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Orange revolution, Japanese style

For decades, Japanese have complained about the nepotism, incompetence and pork politics of the Liberal Democratic Party. After 54 years of near-uninterrupted rule, the party appears likely to lose Sunday’s election. Passport talks with Tokyo correspondent Gavin Blair about what took so long, and what the change will mean.

(photo by Kim Kyung Hoon / Reuters)

 

Editor's note: The play button will work when the audio has downloaded. That may take a minute. Below is the transcript of the Correspondent Call with Gavin Blair.


Passport: Good morning and welcome everybody. It’s August 27, 2009 and I’m David Case, Editor of GlobalPost Passport in our Boston newsroom. There’s big news coming out of Japan these days after more than half a century of almost uninterrupted rule, the Liberal Democratic Party is poised to be ousted from power this weekend. The big question is, what’s going on there? Have the Japanese people finally decided they want change? The LDP has long been seen as afflicted by corruption, by nepotism and inertia, backroom dealing. Why is the change happening now? What does it mean for Japan? What does it mean for the US, with whom Japan has an enduring military arrangement? What does it mean for the standoff with North Korea? And for business for Asia? With us to discuss this is Gavin Blair, a Tokyo-based GlobalPost contributor. Gavin has lived in Japan for twelve years and writes for many news outlets around the world. He’s also the author of Passport’s biweekly country brief on Japan. Welcome, Gavin.

 

Gavin Blair: Good morning to you there.

 

Passport: Before we begin, I have a couple of announcements. Before we begin, remember that the call is being recorded and will be posted on GlobalPost Passport’s website. The call is meant to be informal. As usual, I’m going to lead a Q and A that will last about 20 minutes. But, if you’d like to ask a question, feel free to jump in. For now, your lines are muted. If you do have a question, you can un-mute your lines by pressing *6. We ask you to please identify yourself. Be mindful of the time when you ask your question and try to make your questions relevant to the current discussion, if you can. We will still have ten minutes at the end of the call for unrelated questions.

 

Gavin, the Liberal Democratic Party has been in power for all but ten months, or eleven months, since 1955. Why does it look like finally now we’re going to see a political shift in power? What’s happened to the LDP’s power base?

 

Blair: I think that Japanese politics have been in a state of largely consented apathy for decades, until fairly recently. Mostly for what happened with the standard of living having risen fairly steadily since the 1960’s. And that growth has been delivered fairly evenly to the population. However, the prolonged stagnation since the bubble burst at the end of 1989, punctuated by only short periods of moderate growth, and the widening income gaps that have opened up since have brought that era to a close. As for the LDP’s power base, I’d say the majority of people, rather than having any great belief in it’s policies, the majority of supporters were happy with the status quo and voted for it out of personal and group relations, which are the foundations of most of the politics in Japan.

 

Passport: Gavin, you’ve lived in Japan for a while now. Tell us what’s changing on the street. The LDP survived Japan’s difficult “lost decade” during the 1990’s, but now people are suddenly saying they’ve had enough. What are they telling you? Why is this happening now?

 

Blair: I think the recent economic crisis has definitely been a tipping point. People are concerned about the danger of ordinary workers, young people, the elderly, suffering, through no fault of their own, and being left to survive on a welfare system that was only really ever designed for full employment. I think there are genuine fears about the future of Japan on its present course. There are very few Japanese people that I’ve spoken to, certainly under the age of 50, who are admitting they’ll vote for the LDP this time around.

 

Passport: And we hear the turnout for the elections is supposed to be very high this time around.

 

Blair: It’s looking that way. It was above two thirds in 2005, which was itself up on the 2003 elections. And they have an early voting system here and the early reports are saying that’s up by fifty percent, which is dramatic. I think it’s fair to say that people are really energized this time around for the prospect of change that really hasn’t been seen recently, certainly since I’ve been here, and in most voters’ living memory.

 

Passport: It sounds like an exciting time to be there. It sounds like Japan’s version of a quiet Orange Revolution.

 

Blair: There’s certainly a bit of buzz about the place but certainly in a very Japanese, restrained way. I mean, obviously the increased voting figures are healthy for any democracy. I mean, it’s fair to say that Japan’s been as much of a one-party state in the last half-century as China has.

 

Passport: Interesting comparison. It used to be so Japan was a nation of 100 million middle-class people. Is that notion now a thing of the past? Is it the end the political consensus that has kept the LDP in power?

 

Blair: Well, one of the things that people are justifiably proud of here is that Japanese society has been fairly harmonious, peaceful, crime-free. And I think the people are afraid that if the divisions continue to widen, as they have been, that that may break down. I think it’s a testament to the people here that it hasn’t done so far. Having said that, there are crack beginning to appear. I wrote a piece earlier this year for GlobalPost about an increase in elderly crime. And this week, the national police agency released a report that said that arrests for shoplifting amongst elderly people were up by eight and a half times from the previous year. That’s kind of shocking in a wealthy nation. Whether the LDP returns anytime soon will, of course, depend on the success of the new administration. I think the litmus test for both parties will be the Upper House elections next year. And it’s also possible that appearing in opposition to the LDP will divide the sections within it more than unite it, in which case we’ll probably see more breakaways and more parties being formed.

 

Passport: Interesting. It appears that the Democratic Party of Japan will win by a comfortable margin in Sunday’s election, so let’s talk about them. Who are the DPJ and what do they stand for?

 

Blair: The latest polls are predicting they’ll win 320 out of 480 seats in the House of Representatives on Sunday, so a big win’s looking likely. It’s a good question as to who the DPJ are and what their ideology is and not a particularly easy one to answer. I mean, it really is a broad church in a broad spectrum that contains it from former socialists to conservative nationalists and a lot in between. It should also be remembered that the majority of senior DPJ figures, including Hatoyama, the leader Ozawa, and Okada are all ex-LDP. So it’s pretty fair to say that the one thing that unites them and the rest of the party is a desire to defeat the LDP. The central themes of the DPJ’s campaign plan have been support for families with children and administrative reform. They’ve maintained pretty impressive party discipline throughout the campaign and the preceding months, really sticking to the manifesto. Whether this can be maintained if and when they take power is another matter and my feeling is that divisions will start to open up fairly early on in the new administration.

 

Passport: It seems unlikely that there will be a hung parliament after this election, but are there any smaller parties that are significant in terms of possible coalition partners and so forth?

 

Blair: Right. It’s looking likely that it’ll be a solid win for the DPJ, but it’s not quite that simple, as they don’t have a majority in the Upper House. They really need a two-thirds majority in the Lower House to get their legislative program through. So, if they fail to get that, then they may be looking for coalition partners. The current junior coalition partner in the current administration New Komeito, which is a Buddhist party, and they’ve stated they won’t work with the DPJ. So it doesn’t leave them with a great deal of alternatives. There’s the Japanese Communist Party, who the DPJ are unlikely to want to ally themselves with. And there’s the SDP, who are the former socialists, who only have about seven seats, which may again change on Sunday, but they may lose seats. Other than that, there are around fifteen independents and a handful of small parties with a handful of seats. So if they fail to get the two-thirds majority, likely we’ll see some backroom wheeling and dealing and some defections, probably, from the LDP.

 

Passport: So they need a two-thirds majority even though they have this strong mandate?

 

Blair: Really, the situation in Japan is that the Upper House has quite a lot of power to send bills back to the Lower House, so if they don’t have an overall majority in the Upper House, therefore the remaining LDP have not quite a majority, but a simple majority in the Upper House, can force the bills back. So if they really want to push their programs through, they really need a two-thirds majority.

 

Passport: Talk about Yukio Hatoyama who was elected in May as the leader of the DPJ. Who is he and what kind of Prime Minister is he likely to be?

 

Blair: He’s a fourth generation politician, which is hardly unusual in Japan, although he is the most blue-blooded of blue bloods. His grandfather was Prime Minister, his father was Foreign Minister, and his brother was, until recently, a cabinet minister in the LDP. And in fact, his grandfather and Aso’s grandfather, the current Prime Minister, were political rivals at the time of the founding of the LDP. Also, like Aso, he studied in the States, he lived in the States, he got a Ph.D. from Stanford in engineering, which is quite unusual in itself for a Japanese politician. They tend to study law or politics. He doesn’t come across as particularly forceful or charismatic, nor particularly ideologically driven. And despite the early criticisms of him using the word “fraternity,” he seems to have warmed to his theme and he actually used it in a contributed piece to the New York Times just yesterday. And if anything, the Japanese termis even more vague and doesn’t give any sense of what he stands for, other than a kind of fuzzy idea that he’s going to be nicer than the LDP.

 

Passport: So not much of a visionary.

 

Blair: Not really. He’s been struggling to get a vision across, to be honest.

 

Passport: And what about Ichiro Ozawa? He’s somebody else we hear about; he’s an important figure in this election.

 

Blair: Right. He’s considerably more charismatic and certainly forceful. His nickname is “The Destroyer,” mainly because of the number of political parties that he joined and then destroyed or left in his wake. In many peoples’ eyes, he’s the man who should have been Prime Minister and seemed to be destined to be until his downfall in a donation scandal earlier this year. He’s always been a very shrewd backroom operator, which is probably more essential in Japan than it is elsewhere. And he’s likely to remain a fixer with some considerable power behind the scenes.

 

Passport: Interesting. The way you’re talking about them, it doesn’t sound much different from the LDP.

 

Blair: (Laughs) As they’re all ex-LDP members themselves, they all came up in that culture. Ozawa’s mentor was Tanaka, the Prime Minister in the 70’s, he was brought down by the Lockheed scandal, it emerged that he had taken two million dollars in bribes from Lockheed for the awarding of contracts. So, yeah, they definitely come from that background. I think Ozawa’s likely to be still very strong behind the scenes, I don’t think he’ll be quite Putin-esque, but he’s going to remain, certainly, a power behind the scenes and it’s going to be a test of Hatoyama’s premiership to see if he’s the one calling the shots.

 

Passport: It’s going to be interesting to see how this all evolves. It seems like the Japanese people are getting kind of a distinction without a difference at this point. Let’s turn to foreign affairs for a moment, Gavin. How will a DPJ victory influence Japan’s relations with the US? And specifically, what is the reading of the new US administration? Can you talk about that a bit?

 

Blair: I think it’s important to realize that the overwhelming focus is going to be on domestic issues for the immediate future. And although the DPJ has portrayed itself as the party that is going to stand up to America, I think a lot of that has been posturing to draw distinction between itself and LDP. It’s already backed off its earlier proposal to end the refueling mission in the Indian Ocean that supports the operations in Afghanistan.

 

Passport: So they’re going to continue to refuel American warships in the Indian Ocean.

 

Blair: Until the contract… I think it’s sometime early next year, it has to be renewed. Their initial proposal was to pull it straightaway, now they said they will reexamine it when it comes up for renewal. My feeling is, they’ll renew it. But, we shall see. They may take a slightly tougher line on, for example, the relocation of American bases in Okinawa and the relocation of the Marines to Guam, which is in the pipeline. On the whole, I don’t think it’s a great deal that Washington will be overly concerned about. I think it’s been a fair amount of electioneering and posturing. I also think that the DPJ has borrowed from a certain extent from Obama’s message of change and I think Hatoyama will be keen to ally himself with Obama and show good relations with the President who still remains a fairly popular figure here.

 

Passport: North Korea has been a big story in the news this year. Can you talk about both the feeling on the street and in political circles about the recent what’s called “the defrosting” of relations with North Korea.

 

Blair: Yeah, there was a defrosting until they started testing missiles again. Obviously, they didn’t make themselves particularly popular with Japan. I mean, North Korea really is the wild card in the region. And it’s questionable if anyone in the outside world, bar Bill Clinton, apparently, can have any influence on them. Japan is definitely nervous about North Korea. Whether or not Hatoyama can defrost those relations further is questionable. He won’t want to appear weak in the face of North Korea’s perceived aggression with testing the missiles, so that will straight-jacket him to a certain extent.

 

Passport: What about elsewhere in Asia? Will the DPJ administration be able to improve relations with China and with other Asian neighbors?

 

Blair: Hatoyama seems inclined to take a more conciliatory approach with China, particularly regarding Japan’s military past. He’s apparently an enthusiastic supporter of an East Asian community, but the details are predictably vague. He has suggested an alternative to the controversial Yasukuni shrine in Tokyo, which is where Japan’s war dead, including war criminals are interred. And any time a Japanese politician visits, it irritates the Chinese and Koreans and other Asian nations considerably. He’s suggested a non-religious alternative for that where Japanese politicians and the Emperor, etc. could go visit. And that will go down well with the Japanese and the Koreans. Although, I think now that China and Japan are such huge trading partners, past history is going to fade into insignificance. Perhaps Hatoyama can accelerate that process somewhat.

 

Passport: Ok, let’s move on to business. Let me remind the listeners, if you have any questions, please feel free to jump in by pressing *6 on your phone to un-mute. If we have any questions, now is a good time, otherwise I’ll move on to some questions about business. What does the DPJ’s rise mean for business, Gavin? During the campaign, both Hatoyama and incumbent Prime Minister Aso have been critical of the US free-market capitalism as the cause of the current economic troubles. Is this simply opportunist rhetoric, or could it signal an increase in protectionism and a shift in economic policy in Japan?

 

Blair: I think much of it is indeed populistic electioneering and that both of them know that US free-market capitalism was one of the only drivers in the Japanese economy in recent years, in terms of export growth. Having said that, I think the DPJ has tapped into a certain feeling among people here that they would like to see some free market reforms rolled back and a return to a perhaps more Japanese-style, gentler form of capitalism. I don’t think it’s going to make it more difficult for US firms to do business here, except for the more aggressive private equity firms and the buyout M&A specialists but they’ve never found it particularly easy anyway. I don’t think over-protectionism is an option. If anything, the current economic troubles have made it crystal clear just how dependent Japan is on over-seas trade in terms of its economy.

 

Passport: Part of the LDP’s formula for maintaining power was sort of a mutual back scratching with multiple business sectors. You talked a little bit about the backroom dealing within the DPJ. What sectors are currently supporting or being supported by the political powers? The automotive sector, the telecom sector, manufacturing… and how is that likely to change under the DPJ?

 

Blair: I think more than individual sectors, it’s big business as a whole. It’s referred to as the Iron Triangle of the LDP, the bureaucracy and big business and they basically work out policy between them and they corporate very, very closely. And have done ever since the post-war period, really. And even before that, in reality. I think that big business has a lot of sway in most countries. I think the thing that really distinguishes Japan is the power of the bureaucracy here. It’s really difficult to over-state the power of the bureaucrats here. They do everything from setting budgets to interpreting the laws to answering questions in the Japanese parliament on behalf of ministers. There are apparently a lot of negotiations going on in the background now between the DPJ and particularly the Finance Ministry officials who obviously have a huge amount of power. And those officials have almost always worked with and LDP government, so this is now going to change. And now a Ministry of Finance official has been seen visiting Ozawa and not Hatoyama’s office. It’s going to be essential to the DPJ, if they do want to push through their reforms to really take control of the bureaucracy and to shift the power towards the Prime Minister’s office. The national budget is basically worked out by the Ministry of Finance and if anything, they have more power than the politicians in doing that. That’s really going to be essential for them to push their reform program through.

 

Passport: That sounds like a monumental task, doesn’t it, considering they’ve had these working relationships and the mutual back scratching that we talked about going on for more than half a century and now a new party with people who were actually members of the old party in the past are coming in to try to change the way things are done.

 

Blair: Yeah, entrenched doesn’t even begin to describe the position of some of these bureaucrats. As you say, some of these people being ex-LDP members themselves, such as Ozawa have worked with these bureaucrats in the past and that may turn out to be an advantage, however, as a break from the past, it’s questionable. But again, certainly it’s a monumental task.

 

Passport: We have an interesting question from a member. It has relevance outside of Japan. Japan was one of the earliest practitioners of strong stimulus spending. What do people think about what’s going on in the world right now, the massive stimulus packages that you see in China or in the US?

 

Blair: I think for the ordinary Japanese person, it certainly doesn’t seem anything strange because that’s what they’ve grown up with. Certainly in the last twenty years, whenever there’s been some kind of economic trouble, the answer has been to pump prime the economy. So, there’s certainly not a lot of surprise, I’m sure some are seeing back and thinking, ‘you can’t imagine the trouble you’re bringing yourself in the future.’ But, Japan’s taken it a lot further than most other countries have anyway in terms of racking up public debt through public spending, so some, I don’t think, are particularly alarmed by it, I think its par for the course.

 

Passport: Gavin, what are the challenges that a new administration faces in carrying out these structural reforms that are necessary to tackle issues such as ballooning public debt and the prolonged, sluggish domestic economic growth? You wrote a good piece for Passport earlier this year about the nearly 200 percent of GDP that Japan currently has in public debt.

 

Blair: As we talked about, getting the bureaucracy in line is absolutely paramount. And then at some point, despite promises to the contrary, taxes are going to have to rise. It’s pretty much unavoidable. And get public spending in check. Japan still has relatively low rates of taxation and that’s going to have to change. Getting the economy going again with a declining population is going to be a tough call and there’s no doubt about that. And I think that growth in Asia will continue to benefit Japan, although all those countries are competitors, there’s also markets for them that’s huge. I think the elephant in the room, which I touched on in that article, is immigration. That’s the only practical solution to Japan’s shrinking population. Whether any politician has the guts to grab that bull by the horns is another matter. You really need new people coming in and paying into the tax and pension system.

 

Passport: And is there a sense yet about how the new administration is likely to deal with immigration?

 

Blair: It’s been a little bit vague on it, it said it would look at it and it appears to be slightly more pro-immigration than the LDP, but there’s no concrete proposals, and they have to move a population, a populace, that is relatively hostile to large-scale immigration.

 

Passport: Not necessarily an easy thing to do for a party that’s taking power for the first time.

 

Blair: Indeed. It’s often an easy stick to bash political parties with and it’s something that can be appealed to quite easily by populist politicians, so it’s a fairly big risk to take, considering how much they have on their plate at the moment.

 

Passport: Well, it’s going to be interesting to see how this develops. We have kind of a distinction without a difference, we have a new party that has a lot of members of the old party in it, is making change, but in a quiet, very Japanese way, despite an overwhelming public cry for some sort of change in Japan. Thanks everybody, for joining us today, thank you, Gavin, for joining us as well.

 

Blair: My pleasure, good to talk to you.

 

Passport: Ok, we’ll talk to you next week.
 

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