Vying to lead Japan into the post-Koizumi era

David Pilling – The Financial Times

Copyright The Financial Times – May 9, 2006
A sure way to stump a quiz fanatic is to ask the names of the
Japanese prime ministers who shuffled in and out of office in the 1990s. For the
record, there were seven of them, including Tsutomu Hata, a former bus
company employee who lasted all of two months. Yet not so many would
struggle to name Junichiro Koizumi, whose maverick style and
distinctive policy agenda have kept him at the helm of the world’s second largest
economy for five years. That makes him Japan’s third longest-serving
minister since the second world war and one of the few to command a
presence on the world stage.
In that time, he has transformed the political landscape.
the sake-lubricated backroom deals of old, he has pursued his sometimes
quirky policy agenda on the floor of parliament and on the television
screens of Japanese homes.
By disregarding the usually accepted wish to form a consensus, he
privatised the gargantuan post office, sent troops to Iraq in the face
Japan’s pacifist constitution and articulated a market-led economic
If he has had the luck to be prime minister when the economy finally
up four years of growth, he has given the impression of making his own
fortune as well as riding it.
Now Mr Koizumi’s ride is almost over. In another act that
convention, he has pledged – in spite of continuing high popularity
after a
landslide election victory last autumn – to make way for his
successor in
September. The problem is, no one knows who that will be.
The question of who comes after Mr Koizumi is important for the
as well as Japan. Economically, his successor must build on the
recovery to
tackle the problems of towering debt and an ageing population. Even
important, Japan’s next leader will have to seek a way out of the
dead end into which Mr Koizumi has led it. In the past five years,
with China – now Japan’s biggest trading partner – as well as
those with
South Korea have almost broken down.
Those countries, former victims of Japan’s imperial
adventurism, have
ostracised Mr Koizumi largely because of his annual pilgrimage to
shrine, a symbol of Japanese nationalism where millions of soldiers,
some convicted war criminals, are honoured. Few believe that Japan’s
leader would be wise simply to allow such bad feelings to fester.
With months to go, it is rash to predict who will run for head of
ruling Liberal Democratic party, and hence prime minister, let alone
will win. No one has officially declared a candidacy. Yet even at this
stage, the issues of how Japan should manage its economy and diplomatic
relations are shaping the contest. Kaoru Yosano, economy minister and
astute political observer, says: “I want to hear from all the
about their thinking first on diplomatic policy, including Asia, and
on fiscal discipline.”
For months, the frontrunner has been Shinzo Abe, at 51 considered
dashingly young for a would-be leader. With high popular appeal, Mr Abe
looks like a natural heir to Mr Koizumi. In opinion polls on prime
ministerial quality, Mr Abe, chief cabinet secretary, consistently
above 40 per cent – until recently streaks ahead of rivals wallowing
in the
low single digits.
If this were a popular vote, Mr Abe would be almost home and dry.
it is the Liberal Democrats, not the people, who will pick Japan’s
prime minister.
In recent weeks, another potential candidate – Yasuo Fukuda,
from one
of the ruling party’s most famous families – has been climbing the
polls. In
one survey, the 69-year-old former chief cabinet secretary scored 14
cent, a respectable showing for a non-cabinet minister.
Other expected contenders, including Sadakazu Tanigaki, the
technocratic finance minister, and Taro Aso, the aristocratic foreign
minister, are still far behind. But they, or other dark-horse
have ample time to make up distance.
Of the two issues on which the contest is likely to hinge,
is the more unpredictable. Mr Abe owes his popularity to his reputation
standing up for Japan’s national interest, particularly in dealings
North Korea. Until recently Mr Abe had stated firmly that the next
leader had every right to follow in Mr Koizumi’s footsteps by paying
at Yasukuni.
On one level, this sentiment taps into the national mood,
among many younger Japanese who believe the country has apologised
for events of 60 years ago. The time has come, they say, for Tokyo to
Chinese bullying in, for example, the incursion of Chinese submarines
Japanese waters and a dispute over gas reserves in the East China Sea.
Yet what had appeared to be Mr Abe’s trump card could yet
become a
liability. Opinion polls show that, despite distrust of China, many
are nervous about antagonising Beijing – a sentiment that has grown
last year, when anti-Japanese protests erupted in several Chinese
Tsuneo Watanabe, Japan’s most powerful media baron, is pressing
for a
more honest account of his country’s wartime history. And some
leaders have quietly begun lobbying against Mr Abe, whom they fear
worsen relations – and business opportunities – with China. Even
which has refrained from criticising Mr Koizumi publicly, has started
express quiet concern about having a reputed hawk as Japan’s next
“We have to improve our relations with China and South
Korea,” says Mr
Yosano, the economy minister. “There are many difficulties but China
is a
reality, China is rising, and we have to face that.”
This change of mood plays into the hands of Mr Fukuda, a party
who is believed to have better relations with Beijing and who has vowed
shun Yasukuni. In a recent speech calculated to polish his diplomatic
credentials, he called for updating the Fukuda Doctrine, a policy of
conciliation towards the rest of east Asia formulated 30 years ago by
late father Takeo, who was then prime minister.
In spite of an insistence from Mr Abe’s camp that Beijing
should not
be allowed to influence a domestic election, the China question is
having an impact. In a recent interview with the Financial Times, Mr
rowed back from his previous strong line on Yasukuni, saying: “I have
intention whatsoever to make a declaration that I will go to the
Akihiko Tanaka, a professor at Tokyo University, says China could
decisive in determining Mr Koizumi’s successor. Yet he argues that,
aside, whoever comes next will need to move in broadly the same
“Part of the reason for the current abnormal relations stems from the
peculiar behaviour of Mr Koizumi, which in my opinion doesn’t reflect
s broad national interest,” he says. “Whoever takes over, the
will become more normal.”
Prof Tanaka says Mr Abe has some juggling to do. “His challenge
is, on
the one hand, to keep his image of a disciplined conservative for his
original supporters, while assuring the many people in the middle of
road that he will not destroy Japan’s relationship with China or
Korea. The opponents of Abe will, of course, emphasise the latter
Economic management is a less obviously explosive issue but is
just as
important. The main point of debate is how to repair Japan’s
finances, which
deteriorated badly in the 1990s as successive governments tried to
recovery through massive borrowing. Even after five years of attempted
austerity from Mr Koizumi, the fiscal deficit runs at about 6 per cent
gross domestic product, while gross outstanding debt has swollen to 160
cent of GDP, the highest among industrialised nations.
Supporters of Mr Abe have tried to polarise the debate. They have
successfully cast potential opponents, particularly the earnest Mr
as fiscal hawks, in too much of a hurry to raise consumption tax.
Mr Abe’s followers have suggested Japan should pursue policies
maximise nominal growth – they estimate that 4 per cent a year is
attainable – and to cut spending, particularly within government.
Only after
that, they say, should the next administration resort to tax increases.
Mr Abe’s implied delay of a tax rise for several years enjoys
from some economists, who say lifting consumption tax from its current
of 5 per cent could smother a nascent recovery in household spending. A
delay also looks astute ahead of the upper-house elections, in which
the LDP
must defend a thin majority.
Mr Tanigaki is shunning expedience. He recently dismissed a
from people in the Abe camp that a tax rise of 3 percentage points
would be
sufficient, saying spending on social security to support the ageing
population would require more of an increase.
Mr Fukuda, a former oil executive, has yet to be drawn on the tax
issue but is a seasoned enough politician to avoid making unpopular tax
increases central to his campaign. Many business people also regard Mr
Fukuda as a more capable economic steward than Mr Abe, whom they tend
dismiss as economically illiterate – a charge that has also been
levelled at
Mr Koizumi, despite his strong economic record.
Apart from diplomacy and economics, an additional factor could
events: generational politics. Mr Abe has begun to suffer from a
campaign that he is too young to become prime minister.
This stems partly from a fear among older politicians that their
generation could be passed over. But even supporters of Mr Abe suggest
might be wiser to wait, allowing a caretaker prime minister to guide
party through next year’s tricky elections and prepare the ground for
a tax
Ichiro Ozawa, the recently elected leader of the main opposition
Democratic Party of Japan, is a wily veteran whom some fear could run
around the relatively inexperienced Mr Abe. Yet there is an equally
argument that the Liberal Democrats would be more electable with a
charismatic leader rather than the fusty Mr Fukuda.
Mr Abe insists such talk is irrelevant. “I believe seniority
much less,” he says, emulating Mr Koizumi’s habit of attacking
sacred cows. “What matters is whether a person can bring results.”
The final twist in the leadership contest is that both Mr Abe and
Fukuda come from the same faction within the Liberal Democrats, which
normally preclude them from running against each other. One of them may
bow out gracefully.
But Mr Koizumi, one of whose missions has been to smash what he
regards as the party’s corrosive factions, last week declared
discipline dead. “If both men wish to run, nothing can stop them,”
If that happens, the spirit of Mr Koizumi’s iconoclasm will
outlasted him – by helping to determine the identity of his

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