Koizumi sailing in troubled water

It is quite significant that the threat was not directed to any of Japan's opposition parties, but to a rebel group of parliamentarians within country's main ruling Liberal Democratic Party (LDP). The calculation that the prime minister had in his mind was more or less the same as it worked out during a vote over the same bills at the lower house last month. At the lower house of the Diet the bills narrowly made it through despite a total of fifty one LDP lawmakers either voting against the bills or abstaining. The eventual result in the voting was a difference of only five votes that allowed the bills to move over to the upper house for final approval. As the revolt within the party became clear after that crucial lower house voting, it remained uncertain which way the upper house might go in dealing with the bills. A rejection would mean return of the bills to the lower house and necessity for two thirds majority in the house to become law. Last Friday a special committee of the upper house voted in favour of the bills, and political maneuvering intensified as the plenary session of the upper house moved for voting on Monday.

Much before the voting in the lower house, the prime minister made it clear that he would dissolve the house if the bills fail to get the approval of the Diet. No doubt he received clear signals about the rebellion and by announcing his desire to resolve the parliament he wanted to warn his opponents that in case they opt against the bills it would be them coming out as losers, as the party would give a second thought before deciding whether to give them nomination in the next election.

Though the threat worked out in case of the lower house, it could only narrowly save Koizumi from the embarrassment of a defeat. The number of rebels crossing the figure of fifty gave a clear signal to Koizumi that things might turn otherwise when the bills move to the upper house. Hence he felt the urgency of repeating the same threat, probably with the idea that the rebels would not dare to lose their political influence by not getting electoral tickets, and would urge their close associates in the upper house not to rock the boat that much so that it might sink. But it was eventually the threat of dissolving the lower house that turned out to be a big mistake for Koizumi and his position was soundly defeated in the upper house as 125 expressed their objection to the bills against 108 who voted in favour. The ultimate defection of 22 LDP members was a larger than expected number.

At the centre of the debates were six bills aiming at the privatisation and overhaul of Japan's postal services system that controls a massive amount of almost $3 trillion. The Japanese postal system not only serves as the main channel of delivering mail, but also provides financial services as savings bank and insurance institution. With $3 trillion in assets, it is considered to be the world's largest savings bank and has long served to finance various official projects by virtue of being the largest purchaser of government bonds. It has 25,000 branches across the country and provides employment to more than 270,000 people.

Under the plan Koizumi proposed splitting the banking and insurance businesses from mail delivery in 2007 and selling out of banking and insurance services to private ownership by 2017. But since postal employees have long been considered to be loyal supporters of LDP, a section of party leadership felt that privatisation of the postal system would eventually contribute to the erosion of party support at the grass-roots level, as the move would invariably result into job losses and shrinking of postal and financial services to rural areas. That triggered the beginning of the rebellion within the party, the extent of which Koizumi simply failed to realise.

Let us now focus on the possible outcome that the next general election might bring. The lower house election to be held on September 11 could drastically change the political landscape, not only for the LDP, but also for Japan as well. Shizuka Kamei, a former LDP policy chief and one of the most vocal opponents of postal privatisation, had hinted that he and his political allies might form a splinter party if lower house election was called. This came as a clear indication that LDP would go into the election with its unity shattered to the core. Moreover, if Koizumi insists on punishing rebel lower house members who did not vote in favour of the bills by refusing to give them election nominations, this would trigger further erosion that might see LDP finally moving towards a permanent decline in the fiftieth anniversary of its formation.

The main opposition Democratic Party of Japan (DPJ) has already a game plan for the election. DPJ leader Katsuya Okada reacted to Koizumi's decision to dissolve the lower house by saying that this was the opportunity that the party had been waiting for and it came much earlier than expected. The party plans to endorse 250 candidates on its party ticket and also intends to make political gain by blaming Koizumi for the state of strained relations with Japan's neighbours, and the government's failure to win a permanent seat at the UN Security Council.

Koizumi, however, remains optimistic that he will win the election and hinted that the postal privatisation bills are to return again to the lower house when he forms a new cabinet after the election. But no doubt, he took a big gamble as he pressed fellow LDP lawmakers to support his bills under threat of dissolving the lower house.

As for the general public, majority have shown little interest in postal privatisation, as there are many other pressing issues that need to be resolved. As a result, it is most likely that convincing voters to cast ballots for the LDP would be an uphill task. Moreover, LDP's junior partner in the coalition government, the Komei party, also has hinted that it might stay out of a new coalition with the LDP. The party was against dissolving the parliament, and as a result felt being bypassed by Koizumi in the process of taking such a crucial decision.

All this suggest that Japan might be moving towards a change in government, should there be no big blunder on part of those who are poised to make a big gain. But it would also be a mistake not to take into account the fact that voter behaviour in Japan has always seemed puzzling to outsiders. On a number of occasions in the past, LDP not only had proved itself to be immune from punitive action on the part of voters, but also was capable of bridging the internal gaps when the crucial moment came.