[paper] To Proceed with the Structural Reforms of Politics

Yasunori Sone: Professor, Keio University

Yasunori Sone: Professor at the Keio University, the head of provisional private political investigative committee. Professor Sone was born in 1948, majored in political science and policy analysis and obtained a Ph.D. at Keio University. His articles include "Kettei no Seijigaku","Gendai no Seijirironn","Political Dynamics in Contemporary Japan"; his collaborations include: "Political Science","Kono Seijikuuhaku no Jidaini".

Progress on Prime Minister Koizumi's structural reform has not been very smooth. This is not so much because of the vagueness of its objectives and strategies, but rather it is because of the delay in political restructuring to adjust relationship between the cabinet and the ruling party.

People are placing much expectations on Koizumi’s reform plans, but in order to carry them out, we think that the relationship between the cabinet and the Liberal Democratic Party(LDP) need to be changed to establish a Prime Minister-led mechanism to decide policy. Based on this thought we worked on our ideas into ‘Proposal for political reform to support Prime Minister's initiative in November.

Currently, ruling parties hold an examination(Ruling Party Examination) on cabinet bills prior to the Diet debate, but this is the convention that need to be reviewed in the first place to set up the Prime Minister-led mechanism. After we had produced the proposal, this unfamiliar term Ruling Party Examination aroused opposition among LDP members and became the point under political debate. But we should remember that changing conventions entails changes in the party and bureaucrats. This relationship between the cabinet and the ruling parties is the biggest challenge that has been left untouched throughout the past political and administrative reforms

Prime Minister Koizumi still retains high approval rate, which stands at more than 70%. The rate did not come down even during the Diet debate on special anti-terrorism bill, which took place after September 11 terrorist attack. Actually, some people even argue that if anything, the terrorist attack dampened criticism emerging in the LDP around the end of August and thanks to that, Koizumi could rally his support. Still Koizumi's reform has not been conducted as much as expected. Some people criticize that what he did on the medical insurance system and public corporations such as Japan Highway Public Corporation were not restructuring but compromising. However, leading bureaucrats and LDP members think that Koizumi has won on these issues. That is because Koizumi brought up a process, which may skip the prior consultation to the ruling party and this process can be applied to the issues of budgets and privatization of the postal services. Also, if he can submit bills directly to the Diet and open debate without going through the prior examination, he will stand a good chance of passing his proposals. In the past one month, the issue of Ruling Party Consultation has come to the fore as a focal point of political debate. Currently the debate is conducted in a form of a confrontation between "Resistant Group" to Koizumi's reform, which tries to protect vested interests and Destroyer, which support his reform. However, if this debate can be turned into a debate, which focuses on the political process concerning Ruling Party Examination; Koizumi, even though he is in the minority in the LDP, can stand a fair chance of wining. So far Koizumi has been bluffing with the high approval rate and the similar stance of the Democratic Party of Japan; but if, in addition to these, the cabinet gains the authority to decide policy; it will make the situation very difficult for old guard to resist Koizumi's reform plans.

The Koizumi cabinet is very popular in spite of the economic slowdown and increased unemployment. This is an anomaly in politics. The fact that Japanese still expect Koizumi an essential factor in the future of his cabinet's reforms.

We must remember that in last July, when the upper house election was held, 40% of the voters did not support the Liberal Democratic Party but did support Mr. Koizumi. Thus, recent opinion polls do not necessarily mean that the approval rating of the LDP is on the rebound.

By now, the policy concept of Koizumi cabinet has been submitted. Therefore a crucial factor for Koizumi cabinet is whether it can carry out the structural reforms based on its policy concept.

The Japanese government has tried most conventional fiscal and monetary measures over the past 10 years without success, thus this government felt that it is necessary to undertake structural reforms. "Structural reform" is an ambiguous phrase that can mean, individually or severally, to put the economy back on the long-term recovery path, make the economy more efficient and/or make Japan's market economy more transparent, free and fair.

What is common in these understandings is that people are aware that this nation's finances and companies cannot recover from the current stagnation by using stopgap measures and it is the time to make the economy more efficient.

However, in general structural reforms are mid-term and long-term measures.

Recently more and more people want instant stimulus measures, since the economy has been deteriorating and showing signs of deflation.

If the government is asked to cope with deflation in general, it must choose either fiscal or monetary policies. This is the problem it must solve.

Of course the government can handle the situation by asking the people to wait for economic recovery before they can implement economic structural reforms. But I think that the government should have prepared a short-term, structural reform policy option up its sleeve to counter those who favor economic stimulus measures.

I suppose that the people view the government's structural reforms as if they are like the corporate reforms of Nissan President Carlos Ghosn, who made an effort to rejuvenate the firm in a short time.

Locus of the resisitance

In general, the Japanese think that there are forces of resistance that are keeping the Koizumi cabinet's reforms from moving faster. This resistance force is comprised of interest groups, LDP politicians and bureaucrats who represent views of vested interests.

However interest groups and vested interests are found in every country and reforms are still carried out in many countries all over the world. In Japan, large-scale political reforms are rarely implemented, but such political reforms as the one being proposed by Mr. Koizumi have been carried out very often in foreign countries.

Raising the question as to why the Koizumi cabinet's reforms cannot simply be carried out, has brought to light the problem of policymaking in Japan. Advocacy-based opinions are not reflected in the government's measures because they are frequently blocked by the above-mentioned vested interests.

It is standard political practice that policies are realized in the form of laws or the budget and legislation necessitates passage in the Diet. Traditionally in Japan, even cabinet sponsored bills can not be submitted to the Diet without the approval of the ruling parties. Such an approval is dubbed as the ruling partie' examination and an approval before bills are introduced to the Diet is called the prior examination . Therefore, it can be argued that the resistance to reform is not in the Diet but in LDP committees, such the Policy Council or the General Council, where the prior examination takes place.

This custom of the screening system, which brings the decisive and substantial deliberation on bills to committees in the LDP, has come into being because it is convenient for the LDP Diet members and the bureaucrats who require the passage of bills.

If the ruling parties approve a bill it is almost automatic that the bill will be passed as they constitute a majority in the legislature. This means that the substantial discussion on laws disappears from the Diet and the roles of the ruling parties mainly consist of the Diet Affairs” for passing drafts.It is generally said that this custom is one of the features of the parliamentary system.

Looking back on our history, this system became a custom only since the first half of the 1960's when the LDP dominated the government. In a parliamentary system like that of the UK, there is nothing like the ruling parties' prior examination.

What would happen if the cabinet-sponsored bills could be submitted to the Diet without the approval of LDP committees such as the Research Bureau and the General Council. Of course it would be OK by law. But even under the current situation, many lawmakers oppose the Koizumi cabinet and if bills were to be presented to the Diet without this traditional process inside the LDP, an all-out war would break out

One can imagine that under this scenario the ruling parties' lawmakers will vote against the bills because the examination process is skipped, thus defeating the bill in the Diet. However I suppose that the lawmakers' remarks made publicly in the Diet will be different from remarks in a closed-door meeting inside the LDP.

At this point, the picture does not have to be completely pessimistic, but this means if the Diet becomes the main battleground for legislation, the outcome will be difficult to predict.

Currently, political structural reform, in particular the relationship between the cabinet and the ruling parties, has not been discussed adequately. Therefore, even though Prime Minister Koizumi emphasizes the importance of the economic structural reforms, I can assume that many of his reform plans are doomed to fail because opposition elements insist on following the conventional intra-party policy formulation procedures.

Please refer to the 21st Century Commission's proposal calling for political structural reform under the Prime Minister's initiative in which these points are elaborated.

The commission held a press conference on November 8th to announce this proposal and delivered it to the Prime Minister on November 19th.

Prime Minister Koizumi instructed the LDP to consider the proposal and some lawmakers have reacted against it. If the Prime Minister wants to accelerate his reform, which is expected by the Japanese, he must take the initiative to create a Prime Minister-led policymaking system that changes the relationship between the cabinet and the ruling parties.

I suggest we take “abolishing the prior examination by the ruling parties' as the starting point of our discussion.

A war or a compromise

Prime Minister Koizumi will have to make an important decision as to whether it should be an all-out-war or a compromise. Apart from this scenario, there are several moderate alternatives. To categorize them roughly, we will have these two options.

Generally speaking, a compromise is realistic and likely to happen. One of the interpretation of the parliamentary system views the prime minister as exceeding his rights. Based on this view, some suggest that Prime Minister Koizumi concede and side with the majority of his party.

On the other hand, Koizumi won an overwhelming victory and was nominated for Prime Minister in the Diet. In addition, he won the LDP's presidential election after the upper house election without opposition. If they were going to resist his campaign promises, members of LDP should not have voted for him. If LDP members thought that they would make Mr. Koizumi their party president for winning the upper house election him only to oppose him or do anything they want after the election, LDP's intra-party procedures were not at all reasonable.

The reason that some have behaved in such a way is based on the idea that the Prime Minister is only required to act as a figurehead of his party.

The common understanding that the prime minister as a figurehead can be replaced, but the party should be stable is merely remnant of the so-called 1955 system and is difficult to theorize. I think whether Prime Minister Koizumi can choose an all-out war, not to opt for a compromise is one of the significant factors for the future.

Another task for the cabinet is to name several heavyweights as cabinet members.

Moreover it is important to establish a mechanism to absorb opinions inside the party and discuss the policy-making process in the cabinet. I am not optimistic about the Prime Minister's ability to initiate parliamentary change and settle the current confrontation between the cabinet and the ruling parties.

The current system lacks several factors that would allow government policy to be controlled by the government under the cabinet's initiative centering on the Prime Minister. Although the Prime Minister's supporting staff has been strengthen considerably in this year's realignment of ministries and agencies, it remains fragile.

Prime Minister Koizumi has established a special team comprised of bureaucrats of ministries, which do not have minister's secretaries, but it is still not enough.

Presumably it will be required to create some political systems like the Policy Unit implemented by the former British Prime Minister Thacher and the current Prime Minister Blair and discuss how far the prime minister's rights to decisions on personnel.

Learn something from Mr. Carlos Ghosn's method.

Prime Minister Junichiro Koizumi's opinion that he should carry out structural reform with no sanctuary, including the pain, has some problems but it is to the point. It is not unlike Mr. Carlos Ghosn's method of accomplishing Type V business recovery, i.e., rapid short-term recovery,Nissan's short-term restructuring. It is important for Nissan to maintain their competitive ability in the medium or long term, but for Koizumi it's necessary to consider the decisive reasons why structural reform can't be accomplished in the short term. Mr. Ghosn's four points for success with difficult restructuring are,

1. To have company-wide commonality in targets, priorities and strategies.
2. To try to make employees believe in their restructuring plan.
3. To listen to employees' opinions.
4. To make it clear that management believes employees. (Nippon Keizai Shinbun Oct.31,2001)

One of things that Koizumi can learn from these points is that he should make the target of structural reform clear. Then he should establish the priority between disposal of nonperforming loans and reform of special corporations, especially which special corporations are to undergo reform. Then he needs to decide the strategy for the target. But this is not a private firm, this is politics, so opposition parties and forces of resistance are an inevitable accompaniment. The next problem, however, is the extent to which there is a shared awareness that the Japanese economy must undergo structural reform. Koizumi's high support rate in the current opinion polls could be evidence that (2) people believe in the structural plan. At the same time, it has few adherents in the governing party. If that balance is upset, bureaucrats would adopt a wait-and see attitude.

Unlike private enterprise, people in politics must act under the inevitable constrains of multiple organizations and hard conflict. However, without forgetting the precedent of Shoji Matsuda, Toshiaki Kasai, and Masatoshi Ide and the privatization of the former Japanese National Railways in the Dokorin-tyo era, we need collaborators inside organizations to carry out reform. It is essential that we use their knowledge in the optimal way. This is what led to the failed privatization of the three postal businesses during Prime Minister Hashimoto's administrative reform, so it is absolutely necessary for Koizumi's reform of special corporations such as the Public Roads Administration.

In addition, regarding Mr. Ghosn's points (3) and (4), I think it's still not clear whether Prime Minister Koizumi is aware of them. That's why he is considering the worst-case scenario of confrontation in the LDP, policy deadlock, dissolution of the House, a general election, and political realignment. In short, when confrontation within the LDP occurs in the Diet, it will be clear who is for him and who is against him. If the Cabinet bill isn't approved at the same time, Koizumi can resort to dissolution. On the other hand, if it is a case of policy deadlock within the party's committees, his scenario of dissolution and general election can't be justified.

Dissolution and general election due to conflict in the Diet is easy to understand and can be seen as a means of carrying out the people's will. Koizumi promised from the beginning, "I'll desperately carry out reform" and the people count on him. That is why a Koizumi compromise within the LDP, if it's possible, would end in disappointment for the people.

The unusual concept of prior examination by the ruing party has emerged as a controversial political issue and has been accepted as a national issue by the people. However there are a few big roadblocks left before it can be thoroughly discussed and implemented. At least the custom of selecting ministers from the LDP's faction list when forming a Cabinet has been destroyed by Koizumi. Prior approval by the ruling party is also such a custom. Changing that means substantial change in the Diet, parties, and bureaucrats. The relationship between the Cabinet and the ruling party is the biggest problem left to be tackled by conventional political and administrative reform. Without that reform, it's difficult for the Prime Minister to demonstrate his leadership.