Koizumi presses bid to reshape politics

Japan votes Sunday in a snap election called by the prime minister over his economic reforms.

Katsuya Okada, leader of Japan's main opposition party, is working the crowd. Outside Kitasenju Station in Tokyo, he heads to a bank of microphones to appeal to some of the 1 million commuters that pass by each day.

"The current government has been unable to reform the system - only the Democratic Party can carry out true reforms. We need a change of government!" he shouts.

But only about 300 people pay attention - underscoring the uphill battle Mr. Okada faces as he battles a Teflon-coated Junichiro Koizumi, now Japan's fourth-longest-serving leader since 1945.

Since his largely unexpected selection as president of the Liberal Democratic Party in 2001, Mr. Koizumi has dragged cautious LDP lawmakers into unfamiliar waters, urging fiscal restraint and smaller government. He has smashed the traditional mold of consensus politics and led from the top down. He's succeeded in halving the bad loans at major Japanese banks; nonperforming loans fell by nearly 60 percent to $164 billion in March. And he's pushed economic reforms, particularly the ambitious focus of this election: privatizing the postal savings system.

Now that flamboyant style may be paying off. Buoyed by dropping unemployment - the rate in July was 4.4 percent - and moderate economic growth, Koizumi may have boosted the likelihood that he'll keep his job, while setting the stage for future strong leaders by increasing the authority of his office.

"Koizumi wants to cull all the reform weaklings from the party, and people rate that kind of political backbone highly," says economist Tatsuhiko Yoshizaki at Sojitz Research Institute.

Even so, the attempted privatization of Japan's massive postal-savings system - the issue that prompted Koizumi to dissolve the Lower House and call a snap poll - is more than the LDP can swallow in its present form. The party's political power-base in the countryside has long benefited from policies that spread the wealth of Japanese cities to rural voters; Koizumi's reform program attacks such pork-barrel politics.

Indeed, the election has become something of a referendum on Koizumi's pursuit of neoliberal ideology, says Jiro Yamaguchi, a professor at Hokkaido University: "Privatization of the postal service is just a symbol of this change."

The problem is that there are reformers as well as conservatives on both sides of the chamber - and this may lead to some kind of political realignment after the election, with both the LDP and the opposition Democratic Party of Japan (DPJ) reconstituting along more clear cut proreform and antireform lines, says Mr. Yamaguchi.

If Koizumi wins a mandate, he will be in a strong position to introduce neoliberal policies in areas from health to pension reform to agriculture. LDP bigwigs are also urging him to stay beyond the scheduled end of his tenure in September 2006.

Analysts say victory for Koizumi would be yet another major blow to Japanese politics, which is heavily influenced by factions within the parties, and a further step toward a more Western, confrontational-style democracy.

"The power of the prime minister has grown ever since electoral reforms were passed in the mid-'90s, and this is a trend that will continue," says Jun Iio, an expert at the National Graduate Institute for Policy Studies (GRIPS) in Tokyo.

When the election was announced on Aug. 8, it was anyone's guess as to whether the ruling LDP and its junior coalition partner would be able to hold a majority. But Toshihiko Fukui, the governor of the Bank of Japan, and Heizo Takenaka, minister for economic and fiscal policy and the main architect of the current economic comeback, quickly declared that the economy was trending upward again. The largest business lobby threw its weight behind Koizumi and his support leapt more than 10 percentage points, into the mid-50 percent range.

Since then, those LDP lawmakers who oppose postal reform and other ad hoc groups have formed not one new party, but three. But Koizumi has dominated press coverage through a tactic of announcing celebrity candidates to run against antireformers. The list includes university professors, top business people, and media darlings like the youthful Takafumi Horie, a multimillionaire Internet entrepreneur who recently led takeover attempts of Japanese baseball teams and a major TV broadcaster.

After a credible showing in last year's Upper House election, trends favored the DPJ. But it has had limited success in moving the debate away from postal reform and Mr. Koizumi's antics.

The DPJ has scored points with voters by touting a "manifesto" of election promises. Think tanks generally rate the policies more highly than those of the LDP, with the exception of postal reform. DPJ scores are particularly impressive on a fiscal policy that offers more drastic cuts in government spending. Okada has also promised not to visit the controversial Yasukuni Shrine honoring Japan's war dead, and to pull troops out of Iraq by December.

Newspaper polls show that as many as 40 percent of voters remain undecided. But they also show that more urban voters are switching allegiance from the DPJ to the LDP in the belief that Mr. Koizumi's program is starting to bear fruit, and in support of the political risk he took calling a snap election. Some surveys have predicted that the LDP may not only keep its hold on power but could garner enough support to form a single-party government.

Japan's postal savings

Prime Minister Junichiro Koizumi has made privatizing the postal-savings system a central theme of his tenure. He called Sunday's snap election after losing a key vote on its reform last month in the upper house of the Diet.

As its name suggests, the system delivers the mail through a national network of 25,000 post offices. But it also functions as a financial institution - the largest in the world - with some $3 trillion in individual savings and insurance deposits. The system has been a major source of off-budget revenue for public-works projects that are popular with politicians and their constituents. Those who argue for privatization say such a step would allocate resources more efficiently.

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