TOKYO - The latest risk assessment from the Eurasia Group, a prominent international risk assessment consultancy, places Japan under its new government as No. 5 on its Top 10 global risks for 2010, just behind financial deregulation in the United States and ahead of the collapse of global warming talks in Copenhagen late last year.
The group postulates what it calls "a continuation of the post-[ex-premier Junichiro] Koizumi era succession of weak governments, but this time without the benefit of a strong unified bureaucracy to guide policy and with a much more worrisome economic situation. ... Some pundits worry that the United States will replicate Japan's lost decade. For 2010, the greater risk is that Japan might be starting another one."
The Democratic Party of Japan (DPJ) came to power with one overriding fixed idea: curb the enormous power historically exerted by the civil service under the long domination of the Liberal Democratic Party (LDP). The new government wants elected officials and ministers, not bureaucrats, to lead the country, which the consultancy evidently sees as risky proposition.
Needless to say, not everyone in Japan has such a pessimistic view of the future under the new government, but certainly some of the glow from the DPJ's historic electoral landslide in the Aug. 30 general election is wearing off.
The government's approval ratings, which started out in the high 70s shortly after the election, have sunk now to around 50 percent. Most observers believe that the party has enough bedrock support in the country to keep it falling from any further, for the time being at least. There has been no corresponding uptick in the LDP's approval ratings.
Hiroshi Hoshi, senior political writer for the Asahi Shimbun newspaper, says the perception that Prime Minister Yukio Hatoyama is weak and indecisive comes mainly from his supposed dithering over the issue of moving the U.S. Marine Corps air station on Okinawa. "I've known Hatoyama for 20 years, and he is actually quite decisive," he said.
The next six months - leading up to the July election for the House of Councellors, the upper house of Japan's bicameral parliament - are likely to be trying times for Japan and its new government. The Diet has just convened, and the attention will turn to the 2010 fiscal budget, which will likely produce many standoffs with the opposition.
Despite its promises and efforts to cut spending in unneeded areas, the DPJ government has presented the country's largest budget of 92.3 trillion yen (about $1 trillion), only about half of which is covered by falling tax receipts. That means the government also must issue 44 trillion yen in new government bonds, also the largest such expenditure, to cover it.
Bowing to fiscal realities the government has had to drop for now some of its campaign promises such as eliminating highway tolls and the gasoline tax. However, it is still committed to its promise of providing government payments to young couples with children and ending tuition for high schools.
The first checks in the child allowance, amounting to about 15,000 yen ($150) a month, will probably go out in June or about a month before the upper house election. "It remains to be seen how these handouts will be viewed by the public. Will they be appreciated or seen as a government boondoggle," Hoshi said.
Almost every move the government makes over the coming months must be seen against the backdrop of the crucial upper house election, which must be held in July for half of the seats. The DPJ narrowly controls the body now with its coalition partners, but it is seven seats short of a majority in its own right.
If it manages to win that majority, the DPJ can shed its smaller coalition partners, which are in some ways a drag on the government. That can be seen in the issue of the American Okinawa bases, since its smaller partner, the Social Democratic Party, keeps making hints that it will withdraw from the coalition if the government fails to move the Marine base outside of Okinawa.
Foreign Minister Katsuya Okada's recent meeting with Secretary of State Hillary Clinton in Hawaii about the bases issue was inconclusive, with Clinton holding fast to the American position that it's a done deal. It is expected, though, that Hatoyama will not make a decision until May, when he can see the lay of the political landscape better.
If things look good at that time, Hatoyama, says Hoshini, might dissolve the coalition with the socialists and another small party in order to reach an agreement with Washington. If things look dicey, he will keep the coalition in place and postpone a decision until after the upper house election.
The opposition LDP has so far not shown much sign of life. It may be pinning its immediate prospects on the hope that new scandals surrounding the DPJ's two main leaders will blossom in the coming months. The most serious would be against party secretary general Ichiro Ozawa, involving alleged improper campaign contributions from one of his support groups.
The question of electoral propriety, which forced Ozawa to resign as leader of the party early last year, had been dormant for several months but is back on the front pages, with the LDP clamoring for him to testify regarding some expenditures from his political action group involving a land transaction.
It took a turn for the worse for Ozawa and his party on Jan. 15, when the Tokyo Prosecutor Office arrested one of his aides, himself a member of the Diet, for allegedly mishandling campaign funds. Hatoyama has vowed to support Ozawa, but he may eventually be forced to push Ozawa out of his party office. That would handicap the party in the upcoming election since Ozawa is, by far, the best electoral technician the party has.
