In selecting his first cabinet and party executive line-up in September 2011, the most important motivation for Japan’s Prime Minister Noda was intra-party harmony.

His ministers were largely selected to appease political strongman Ichiro Ozawa, who maintains a well-deserved reputation for either running parties or destroying them. Noda’s approach contrasted with his predecessor, Naoto Kan, who followed a ‘datsu Ozawa’ line and sought to exclude Ozawa’s influence from his administration. The result was a series of furious internecine disputes. Ostensibly the fights were about policy; in reality they arose from Ozawa’s grievances about the distribution of power within the party.

If Noda’s first cabinet was selected to keep Ozawa at bay, his recently appointed second cabinet aims to placate the opposition by getting rid of offending ministers. Defence Minister Yasuo Ichikawa and Consumer Affairs Minister Kenji Yamaoka, against whom the upper house passed censure motions last year, were both demoted. By these actions, Noda has kept alive the possibility of constructive negotiations with the opposition on a proposed consumption tax and social welfare-reform legislation. But the opposition will find it hard to agree on any legislation unless they see direct political advantage in doing so. Their primary objective is to bring down the Noda government and force a general election.

Noda paid the price for intra-party harmony the first time round. He appointed Ichikawa and Yamaoka not on the basis of their policy experience or political nous but because of their strong political connections to Ozawa. He also went for political balance in the party, choosing not only Azuma Koshiishi — one of Ozawa’s major supporters and defenders — as DPJ secretary-general, but also anti-Ozawa stalwart Seiji Maehara as chairman of a strengthened DPJ Policy Affairs Research Council.

Noda has also continued the trend begun under Kan toward decentralising the policy-making process, thus strengthening the role of the party as a separate policy organ. These changes reversed earlier reforms instituted under the Hatoyama administration, which sought to centralise policy making in the cabinet and reinforce the prime minister’s executive powers by establishing entities such as the National Policy Unit. By prioritising consensus within the government and the ruling Democratic Party of Japan (DPJ), Noda successfully undercut the executive policy-making power of the Kantei and the cabinet. Unfortunately, Noda soon realised that his administration needed more executive power to carry out difficult tasks such as increasing the consumption tax and engineering Japan’s membership of the Trans-Pacific Partnership. Ozawa’s cronies had begun using the consumption tax issue as an excuse to jump ship and form another political party (New Party Kizuna), in addition to another new party led by former Diet member and convicted felon Muneo Suzuki (New Party Daichi-True Democratic Party), which has enlisted two key ex-DPJ Ozawa supporters to its ranks. All the while, Ozawa’s previously muted criticisms have been growing louder and his behind-the-scenes machinations for possible party realignment more apparent.

Now Noda has sought to swing the pendulum back the other way with the appointment of Okada as Deputy Prime Minister and simultaneously to a whole host of other ministerial positions. Okada’s selection signals that Noda feels the need to buttress his policy leadership, but his elevation may also be a sign that Noda recognises his own policy leadership is weak. Okada is the DPJ’s Koizumi — someone who acts on the basis of policy conviction, rather than from the careerist mentality of so many other Japanese politicians.

Okada will certainly add some ballast to the Noda administration, but the downside is that Okada’s policy convictions can lead him to act unilaterally, without clearance from fellow members of the government. Moreover, Ozawa is implacably opposed to Okada given their past dealings: Okada was the principal architect of Ozawa’s suspension from the DPJ in 2011. And even though Ozawa is engaged in a long-drawn-out trial over an alleged money–politics misdemeanour, a wounded lion can still be dangerous. His criticism of the Noda administration may now become stronger after the reshuffle, although it is unlikely to reach the intensity with which he sought to bring down the Kan administration.

It is possible that Noda has repeated his earlier mistake in appointing Naoki Tanaka to replace Yasuo Ichikawa as Minister of Defence. Both Tanaka and Ichikawa have strong connections to Ozawa. Noda made both appointments to appease Ozawa, but Ichikawa’s incompetence on the job came back to bite him. Tanaka has had a singularly undistinguished political career, with his biggest claim to fame being his connection to the Tanaka family — his father-in-law is a former prime minister and his wife Makiko also has a long career in politics. And though Tanaka’s most recent position was as a member of the Special Committee on Okinawa and Northern Problems, he is completely untried and untested in dealing with security issues involving the US.

Normally, cabinet reshuffles are undertaken to breathe new life into governments. It remains to be seen whether Noda’s new line-up achieves this objective. The overwhelming impression is that both Noda and his cabinets are only temporary. The new cabinet is not going to save the Noda government, just extend its life briefly. Its effect will be palliative rather than curative.

Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. Noda’s cabinet reshuffle: does it give him a stronger hand?
2. Indonesia’s cabinet reshuffle: how low can it go?
3. Japan: Hatoyama delivers an impressive cabinet

The Japanese government’s new policy reform plan, Basic Policy and Action Plan for the Revitalisation of Our Country’s Food and Agriculture, Forestry and Fisheries, (published 25 October) does little to promote agricultural trade liberalisation.

While containing a number of reform proposals designed to expand the scale of farming and facilitate agricultural land transfers, the plan fails to address the most important issue of all: reducing direct income subsidies to small-scale farms.

The current program of universal farm-income support preserves the existing structure of agriculture by providing incentives to keep inefficient small-scale farms in business. So if the government avoids the politically difficult decision to cut this program, the existing and new policy will be in conflict. But if the government were to use farm-income support as an instrument of structural reform, by providing subsidies only to larger-scale farms, then this would be a powerful step in the right direction.

So far, direct income subsidies for farmers have been a baramaki (pork barrelling) policy to win the votes of farmers, the majority being small-scale producers, with 80 per cent managing two hectares or less. This is unlikely to change, particularly with former LDP nōrin zoku Michihiko Kano in charge of the Ministry of Agriculture, Forestry and Fisheries (MAFF). His political instincts are perfectly attuned with those of the MAFF — maximise government spending on agriculture and preserve the handout mentality of subsidy-dependent farmers that pervades the industry. These attitudes and associated policies ensure that Japanese agriculture — in the hands of an aging workforce cultivating tiny plots — continues to decline and exhibit very low productivity and international competitiveness. Moreover, the government continues to confuse industry policy for agriculture with social policy for the aged and rural dwellers.

Retaining the current income-support program while liberalising agricultural imports will have serious budgetary implications. Dealing with the consequences of agricultural tariff reductions by supplementing farmers’ incomes will push up the cost of farm-income compensation to enormous levels, adding massively to the fiscal burden on the government — which currently pays about ¥1 trillion (US$12.8 billion) per year in subsidies to farm households.

There are also timing issues. Revitalisation of Japan’s farming sector, the plan’s central theme, is a long-term project. It will take years for the reform measures it advocates — hobbled as they are by internal contradictions in government policy — to work their way through Japan’s farming economy. In the meantime, Prime Minister Noda must deal with the immediate issue of whether or not Japan will join the Trans-Pacific Partnership (TPP) negotiations and the agricultural trade liberalisation implications of any subsequent decision to join the TPP itself. Noda cannot approach urgent policy decisions that demand radical short-term action by offering long-term ‘pie-in-the-sky’, ‘hope-for-the-best’ reform programs that could take years to yield results. Even five years seems too optimistic a timeframe for the reform plan.

The usual suspects are also campaigning against the TPP. The Japan Agricultural Cooperatives’ (JA) vociferous anti-TPP campaign is all about protecting the organisation’s own interests — not the farmers. Its profits on high-priced farm inputs such as fertilisers and pesticides are at stake, as are its marketing commissions on high-priced agricultural products (which are a percentage of the selling price). JA represents yet another layer of expensive agricultural bureaucracy in Japan, financially burdening the agricultural sector and blocking all kinds of economic efficiencies for producers.

Moreover, anti-TPP groups are mounting a campaign of disinformation, taking advantage of widespread ignorance and uncertainty about what might be required of Japan if it did join the free trade group. Scare-mongering and extremist rhetoric is common. The Vice-Chairman of JA-Zenchu, Mitsuo Murakami, recently argued that participating in the TPP would lead to people committing suicide. Kano’s predecessor as MAFF Minister, Masahiko Yamada, now chairman of the anti-TPP DPJ Diet members’ league, has also proclaimed he is putting his life on the line to prevent Japan from participating in the TPP. And the rhetoric is getting through: 97 DPJ Diet members signed a petition against joining the TPP, including the DPJ’s first MAFF Minister, Hirotaka Akamatsu. More than two-thirds are first-term Diet members whose electoral prospects are the shakiest.

On top of this, Noda has given a stronger voice to TPP opposition in his own party by strengthening the role of the DPJ’s (anti-TPP) Policy Affairs Research Council and separating it from the executive. This has allowed the group to become the same kind of ‘veto point’ that the internal LDP agricultural lobby used to be. The key difference between Japan’s current and earlier debates on trade liberalisation is that the voice of corporate Japan — which in the past, fearful of challenging the sacred cow of agriculture, went unheard or muted — is now loud and forceful. Whether it will predominate remains to be seen.

Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. Japan’s agricultural politics, the DPJ and the prospect of trade reform
2. Is Japan’s DPJ a party of reform on agriculture and agricultural trade?
3. Can Kan deliver a breakthrough on Japan’s agricultural trade policy?

One of the big questions hanging over the newly formed Noda administration is whether the prime minister will be able to restore harmony within the ruling DPJ after the internal party discord that characterised the Kan administration.

Noda appeared to take a step in the direction of party unity by making a number of DPJ executive and cabinet appointments from among close supporters of party kingpin Ichiro Ozawa. It was Kan’s ‘escaping from Ozawa’ (datsu Ozawa) line that produced such high levels of discord between supporters and detractors of Ozawa. As Noda himself was generally aligned with the anti-Ozawa camp, he clearly made concessions for the sake of reconciliation within the DPJ.

Ozawa, too, made it clear that his view of the Noda administration was based directly on whom Noda appointed as party executives, indicating his cooperation with Noda was conditional on how Noda ‘will make arrangements on personal affairs’. Ozawa was satisfied with the appointment of two of his closest allies and spokespersons — Azuma Koshiishi and Kenji Yamaoka — as DPJ secretary-general and chairman of the Public Safety Commission respectively. He would have also been pleased with the appointment of self-confessed novice in national security affairs, Yasuo Ichikawa, as Minister of Defence.

Koshiishi’s appointment is key. In the DPJ, the secretary-general’s office exercises authority over party funds, approves official candidates in national elections and appoints party Diet members to various party and government posts. The position has tremendous organisational power. When Ozawa was DPJ president, he appointed Yukio Hatoyama as secretary-general. Between them they distributed ¥2.2 billion (US$28.7 million) in party funds in 2006–08. The money went to favoured candidates in key electoral districts. Hatoyama, when DPJ president (and prime minister), returned the favour by appointing Ozawa as DPJ secretary-general in his administration. It was Ozawa’s control over party money and appointments that enabled him to build up the biggest group of followers in the DPJ.

But Noda may pay a high price for buying Ozawa off. In addition to Koshiishi, there are other important appointments to Ozawa supporters — Noda has basically handed over the keys to the DPJ’s kingdom to Ozawa.

Most important is Koshiishi’s appointment of one of Ozawa’s former secretaries, Takeshi Hidaka, as a deputy secretary-general in his office. He names Ozawa as ‘the person he respects’ on his website and the first four photographs that flash up are of him and Ozawa. Hidaka worked for Ozawa from 1991 until 2000, accompanying his boss out of the LDP into the Renewal Party, then to the New Frontier Party and finally into the Liberal Party. In 2000, he published a book co-authored with another close Ozawa associate and former Upper House member, Sadao Hirano. Hirano was behind the internal revolt of 16 Ozawa supporters earlier this year. The group of rebels applied to leave the DPJ’s Lower House caucus and ended up abstaining from the vote on the budget. Hirano suggested the idea to Ozawa, advising him that it was the only way to replace Prime Minister Kan without anyone having to leave the party. Hidaka was one of five deputy ministers and parliamentary secretaries who resigned their posts on 2 June to vote in favour of the no-confidence motion submitted by three opposition parties.

The significance of Hidaka’s appointment is that Hidaka is in charge of the most important tasks of devising election strategies, deciding who gets what amount of party funds and who should be endorsed to stand as DPJ candidates. Given that Hidaka is an Ozawa lackey, Koshiishi effectively handed over these functions to Ozawa. If Noda ever leads the DPJ into a Lower House election, these chickens will come home to roost.

Hidaka is also in charge of receiving requests for government patronage. It is his job to accept petitions from the DPJ’s prefectural federations and industry lobbies (for policy favours and the allocation of budget funds for specific projects). These were all functions that Ozawa jealously appropriated to himself when he was secretary-general of the DPJ in the Hatoyama administration as a means of further aggrandising his own power within both the party and the government. Indeed, Ozawa wanted the secretary-general’s position to take charge of these functions. But Koshiishi is the best proxy he can get and Koshiishi delivered with his appointment of Hidaka.

Koishiishi’s predecessor, Katsuya Okada, did things differently. He put himself in charge of election campaigning and receiving petitions from supplicants. He also introduced a system whereby party funds were subject to external auditing in order to secure transparency in the distribution of these funds. Koshiishi is yet to declare whether he will follow Okada’s example in this regard.

Also in the secretary-general’s office is another Ozawa henchman and chairman of Ozawa’s intra-DPJ group (called Isshinkai), Katsumasa Suzuki. Suzuki is the senior deputy secretary-general in charge of Diet affairs, and number two in the office. Along with Hidaka, Suzuki resigned his post as deputy minister of Internal Affairs and Communications prior to the no-confidence vote in June. His primary loyalty is to Ozawa, not to the DPJ, let alone Prime Minister Noda. He is an ideal lieutenant to Koshiishi.

Through these appointments, it seems that Prime Minister Noda has put Ozawa as de facto head of the DPJ’s secretary-general’s office.

Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. Ozawa’s influence in Japan’s DPJ still questionable
2. The return of Japan’s shadow shogun Ichiro Ozawa?
3. No easy option with Japan’s Ozawa Ichiro

Yoshihiko Noda’s victory in the race for the DPJ leadership this week greatly surprised the pundits and even many in the DPJ itself.

There was an audible gasp from the assembled DPJ Diet members when Noda’s high vote tally was read out after the first round of balloting.

Many outside observers thought that DPJ Diet members had taken leave of their senses. To pass over someone like Seiji Maehara, with the highest public popularity rating of any politician in Japan, for someone like Noda, who barely registered on the popularity scale, seemed to fly in the face of good political judgment, particularly at a time when the DPJ’s stocks are so low.

But Noda in many ways represents a new, younger generation of politicians in Japan, and (despite an extreme right-wing position on Japan’s convicted war criminals) belongs to the progressive urban wing of the DPJ. In that respect, he exemplifies the DPJ’s true character as a predominantly urban-based reform party. And like many urban-based DPJ politicians, Noda is anti-bureaucracy and anti-vested interests.

Noda is a professional politician by training, and could not be more different from the old (LDP) politics model of hereditary, rural-based, special-interest-bound politicians. Noda is, as he describes himself, ‘an ordinary man’, and in one respect looks like a typical urban ‘salaryman’. He has no links to special interests, no moneyed connections and relies on his oratory skills to convince constituents to vote for him. His almost daily public speeches in his electorate were the making of him as a politician. These oratory skills came in handy when persuading fellow DPJ Diet members to vote for him this week; an added flourish was his self-deprecating humour, which only served to underline his sincerity.

A collection of ‘sayings’ posted on his website showcases his ability for original rhetorical flourishes as well as the exercise of ‘soft’ power. Noda calls for reform of Japan’s vested interest system, including the ‘iron triangle of politicians, bureaucrats and businessmen’, which was so entrenched under the LDP. He also describes himself as an advocate of deregulation and a free-market economy, arguing the LDP had to be ousted because ‘You can’t do drastic reforms [under the LDP-led administration]’. More recently, Noda is on record as supporting Japan’s participation in the Trans-Pacific Partnership, signalling that he is open to the prospect of greater Japanese trade liberalisation.

Looking at Noda’s Diet career, which began in 1993 as a member of the reform-oriented Japan New Party, his particular strengths are in financial and fiscal affairs, and in the management of the party’s legislative program in the Diet. These are two key areas of expertise that will come in handy in the political and policy environment he finds himself in at present. Moreover, his record as shadow minister of finance in the DPJ’s ‘Next Cabinet’, deputy minister of finance and minister of finance are a mark of his own expertise in this policy area, giving the lie to critics who wrote him off in the election this week as merely the Ministry of Finance’s candidate.

In a broader sense, it does not matter who Japan’s prime minister is. Not only does Japan have a parliamentary cabinet system, which provides for collective responsibility for government policies, but any prime minister’s capacity for exercising leadership is also severely constricted by a range of factors. These include extremely high levels of public debt, constraining government spending, and, not least, powerful vested interests that block change, in particular the institutionalised interests of vertically-divided ministries and politically-entrenched local, sectional and clientelistic interests. No matter what reforms ever make it on to the public policy agenda, they immediately become a signal to special interests to mobilise, with the result that policies for change end up being blocked, emasculated or shelved. Noda will doubtless be stymied by vested interests at every turn.

On top of these obstacles, the new prime minister must contend with two other extreme difficulties in managing his government: an inability to get legislation passed without concessions to opposition parties and a party split down the middle into pro- and anti-Ozawa camps. Healing this rift is likely beyond Noda and anyone else in his shoes. As a new breed of politician, Noda in his outlook and modus operandi could not be more different from Ozawa. However, a key indicator of how he is dealing with this issue comes in his appointment of an Ozawa ally, Azuma Koshiishi, as DPJ secretary-general. This was undoubtedly a conciliatory gesture for the sake of party unity, but it will effectively put the party into Ozawa’s hands in terms of electoral endorsements and funding, signalling that Noda has already capitulated to the Ozawa side on party matters. The same may not be true of the policy side with Maehara appointed as chairman of the DPJ’s Policy Affairs Research Council. Maehara will likely resist Ozawa’s interference in the party’s policy affairs.

In the wake of the most recent disasters, the Japanese public’s faith and trust in government is at a new, all-time low. As the former head of the DPJ secretariat, Atsuo Ito, said: Japan has moved from ‘the politics of distrust’ to ‘the politics of despair’.

Whether Noda can rescue his country from this deep low remains to be seen. New prime ministers have come and gone in the past: they briefly energise the political scene, only to sink quickly into the political mire.

Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. Japanese PM Yoshihiko Noda: Staying for the long haul?
2. Japan gets a new prime minister
3. Japan’s prime minister and a country in limbo

The top two contenders for the presidency of the governing DPJ in Japan (and therefore Japan’s prime ministership) on 29 August are Banri Kaieda and Seiji Maehara. Kaieda represents the combined Ozawa-Hatoyama camps.

Not only is he a member of the Hatoyama group, but he has managed to secure the backing of Ichiro Ozawa. Who Ozawa would support has been one of the biggest questions in Japanese politics in the past week.

Given that the choice is between these two, what kind of prime ministers would they make?

It seems that all is quickly forgiven and forgotten in Japanese politics if power and ambition are at stake. Kaieda was once a strong critic of Ozawa for all the usual reasons. He felt so strongly about Ozawa’s faults that he wrote a book entitled The Real Reason Why I Don’t Like Ozawa (Politics) [Boku ga Ozawa (Seiji) o Kirai na Honto no Wake], published by Niki Shuppan in 1996. On the back cover of the book are the words, ‘That’s why I don’t like him’ printed in English.

Kaieda begins the book saying: ‘He was the man who has been controlling Japanese politics from behind the scenes since former Prime Minister Kakuei Tanaka … He was the man who has been having his way in a high-handed manner in the dual power structure of politics as though he were a shadow shogun’. Kaieda then reflects on the ‘history of Ozawa’s imperious disposition’ and relates numerous stories of Ozawa’s power plays and their far-reaching effects not only on the individuals involved but on political developments in Japan. Kaieda also provides commentary on what he regards as Ozawa’s unfinest hours, including a series of grand political and policy failures from the time of his first stint as LDP secretary-general in 1989.

At one point in the book, Kaieda refers to Ozawa’s role in the Sagawa Kyūbin scandal, when he was identified by witnesses as a party to the discussions during which illegal deals were allegedly made involving former LDP Deputy President Shin Kanemaru and the head of the Sagawa Kyūbin trucking company. Ozawa testified in the Diet that his own role in the scandal was merely to empty ashtrays and refill glasses without participating in any of the discussions. But as Kaieda writes, ‘I don’t think anyone could believe this testimony … Would Ozawa, who was being favoured by Kanemaru … really be called … only to work like a porter? … He might have said he wasn’t listening, but he must have been listening for sure’.

It now seems that Kaieda has volunteered to play the role for Ozawa that he described in his own book when he wrote, ‘Ozawa does not appear on centre stage, but rather accomplishes things through using other people. Isn’t this true? … This means that Ozawa likes a dual power structure’. Undoubtedly, Ozawa would seek the position of DPJ secretary-general in a Kaieda government.

On policy, Kaieda appears to have completely capitulated to the Ozawa line, not only in opposing an increase in the consumption tax and forming a coalition with the opposition, but also in implementing a policy of unbridled spending on public works. He proposes to use the earthquake and tsunami disaster as the reason for a public works spending spree in the best tradition of LDP politicians of yore.

Kaieda was far from Ozawa’s first choice to run for DPJ leader. Ozawa only agreed to support Kaieda because he could not get his personal choice to stand as a ‘front man’. He reached into the ranks of party elders — Azuma Koshiishi and Takeo Nishioka — asking both if they would stand. Such candidates would have been pure puppets with little support from either the wider party or the public, but with Ozawa pulling the strings. Any support they might have attracted would have been simply drummed up from the ranks of his own group and Hatoyama’s. In the event, Koshiishi turned Ozawa down and Hatoyama’s support could not be secured for Nishioka. The fact that Ozawa approached these unelectable leaders for the DPJ presidency reflects both his old LDP factional reflex in attempting to inflict his choice on the party and the public, and perhaps an ambition to return as the saviour of the party at a later date. In the end, Ozawa settled for Kaieda because the combination of his and Hatoyama’s group gave him a good chance of being on the winning side.

Maehara is generally recognised as being outside the Ozawa camp, crossing swords with Ozawa over the road toll issue last year and supporting Kan’s datsu Ozawa (‘escaping Ozawa’) line. This does not mean that he is altogether eschewing support from the Ozawa camp, particularly through his call for party unity — code for allowing Ozawa back into the DJP.

Maehara is the strongest candidate in terms of public support but the public are bystanders in this election, which only involves DPJ Diet members. Among party members, his prospects are far from assured.

Maehara’s personality is often criticised by observers who have had first-hand experience of it. His single-minded ambition to reach the pinnacle of Japanese politics has never been in doubt. His political judgment is another matter. His propensity to do backflips on policy issues and his inability to carry things through, such as cancelling the Yamba Dam project and restructuring Japan Airlines when he was Minister of Land, Infrastructure and Transport in the Hatoyama government are considered among his weaknesses. Maehara is also known for making rash public statements, which suggests that he speaks before he thinks. An article published in the Japanese weekly magazine, Shukan Gendai in February this year called him ‘the most dangerous person in the DPJ’, someone who makes ill-considered remarks, a ‘human time-bomb’ whose administration would not last beyond three months’. In an apocryphal story, his former professor at Kyoto University is said to have advised him to become a politician because he was not clever enough to be a scholar.

The DPJ presidential election is, therefore, a choice between an opportunistic convert to Ozawaism with all the risks of backroom manipulation that would bring, and a superficially attractive figure but one without a great deal of policy substance. If the former wins, it will be testimony to the fact that Ozawa still calls the shots in the DPJ. Neither leader could be relied on to follow through on earlier policy positions, such as their commitment to the Trans Pacific Partnership (TPP).

Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy in Canberra.

1. The next Democratic Party of Japan prime minister
2. Japan’s prime minister and a country in limbo
3. Yoshihiko Noda, Japan’s not-so-ordinary prime minister

Diet politicians in Japan’s ruling party are reverting to form: they are consumed with the politics of power and position rather than with policy.

The last thing Japan needs at this time is more jockeying for political advantage among a group of would-be prime ministers. But that is what is occurring as the process of replacing Prime Minister Kan reaches its expected climax on the 29th of this month.

A tug-of-war over policies is disguising what is, in reality, a struggle for power. While the job-seekers in line for the prime ministership pay lip service to a set of policy convictions, with some hopefuls issuing policy statements or publicising their ‘visions’ for the future, their main ambition is not to implement a set of policies (let alone carry out much-needed political reforms) but simply to gain the highest office in the land as an end in itself. Not only are they driven by a desire for the status and prestige, but also by a sense of entitlement — that it is their ‘turn’.

At the centre of all this politicking is, once again, Ichiro Ozawa. No doubt, he will live up to his reputation as a ‘shadow shogun’ (yamishogun), ‘wire-puller’ (kagemusha) and ‘puppet master pulling the strings from behind the scenes’ (kuromaku). The sort of influence that Ozawa wields is ‘the power of numbers’, a lesson he learnt from his old boss and mentor, former Prime Minister Kakuei Tanaka. The number he can muster for the leadership ballot is said to be about 120, which makes it the biggest group in the DPJ. This means it will have the casting vote in the selection of the next DPJ leader and prime minister and, at the very least, will offer crucial support for the victor.

Moreover, Ozawa has recently been working overtime to strengthen the solidarity of his group to ensure they vote as a reliable bloc after signs of disunity in the wake of the failed no-confidence vote in the Kan government in June. Ozawa recently said on NHK News 7, ‘What is important is that we unite and this time we’ll be able to win’. Ozawa has also been meeting with former Prime Minister Yukio Hatoyama with a view to cooperating in order to hold sway as the largest bloc of votes within the DPJ.

Clearly the would-be prime ministers beating a path to Ozawa’s door think that his support is indispensable. Current Finance Minister Yoshihiko Noda (who put his name forward in the very early stages of the hunt for a Kan replacement) met with a close associate of Ozawa’s back in June, just after Kan announced he would resign at an unspecified date in the future. Superficially, Ozawa and Noda do not have much in common when it comes to their declared policy positions. Ozawa is opposed to a rise in the consumption tax, but Noda in his ‘Visions for an Administration’ published in Bungei Shunju, on 10 August, expressed a strong determination to hike the consumption tax to 10 per cent by the mid-2010s. More immediately, Noda has advocated tax increases to raise revenue for post-quake reconstruction as well as an early decision on the Trans-Pacific Partnership (TPP) to which the Ozawa group is opposed.

Others seeking to get Ozawa on side are former Transport Minister Sumio Mabuchi, former Environment Minister Sakihito Ozawa and current Agriculture Minister Michihiko Kano. When the Environment Minister met with Ozawa, he expressed his desire to receive Ozawa’s ‘instructions’. Mabuchi met Ozawa twice as well as a group of his young supporters, and is making the right noises by opposing the consumption tax and Kan’s confrontationist attitude towards Ozawa. Kano was an early prospect for support from the Ozawa group but will reserve his final decision on whether to run after talking to Ozawa this week. A late entrant is METI Minister Banri Kaieda who has met with both Ozawa and Hatoyama, asking for their assistance. Even Seiji Maehara, who has just announced his decision to run, is said to have curried favour with a key Ozawa ally earlier this year. Some members of the Ozawa group have also expressed support for him as offering the best prospect to revive the DPJ’s fortunes.

But Ozawa’s support will come at a price (one which Kan found too heavy to pay). The selection process for party leader is tailor-made for Ozawa to ride back to power. His influence is already being reflected in the requests of several prime ministerial contenders for a reinstatement of Ozawa’s membership in the DPJ (currently under suspension).

In exchange for delivering what is effectively the prime ministership, Ozawa will exercise veto power over key appointments in the new administration and over key policies. This is exactly what he did with the Hatoyama administration and others before it such as the Kaifu administration of 1989–91 and the Hosokawa administration of 1993–94. The recently-published memoirs of both Kaifu and Hosokawa are replete with the difficulties they had in dealing with Ozawa.

The contenders who are approaching Ozawa seem to be willing to pay the price. Kan, for all his faults, would not compromise on his principle of keeping Ozawa firmly at arms length. He established an Ozawa-free government but he also paid a price of sorts. He had to contend with endless sabotage of his administration by Ozawa and his group who acted as Ozawa proxies both in the Diet and in the party.

What the DPJ needs now is a leader who can unify the DPJ and eliminate the axis of confrontation — Ozawa vs. anti-Ozawa — whilst not allowing a dual structure of power to develop. If the behaviour of the aspirants beating a path to Ozawa’s door is any indication, this looks unlikely.

Aurelia George Mulgan is Professor of Politics at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. Why Japan’s Ichiro Ozawa stays in the DPJ
2. No easy option with Japan’s Ozawa Ichiro
3. Japan’s Ozawa Ichiro – the power of one

The Trans-Pacific Partnership (TPP) issue is clarifying the lines of division between Japanese industrial and agricultural interests in a way not seen before.

The Great Eastern Earthquake is serving to solidify these lines even further because both sides are using the disaster to argue for and against trade liberalisation respectively.

In mid-April, the Japan Business Federation (Nippon Keidanren) released its ‘Proposals for Japan’s Trade Strategy’. The comprehensive document called for Japan to ‘pursue a proactive and strategic trade policy’, including a proactive approach to concluding the WTO Doha Round this year and promoting ‘the conclusion of EPAs with the United States, China, and the EU … through the frameworks of the TPP, ASEAN+6, and Japan-EU EIA’.

The document links these trade policy proposals directly to the situation in post-disaster Japan, asserting that for companies involved in rebuilding the national economy and industrial infrastructure it is important to ‘seek sources for growth overseas from their bases in Japan and to develop global business operations’. For these reasons ‘the WTO and TPP remain important policy issues’. At Keidanren’s recent summer forum in Tokyo, many business leaders expressed concern about the lack of progress in negotiations towards Japan joining the TPP.

Japanese business representatives argue that the earlier Japan joins then the more influence it will have over setting TPP rules. This is particularly important regarding concerns about the US trying to shape the TPP trade rules in its own interests.

In early May the National Central Union of Agricultural Cooperatives (JA-Zenchu), the agricultural sector’s peak lobby group, counterpunched with its own set of proposals for the rehabilitation of agriculture based on the lessons learnt from the earthquake. It requested the government examine and implement agricultural policy measures focussed on revival.

The Kan administration was scheduled to decide whether to participate in the TPP negotiations in parallel with an Agricultural Reform Basic Policy in June, and formulate an action plan by October. But, because of the earthquake, the government’s discussions about agricultural reform halted and the decision on whether to participate in the TPP has been postponed. Its May ‘Policy Promotion Guidelines — Towards Japan’s Regeneration’ said only that the timing of a decision would be considered in a comprehensive manner, but it remains unclear when the decision will be made.

In June, the political arm of the agricultural cooperatives, Zenkoku Noseiren, called for an immediate halt to TPP discussions, reasoning that ‘because the damaged areas are regions where agriculture, forestry and fishing are the main industries … consideration of participating in TPP negotiations will become a burden on this revival’. Zenkoku Noseiren also shot down one of the Kan administration’s principal arguments in favour of agricultural trade liberalisation — that it would facilitate Japanese agricultural exports — highlighting that, because of Fukushima, a number of countries have banned food imports from Japan due to nuclear contamination risk.

In early July, the Ministry of Economy, Trade and Industry (METI) released a White Paper on International Economy and Trade. It echoed the arguments advanced in the Keidanren proposals, asserting that FTAs with other countries were important for Japan’s economic recovery. As an illustration, it noted that ‘if various costs are reduced by free trade agreements … it would give a boost to [companies’] production activities’. But on the TPP issue the White Paper was surprisingly tentative, saying only that it ‘might be desirable’ for Japan to join. Here, METI’s vague wording may reflect a decline in political influence following Fukushima, and an unwillingness to broach the sensitive issue of joining the TPP when farmers in north-eastern Japan are still recovering.

So where to from here? The short answer is ‘nowhere’. Despite METI and Keidanren drawing the obvious link between boosting Japan’s trade prospects and economic revival, Kan has no political capital to expend on the TPP issue. At present, trade policymaking is a holding operation, as is the administration itself. This is despite recent approaches to the Mercosur agreement and comments in April about Japan conducting a joint study with China and South Korea on a trilateral FTA.

The political uncertainties facing the Kan government make dealing with the TPP issue impossible. As the PM himself has been such a key driving force behind the government’s proactive trade policy, its fate is tied up with his, which looks bleak. Kan’s government is set to end in August. The trade policy of the next administration is an unknown quantity. If it were led by current MAFF minister Kano Michihiko, who is shaping up as the candidate of the Ozawa group, then any further agricultural trade liberalisation could be ruled out.

Japan needs strong political leadership to create the domestic conditions for joining the TPP. This, in turn, needs to be buttressed by institutional reforms that prevent the pro-liberalisation METI and the pro-protection Ministry of Agriculture, Forestry and Fisheries cancelling each other out. If trade policy reform could be dealt with by a policy command centre such as the National Strategy Office, then progress might be made. As argued elsewhere, trade liberalisation would also be assisted by having a separate government body with the power to negotiate trade agreements and to override the line ministries, as in South Korea.

Aurelia George Mulgan is Professor of Politics at the University of New South Wales, Australian Defence Force Academy, Canberra.

1. Japan’s confused debate about the TPP
2. No breakthroughs in the Australia-Japan EPA negotiations
3. Is Japan’s DPJ a party of reform on agriculture and agricultural trade?

As the foremost maker and breaker of political parties in Japanese politics, Ozawa Ichiro has confounded observers with his limpet-like attachment to the ruling Democratic Party of Japan, a party he clearly despises and recently called a ‘failure’.

Doubly humiliating is that Ozawa has had to endure the provocation of Prime Minister Kan’s ‘breaking away from Ozawa’ (datsu Ozawa) line, including his exclusion from all party and government posts plus the suspension of his party membership. The DPJ executive handed out the suspension in February because of Ozawa’s mandatory indictment for an alleged violation of the Political Funds Control Law.

The suspension means Ozawa cannot attend formal party functions, cannot stand for party president or vote in the party presidential election, and could face the next general election without the DPJ’s endorsement and financial backing.

Kan’s personal hostility towards Ozawa is also palpable, having indicated that Ozawa should consider resigning from the DPJ and Diet. At the New Year’s Day party at the Kantei, Kan said Ozawa ‘will soon be forcibly indicted, so his political activities will become extremely limited. Politically, he is gradually vanishing… I recently read former Prime Minister Hosokawa and Kaifu’s books. What they both had in common as prime ministers was that their administrations were led astray and eventually collapsed and became completely mutilated as a result of Ozawa’s manipulation. In the end, they were both disgusted and held a grudge against Ozawa… I won’t make the same mistake.’ [Bungei Shunjū, February issue].

Given Ozawa’s obvious discontent with the political status quo, why has Ozawa not led his followers out of the DPJ and formed a new party, thus precipitating a new round of party realignment? This would reprise the role he played in 1993 when he made his first major break from an established party, guiding a group of supporters out of the LDP, then joining with the opposition parties in a vote of no confidence in the Miyazawa government, which subsequently fell.

The reason is, in 2011, Ozawa is dealing with an entirely different political environment. As he has calculated, such a move is likely to be a journey into the political wilderness. When Ozawa left the LDP he used electoral reform as the clarion call to rally not only his own supporters but also the electorate, a new party and a new coalition government. There is nothing equivalent at the present time.

There are also no parties or elements within other parties that would seriously consider joining with an Ozawa breakaway group. Linking up with his old party, the LDP, is hardly a credible option given the aversion of many of its members, leaders and former leaders to Ozawa personally, although there were rumours earlier this year of a possible realignment of political forces involving elements of the LDP and DPJ Diet members loyal to Ozawa.

Another factor is that the Lower House now has an electoral system that generates strong disincentives for candidates standing for minor parties, leaving few reasons to defect from the DPJ. If a new Ozawa political grouping aspires to be anything more than a minor party, it will have to put up candidates to run against the LDP and DPJ in most districts. This will be beyond even Ozawa’s much-vaunted personal financial and logistical resources.

Ozawa will also need a large number of Diet members to follow him out of the DPJ at a time when the number of his followers is declining. At present, Ozawa retains the fervent support of a core group of 20–30 acolytes — some even left the DPJ’s parliamentary caucus in a gesture of defiance against the Kan administration earlier this year. But this group mainly consists of first-term Lower House Diet members whom Ozawa recruited and funded to stand for proportional representation seats in the 2009 Lower House election. With one or two exceptions, second- to fourth-term Diet members of the Ozawa group are more circumspect in their parliamentary behaviour. This means Lower House politicians more inclined to leave with Ozawa are the most electorally vulnerable and unlikely to survive a Lower House election. He would be leading a party of the unelectable.

It would take a huge leap of faith in Ozawa’s leadership abilities and his future career trajectory for any Diet member contemplating leaving the DPJ to place the fate of their Diet seat in Ozawa’s hands. The entire Ozawa group recently voted for the extension of the Diet session under Prime Minister Kan for fear of a Lower House dissolution and general election.

Ozawa himself remains under a cloud of suspicion for as long as his trial is set to run and the verdict remains unknown. In the circumstances, the likelihood of an Ozawa party attracting much public support is low. In a recent poll, 89 per cent thought badly of the way Ozawa and his supporters acted in relation to the no-confidence vote in the Kan administration, and only 1.7 per cent viewed Ozawa as a possible replacement for Prime Minister Kan.

Ozawa remains in the DPJ not because of any particular attachment to the party, or because he really believes in the importance of consolidating a two-party system which he helped create, but because his own prospects outside the party are so meagre.

Ozawa has decided that his best course of action is to work hard to bring down the Kan administration and install another more congenial to his interests — one that does not exclude him from the centre of power. This strategy explains his threatened support of the recent no-confidence motion (averted only when Kan offered to resign) and his followers’ attempted sabotage of the government’s legislative program.

Everything Ozawa has done over the past nine months since losing the DPJ leadership election suggests Ozawa is planning a comeback in the DPJ: getting rid of Kan and his cabinet, and engineering a power structure within the party more amenable to his manipulation. For Ozawa, the closer Kan gets to resigning, the more incentive he has to stay in the DPJ. He sees his future in an acquittal at his trial and a possible run again for party leadership.

Aurelia George Mulgan is Professor of Politics, Australian Defence Force Academy at the University of New South Wales, Canberra. 

1. Ichiro Ozawa goes quietly
2. The return of Japan’s shadow shogun Ichiro Ozawa?
3. Japan’s Ozawa Ichiro – the power of one

Given that Prime Minister Kan has survived the vote of no confidence in his government on Thursday, he may be in a position to make good on the commitment he made at the recent G8 summit to decide Japan’s possible participation in the Trans-Pacific Strategic Economic Partnership (TPP) at an early date.

The subject came up in the conversation between Prime Minister Kan and President Obama. The subtext of the Kan-Obama discussion was US anxiety that in the wake of the disaster, Japan would adopt an inward-looking attitude to international issues such as the TPP. Another unspoken concern was that for the prime minister, who has a weak government, the most difficult issues will be those that take time and require domestic adjustment, such as the TPP.

This made Prime Minister Kan’s comments about the TPP all the more surprising. He said: ‘Although the deadline for the decision on whether we would participate in the TPP negotiations was delayed because of the earthquake, I would like to make a decision as soon as possible after comprehensive discussions.’ The president responded positively: ‘I believe that the TPP will contribute to development in the Asia-Pacific region. I appreciate that Japan is considering participation in spite of the earthquake.’ Obama adopted the same tone as US Trade Representative Ron Kirk in offering encouragement rather than pressuring Japan to join the TPP.

It would be a different story in the negotiations. Japan could expect strong US gaiatsu (external pressure) from the United States on market access issues, particularly for agriculture. Gaiatsu has been a consistent feature of US-Japan trade negotiations for decades, and has been credited with varying degrees of success in opening Japanese markets.

One could argue that both Japan and the United States view the TPP through a similar lens, aiming to revive their own economies by trading more with the fast-growing economies in Asia, thus engineering economic growth through expanded exports.

Beyond this common goal, the question is to what extent US and Japanese economic and trading interests would align in the negotiations. The TPP naysayers in Japan warn that because the United States will become the major power in the TPP, it will influence the negotiations to suit its own interests. Not only will the United States dominate the TPP agenda, including the timing of any final agreement and thereby risking a premature outcome that potentially allows many sensitive sectors to remain protected — but also, for Japan, US pressure would inevitably mean an inability to negotiate favourable terms for its own entry. As Akira Kojima, Senior Fellow of the Japan Center for Economic Research, observes, ever since the ‘TPP was thrust into the Asia-Pacific limelight by the United States’ announcement in November 2009 that it would seek to join this partnership and strengthen its involvement in the dynamically growing economies of Asia … the TPP talks have proceeded at Washington’s pace.’

One of the most outspoken anti-TPP voices in Japan is Assistant Professor Takeshi Nakano of Kyoto University. He argues, ‘if Tokyo’s hastening of Japan’s participation in the TPP is motivated by a diplomatic stance underscored by the nation’s growing dependence on Washington, negotiating rules beneficial to it would be next to impossible.’ The import of this comment is that Japan could not stand up to the United States in the TPP negotiations.

If Japan joined the TPP, it would be tantamount to signing an FTA with the United States. In fact, the United States has made it clear that its TPP goals ‘exceed’ those of past FTAs. The political arm of Japan’s agricultural cooperative organisation, the Zenkoku Noseiren, reports that information leaked from the 5^th round of negotiations amongst existing and prospective TPP members in Chile in February 2011 suggests that the United States is proposing to include all items without exception on their list of liberalisation of trade in goods. This considerably alarms Japan’s agricultural lobby.

Japanese economic analyst, Mitsuhashi Takaaki, argues that America’s TPP goals amount to an ‘an extreme Japan-US FTA’ that extends well beyond issues of agricultural market access. As he writes, ‘I think an increasing number of readers might be starting to realise that the TPP issue in Japan is not an agriculture issue or an issue for exporting industries such as electronics and cars….The US has a reason for wanting Japan to participate in the TPP. It is very simple and clear. The US wants Japan to abolish non-tariff barriers for the benefit of US domestic employment. That is, the US wants [Japanese] deregulation’. This would amount to gaiatsu for Japanese structural reform, reminiscent of the Japan-US Structural Impediments Initiative of 1989, the 1993 Japan-United States Framework for a New Economic Partnership and subsequent to that, the US-Japan Regulatory Reform and Competition Policy Initiative. In Mitsuhashi’s words, ‘“extreme structural reform” is the real spectre of the TPP’.

The import of Mitsuhashi’s comments is that what the United States is really targeting is access to Japan’s markets for financial and insurance services, made more difficult because of the pending government bill reversing the privatisation of postal operations, which raises the spectre of unfair competition in these markets posed by the government-backed Japan Post Holdings Co. Even more alarming is that the United States is also trying to make liberalisation of investment part of an expanded TPP with a view to participating in the Japanese government’s procurement market. In Mitsuhashi’s view, this would bring about the ‘Heisei collapse of Japan’ rather than the ‘Heisei opening of Japan.’

Aurelia George Mulgan is Professor of Politics at the University of New South Wales, Australian Defence Force Academy.

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2. No breakthroughs in the Australia-Japan EPA negotiations
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In recent talks with Australian Prime Minister Gillard, Prime Minister Kan reaffirmed his government’s commitment to concluding a bilateral free trade agreement (FTA) with Australia and to resuming talks at the earliest possible opportunity.

The Joint Statement by the Prime Ministers of Japan and Australia formally pledged that the ‘two countries would conduct further negotiations leading to a conclusion of a comprehensive and mutually beneficial bilateral FTA/EPA’.

Importantly, the Joint Statement also acknowledged the key link between trade liberalisation and economic growth … It states, ‘The two Prime Ministers recognised that trade and investment liberalisation would be vital to…economic growth in the two countries’. The link between trade liberalisation and economic growth is the most important reason why the Kan administration has adopted a pro-active free trade agenda.

The Kan administration’s ‘New Growth Strategy’ of June 2010 committed it to considering ‘how to pursue economic partnerships with Asian countries and other major countries and regions’, and to creating a Free Trade Area of the Asia-Pacific (FTAAP) by 2020 as a way of incorporating Asian growth.

The ‘Basic Policy on Comprehensive Economic Partnerships’ of November 2010 continued the same narrative, linking Japan’s economic growth to deepening ‘economic relationships with Asian and emerging countries, whose markets are expected to grow, and with Western and resource-rich countries’. At the cabinet meeting that formally decided the Basic Policy, Prime Minister Kan emphasised the importance of trade liberalisation for spurring economic growth. In his view, the policy marked the beginning of a major strategy to create a new prosperity for Japan, one that would ‘definitely bring benefits’.

Recommendations from the party to the cabinet about Japan’s participation in the TPP also acknowledged that ‘entry into the TPP would enable Japan to “tap the Asia-Pacific region’s growth and use it as a catalyst to revitalize its own economy”’.

The Minister of State for National Policy, Gemba Kōichirō, later remarked, ‘Today Japan requires a strategy that will allow it to incorporate the demand arising from the enormous population of the Asian market”. He specifically flagged the relevance of the TPP in February, stating that that ‘“An extremely important vehicle to ensure Japan’s economic growth is free trade agreements. Japanese people should once again look overseas”…adding that it is essential for the country to incorporate the energy of Asian countries to seek growth on its own’.

These statements from the Kan administration implicitly reflect its acceptance of the economists’ creed that trade liberalisation leads to a net gain in economic welfare. More obviously, they reflect the consensus amongst Japanese business organisations and the economic media that it is imperative to harness the forces of trade liberalisation to breathe new life into Japan’s moribund economy. Former chairman of the Japan Association of Corporate Executives (JACE), Sakurai Masamitsu, described his country’s growth strategy as ‘Opening up the country and then welcoming demand from Asia and the world’s growth markets’.

These views also reflect Japan’s growing reliance on trade with Asia. Statistics for 2010 released by the Finance Ministry in January 2011 reveal that 51 per cent of Japan’s total exports and imports are now with the rest of Asia, exceeding 50 per cent for the first time. Japan’s No. 1 trading partner is China, but Japanese companies are also increasingly using ASEAN nations as a base for exporting to countries outside the region.

Yet structural reform of the economy, including agriculture, is not regarded as a means towards economic growth by the Kan administration, nor is structural reform a goal of the DPJ’s increasingly  pro-active free trade policy. As noted elsewhere, the DPJ is simply not the party of structural reform in the agricultural sector. Economic reform only figures in so far as it may be required to facilitate trade liberalisation. In short, the end and means have been reversed: economic reform is now a means towards trade liberalisation.

At most, the government’s plan for agricultural reform envisages some consolidation of farmland, relaxation of restrictions on corporate entry into agriculture and promotion of farm exports. At the same time, the Kan administration is proposing on-going government intervention to support agriculture in order to facilitate trade liberalisation agreements. In particular it envisages the construction of a comprehensive safety net of direct income subsidies to protect all farmers (including inefficient ones) from the downside of increased market access. In Kan’s mind, the safety net is an integral aspect of opening up the country. He declared at a meeting of cabinet ministers involved in FTA policy, ‘It is essential to prepare substantial safety nets on various areas, including agriculture, in opening up our country’. The safety net will in fact impede structural reform of agriculture, although it will make agricultural trade liberalisation more politically feasible.

The switch of ends and means also affects timing. Domestic reforms have to be carried out first, before substantial trade liberalisation can be contemplated, particularly for agriculture. For example, the commitment to promoting EPAs in the Basic Policy is accompanied by a simultaneous commitment to ‘first press ahead with fundamental domestic reforms in order to strengthen the competitiveness it will need for economic partnerships of this kind…. In particular, agriculture is the field most likely to be affected by trade liberalization….the Government of Japan…will first promote appropriate domestic reforms with respect to areas of the agricultural industry’ (emphasis added).

What this means in practice is that there will be no comprehensive market opening before agriculture is sufficiently competitive to withstand it. The envisaged reforms will take 5-10 years to bear fruit, and it will be crucial, therefore, to slow down the pace of tariff reduction so that this process will not leave Japanese farm households exposed.

This approach to agricultural reform and trade liberalisation crucially affects the Kan administration’s ability to conclude FTAs under consideration successfully, including the TPP. The risks are high that the Kan government’s trade policy will end up merely as a statement of rhetorical goals combined with minimalist concessions at the negotiating table.

Aurelia George Mulgan is Professor of Politics at the University of New South Wales, Australian Defence Force Academy.

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3. Can Kan deliver a breakthrough on Japan’s agricultural trade policy?