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From The Socialist newspaper, 4 May 2001

Koizumi's mission: impossible

AS JAPAN'S rulers struggle to extricate the economy from its decade-long morass, hopes have been placed in newly elected Prime Minister Junichiro Koizumi. But, as JIM HORTON explains, the populist maverick Koizumi faces a difficult task.

FIRSTLY, HE needs to restore the credibility of the ruling Liberal Democratic Party (LDP) if it is to avoid certain defeat in July's elections to the upper house of the Japanese Diet (parliament). This will very much depend on his second difficulty, reviving a stagnant economy teetering on the brink of recession.

Koizumi's unexpected victory to become LDP leader has sent shock waves through the party's ruling elite. However, he received overwhelming support from the LDP's 2.3 million rank-and-file members.

Opinion polls before his election showed 55% support among floating voters. Koizumi was able to capitalise on ordinary people's frustration, summed up in the saying: "Nagatacho's common sense is the man on the street's nonsense".

Nagatacho, the LDP's old guard, underestimated the desire for change. It has dominated Japanese politics for the last 30 years and is held responsible for the economic and political crisis.

Despite having spent 30 years loyally serving one of the most conservative parties in the world, Koizumi is now described as a radical reformist, whose colourful flamboyancy contrasts favourably to the dull gerontocracy of Japan's rulers.


A BETTER indication of Koizumi's politics are polls that show him as the first choice for foreign investors backing his pledge to privatise Japan's huge postal savings business and to introduce painful financial sector reforms.

Koizumi has his own agenda as an aggressive economic reformer and an uncompromising nationalist. He is no friend of Japan's working class.

Restoring the LDP's fortunes will not be easy. It has been the ruling party for most of the time since the second world war, temporarily losing power in 1993 following a multi-billion yen corruption scandal.

Following its re-election the LDP spent the 1990s presiding over a stagnant economy. Under Yoshiro Mori, whose resignation as LDP leader paved the way for the succession of Koizumi, LDP support plummeted.

Mori was the most unpopular prime minister for decades. He left the LDP with a popularity rating of less than 10%.

Koizumi has been quick to make some changes. He has appointed a cabinet with five women, a record for Japan, including the first female foreign minister.

He also broke with tradition by appointing only a few ministers from the LDP's largest faction.

These reforms were relatively painless to implement. Reforming the factional character of the LDP and sorting out the economic mess will prove more difficult.

Moribund economy

KOIZUMI HAS also signalled an intention to expand the role of Japan's military, requiring revision of Japan's 'peace constitution', and supports official visits to the Yasukuni Shinto shrine where Japan's war dead, including executed war criminals, are worshipped.

This will antagonise New Komei, a junior coalition partner backed by a powerful Buddhist sect opposed to government links with other religions, as well as the Left who regard the shrine as a symbol of Japan's wartime totalitarianism.

The key issue facing Koizumi is Japan's moribund economy. The Japanese economy is the second largest in the world.

Ten years ago it was held up as a model, following four decades of spectacular growth. However, increasing speculation in the 1980s led to a huge inflation in share and asset prices.

Such was the 'bubble economy' that at one stage the imperial palace grounds in Tokyo were worth as much as the whole of California. But the bubble burst in 1989, land and stock prices came crashing down, leaving the country mired in debt.

During the 1990s the ruling LDP implemented 13 separate reflationary packages in an attempt to kick-start the economy. The only lasting legacy of these failed measures is a public finance mess, with Japan's national debt now equivalent to 130% of annual output (GDP), the highest ratio of all the major economies.

Koizumi is now desperately looking to cut public expenditure, particularly on public works. He is also planning to privatise the mail service, postal savings and postal insurance.

With the failure of both reflationary packages and interest rate policies, Koizumi has decided to push through 'painful' structural reforms, curtail borrowing, clean up the banking sector and extend privatisation. This has been referred to as the shock therapy of 'creative destruction'.

Koizumi is expecting Japan's working class to pay the price for the country's economic ills. Banks will be forced to write off bad loans of up to 13 trillion yen.

This means allowing defunct companies to go to the wall, resulting in increased unemployment and poverty.

Koizumi faces an impossible task. He has only a couple of months to be seen to be turning the situation around.

If there are no indications of an economic improvement, and if the LDP is hammered in the upper house election in July, then Koizumi, Japan's eighth prime minister in as many years could find himself ousted in the LDP presidential election in September.

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In The Socialist 4 May 2001:

Global capitalism: A System Under Siege

Class struggle makes a comeback

Police provocation resisted

Public Health Not Private Profit

Baby Bonds: Labour's election gimmick

1926 general strike: A showdown between the classes

Foot and mouth disease outbreak: Crisis On Tony's Big Business Farm

Japan: Koizumi's mission impossible


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