[paper] Article by Sir Hugh Cortazzi for Genron

Hugh Cortazzi: The former English Ambassador to Japan

Born In 1924. After serving in the Royal Air Force, he joined the Foreign and Commonwealth Office In 1949 and served as the Ambassador to Japan from 1980 to 1984. After leaving the Foreign and Commonwealth Office, he served as the Chairperson of the Japan Society In London. His major publications include "Higashi no shimaguni, Nishi no shimaguni"(The eastern Island, The western Island), and "Nichiei no aida de ---Hugh Cortazzi kaikkoroku" (Between Japan and the Great Britain --- the memories of Hugh Cortazzi). He continues to contribute many articles to newspapers and magazines.

Is the Japanese economy in terminal decline?

The general view in London on the future prospects for the Japanese economy remains gloomy despite the recent recovery in the Japanese stock market and in the yen. It is not yet clear that there is the political will to take the necessary action before the situation gets worse. In the longer term the problems of a declining population and an ageing society will make solutions even more difficult. But if determined action is now taken Japan's position can be ameliorated. Pessimists should not forget Japan's achievements not least in technology.
As interest in Japan declines Europeans are focussing more on China with its huge potential market. This is a mistake not least because such Europeans underestimate the huge problems faced by China in developing an effective market economy under a one party dictatorial regime. Political stability in China is not guaranteed.
In the bubble years the talk was of Japan as "number one' and of the United States as being in decline. Now the pendulum has swung back and Japan is seen as ailing. History teaches us that no country has remained dominant for very long except the Roman Empire, which lasted for many centuries. It is by no means certain that the US economy can maintain its supremacy over centuries but in my life time it seems unlikely to be replaced as the engine of economic growth by Europe, Japan or for that matter China.

Many Japanese can't grasp reality.

It is difficult for the casual visitor to Japan to perceive and understand the deep-seated problems facing the economy. Superficially Japan looks prosperous. The shops are full and people are still buying luxury goods while food is wasted in large quantities. Trains are packed and Japan has one of the best and most efficient train and underground systems in the world. We in Britain are envious; our trains are often late and the London underground is a disgrace, but we must remember that praise was heaped before the Second World War on Mussolini's Italy where it was said that the trains ran on time. The pre-war Italian economy, dominated by a fascist ideology, had serious weaknesses. Unfortunately many Japanese, currently enjoying a comfortable standard of living, fail to grasp the realities below the surface and remain complacent about Japan's difficulties.
British people envy Japanese superior engineering and infrastructure developments with so many new bridges, tunnels and roads, but they do not envy the despoiling of the Japanese countryside and the environment by huge swathes of concrete. According to a recent book by Alex Kerr ("Dogs and Demons: Tales from the Dark Side of Japan", New York 2001) sixty percent of Japan's coastline is now covered in concrete, mainly tetrapods, while the river bureau has damned or diverted all but three of Japan's 113 major rivers. 2,800 dams have been built and 500 new ones are planned. Ten per cent of Japan's workforce is dependent on construction work. Is all this contributing to Japan's quality of life? The answer must be "only marginally'. More important will these projects ever yield an economic return to the savers who have funded them through the Fiscal Investment and Loan Programme (FILP)? This seems very unlikely at least for decades to come.
The top agenda is significant political reform
I see no simple and quick solution to any of Japan's economic problems. Prime Minister Koizumi needs to tackle a vast range of problems. At the top of his list in my view should be significant and far-reaching reforms of the political system. Among the political reforms, which I think are essential, are the following.
Firstly the imbalance in the value of a vote in urban and rural constituencies must be rectified. It may not be possible to ensure exact equality but instead of a ratio of over two to one the immediate aim should be to bring the ratio down to no more than one to one and a quarter. This may well mean amalgamating some prefectures. This seems desirable in any case to cut out wasteful duplication and bureaucracy. Unless such a reform is implemented the urban population, on whom growth increasingly depends, will lose out to the pampered farming communities whose agricultural products are protected against foreign competition and whose high prices keep the cost of living high, thus reducing Japan’s overall ability to compete.
Secondly the role and powers of the zokugiin must be greatly reduced. This could be done by making it illegal for lobby groups to make political contributions and by ensuring that all donations to political parties and organizations over a limited amount are publicised. At the same time all contacts by members of either house of the Diet with bureaucrats should be reported to the Ministers in charge of the departments and the records of all such contacts should be open to scrutiny by the media and by interested parties. As politicians may deny what they are recorded as having said meetings with politicians may have to be tape-recorded.
Factions, especially those within the Liberal Democratic Party (LDP), should be effectively abolished. In theory they have been abolished on a number of occasions but this has never been achieved in practice. The factions exist because they are a useful way of channelling funds to individual members of the Diet to cover election and other expenses. One way to curb their power would be to set more stringent limits on the amount which candidates can spend in elections and decrease the number of multimember constituencies where there are too many electors.

What is necessary to increase public interest?

Mr Koizumi was absolutely right to insist on appointing members to his cabinet on the basis of ability and not because they were nominated by factions on the basis of "it's my turn now' like "kawari-banko' among children waiting for their turn on the swings. If Ministers are to be more than figureheads, who do the bidding of their bureaucrats, and develop their own policies they need to stay in their posts for considerably longer than the year or so, which has been the norm in the past.
More must be done to increase public interest in elections and the voting rate. There is no easy answer to this problem, which exists in other countries including Britain. But a prerequisite is to raise the prestige of politics and politicians. This means that political sleaze and corruption have to be firmly eradicated and politicians involved in such practices expelled from their party and in criminal cases expelled from the Diet. Politicians must be taught that they will lose their seats if they are involved in corrupt practices. They also ought to be forced to recognize that humility, including a willingness to admit when mistakes have been made, and not arrogance will be more likely to ensure their re-election.
In every parliamentary democracy it is essential that the governing party or parties should be held to account for their actions by effective parliamentary procedures and a courageous press. In Japan the kisha club system is an inhibiting factor. Journalists know that if they consistently report unfavourably on a certain department they are likely to find their sources of news curtailed. The system needs to be overhauled and liberalised. However good parliamentary procedures and media scrutiny are, they are no substitute for an effective parliamentary opposition capable of forming an alternative government. Unfortunately, unlike Britain where in general elections the governing party may lose its mandate and be replaced by the main opposition party, Japan has consistently lacked a credible opposition party, capable of taking over the reins of government, and has accordingly had to live under one party rule for over half a century. The LDP not surprisingly often seems to be complacent and unwilling to listen to public opinion.
Prime Minister Koizumi may retort that these suggestions for political reform are all very well in principle, but they are simply not practical politics in Japan today. Perhaps so, but it would be a step forward if the Prime Minister were to set these principles as his targets and reiterate his determination to achieve them in due course.
The point of view charged with the reform of the Civil Srvice.
The Japanese Civil Service also requires reform. Political corruption has bred bureaucratic corruption. The essential task of the Civil Service is to give informed advice to Ministers and make sensible recommendations on policies. Ministers must make the decisions and be prepared to defend their decisions personally in the Diet and with the media. Civil servants must then do their best to implement policies agreed at the political level. In the past Japan's senior bureaucrats consisted of an elite corps of highly intelligent individuals. Unfortunately, in the absence of an effective and incorruptible political leadership and constantly changing Ministers with little knowledge of the issues facing their ministries, they began to see themselves as the rulers rather than the servants. This situation is changing as a result of numerous scandals.
But while it may be popular to prick the bubble of civil service arrogance the fall in morale in the civil service, which is so apparent today, can be equally harmful to good government. Civil servants constantly criticised and bullied by politicians will not and cannot perform to the best of their abilities. A better balance needs to be achieved by guidance from the top.

How do they overcome the economic problem facing Japan ?

All the economic issues facing Japan today are interrelated and a solution to one problem will not mean that Japan is on the way to recovery, although even a few problems solved would constitute steps in the right direction. The independence of the Bank of Japan needs to be upheld if monetary policy is not to be subject to the vagaries of politics. Current political pressures on the Bank of Japan to set an inflationary target are, I think, unwise and the Bank's refusal to give way on this point is understandable not only to preserve its independence but also on policy grounds. Deliberately induced inflation could be difficult to stop. The "Latin American solution' of run-away inflation may succeed in wiping out indebtedness but it would destroy Japanese savings and condemn Japan's ageing population to penury and misery. It is also difficult to see how at this stage a limited inflation target of say two per cent could be achieved. The Japanese money supply with practically zero interest rates cannot be described as inadequate. The problem seems to lie in the lack of demand and above all confidence that deflation is being halted. Confidence will only return when it is apparent to Japanese people that reforms are being implemented and recovery is on the way.
Some have argued that Japan can lever itself out of deflation by allowing or forcing a decline in the value of the yen. Apart from the fact that lasting changes in exchange rates are dependent on market forces it is most unlikely that a lower yen would lead to a significant increase in growth. Exporting firms would benefit but because Japanese costs are so high more and more Japanese products are being manufactured abroad and this would reduce any benefit to Japan from an increase in Japanese exports. A significant decline in the value of the yen against the dollar might, according to some economists, lead in due course to up to one per cent increase in growth, but it would certainly increase trade friction with the USA which has in any case grown as Japanese demand has weakened and the US economy has suffered in the aftermath of the September 11 incidents.

Proceeding with banking management and disposal of non-performing loans.

The commercial banks are unwilling to jeopardise still further their viability by lending to companies, which may be forced into bankruptcy and healthy companies do not need to borrow to finance capital investment when they are facing falling demand. The unwinding of keirestu holdings has also reduced companies' need to borrow, but even when they want to borrow the commercial banks are constrained by the extent of their non-performing loans.
To many observers the banks and their problem loans are Japan's most intractable economic problem. There is a widespread feeling that Japan's FSA continues to underestimate the extent of the bad loan problem which many see as getting worse every day as more companies get into difficulties in the face of declining demand. I can well understand the reluctance of the Japanese government to pump more public money into the banks, but if there were to be signs of systemic failure they would be forced to do so or/and nationalise failing banks. The recent mergers of banks and other financial institutions should in theory lead to the development of stronger and healthier banks and insurance companies, but this will surely depend on the willingness of the merged institutions to rationalise their operations by streamlining management systems as well as cutting branches and staff. So far there are little signs of this happening.
The phasing out of the "pay-off" system should also lead to a decrease in the number of second tier banks, but it remains to be seen whether this can be carried out smoothly. If second grade regional banks have to close, there will surely be outcries from the regions affected and pressures to rescue local banks may be difficult to resist. The recent case of the Ishikawa Bank underlines the difficulties. The FSA rejects accusations of being too soft in their inspections, but foreign observers wonder whether their reports are any more reliable than those of the auditing profession whose reputation has fallen greatly as a result of the Enron scandal. It has been argued that the fundamental problem in clearing up the bad loan situation is not the large number of medium firms involved but the thirty or so large firms which are in such a bad way that the only way to prevent them from bankruptcy, which would lead to large increases in unemployment, and further undermine confidence, (apart from the implications for the Members of the Diet who are under an obligation to the firms in question), is to prop them up with further loans. The most serious problems arise in the construction industry. Some Japanese construction companies are thought to be basically insolvent and incapable of recovery; yet they continue to operate. The banking industry can probably only return to a healthy position, if companies such as Daiei, Yukijirushi and others are allowed to, or forced to, become bankrupt.

Evaluation of fiscal policy and reform of semi-governmental organizations and postal saving bank

Fiscal policy is constrained by Japan's overall indebtedness. This means that tax cuts unless they lead to an increase in demand and therefore growth, which expands the tax base, are likely to raise Japan's debt to GDP ratio. The government could gamble that cuts in income tax would lead to increased spending, but in the absence of confidence and, in view of Japan's high propensity to save, tax payers might simply decide to save the extra income they gain from tax cuts. It is even more doubtful whether a cut in consumption tax would lead to increases in spending or demand. However the Japanese government would be wise to carry out soon a major reform of the Japanese tax system. Cuts in income tax should probably be balanced by increases in indirect taxes, not only in the general consumption tax rate, but also in taxes on tobacco and happoshu. Greater incentives to invest in equity capital are needed and incentives generally improved. The kind of major tax reform, which is necessary, can only be forced through if the government have sufficient political courage to stand up to the lobby groups and determination to see reforms implemented rather than merely discussed and agreed in principle.
Previous Japanese governments have attempted to spend their way out of recession. This has failed in the past and is becoming increasingly difficult as the public debt rises. As most government bonds are owned by Japanese, who are disillusioned with equity investments in view of past losses and scared by exchange rate instability to invest abroad, some increase in government borrowing could probably be accepted without causing the cost of servicing Japan's public debt to rise too far and too fast, but present rates of return cannot be held for ever and debt servicing costs will rise as Japan's public debt is further downgraded. Mr Koizumi has been right to resist pressures to increase his self-imposed limit on new borrowing and to reject calls for increasing expenditure on under-used roads and on practically useless bridges and dams, which while benefiting construction companies, their workforces and the politicians beholden to them will not help the Japanese economy as a whole and will merely add to the burden of public debt. Increases in expenditure on information technology, on health and care facilities for the elderly as well as on improvements in education would be more beneficial, but these need to be combined with structural reforms to be effective.
Mr Koizumi was surely absolutely right to put high on his agenda the privatisation of the plethora of semi-governmental organizations whose economic value is at best problematic. The British were among the first to see that public utilities needed competition if they were to become more efficient and prices reduced to the consumer. Japan has been slow in privatisation even in telecommunications. There have been too many vested interests involved and Japanese governments have been generally unwilling to tackle the bureaucrats and politicians who have resisted change because it would affect their cosy monopolies. Mr Koizumi has been right to give priority to privatising the Dorokodan which has wasted huge amounts in building roads in e.g. Hokkkaido which are practically empty. Before construction projects were approved were adequate cost benefit analyses made? Were environmental impact studies published? Were communities affected properly consulted? Were fair competition rules applied before contracts were awarded or was the dango system allowed to operate? Another glaring example of wasteful investment has been the building so many new airports, which are almost certain to be underused for decades to come? The Kobe airport is surely unnecessary when Osaka International airport, which cost such huge sums, is so little utilised. The costs to carriers of operating to and from Japanese airports are so high that Japan will lose international traffic to China and Korea. If private firms had to build and finance these airports there would be many fewer such projects.
Mr Koizumi was also right to target the postal savings bank. Its operations with all the guarantees, which come from being a governmental organization, constitute unfair competition to the commercial banks. The government must also be worried about the way in which deposits have been used to finance uneconomic projects such as roads, bridges, tunnels and airports. The government guarantees of postal deposits amount to a huge increase in the Japanese government's indebtedness.

Reform of Japanese management and effective corporate restructuring

While government reforms have been slow in coming through, there has clearly been major restructuring in Japanese industries especially those subject to foreign competition. A few years ago mergers across keiretsu boundaries would have been unthinkable. Now it is commonplace, but it remains to be seen how quickly the often very different corporate attitudes can be married and efficient new managements instituted without too many personal tragedies. In many companies effective amalgamation will be difficult for the current generation. A change of generation, involving promotion on merit rather than seniority, is almost certainly needed and may already be taking place in some important companies. But there will also have to be changes in the consensus system, which has dominated Japanese management thinking. The consensus system often leads to delays in decision-making and to decisions when made, which amount to the lowest common denominator. Japan needs many more young and ambitious entrepreneurs who are often stifled by the seniority dominated bureaucracies in large Japanese companies.
Japanese management has for too long been dominated by a gerontocracy which has resisted fundamental changes in corporate governance. New rules on corporate governance ensuring that the interests of the owners are given greater weight in decision-making are a priority. Above all there needs to be much greater transparency, accompanied by clearer accountability rules.
Fundamental to effective corporate restructuring is an increase in competition brought about by widespread deregulation. There have been few announcements of significant deregulation, for instance in land transport. One British firm who wanted to import by air a special office table found that it took longer and cost more to get the table from Narita airport to their offices in Tokyo than it had cost to transport the table from the UK factory to London airport and from London to Tokyo by air. One problem was the Byzantine bureaucracy of Japanese Customs procedures; another was the way in which Japanese haulage firms, protected by elaborate licensing systems, operate. This story may have become exaggerated in the telling but it underlines the way in which Japanese regulations keep up the costs to be paid by Japanese companies and hence reduce their overall competitiveness. Competition, especially in service industries, is still insufficient while new ways are devised to protect Japanese firms against foreign competition. The legal profession is a particularly blatant example of Japanese protectionism.

Education, labour and women power

There has been much argument in the Japanese media about the decline in educational standards in Japan. Some ascribe this to the new curriculum. Others put the blame on the teaching profession and the examination system. Parents also cannot escape criticism for either overdriving their children or/and overindulging them. Foreign observers whose direct knowledge is inevitably limited guess probably correctly that all these factors have to be taken into account. Perhaps the fundamental problems lie in improving motivation, inducing a sensible degree of ambition, encouraging individuality and producing determination and willingness to question the "perceived wisdom’.
This is a very controversial and difficult area, but one thing is clear. Japanese young people will not be able to enjoy the old patterns of lifetime employment in one company. Japanese labour laws will have to be liberalised and employment patterns must become more flexible. This means a much greater emphasis on practical training and on specialisation. There will inevitably be fewer generalists and the demand will be for people with specialist skills and experience. The Japanese government's role must be to deregulate labour markets while at the same time improving safety nets and vocational training facilities.
Mr Koizumi, by his appointment of a record number of women as cabinet ministers, has recognized another lacuna in Japan's economic system. That is the way in which Japan's women power has been neglected and wasted. As the Japanese population ages and the net reproduction rate (already a mere 1.38) declines Japan will face an increasing shortage of productive workers. The burden on the working population to look after the ageing population and provide adequate pensions will rise. The age of retirement will have to go up and women power will need to be better used. Incentives for working women to have children should be increased by the provision of maternity leave and children's creches at offices and work places, but this will not be enough. A fundamental change in the male chauvinist attitudes permeating Japanese society will be required. Immigration will also have to rise and this will require basic changes in Japanese attitudes towards people of other races.
The Japanese pension system, already under strain, will have to change still further. "Pay as you go" pensions (i.e. pensions paid out of current revenue) cannot simply be replaced by funded schemes although there should be an increase in the coverage of such schemes to reduce the burden on the state. But unless funds are invested abroad and yield reasonable returns they will have to be invested in Japan. This means that a smaller number of Japanese workers will have to increase their productivity to ensure adequate returns.

Is Japan "NATO"?

Mr Koizumi's reform agenda is vast. Some of the problems, which I have mentioned, are beyond the scope of any government to rectify although governments can help to create the right conditions for change and can help to alter public perceptions. Mr Koizumi started with high popularity and an ambitious set of proposals. He emphasised that there could be no progress without pain and his rhetoric seemed to strike a chord with the Japanese public. Unfortunately it seems that opposition from short sighted and self- serving politicians and bureaucrats have stifled much of Mr Koizumi's efforts in effecting vital reforms. His opponents apparently suffer from what is known as NIMTO or "not in my time of office", i.e. let me enjoy the benefits and let my successors clear up the mess after I have retired. The term "NATO" in Japan, according to some, does not mean as it does here "The North Atlantic Treaty Organization" but "No Action Talk Only’. Certainly it is far from easy to produce a list of significant reforms adopted and implemented by Mr Koizumi's government. He would doubtless argue that radical reforms could not be put into effect over the months he has been in office. Transforming proposals into legislation and implementing major restructuring plans may take years. Mr Koizumi would also argue that deliberations in the Diet and opposition from within his own party, which squabbles all the time over sharing power, have slowed down the process.
Unfortunately his strongest weapon namely his public popularity has recently been eroded and this is making his task ever more difficult. Most foreigners find the popularity of Ms Makiko Tanaka difficult to understand and thought her dismissal justified. She was tactless, indeed often rude and a bully; moreover she seemed to be ignorant of foreign policy issues and was generally prevented by the Diet from representing Japan at conferences overseas for fear that she would damage Japan's image and prestige by further gaffes. No doubt her forthrightness and toughness with the allegedly arrogant and corrupt officials in the Gaimusho was popular, but it is hard to understand why her loss of office should have dented Mr Koizumi's popularity so much. It is apparent that Mr Koizumi's enemies in the LDP are determined to force him out, but who, do they envisage, should replace him? A return to the discredited policies of the past with more spending and more propping up of bankrupt construction companies would lead to a further erosion of confidence in the economy. Foreign observers might then be forced to conclude that Japan was in terminal decline and the sick joke, which asked "what was the difference between Japan and the Argentine?" and to which the answer was "five years", might not be so wrong after all.

Japan is not in terminal decline yet.

My answer to my own question "Is Japan in terminal decline?" is "not yet and it need not be if reforms are pushed with vigour and determination." I hope that Mr Koizumi will succeed and pray that there will be other Japanese leaders ready to carry on with determination the process of reform.

Question to Sir Hugh Cortazzi

1. What were themes of Political reform after Thatcher?

Political reform issues since Mrs Thatcher resigned include:

a) political sleaze. In Britain this has not generally involved politicians using their position for personal gain from government contracts. It has rather involved using their parliamentary position to further the interests of their friends e.g. through parliamentary questions and influence with Ministers. Sleaze accusations have led to failed libel actions and to two former Conservative politicians (Jonathan Aitken and Geoffrey Archer) being prosecuted and convicted of perjury. Accusations of sleaze were among the reasons for the defeat of the Conservatives at the election in 1997. The Labour Government has also suffered from sleaze and accusations against Ministers led to the resignations of Geoffrey Robinson and Peter Mandelson. Efforts are being made to improve standards in public life, but there is a good deal of cynicism in Britain about the likely success of these efforts. Sleaze has undoubtedly detracted from the prestige of politicians and is a factor in electoral apathy.

b) The most important reform issues in recent years have been constitutional:

(i) devolution and the establishment of the Scottish parliament and the Welsh assembly;
(ii) the establishment of a greater London council and the appointment of a Mayor of London following a popular election;
(iii) proposals for and debate about reform of the House of Lords;
(iv) enactment as part of UK law of the European code of human rights.
(v) discussions on amending the electoral law to bring in an element of proportional representation as demanded by the Liberal Democrats, Britain's third party.
(vi) Relations between Ministers and their political advisers on the one hand and civil servants on the other. There is pressure for legislation to clarify the relationship and to reassert the independence of the civil service while emphasising its function to carry out the will of parliament as represented by the government of the day,
The issues briefly described above have all aroused a great deal of debate and controversy with divisions along party lines. The Conservatives have in effect accepted b) (i), (ii) and (iv), but standards in public life, reform of the House of Lords, electoral reform and relations between Ministers, their political advisers and civil servants will continue to fuel controversy for many years to come. The British constitutional reforms are not really relevant to Japan: the elimination of sleaze is relevant, but our methods including judicial review are not in accordance with Japanese traditions. Relations between Ministers and Civil Servants are relevant to Japan but the problem in Britain is different from that in Japan where the problem seems to be between civil servants and politicians who are not Ministers.

2. What do you think of Prime Minister's leadership under the member cabinet system?

Traditionally the Prime Minister in Britain has been simply "primus inter pares" i.e. first among equals and government policy is supposed to be decided by consensus in cabinet with each Minister being responsible for his department but contributing as individuals to deliberations on the broad lines of government policy. Both Mrs Thatcher and Tony Blair have been accused of trying to establish a Presidential style of government with major issues being settled outside cabinet by cabals or by cabinet committees. Inevitably as the apparatus of government and the range of issues requiring political decisions has grown Cabinet committees have become increasing important. During the last war Churchill's war cabinet rarely consisted of more than seven senior Ministers. The Overseas Policy and Defence Committee has for decades been one of the more important cabinet committees. Individual Ministers assert their powers through membership of cabinet committees, through their relationships with fellow Ministers especially with the powerful Chancellor of the Exchequer and by their individual abilities and personalities. The British Civil Service is precluded from taking part in politics but it prides itself on serving its political masters faithfully and providing them with independent and as far as possible objective advice.

3. How do you evaluate Koizumi's process of reform?

I am not sure that I know what his "strategy" is. Presumably his aim is to carry out a wide scale reform of the way the Japanese economy is run and to improve the political process. I assume that he has relied on his popularity with the public to put pressure on his opponents in the LDP. He also presumably takes account of the difficulty which the LDP would have in finding an alternative leader who could ensure the party's re-election. Perhaps he also thinks that if the majority of the LDP turned against him he might be able to get some support from parts of the Democratic party, perhaps leading to a split in the LDP and a realignment in Japanese politics, but it seems to me that this would be very difficult to achieve. As I said in my draft article it seems to me that political reform including changes in the constituency system should be a high priority for Mr Koizumi. It will be difficult to defeat the zokugiin without changes of the kind I advocated, but I am conscious that such changes would arouse strong opposition in the LDP and may be unattainable without endorsement at a general election. The power of the Prime Minister to call an election at the time of his own choosing is strong weapon but one which Mr Koizumi can probably only use once. So he needs to "keep it up his sleeve" for the moment.

4. How is restriction of contact between politicians and bureaucrats in Britain?

You refer to "the British model such as restriction of contact between politicians and bureaucrats". There is no rule against civil servants having contacts with politicians but they have to be very careful to ensure that they do not become involved with political issues in such contacts. Normally a politician wishing to take up a matter affecting his constituency would either write to the relevant Minister or ask a parliamentary question. Civil servants would draft the appropriate reply which would issue from the Minister concerned, but Members of Parliament often seek briefings about particular issues from civil servants. This would be done with the approval of the relevant Minister and of course reported to him/her. For instance if a MP is going on a visit to a foreign country he may want to talk to the relevant officials.
As I have said cabinet committees are of long standing. There are also policy units in the Prime Minister's office and in the Cabinet Office. Each department of state also has its own policy units and in Whitehall ad hoc committees with representatives from relevant Ministries are set up to coordinate policy and ensure performance.
I certainly think that the "prior approval system by the LDP for legislation should be abolished". decisions of this kind should be a government responsibility.
Turning to the Asahi article, I would agree that the cabinet should take the leadership role, centring around the Prime Minister, but this is vague. Is he first among equals or should the Prime Minister assume a Presidential role?
"elimination of the influence of bureaucrats in the process". I don't see how this can be achieved. Nor does it make sense. Politicians need input and advice from civil servants who have detailed knowledge and experience of the issues. This does not mean that civil servants should make policy decisions which should lie with politicians.
"putting an end to party lobbies' ability to influence policy". Yes, of course.