FOUR months after the Democratic Party of Japan took power through a historic election victory, many voters and investors are wondering if Tokyo has exchanged one set of scandal-tainted, incompetent leaders for another.
Support for Prime Minister Yukio Hatoyama’s government, which had already slid on doubts about his ability to make decisions, fell this week to around 45 percent due to a funding scandal ensnaring party kingpin Ichiro Ozawa. A Reuters survey of retail investors in Japanese shares late last year showed similar concerns about Hatoyama’s leadership.
Short-term, investors face an uncertain political environment. But many experts say it’s too soon to write off Japan’s first real experiment with a two-party system in more than half a century, one that could make it a better long-term bet. “This is the type of change that occurs only once every 20 or 30 years, so we shouldn’t make a judgment after a few months,” said Norihiko Narita, dean of Surugai University near Tokyo.
Whether voters will be patient and back the Democrats in a mid-year upper house election they need to win to forge ahead with their agenda, however, could hinge on their handling of the scandal embroiling Ozawa, a political mastermind whose image as an old-style fixer is proving a big burden for the ruling party. Ozawa has denied intentionally breaking any laws and said he would stay in his post of party secretary-general despite the arrest of aides on suspicion of misreporting political donations. “As long as he’s the ghost of the corrupt past, it is really making it hard for there to be a decisive break with how politics has been conducted,” said Tobias Harris, who writes Observing Japan, a blog on Japanese politics.
The Democrats swept to power in an August poll promising to curb bureaucrats’ clout over policy, compete with rival parties based on clear policies, and put policy priority on consumers to boost domestic growth and wean the economy from exports. Also central to their agenda is a challenge to the concept backed by the long-dominant Liberal Democratic Party (LDP) and its bureaucratic allies that the state is all-powerful, all-knowing and superior to its citizens. “It’s an attempt to have a more pluralistic state power and that is precisely what bothers bureaucrats, whose idea is that the state is superior and always correct,” said Koichi Nakano, a political science professor at Tokyo’s Sophia University. “That is a big paradigm change, potentially.”
How much progress the DPJ can make toward those goals will affect their ability to address deep problems ranging from how to generate growth to funding social welfare in an aging society. “Anything less than state control is bound to be messy, but it is also supposed to generate dynamism,” Nakano said. “That is what the DPJ can possibly stand for, and that’s what last year’s alternation in power was about.” Hatoyama’s novice party has had a bumpy ride since it took over the reins of government in September along with two tiny coalition partners who often differ on policies but whose backing is needed to pass laws smoothly in the upper house. The government finished drafting a budget for the year from April 1 by the end of December despite a late start due to the election, but then had to scramble to replace one of its architects when the elderly finance minister resigned in January.
Efforts to put politicians, not bureaucrats, in charge of policies have resulted in Cabinet ministers and their juniors sometimes making conflicting comments. Hatoyama himself has come under fire for seeming flip-flops and indecisiveness.
The role of a new National Strategy Bureau, whose mission is to set a growth strategy and a framework for compiling budgets, remains unclear.
Analysts say the early confusion should come as no surprise given the Democrats’ inexperience. The scope of problems they inherited — including public debt nearing 200 percent of GDP — and the fragility of a recovery from Japan’s worst recession since World War II — also make finding solutions difficult.
“They’ve got an accumulated 50-year mess and a current mess, and they have to deal with the current mess on an emergency basis,” said Stephen Church at research firm Japaninvest. Still, too many bumps along the road could prevent the Democrats from reaching their goals.
“What the Hatoyama government has to do is not create so many distractions that the important stuff can’t go forward.”
