Koizumi vows no sanctuaries from reform

Stressing the need for “structural reforms without sanctuaries,” Prime Minister Junichiro Koizumi on Monday gave his first policy speech and promised a two-step approach to end Japan’s debt-ridden fiscal woes.

“Without structural reforms, there can be no economic recovery,” Koizumi said during the 30-minute speech at the Lower House plenary session. “We already have the prescription. What I have to do now is make a decision and carry it out.”

In the speech, Koizumi made it clear his government will shift emphasis from his predecessors’ reliance on debt-financed spending to correcting structural woes. As one example, he promised to have the nation’s banks write off their nonperforming loans within three years.

Koizumi, who was inaugurated as prime minister two weeks ago after a landslide victory in the Liberal Democratic Party presidential race, also pledged to bring more competition to the economy by initiating further deregulation and by reinforcing the functions of the Fair Trade Commission.

He touched on other aspects of the economy as well, promising to invigorate Japan’s stock markets by introducing tax breaks to encourage individual investors.

As for the nation’s snowballing debt — which will amount to a whopping 666 trillion yen by March — Koizumi said he will take a two-step approach, the first phase of which will start this year.

“In the first step to regain fiscal health, I will seek to contain the issuance of government bonds to no more than 30 trillion yen in the fiscal 2002 budget,” the draft of which will be drawn up by year’s end, he said.

The second step will be to realize a so-called primary balance, although Koizumi did not give a time frame for this.

A primary balance is hit when expenditures excluding debt servicing do not exceed revenues excluding bond issues.

“I will set myself on the task of not depending on new debts, except for the purpose of paying interest on past debts,” he said.

As for administrative reforms, he promised to streamline operations of the central government bureaucracy under his mantra of leaving private businesses and local governments alone to do what they do best.

Koizumi also said he will soon launch a new team to study the possibility of privatizing the state-run postal businesses — one of his pet proposals that is sure to face strong resistance from among his LDP colleagues — and will unveil a concrete plan to introduce a popular vote to select the prime minister.

A popular election for the prime minister, which was among his campaign promises during the LDP presidential election, would require an amendment to the hitherto-untouched Constitution. Koizumi indicated in his first news conference as prime minister that he will try to change the charter with regard to this issue.

Koizumi, who also advocates reviewing the war-renouncing Article 9 of the supreme code, avoided discussing the issue in his speech, evidently accepting suggestions from his aides that he should not mention the touchy matter. One of the LDP’s coalition partners, New Komeito, opposes reviewing Article 9.

“The prime minister only spoke about issues that he is ready to tackle during the ongoing Diet session,” which ends June 29, a senior aide explained. After the speech, Koizumi indicated to reporters that reviewing Article 9 will not be on his immediate agenda.

Last week, Koizumi openly said he believes Article 9, which prohibits the nation from maintaining an army, navy and air force, should be reviewed as it contradicts the reality that Japan has had a military force, the Self-Defense Forces, since 1954.

On foreign relations, Koizumi noted that Japan’s postwar prosperity owes much to its alliance with the United States, adding that the relationship will remain the linchpin of Tokyo’s diplomacy.

Koizumi also termed Japan’s relationship with China “one of the most important bilateral relationships” for Japan and that his government will continue to pursue closer cooperation with Beijing.

Tokyo-Beijing relations have been strained over a series of recent developments, including Tokyo’s issuing of an entry visa for former Taiwanese President Lee Teng-hui, the approval of a controversial history textbook that critics say glosses over Japan’s wartime aggression against its Asian neighbors and the introduction of emergency curbs on farm imports from China.

Koizumi, whose strong popular appeal has seen his Cabinet’s public approval ratings soaring over 80 percent in recent opinion polls, went on to promise that he will hold “town meetings” along with relevant Cabinet members in all 47 prefectures within six months as part of his efforts to seek more dialogue with the public.

A Koizumi Cabinet e-mail magazine will soon be available, too, the prime minister added.

Opposition reaction

Opposition leaders criticized Prime Minister Junichiro Koizumi on Monday, saying his first policy speech showed he is merely maintaining his predecessors’ policies and is not intent on following through with promised reforms.

Yukio Hatoyama, leader of the largest opposition Democratic Party of Japan, said that although Koizumi describes himself as a reformist, his policy lacks details of what he will do to change the party and the nation.

“He is merely sprinkling words of reform on the bureaucrat-based politics that was the core of the preceding administrations under (former prime ministers Keizo) Obuchi and (Yoshiro) Mori,” Hatoyama told reporters.

Kazuo Shii, head of the Japanese Communist Party, said Koizumi’s reform, including the disposal of nonperforming loans by the nation’s banks within three years, will simply force the public to shoulder further burden and pain.

“If the government abandons small and midsize firms in times of bad business, the economy will break down,” he said.

Social Democratic Party leader Takako Doi noted that Koizumi’s speech “contained nothing” in detail on measures of how to realize structural reform.