Japan's Comeback Kid?

Conventional wisdom, supported by terrifying opinion polls, says that Japanese Prime Minister Taro Aso and his beleaguered party are toast. When eventually Japan gets to vote in a general election, it is primed to turn him and his Liberal Democratic Party (LDP) out of office, especially with the economy now having fallen off a cliff.

According to this view, it is no longer a case of merely punishing the party by severely reducing its bloated majority. After all, the LDP could lose up to 60 seats in the election and still have a majority necessary to form a government, although whether Aso himself could survive such a debacle is another issue.

It is now viewed as a virtual certainty that the LDP will be ousted in the general election and replaced by the opposition Democratic Party of Japan (DJP), under its leader Ichiro Ozawa. It would be the first time in postwar history that power had changed hands through the ballot box, although the LDP briefly lost power in 1993 in a parliamentary maneuver.

The most recent public opinion polls see the Aso cabinet's popularity sinking to 14 percent, down from 19 percent in January. Other premiers have had even lower approval ratings – former Prime Minister Noboru Takeshita's numbers fell to 7 per cent in 1989 - yet the LDP retained power after an election.

Aso might take some comfort from that history, but it should be remembered that the governing party prevailed then over a much weaker opposition. The DJP, which captured the upper house of Japan's bicameral parliament in 2007, is in a much stronger position to exploit the LDP's failings, win and govern Japan.

A general election does not have to be called before September, when the term of the present Diet expires, and, given Aso's sinking polls numbers, it seems unlikely that one will be called sooner than late summer. So the premier has about six months to turn things around. What can he do?

Become a born-again reformer. The Japanese like "reform" provided it impacts somebody else, so Aso has come out in for of moving up the planned abolishment of the widely criticized practice of senior civil servants finding cushy post retirement jobs, a long-term practice known by the colorful Japanese term amakudari or "descent from heaven."

Unfortunately, Aso immediately undermined his reformer credentials when he declared that he was "against" the privatization of the postal service and hinted he wanted to alter it. He could hardly have handled an issue more clumsily. As a member of former Prime Minister Junichiro Koizumi's cabinet, he had called it the "administration's best bill".

Postal privatization was the key administrative reform for which Koizumi will be remembered. He made it the sole issue in the 2005 general election where the LDP picked up more than 80 seats. The party's overwhelming majority in parliament today stems directly from that successful election campaign.


Some party members trace the government's latest popularity plunge to Aso's remarks. The premier may have been thinking about winning back postal workers and postmasters, who are an important part of many LDP members' local election machines. That's why many LDP party stalwarts had opposed the postal reform in the first place.

Make a splash on the international stage. This is always good politics. The Japanese like to see their premiers hobnobbing with other world leaders. Aso kicked off this part of his rehabilitation campaign by speaking at the World Economic Forum, where he promised that Japan would take a leading role in helping revive the battered economy.

This month provides several other opportunities. U.S. Secretary of State Hillary Clinton arrives in Japan for her first foreign visit while in office. Aso is also planning a trip to Sakhalin island to meet with the Russian president Dmitry Medvedev, ostensibly to inaugurate the big Sakhalin-2 natural gas project.

Of course, if he could find something positive to report on the perennial question of returning four small islands north of Hokkaido, seized by Russia during World War II and still claimed by Tokyo as the lost "Northern Territories" that would be icing on the cake.

In April comes the G-20 financial summit in London and in July the annual G-8 meeting. Unfortunately, for Aso, Japan's turn to host the meeting was last year. This year it will be in Italy, but it will still another chance to join the photo lineup with the presidents, prime ministers and chancellors of the industrial world.

Of course, the piece de resistance would be a one-on-one meeting in Washington, where he can bask in the reflected glory of President Barack Obama. More reflected glory could accrue by orchestrating an extravagant celebration of the 50th wedding anniversary of Japan's Emperor and Empress on April 10.

Hand out pots of money. When the going gets rough, the rough start printing. The Diet has already approved the government's second supplementary budget for fiscal 2008, which contains the stimulus cash handout of ¥12,000 (about $120) for every Japanese even though most Japanese feel it is a waste of money that will do little to stimulate the economy.

But at least the handout is in "real money," that is money obtained from somewhere, usually by issuing government bonds or dipping into reserves. But some desperate members of the LDP are proposing that the government print fiat money and hand it out by the bucketful – as much as ¥600,000 ($6,000) for each resident.

Fiat money is currency with no intrinsic value or guarantee that it can be converted into any "hard currency". The government simply declares (by fiat) that it is a legal means of payment. Fiat obviously expands the money supply and leads to inflation, but some party member think it may be the only way out of the current economic slump, not to mention their own political slump. "We have to think of all possible measures," said Yoshihide Suga, deputy chairman of the LDP's election strategy committee.

So far the party leadership, including Aso himself, has steered clear of the idea, although cautiously. "Now is not the time to contemplate such a move," the PM said. But who can say what might happen down the road? It's a long way to September.