TO ALL:
Looks like it might be a rought day at 'the office'
tomorrow:
washingtonpost.com
Japan's Ruling Party Rebuffed
By Kevin Sullivan and Mary Jordan
Washington Post Foreign Service
Monday, July 13, 1998; Page A01
TOKYO, July 13 (Monday) - Prime Minister
Ryutaro Hashimoto's Liberal Democratic
Party suffered a smashing defeat in national
parliamentary elections on Sunday, raising the
likelihood of Hashimoto's resignation and
clouding the future of reforms for Japan's
ailing economy.
Angry voters turned out in unexpectedly high
numbers - nearly 60 percent - in an election
that was viewed as a referendum on Hashimoto's handling of
Japan's economic crisis. With Hashimoto reportedly planning to
offer his resignation today and a major reshuffling of the
government expected, analysts said that Japan's critical economic
reform efforts at least would be delayed, if not severely disrupted.
In results that shocked even those who had predicted an LDP loss,
the party retained only 44 seats of the 61 it was defending in the
upper house as voters sent a blunt message of no-confidence in
Hashimoto and his party, which has dominated Japanese politics for
50 years.
"It's a big defeat. Voters are punishing their leaders for their bad
performance in this economic crisis," said Yasunori Sone, a
professor of political science at Keio University in Tokyo. "This is
big news."
The news for world financial markets appeared mixed. Some
analysts said that the removal of the Hashimoto government, which
had moved too slowly on reforms for many critics, might help the
reform process in the long run. But many financial analysts were
predicting trouble for stock markets when trading begins this
morning in New York, London and other financial centers where
the election results were being watched closely.
In early trading in Tokyo today, the Japanese yen dropped against
the dollar in the first few hours of trading, falling to more than 144
yen to the dollar after closing in New York on Friday just above
140 yen.
LDP secretary general Koichi Kato, in a television interview
Sunday night, appeared to try to calm international investors who
recognize that the election results almost certainly will mean
further delays in addressing economic problems. Kato, who also
may be forced to resign, said promised reforms, especially those in
the ailing banking industry, "will go forward."
Still, one U.S. official said the new uncertainties in Tokyo would
inevitably "lead to a new round of American anxiety about Japan."
U.S. officials have been urging Hashimoto to take stronger
measures to rescue the economy, and have repeatedly expressed
frustration at what has been seen in Washington as a slow and
inadequate response to the crisis by his government. Hashimoto was
due to travel to Washington next week for a state visit that both
governments hoped would produce new backing for reform
measures and reassure international markets.
A drawn-looking Hashimoto appeared on television late Sunday
night and accepted blame for the election results: "The results are
entirely my responsibility," he said. "Everyone has handed down
their judgment, and we must accept that with sincerity."
If Hashimoto resigns, it is not yet known who would succeed him,
but whichever LDP elder is chosen will govern over a severely
weakened party, which may have to seek out new coalition partners.
Leading candidates appeared to include Foreign Minister Keizo
Obuchi and former chief cabinet Secretary Seiroku Kajiyama.
Hashimoto's resignation would make him the latest leader to be
toppled by the Asian financial crisis, which has seen the collapse of
currencies and stock markets, an outflow of investment and a surge
in unemployment around the region over the last year. Public
outcries in Indonesia, South Korea and Thailand have all led to new
leadership.
Unemployment and bankruptcies are at record highs in Japan, and
though this nation's economic problems are not nearly as severe as
its neighbors', millions of Japanese have watched their paychecks
shrink as anxiety about their future swells. The economy has
declined for two consecutive quarters, and despite a large
government stimulus package announced in April, consumer and
business confidence are low and the yen has been under strong
pressure in currency markets. A new plan to stabilize the banking
system, which suffers from massive bad loans, failed to reassure the
markets when it was announced early this month.
"I hope this throws cold water on the LDP and wakes them up," said
Riichiro Watanabe, 67, one of the many who voted to throw out the
LDP. Watanabe, the owner of a real estate firm, said he voted
against Hashimoto's party because Japan is stagnant and "needs a
new wind."
Still, while the voters' stunning rebuke will force leadership
changes, it does not dislodged the LDP from power.
The upper house of parliament is essentially a rubber-stamp body,
and its elections usually merit little attention here. In the far more
powerful lower house, the LDP still holds a comfortable 13-vote
majority. The lower house controls government policies, including
banking and financial reforms, and it is the body that passes the
budget and chooses the prime minister.
"Will Japanese policies fundamentally change? I don't think so,"
said Ronald Morse, a professor at Reitaku University.
"Fundamentally, it will stay on the same course."
"Upper house elections have always been the Japanese option for
protest, because the upper house doesn't mean anything. So it's a
cheap shot that sends a message," Morse said. Noting that the
Communist Party performed well in the polling, picking up nine
new seats for a total of 15, Morse said: "This is the Perot vote. If
you're going to throw your vote away to send a signal, this is the
place to throw it."
Japan does not have a functioning two-party political system.
Instead, it has a single dominant party, the LDP, and the collection
of small opposition parties who split the anti-establishment vote
Sunday. In addition to the Communists, the fledgling Democratic
Party, led by charismatic Naoto Kan, was the biggest winner,
picking up nine seats for a total of 27.
If Hashimoto resigns as expected, a new prime minister could be
chosen at a special session of parliament scheduled later this month.
Richard Medley, a New York-based international investment
advisor with close ties to the LDP, said shocked LDP leaders were
still trying to absorb the defeat and hadn't decided on how to
proceed.
"It's like getting the news that your entire family has been wiped
out in a tornado - you don't go to bed worrying about what the next
wife is going to be like," Medley said.
Some analysts here say that the appointment of either of his most
likely replacements could be a step backward into patronage politics
that would be greeted harshly by jittery global financial markets.
Foreign Minister Obuchi, 61, is seen by many Japanese as a party
functionary with little economic expertise. Obuchi's chief claim to
leadership is seniority, having served in parliament since he
inherited his father's seat in 1963.
Former chief cabinet secretary Seiroku Kajiyama, 72, is seen as
more intellectually facile than Obuchi, but still less capable and
dynamic than Hashimoto, and a symbol of old-style Japanese
politics.
Medley said LDP officials were also considering a scenario under
which an "emergency prime minister," such as former prime
minister Kiichi Miyazawa, would be installed temporarily to
oversee swift enaction of economic reforms. Commentators Sunday
night said that a dark-horse candidate, such as former LDP
president Yohei Kono, also could emerge from today's meetings of
the party.
By dealing the LDP such a stunning defeat, voters defied
conventional wisdom. Before the elections, many analysts said that
the Japanese public had not fully comprehended the depth of the
financial crisis it faced, because the average Japanese still has
remarkably high personal savings and enjoys relative affluence.
Also, many analysts had said that in times of trouble, the Japanese
turn conservative and retreat to the familiar. In Japan, nothing is
more familiar than the LDP, which led Japan's growth from
post-World War II basket case to the world's second largest
economy during almost 40 years of single-party rule. Voters
dumped the LDP in 1993 following a series of corruption scandals,
but the LDP later won back almost all the support it lost.
Unlike the 1993 election, voters Sunday did not seem to be rejecting
the LDP in favor of a popular opponent. A chief beneficiary of the
protest vote was the Communist Party - not so much because the
Japanese favor a Communist style of government, but because the
Communists were the one party that seemed organized and
thoughtful about its policies.
The LDP had staged a major offensive to get out its party vote, with
Hashimoto leading the charge on the campaign trail to the last
minute. LDP leaders clearly were spooked last week when a poll in
the influential Nihon Keizai Shimbun newspaper showed support
for the LDP at just 28.5 percent. As a result, the LDP sent every one
of its officials in parliament out to campaign for the party.
"Please trust me, please trust the LDP," Hashimoto pleaded at a
last-minute rally Saturday |
