Koizumi in uphill battle on promises

Four weeks after promising to break the mould of Japanese politics and radically reform the nation's economy, the Prime Minister…

Four weeks after promising to break the mould of Japanese politics and radically reform the nation's economy, the Prime Minister, Mr Junichiro Koizumi, has lost little of the grassroots popularity that unexpectedly swept him to the top post.

Mr Koizumi's charismatic Diet dispatches, peppered with witty put-downs and delivered with steely-eyed forcefulness in front of a slightly mesmerised opposition, have drawn the highest television audience ratings ever to an institution that once sent even the most dedicated political junkies to sleep.

Most observers agree that the slightly eccentric and rakish Prime Minister has added a much-needed dash of colour to Japanese politics, and the press, who spent 12 long months tailing his increasingly sullen predecessor, Mr Yoshiro Mori, have given him an unusually long political honeymoon.

But on the question of whether Mr Koizumi has begun to deliver his much-vaunted structural reforms, the answer seems to be a resounding Yes and No.

READ MORE

Few doubt that if his administration fails at least to start making headway on its promises before crucial upper house elections in July, the shine on Mr Koizumi's crown will quickly begin to fade. Since 1989 Japan's assets have been shrinking at an unprecedented rate, and the country's banks are buried under a mountain of bad debt. In the 10 years to 1999, financial institutions registered 87 trillion yen (£713 billion) in loan losses with no end in sight.

The government has pumped billions of yen into the economy to prevent it from declining further, running up the world's worst public debt at 130 per cent of GNP. The country is now in the grip of deflation, with consumer prices falling for two consecutive years.

Mr Koizumi's remedy for this economic mess involving privatisations, structural reform of financial industries, including the final disposal of non-performing loans within three years, limiting government bond issues and a promise to balance the budget, were made in his May 7th maiden speech.

Despite earlier proposals to force indebted companies to the courts to clear up bank balance sheets, the Finance Minister, Mr Hakuo Yanagisawa, seemed to back-pedal this week when he exempted general contractors from the requirement. Construction companies are a key supporter of the LDP and a major recipient of public works.

Mr Koizumi has kept his radical image alive, however, with an increasingly hawkish stance on constitutional and defence issues, raising the possibility of changing Japan's so-called "peace constitution", written after the second World War, which renounces the country's right to wage war. Mr Koizumi and others in his party want to revise it to allow Japan legally to field an army.

He has signalled a tougher line with China than his predecessors by vowing to visit Tokyo's controversial Yasukuni Shrine on August 15th. The memorial, which honours several Class A second World War criminals, has been politically taboo for many years.

The decision, coming on the back of school textbook revisions which critics say whitewash the country's war history, has predictably enraged Japan's Asian neighbours.

These moves will satisfy the right in his own party, but it is too early to tell whether Mr Koizumi is in danger of committing hara-kiri with his own rhetoric.