Samurai Koizumi rides again

This election has also belied the hopes of a full-fledged two-party system emerging in Japan. Informed Japanologists have dubbed the Japanese party system as a “one and a half party system”, where the LDP has occupied the larger part of the political space, leaving opposition parties to grab whatever they can of what was left unoccupied by the LDP. Consequently, opposition parties end up cutting into each other’s voter base. Even in this election, the Democratic Party of Japan (DPJ) suffered both from a weak organisational base and a weak ideology. It therefore never posed a serious threat to the LDP.

The economic mandate of a Koizumi victory is clear and unambiguous — speedier progress along the reforms path. Although the entire elections revolved around a single issue — the privatisation of the Japanese postal system — the larger facet of the elections was a vote of confidence on the entire gamut of structural reforms which Koizumi has been trying to carry out over the last four and half years.

The elections have given Koizumi a freer hand to go ahead with the privatisation of the world’s largest savings bank and the nation’s largest life insurer — the Japan Post. Now that Koizumi’s charisma has been demonstrated, his effectiveness will be put to test. He has to prune public spending and give a fillip to investments so that the economy — which is already on a growth path — continues to recover from the decade long recession. The debt-GDP ratio today stands at nearly 150 per cent. This puts pressure on Koizumi to reduce the huge outstanding debt. This would require tax reform and inventive schemes like private finance initiatives. Bad debts and non-performing loans have dropped by more than 60 per cent in the last three years, but the good work should be taken to its logical end. With Japanese society aging rapidly, the pension reforms issue — which Koizumi skirted around during this campaign — has to be addressed on a priority basis. Greater financial security will assuage the people’s sentiments as well as encourage spending which, in turn, will boost growth.

While acceleration on the economic front is desirable, Koizumi has to tread cautiously on foreign policy. The DPJ had in its election campaign promised to withdraw Japan’s small security force from Iraq and build an alternative to the controversial war memorial, the Yasukuni shrine — moves which would have been welcomed by many countries in the region, particularly China.

In victory, Koizumi should not go overboard in revitalising the US-Japan alliance to the extent that it instills a perceived threat in the Chinese and causes further deterioration in the already tense relations between the two countries. Ties with China and North Korea will have to improve if Japan wants stability in the region. Koizumi will also have to take crucial decisions on the UN reforms issue very soon. In other words, Koizumi has little time to bask in the glory of a landslide electoral victory. It will not be long before he feels the political heat yet again.

The writer is in the Indian Revenue Service. The views are his own