High Season for LDP-Bashing


By Brian Bremner As Yukio Hatoyama surveys the mad mating dance within the Liberal Democratic Party to replace outgoing Prime Minister Yoshiro Mori, he's in good form. These days, Hatoyama is relaxed, confident, and having the time of his life in Nagata-cho, Japan's Capitol Hill. And why not? The LDP looks like a party in a state of panic, bereft of ideas and possessing a bench about as deep as this season's Chicago Bulls.

Of course, you would expect that from the photogenic and urbane Hatoyama. He's president of the biggest opposition party, the Democratic Party of Japan, which together with its allies hopes to grab control of the Upper House of the Diet in a general election this summer. And at the moment, he's getting a lot of help from an LDP that seems to be in self-destruct mode.

"NOTHING WILL CHANGE." It's not just that the past year under Mori has been almost comical, thanks to over-the-top scandals, diplomatic blunders, and, of course, a nowhere economy that's probably already under the waterline. Now, a four-way LDP race for party president is under way, and Hatoyama is greatly amused by all the policy contortions these candidates are putting themselves through to show voters that they finally have their act together.

Yet "nothing will change," he says, because all the noise about reform is really big party factions trying to gain enough votes to grab the premier's chair and plug their pals into key Cabinet posts, rather than focus on some coherent strategy to pull Japan out of stagnation. Hatoyama thinks he's the man with the plan -- the other guys don't come close. And the public is figuring this out just in time to put the opposition parties in complete control of the government in the next year or two.

Is he right? Well, up to a point. The most likely candidate to prevail in the LDP race is Ryutaro Hashimoto, remembered in Japan as the premier who raised taxes in 1996 as he steered the economy, with a lot of help from the Asian financial crisis, into recession in 1998. Well, he has apologized for that and no longer wants to focus on a big restructuring push until the government secures a real turnaround. Reform-minded LDP types don't much like the guy, who treats underlings and rivals with the subtlety of a scorpion.

Hashimoto is joined in the race by LDP Policy Research Council Chairman Shizuka Kamei, who advocates even more delaying on reform and wants to cut Japan's consumption tax -- in the country with the heaviest debt load in the industrialized world. He doesn't have a prayer. Nor does Taro Aso, the State Minister for economic and fiscal affairs.

TALKING TOUGH. The one guy who could conceivably push the LDP in the right direction is Junichiro Koizumi. He's a pretty intense soul, a big talker on reform, and extremely popular with the public. Koizumi, who quit his party faction, thinks the LDP is heading into political oblivion unless it ditches its penchant for short-term power grabs, revolving-door Prime Ministers, and Cabinets that accomplish precious little.

He wants a tough stance on the banks, thinks some companies ought to go under, and says Japan will never revive without some short-term economic pain. More money should be steered into job training and unemployment benefits. A sensible, clear, and measured plan to do away with Japan's government debt load will make consumers less anxious to spend. His bottom line: Hey, this is manageable. Sure, it won't be fun, but let's get on with life, Japan.

Actually, this isn't that far off from Hatoyama's message. The DPJ chief wants to cut spending 30% over five years by easing out bureaucrats, ending wasteful public-works spending for Japan's overgrown construction-industry complex, and other measures. Will it hurt? Sure, he says, for about two years. But the only way out of Japan's mess, he figures, is to "show a script of reform so we can alleviate the anxiety of the public" about the future.

The fastest way for that to happen would be to combine the reform-minded types in the DPJ with like-minded souls in the LDP into a government that believes in change. Koizumi is flirting with the idea as a way to build up his profile or perhaps signal his threat to the LDP hierarchy. That was the gambit of Koichi Kato, another LDP reformer who supported an opposition-led no-confidence vote last November and then lost his nerve at the last second.

WEAK-KNEED. Hatoyama views any cohabitation with the LDP in power as a cynical and unholy alliance. Yes, he would love to join forces with the reformers within the party, but they will have to cut all ties first. "If they have the courage to jump out, we will cooperate," he says. Too bad it will probably take a massive LDP defection to make that happen. A lot of those pols don't have the guts to make the leap.

Make no mistake: Hatoyama likes the opposition's chances in any event. And the LDP will probably lose control of the Diet's Upper House, unless there's a miraculous economic recovery in the next three months or a sudden outbreak of enlightened thinking inside the ruling party. But then what happens? Probably, a lot of policy gridlock that Japan can no longer afford. It's not a pretty picture. Bremner, Tokyo bureau chief for BusinessWeek, offers his views every week in Eye on Japan, only for BW Online


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