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On the 20th of this month, the ruling Liberal Democratic Party (LDP)
will hold elections to choose the leader of its party. It is very likely
that Prime Minister Keizo Obuchi will be again elected to head the LDP.
The re-election of Obuchi would likely pave the way for the formation
of a new coalition government consisting of the Liberal Democratic Party,
the Liberal Party, New Komeito and the Reform Club.
Meanwhile, the Democratic Party of Japan, the main opposition party,
will also be holding elections to choose its party head. Incumbent party
leader Naoto Kan will have a difficult re-election bid as he faces stiff
challenges from Yukio Hatoyama (deputy secretary general) and Takahiro
Yokomichi(executive council chief).
If Hatoyama were to be elected as party head, his supporters, a faction
made up of former Japan Democratic Socialist Party members and Tsutomu
Hata (a former LDP member), would have increased influence over party
policy making.If Yokomichi were to be picked to head the party, his
policies would have to take into consideration the wishes of labor unions
as much of his support would be coming from members of the defunct Japan
Socialist Party. However,in this case it is very likely that supporters
of Hatoyama would work with a conservative faction established within
the LDP by Shizuka Kamei and Taku Yamazaki to develop policy.
This month will likely usher in some changes in political power in Japan.However,
we should abandon any hopes that these changes will lead to new economic
or other policies. Even the financial authorities watching these political
developments have only shown a passive stance towards policy.
In addition to the remarkable shortfall in tax revenues, the current
financial situation is acting as a kind of policy straightjacket. Looking
at these economic realities, it has been suggested that whoever is selected
to head the LDP, be it Prime Minister Obuchi, former secretary-general
Koichi Kato, or former policy research chief Taku Yamazaki, that person
will have to raise taxes sometime over the next few years.
Candidates for leader of the Democratic Party of Japan; namely Naoto
Kan,Yukio Hatoyama, and Takahiro Yokomichi, have all expressed opposition
to increasing taxes, but these men have failed to offer any concrete
alternatives.
The processing of the mountains of bad debt that have crippled Japanfs
financial sector has yet to be completed, and even the ongoing mergers
of some troubled banks will not make these problems vanish overnight.
It would seem that none of the candidates are prepared to offer policies
that will help to smoothly process these mountains of bad debt, lend
support to the economy, and further reduce deficits.
On the surface, the Liberal Party has begun to show some conservative
political stances. However, under this surface they decided to move
up the budgeting for the construction of a new bullet train line after
consulting with the ruling LDP. Amidst the current political confusion,
this party managed to secure concessions in the form of new construction
projects, and so it would appear that there has been absolutely no change
to the old-style politics.
The following points will likely hold true for the upcoming political
changes in Japan.
- Raising taxes will become a key issue after the next Lower House
election.
- The new leaders will fail to carefully consider and select policies
to help Japan overcome its current economic slump.
- During the next Lower House election, the coalition government
formed by the Liberal Democratic Party, Liberal Party, New Komeito,
and the Reform Club will prove to be an advantage in rural districts,
but will be a disadvantage in the large cities.
- The creation of this new coalition government will highlight many
of the conflicts of interest between Diet members from the large cities
and those from rural districts.
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