The Liberal Democratic Party (LDP) was defeated in the July 29 Upper House election and lost its majority to a coalition led by the Democratic Party of Japan (DPJ).  Abe Shinzo vowed to stay on as prime minister despite calls for his resignation, reshuffling his Cabinet in late August and then continuing diplomatic initiatives in meetings with President George W. Bush and others at the APEC summit in Sydney.  However, presented with news from his doctors that his ulcer-related health problems were now chronic and facing intractable opposition from DPJ leader Ozawa Ichiro to an extension of the government’s counterterrorism law in support of Operation Enduring Freedom, Abe suddenly resigned a week after the Sydney summit.  The quarter came to a close with Fukuda Yasuo succeeding Abe and vowing to forge ahead with economic reforms and strong support in the war against terror.  But Fukuda only has three months to win back public support as the Diet could deadlock during contentious budget negotiations early next year, forcing an election for the more powerful Lower House by the spring.  Such a showdown seems likely, given Ozawa’s pledge of a no-holds-barred fight to destroy the LDP.

Power shift in the Upper House

The LDP won only 37 of the 121 contested seats (half the total) in the Upper House election and lost 27 seats, consequently ceding its majority to a coalition led by the DPJ.  The opposition took advantage of a debacle involving the pension system (the government admitted to having lost 50 million pension records), and a series of corruption scandals and gaffes by Cabinet members, all of which led to damaging questions about Abe’s leadership among the press and public.  The DPJ tried to portray Abe as being out of touch with the concerns of citizens and gained support not only in urban districts but also in the rural areas that had been typical strongholds of the LDP.  Ozawa was masterful in running strong candidates and highlighting resonant themes in the rural LDP strongholds, but whether a victory against an inexperienced Abe in the less influential Upper House can be translated into longer-term support for the DPJ remains to be seen.  A Mainichi Shimbun poll dated Sept. 14 showed that 43 percent of the public wants the DPJ to win the next general election while 39 percent stuck with the LDP.  Another poll by Yomiuri Shimbun released Sept. 10 revealed a 29 percent public approval rating for the LDP and a 21 percent approval rating for the DPJ.  Ozawa has urged his party to introduce numerous bills in the current Diet session to convince the public that the DPJ is not merely an opposition party capable of criticizing the LDP but one that is fit to govern.  Switching to a proactive offensive strategy has never been easy for the DPJ, which has always lacked internal cohesion over security and economic policies.

Exit polls conducted by Yomiuri and Nippon Television after the Upper House election revealed frustration with Abe’s inattention to economic matters.  When asked to rank their priorities, respondents listed the pension system first, followed by business conditions, income disparity between urban and rural areas, a general wealth gap, fraudulent accounting by politicians (recent scandals), and education.  Some of the analysis, particularly in Western media, tended to stress public discomfort with Abe’s nationalist agenda – a New York Times editorial Aug. 1 argued that voters were bothered by “the feeling that reviving military spirits was all Mr. Abe cared about” – but the economy appears to have trumped other concerns.

Abe stays; Ozawa attacks

The Upper House election had no direct Constitutional bearing on Abe’s fate – the more powerful Lower House selects Japan’s leader – but calls for Abe’s resignation emerged as soon as the results became known.  Abe defiantly refused to step down after a few key LDP leaders expressed support and instead vowed to continue pushing his agenda and implementing reforms.  He reshuffled his Cabinet Aug. 27 and installed veterans in key posts to reassure the public of his competence.  Polls showed they liked what they saw and Abe’s approval rating increased to around 40 percent from a pre-election low of 29 percent.  One thing Abe could not change, however, was the LDP’s minority status in the Upper House, and Ozawa seized an opportunity to paint Abe into a corner by opposing legislation with potential foreign policy implications.  It also appears that Abe’s health problems may have sapped his readiness for a showdown that senior LDP politicians, including his predecessor Koizumi Junichiro, thought he could win.

The opposition’s main target in the Upper House was extension of the Antiterrorism Special Measures Law (SML), first passed in 2001, which enables Maritime Self-Defense Force vessels to participate in refueling operations in the Indian Ocean in support of Operation Enduring Freedom and stands as symbol of Japan’s readiness to “show the flag” in the war on terror.  The legislation is set to expire Nov. 1 and while the Lower House can override any Upper House vote by passing legislation a second time with a two-thirds majority, the Upper House can delay a vote on any legislation forwarded by the Lower House for up to 60 days.  Ozawa’s stance would essentially kill the bill absent a major compromise.

U.S. Ambassador to Japan Thomas Schieffer encouraged Ozawa to support the legislation during a meeting at DPJ headquarters on Aug. 8, but to no avail. Ozawa publicly criticized Operation Enduring Freedom before the assembled media, declaring “the U.S. started this war unilaterally without waiting for a consensus to be built in the international community,” confusing Afghanistan with Iraq. While Ozawa was criticized within the DPJ and internationally for putting Japan’s reputation at risk, he stood firm in the knowledge that the crisis could undo the LDP.

Abe was forced to make the case for the bill in the Diet and then tried to revive his standing by using the APEC summit in Australia to showcase his strengths in other areas of international diplomacy.

Bush-Abe at APEC

Abe continued his push for close ties with “like-minded” nations by elevating the U.S.-Japan-Australia Trilateral Security Dialogue to the leaders’ level in a meeting with Bush and Prime Minister John Howard in Sydney.  Abe and Bush also met separately to discuss the Six-Party Talks, Iran, energy security, climate change, and the situation in Iraq.  Bush used a photo opportunity after the meeting to praise Japan’s role in the war on terror, and Abe, in turn, promised to ensure Japan’s continued participation in the Indian Ocean refueling operations.  Abe went one step further in a separate session with the Japanese press, stating that he would step down if the extension of the SML did not pass.  Given the intractability of Ozawa, this was an early indication that Abe might not tough it out as originally thought.

Fukuda replaces Abe

Political observers saw that Abe’s new Cabinet helped his standing and expected that a strong address to the Diet on Sept. 10 might help him sustain public support through to next year’s G-8 Summit in Hokkaido. In his Diet speech, Abe made a strong case for extending the SML, but actions by the LDP Diet affairs managers on the ground indicated that the government had little confidence that the measure would overcome Upper House opposition in time to pass this year.  Two days later, an exhausted Abe appeared at a hastily arranged news conference to announce his resignation, stating that “the people need a leader whom they can support and trust.” Ozawa immediately criticized the decision, noting that Abe was scheduled to answer questions in the Diet that day, and repeated his steadfast opposition to the SML.  Abe was hospitalized Sept. 13 and diagnosed with abdominal pain caused by stress.

The LDP quickly settled on Sept. 23 as the election date for party president. Aso Taro, foreign minister under both Koizumi and Abe (and moved temporarily to the powerful LDP secretary general position in the Aug. 27 Cabinet reshuffle) was initially thought by many to be the logical successor to Abe, given that his popularity had always been next highest. But Abe’s former boss as chief Cabinet secretary under Koizumi, the mild-mannered Fukuda Yasuo, quickly emerged as the party’s choice to re-establish public trust in the government.

Fukuda won the LDP presidential election Sept. 26 and immediately set the tone: Koizumi’s reforms and strong alliance with the U.S. would continue, including a push for the SML, but the subtext was that Fukuda would be less ideological and more inclusive.  Fukuda took office on Sept. 26, retaining 13 of 19 Cabinet members from Abe’s late-August reshuffle. Machimura Nobutaka, foreign minister in Abe’s second Cabinet and in previous administrations, was named LDP secretary general. Komura Masahiko, also former foreign minister and defense minister in the second Abe Cabinet, was named foreign minister. Ishiba Shigeru, a former director general of the then-Japan Defense Agency, was named defense minister. All three are veterans tasked with handling the opposition and, especially in Ishiba’s case, ushering the SML through the Diet.  They are also well known in Washington.  Fukuda himself enjoys a strong reputation among those who remember him as the man who pulled together Japan’s response to the Sept. 11 terrorist attacks for Koizumi.  Fukuda’s proven competence and pledge to work on the growing income gap and the pension crisis resonated with the public and his new Cabinet received a 57 percent public approval rating according to a Yomiuri poll on Sept. 27.

That same poll revealed 47 percent public support for the extension of the SML, a slight increase from earlier surveys, signaling a possible split on this issue.  Fukuda pledged in his opening Diet address to press for passage of the SML and to compromise with the DPJ if necessary to do so.  Ozawa’s public stance has not changed, but within the DPJ, pro-defense members like Maehara Seiji and Nagashima Akihisa steadily expanded support for a compromise with the government that would allow Japan to “show the flag” in the war on terror. Still, Ozawa’s position in the DPJ remained strong, given his performance for the party in the Upper House election, and a showdown over the SML and other economic issues still seems likely as the Diet calendar is dominated by budget issues next year.  By the end of September, political analysts in Tokyo were predicting a spring election to settle the fight once and for all.

Looking ahead

Abe’s resignation introduced turmoil into an already tense political environment in Tokyo, and Fukuda has the unenviable task of getting a key piece of legislation passed while facing an unrelenting opposition and a public that is frustrated with political leadership and concerned about bread and butter economic issues. Ozawa and the DPJ will make Fukuda’s life difficult and work to strengthen their own public image looking toward a desired transition from opposition to majority.  The DPJ has never successfully made that transition in the past, but Ozawa thinks this is its chance.

The next quarter could feature a visit to Washington by Fukuda to either celebrate the extension of the SML or reassure his counterparts that Japan will sustain its global leadership role in other ways.  The alliance will be tested as the two governments begin to negotiate a renewal of the host nation support agreement that covers billions of dollars of costs for U.S. forces in Japan. Fukuda has pledged to be more flexible on negotiations with North Korea, but prospects for movement on phase two of the Feb. 13 Six-Party Talks agreement mean that Washington may move toward lifting terrorist-related sanctions on North Korea that Tokyo had wanted in place until the Japan-DPRK abductee issue is resolved.  Fukuda will have to manage Japanese public opinion on that issue while keeping his pledge to Washington that he will be more flexible.  On the economic front, there are fears the LDP might return to the old pump-priming, but Fukuda has been clear that he will not make the budget situation worse.  He has even advanced the unpopular idea of raising the consumption tax again to offset declining revenue from income tax caused by Japan’s changing demographics.  Movement on that front is sure to draw fire from the DPJ.   Fukuda will also have to coordinate other complex issues with the U.S., including Burma, where neither U.S. sanctions nor engagement by Tokyo has engendered change. Bilateral coordination on a new international approach combining carrots and sticks could begin to take shape and send a strong signal about the positive role of the alliance in Asia. The two governments could also address Iran as it refuses to halt uranium enrichment and attempts to weaken the solidarity of the international community.