Hatoyama's Agenda in Japan

-Dr. Abdul Ruff Colachal

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Japan's newly-elected Democratic Party (DPJ) has agreed to form a coalition with two smaller parties the New People's Party and the Social Democratic Party. The deal with came after agreement was reached on a proposal to move a US base in Okinawa. Despite winning a landslide victory in last month's election of August 30, the DPJ needs support in parliament's upper house. Talks had faltered on Sept 08 over the wording of a proposal to move a US base in Okinawa and relocate some US troops out of Japan to the US territory of Guam, in the Pacific. 

Japan's next leader, Yukio Hatoyama, 62 has hailed an election "revolution". Hatoyama, who is almost certain to lead the next government, is the wealthy grandson of the founder of Bridgestone tyres. His other grandfather was a former LDP prime minister, has promised to boost welfare and reform the bureaucracy. However, Hatoyama has indicated he wants Japan to distance itself from US diplomatic policies and be more independent. Yukio Hatoyama is beginning a transition to power after winning a landmark general election. Hatoyama, the wealthy heir to an industrial and political dynasty, has announced a transition team and his party has been in coalition talks with two smaller opposition parties whose support it needs in the upper house. 

The vote was as much an expression of disgust with the Liberal Democratic Party as an endorsement of the Democratic Party of Japan. But the people have handed Hatoyama a thumping majority as DPJ got 308 of the 480 seats in the lower house and much less to the LDP 119 the legislative clout to push change through parliament. PM Aso's LDP party has governed Japan for all but 11 months since 1955. The LDP party's immediate task will be to find ways to recover from this historic defeat. However, it will not be easy for the LDP to rally from the catastrophic blow of this election, in which many party heavyweights lost their seats. Taro Aso has conceded defeat and said he would resign as LDP head his successor is expected to be named in September. Media forecasts give the, almost an exact reversal of their previous standing.

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Attention will now to turn to whether Hatoyama can deliver on his election promises. Many challenges await the new government to be headed by DPJ leader Yukio Hatoyama. It must bring about change without growing complacent in numbers, and with the spirit and readiness to revamp Japanese politics. Hatoyama has promised to expand the welfare state, even though Japan is already deeply in debt and the rapidly ageing population is straining social security budgets. He must steer the world's second biggest economy back to sustainable growth after a crushing recession, and tackle record unemployment. On foreign affairs, the DPJ says it plans to create a new diplomacy less subservient to the US and to improve relations with Japan 's Asian neighbors. The White House has already said it hopes to forge strong ties with the incoming government.

Japan is suffering record unemployment and its economy is struggling to emerge from a bruising recession. Reviving the economy is the Democratic Party's top priority, with unemployment at a record high and investors concerned about deflation and whether the new government will raise spending and increase still further the country's soaring public debt. Hatoyama exchanged views on economic matters with Bank of Japan Governor Masaaki Shirakawa, while top finance bureaucrat Yasutake Tango met members of the party to discuss the agenda for a meeting of G20 finance ministers in London at the end of the week. Outgoing Economics Minister Yoshimasa Hayashi warned about the risks of deflation and urged the new government to consider carefully its exit strategy from stimulus measures introduced to help Japan weather the global financial crisis. 

The DPJ has said it will shift the focus of government from supporting corporations to helping consumers and workers. Hatoyama says he wants to raise spending on healthcare, child support and subsidies for farmers. But he has ruled out raising taxes to do this - prompting critics to ask where the money will come from. Opponents also say he and his party are almost entirely untested in government, questioning whether they have the experience to lead Japan through the current severe recession. Hatoyama says he is ready for the challenge. Hours after the election was called, he spoke of a "historic mission". "It will be a revolutionary election that will end the leadership of bureaucrats and put the focus on the people.

Besides focusing spending on households, the Democratic Party has promised to reduce the power of bureaucrats, whose long hold over policy has been blamed for Japan's inability to cope with deep problems such as a shrinking and rapidly aging population. Japan's public debt has ballooned to 170 percent of GDP, the highest among developed nations, due to its repeated attempts to spend its way out of the economic doldrums. Some investors are concerned about fiscal discipline under the Democrats, who have promised policies such as cash handouts for parents of young children, but the party has said it will clamp down on spending in other areas to fund its new policies. In the Japanese government bond market, there are concerns about a possible spike in government debt issuance. But investors find it's still too early and too uncertain to trade on that.

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The Democratic victory was driven more by frustration with the outgoing LDP than broad support for the decade-old opposition, explaining a lack of post-election euphoria in the world's second-largest economy. Democratic Party, fresh from a landslide election victory, met the central bank governor and senior finance ministry bureaucrats on Sept 01 as the transition to a new government stepped up a gear. Fiscal discipline could be the corner stone of the new regime.

The Liberal Democratic Party (LDP) helped build the world's No. 2 economy, but it has also imposed a stifling consensus that discouraged public debate and suppressed civil society initiative. Most pundits have dismissed the vote as simply a protest against the ruling Liberal Democratic Party's ineptitude, the rising unemployment figures, and the indignity of living in a one-party state.

This dismissal obscures the fact that the Democratic Party offers a dramatically different platform. Party leader Yukio Hatoyama recently delivered a stinging attack on "market fundamentalism." Instead of this "U.S.-led" approach, he argued that "we must work on policies that regenerate the ties that bring people together, that take greater account of nature and the environment, that rebuild welfare and medical systems, that provide better education and child-rearing support, and that address wealth disparities."

Both Hatoyama and Aso had a prime minister for a grandfather. Hatoyama comes from the political and industrial elite. Both men graduated from an elite university and spent time studying in the US, before joining the ruling Liberal Democratic Party (LDP). But there their paths diverged. While Aso climbed the LDP ranks, Hatoyama left to form a new party. Yukio Hatoyama walked away from the LDP in 1993. Now he has lad the Democratic Party of Japan into a landslide victory, ousting the LDP for only the second time since World War II. Hatoyama served as deputy chief cabinet secretary under Prime Minister Morihiro Hosokawa - but a funding scandal felled the government only eight months later and the LDP was soon back in power.

Hatoyama went on to co-found the Democratic Party of Japan. Initially a minor party, it merged with three others in 1998 and steadily increased in popularity. In 2002 he was forced to stand down as DPJ leader following strong criticism of his plan for a merger with more opposition groups. But he returned seven years later after the resignation of leader Ichiro Ozawa in another funding scandal. By then the DPJ was in a position of strength. It had rebounded after a drubbing in the 2005 polls, mostly because of a succession of LDP gaffes, policy mix-ups and prime ministerial resignations. In July 2007 voters used upper house polls to show their displeasure with the LDP, awarding control of the house to the DPJ for the first time. Voters have continued to desert the LDP with the faltering economy. 

Hatoyama is expected to head to the USA son to make his diplomatic debut at a U.N. General Assembly meeting and a G20 summit in Pittsburgh. Japanese media said he would hold talks with U.S. President Barack Obama during the trip. That meeting will be closely watched given Hatoyama has said he wants Japan to forge a more independent stance from key security ally Washington.

An Observation

While investors sought an end to the political stalemate, uncertainty over the new government's direction has weighed on Japanese stocks. The yen strengthened on the end of the political uncertainty and held its ground. The Democrats historic election win over the long-ruling Liberal Democratic Party (LDP) in the lower house broke a deadlock in parliament, where the opposition had controlled the less-powerful upper chamber since 2007 and could delay bills.

It appears the poll verdict, if it supports the campaign rhetoric of the now ruling party, the future of U.S.-Japanese relations would be qualitatively different form the one existing. The Hatoyama’s DPJ has pledged that foreign policy should lean more towards Asia, but Hatoyama, who is set to be voted in as prime minister on 16 September when parliament meets, has said the alliance with the US remains central to Japan's diplomacy. The United States was quick to assert that the alliance with Japan will survive intact.

Many in USA seek deeply committed to a strong relationship and worry that a DPJ government may undermine the U.S.-Japanese security alliance The DPJ has never been enthusiastic about Japan serving as a handmaiden to U.S. military operations. Hatoyama has called for a more equal relationship with Washington. This rhetoric might simply translate into a demand that the United States pay more for stationing troops in Japan. Or the DPJ implement a much more Asia-centric, multilateral, diplomacy-rich approach that kicks U.S. troops out of Okinawa (and perhaps the Japanese mainland as well), ends all support for U.S. military operations in the Middle East and in Asia, and fundamentally recasts the bilateral Status of Forces Agreement.

Hatoyama has vowed not to visit the controversial Yasukuni shrine as long as it continues to house the spirits of Japanese war criminals. This could lead to an upturn in Japan-South Korean relations as well. Hatoyama also envisions a new foreign policy for Japan. Regionally, the Democratic Party would likely guide Japan toward better relations with China.

As the most manipulative nation on globe, Washington can take some comfort from knowing that dire predictions of a dramatic leftward lurch in Japan are wrong.  Many Japanese argue for the new dispensation in Tokyo would effect foreign policy change that the Japanese (and Asians in general) can truly believe in. The general populace as well as the Japanese revolutionaries who engineered the DPJ's electoral victory will accept nothing less.

Hatoyama has not yet announced Jpaan's resolve to withdraw terror forces from the NATO team in Afghanistan and elsewhere. Also, one does not know if the proposed shift to ordianry populace welfare would lead to socialist formations in Japan and, if so, how far that new path would be  allowed to go. Elections to the less powerful upper house are due next year and the DPJ will want to retain the control it gained there in 2007 to push through its agenda. Japan might become the first country to implement a serious, post-meltdown economic policy that will humanize globalization and drive a stake through casino capitalism. 

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Dr. Abdul Ruff Colachal

Specialist on State Terrorism

Independent Researcher in International Affairs, The only Indian to have gone through entire India, a fraud and terror nation in South Asia.