Japan: Koizumi's Enduring Effect

The Prime Minister aims to displace reform opponents in the elections. But whatever happens, he has already created a lasting political shakeup

By Brian Bremner

By Japan's standards, the runup to the Sept. 11 general elections has been a rollicking affair, thanks to the adroit political brinkmanship of the country's mop-top, rock-'n'-roll-loving Prime Minister, Junichiro Koizumi.

He made good on a long-standing promise to call a general election after his crusade to privatize Japan's sprawling postal system -- which not only delivers the nation's mail but also controls some $3 trillion in savings deposits and insurance premiums -- hit a roadblock. The system had long been a massive piggy bank for Koizumi's ruling Liberal Democratic Party (LDP), which for decades leveraged the money to deliver bridges and concert halls to its political base in rural Japan.


  Koizumi argued that the government's addiction to public-works spending called for reform and that the LDP needed a new political agenda to accommodate a Japan requiring economic catharsis and faster growth. When 37 LDP members rebelled and blocked the legislation in early August, Koizumi dumped party dissidents from the LDP ticket and instead fielded what the Japanese press has dubbed shikaku, or assassins, to replace them.

The shikaku include maverick Internet entrepreneur Takafumi Horie and a raft of celebrity female candidates -- among them, former Olympic cyclist and speed skater Seiko Hashimoto. By bringing in these new people, Koizumi has deflected media attention from the opposition Democratic Party of Japan.

Much speculation has centered on whether Koizumi's reconstituted LDP will win big enough to give him the requisite political clout to push through postal reform and attend to other challenges. These include a fiscal revamp and Japan's grossly underfunded pension and national health schemes.


  Japan's government debt is clocking some 140% of gross domestic product, the highest level in the rich industrialized world. Given the country's relatively strong economy, robust corporate profits, and a modest jobless rate of 4.2%, odds are that Koizumi's LDP will retain power. Yet win or lose, Koizumi has already had a profound impact on Japan's political culture since he assumed the top job in April, 2001.

Although the LDP and its bureaucratic allies in the ministries have held power almost continuously over the last five decades, the party has produced preciously few dynamic, strong leaders. Some exceptions prior to Koizumi -- Yasuhiro Nakasone, for instance -- have occurred. But during the 1990s, Japan saw a series of revolving-door Prime Ministers who never stayed in power long enough to accomplish much.

The reason: Political power pretty much stayed within a group of party factions that often competed for top ministry jobs, Cabinet posts, and the premiership. Engineered to reward party loyalists, Cabinet reshuffles occurred frequently. Political and policy-making smarts assumed a secondary importance in many cases.


  And any Prime Minister who didn't heed the advice of the party elders running the factions simply didn't last very long. When Japan grew robustly during most of the post-war period and kept a low profile internationally, this weak political leadership mattered very little.

Koizumi changed all that when he came to power. He promised "no sacred cows." And though he failed to deliver reform in some key areas, such as making a real dent in Japan's gargantuan deficits, he did make headway elsewhere, like banking. Heizo Takenaka, his controversial Economic Minister, unleashed government auditors on the banks. As a result, bad loans at Japanese lenders have been nearly halved, to $161 billion.

Koizumi is set to relinquish the premiership in late 2006, but Japanese politics will probably not revert to old form. For starters, the LDP's political appeal would likely take a huge hit from voters, and the group would probably cede control to another party identified with reform.


  Second -- and Koizumi deserves a lot of credit for this -- the Japanese public now realizes that economically and politically ascendant China threatens the country's future prosperity. And the country's citizens know that North Korea and global terrorism may compromise the level of national security.

Perhaps the most significant change during the Koizumi premiership has been the gradual rollback of the pacifism that has characterized Japan's relations with the rest of the world. Koizumi figured out early on that not only did Japan's economy need to get growing again, but also the country had to play a more assertive role in global affairs.

Following the 2001 terrorist attacks in the U.S., Koizumi pushed the Japanese Diet to approve a law that freed the Self-Defense Forces' naval arm to provide logistical support to the U.S. invasion of Afghanistan. Also, Japan has sent hundreds of support personnel to Iraq.


  The Prime Minister has also led efforts to reform Japan's war-renouncing constitution so that troops can play a bigger role in managing the country's national security. Plus, he has pushed for a Japan seat on the United Nation's Security Council, and the country has launched spy satellites under his watch to track North Korean missile developments. Koizumi has pushed Japan into missile-defense research with the U.S. and threatened to initiate economic sanctions if North Korean doesn't give up its nuclear-weapons ambitions.

Sure, there have been missteps. Relations with China and South Korea have soured thanks to Koizumi's insistence on honoring Japan's war dead at the controversial Yasukuni Shrine in Tokyo. On the other hand, Japan is no longer willing to keep its head down and remain silent when its neighbors threaten its national security interests.

Add it all up, and clearly the world will remember the Koizumi years as a time of significant change for Japan. And regardless of how Koizumi and the LDP fare on Sept. 11, those changes are likely to be lasting ones, too.

Bremner is Asia regional editor for BusinessWeek in Hong Kong

Edited by Patricia O'Connell