Koizumi in recession
By Richard Hanson

TOKYO - When in a political bind, why not try a maxim from Confucius, the ancient Chinese sage? Junichiro Koizumi, leader of the world's second-largest economy, does. No doubt the 63-year-old prime minister has thumbed through The Analects for what he claims as one of his favorites: "If the people have no faith in their leaders, they [the leaders] cannot stand."

That is just one of messages being sent by the people - especially those elected to the National Diet (parliament), which convened in late January for a regular 150-day session. Politically speaking, barring sudden disaster, this session will mark the high point of Koizumi's remarkably long reign as leader of the ruling Liberal Democratic Party and the government.

"Koizumi does not have to worry any rivals taking over," one senior government official said of recent talk that he could be "challenged" by any other rising star within the conservative LDP.

His most serious rival hyped in the media is a "young" Shinzo Abe, who has served one term as secretary general of the LDP, but not as a full cabinet minister. (Abe draws support from the "right wing" of the LDP, especially for his hardcore support for sanctions against North Korea over the emotional issue of Japanese who were kidnapped decades ago by the regime of Kim Jong-il.)

The prime minister, however, is battling on two crucial - and potentially prime-minister-zapping - fronts. The most immediate challenge is his recent showing in the popularity poll, which would furrow the brow of Confucius. The other is a more insidious enemy - time.

The clock is loudly ticking the words "lame duck". Koizumi's term in office expires in the autumn of 2006. Rather than popularity, vibes coming from within the parliament itself are indicating the hard-to-avoid conclusion that the prime minister's clout is eroding.

More telling, this is also a time for closer scrutiny of the content of Koizumi's "legacy-building" legislation. The harshest looks are being given to the bills that will privatize Japan massive postal system, on which the prime minister has on several occasions staked his government.

First, the latest media polls.

On Thursday Jiji Press reported that its polling showed the Koizumi cabinet's public-approval rating dropped to 36.5% in February, down 4.1 percentage points from the previous month. Note that the emphasis is on the cabinet. In contrast, the disapproval rating rose 2.3 points to 41.4%. The poll was conducted over four days through Sunday.

Timing is important. According to Jiji, the second-largest Japanese news service, people are believed to have been disappointed with the stalemate on issues related to North Korea, such as the communist state's failure to account fully for the fate of Japanese abductees and the country's nuclear-weapons development, especially its latest declaration that it does have nukes and is suspending participation in six-party disarmament talks that include Japan.

Jiji found that on Koizumi's top-priority reform issue, privatization of the postal service, only 20% said the move would make the service more convenient. About half said they expect no change, while 16% expressed concern about a possible deterioration of the service's quality.

The Jiji poll and others showed some of the lowest levels of support for Koizumi since he came to office in 2001 with record-high showing of more than 80%. Other polls have shown similar drops in support for the cabinet.

The Asahi Shimbun, a leading liberal daily newspaper, reported an even sharper drop in its polling. Junichiro Koizumi appeared to shrug off that news, that his support had hit a record-low 33% in January, down from 37% in December. The fall in support was attributed as much to domestic conditions, such as a fall in the economy over the past three quarters, as any international tensions, especially over the threat of North Korea and its ability to attack with missiles and nuclear weapons.

These polls were all taken before the economic news was confirmed as getting worse. Japan's economy slipped back into recession, it was announced on Wednesday, with newly released data showing the gross domestic product had contracted for three consecutive quarters, bringing an official end to the country's three-year recovery.

Preliminary figures from the Cabinet Office showed gross domestic product (GDP) shrank 0.1% between October and December. Revised figures showed that the contraction began nine months ago, with growth down 0.3% July-September and 0.2% April-June. A recession is normally defined as two consecutive quarters of negative growth.

Here's what the political home front looks like.

On the bright side, in April, the prime minister will observe the fourth anniversary of his landslide primary election vote as party president. That was a sort of Pyrrhic victory that put Koizumi in power - backed massively by female voters and pro-reform forces in the business community - with a majority of LDP lawmakers actually opposed to him and his radical "structural reform" agenda. The prime minister faced off against the largest personal factions in the LDP (he quit his own faction in a drive to curb the power of factions in the LDP).

But under LDP rules, Koizumi's second, and final, term in office expires in the autumn of 2006.

The lame duck Koizumi will preside over the festivities celebrating the party's 50th anniversary, when the so-called 1955 era of mostly stable one-party rule began. One highlight will be an LDP proposal to amend parts of the current occupation era imposed constitution, and its famous Article 9 "peace" provision, which some opposition parties will fight. These and other LDP favorite "conservative" causes probably will not be passed into law during Koizumi's watch.

The danger to the Koizumi agenda is coming, as expected, from the opposition parties, led by Koizumi's arch-enemy Democratic Party of Japan (DPJ, or Minshuto in Japanese), which has in the past year and a half turned into a potent adversary for the LDP (and its only coalition partner, the New Komeito, affiliated with a large Buddhist sect).

In a general election and last summer's Upper House election, the DPJ did well. The only comfort for Koizumi's LDP is that there will be no general election - and a chance to gain more seats for the next three years - unless Koizumi calls one. This, of course, leaves the true threat to the "legacy" to opponents within the LDP itself.

For the prime minister, the battles now are being fought within his own party and at times spilling into the Diet floor debate itself.

As one newspaper put it: "With opposition Minshuto lurking, compromise nears on postal privatization."

One respected political analyst, former Kyodo News editorial writer Keizo Nabeshima, sees the crisis as focusing on the postal-privatization issue and points out that early this week, the LDP members were blasting Koizumi on the postal issue at a meeting of lawmakers.

"This meeting is not about protesting the postal-privatization plan," said Tamisuke Watanuki, an LDP lawmaker known for his anti-privatization stand. "Rather, I am deeply concerned about parliamentary democracy being put at risk." According to press accounts, the LDP members then decided to "refrain from ripping apart the privatization plan. Instead, they reserved their criticism for the prime minister's headstrong attitude toward the issue."

According to editorial writer Nabeshima, "The two sides still have many points to work out, but they do agree there is a potentially more destructive force waiting to pounce: Minshuto."

As the Diet session continues, an all-out battle between the government and the LDP over the postal plan could give the main opposition party room to attack during the current Diet session. That means concessions on the contents of the privatization bills to ensure they are passed.

Koizumi showed his willingness to cave in. He told reporters he does not plan to persist on sticking to the government's target of submitting the bills in mid-March, giving him room to maneuver until June, when the Diet session is scheduled to close.

"It is my responsibility to legislate [privatization bills] during the current Diet session," he told reporters, according to Kyodo news service. "To let them be carried over to the next Diet session for continued discussions would be the same as scrapping the bills. Scrapping them would mean no confidence in my administration."

This is where Confucius comes in for Koizumi. Some government and LDP officials are now praising themselves over how things have proceeded so far without a heated confrontation. The anti-reformers in the LDP seem more inclined to have their voices heard in the privatization plan, rather than vehemently oppose it, observed Nabeshima.

In short, Koizumi is going to build a consensus in the "same way as his predecessors did".

These are the words from The Analects of Confucius.

"The requisites of government are that there be sufficient food, sufficient military equipment, and the confidence of the people in their leaders," Confucius said.

A scholar asked: "If you had to give up one of the three, which would it be?"

"Give up military equipment," Confucius replied.

And if you had to dispense with one of the other two?

"Give up food," said Confucius. "Death has always been with us, but if the people have no faith in their leaders, they cannot stand."

Whether Prime Minister Koizumi has shared this wisdom with North Korea's Kim Jong-il is not known.

Richard Hanson, veteran correspondent and expert on Japanese economy, finance and politics is the author of Money Lords: The Pride and Folly of Japan's Finance Ministry Elites.

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