After nearly two years in office, Prime Minister Junichiro Koizumi is increasingly beleaguered in his bid to retool Japan’s dysfunctional economic systems. He is sticking to his banner slogans — “Structural reform without sanctuaries” and “No reform, no growth,” but the gap between words and deeds continues to widen. That is one way to look at the policy speech he delivered in the Diet on Friday.
No doubt his main job is to halt falling prices and get the economy moving again. Disappointingly, he showed no inspirational blueprint for accomplishing that. Instead, he spent much of the time reiterating the policies he had announced previously. What is more, the speech was devoid of the zeal for reform that he had so eloquently expressed in his maiden policy speech in May 2001. The biggest challenge for him now is to reduce the distance between rhetoric and reality.
In Friday’s address, Mr. Koizumi stressed the need to rebuild Japan through bold reforms, saying it is vital to revive economic growth, reduce the budget gap, create a smaller government and advance technological progress. He singled out deflation as the worst economic malaise Japan has suffered since the end of World War II, noting that the continuing slide in prices is having a “severe impact” on economic activities and people’s lives. To achieve economic revival, he said “all available policy measures” will be taken to accelerate reforms in four key areas — spending, taxation, finance and deregulation. To fight deflation, he added, the government will work in tandem with the Bank of Japan.
The problem for him is that the general public is becoming increasingly skeptical about his promises. His pledge to cap the debt issue at 30 trillion yen a year is already a thing of the past. The government is now set to sell 36 trillion yen in new bonds in fiscal 2003. The plan to balance the spending budget (excluding debt service costs) by the early 2010s looks like a rosy dream that may or may not come true. Trying to achieve this only through belt-tightening is unrealistic.
The prime minister is now pledged to keep the 5-percent consumption tax on hold during his administration. Given the mounting calls for tax increases, though, one wonders whether he will not eat his words again. Earlier in the Diet, responding to criticism that he has failed to keep some of his key promises, Mr. Koizumi snapped, “It’s no big deal.” Although he later apologized for the remark, the public’s trust in his commitments appears to have further diminished.
To secure public backing, the prime minister must keep his reform drive moving. That won’t be easy, to say the least. No wonder the speech seemed to betray a lack of self-confidence. “The reforms are still in progress and it will take a little more time before they begin to show results,” he said, acknowledging in effect that he is fighting an uphill battle. His mainstay reforms — privatization of postal services and highway corporations — continue to meet stiff resistance from within his own party. If he loses the battle, that may well spell an end to his administration as well.
Oddly, the speech made only brief references to the diplomatic challenges of the moment: the standoff with North Korea and Iraq as well as the kidnapping of Japanese nationals by North Korean agents. The prime minister said Japan, together with the United States and South Korea as well as China and Russia, will “strongly urge” Pyongyang to renounce its nuclear ambitions. He pledged to make “maximum efforts” to resolve the abduction issue. On the Iraqi crisis, Mr. Koizumi said Baghdad must disarm in full compliance with U.N. Security Council resolutions, adding that Japan will continue “proactive diplomatic efforts.”
In essence, that is all he said about these make-or-break disputes. He did not say what he meant by “proactive diplomatic efforts,” leaving the nation — and the world — wondering how Japan would act in the event of war in Iraq. Nor did he send any clear message regarding the nuclear threat from North Korea and its systematic abduction of Japanese citizens.
The reference to political ethics was likewise superficial — this despite the Supreme Court’s conviction of former Construction Minister Kishiro Nakamura for bribery and the arrest of Liberal Democratic Party local officials for illegal campaign funding. Mr. Koizumi said only he was “gravely concerned” about these violations and that “each and every politician must shape up.” It is quite right, as he said, that “public confidence in politics is the basis of reform.” In this respect, too, he has yet to produce convincing results.
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