Cabinet OKs postal reform package amid chaos in LDP

by Reiji Yoshida

The Cabinet of Prime Minister Junichiro Koizumi finalized a package of postal privatization bills Wednesday night after executives of his Liberal Democratic Party rammed the bills through a series of internal meetings.

After the Cabinet approved the bills, they were immediately submitted to the Diet, making good on Koizumi’s promise to deliver them by the end of the month.

But the LDP’s top decision-making body, the Executive Council, failed to decide whether the party should issue an order obliging all party members to back the government-sponsored bills during voting at the Diet.

It is believed such an order could affect the fate of the postal bills by causing privatization opponents to rise against Koizumi in the final stage of deliberations, which includes the vote.

“We haven’t approved the contents of the bills at all,” claimed former LDP policy chief Shizuka Kamei as he emerged from an exhaustive Executive Council meeting hours behind schedule.

But Koizumi remained undeterred.

“I expect (privatization opponents) to act by common sense as ruling lawmakers in the last stage,” he told reporters later in the day.

Japan Post’s postal savings and insurance divisions now have assets worth a total of 350 trillion yen, or one-fourth of individuals’ total assets.

Under Koizumi’s privatization plan, the postal services would be split into five new entities, including three government-linked special corporations, by 2017.

After forcing the bills through the party’s Policy Affairs Research Council in the afternoon, the LDP executives had them endorsed by the Executive Council in the evening.

The Executive Council meeting ended hours behind schedule at around 7:40 p.m. due to continued opposition from antiprivatization lawmakers.

In a rebellion against Koizumi and top LDP executives, opponents to postal reform within the party have said openly they would disobey if ordered to vote for the privatization bills.

“Let us decide whether or not to vote for the bills at our own discretion when they are submitted to the Diet,” Hisaoki Kamei, a key member of an group of LDP lawmakers opposing the privatization plan, said late Tuesday night. The opposition is led by former House of Representatives Speaker Tamisuke Watanuki.

Late Tuesday, LDP policy chief Kaoru Yosano abruptly declared an end to the meeting of a joint party panel on postal issues, in which it appeared a majority of the participants were voicing opposition to the government’s privatization scheme.

On Wednesday, the bills were discussed at a higher-level meeting of the policy affairs council and approved. Then the Executive Council approved them.

Throughout the process, privatization opponents cried foul.

The political battle between Koizumi and his LDP opponents is beginning to appear to be more of the long-standing power struggle between the LDP and the Koizumi Cabinet.

Throughout debates over postal privatization, LDP opponents have criticized Koizumi for being “dictatorial” and ignoring opinions of party members on policy affairs.

“A man with power must be modest and humble,” former LDP chief Shizuka Kamei said Wednesday. “The current situation is crisis of Japanese politics.”

Meanwhile, Koizumi supporters threatened that the prime minister might dissolve the Lower House and call a snap election should the bills be scrapped through resistance from the LDP rebels.

“The ruling parties may not be able to win a majority (if a Diet is dissolved and an election is held now). But I still want to see how the situation will be,” said Takashi Sasagawa, a House of Representative member during a recent meeting of the party panel on the privatization issues.

Koizumi’s privatization plan has also drawn criticism from reform supporters. They have said his Cabinet has conceded much to the LDP, watering the privatization plan down to win over rank-and-file members.

Under the plan, state-run Japan Post would be split into a holding company and four other units to deal with over-the-counter service, mail delivery, postal savings and insurance.

The government would keep more than a one-third stake in the holding company, which would own 100 percent of the over-the-counter-service and mail-delivery units.

All shares in the postal savings and insurance firms would be sold off after a transitional period of 10 years.

In a compromise with opponents within the LDP, however, the government said it would allow cross-shareholding among the five units, including the government-backed holding company.

Kazuaki Tanaka, a professor at Takushoku University and expert of administrative reforms, argued that Koizumi’s plan has serious defects, although praising Koizumi’s achievement as a “first step” in the current severe political situations surrounding him.

“Now, there is no other way but to move one step ahead first, and then correct problems later” to promote reforms, said Tanaka, who gave a just-pass score of 50 points out of 100 when asked to rate Koizumi’s privatization plan.

Tanaka said the privatized savings and insurance units would be so big that other private-sector institutions wouldn’t be able to compete on a fair and equal footing.

The two entities, he argued, should instead be broken up into smaller regional units.

Tanaka also argued that government control over the new entities would be too strong under Koizumi’s plan, which would allow the government to have them continue investing money into inefficient public sectors — rather than to private sectors as originally envisioned in the privatization plan.

Most of the funds held by Japan Post have been invested in government bonds to support debt-ridden state coffers and keep inefficient government-backed corporations afloat.

Meanwhile, Katsuya Okada, leader of the main opposition Democratic Party of Japan, argued that Koizumi’s plan is “totally unrealistic” in that it lacks clear prospect for business operation of the privatized entities.

For example, Koizumi’s plan assumes that the privatized postal savings company would run a lending business that would eventually expand to a scale of 35 trillion yen — even though currently the state-run postal savings operation does not include lending.

“This amount equals that of a megabank. Who could do this, and how?” Okada asked during a recent one-on-one debate session with Koizumi at the Diet.

“A megabank has continuously hired talented staff, acquired experiences and won customers over the postwar decades. It would be impossible to extend the same amount of loans only in 10 years with no (assets) like that at all,” Okada said.