Montrose Journal Winter 06


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CHANGE IN JAPAN:BETWEEN COURAGE AND CAUTION -

HENRY SCOTT-STOKES, WRITER AND COMMENTATOR

What do you do to bring about change in a risk-averse society? Last year Japan saw just how hard it is to bring about a major change in policy—and yet how it can be done. The person who single-handedly accomplished this mission was Junichiro Koizumi, the "Lion Heart" of Japan, he of the wavy hair-do—he has just retired as prime minister after 5 years in office.

This tale of autumn 2005 is well-known. Koizumi used one of the very few powers a premier has in Japan—his authority to dissolve parliament and call elections—to attack and wipe out a reluctant minority of his own party in the Diet (Parliament) and win passage of a piece of legislation, namely reform of the nation's huge Post Office system. His reasoning was that the Post Office and its pool of savings - the largest in the world - served as a foundation to the old ruling party system, especially in the rural areas.

"I want to destroy the (old) Liberal Democratic Party from within," he said, when he campaigned for the premiership. Tackling the Post Office was the way to achieve this objective.

Not that it was easy.

Koizumi faced a revolt of 37 opponents entrenched in his party in parliament. They had all voted against reform of the Post Office.When Koizumi dissolved parliament and called for elections, he took a tremendous risk. Hardly anyone I knew thought that he would succeed. Yet the choice of able new official candidates won the day in most of the 37 constituencies. And lo and behold, the strategy worked. Koizumi pulled a white rabbit out of his hat. It was the strategy of a man born to the "great game" of politics as Disraeli called it.

It will still be many years—the date for completion is as far away as 2017—before the Post Office is dismembered, and there could be all kinds of back-sliding, knowing Japan. However, Koizumi won his fight. ***

The question of how you bring about change in a society such as Japan is perhaps best illustrated by a comparison. "I should think," said Bill Emmott in a recent letter to me, that one "ought to answer it by reference both to Japan l995-2006 and India l991-2006". I confess I know nothing of India at first hand, but let the ex-editor of The Economist speak:

"In both places (Japan and India) strong vested interests opposed change. In Japan, people were risk-averse, yes, for reasons of social stability and vested interests; in India, people were and are risk-averse because of worries about external interference (the colonial legacy) and also the stability of an extremely diverse place. How have both managed to change?"

Here, a parenthesis.What distinguishes today's India and China, according to prominent Swedish businessman Percy Barnevik, is that the former enjoys freedom of the press, while the latter does not. Accordingly, Barnevik said that if he were asked where the best place to invest in Asia is, taking the long-term, he would unhesitatingly favour India.

Returning to Bill Emmott's view of Japan and India, he asked a different question:

"How have both managed to change? Both have opted for gradualism rather than shock therapy or dramatic overnight change. External pressures have helped: in India the pressure of a balance-of-payments crisis in l991; in Japan, the emergence of China as a serious regional economic and political rival. In both places, gradualism seems to me to have become possible once a general consensus formed that reform was necessary; all main parties agreed on the direction, even if they did not agree on the speed or the exact content. Some of the reform in Japan seems to me almost to have been stealth reform; the accumulative effect of hundreds of small changes that together have formed a big change.

Bill goes on to portray the post office reform as important but not the whole story:

"In a way, with the exception of Koizumi's Post Office coup, most of it was achieved by playing down the drama. A good question is how did Japan pass far-reaching labour reforms in 2001-03 without protest when gentler efforts brought the French out on to the street? Heizo Takenaka (Koizumi's economics chief) seems to me to have succeeded largely through doggedness and keeping his head down, no doubt strengthened by Koizumi's  backing."

So "Koizumi's backing" was the key, even though it was not as clear as in the Post Office reform. Koizumi's handpicked successor, Shinzo Abe, is however an unknown quantity. Like father, like son, is my worry about him. . Two decades ago, I received a call at my office from Dentsu, the leading PR agency here. The caller, a Mr. Ohno, proposed that he introduce to me the "future prime minister" of Japan - Shintaro Abe (the father of Shinzo). I worked for The New York Times, as Tokyo Bureau Chief at the time. The man from Dentsu wanted to use my newspaper to launch the present Mr. Abe's father as Japan's new leader. I agreed to meet Mr. Abe Sr.We sat in his quiet garden together for an hour, while his aides withdrew to a distance.

This meeting led nowhere. There was a problem. The elder Abe, a journalist by background, didn't say anything that day. He was unquotable on the great issues of the day (they are still the same: the l947 "Peace Constitution"; the US-Japan alliance; defence policy; the stance towards China; pensions)—as were almost all the LDP leaders I met down the years (Sato Eisaku, Tanaka Kakuei, Miki Takeo). Koizumi has broken the mould of the old undemocratic Liberal Democratic Party, and opened the door to change.

He has put a personal imprint on the political scene here, above all with his embrace of the US in general and President George W. Bush in particular. He has set a standard in relations with Americans that leaves behind every other Japanese leader of the post-war era, including Yasuhiro Nakasone. Can one imagine Nakasone dancing a foxtrot with Richard Gere, the movie star, or bursting into song at Elvis Presley's old mansion, with George Bush smiling in the background. Who else from Asia could let the president stay in the background?

Koizumi, like Baroness Thatcher in her time in the UK, is an impossible act to follow. It almost inevitably follows that the successor—the "John Major" in Japanese terms—is a nice chap, seen as friendly and equable, and well-mannered, but not a leader in his own right. How so? Koizumi has set the agenda for years to come. It is foursquare support for the US under whatever circumstances. Is Iraq a mess? Has the US gone in deep without forethought? Is there pain in Washington DC? It is at such times that America needs friends.

That was at least what Koizumi-san thought. In the eyes of official Washington, he could do no wrong. He was the only leader in Asia, who spoke out immediately after 9/11, loud and clear, to express sympathy for the victims of many nations, and support for the US—the only one who spoke out. As a place to speak, Koizumi chose the Foreign Correspondents Club. There, he was assured of the presence of the foreign press, as well as the Japanese media (twelve network cameras in all). The club was the right place to perform, Koizumi's handlers saw.

I was there that day and heard Koizumi speak.What he said that afternoon at the FCCJ seemed perfectly natural and normal. Not blessed with omniscience, I had no idea that I was seeing history made. I had no idea that no leaders would step forward in China, India, Korea or the Philippines, or Indonesia, or anywhere except Australia, and say the obvious, right things.

This is Koizumi's inheritance. He is a reformer at home, and a supporter of the US and of democracy. This is the agenda that the incoming "Mr. Major" has to shoulder, if he is to survive. Glancing at the pieces written about him, as he prepared to take office, I wondered whether Abe Jr. is up to it. He is young and fresh-faced, and then, at times, he looks exhausted. I came across an immensely long piece in the FT, written by its Tokyo Correspondent. I could not find a quoteable quote.

In the event, God forbid, of another 9/11 can we imagine this Abe—with his Dentsu handlers in the background or not?—getting into his car, and telling his driver to go to the Foreign Correspondents Club, and not the Prime Minister's Office, where there is a tame crew of Japanese reporters waiting at all hours ?

The question remains: how to bring about reform in a society that is averse to change and dreads risk? Here, I revert to Bill Emmott's remarks. Further change is going to be brought about in Japan by piecemeal reforms, not by any grand vision or shock tactics a la Koizumi. It is perhaps no coincidence that the two Asian countries that have been having success in this approach over the last 15 years are Asia's two large democracies, Japan and the India that Percy Barnevik favours. Along with this least bad form of government goes a willingness to experiment, to move forward, and to try again.

This seems to be the essence of politics in Japan right now. As a first step, Prime Minister Abe is at the time of writing seeking a meeting with the Chinese leaders. Something has to be done to patch up relations with the Middle Kingdom, given that Mr. Koizumi, in a rare misjudgment, totally mismanaged this aspect of Japan's international relations by insisting on continuing his visits to the main war Shinto shrine in Tokyo, year after year.

These peregrinations to the Yasukuni Shrine in central Tokyo have caused deep offence in Asia, there is no question. Leave aside the question of why Koizumi-san persisted with them, there is no doubt in my mind that the US considers that, if the reform agenda of the outgoing  PM is to be respected, and the momentum is to be kept up here, then something has to be done to repair Japanese ties with the mainland.

Certainly, one overdue part of the reform agenda is education in general, and, more specifically, instruction in the schools on history. To this day most Japanese under the age of 60 know little or nothing of the l930s, as a wretched decade in the 2,000 year history of this nation. My family—that part of it that is Japanese—had not the faintest idea until I enlightened them that certain events took place in the heyday of Japanese ultra-nationalism (l931-1945), and that much of what happened in those years was to be regretted by all of us.

Colonization of Korea (l910-45)? Manchuria in 1931? The China Incident? Nanking? The Attack on Pearl Harbour (cursorily mentioned in Japanese textbooks)? The Bataan March? The Burma Road? The camps? My relatives are uninformed on these matters, thanks to Japanese education. The part of the LDP that Abe Jr. represents say they want to reinforce the bland approach to the telling of Japan's modern history in the textbooks. I would think that the Chinese—not above criticism themselves on this score—also need to consider their history.

At least there is freedom of the press in Japan. It should not be beyond the wits of enlightened teachers here and (here and there) on the Mainland, to draw attention to what is on the Internet. Fifty years ago, I would wager, because so many Japanese who had direct experience of the l930s and World War Two were alive, there was a far higher degree of knowledge about this nation's modern history than there is today. Somehow, the Ministry of Education here has acted to wipe the slate clean and leave just an empty space.

If I'm optimistic about Japan, still, it is because Koizumi managed to kick-start a change in the national mood accompanied by a myriad little shifts in the way business is done, to bring about actual, material gain. Look at the small company sector and consider what a sea-change companies have gone through. Back in the late l990s not one of these Japanese small caps—with the possible exception of Yahoo! Japan—had a website, or an IR person, or e-mail addresses—and consolidated its accounts. Now they all do. I am not sure that Abe is the person to keep this avalanche of quiet, low-key shifts going forward in business. But as long as there is someone under him like Takenaka under Koizumi, who has the courage and the stealth required to make this risk averse society keep loosening its bonds, change may yet prevail in this very conservative society.


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