June 2, 2011 / 11:56 AM / 6 years ago

Analysis: Japan political drama leaves basic ills unresolved

<p>Japan's Prime Minister Naoto Kan (R) shakes hands with Truong Tan Sang, permanent member of the secretariat of the Vietnamese Communist Party's Central Committee, in Tokyo June 2, 2011. REUTERS/Franck Robichon/Pool</p>

TOKYO (Reuters) - A lame duck leader, a combative opposition that can block legislation, and a ruling party divided by private feuds and differences over how best to solve the country’s long-term ills.

It’s back to square one in Japan.

When the dusts settles, that may be the takeaway from the political drama that concluded on Thursday with a promise by Prime Minister Naoto Kan to resign once he has brought the crisis at the Fukushima nuclear power plant under control.

The unpopular leader’s pledge was a last-minute deal to keep rivals in his Democratic Party of Japan (DPJ) from backing a no-confidence motion in parliament that would have forced him to resign or call a snap election.

The bargain Kan struck has averted the worst-case scenario of a political vacuum as the government struggles to rebuild a vast area devastated by March 11’s earthquake and tsunami, and contain radiation leaks at Tokyo Electric Power Co’s Fukushima plant, which was torn apart by the natural disaster.

But beneath the surface, what has lately looked like a dysfunctional political system remains in dire straits.

“Nothing is made any easier by this decision and the focus of attention will be on politics in the Beltway,” said Columbia University professor Gerry Curtis.

“They will spend all their time maneuvering ... and who is going to think about foreign policy, about Tohoku (the tsunami-devastated northeast) or about anything of significance?”

Indeed, no sooner had Kan survived the no-confidence vote on Thursday, signs of friction resurfaced, with a former prime minister who had helped broker the deal calling the party’s No.2 a “liar” .

One reason for the lingering tension is that Kan did not give a target date for his departure, which could come in a matter of months but without a timetable his pledge is vague.

Optimists said the deal might persuade the opposition, who control parliament’s upper house and can block bills, to agree to enact a law enabling the government to borrow more to fund nearly half of a $1 trillion budget for the current fiscal year.

But the main opposition Liberal Democratic Party (LDP) on Thursday repeated its stance that the DPJ must first drop key campaign promises to leave more money in consumers’ pockets. The

No. 2 in the party also threatened to take the fight to the upper house which the opposition controls and present a non-binding censure motion against Kan there.

“GRAND COALITION”

Some predict that enacting an extra budget to pay for what will be Japan’s biggest reconstruction project since the days after World War Two might be easier now that the opposition has failed to pass the no-confidence motion.

But divisions persist even within the DPJ over how to fund such spending, with some lawmakers opposed to raising taxes to repay the fresh debt that is certain to be needed.

Former foreign minister Seiji Maehara, sometimes cited as a possible successor to Kan, said the passage of the funding bill was not assured given the divided legislature.

“If the funding bill is not passed, it will be a big drag on the Japanese economy and reconstruction, and it is also directly linked to the extra budget,” Maehara said. “So even though the no-confidence motion has been rejected, things have not settled down and the problems have not changed.”

Equally troubling, Japan’s next leader may fare no better in efforts to cap the rising social security costs of a fast-aging population and a ballooning public debt that is twice the size of the $5 trillion economy.

Ratings agencies have already warned that Japan’s political stalemate and bickering could lead to a downgrade of its sovereign debt rating on the world’s third-largest economy.

Some analysts said the chances of a “grand coalition” between Kan’s Democrats and the LDP would probably be higher under Kan’s successor -- since the opposition party has insisted his grip on power was the major obstacle.

Among the names that have been floated are: Deputy Chief Cabinet Secretary Yoshito Sengoku; National Strategy Minister Koichiro Gemba, who has good ties with some in the LDP; Agriculture Minister Michihiko Kano; Maehara, a security hawk; and Shinji Tarutoko, who lost a party leadership race to Kan last year.

“Once Kan resigns, the chances of a coalition are higher,” said Kyohei Morita, chief economist at Barclays Capital Ltd. “Political decision-making capability would be greater, but that doesn’t mean they would adopt the right policies.”

Forging policy pacts among a giant coalition’s diverse members would not be easy. While many in both parties agree that Japan must raise its sales tax from 5 percent to fund rising social security costs, others in both camps are opposed.

“It’s another disaster. Kan will step down, but the question is, who will succeed him?” said Masaaki Kanno, chief economist at JP Morgan Securities Japan.

“The basic problem will never be solved (by a coalition) because in the LDP a number of people object strongly to a consumption tax hike and it’s the same in the DPJ,” he said, adding that only a fundamental realignment of the political parties along policy lines could solve the dilemma.

“Until we have political reorganization, we will have this problem.”

Editing by John Chalmers

Our Standards:The Thomson Reuters Trust Principles.
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