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KOIZUMI'S HOT SUMMER
Good for
business
In this series:
If it's my party, I do as I want
to
It's August, do you know where your
party is?
Stone soup
By Richard Hanson
TOKYO - This summer, even in the deep dog days
of August, Japan's peripatetic Prime Minister Junichiro
Koizumi has seemed almost whimsical in public for a man
who just recently battled foes in his own party over his
centerpiece agenda of far-reaching reforms. Only two
major pieces passed.
He has been spotted among sightseers
trying to catch a glimpse of a lost baby seal,
blown off course to a river bordering the capital. His
ministers and staff are sweating new strategies into shape
for the next round of legislative combat this fall.
And now he is breaking historic ground by
surprising the world with a plan to visit North Korea on
September 17, becoming the first Japanese leader to do
so. Needless to say, that will boost his political
capital around the world.
It also helps to
explain why the prime minister has looked quite
satisfied with himself of late. Some suspected a hot
summer romance, perhaps? Close, but the romance is with
big business. And that has given the prime minister
something to say kim chi about.
Asia
Times Online has learned that Japan's three most
powerful business organizations, led by the Japan
Business Federation (Nippon Keidanren), in July secretly
decided to join lock-step in strong, direct support for
Koizumi and his embattled reform plans. The other two
are the Japan Chamber of Commerce and Industry and the
Japan Association of Corporate Executives (Keizai
Doyukai).
The first major "event" in this new
strategy is already scheduled for October 17 at a
prominent Tokyo hotel. The only guest of honor: Prime
Minister Koizumi. The still unofficial name of the party
is "A Gathering of 1,000 to Support Koizumi Reform".
This is not a political fundraiser per se. It is
being paid for by the three major organizations, and
whatever is charged for admission will not be in form of
a political donation (a complicated business). Other
groups are joining the big business organizations, with
political links and an interest in reform.
This
includes a group named the 700-Member Reform Committee
(Gyokaku 700 Nin Iinkai) formed by Kiyoshi Mizuno, a
former minister of administrative reform in the last
cabinet of former prime minister Ryutaro Hashimoto.
Hashimoto has been a fierce opponent of Koizumi over
reform. Koizumi defeated Hashimoto last year in the
Liberal Democratic Party (LDP) leadership election.
The arrangements for the event were confirmed
with the prime minister this week, with virtually no
notice taken in the local press. It was reported only
that business leaders would hold a meeting with Koizumi
to support structural reform. A formal announcement has
not been issued.
Those involved in the Koizumi
project emphasize that this is a radical departure on
the part of the leadership of big business, one that
could significantly improve Koizumi's chances of passing
reform legislation in the next parliamentary session.
That would strengthen the prime minister's grip on
power. Measures of his political health have fluctuated
wildly since the start of this year.
Koizumi
started in office in April 2001 with stunning figures
showing his support among voters to be over 80 percent.
His poll popularity was heavily weighted to females, who
found Koizumi to be more attractive than most other
politicians. Early this year, that support collapsed
with a party row involving the popular female foreign
minister Makiko Tanaka. Koizumi fired Tanaka, and his
cabinet popularity plunged to below 50 percent, where
its has remained.
A boost from big business
could stabilize his grip on his government. Nippon
Keidanren has never been described as fickle.
"It is unprecedented for Keidanren to support an
individual prime minister," a top official at Nippon
Keidanren told Asia Times Online. The full implications
are hard to foresee. But any major shift in the balance
of influence within the mostly static world of politics
and business is worth paying attention to.
"This
is about sending a message," another official said. For
Nippon Keidanren that message is aimed almost
exclusively at the LDP itself. The aim is to clear away
political obstacles to reform legislation that business
now believes is urgently needed. One former senior
Keidanren executive agrees with the organization
internal reckoning that "90 percent" of all of its
members support extensive structural reform. That is far
greater than the public at large.
Organized big
business has concluded that Prime Minister Koizumi is
their best, and perhaps only, hope to push Japan's
political economy to action after more than a decade of
stagnant to deflationary economic performance and
political impotence. Japan's latest economic indicators
show there is little chance of a recovery. Those
prospects seemed brighter when the US economy appeared
to be on a recovery last year. That is no longer the
case.
The bottom line is clear. Business is not
getting its money's worth from the LDP despite still
footing the lion's share of large bills that keep the
ruling party in business. At its peak, the old Keidanren
members contributed about half of the party's budget,
and much more in the case of an election year.
(Keidanren does not contribute to any other party.) That
has fallen, but still is the base for the LDP.
Koizumi has his own problems with the LDP,
despite being the elected president. At times, there is
no love lost with significant factions of the party.
Koizumi managed to pass the first stages of
reform for the postal system (also a hotbed of
pork-barrel politics and some corruption) and the
national health plan. But his reform program has
faltered on other reform targets involving highways and
other construction. There are strong LDP lobbies for
such items. Koizumi has tried to make the best of it,
though, and has kept an eye on private business
priorities.
With calculated political flair, the
prime minister made good on a promise to appoint a
private-sector businessman to head the postal operation,
which encompasses enormous postal savings and insurance
businesses that are slated for privatization. He chose a
well-known shipping executive, Masaharu Ikuta, currently
chairman of Mitsui OSK Lines Ltd and a vice chairman of
the corporate executives association Keizai Doyukai.
Naturally this brought much cooing of approval
from business. Nippon Keidanren itself has just emerged
from the most far-reaching reorganization of its postwar
history. In May, the old Keidanren, formed in 1946
during the Occupation, completed a merger with big
business' labor-affairs specialist, Nikkeiren (the Japan
Federation of Employers' Associations).
Keidanren was established to help rebuild a
war-ravaged industrial base, and quickly became allied
with the conservative spectrum of political parties.
Nikkeiren's job was to suppress or control wage
increases and labor demands. That job has faded in
importance with the end of high economic growth. Both
organizations were incarnations from wartime
organizations (Nikkeiren's wartime job was to suppress
socialists and communists.) Both lost much of their
raison d'etre as the era of high economic growth
came to a halt.
Keidanren's primary role was to
funnel political funds from their member businesses to
the ruling party. That worked well until the early
1990s. In 1993, the LDP lost control over the government
for the first time since it establishment as a coalition
of parties in 1955. A litany of scandals prompted a
split in the LDP.
That was the only time that
Keidanren seriously flirted with strong support for a
new reform-minded party in power. The reformists, and
the Keidanren, were soon betrayed from within their own
ranks. What followed was a series of coalition
governments involving the LDP. There was one coalition
that placed a Socialist in the Prime Minister's Office
for the first time since the Occupation. (At the moment,
the LDP coalition includes two other smaller parties.)
The 1990s changed the nature of political
fundraising and giving by Keidanren and others. A
political funding law in 1995 tightened controls on how
political donations could be made. For Keidanren, that
meant a gradual decline in the amount of money channeled
on behalf of its members through its conduit, the
People's Political Association (Kokumin Seiji Kyokai).
Numerous other flows popped up.
Nippon Keidanren
has despaired mostly over the fact that despite
still-massive contributions to the party they are not
being looked after properly. Business has some rather
simple priorities. They are administrative reform and
smaller government.
The decision to support
Koizumi and his reforms was easy math. One. There is no
other likely candidate poised to replace the prime
minister in the foreseeable future (say as far ahead as
2005). Two. There is no other party that can duplicate
the one-stop service provided to business by the LDP's
reasonably efficient organization. The third is that
Koizumi can probably deliver on the business agenda and
remain as party chief.
Nippon Keidanren's ledger
on Koizumi is fine. The prime minister also has
compelling reasons to be adopted by business. Koizumi
does not have any personal faction to boost him and do
his dirty work. He is constantly at odds with the
permanent bureaucracy in government, who control the
flow of intelligence. Nippon Keidanren has developed one
of the most sophisticated intelligence gathering and
disseminating operations in Japan.
Moreover, big
business can give him the sort of "town hall" type
venues he needs to get his messages across to voters.
That should boost his stock. The term "town hall" is
being bandied around for the format of the October 17
meeting for the prime minister.
There is also
what can be called the "clean" factor that surrounds
Koizumi in part because he does so little in the way of
fundraising. The LDP has been rife with scandal in the
past year. There is the criminal case of Diet member
Muneo Suzuki, a hack LDP fundraiser from the northern
island Hokkaido. He ended up wielding tremendous
influence over the Ministry of Foreign Affairs before
being arrested and rearrested on bribery charges. Suzuki
is still in jail assisting the police with their
inquiries.
Then there is the sophisticated,
highly educated now ex-Diet member Koichi Kato, who quit
this year after disclosures regarding his political
fundraising activities, and those of a fundraising
former secretary. The secretary was arrested for tax
evasion. Muneo Suzuki ranked as the second-biggest
fundraiser in Japan. Kato was No 1, and was best known
for a failed attempt to win the LDP presidency. Kato was
also closely related with Koizumi on the liberal side of
the party.
Both Suzuki and Kato waded through
the swampy terrain of raising funds by setting up
sub-branches of the LDP, into which companies could pour
money without drawing much attention. These were abused.
Koizumi kept his political plate clean and lives
frugally. He is a third-generation politician from a
seaside district near Tokyo. It is not clear to what
extent Koizumi wooed big business to his side. But he
has made it clear that he would like to have business
act as more of a "cheering squad" for the reforms he has
in mind. He is as pro-business as anyone in politics is.
He is also patriotic and respects such practices as
visiting the controversial Yasukuni Shrine in Tokyo, to
pay respects to the spirits of the war dead (which
include some war criminals, angering China and Korea).
While communing with the spirits, Koizumi also
has kept an idea on issues that business cares about.
Over the summer, the prime minister made it
clear that he was opposed to ideas from within the
government to introduce changes in the corporate-tax
rules that could cost business money. At present, the
majority of corporate entities pay just about zero
corporate tax.
Koizumi has also virtually
removed any threat of a long-planned abolition of
remaining full government guarantees on certain bank
deposits. The abolition is scheduled for next April. He
is following the common-sense path of avoiding anything
that might undermine economic confidence.
When
the prime minister is not fretting over domestic
matters, he is paying attention to international
affairs. That too is a priority for business. Since the
September 11 terrorist attacks last year, he has
bolstered his relationship with the United States and
its president, George W Bush. After a shaky start, he
has smoothed relations with China and South Korea. The
joint Korea-Japan World Cup games went off without a
major problem.
Koizumi's move to improve sharply
strained relations with North Korea is more than
welcome. Last year, the Japanese Coast Guard had a
deadly skirmish in waters near Japan with a suspected
North Korean spy ship. The issue of North Korea
abducting Japanese many years ago remains a sensitive
problem, more so recently as new revelations have
surfaced. A leader-to-leader talk can't hurt.
All in all, Koizumi is good for business.
(©2002 Asia Times Online Co, Ltd. All rights
reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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