No. 39 — October 15, 1999


Feature Article


Barbara Wanner


The Democratic Party of Japan, the largest opposition force, was riding high in July 1998. Upper house elections had boosted its ranks in this 252-seat Diet chamber to 47 members from 38 and had shrunk the Liberal Democratic Party's presence to 102 from 119. Basking in the glow of the unexpected windfall, then-DPJ President Naoto Kan vowed to unite the political opposition at the time composed of six main parties and an assortment of small groups to wrest control of the government from the LDP.

In time, however, seemingly dull Prime Minister Keizo Obuchi and his wily LDP lieutenants proved to be more politically savvy than the charismatic Mr. Kan. Initially bringing the small, right-wing Liberal Party into the governing fold, the LDP later co-opted the New Komeito, the second-largest opposition party. That gave the Obuchi administration a tripartite base and solid majorities in both Diet chambers. By late September, Mr. Kan at one time, the most popular politician in Japan was out of a job. The DPJ tapped its deputy secretary general, Yukio Hatoyama, to unite and reinvigorate the opposition.

Mr. Hatoyama has his work cut out for him. For starters, he did not win the leadership race on the first ballot, suggesting not-insignificant divisions within the ranks. The challenges posed by Mr. Hatoyama's apparent political weakness are compounded by the philosophical breadth of his constituency. The DPJ's membership encompasses leftist former Social Democratic Party of Japan lawmakers as well as conservative politicians who previously were aligned with the LDP. Such diversity undoubtedly will complicate Mr. Hatoyama's efforts to develop a cogent, well-conceived platform that makes clear how the DPJ would govern Japan differently and better than the long-ruling Liberal Democrats. Clarity is particularly crucial if the largest opposition party is to mobilize Japan's legion of nonaligned voters in the next general elections. The July 1998 upper house polls and recent local elections have revealed the power of this bloc to swing a contest usually to the LDP's disadvantage.

Mid-September opinion surveys indicated, however, that public stock in the once-vibrant DPJ had plummeted to an all-time low. But while the Democrats currently are down, experts contend that their problems will not necessarily contribute to a reversion to the pre-1993, LDP-dominated political order. For one thing, the staying power of Mr. Obuchi's new triparty government is in question, given the strong opposition among the LDP rank and file as well as the public to the inclusion of the Buddhist-backed New Komeito. Neither will the Democrats' apparent disarray create conditions favorable to the emergence of the Japan Communist Party as the leading voice of the opposition despite the JCP's impressive gains in recent elections.

Pointing to the leadership talent in the DPJ's ranks and its centrist, reform-oriented policies, most analysts believe that the party will continue to attract sufficient support at the polls to at least remain the biggest opposition group. However, challenges in the economic, diplomatic and security environments will continue to create turbulence in the Japanese political milieu. This makes it all the more important for Mr. Hatoyama to rally his troops and to develop and articulate a strategic vision that provides voters with clear policy choices.

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Weekly Review

--- by Barbara Wanner

Prime Minister Keizo Obuchi finally formed a triparty administration October 5 consisting of his Liberal Democratic Party, the Liberal Party and the New Komeito. The alliance is the fruit of a yearlong effort to gain complete control of the Diet. The governing bloc now dominates the lower house with 357 of the 500 seats and controls 141 seats in the 250-member upper house (see Table 1). At his inaugural news conference, Mr. Obuchi predicted that the government's new strength in numbers would facilitate prompt legislative action on policies aimed at ensuring a sustained economic recovery. He also mentioned another priority that the tripartite coalition will be well-positioned to realize: a successful summit of the leaders of the Group of Seven major industrial nations plus Russia, which will be held July 21-July 23, 2000 on Okinawa.


--- by Douglas Ostrom

The American and Japanese electorates alike will vote in national elections within the next year. The name George Bush figures importantly in early campaign skirmishes in both countries, but it is a different George Bush in each. While Americans are considering the possibility of George W. Bush as the Republican standard-bearer, it is the 1992 experience of his father, President George Bush, that is most relevant to the Japanese and particularly to Prime Minister Keizo Obuchi as his Liberal Democratic Party prepares to face voters in lower house elections that must be held by October 2000.


--- by Jon Choy

Japan's financial markets have undergone a transformation over the last five years or so. Regulations have been updated to bring policies and practices in line with global norms and to meet the evolving needs of corporate and individual customers (see JEI Report No. 22A, June 11, 1999). Moreover, all types of domestic financial services firms are rushing to adapt to the changing market environment — entering new lines of business, striking alliances, initiating mergers or acquisitions and, in some cases, closing their doors. Opportunities for foreigners also are increasing rapidly. Offshore competitors are exploiting these openings by setting up offices, expanding existing operations and buying assets from failed Japanese firms.


--- by Marc Castellano

At the October 6-8 Conference on Facilitating the Entry into Force of the Comprehensive Test Ban Treaty, former Foreign Minister Masahiko Komura urged the United States and other major nuclear powers to ratify the CTBT as soon as possible. The ministerial-level meeting, convened by United Nations Secretary General Kofi Annan and chaired by Japan, was held in Vienna, Austria just as political wrangling over the treaty unexpectedly heated up in Washington. American support for the CTBT is widely seen as pivotal to the success of this attempt to curb the global spread of nuclear weapons. However, the GOP-controlled Senate threw the future of the CTBT into doubt October 13 by rejecting the treaty on a 51-48 vote.



Antitrust Pact - Following up an announcement made during last May's summit between President Clinton and Prime Minister Keizo Obuchi (see JEI Report No. 18B, May 7, 1999, and No. 25B, July 2, 1999), the United States and Japan signed an agreement October 7 to cooperate on antitrust enforcement. The developers of the accord, which is similar to existing U.S. arrangements with Canada and the European Union, expect the two sides to work particularly closely on international antitrust matters. In perhaps its most significant provision, the agreement incorporates what is known as positive comity, under which "each antitrust agency would give careful consideration to a request by the other to take antitrust enforcement action against illegal behavior occurring within its jurisdiction that injures the other party's interest."

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