The Zero-Party State

What happens when the governing party in a basically one-party state, like Japan, loses power? You have a "zero-party state." That, anyway, is what the Euroasia Group thinks. Euroasia Group is a prominent international risk assessment consultancy that this month placed Japan, under its new government, as one of its Top 10 global risks for 2010.

To be exact, the consultancy placed Japan as No. 5 on its shortlist of things investors should be wary about in the coming year, just behind financial deregulation in the United States and ahead of the collapse of the global warming talks in Copenhagen and its impact in the coming year on international trade.

Euroasia postulates what it calls "a continuation of the post-[ex-premier Junichiro] Koizumi era succession of weak governments, but this time without the benefit of a strong unified bureaucracy to guide policy and with a much more worrisome economic situation.. . . Some pundits worry that the United States will replicate Japan's lost decade. For 2010, the greater risk is that Japan might be starting another one."

The Democratic Party of Japan came to power with one overriding political ambition. That was to curb the enormous power historically exerted by the civil service under the long domination of the Liberal Democratic Party (LDP). The DPJ wants elected officials and ministers to lead the country, which the consultancy evidently sees as risky proposition.

Needless to say, not everyone in Japan has such a pessimistic view of the future under the new government, but certainly some of the glow from the DPJ's historic electoral landslide in the August 30, general election is wearing off. Prime Minister Yukio Hatoyama's approval ratings, which started out in the high 70s shortly after the election, have sunk now to around 50 percent.

Most observers believe that the party has enough bedrock support in the country to keep it falling from any further, for the time being at least. There has been no corresponding uptick in the LDP's approval ratings.

Hiroshi Hoshi, senior political writer for Asahi Shimbun, says that the perception that Hatoyama is weak and indecisive comes mainly from his supposed dithering over the issue of moving the U.S. Marine Corps air station at Futenma on Okinawa. 'I've known Hatoyama for 20 years, and he is actually quite decisive," he said.

The next six months in Japan, leading up to the July election for the House of Councillors, the upper house of Japan's bicameral parliament, are likely to be trying times for Japan and the new government. The Diet will convene soon, and the attention will turn to the 2010 fiscal budget, which will likely produce many standoffs with the opposition.

Despite its promises and efforts to cut spending in unneeded areas, the DJP government has presented the country's largest budget of ¥ 92.3 trillion (about $1 trillion), only about half of which is covered by falling tax receipts. That means the government also must issue ¥ 44 trillion in new government bonds, also the largest such expenditure, to cover it.

Bowing to fiscal realities the government has had to drop for now some of its campaign promises such as eliminating highway tolls and the gasoline tax. However, it is still committed to its promise of providing government payments to young couples with children and ending tuition for high schools.

The first checks in the child allowance, amounting to about ¥15,000 ($150) a month will go out probably in June, or about a month before the upper house election. "It remains to be seen how these handouts will be viewed by the public. Will they be appreciated or seen as a government boondoggle," Hoshi said.

Almost every move the government makes over the coming months must be seen against the backdrop of the crucial upper house election, which must be held in July for half of the seats. The DJP narrowly controls the body now with its coalition partners, but it is about seven seats short of a majority in its own right.

If it manages to win that majority, it can shed its smaller coalition partners, which are in some ways a drag on the government. That can be seen in the issue of the US bases on Okinawa bases, since its smaller partner, the Social Democratic Party, keeps making hints that it will withdraw if the government fails to move the Marine base off the island.

Foreign Minister Katsuya Okada's recent meeting with Secretary of State Hillary Clinton in Hawaii about the bases issue was inconclusive, with Clinton holding fast to the American position that it's a done deal. It is expected, though, that Hatoyama will not make a decision until May, when he can see the lay of the political landscape better.

If things look good at that time, Hatoyama, says Hoshini, might dissolve the coalition with the socialists, and another small party, and reach an agreement with Washington. If things look dicey, he will keep the coalition in place and postpone a decision until after the upper house election.

The opposition LDP has so far not shown much sign of life. It may be pinning its immediate prospects on the hope that new scandals surrounding the DJP's two main leaders will blossom in the coming months. The most serious would be against party secretary general Ichiro Ozawa, involving alleged improper campaign contributions from one of his support groups.

The question of electoral propriety, which forced Ozawa to resign as leader of the party early last year, had been dormant for several months but is back in the news, with the LDP clamoring for him to testify regarding some expenditures from his political action group involving a land transaction.

It is conceivable that the Tokyo Prosecutor's office may indict one of Ozawa's key aides, who also happens to be DJP Diet member. If something like that should happen, Hatoyama might have to push Ozawa out of his party office. That would handicap the party in the up-coming election since Ozawa is, by far, the best electoral technician the party has.