Koizumi faces divisions as traditional role changes

01.07.04 Publication:

Japan´s sun is rising again, after a decade of stagnation, with economic recovery now widely based and quite powerful, even if it is too soon to say whether better times are back for good. You would thus expect the man who has been prime minister for the past three years, Junichiro Koizumi, to reap a reward in Sunday´s election.

Not if the opinion polls are to be believed, however. His coalition cannot lose its majority in the upper house of parliament, for only half the seats there are up for grabs, but he may well do badlyjust as he did in the election for the more powerful lower house last November.

The reason for such a lukewarm response to hotter economic news tells you a lot about how Japan has changed—and in some ways not changed—since its economy and stock and property markets tanked in 1990. It also arises from big changes that have taken place in its Asian neighbourhood.

For the first time, Japan now almost has a two-party system, with Koizumi´s right-wing Liberal Democratic Party facing a powerful rival in the more centrist Democratic Party of Japan. The LDP has governed Japan almost uninterruptedly since 1955. So while it took the credit for the country´s economic miracle, it should also have taken the blame for the slump of the 1990s. It didn´t, because there was no credible alternative government. There now is, which is why many voters are tempted to try something new rather than rewarding Koizumi.

Such a reward would hardly be justified, in any case. Better times have not come because of better government policies or brave, Thatcher-like reforms. All Mr Koizumi can be credited with is having chosen a good new governor for the Bank of Japan, whose reflationary policies have boosted growth, and with not having messed things up himselfas some of his 1990s predecessors did, with foolish tax rises or wasted public spending.

He has made little headway in reforming Japan´s financial system, which has been insolvent for a decade, nor its public sector, which obstructs growth and development in multifarious ways, nor in broader deregulation. That is because his own party, the LDP, has blocked him, since factions within it rely on banks, bureaucrats, farmers and other vested interests.

Meanwhile, though, such dinosaurs in his party are growing weaker, for the cash flow from such traditional supporters has itself dwindled, thanks to economic troubles in rural Japan and tighter control of public spending. Urban Japan is where the recovery is taking place, and that is where two rival parties are much stronger: the DPJ, and a Buddhist-backed party in Mr Koizumi´s coalition, Komeito.

Hence the LDP´s nightmare must—or should—be that Komeito will eventually switch sides. Its backer is Japan´s biggest Buddhist sect, the Soka Gakkai, which, while loving the power and money that comes from partnership with the LDP, is also traditionally pacifist. That has made Komeito deeply uncomfortable with Koizumi´s biggest innovation in office, his backing of America´s war in Iraq by sending 500 Japanese troops, the first time since 1945 that Japanese troops have been sent to a war zone.

Iraq, and Koizumi´s more muscular foreign policy, have divided Japan just as such issues have divided Britain. It has not, though, divided Japan on the old grounds of pacifism versus militarism. The Japanese have changed: they seem proud that their forces can now play a more “normal” role in helping to sort out international problems, and want such normalisation to continue.

Where they are divided, however, is over whether it is best to do so shoulder to shoulder with Japan´s long-standing ally, the United States, like Britain and Australia, say, or whether a more independent role might be desirable. Such independence is especially tempting because of the biggest change that has taken place during Japan´s long stagnation: the rise of China.

The party divide on that question, of whether to be a strong, “normal”, regional power as an independent country or as a close American ally, is still not clear, with the DPJ itself divided. But, after tomorrow´s election and in the coming few years, it is likely to become an important and polarising concern.

Bill Emmott is editor of The Economist, and author of three books on Japan, including “The Sun Also Sets”, published in 1989.