: [South] Korea and China. He knows perfectly well, even though I believe he is a fairly nationalistic prime minister, it behooves his government to get along with its closest neighbors. I don’t think we’ll see any drift toward more tension in those relationships.

Some experts have suggested that Koizumi’s consolidation of power could lead to an amendment that does away with the pacifist provisions of the Japanese constitution. Is that likely?

Not in the next year. This is an issue that has been hanging over the Japanese for the fifty-seven or fifty-eight years the constitution has been in effect. It’s getting closer to a real possibility, but this is a kind of wrenching public debate that is really still in the early phases in Japan. Certainly the outcome of this election, with a resurgence of support for the LDP, moves the process in the direction of revising the constitution. I think we’re still looking at a five- to ten-year horizon for that issue. There’s a lot of open debate that still needs to take place.

Is it true the Democratic Party of Japan [DPJ], the main opposition party, is actually more reform-oriented than Koizumi’s LDP?

That is absolutely accurate. That is what makes this election so surprising. The DPJ was formed as an alternative to the LDP. It was formed with a specific agenda of being more reform-oriented, arguing that the LDP, which is actually a conservative party, was never going to carry out the extent of structural reform in economic policy and social policy Japan needed. That’s been their theme since they’ve come into existence. So it’s a little more surprising that Prime Minister Koizumi, through the force of his personality, was able to convince people that, in fact, his party, or the progressive wing of his party—which he claimed to be trying to strengthen—represented a more realistic approach to reform than the DPJ.

What does the LDP’s big win over the DPJ suggest about the prospect of real reform in Japan ?

Very little, actually. A reform process has been underway for the past decade. It’s had periods of acceleration and deceleration, and has accelerated modestly under Koizumi, but he neither started the process of reform nor will he be the one to make it happen faster. There has been a general mood that something was indeed broken, that Japan would not get back to a path of higher economic growth until it had resolved some structural issues, and not just fixing problems through macroeconomic policy. That’s been happening. Nonperforming loans have been coming down, Koizumi probably does deserve some credit for getting that process accelerated. Public-works spending—where Japan had an excessive amount of very foolish bridges to nowhere as of the mid-1990s—has been coming down substantially, but that’s a process that began well before Koizumi came into office. All he’s done is continue with what [former] Prime Minister [Ryutaro] Hashimoto got underway.

Will this process continue after year, when Koizumi’s term expires?

Yes, although we may be coming near the end of enthusiasm for changes through deregulation or vigorous action against nonperforming loans. Nonperforming loans are now down to a manageable level. With the economy starting to perform better—over the last two years there’s been more economic growth, and the current prospects are that this will continue for a while—that will take some of the steam out of the reform efforts. That said, Japan still faces two things that any prime minister, whether it’s Koizumi or anyone else, will have to face over the next five years. One is further reform of social security: They’ve had two rounds of it already and they will still need to raise social-security contributions and reduce benefits in order to keep that system solvent. [The other is] national healthcare, which faces the same kind of future-funding crisis and will need some scaling back of services and increase in contributions.

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