And Just How Bad Was it for the DPJ?

Bad. Actually, very, very bad. While the DPJ managed to just pip the Japan Restoration Party for second place with 57 seats (down from 308), the “third pole” parties still did overall quite well with the JRP getting 54 and Your Party getting 18, for a total of 72.

Thus we have the governing parties of the LDP (294) and Komeito (31) with 325 seats, the “centrist” DPJ with 57 seats, the “third pole” with 72 seats, and the “left,” collectively made up of the Japan Future Party (9), the Social Democratic Party (2), the Communist Party (8), and New Party Daichi (1) with 20 seats. Perhaps most telling is the number of current  (7) and former members of DPJ cabinets (10) that lost not only their SMD seats but did not even make it back into the Diet on the PR list (17 in total!). That said, whether it be Okada, Hosono, Edano or Maehara who takes over, many of these people will not be missed by them as they rebuild the party, if that is even possible.

 Current ministers in the Noda cabinet:

Mitsui Wakio, Minister of Health, Labour and Welfare

Kodaira Tadamasa, Consumer Affairs

Jojima Koriki, Finance

Nakatsuka Ikko, Financial Services

Tanaka Makiko, Education

Fujimura Osamu, Chief Cabinet Secretary

Tarutoko Shinji, Internal Affairs

It cannot be often that both the sitting finance minister and chief cabinet secretary, considered to be two of the top four jobs in the cabinet, lose their jobs outright.

Previous Ministers:

Hachiro Yoshio, METI (Mr “I’ll give you radiation”)

Kano Michihiko, Agriculture (anti-TPP ringleader and thorn in both Kan and Noda’s side)

Hosokawa Ritsuo, Health, Labour and Welfare

Tanaka Keishuu, Justice (Quit after connections to the Yakuza were revealed)

Komiyama Yoko, HLW

Kawabata Tatsuo, Internal Affairs

Hirano Hirofumi, Chief Cabinet Secretary (Hatoyama cabinet – widely considered to be incompetent)

Hiraoka Hideo, Justice (appointed someone with a criminal record to be his secretary)

Sengoku Yoshito, Chief Cabinet Secretary (Accused of sexual harassment, responsible for the Senkaku debacle by pressuring prosecutors to release the captain, etc)

Matsumoto Ryu, Environment (Abused two Tohoku governors after the tsunami, threatened a journalist, then blamed it on his Kyushu background and his blood type)

Not too many of the people from the second list will be missed.

Notable DPJ members who were “revived” on the PR list after losing their SMD seats include former PM Naoto Kan and Noda’s DPJ leadership run-off rival Kaieda Banri.

The LDP and Issue Avoidance

Michael Cucek, while agreeing with the general thrust of my previous post on the changing electoral composition in Japan, questions whether my suggestion is likely to implemented in reality. To be sure, the likelihood of anyone seeing sense as I described it is indeed small. Nevertheless, I think pointing out that when the Diet reconvenes early next year, taking an axe to the PR component of the current electoral system will be the exact wrong strategy for all parties except for the LDP, has some merit. One can only hope that the DPJ in particular realizes this, as ultimately Abe’s promise to undertake a fuller reform of the House of Representatives was made to the DPJ and it is up to them to make the running on this issue.

If the opposition parties collectively were more focused, then they could well force more out of the LDP than MTC lets on, however. If (that word again) Abe is smart he will spend the first regular Diet session of next year focusing on economic issues and avoiding any moves on the more controversial issues such as changing the constitution or the interpretation of the right to collective self-defense. Abe needs to build political capital before he can spend it. The issue of timing regarding pushing forward on constitutional reform is ultimately in Abe’s hands. The goal should be to make it to the House of Councillors elections with as little drama as possible and again use the House of Councillors electoral math to put the LDP in a strong position to take back the house as the uninspiring default option.

Two issues that will likely need to be progressed one way or another in the next Diet session are the electoral reform bill as promised to the DPJ, and a final decision on the TPP. A decision on the TPP will not wait much longer. First, the general perception in Washington according to one high-level proponent of the TPP in a conservative DC thinktank I spoke to last week is that the TPP will live or die in 2013 one way or another, in contrast to the RCEP, which will be slower but more “sustainable” in terms of the process. This seems like a reasonable insight. Another reason why Abe will be faced with a decision is that expectations are high in Washington itself that Abe will actually bring the Japanese electorate around and, in the words of the aforementioned thinktanker (not Michael Green), “betray the people” if need be in order to bolster the US-Japan alliance (that said, the public has been for some time somewhat in favour of joining the TPP).  There is a small chance Abe may be able to put off a decision until immediately after the House of Councillors election, where the vote disparity is almost 5:1 in favour of rural districts, but the window will be very small. This kind of thinking is probably optimistic on the part of DC crowd, but on the other hand I would not rule it out.

How Abe will deal with his promise to the DPJ will depend on how aware of its own viability the DPJ is in terms of its long-term prospects for political influence. The only hard and fast rule of the promise to Noda is that there needs to be a reduction in the number of Diet members in the Lower House. The issue of how they are elected was not directly touched upon although the DPJ could argue that as they included it in the bill that was rejected when Noda extracted the promise from Abe, then Abe implicitly promised to consider this issue as well. If the LDP takes not much more than 30 percent of the total PR vote, and wins as resoundingly as many are expecting in terms of actual seats gained – all on the back of an unconstitutional election which treats large swathes of the electorate as less than half a citizen – then the opposition parties will be more than justified making a lot of noise about how the HoR not only needs to be reduced, but also needs to be dramatically reformed. MTC may be right in pointing out that the LDP will be extremely hostile to any changes to the electoral system, but on the other hand, will it be the price for political peace in the lead up into the House of Councillors election? The opposition parties if they were smart, should make it so. Where I agree with MTC is that the DPJ probably has little awareness about what its actual interests are. Much like on September 16, 2009.

This could ultimately be all up to Abe. Will he learn the correct lesson from his first time in power, and for that matter from Hatoyama and from Kan’s strategic blunders in terms of issue selection, and choose the right issues to address first?

What Will Noda Be Up to in Moscow?

I’ve been having minor disagreements with MTC of late (by clogging up his comments section) regarding the coherence of the Noda administration’s approach to the current political situation and what they hope to get out of it. Long story short – MTC sees Noda as still having a few cards to play, while I am more inclined to agree with LDP Secretary-General Ishiba Shigeru (日) that whatever game he is playing, it is futile and will probably lead the DPJ to even worse results than it currently faces. Minister of Education Tanaka Makiko’s somewhat abrupt, misdirected crusade against ‘poor quality universities’ by picking on three due for accreditation next year, will likely consolidate Noda’s fate unless Ms Tanaka has become less stubborn since her last stint as a minister and retracts her comments, preferably by yesterday. (See Jun Okumura here for reflections with which I concur). It certainly will give LDP leader Abe Shinzo a lot of timely ammunition (日) given that he himself would have seen Tanaka’s “interesting” behaviour up close while he was Deputy Chief Cabinet Secretary during the first Koizumi cabinet.

I have however held in the back of my mind one potential exception that could actually genuinely help Noda raise his image – that exception being a “December surprise” in regards to Noda’s visit to Russia. In the middle of this year’s APEC meeting near Vladivostok, against the backdrop of Russia’s pronouncement that it wanted to conduct a pivot of its own to the Asia-Pacific, President Putin invited Noda to visit again later in the year suggesting something ‘substantial’ could be discussed. Over the last few months there has also been more diplomatic activity than normal around Russo-Japanese relations, and I have noticed a little more interest in Russia among Japanese observers of Japan’s foreign policy.  Japan reacted with atypical calm to Russia sending a warship to the Kuriles during the height of tensions with China over the Senkakus in 2012, especially given former PM Kan’s 2010 outburst regarding Medvedev’s visit to the Kuriles (to be sure likely an overcorrection given the 2010 Senkaku dispute had taken place not long beforehand exposing Kan’s lack of foreign policy nouse, and for that matter, interest). Now that Putin is safely entrenched for another 8 years now would indeed be a good time to start to work on a long-term foreign policy agenda. Assuming a degree of Japanese diplomatic flexibility that, without China’s recent indiscretions, would probably normally not be forthcoming, it would seem the stage is being set for an interesting December meeting.

Is this what Noda could be holding out for? Is this why (or one of the reasons) the LDP is so urgent to have an election this year (or have Noda commit to one before he gets on a plane to Russia)? Will there be significant announcements regarding political commitments to resolve the Kurile Islands dispute and strategic alignment on energy policy?

So I have wondered anyhow.

This comprehensive piece by a former Indian diplomat to the Soviet Union would suggest there might be something to this line of thought.

Ultimately, Japan may be of great assistance for Russia’s desire to soft balance against China and its influence in the Far East by inserting itself into Asia. Japan certainly has assisted India’s being drawn into the East Asian diplomatic fold over the last 5 to 10 years after its “Look East” policy started to take effect. Like for India, access to Japanese finance and technology could also help drive a degree of economic upscaling and development.

Whether any big announcement, if it comes to fruition, will really have any impact on Noda’s fortunes is unclear. As it is, foreign policy usually has only a fleeting command over any public’s imagination and mostly it is something that only subtracts from popularity, not enhances it, as Hatoyama and Kan have already learned. To be sure a big announcement may well have had an impact earlier in Noda’s tenure. However it would seem with Noda now having dipped to 17 percent support, after having already risen and fallen a few times, the public will be indifferent to anything but the most startling positive developments.

I don’t believe the Russians are going to be quite that accommodating.

Update: Former PM Mori is preparing to go to Moscow.

Which Party Will Sit Out 2013?

It is generally accepted that we are moving closer to an election, but that is all we know. In fact, we may not even know that. Noda has been at his evasive best saying one thing (yes, yes, election soon), but intimating another – at the recent APEC he said to Putin that he was keen to visit to discuss issues of “historic” importance. My rational side says nothing much will come of it, but sounds like as good a reason as any to put off an election. Who knows – maybe Noda has a “Nixon goes to China” card up his sleeve.

Nevertheless the punditry has begun, mainly because we now know that Hashimoto Toru’s party (Japan Restoration Association (Party) or JRA) will be competing in the next lower house election, and has secured seven current MPs, thereby allowing the JRA to run candidates in the regional PR blocks as well as the Single Member Districts. We also have a fair idea of what his policies will be (another post).

So it is about time I put in my almost certainly overvalued two cents.

Jun Okumura says that incentive is for Hashimoto’s JRA to stay out of any post-election coalition – to let the DPJ-LDP-Komeito marriage of ill-repute come together with extremely low expectations, and to fail to even meet those. All the while the JRA will be ready to pounce,  having acquired for itself some basic party funding, in the 2013 House of Councillors election and the likely snap election that would probably take place soon after. A recent Asahi Shimbun poll (日) supports such a view – even before discussions about a grand coalition 43% are against the idea of three-way cooperation versus 38% for a grand coalition. Such numbers will only drop once “deals” are done and the sausage factory is opened to the public. The same poll also asked people who were well disposed to the JRA having influence after the election which party the JRA should cooperate with after this election. 54% of those people said there was no necessity for the JRA to collaborate with any of the existing parties, corroborating Okumura’s view.

Michael Cucek suggests on the other hand that the incentive is actually for the DPJ to stay out of any post-election coalition, utilizing an ‘excuse’ of having essentially “lost” the faith of the people, to take advantage of a likely LDP-Komeito-JRA train wreck. If there is a formal or semi-formal arrangement – perhaps the LDP-Komeito forming a minority government, with the JRA providing confidence – Cucek predicts that such an arrangement falls apart due to countless skeletons coming out of the JRA amateurs’ (in the non-critical sense of the word) closets and various other iniquities and incompetencies. Even if the arrangement is very loose, it is hard to see collaboration surviving beyond the first budget – the LDP has promised to essentially bring back the “construction state” while the JRA’s continued existence will depend on it not being seen to support such an outcome. The DPJ will, with new leadership and after a period of reflection, be able to make up some ground in the snap election that would come from this,  and will ultimately be in a better position to finally implement, along with the JRA, some of the administrative reforms it originally wanted to.

Where do I stand on this?

I say it depends on how who is left standing in the DPJ after the next election. My issue with Cucek’s scenario is a simple one – I can see his logic, but is the collective leadership of the DPJ that smart…or more so, that brave?

Cucek is correct when he states that Ozawa, and the DPJ in general, had brought in good talent to man, and importantly, woman its middle and junior ranks. The greatest tragedy would be that such talents would go to waste while the ancien regime of the Cold War left and the now compromised senior leadership squeak on by. The party has over time brought in many centrists with real world experience outside of politics, and with a genuine interest in policy. If these talents are wiped out completely then the DPJ will have nothing to rehabilitate and may as well join in on the grand coalition. If the party can affect true “generational change,” perhaps under a humble but young leader like Hosono (who tactically and symbolically did the right thing by not running for the DPJ leadership), then Cucek’s strategy may be plausible. So can a decent size rump of the “next generation” survive 2012?

Depending on who the LDP selects as its leader, the DPJ will probably as the polls show finish second or third in the PR – they will be lucky to get much more than 20%. This will likely rehabilitate the current leadership through PR lists but not much more. So it will come down to   the 300 (or 295) SMDs whether the DPJ can find any salvation. The DPJ “kanban” is certainly not of any help. However much of Ozawa’s recruited talent have been squirreling away and paying attention to their constituencies and their stakeholders over the last 3 years. Those in urban areas should do better than the DPJ’s PR vote. It is likely Rengo, as well as some of the other stakeholder organizations that crossed over to the DPJ in 2009, will still get out significant votes for the DPJ. At least, the LDP has not really given them any reason to go rushing back. Should the JRA eat into the swing against the DPJ, thus depriving the LDP of the former DPJ votes they would have been expecting, then it is possible that the DPJ might do ok in some urban SMDs in a three or four way race. Nevertheless, you would expect some tactical deals to be struck between the JRA, Komeito, the LDP in particular. Already the JRA and Komeito have struck a deal in the Kansai region to lend each other support, but what deals are going to be struck in the rest of the country? Can the DPJ get in on any of these deals?

In terms of the calculus, Hashimoto is losing a little of his shine. Recent opinion polls have asked the question of whether people would want to see Hashimoto having influence in the next government. Previously the numbers had been closer to 2 to 1. Now they are evening up – I recall one recent poll having it at 50% in favour of post-election Hashimoto influence vs 43 % against . A recent NHK poll (日) has 54% as having expectations for Hashimoto’s party, while 42% not having these expectations. In the aforementioned Asahi poll, with the more exact question of “would you like to see Hashimoto’s party take enough seats in the election to have influence,” the number is 50% for the proposition versus 36% against, meaning that the JRA’s ability to take out a large number of SMDs on its own may be compromised if these numbers head further south. Indeed if the above Asahi poll is anything to go by, where only 5 percent said at this point they would vote for the “Osaka Ishin no Kai” then it seems the public’s support of the Hashimoto zeitgeist is not automatic – they may like many of his policies but that is not going to automatically translate into votes. I am not sure I buy the 5% as being representative, but nevertheless the party will still have some work to do and who it puts out as candidates, and what they say will be important. Perhaps Noda’s desire, having now lured Hashimoto to reveal his strategy, is to lengthen the time until the election precisely to allow for as much time for mistakes and disclosures, as Cucek has predicted, to take place.

In any respect the DPJ, if it is concerned with its own long-term survival, should be doubling their efforts to put a wedge between the LDP and Komeito on any issue possible, particularly electoral reform. The DPJ will still likely lose big, and even some notable party names may be knocked off, but if the party is smart or lucky then in the urban centers a number of the younger, centrist Diet members can survive the next election.

However I have my doubts if the senior leadership of the DPJ is that focused, or that considerate of those that they are leading. We can see this is in party elder Sengoku Yoshito’s recent statement that the DPJ would likely, if it had to, settle for the simplest solution to the unconstitutionality of the vote disparity in the House of Representatives of only reducing the number of SMDs by five seats. The rank and file of the DPJ should be under no illusions – if Sengoku represents the party leadership’s feelings, then Sengoku essentially wants to hasten the transition to the grand coalition as soon as possible, but on the most favourable terms for traditional LDP interests, something unforgivable from both an emotional partisan and a rational actor’s point of view.

Noda’s Next Step: the TPP?

Below is the more detailed and longer version of my piece on Japan and the TPP published over at the East Asia Forum.

Speaking of publishing elsewhere, I also am making regular contributions to the Shingetsu News Agency’s news site. SNA is a foreign independent news agency in Japan- one of the few, but well needed. They cover a lot of Japan stories on the ground too, which is becoming less common for international media agencies – see some of their videos here.

There is of course also Japan Security Watch and Asia Security Watch. Anyway, enough of the PR!

Why the TPP will not be Noda’s next big challenge

International expectations of Japanese Prime Minister Noda Yoshihiko’s administration seem to have increased greatly since his success in getting the consumption tax and related social security bills through the lower house late last month. Matthew P. Goodman a former White House coordinator for Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit (EAS), writing for the CSIS, argues that[1] Noda needs “to make one last push over the next few months to secure Japan’s economic future—and his own legacy as one of the most effective Japanese leaders of the postwar era.” The Financial Times’ Mure Dickie[2] also writes that “the black-belt judo enthusiast should not be satisfied with a tax rise as his only legacy,” and along with Goodman suggests that Japanese commitment to joining TPP negotiations should be one of Noda’s main goals going forward.

Certainly Noda has been by the most effective of the (3) DPJ prime ministers. Unlike his predecessors Hatoyama Yukio and Kan Naoto, Noda has remained focused by taking on one policy challenge at a time, and has been calm, resolute and consistent in articulating his rationale for addressing said policy problem. He has avoided needlessly alienating supporters and potential allies, and most importantly, has focused pressure on his adversaries’ weaknesses and vulnerabilities in order to drag them into reluctantly supporting his policy program. While he stumbled in his first few months, he has managed to retain influence in articulating the narrative surrounding the “meaning” of his premiership, something that Hatoyama and Kan both lost early on in their tenures.

If one accepts the above evaluation of the Noda regime, then it would not be unreasonable to think that Noda may well have one or two more policy successes up his sleeve. Noda, and the DPJ, certainly need more than the single, unpopular success of raising the consumption tax to fight the next election on the basis of ‘effective leadership.’ Given that Noda identified joining the TPP as a priority late last year it is therefore natural to speculate that Noda may push forward with a bold Japanese bid to join the growing list of TPP nations in time for September’s APEC meeting in Vladivostok.

There are however many reasons why the TPP will not take a prominent place in Noda’s thinking over the next few months. Aside from the recent challenges surrounding the political management of his much reduced lower house majority, Noda will find pushing forward on the TPP much less attractive than he would have late last year. At the time, Noda found a proactive approach towards the TPP useful as it allowed Japan to temporarily take the focus off Futenma in the, at the time, troubled US-Japan relationship. It also seemed to stimulate Chinese interest in looking at pushing ahead with a trilateral trade agreement with Korea and Japan, giving Japan some diplomatic space for maneuver. This, Noda would have hoped, would have reduced the risk of foreign policy undermining his ability to push forward on domestic issues such as happened with his two immediate predecessors.

However much has changed since then making pushing forward on TPP even more unpalatable than it would normally be as a policy issue to burnish his credentials as a persistent, pragmatic and effective political executive. This time it is not Japan’s hesitancy to take on small but powerful political interest groups, but the US domestic situation that seems to be the biggest barrier to Japan’s entering TPP negotiations. In late May the United States gave a signal that it would start pressing Japan to reduce the nontariff barriers to car imports in talks over Japan’s participation in the TPP. [3] Then came news that the US required concessions in six areas related to automobiles before allowing Japan to join TPP negotiations. The necessary concessions would include relaxation of technological, ecological and safety standards, tax treatment for different engine displacements, and concessions on customer service and distribution. [4]

However Japanese industry reacted with incredulity to both the suggestion that Japan’s automobile market was a closed one and to the unreasonableness of what Goodman curiously describes as “token concessions.” Toyoda Akio, the head of Japan’s automobile industry association and president of Toyota Motor Corp., told the Japanese media that he was “greatly confused” by US requests. He declared that “Japan is an open market without any restrictions on imported vehicles and without any tariffs (on those imports),” and called for an “open dialogue based on facts.”[5] Toyoda also pointed out that Japanese car manufacturers were already having a hard enough time with the extremely strong yen and the weak dollar, something that should have seen US car manufacturers become much more competitive in the Japanese domestic market. The Japanese side argues that poor sales of US cars in Japan are the fault of US automakers and note that there are higher sales of foreign cars in Japan’s domestic market, just not American cars.

Looking at the Japanese media it appears that it has become conventional wisdom in Japan that accusations of Japanese protectionism and demands for unreasonable concessions are ironically part of a US auto industry strategy to maintain US tariffs, currently set at 2.5 percent on imported passenger cars and 25 percent for trucks.  Believing that the Japanese will not accede to these demands, the goal, it would appear to the Japanese, is no more than the exclusion of Japan from the TPP, or the US receiving an exemption for its auto industry – something that would only take place if Japan received a similar exemption for its own sensitive agricultural sector.

At about the same time as Toyoda’s remarks, METI Minister Edano met with U.S. Trade Representative Ron Kirk on the sidelines of an Asia-Pacific Economic Cooperation (APEC) meeting of trade ministers in Kazan, Russia.  The Asahi Shimbun reported that a Japanese source had said the talks had turned into a “game of chicken,” with both sides refusing to back down, despite the Edano-Kirk meeting lasting 20 minutes longer than the expected 45 minutes. [6]

On June 14, Yamaguchi Tsuyoshi, the Parliamentary Senior Vice-Minister for Foreign Affairs who accompanied Edano to the Kazan meeting, told a lower house agriculture committee that there was little hope for Japan being accepted into the TPP until after the US presidential election. [7] This is due to political sensitivities surrounding the US automobile industry’s influence in crucial swing states. Noda at the same time stated that he was not going to force a decision on joining the TPP by the then upcoming G20 meeting, [8] suggesting that a decision would be put off further. While some Japanese media outlets such as the Yomiuri lamented the possibility that Japan would be left behind when Mexico, and then Canada – both countries that declared their interest around the same time Noda did in November last year – announced that they would accept an invitation to join TPP negotiations during the mid-June G20 conference, [9] the Japanese government seemed to be unmoved. After a 19th June cabinet meeting Edano said in response to news of Mexico joining that “every country’s situation and conditions are different, and there is a need to continue to investigate and discuss with internal stakeholders.”[10]

The Japanese government’s suspicions were confirmed at the end of June. First US presidential candidate Mitt Romney, reacting to pressure from the three biggest automakers stated that he did not support Japanese participation in the TPP “at this time.”[11] Later US Senator Sherrod Brown of Ohio introduced legislation “aimed at preventing a new Pacific trade agreement from harming auto employment.”  Then 132 House of Representatives’ Democrats (about two-thirds of the caucus) also sent a letter demanding more transparency and better consideration of US stakeholders’ interests to USTR’s Ron Kirk. This coincided with an energized effort by US automakers to put pressure on Washington to not let Japan join talks on the TPP. For example Ford’s vice president of international government affairs Stephen Biegun declared that “It is just simply wrong the decision to put in that discussion a country which is demonstrably protected and closed to American exports.” [12]

While the Japanese auto industry rejected the claims by Ford in particular, arguing that Ford had “chosen to essentially withdraw from the Japanese market” and refused “to seriously compete there,” the fact remains that Japan is did not participate in the 13th round of TPP negotiations in San Diego taking place now, and is unlikely to participate in negotiations in the near future. Those calling for Japan’s immediate entry into the TPP in order to reinvigorate its economy, and for Noda to expend political capital on this goal, need to consider how disastrous it would be for Noda to pursue TPP accession under the current conditions and limitations.

There also needs to be more balanced discussion on what the real factors that are obstacles to Japan joining the TPP. One such factor is that it is not just the Japanese domestic political situation that is an obstacle to strengthening the multilateral trade order in the Asia-Pacific. Neither is it that the Japanese are still necessarily hostile to entering trade agreements with countries with sensitive sectors as seems to have been the case in the past. In the last three years the Japanese have made small but positive steps towards furthering discussions and negotiations to enter economic partnership agreements with nations such as China, Korea, Australia, the EU, and most recently, Canada, in addition to completing agreements with Switzerland, Peru, Vietnam and India. Politically, while the current group of national politicians is still undecided on the merits of free trade, supporters of administrative reform such as Hashimoto Toru are very much, in principle, in favour of increasing trade relations and Japan’s economic internationalization. Aside from MAFF and affiliated organizations, within Japanese officialdom there is increasing openness to liberalizing trade relations and indeed some see it as vital.

Nevertheless, the Japanese focus will remain in the medium-term on forging trade agreements with those nations where the benefits are most clear, and not with countries which insist on “protection” for not only industry interests in their own countries, but are also essentially demanding “protection” in the domestic markets of others, such as we are seeing in the US automaker’s case.

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[1] http://csis.org/publication/noda-should-keep-his-eye-prize

[2] http://www.ft.com/intl/cms/s/0/f8468a6a-c4f6-11e1-b6fd-00144feabdc0.html

[3] http://ajw.asahi.com/article/economy/business/AJ201205190051

[4] http://ajw.asahi.com/article/behind_news/politics/AJ201206020040

[5] http://ajw.asahi.com/article/economy/business/AJ201206050054

[6] http://ajw.asahi.com/article/economy/business/AJ201206060085

[7] http://www.jiji.com/jc/zc?k=201206/2012061401000

[8] http://www.asahi.com/politics/update/0613/TKY201206130543.html

[9] http://www.asahi.com/business/update/0619/TKY201206180691.html

http://www.news24.jp/articles/2012/06/20/10207990.html

[10] http://www.asahi.com/politics/update/0619/TKY201206190130.html

[11] http://www.detroitnews.com/article/20120618/AUTO01/206180394

[12] http://www.detroitnews.com/article/20120627/AUTO01/206270424#ixzz1zjhjMPKf

Ozawa Leaves the DPJ: A Minor Victory for Noda

Or at least a more favourable development for Noda’s quest to extend his already somewhat unlikely administration’s longevity.

There were three numbers of primary importance that would have concerned Noda in regards to Ozawa’s expected resignation along with his most loyal members.

55

The number of House of Representatives members that would need to leave to reduce the DPJ-PNP coalition to a minority government. The implications of this would be that this coalition would not be able to defeat a no-confidence motion without support from outside parties, or would be able to pass the budget.

42

The number of House of Representatives members that would need to leave to give the new Ozawa party the right to put forward a no-confidence motion. The assumption here is that the 9 members of the Kizuna party of Ozawa-ites who had already left the party would join the new party.

So how many did House of Representatives members Ozawa manage to convince to leave the party?

40 (日)

This will enable Noda to breathe a little more easily. Not only can the Ozawa party not bring down the government but they cannot submit a no-confidence motion. The LDP could still of course bring such a motion, but its leaders will be mindful of  the passage of the LDP-DPJ-Komeito negotiated consumption tax/social security bills. The public may not appreciate the LDP both cooperating with and seeking to bring down the government at the same time, despite that being exactly what they have been trying to do, quietly. It would have been so much better if disgruntled members of the ruling party were the ones to bring such a motion. The Ozawa party will likely collect the necessary members at some point in the near future to enable it to submit such a motion, but it takes away the immediate risk.

19

The other number, which they were unlikely to get in any case, relates to the House of Councillors. This would have reduced the DPJ to being the second largest party in the House of Councillors, and led to the loss of the associated procedural privileges and control of the agenda. Ozawa managed to convince 12 House of Councillor members to leave.

There is however one other interesting number – 6 – that may be more consequential. The DPJ-PNP and Komeito will not be able to pass legislation on their own. This most likely will have consequences for the DPJ’s planned electoral reform mentioned previously, which is part of an attempt to drive the LDP and Komeito apart in terms of electoral cooperation. Furthermore, if a lower house election was to be held before July 2013 when half of the current House of Councillors members’ terms are up, then the DPJ and the Komeito, if they had such an option based on the results of such an election, would not have control of both houses of the Diet.  Any such government could potentially spend time spinning its wheels until the July 2013 upper house elections.

The other main reason for Noda to be not completely unhappy with this outcome is that he does not have to dirty his hands publicly doing what he may have been pressured into doing anyway – ‘dealing’ with ‘Ozawa’ once and for all. There was internal and external pressure for Noda to cast off Ozawa, and while Noda was none too happy himself with Ozawa’s defiance, a combative threat of expulsion for Ozawa specifically or long-term suspension of all those who went against the party could have led to a much larger exodus of party members that he would have wanted (as per the numbers above). A bitter and protracted “fight” over the appropriate level of punishment could have broken out, especially given the quite reasonable criticism that Noda administration had betrayed the DPJ’s original manifesto, and lost its electoral mandate in pushing forward with the consumption tax rise.

Now Noda can be strategically lenient towards those in his party who did vote no or abstain on the consumption tax bill without necessarily being seen to be taking a “weak” stance on party unity and discipline. He can also go to the LDP with a request to quieten down on DPJ internal issues now that Ozawa is “gone,” as the LDP has been demanding for some time. They will still make some noise – as they were an hour after the announcement (日) –  about needing to go to the public to “ask for the citizen’s trust,” but it is likely to be less enduring than it would have otherwise been given the exit of Ozawa. This removes one more issue for the opposition to use in regards to maneuvering around legislation and the timing of the next lower house election. This by no means means that Noda is safe until the September end of the parliamentary session, but it may give him some space to implement a political strategy for further extending the life of his cabinet.

Is this the End for Yoshihiko Noda?

57 against. 16 no shows or abstentions. This has made things somewhat more difficult for the Noda administration.

As explained the dilemma will now be that the application of strict penalties could lead to the DPJ losing its lower house majority and make it vulnerable to losing a no-confidence vote, while a soft application of penalties could be used by Noda’s political enemies in other parties against him in political posturing.

Ultimately Noda and the senior leadership should come down on the side of softer/delayed penalties. While the LDP in particular will try and herd Noda into undermining his own government by taking a hard line, it will be a dangerous game for the LDP to play out too publicly. If the LDP president Tanigaki plays games in the upper house around the tax/social security bills trying to force Noda to cut loose Ozawa and the 57, it may help him achieve his goal of forcing an early election but it will not do the LDP any favours in that election.   Tanigaki and the LDP voting against the tax bills on the basis of another party’s internal affairs will be too much for most to stomach – particularly because they themselves have argued the reforms are necessary for Japan’s fiscal future and have already voted in favour of them once. I suspect the DPJ will figure that out in due course and in the mean time will try to drag out the punishment process as long as possible.  I would expect the bills to pass the upper house in September as planned.

On the issue of a supplementary budget or other legislation however then it may be another matter. While Noda was able to successfully maneuver the LDP into voting for the tax bills without having  to give up his trump negotiating card, a negotiated election set for after the next LDP and DPJ party elections in September may well  be the pound of flesh extracted for any further cooperation on legislation. Komeito has expressed a preference for an election in the second half of this year as well.

If Noda can make it until August however without too much political damage then there may be another factor he could exploit – that of what could turn out to be desperate maneuvering for the role of LDP president. We may see all sorts of actors come out of the woodwork due to the, perhaps dubious, assumption that the next LDP president will be Japan’s next prime minister. In reality no one in the LDP wants to see Tanigaki succeed, and LDP hopefuls will want to be the ones to take credit for bringing down the DPJ government.

On the DPJ leader elections, under normal circumstances it is difficult to imagine the September DPJ election going against Noda unless he handles things badly in the next two months- the most likely candidates  have been prominently co-opted into either the consumption tax process (Maehara and Okada) or the restarting of Japan’s nuclear reactors (Edano or perhaps as an outside “election face,” Hosono). The one extenuating factor in this case is that the next DPJ election will allow DPJ party executives, regional politicians, and paid-up DPJ members to vote, which could be exploited by someone running a more populist campaign.

The other thing to watch for is the election reform bill. While the fuss over the tax bill was being played out the DPJ submitted to the relevant parliamentary committee its bill which it is hoping will eventually be backed by the Komeito. The DPJ has said that it is going to go ahead with a vote on the bill one way or another, so unless the Komeito party reacts strongly against it the LDP will also have another difficult choice to make – go against the bill but risk ‘splitting’ the LDP-Komeito relationship of convenience (some in the Komeito have come and said that the DPJ bill would lessen the incentives for the Komeito to cooperate with the LDP in the next election) or go along with a bill the party does not like. Noda may be able to use  this bill as leverage to fend off LDP demands on other bills.

Finally it seems that Hashimoto is on the move again – and his timing was good – perhaps too good. Just  a few days before the tax/social security bills passed the lower house Hashimoto came out all guns blazing against the betrayal of “manifesto politics.” He argued that, given the original DPJ pledge not to raise the consumption tax for at least four years, the DPJ was in passing the tax bill taking the concept of pragmatism far too far, and that actions such as the DPJ’s are the reason that Japanese do not have trust in the public. He makes a good case that will be hard to deny. Of course for Hashimoto the timing was good because the bills were a fait accompli. Hashimoto has in the past been reluctant to state his explicit view on the consumption tax rise, saying that a reorganization of the Japanese administrative structure would be required before making such a decision. He was over the last few days very careful in his words to not attack the consumption tax rise directly but rather the DPJ’s style of politics around it. The reality is that the DPJ seems to ahve done the dirty work for more populist parties campaigning on the basis of fiscal and administrative reform. That the DPJ has brought the LDP along with them is all the better. It is very unlikely that any party is going to roll back the consumption tax rise if it claims power. Even if such a party(s) was earnest in its attempt to cut spending and weed out waste in the political and bureaucratic system, there will still be a hole. This will help them reduce this somewhat and may make it easier for them to keep a hold on power. That may be the important long-term consequence of Noda’s success, even if in the short-term it has made things considerably more difficult for the DPJ and himself. 

The DPJ after Today’s Consumption Tax Vote

After an initial delay the legislation has been submitted and the roll call for the first of the various bills that fall under the  “social security and tax reform” designation pushed forward by the 3-party DPJ, LDP and Komeito (non-)coalition is expected to take place around 2.20pm Japan time today.

The situation seems to be coming into focus and there is good news and bad news for the Noda administration. As predicted Prime Minister Noda seems to have been quite successful in convincing the “middle-roaders” to bite the bullet and vote for the bill(s). He has not been so successful however in picking off those less resolute Ozawa/Hatoyama group members by convincing them to abstain or not turn up to the vote. The media strongly believes that 57 DPJ lower house parliamentarians have resolved to vote “against” the bill. If it was somewhere in the 40s then Noda could deal with these members however he wished. However any number above 50, and then 54 if we include the DPJ’s now quite subservient PNP coalition partner, would mean expulsion would likely lead to a no-confidence vote against Noda actually passing. Noda will thus be forced to either be lenient on even those that voted directly against the legislation, or be willing to take the risks of operating a minority government where LDP outrage on any issue – faux or otherwise – could lead to the end of Noda, or if a replacement cannot acquire the confidence of parliament, lead to a general election.

The LDP, citing Koizumi’s actions after the postal reform bill was rejected the first time in 2005, will be pushing the DPJ to expel the rebels from the party. Of course. The difference  is however that these rebels will not have actually prevented the legislation from actually passing and thus not as spectacular a public challenge to Noda’s leadership. There is leeway – especially as there is no DPJ precedent for dealing with this kind of situation – for Noda to treat the rebels somewhat more leniently. Indeed it will likely be very much in his interest to do so.

And the good news on this front for Noda is that it seems that only about 36 to 40 of the most hardcore Ozawa-ites have determined to leave the party after the vote and to set up a new party. With the Kizuna party, they would form a bloc of roughly 40 to 50 or so parliamentarians. While there might be up to 70 DPJ members who will not vote for the bill, not all wish to leave the party. Hatoyama, curious as always, has declared that he will vote directly against the bill – but he will not leave the party and does not wish to break the party apart. Under normal circumstances such a statement would seem to be putting the cart before the horse, however Hatoyama understands that DPJ executives will ultimately be forced to treat those like himself more leniently.

The question will therefore be how lenient – and how will those who wish to stay in the party react to that? One suggestion has been the suspension of party privileges for a designated period of time. However if the suspension is three months or more, then this will prevent such members from voting in the September DPJ presidential election. This may be unacceptable to some and they may end up leaving anyhow. There are some calls within the DPJ for the application of any penalties to be “delayed.” One option here may be only applying the penalty closer to election time, where essentially the DPJ would withdraw official party endorsement for that members reelection campaign. This would probably be the expectation of anyone submitting a “no” vote anyway, and at least in the interim they could enjoy the benefits of being in the government party while they consider their next move.

The DPJ party executives will be working the phones up to the last minute. They have constructed a document ranking DPJ members in terms of their resoluteness in terms of voting yes or no. Noda himself has been calling around. Will there be any last minute deals struck that may get the straight no votes down to around the low 50s? Another interesting thing to watch out for will be whether party discipline holds for the LDP as well. We may know around 5pm today.

…and then we will need to start thinking about the passage of the bill through the House of Councillors. It will pass – but there will be implications for defections and subsequent treatment in this as well – especially since one way or another the House of Councillors is locked until July 2013.

Update: Hatoyama has just now thrown (日) up another option that may justify lenience- he is only going to vote against the specific bill raising the consumption tax, not the full suite of bills. He and seven others may do this. Could this be a last minute Hatoyama classic which undermines the resolve of other members to vote against the prime minister (ie safety in numbers)? Or simply a distinction without a difference?

D-Day for the Consumption Tax?

Having hammered out a tentative deal with the Komeito and the LDP in regards to the rise in the consumption tax, and an overarching framework for the reform of social security spending, Party Secretary-General and the DPJ’s policy chief Seiji Maehara today go into today’s crucial session (日) of the DPJ’s Party Research Council to ask for agreement on the 3-party deal.

Noda is currently on his way to the G-20, but despite having managed to acquire Komeito and LDP agreement on tax reform, he will not be resting easy. Noda has been working on the assumption that if need be he could go ahead with the deal and submit it to the Diet in the current parliamentary session even if the Ozawa group opposed. As long as he made appropriate looking overtures, he could handle Ozawa group opposition as long as he had LDP and Komeito support. Indeed success in passing it under such adverse circumstances would demonstrate Noda’s “political leadership” and with Ozawa’s star even further on the wane than usual due to some (as yet unverified – Shukan Bunshun after all) accusations (E) about what he was doing around the time of the Fukushima incident’s escalation, then he probably figured that he may be able to live – and may even benefit- from an Ozawa internal party insurrection in this context. This is of course as long as any disciplinary measures (such as expulsion) did not reduce the party’s lower house numbers below the magic 240 mark.

However in negotiating with the LDP and Komeito, Noda has had to make a number of concessions that seem to eliminate for once and for all the DPJ’s original 2009 election manifesto as a salient policy document guiding the DPJ. Up until now the DPJ has time after time had to make concessions on the big policy promises it made in its manifesto, but some of these were seen to be excessive promises in the first place. Some, such as the guaranteed minimum pension policy, however, were seen as one of the few remaining policies they DPJ could point to in terms of responsible election promises.  However the Komeito and the LDP have used their leverage in current negotiations to expunge from the legislative record any hint that the DPJ is a principled party, with an eye to any upcoming election.

Again, if this was to anger only Ozawa and co. then Noda probably calculated that he could get away with it. However, the “middle-roaders” in the DPJ are starting to express misgivings about what this means for the viability of the DPJ as a party. It may in the short to medium term give a boost to Noda’s individual fortunes, but it will probably put the final nail in the coffin for the DPJ’s attempt to portray itself as a party of reform. The opinion of the “middle-roaders” will become the focus of today’s negotiations and debate within the DPJ and it is by no means a forgone conclusion that they will agree to the negotiated deal.

Depending on the outcome of today’s joint session, which is predicted to go into the evening, a number of things will be of interest.

In the best case scenario for Noda, if he is able to get all but the Ozawa’s group sign-off, he may then be able to submit the legislation to parliament on June 21st as promised (or thereabouts now that the session will definitely be extended (日)) . This would be seen as a big victory for Noda – something the LDP and Komeito may ‘perversely’ be quietly hoping against.  Attention will then turn to the electoral reform bill, with the latest incarnation (if you care about the details ask me in the comments) having very mild Komeito support. The LDP has said it will not support this bill but it seems that the DPJ might go ahead and put it to a straight up and down vote anyway. The Komeito and ultimately the LDP may come around and vote for this as, ultimately, their ostensible motivation for negotiating with Noda on the social security and tax bills is to extract an early election from Noda, technically constitutionally problematic as of this moment. Without this legislation Noda can put off an election indefinitely.

However Noda may try and ride out calls for an election as long as possible. Passage of the tax bill will strengthen Noda in the near term, and this is even without having to promise an election which at one point looked like an absolutely essential compromise for the DPJ to make in order to gain LDP/Komeito support. The reason for this is of course the Hashimoto dynamic, and fear of what the Ishin no kai might do to the LDP’s support base in an election, pushed the LDP/Komeito towards engaging with Noda and the DPJ mainstream. As long as Noda can minimize the impact of an internal revolt, and survive the September DPJ presidential election, he may even be able to last until 2013 and the “double election.” While he will not be able to appeal to the ‘reformist’ narrative, if he can keep cabinet misdeeds and scandals to a minimum he may be able to appeal to the Japanese public as an example of gritty “leadership” and “responsibility.” The focus thus will be on whether the LDP or Komeito can maneuver Noda into calling an election before the end of 2013, and before he builds too much of a “success” portfolio in the interim.

If Hashimoto et al can be placated with the legislation he wants for the “Osaka-to” concept, and thus refrains from making an entrance into the national political scene, as he has suggested he may, then the LDP and Komeito may become much bolder in pushing the DPJ towards an election. Thus expect the LDP and Komeito to focus on this particular piece of legislation if Noda is able to get his way with the consumption tax rise. In this scenario, the DPJ party leadership, made up of the “mainstream” faction (Noda, Okada, Maehara, Sengoku etc), and the LDP/Komeito combination may well be in a post-election situation of (having to) forming a grand coalition. Or so the LDP in particular seems to hope (日). For the LDP and Komeito, they will likely be strengthened in any election that does not feature Hashimoto or other reformist elements, although it is unlikely that they will acquire a majority. However the LDP from their point of view may likely get hold of the PM position in any grand coalition and other cabinet goodies that they are currently denied. This will be, in my calculations, despite Noda and the DPJ faring better in any election from having his “leadership” credentials burnished, even if the policy and ideological content of the DPJ vanishes.

My bet is on Noda putting off an election for a period of time. We also need to factor in the LDP’s own internal party unity that may become an issue if the consumption tax bill is passed, which may limit their own influence and capacity to call for an election. There is also the fact that many in the LDP would likely want to wait until after the LDP’s own September election to push for a general election, as that might, in their calculation, give whoever is victorious a shot at the party leadership (Tanigaki will have to step down if he is unable to secure a DPJ promise for an early general election by September), and as identified above, and also put them in pole position to attain the prime ministership.

However if the “middle-roaders” reject the current negotiated deal today and are unable to be brought around by June 21 when Noda gets back, or at the very least this Diet session, then things will remain murky.

What we do know is that this will require Noda putting off a vote on the tax bill and going back to negotiations with both the LDP/Komeito and DPJ recalcitrants.

Noda will then likely also have to face a no-confidence vote as the LDP and Komeito have promised to submit one if Noda is unable to bring his party into line and deliver the votes for the passing of the tax and related legislation on 21 June or thereabouts. The LDP/Komeito will likely not tolerate internal bickering in the DPJ for very long. Then the focus will be on whether the DPJ still pushes forward on the electoral reform bill that is required before any constitutionally valid lower house election can be held. In their heart of hearts the LDP and Komeito will be hoping that Noda fails with the DPJ intra-party negotiations and has to either call an election in response to a no-confidence motion passing, or quit the party leadership due to his failure to honor his pledge to raise the consumption tax in the current parliamentary session, or both. In this scenario the DPJ will be dead in the water as a vehicle for electoral success. The DPJ mainstream will be discredited as both a ‘pragmatic’ leadership as well as a policy reform voice in Japanese politics, while Ozawa and anyone associated with an Ozawa breakaway group will also have a hard time making a case for election.

However the LDP with the support of Komeito in single member districts may even be able to acquire something close to a lower house majority as any legislation passed to reform the system will likely reduce the number of proportional representation seats, which will undermine the influence of the minor parties.

The wild cards are still Hashimoto and the Ishin no kai, and in particular what the middle roaders in the DPJ will do in reaction to whatever outcome arises from today’s joint session. The Ozawa and middle wings of the Ozawa will be cognizant of the LDP/Komeito’s strategy around these negotiations. The middle-roaders may end up going along with the tax rise as the lesser of two evils in terms of their likely electoral fate, although it may well be bad either which way. They may perceive that they have a fighting chance with Noda if they think he can last until 2013.

Or  they may take a risk, in which case it will come down to whether they will breakaway but also distance themselves from Ozawa, and possibly hook up with other reformist political actors in the system, including the likes of Hashimoto and the Ishin no kai. Ozawa has recently come out and suggested that, much like Tanaka Kakuei did when he was going down in the 1970s, his people could use him as a punching bag for electoral gain, although one wonders whether Ozawa would be so generous as to both fund such a group and at the same time shelve his pride.

My own prediction is that the middle-roaders and even some in the Ozawa group will go along (or possibly abstain) with the Noda bill simply because it allows them to live to see another day, assuming Noda is not pushed into declaring an election any time soon. If they calculate that Noda can put back an election they may then start to think about how to cultivate an alternative vision for the DPJ or any spin-off party that could help them fight against an effective grand coalition ‘bogeyman’ in 2013 of the LDP, Komeito, and the ‘DPJ mainstream.’

What will be of interest is which policy issue will the Noda cabinet pursue next? The tax rise will be a temporary victory only – Noda surely understands that he will need more achievements before facing the electorate later this year or in 2013. The TPP 6 months ago would have been odds-on, but now seems an outside bet as it appears that it the TPP is being hamstrung both by opponents at home as well as by US commercial interests who as time goes on are making joining the TPP even more unappealing for Japan . Perhaps a new energy strategy or energy sector reform based on reduced but not eliminated nuclear reliance?

Ozawa’s “soft” support base

It now appears that NHK has retracted their statement that Mabuchi and co. went for Noda’s group and in fact Mabuchi himself voted for Kaieda while seemingly the rest of his supporters voted as they wished. It also appears that Kano, Maehara and Noda had struck a rough agreement that the 3rd and 4th place getters would support the 2nd place getter in a strategic arrangement made before the first round of voting. Apparently Kano and his group, and a few of the younger cohort in the DPJ eventually baulked at the pressure applied to them by Ozawa, were concerned at the inelegance of Ozawa’s manoeuvring, and decided to throw in their lot with the mainstream group. According to this (jp) Nikkei article, Kano, after finishing fourth and being eliminated in the first round, took off his suit jacket to indicate to the 30 or so members most loyal to him that he was going to go with Noda and that they should follow his lead. Along with a few Mabuchi followers defecting to Noda this would bring Noda up to the 215 votes or so that he received, if some of Maehara’s votes defected to Kaieda out of concern for Noda’s tax rise friendly platform. It is still possible that Ozawa threw a few votes Noda’s way in round one for insurance but there was probably already a strong sense that, in addition to their not getting anywhere near 199 in round one, they were also likely to lose in the run-off as well. The scenario identified two posts before of Ozawa’s support base softening seems to be the most appropriate interpretation of yesterday’s events.

If the Nikkei’s summary of yesterday’s events (table -jp) is roughly accurate then this is bad news for Ozawa’s strength within the party. First of all, Okada has claimed that events proceeded as exactly as he (and Sengoku) expected. This suggests they have a good understanding of internal party relationships, something which Ozawa is increasingly losing. Furthermore, if we subtract the roughly 40 or so that we know are loyal to Hatoyama from Kaieda’ first round vote, then we can conclude at the very most we have 100 members inside the Ozawa “clique.” A far cry from the much larger 150 plus commentators were ominously talking about soon after the 2009 election. The strength of loyalty of even this 100 is probably suspect and as argued without a strong hold on the Secretary-general job Ozawa’s ability to command loyalty is going to decrease. In addition the Japanese media is already talking about “3 consecutive defeats” for Ozawa, with some glee to be sure, and those loyal to him are likely to going to see the writing on this particular wall. The way Ozawa played with even some of his most loyal supporters in the run up to the election is also going to leave a particularly bad taste in many mouths when the post-mortems are conducted today.

Kano for his sins, along with Koshiishi Azuma, is also featuring in talk regarding the important DPJ Secretary-general role. This might not only be some kaeshi for helping out Noda but both are seen to be quite middle of the road members within the DPJ. As opposed to Okada, Sengoku, Maehara or Edano, the selection of either of Koshiishi or Kano would be a signal to other DPJ members that appeals to “party unity” are not the empty slogans that they were perceived to be under Kan. Already some who supported Kaieda have approved of the possible selection of these candidates, and even Ozawa himself has been quoted as saying that he would support Noda if his appeals to party unity do indeed turn out to be more than empty words. Of course we will believe that when we see it but yesterday’s events seems to confirm that Ozawa may have little choice in the matter if Noda takes a pragmatic approach to selecting party personnel and focuses on manageable policy outcomes.

In this respect Noda will still have to act decisively in the short-term to ensure party divisions do not break open into a full internal civil war. However the election of Noda over either Maehara or Kaieda may help to avert an immediate breakdown of the DPJ, although Noda’s popularity, and thus to a substantial degree, ability, to navigate the domestic political situation will be the more important long-term challenge.