Japan Tries (Yet) Again

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Japan Tries (Yet) Again

Yoshihiko Noda takes office at the most crucial time for Japan in half a century, says Michael Auslin. But with lacklustre public support, he has his work cut out.

Japan’s battered ruling party has just elected its third leader, and hence prime minister, in as many years. Yoshihiko Noda, who has been serving as finance minister for the past year, will take over from Naoto Kan, whose muted response to the devastating March 11 natural and nuclear disaster doomed his premiership.

It’s bad news for Noda that word of his selection was greeted with lacklustre support among the public, while the ruling Democratic Party of Japan is also slightly behind the opposition Liberal Democratic Party in an opinion poll this week by the Yomiuri Shimbun. That shouldn’t cheer the LDP, however, for both main parties received less than a quarter of public support, while nearly half the polled electorate favoured no party at all.

This is Noda’s most important challenge: an apathetic citizenry that has lost faith in its leaders and whose demand for competent leadership from the DPJ has been dashed by the failure of former prime ministers Kan and Yukio Hatoyama. Without public support, it would be hard for any prime minister to rally and unify the party and take on the obstructiveness of the LDP in the Upper House, where they hold the most seats. If he’s no more successful than his predecessors, then Noda’s premiership promises to be brief and bitter, perhaps leading to the end of the DPJ as the majority party.

Still, Noda has some strengths that he should capitalize on. First, he’s a decade younger than Kan, and thus is the closest the DPJ has had to a generational change. He straddles party elders, such as disgraced founder Ichiro Ozawa and Kan and Hatoyama, as well as such young turks as former foreign minister Seiji Maehara, who competed for the DPJ presidency, but lost in the first round. Noda is 54 years-old, and is from the first generation of non-LDP politicians to come to power after the LDP first lost national power in 1993.

Noda is, therefore, able to portray himself as a genuine reformer, even though he has been in office for nearly two decades. Of course, Kan also was a non-LDP reformist politician, but that didn’t help him in the party. Noda will have to do better at melding reformist instincts with practical policies. His signature populist effort was meeting constituents every day at train stations in his district, located close to Tokyo. Winning the trust of Japanese by being both open and competent is his biggest challenge.

Second, he has been directly involved in dealing with Japan’s economic problems for the past two years as deputy finance minister and then as head of the ministry. Noda was among the first politicians to publicly warn about Japan’s staggering public debt, calling it unsustainable. His colleagues didn’t heed his words when it came to cutting the 225 percent debt-to-GDP ratio, and last week, Moody’s lowered Japan’s credit rating to Aa3 – three notches from the top. Faced with massive reconstruction bills, which may total $250 billion in government spending following the March 11 disaster, Noda is keenly aware of the fiscal hurricane facing Japan, and may have the authority to deal with it.

However, he has also taken the most controversial position among the contenders for the DPJ leadership, proposing doubling the national sales tax to 10 percent over the next several years. In a Japan that has seen flat income for over a decade, and in which the savings rate is steadily declining, any increase in taxes on consumers may be politically dicey. Noda will have to combine his taste for revenue enhancement with significant budget discipline to make it seem like he has a long-term plan for restoring Japan’s fiscal balance.

Finally, Noda has a realistic view of foreign and security policy. Regarded as a strong supporter of the alliance with the United States, Noda may be the man who can settle relations with Washington after two years of strain started by Hatoyama. While daily working relations have continued, there has been little high-level discussion between the two sides, due to an ongoing inability on the part of Tokyo to implement a 2006 agreement to move a US Marine Corps air station out of a congested area on Okinawa to a more remote location in the north of the island. Moreover, Noda has warned about China’s military build-up, which threatens to create more uncertainty in a region already rife with territorial disputes. Clearly implying that Japan has a major role to play in maintaining regional stability, Noda has argued for forthrightly acknowledging that the Self Defense Forces are a proper military, an arcane but controversial point in Japanese society.

Yet Noda also faces significant obstacles, perhaps the most important from his own party. He wasn’t a unanimous choice, and his main opponent, Trade Minister Banri Kaieda, was supported by party heavyweight Ozawa. This means that Noda may have to spend much of his time managing factions within the DPJ and not dealing with pushing through policies from a united party. Nor has the DPJ’s long-term generational conflict been resolved. Still waiting in the wings are Maehara and current Chief Cabinet Secretary Yukio Edano, both in their 40s, along with other young members, such as Goshi Hosono and Akihisa Nagashima, all of whom have been gaining public attention lately. Noda may wind up being a transitional figure between the DPJ members that will lead the party for the next several decades and the elders whose failed policies and political scandals have eroded public support so dramatically.

One thing is clear, though. Noda takes power at the most crucial moment for Japan in nearly a half-century. Its economy is threatened, its export industries are looking to leave the country, its population is demoralized, and it faces a largely confident, seemingly unstoppable regional challenger in China.

Japan’s role as a bulwark in the international economic system and a crucial member of the US-led liberal bloc remains as needed as ever. It must repair its problems at home, not least so that it can play a more significant and positive role abroad. Noda should therefore have the moral support of everyone watching Japan.


Michael Auslin is a Resident Scholar in Asian and Security Studies at the American Enterprise Institute and also directs the Japan Studies programme.