[talk] How to Proceed with the Prime Minister led reforms

Yasuhisa Shiozaki: House of Representatives

Born 1950. B.A. from Tokyo University, Department of Liberal Arts. Master Degree from Graduate Program in Public Administration, Harvard University. Bank of Japan 1975- 1993. Elected to House of Representatives in 1993 from former Ehime Constituency, 1st District. Parliamentary Vice-Minister of Finance, Chairman of the Legal Committee of Liberal Democratic Party(LDP); Chairman of the Diplomacy Committee, LDP. Authored: "Found Japanese SEC" "Second Phase in Money Riot-Rebuild Assets Market" and more .

Yoshimasa hayashi: House of Councilors

Born 1961. B.A. from Tokyo University, Department of Law 1984. Mitsui Corporation since 1984. Graduated from Harvard University Graduate School 1994. Elected to House of Councilors in 1995. Participated in development of Mansfield Bill in U.S. in 1991. To present, Vice Chairman -LDP Upper House Policy Review Committee, etc.

Two Diet members from Liberal Democratic Party talk about their view and appraisal on the progress of Reform Plans initiated by Prime Minister J.Koizumi. Both Yasuhisa Shiozaki, House of Representatives, and Yoshimasa Hayashi, House of Councilors, are the LDP mid-level officials, actively involved in policy and measures development. Genron-NPO asks their view on how persistent resistance inside LDP interferes with the Prime Ministers reform process; is the controversial "preliminary bill screening by ruling party" a real stumbling block to the reforms. And also asks how they see the effectiveness of Japanese lawmaking system, as actual participants in the process inside LDP.

Yasuhisa Shiozaki:

Some measures could be highly rated as we can see the notable progress.( e.g. streamlining Special Public Corporations), while others are not. Doesn't fully agree with the Prime Minister's priority setting and particularly in economy reform plans.

The Council on Economic and Fiscal Policy plays an important role to provide the Prime Minister with power to drive the reform. We must legitimize a system in LDP of visionary and prudent but also quick decision-making, no matter who will be the Prime Minister. That system should demand high-level discussion among LDP Diet members to come up with Cabinet positions that are aligned with the Cabinet objectives of the Prime Minister. Once we have such a system in place, bill screening could be eliminated.

The Prime Minister could leave key reform bills up to each representative's discretionary voting with no LDP screening. Discretionary voting is definitely an option to be reserved by the Prime Minister when it comes to a point where he must have a political showdown. Under current constituency system, a party could have a representative whose belief is conflicting with the party policy. If those representatives choose to vote based on their personal beliefs, the party's control over the vote will be fragile. That may trigger to break the party frames. A debate on policies throughout parties and the Disparked so be sparkedso that policy alliance across parties will be visible.

Yoshimasa Hayashi:

Because a certain paradigm shift has been seen at the start of the reform, the expectation level has been raised to high. I was afraid that people might be disappointed about the gap between expectation and reality. But at least now, reforms are advancing with high public approval rate. We have to accomplish all reforms while the high support continues.

I never recommend that all the bill screening be eliminated. It’s a matter of counterbalancing (between the cabinet and lawmakers). What's unusual in Japan is that Japanese Diet members are forced to vote unanimously for the party direction, even though they won the election with their own effort and strategy. We could try to hundle some bills without party screening and unanimous voting direction. Our party pledge in the last election, which did not specify the reform contents and timeline, might be the cause of never ending disputes inside LDP.

Time is running out for the budget and taxation bills. If these are submitted to the Diet with no mediation made in LDP, we will risks drastic changes or confrontations being raised in the session. This could lead to the situation Mr.Shiozaki hinted. Right now though, we have no time to dissolve the lower house and repaint political maps.

KUDO: (Genron NPO Chief Editor)
It's been about seven months since Prime Minister Koizumi’s Reform plan started. It seems to be making some progress in political timeline although many gave mixed appraisals as the declining economy continues. Would you tell us what is your interim rating to the Reform progress?

SHIOZAKI:
Nothing was specific until we saw proposals on reengineering Public Corporations . I however believe that Mr. Koizumi has successfully demonstrated his commitment to accelerate the reform process by announcing streamlining of seven corporations as phase one, followed by some others as well.

Since the LDP's (Liberal Democratic Party) President election, we at the LDP kept appealing the Koizumi Reform Plan to constituents and received a big approval in the election of the House of Councilors. In other words, we made a big promise for changes to the whole nation. Before this, the Ministry of Land, Infrastructure and Transport has never agreed to accept privatization of Public Corporations under their control. Also, third-party organizations are being created, directly reporting to the Prime Minister, not to the ministry. It's another unprecedented event, which could give more vital signs for change.

Now everybody knows that things have already started moving ahead. Public Corporations will be streamlined as described in the master plan, although some other plans, e.g. Medical Reform, might not effectively move ahead as originally planned. At any rate, Major reform actions could only be viable under the Koizumi Administration.

I am a bit concerned over the priorization of major policies implementation. The most critical is economic policies, symbolically, bad loan disposals. In my opinion, it is a too big issue to throw away all public finance options. Philosophically, it's ideal since we should bring our public finance back in good standing. I think things need to be done in the correct order. Today's top priority should be clearing bad loans to revitalize businesses and industries. I support the concept of replacing the public finance components, but the proposed sequence of financial measures does not appear practical. This could lead to a cumulative negative balance in the national balance sheet, accelerated deflation that could negatively impact the unemployment rate and because corporate bankruptcy as more bad loans get written off and reengineering of businesses and industries takes place.

Even though we have to take some measures toward medium to long-term public finance rebuilding, I see no reason to worsen our financial position right now. One short-term option is to reserve the right to cash government assets to counter deflation impact. In the meantime, I support his commitment to the 30 trillion yen cap of national bonds as a symbol of finance reform. This could go hand-in hand with my option.

HAYASHI:
These days I often think of the English word "Mandate", which means the will of constituents to the president-elect to follow when he starts his tenure. Ever since I ran the last election for the current term at the House of Councilors, I keep feeling that the "Mandate" from the last election must be "Commitment".

This means we proposed at the election: "We are committed to reform the nation, with your approval and consistent support all the way". They positively responded with their support and understanding to the reform that will bring a certain amount of pain involved. I assume that's why Mr.Koizumi keeps consistently high public approval rate under a devastating economy.

So, we must push hard to dispose bad loans, which have been shelved for long. At the same time,we must give confidence in the future. We were asked "Would the private sector only be the hardest hit when a series of rehabs are implemented ?" or "Will the finance reform include the medical reform bill, is implemented?" ," The downsizing plan on the government's side must be a head start for the series of reform initiatives.

While streamlining Public Corporations looks stand-alone, there are two other key elements in the reform package that should be addressed, reengineering of public employee organizations and Nonprofit Organizations. The progress of the three as a package seems successful as part of the Koizumi reform.

Since some changes have been seen, expectation of the reform went up to an extraordinarily high level. I was afraid that people might be disappointed about the gap between expectation and the reality. But Mr. Koizumi very passionately encouraged people by demonstrating his commitment even under many constraints.

Objectively, that expectation is still kept up high. We have to keep that level as high as possible so that we can implement all major actions without delay while the "Mandate" persists with passion.

Appraisal on Koizumi Economy Measures

KUDO:
Mr.Shiozaki, you have been advocating a full-blown preparation prior to lifting full protection of bank deposits. Are you satisfied with the current progress?

SHIOZAKI:
I am very worried about it. Some bank stock prices have gone down below \100 level. I have been warning this could happen since early 2001. Unless the government spearheads to work on immediate solutions to the bad loans issues and restructuring distressed companies, the market will seek its own catastrophic solution. That’s exactly the worst scenario foreign leaders had in mind for Japan since early 2001.

I kept emphasizing the needs for drastic disposal of non-performing loans before the April "cap" rule kicks in. It is still questionable whether a government-led disposal could be completed so that the rule would be effectively implemented by April. In reality, due to Mr.Koizumi's strong pressure on Finance Services Agency, a certain progress is seen in "big-boned policy (policy guidelines featuring a set of structural reform measures aimed at reviving the economy)" and "Reform Timeline" . But it is still unclear as to how far they could go. People are getting suspicious whether the government is serious on this issue as the April timeline is a factor.

KUDO:
Mr.Hyashi, I ask you on the same issue; there are always two conflicting issues involved at the same time. One is that there will be some pains we have to face as the reform moves ahead. The other is an already slow and still declining economy. Mr.Shiozaki showed his idea to sell government assets for cash to bolster national finance. Is there any consensus made inside LDP on this issue? It is unclear to me what is LDP’s goal on economy policies. For instance, they first talked about precautionary measures on deflation, then it has been changed to prevention of deflation spiral. Reforms should go on at full sails to increase the economy growth rate but on the other hand there are advocates of stimulus package inside LDP. Will these different views eventually be unified to one single policy or will such diversity expand?

HAYASHI:
The two issues are always conflicting, not only in LDP but also among economists. One faction believes that the stimulus package should be placed as top priority where aggressive measures for national finance and macro economy are to be introduced first. Structural reform could take place whenever the economy returns to an upward trend. Another faction believes that none of these stimulus measures would work to turn the economy around. I assume the former opinion is somewhat dominant in LDP.

In fact, the Koizumi Reforms are pretty similar to the previous Six Reform Plans led by Prime Minister Ryutaro Hashimoto who tried to reduce national debt, which was reaching a 400 trillion yen level. Though it did make some progress, due to some other reason the Hashimoto Administration lost the House of Councilors election, leading to the Obuchi Cabinet's take over. I strongly supported another candidate Mr.Seiroku Kajiyama to take power but to no avail. Electing Mr.Obuchi brought a big shift to the policy, resulting an inflated national debt of 666 trillion yen triggering the new reform deal.

Although conflicting opinions are always there, the Reform this time is characterized as top-down and making fair progress.

The key to the success of this reform depends on the level of trust of the Japanese nation who gave that “Mandate”. It appears to me that the Japanese people are committed to go through tough time for reform, as approval rate of Prime Minister Koizumi remains high under unprecedented devastation in jobless and growth rates.

LDP Confrontation to Prime Minister

KUDO:
Many LDP Diet members have led important policy proposals like Mr.Shiozaki. But under such crisis in Japan, the conflict in policy making between LDP and the prime minister drives me crazy. Why does this happen all the time?

HAYSASHI: I do not think that the system itself is malfunctioning. When a policy bill is to be presented top-down, some counterbalancing, or trade-offs, on a bottom-up basis is quite normal. To rephrase, the mandate given to the Prime Minister should be reviewed in due processes of democracy. Once a draft form of the policies is leaked out at an early stage, there will be a series of criticisms, if they were not implemesuccessfullysfuly. It's really not bad to allow room for modification of such drafts in the course of deep conferencing before making decision.

KUDO:
Is there any function in LDP to propose policies?

HAYASHI:
The first place is League of Diet Members where everyone can brainstorm. Most recently, members interested in the Inflation Target got together for debates. When members feel they should move forward, a Subcommittee is formed in the Policy Research Committee of LDP with increased legitimacy. The Inflation Target case though did not go further to propose a bill.

This process is transparent inside the party and an attempt to make it visible to outside the LDP is important. Anyhow, LDP where senior party leaders do not curb newer member's proposals.

KUDO:
As the Koizumi Reform moves ahead, more resistance seems to rise inside the LDP. Would it be better to change the LDP system to allow the Prime Minister to implement his policies without party interference? Someone is even recommending screening by government party be eliminated.

SHIOZAKI:
Currently many LDP members are frustrated because the Council on Economic and Fiscal Policy is dominating many decisions alone. Those frustrated call themselves constructive advisors, but reality they are just resist...., it makes no difference to me. At any rate, the current decision-making is fairly under control by the Prime Minister's office.

We should legitimize a system where we, as a nation, can stand visionary and at the same time respond to global key issues quickly and precisely no matter who is Prime Minister. We shouldn't rely on circumstances of the very visionary and highly popular Mr.Koizumi's presence. Now is the only chance to make functional changes to the nation's governance system and preserve them formally.

We must realize that we live in a new world where we are required to redefine our national interest and goals. From Japan's post WWII recovery till mid 70's, it was simple and obvious to everybody that our national interest and goals are economic growth and improvement in the standard of living. But only because defense and security issues were totally pushed aside, we were able to keep them simple and clear-cut.

Thereafter, the world started to change, going through the Oil Crisis and/or Nixon Shock and the world economy started to mature. After the Cold War, market economies started to explode in former communist countries, leading to a globally borderless economy. Looking back Japan's key policies did not change over that period.

When we were involved in the Financial Reconstruction Total Plan a few years ago, many of the accomplishments would never have been done in the traditional bottom up scheme. The LDP Secretary General, Koichi Kato and Prime Minister Hashimoto who were overseeing the whole process from the summit. In Government administration, we must have individuals who are able to define country goals, how it stands and acts. They are the only people who deserve Prime Minister candidacy and once elected with national endorsement to the vision, the administration should stick to that vision to implement policies.

Nobody paid attention to visions of former Japanese Prime Ministers. No matter who he was, all policies and measure had been implemented systematically based on what was mainly internally agreed upon by LDP. Such a mechanism would not be accepted by the Japanese people's buy-in any longer.

In a system, of which all projects are led under the Prime Minister's initiative, there should be a validation system, to check the conduct of the administration whoever the Prime Minister is. Diet members should represent constituents voices in a representative democracy. If their thoughts and visions are not respected and reflected in the Cabinet's policy administration, the Prime Minister will end up being an autocrat. What's needed now is to develop a speedy but prudent decision-making mechanism for future policies of Japan.

Controversy on screening by ruling party and to be bound by a pardecisionion

KUDO:
Mr.Hyashi, do you think it's necessary to eliminate bill screening by ruling parties for effective Cabinet administration?

HAYASHI:
I never recommend that all the screening be eliminated. It’s a matter of counterbalancing (between the cabinet and lawmakers). In other nations' politics, ruling parties' approval rates are normally poor. I guess that means they develop good policies. However in Japan, Diet members are forced to vote unanimously for the party position, even though they won the election for their own efforts and strategies. I have never seen a system like this outside Japan.

KUDO:
Are party constraints very tight in Japan?

HAYASHI:
Yes. We run elections as individuals but once elected, we are forced to vote unanimously. We are too kind compared to other countries' representatives. Bill screening and unanimous vote are one unit. However, for the Body Organ Transplant bill we agreed on a free voting basis, with minimum parameters approved by the Administrative Committee of LDP. From now on, many moves may be seen. For instance, "in case of legislation by House members, it's a discretionary voting" is definitely an option.

I suggest that discussions in the bill screening be disclosed to make the process more accountable.

The opposition should also do the same. If unanimous voting is only revoked for the LDP and not for the opposition party,it will not be fair game. In the Upper House, the government side is a minority. If we discuss there with the opposition on free voting, it could be a mess.

After all, the key to the success of the reform is in making the process more transparent under any options.

KUDO:
In Japan's rapid growth period, there has been a system inside the government where everything is managed under consensus and compromise. This became an obstacle for bringing power to the Prime Minister. Why voters support these representatives is one issue but with the given situation, how do you deal with the confrontational factions in designing new system that gives more power and control to the Prime Minister?

SHIOZAKI:
Representative democracy is to elect representatives of all the people of Japan by geography, etc. to the Diet for discussion,as all of 130 million Japanese nationals cannot get together at the Diet.Because the ultimate authority in the national rights lies with the Diet and, not the administration, everything must be finalized through Diet voting. For that reason in late 50's a custom was developed that the Cabinet is not to send any bills to the Diet unless they are approved by LDP.

In U.K., only a few ministers participate budget allocation. When an agreement is reached the money is given to the respective sectors fimmediateate use. The system functions because all understand the direction of discussion in the ruling party. Also members of Parliament from the ruling party play important roles in the Cabinet. If we over emphasize the power of the Prime Minister and to let him drive everything as top down without that mechanism, things will get awkward.

I am not sure if it is a good idea to eliminate all bill screenings right away, as Mr. Hahashi said. In the long run, we should go that direction provided that Diet representatives have quality discussions on all key issues to come up with recommendations which are also aligned with what the Prime Minister is trying to accomplish. The Cabinet should present those ideas as Policy proposals. These bills could be overturned at the Diet. The Prime Minister should listen to Diet members representing constituents' voices to make a prudent decision as a leader. But this is totally different from being disturbed by a handful of people who are dominating the party's policy-making process.

KUDO:
Are you recommending, if situation allows, that bills could be voted freely, without party screening?

SHIOZAKI:
Free voting is definitely an option to be reserved by the Prime Minister when it comes to a point where he must have a showdown about his confidence. For instance, he could leave the special public corporations bill up to each representative's decision with no LDP screening.

Conflict inside LDP

KUDO:
What most bothers me is that Mr.Koizumi proposes many reform plans with strong support from voters; nevertheless the LDP members who are dominating party's conventional mediation system challenge his plans. Are they trying to show a live performance of internal debate, or does this simply mean the old mechanism is dying and needs fundamental reengineering?

HAYASHI:
In principle,during the past election,the LDP lacked specifics in our pledge leading to these controversies. We presented no specifics about what we are going to do when we take the government. So what has been delegated by voters is also vague. In the Diet , each of us is not supposed to vote for unless personally.

Each representative cannot precisely judge if he or she should blindly support what the Prime Minister proposes.

In the case of the Japan Highway Public Corporation at the election, has LDP proposed that it remains public for next the 50 years with no government subsidy? No, we haven't. So, that bill may be voted by each LDP representative's discretion as suggested by Mr. SHIOZAKI, even though there is the risk that the bill will not pass since the opposition would take advantage of our controversy. We could live with that risk.

I am not fully convinced of the current obligation to obey the party's decision to such a bill that It was not clearly pledged at the election and has been mediated in the party without my consultation. We need to have criteria for circumstances under which the party can force unanimous voting. Some could be left for free voting like the Organ Transplant; while others could be open for discussion when brought in, then when it gets closer to a consensus, the party could recommend unanimous voting. Both are seen in the U.K. Bills could be handled in many ways by timeline and contents, e.g. 100% free voting; Party directed voting at the end of Committee session where the ruling side also makes amendments to bills submitted by the Cabinet; or unanimous voting only at the plenary session.

However, we need full understanding and cooperation on these methodologies from the opposition. Otherwise we lose ammunition, and they don’t. As I'd like to see more good cases like the Organ Transplant Bill, we need rules for disclosing the content review process.

SHIOZAKI:
In countries like the U.K. and Australia, and probably the U.S. has the same tendency, the two-party system defines each party's characteristic very clearly. Their policies sometimes overlap, particularly in the U.S., but as in the U.K./Australian Conservatives-Labor system, party–controlled voting makes a lot of sense.

Here in Japan, LDP, which is legally a political party with vision, includes an extremely broad base of people whose profiles are not communists, not socialists or with no religious background and so forth a big melting pot of residuals. The Democratic Party of Japan is a bit smaller size melting pot in the same nature. Many candidates run as Democrats because LDP did not give them candidacy in their constituencies.

Parties' vote forcing under such circumstances could distress many representatives. Across many parties, we will soon know whose opinions are similar and whose are different as time goes by. Then regrouping of representatives across party frames wilbebw an issue. Normally this would never happen voluntarily. Even though the constituency constraints could be an obstacle, it is still ridiculous if a representative must vote against a bill he wishes to support only because it came from the opposite side. Now we are at least seeking a structural solution to such an ineffective political system. Otherwise this dilemma will go on endlessly. The recent Anti-Terror Bill session started with for-and-against disputes among parties even though the bill was not yet drafted. We need new governance now. At the same time, political parties should be geared toward change.

KUDO:
Do you have in mind a kind of ad hoc affiliations beyond party frames, to seek a base of political regrouping?

SHIOZAKI:
Let's say Mr.Koizumi could give all representatives a 100% autonomy from the LDP central management in voting for the Public Corporation Reform bill. If we move ahead, the Democrats will be forced to behave prudently.

KUDO:
What if he had quite a few against vote from LDP?

SHIOZAKI:
He must have a showdown about who is right, i.e. whole cabinet to resign or dissolve the Lower House.

KUDO:
It's very easy to understand for the general public. Can he do it now?

SHIOZAKI:
If the majority of LDP ballot was against his bill, he won't survive. The same holds true if the bill did not pass. But if the bill did pass but LDP majority recommended against, it could be a good chance to move the politics into new phases.

Koizumi to risk his political life

KUDO:
Mr.Hayashi, LDP is a huge party with diverse base and opinions. But it is very funny to see that intra-party resistance is still visible although his reform has already advanced halfway. Even though he is honestly struggling to improve the party, tension against him seems critical. What is the best way for him to move along?

HAYASHI:
For budget and taxation the clock is ticking. Budget is literally figures and numbers. While most of other bills are discussed subjectively, i.e. talking about roughly midpoint, or 30% agreeable, etc. the Budget bill is presented in numbers. This could expose composition of Koizumi Cabinet's policy components to objective views. It comes to how the Diet reviews the Budget bill submitted by the Cabinet. In the past, the Budget bill has been handled in a sort of "Fast Track" approach, i.e. take it or leave it within a short timeframe. We had only one exception, requested by Secretary General K.Kato for one revision in the rider of the budget bill.

The Prime Minister in the face of LDP and ruling parties' resistance can push this coming budget bill hard. Theoretically at the Diet session, the ruling parties could dispute the bill. When they deny or insist on drastic amendments to it, Mr. SHIOZAKI's scenario could realize. It sounds exciting but I am afraid that now is not the right time to dissolve the Lower House, followed by nationwide election to scrap and build major parties, as far as time and expense are concerned.

We could wait and see how the Budget bill will go through the Diet rather than insisting on election and political re-affiliation now. If the bill is handled so far smoothly, we might be able to see it as a vital sign for more people to join the reform.

SHIOZAKI:
I am not favoring the dissolution right now either. The resistance sector would not even be able to officially confront the Prime Minister who keeps such a high public approval rating. So,for now they claim to be constructive advisors, and not resistance. As such, Mr.Koizumi is now given a chance to lead the whole process as he wants, although personally. I have some concerns on his national finance measures. We should keep disputing on policies to identify issues in the future.We may encounter a circumstance where the Prime Minister need a political showdown.

The Council on Economic and Fiscal Policy is scheduled to submit Tax Reform proposals in 2002. This must have a big impact to the intra-party resistance as this issue is the closest and biggest to people's lifes.

KUDO:
How do they work with LDP Researchcommissionn on Tax System?
SHIOZAKI:
We never recommended the LDP Committee be dissolved. We say that if the Council on Economic and Fiscal Policy is officially asked to fundamentally review current taxation system, they will do it. No matter what discomfort the party Committee members may have, it's their mission and no laws can prevent them from doing it.

KUDO:: Mr.Hayashi, when the Cabinet brings in a bill, which the resistance faction would never accept, don’t you see any challenges in handling disputes and the steps in the Diet?

HAYASHI:
Certainly we foresee some challenges as the current system requires intra-party bill screening to make consensus in order to dictate unanimous voting to all representatives. Even if internal mediation does not reach a consensus, the party will have to force the vote. Then, people who did not agree will face a big dilemma. They may think about some options like to abstain, voting against and so forth. If they do, the real resistance will ten be known.

KUDO:
Is there any chance for open voting to the Budget bill?

HAYASHI:
Probably not.

KUDO:
Then, certain underwater struggle will be expected.

HAYASHI:
Yes, drafting of the Budget bill.

KUDO:
How does the Council on Economic and Fiscal Policy get involved in the process ?

HAYASHI:
Let's take the taxation reform as an example. There are three entities that are working on the same issue, Council on Economic and Fiscal Policy, Tax Commission and LDP Tax Commission on Tax System . Prime Minister Koizumi recommends that they each work on their own recommendation. The Prime Minister is the head of the Cabinet and the president of LDP. As long as the party's Taxation Committee is a part of LDP Policy Research Council, the LDP president could officially control who should be nominated ascommitteee members. As such, the party and the cabinet may be perceived as one single body but officially, the two reporting lines merges at the Prime Minister. Theoretically we might be able to interpret these organizational charts to find ways to get over the conflicting interests

Economy Reforms Stalled?

KUDO:
The recent U.S. source represents some disappointments to the slower-than-expected reform progress in Japan although it still highly values Mr.Koizumi's reform efforts. Due to lack of a powerful opposition in Japan, America and other countries often assume the auditor's role. They are anxious to see more speedy and thorough reforms to progress. Do you think their concerns are legitimate?

SHIOZAKI:
Absolutely. When we were standing at the crossroads on economy measures three years ago, the government decided to put the stimulus package as the top priority and hold off bad loan disposal and structural reforms. All has been decided in an almost closed chamber. Koizumi was appointed with his pledge to counter those strategies and promised to put top priority to reforms of finance, economy and industries, symbolically, bad loan disposals. Since Japan still fails to show significant results of these reforms, they wonder what's going on. First of all, they like to see recovery of economy, but the first move delivered to them was the streamlining of special public corporations, which they see having no immediate relationship to the economy recovery.

After all, the only one and most important thing they were looking forward to was a major changes in the economy, which has been left stagnant with no fundamental solutions over the last 10 years. So we have no options other than to speed up bad loan disposals. Although it could have been resolved much earlier, it's been shelved for long. We have everything in our toolbox to fix it immediately. They always wonder why Japan doesn’t do it now, and are getting impatient. So, unless we make a quick advance on the bad loan disposals, they will never value our reform efforts.

HAYASHI:
I again emphasize that it comes to a matter of people's commitment to the reform process. There are always two mainstreams in the philosophy of economy measures. Whenever people are getting frustrated to go on the long and painful reform trails, the easy-going thoughts rear their ugly head. I really hate to see the worst scenario where people look back the halfway-abandoned reforms and think what if Mr. Koizumi had been given another chance to move the reforms ahead.

KUDO:
Thank you very much for joining us today.