On September 11,
Japanese Prime Minister Junichiro Koizumi's ruling Liberal
Democratic Party (LDP) won a landslide victory in general
elections, creating the largest LDP majority in the Lower House
since 1986. Japan's Upper House had rejected Koizumi's proposal to
privatize the postal office, including its saving and insurance
systems, precipitating this early election and now Koizumi's
mandate on the issue. As well, LDP will continue its nearly
unbroken half century in power for at least four more years. While
Koizumi has reiterated his vow to step down as party leader and
prime minister when his term ends next September, there is
historical precedent for extending his term, as Prime Minister
Yasuhiro Nakasone did after winning an overwhelming victory in
1986.
This past election may prove to be the most important in Japan's
post-war history. This is not due to Koizumi's achievement of a
resounding public mandate to push ahead with his reform agenda, but
rather his transformation of the domestic political arena. Koizumi
severed ties with several of LDP's once-loyal voting blocks,
including the post office association, the agricultural
cooperatives, and the construction industry. He also gambled that
he could afford to alienate rural voters, who remain largely
opposed to reforms, but rallied record support from the young,
urban, and unaffiliated voters who had long been dismissed LDP as
stodgy and unappealing. To achieve these gains, Koizumi had to
expel those within his own party who opposed reform and embrace
change to modernize the LDP's image.
The party's transformation-as well as its new ideological platform
and prominent deployment of several charismatic female
politicians-jolted many Japanese out of political apathy.
Ironically, the opposition Democratic Party of Japan (DJP) actually
had the more radical and reform-minded agenda, with a bolder
approach to cutting government spending and controlling government
debt. Yet Koizumi skillfully orchestrated public debate to focus on
postal system reform, defining the choice for voters simply: for
LDP or against reform.
Postal reform is not a trivial task, and, if successful, will have
profound consequences for Japan's political and economic
landscapes. The Japanese postal system does far more than deliver
mail: with more than $3 trillion in deposits and a workforce of
380,000, it is also the world's largest public bank and serves as
the primary insurance provider for Japanese families. The postal
system's huge reserves have long been a slush fund for old-guard
LDP members to finance questionable projects and patronage. This
borrowing has led public debt to balloon to 170 percent of GDP for
the better part of a decade, the highest among developed
economies.
His efforts to privatize the postal system indicate that Koizumi
is entering the next and larger phase of a broader reform agenda.
In his current plan, which has been considerably watered down,
Koizumi proposes splitting the banking and insurance businesses
from mail delivery in 2007 and selling the banking and insurance
services in 2017. While he now has the clear public mandate to move
forward with these reforms, implementing them will be slow and
arduous.
The immediate response to the election has been a strong boost in
confidence among domestic consumers and foreign investors, with the
Nikkei stock index surging to a four-year high the day after the
election. Unlike in the 2003 elections, the powerful Japanese
business lobby unequivocally supported Koizumi's reform agenda,
including plans to open markets and shrink government.
But the implications of Koizumi's victory-beyond postal reform and
the shakeup of the political dynamics in Japan-are less clear.
Koizumi's greatest challenges may now lie ahead, as he will have
little excuse for failing to push ahead with major reforms, such as
revamping social security in the world's most rapidly aging society
and ensuring the continued turnaround of the Japanese economy. He
will also have to address weighty foreign policy challenges, which
went largely unmentioned during the campaign, such as China's
growing influence and assertiveness in the region, the ongoing
nuclear standoff with North Korea, tense relations with South
Korea, and the revamping of Japan's own security and defense
policies. Koizumi has positioned himself to address these tasks as
perhaps Japan's most powerful and charismatic post-war leader. What
he will accomplish in this new and complex political environment
remains to be seen.
Balbina Y. Hwang,
Ph.D., is Policy Analyst for Northeast Asia in the
Asian Studies Center at The Heritage Foundation.
Report China
Going Postal in Japan: A Mandate for Reform
September 15, 2005 2 min read
Balbina Hwang
Former Senior Policy Analyst
Balbina is a former Senior Policy Analyst
Authors
Balbina Hwang
Former Senior Policy Analyst
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