Most analysts had thought this quarter would begin with the dissolution of the Lower House of the Diet and elections, but Prime Minister Aso Taro put off the election with the hope that additional economic stimulus measures would translate into increased support for his ruling Liberal Democratic Party.  The stimulus package helped a bit, but Aso received a real boost when Ozawa Ichiro resigned as opposition leader in May due to a funding scandal.  That boost in the polls quickly evaporated when Ozawa was succeeded as head of the Democratic Party of Japan by Hatoyama Yukio.  Revelations that an aide had falsified his political funding reports for several years tarnished Hatoyama’s image, but did not help Aso and the government raise their support rate beyond the low teens in many polls.  As a result, most analysts continued to predict a victory for the DPJ in a general election expected in August and uncertainty continued hanging over the U.S.-Japan relationship because neither political party in Japan is likely to win a landslide – meaning another year or more of parliamentary gridlock.

Japan’s political mess did not get in the way of close U.S.-Japan coordination in response to a series of North Korean provocations, including missile tests and the detonation of a nuclear device.  President Obama also made progress in nominating key personnel to guide the U.S.-Japan relationship including the nomination of attorney John Roos for ambassador to Japan and the confirmation of Kurt Campbell as assistant secretary of state for East Asia and Pacific affairs.  The quarter came to a close with the U.S. Congress gearing up for a budgetary battle with the Obama administration over the future of the F-22 stealth fighter, which the Aso administration has said it wants to buy, and Secretary of Defense Gates has said he does not intend to sell.

Fluid politics

Neither a steady flow of discouraging economic statistics, an average approval rating close to 20 percent, nor mounting criticism from his own party led Prime Minister Aso Taro to dissolve the Lower House of the Diet and call a general election required by the end of September.  Rather, Aso continued to promote his government’s efforts to stimulate the economy and instructed his Cabinet to develop the third in a series of stimulus packages introduced since the onset of the financial crisis.  This latest measure, passed by the Diet in May at a price tag of approximately $150 billion or 3 percent of GDP, did little to improve his standing in the eyes of the public.  Aso was then beset by a series of problems that hurt his approval rating.  He was criticized for being indecisive after a drawn-out spat with his interior minister, who wanted to dismiss the head of the postal service for questionable real estate dealings and eventually resigned after Aso refused.  Other developments also damaged public perceptions of the Aso administration, including allegations of illegal campaign donations against Finance Minister Yosano Kaoru and the resignation of a deputy Cabinet secretary for purportedly visiting his mistress with a free train pass issued to lawmakers.  Concerns about the image of the Liberal Democratic Party (LDP) even prompted party leaders to invite comedian-turned-governor Higashikokubaru Hideo, a telegenic figure of the Koizumi mold, to run in the general election, though many within the LDP denounced the offer as desperate.

Luckily for Aso, the Democratic Party of Japan (DPJ) had its own image problems. DPJ President Ozawa Ichiro resigned on May 11 due to mounting public frustration over the arrest of his chief aide for allegedly accepting illegal donations from a construction company.  Though eager to realize his vision of destroying the LDP as head of the opposition, Ozawa stepped aside in the name of “solidarity” and opened the door for another leader to mobilize the party for the next election.  He was succeeded by his preferred candidate – DPJ Secretary General Hatoyama Yukio, the grandson of a former prime minister – who defeated rival Okada Katsuya 124-95 in a vote among DPJ Diet members.  Polls showed Okada as the more popular public figure but members of Parliament reportedly chose Hatoyama for his ability to manage internal divisions that have consistently precluded the DPJ from articulating a coherent policy blueprint.  Hatoyama has endorsed offbeat ideas in the past, like the proposal to establish a “no bases alliance,” but he is now seen as a pragmatist who supports the U.S.-Japan alliance.  Still, he could face pressure to implement at least some elements of a DPJ manifesto that includes calls to reduce host nation support for U.S. forces and renegotiate the status of forces agreement between the two governments.  The extent to which Hatoyama acts on the party’s “equal alliance” rhetoric as prime minister could depend in large part on whether he has to form a governing coalition with socialist parties.

Aso and Hatoyama have previewed themes for the upcoming election campaign that have focused primarily on the economy.  They debated each other twice in the Diet with Aso stressing the urgency of economic stimulus and Hatoyama accusing the LDP of wasteful spending.  Hatoyama criticized government references to future tax increases but Aso countered by challenging him to explain how the DPJ would pay for its own $218 billion stimulus plan built around social welfare spending.  (The DPJ later backtracked and cut some spending proposals.)  Hatoyama developed a comfortable lead in public opinion polls toward the end of the quarter (a June 15 survey by Kyodo News had Hatoyama favored over Aso by 50 percent to 21 percent) but will likely face intense scrutiny after admitting on June 30 that one of his aides had listed deceased individuals as donors on funding reports dating back to 2005.  This revelation could neutralize Hatoyama’s efforts to move beyond the Ozawa scandal and reestablish momentum for the DPJ.

Aso is expected to dissolve the Lower House in mid-July and call an election for August.  A convincing DPJ victory would solidify its strength in the Diet after having won control of the Upper House back in 2007.  Another scenario involves the DPJ falling short of the two-thirds majority necessary to control the legislative agenda, thus requiring a coalition government.  The LDP is likely to take a hit regardless and would have to form an even larger coalition to stay in power.  The outcome is uncertain but political paralysis could persist until the next Upper House election in 2010.

For its part, the Obama administration demonstrated patience, demanding little in terms of military support for Afghanistan and continuing to send signals that Japan is the “cornerstone” of U.S. relations in Asia (in the words of Secretary of State Hillary Clinton).  However, questions about the health of the relationship in this period of political flux in Tokyo did come to the surface in the U.S. Congress, where the House International Affairs Committee held hearings on “Japan’s Changing Role” on June 25.  The witnesses, Joe Nye, Kent Calder, Arthur Alexander, and Mike Green (co-author of this report) all stressed the challenges caused by the fluidity in Japanese politics and the ongoing economic crisis, but reaffirmed that the Obama administration’s vote of strategic confidence in Japan was well placed.

North Korean provocations

On April 5, North Korea tested a long-range missile that flew over Japan, triggering a flurry of bilateral coordination and multilateral diplomacy over how best to condemn an action that was clearly in violation of United Nations Security Council (UNSC) Resolution 1718, passed in 2006 after North Korea tested a missile and a nuclear device.  The U.S. and Japan worked closely in anticipation of the launch and the government of Japan mobilized its missile defense system for the first time, presenting an opportunity to advance cooperation and interoperability with U.S. forces.  (Japan was on the UNSC, ensuring a central diplomatic role on the issue.)  With the exception of a statement by U.S. Special Envoy Stephen Bosworth suggesting that the U.S. would resume efforts toward dialogue with Pyongyang “once the dust settles,” the Obama and Aso governments sent consistent messages regarding the consequences of any missile test: increased isolation.  After the launch, Japan pushed for a new UNSC resolution with the support of the U.S. but could not prevail due to Chinese objections, yielding a short statement of condemnation from the president of the Security Council after a week of negotiations.

North Korea upped the ante by testing a nuclear device on May 25 but failed to create any daylight between Washington and Tokyo.  On May 30, Defense Secretary Robert Gates and Defense Minister Hamada Yasukazu met their South Korean counterpart for a trilateral defense ministerial meeting, the first of its kind, on the sidelines of a security conference in Singapore.  Deputy Secretary of State James Steinberg then led a delegation to Tokyo, Seoul, and Beijing for consultations.  On June 7 in an interview with ABC News, Secretary of State Clinton suggested that the Obama administration might consider reinstating North Korea to the list of state sponsors of terrorism, music to Tokyo’s ears after a decision last autumn to rescind that designation caused tension in the alliance.  The two governments worked assiduously to negotiate the parameters of UNSC Resolution 1874, passed on June 13, which called on member states to impose additional sanctions against North Korea and support maritime interdiction efforts to prevent proliferation.  Though the measures listed were nonbinding, the U.S. and Japan could point to resolution 1874 as a unified response to North Korea’s actions focused on punishing the regime.  President Obama’s public comments on this matter, amplifying a decision by his administration not to reward North Korea for its provocative behavior, proved reassuring for Japan, which in recent years stood alone in its steadfast opposition to any concessions absent concrete steps toward denuclearization (and a resolution of the abductee issue).

Developing a bilateral agenda

A broad agenda for bilateral cooperation also was taking shape including nuclear disarmament in general.  President Obama’s April 5 speech in Prague was well received in Japan, and Foreign Minister Nakasone Hirofumi outlined an 11-point plan for global nuclear disarmament on April 27, emphasizing nonproliferation and the peaceful use of nuclear energy.  (Privately, senior security experts within the Japanese government also asked Washington to keep a focus on missile defenses and the credibility of extended U.S. nuclear deterrence.) Treasury Secretary Timothy Geithner and Finance Minister Yosano met on the sidelines of a G8 preparatory meeting in Italy to outline a common approach to implement financial sanctions against North Korea and discuss measures the two countries were taking to recover from the financial crisis.  Japan and the U.S. led a commitment to development by each pledging $1 billion in aid to Pakistan at a donors conference in Tokyo.  Climate change also featured prominently as Japan announced a midterm emissions reduction target and the U.S. House of Representatives passed legislation including reduction targets and an outline for a cap-and-trade system.

After months of speculation and anticipation by the Japanese media, President Obama announced his nominee to manage bilateral coordination as ambassador to Japan: attorney John Roos of California.  Roos endorsed Obama early in the presidential campaign and was a core fundraiser.  Though not previously known as a figure in the U.S.-Japan relationship, Roos is expected to benefit from a close relationship with the president in the way that his predecessor, Tom Schieffer, did with President Bush.  Other key personnel including Wallace Gregson, assistant secretary of defense for Asian and Pacific security affairs, and Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, were confirmed this quarter, rounding out a solid team of officials focused on U.S.-Japan relations.

Defense appropriations

On April 6, Defense Secretary Gates announced recommendations for 2010 defense appropriations including his conclusion that the Pentagon should shut down the production line for Lockheed Martin’s F-22 stealth fighter, which Japan covets but cannot acquire due to U.S. law prohibiting the sale of such technology to foreign countries.  However, committees in the House and the Senate voted to add funding to the defense authorization bill for additional F-22 fighters, setting up a potential showdown with the Obama administration.  The House version of the bill included appropriations for materials to build 12 F-22s in 2011 but did not include procurement funds for the planes, while the Senate version did include such funds for seven planes in 2010.  Both houses also called on the administration to produce a report on a possible export model of the F-22.  The Office of Management and Budget recommended that President Obama veto any bill that includes funding for the F-22 but a veto threat is not imminent as the House and Senate must first reconcile the differences between their bills in conference, a process that could extend into fall.  The Japanese government watched these developments closely, as the Japan Air Self-Defense Forces and Prime Minister Aso have continued pushing the F-22 as a strong candidate for Japan’s next-generation fighter, despite Pentagon decisions that the jet would not be available for export anywhere.

Coming up: summits and elections

Prime Minister Aso will likely confer with President Obama during the G8 Summit in Italy.  The Tokyo Prefectural Assembly election is scheduled for July 12 and widely considered a bellwether for the next Lower House election, which could follow in August.  The United Nations General Assembly in September presents another opportunity for bilateral coordination.